SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 0-25259
BOTTOMLINE TECHNOLOGIES (de), INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 02-0433294
(State or Other Jurisdiction of (I.R.S. Employer
Organization or Incorporation) Identification No.)
155 Fleet Street 03801
Portsmouth, New Hampshire (Zip Code)
(Address of Principal Executive
Offices)
(603) 436-0700
|
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10K. [X]
The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the last sale price of the registrant's common stock at the close of business on September 20, 2000 was $337,274,423 (reference is made to Part II, Item 5 herein for a statement of assumptions upon which this calculation is based). The Company has no non-voting stock.
There were 12,860,408 shares of common stock, $.001 par value per share, of the registrant outstanding as of September 20, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 of Part III (except for information required with respect to our executive officers, which is set forth under "Part I--Business-- Executive Officers of the Company") have been omitted from this report, as we expect to file with the Securities and Exchange Commission, not later than 120 days after the close of our fiscal year ended June 30, 2000, a definitive proxy statement for our annual meeting of stockholders. The information required by Items 10, 11, 12 and 13 of Part III of this report, which will appear in our definitive proxy statement, is incorporated by reference into this report.
TABLE OF CONTENTS
PART I
Item Page
---- ----
1. Business............................................................................... 1
2. Properties............................................................................. 13
3. Legal Proceedings...................................................................... 13
4. Submission of Matters to a Vote of Security Holders.................................... 13
PART II
5. Market for the Registrant's Common Stock and Related Stockholder Matters............... 14
6. Selected Financial Data................................................................ 15
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 16
7A. Quantitative and Qualitative Disclosures About Market Risk............................. 29
8. Financial Statements and Supplementary Data............................................ 30
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure... 30
PART III
10. Directors and Executive Officers of the Registrant..................................... 31
11. Executive Compensation................................................................. 31
12. Security Ownership for Certain Beneficial Owners and Management........................ 31
13. Certain Relationships and Related Transactions......................................... 31
PART IV
14. Exhibits, Financial Statements and Schedule, and Reports on Form 8-K................... 32
Signatures............................................................................. 36
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PART I
This annual report on Form 10-K contains forward-looking statements that involve risks and uncertainties. Any statements (including statements to the effect that we "believe," "expect," "anticipate," "plan" and similar expressions) that are not statements relating to historical matters should be considered forward-looking statements. Our actual results may differ materially from the results discussed in the forward-looking statements as a result of numerous important factors, including those discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Factors that May Affect Future Results."
Item 1. Business.
The Company
We provide software solutions that create an e-business infrastructure for use by businesses and financial institutions to present invoices, make payments and conduct electronic banking. Our products and services enable organizations to transition from traditional paper-based billing and payment processes to electronic processes to facilitate e-commerce. We also provide technology for banks and companies to access banking applications over the Internet. Our electronic bill presentment and payment software, NetTransact, provides a secure, interactive system for complex business-to-business transactions that allows companies to present billing information and accept payments over an extranet. Our PayBase payments software provides a Web-interface to control, manage and issue all payments, whether paper-based or electronic, across an enterprise. BankQuest is our electronic banking product that provides Internet- based access to banking applications such as cash management, trade finance and securities processing. SmARt Cash is a software product that improves the efficiency of accounts receivables transactions by automating the process of matching payments and remittance information to open invoices.
Our products enable customers to leverage the Internet to automate existing operations while increasing security and fraud avoidance. They also complement our customers' existing information systems, accounting applications and banking functions. To integrate with our customers' existing operations, we provide multiple options for delivery of complex invoices and detailed payment or remittance information. We also offer consulting services and related equipment and supplies to help customers plan, design and implement the transition from paper to electronic processes.
With our recent acquisition of UK-based Checkpoint Holdings, Ltd., we have opened a new distribution channel, expanded our international reach and increased our capacity to support our channel partners and global customers. The acquisition of Checkpoint Holdings represents a growth opportunity for us as we seek to provide our products and services to the global eCommerce marketplace. We have also recently expanded our development capabilities through the acquisition of Flashpoint, Inc., a web-based software development organization based in Boston, MA.
NetTransact Product
Our NetTransact product provides a pathway for organizations to move from paper-based to electronic invoicing and payments. NetTransact offers businesses and financial institutions the following benefits:
. Open and interactive bill presentment technology. NetTransact enables businesses and banks to leverage electronic billing and maintain an open, interactive relationship with customers and corporate account holders. It permits speedy and efficient access to accounts receivable and accounts payable departments, and it disseminates complex billing information wherever required across an organization, regardless of whether the bill is one page or thousands of pages.
. Facilitation of timely resolution of billing disputes. NetTransact allows payers to review and, if necessary, make adjustments to a bill on-line. For example, if an invoice incorrectly states the number of products delivered, or if a number of items were damaged during shipment, the payer can generate
an adjustment that is e-mailed to the biller for resolution and pay the undisputed amount, without having to wait for a new invoice to be transmitted.
. Cost effective bill presentment solution. NetTransact accelerates cash receipts and reduces days sales outstanding (DSO) for billers by identifying exceptions and providing an efficient means of dispute resolution. NetTransact also provides operational efficiencies to reduce staffing, mailing, processing and audit costs, as well as costs associated with making adjustments and resolving disputes arising in the billing process. Its cost savings and cash flow benefits to both corporate billers and payers offer value enhancements to all participants in the billing process.
. Improved invoice management for payers. NetTransact allows payers to identify and manage invoices and schedule payments with time sensitive priorities, enhancing their responsiveness and their vendor relationships and enabling them to better take advantage of payment term discounts. NetTransact also streamlines the payables process to provide payers with improved control over cash outflow.
. Internet based solution. NetTransact leverages the Internet as an effective means of e-commerce and can be integrated with our other Internet solutions to provide a complete bill presentment, payment and banking solution in an Internet environment.
. Savings to billers through reductions in float. By avoiding the delays associated with preparation of paper bills, their submission by mail and correspondence relating to disputed matters, NetTransact enables enterprises to reduce the expense associated with float on outstanding receivables.
. Seamless integration with accounting systems NetTransact fully integrates with existing accounting systems to facilitate data transfer into both the receivables and payables functions for the biller and payer respectively.
PayBase Products
Our PayBase product suite offers customers the following benefits:
. Internet/intranets remote access capability. Our PayBase product suite provides users with a secure, convenient means to remotely access and control payment information. PayBase enables enterprises to manage and control payments through the Internet and intranets.
. Flexible, dual payment process. Our PayBase product suite has been designed to provide customers with a single software solution that permits both paper and electronic payments. PayBase's dual payment capacity gives enterprises the flexibility to manage the transition to electronic payments at a pace compatible with the needs of their vendors and business partners as they evolve in response to market demands and government mandates.
. Enterprise-wide payment control. Our PayBase product suite offers enterprises a centralized payment control and management system while allowing users to make payments where needed within an organization. PayBase records all payments, transactions and events in a central database, which improves cash management, control of disbursement and receipt functions and audit capabilities. In addition, our PayBase payment control capabilities permit enterprises to readily outsource payment management functions to banks or other third-party suppliers.
. Cost-effective payment solution. Our PayBase product suite provides operational efficiencies that reduce staffing, mailing, processing and auditing costs as well as costs associated with float, risk of error, fraud and fraud related inquiries. PayBase is designed to be easy to use and implement, limiting the commitment of an enterprise's resources required to achieve operational efficiencies.
. Open and scaleable technology. Our PayBase product suite runs on one or more application servers using Microsoft Windows operating systems and leading database servers such as Microsoft SQL Server, Oracle and IBM DB2 Universal Server. PayBase's flexible design provides an enterprise with a scaleable solution to meet growing needs and to manage the migration from a department-wide to
an enterprise-wide system that provides high levels of performance and supports high volumes of payment activity.
. Enhanced security and fraud protection. Our PayBase product suite reduces the risk of fraud through a secure, encrypted database and the control of all payment and operator activity. In addition, PayBase can automatically send a file of all checks issued instantaneously to the payer's bank, enabling banks to quickly isolate fraudulent or incorrect checks and to evaluate questionable payments. For its laser-printing process, LaserCheck uses blank paper that is non-negotiable until it is printed and can use specialized magnetic ink character recognition (MICR) printers for additional security.
BankQuest Product
Our BankQuest product offers customers the following benefits:
. Internet-based access to banking applications. Our BankQuest product enables banks to provide their corporate and institutional customers with a Web-based interface to access banking services such as trade finance, cash management and securities processing.
. Increased speed and accuracy in transactions. By providing an electronic interface into banking applications, BankQuest helps banks to improve the processing speed and accuracy of transactions by reducing potential delays and input errors associated with a manual paper-based process.
. Integration with existing back-office banking systems. Our BankQuest product also serves as an intermediary software solution that integrates with legacy banking applications systems. This enables banks to provide an additional service to their customers without having to incur the expense of rewriting the existing interface for back-office banking functions.
. Reduced costs associated with electronic banking. Our BankQuest product provides Internet access to banking functions that previously required dedicated resources to implement. By reducing the costs associated with installation and maintenance of these resources, banks can offer Internet-based banking services to additional customers.
Strategy
Our objective is to be the leading provider of software solutions that enable businesses and financial institutions to create an automated e-business infrastructure to initiate, implement and manage movements of cash resources, including bill presentment and payment and electronic banking software. Key elements of our strategy include the following:
. Focus on the Internet as the medium for billing, payments, and electronic banking. Our PayBase product allows enterprises to use the Internet or a corporate intranet to make payments from a remote site and to send and receive remittance advices via e-mail. With NetTransact, we provide our customers with an integrated, secure bill presentment and payment solution that can support e-commerce over the Internet. With BankQuest, we enable financial institutions to provide their customers with Internet access to electronic banking functions such as cash management, trade finance and custody services.
. Develop new products and technologies. We intend to develop new products and technologies which leverage our existing offerings and customer base. To capitalize on the growth of the Internet and e-commerce, and changes in payment technologies and practices, we employ professionals who are skilled in the complex environments of e-commerce, financial EDI, banking and payment and billing systems. Furthermore, our technical staff is experienced in the latest database, networking and software development tools, technologies and methodologies. We intend to leverage this combination of business expertise and technical knowledge to enhance our existing offerings and deliver new products and technologies, including products incorporating XML, an emerging e- commerce interface standard.
. Expand and leverage strategic relationships. We intend to expand and leverage our relationships with business partners who play a key role in the sales, marketing and distribution of our products. We expect to expand sales through our existing strategic alliances with companies such as Citibank, UPS Capital, FleetBoston Financial, The Northern Trust Company and Princeton eCom, who have selected our software for key platforms and who are offering NetTransact to their customers. We will also pursue new channel partnerships and continue to leverage our relationships with leading technology providers. We also intend to expand our relationships with enterprise resource planning and accounting system vendors, such as Oracle, PeopleSoft and SAP, and with consulting firms that assist companies with the implementation of our products.
. Pursue strategic acquisitions. We believe that significant opportunities exist to acquire industry expertise and resources to support our product suite, to increase our product offerings and distribution and to provide access to international markets. This will assist us in achieving our goal of providing a comprehensive business-to-business e-commerce infrastructure to initiate, implement and manage movements of cash resources to the worldwide market. We therefore intend to continue to actively pursue acquisitions of such technologies, as well as opportunities to broaden our client base and/or expand our geographic presence.
. Leverage our acquisition of CheckPoint Holdings, Ltd. In acquiring CheckPoint Holdings, Ltd., we have opened a new distribution channel, expanded our international reach and increased our capacity to support our global customers and channel partners. We intend to leverage the acquisition by introducing our products internationally through Checkpoint and enhancing our existing products with CheckPoint's expertise.
. Further penetrate customer base. We intend to further penetrate our existing customer base, which we believe is only in the early stages of implementing electronic bill presentment and payment solutions. Additional sales opportunities to our existing customers include:
. cross-selling our electronic bill presentment software to increase overall sales of an integrated electronic invoicing and payment solution to our existing customers;
. selling our electronic banking product to financial institutions that are existing customers and can benefit from its application;
. expanding department level installations to encompass an enterprise's entire payment system;
. adding complementary payment capabilities through sales of additional software modules, such as electronic payment and receipt creation or check fraud avoidance;
. introducing software upgrades marketing new products; and
. generating additional revenues from our customer base by providing maintenance and support services and selling supplies.
. Expand customer base. We intend to expand our broad customer base by:
. supporting our existing co-marketing relationships to introduce our products to their customer base;
. adding additional co-marketing relationships with financial organizations and hosting partners to re-market our products;
. enhancing our direct sales force to market to large enterprises;
. targeting sales opportunities with financial institutions by leveraging our experience and industry recognition as the developer of FedEDI, the Federal Reserve System's financial Electronic Data Interchange or EDI software solution; and
. pursuing strategic acquisitions.
. Expand international capabilities. We intend to enhance our products with additional functionality to expand their use in international markets. We believe that this will enable us to better accommodate existing and future customer needs. We have begun initiatives to extend product
capabilities to accommodate multiple language output, multiple currency requirements and international standards.
Products and Services
Our software products enable enterprises to electronically present bills to their customers, control, manage and issue all payments, whether paper-based or electronic, and access electronic banking functions. We also offer complementary add-on functionality software for our payment products that customers can select according to their specific needs, as well as hardware to complement our software product offerings. Our software products are further enhanced by an experienced and integrated consulting service and support system. These consultants help customers to plan, design, implement and manage an organization's transition from paper-based to electronic invoicing and payments to enhance operational productivity and customer satisfaction.
NetTransact Product
NetTransact supports corporate billing applications through features that are designed to meet the specific needs of the business-to-business environment. NetTransact is a secure interactive system that allows companies to present billing information and accept payment for transactions. NetTransact operates on an extranet-based Web site in which both billers and payers have an electronic interface. The NetTransact system integrates with the billers' and payers' existing receivables and payables management processes and provides trading partners with opportunities to communicate online before funds are transferred. Payers have the ability to review invoices online, modify them if necessary, approve them for payment and schedule the date of funds transfer to take advantage of payment discount terms. NetTransact is currently configured to make payments using the Automated Clearing House (ACH) and represent authorized debits to the payer's account.
NetTransact provides benefits to both billers and payers, creating business value for trading partners. Its benefits include:
. Benefits to Billers
. improved cash management by accelerating receipts to reduce total days sales outstanding;
. reduction in administrative costs in accounts receivable;
. improved billing accuracy;
. real-time access to credit risk management and income forecasting;
. streamlined operations with the ability to resolve billing differences online before funds are transferred; and
. ability to conduct electronic transactions with customers not configured for electronic data interchange (EDI).
. Benefits to Payers
. streamlined payables processing with improved cash management and more control over payment schedules to manage cash flow;
. increased opportunity to take advantage of biller discount terms;
. lower costs through a reduction in data-entry costs and automatic payment through accounts payable;
. improved communication with business partners through online resolution of billing differences both on an entire-bill or line-by- line basis; and
. Internet access to participate in electronic transactions without incurring additional costs for financial electronic data interchange (EDI) hardware or software resources.
PayBase Products
PayBase provides a single software solution to control, manage and issue all payments across an entire enterprise. PayBase includes the following modules and offerings, which can be purchased as separate products or together:
PayBase ASP (Application Service Provider) Offering. Our PayBase ASP offering provides organizations with a license to manage and distribute Bottomline's payment solutions to their customers across a wide area network from a centrally managed data center. The PayBase ASP product is designed to assist application service providers in responding to their customer's demand for secure third-party management of their payments process. The ASP offering for PayBase can be either client server or Web-based and it includes the ESP (electronically sent payments) module, ERADS (electronic remittance advice delivery system) module and laser check module.
ESP (Electronically Sent Payments) Module. The ESP module allows users to create electronic payments, facilitating the transition from paper checks to electronic funds transfer (EFT). This module permits users to create electronic payment files for their banks that meet the industry requirement of NACHA--The Electronic Payments Association, and other financial EDI (FEDI) protocols. With this module, users can process instructions received from a payment system, such as payroll or accounts receivable. The PayBase ESP module can also create electronic tax payments in the formats required by federal and state governments. When the ESP module is installed with our LaserCheck printing software module, PayBase can create both electronic payments and checks during the same payment run. The ESP module also can create financial EDI payments that will allow vendors to automatically post financial EDI remittance information to their accounts receivable system. This feature eliminates the need for vendors to manually enter information into accounting ledgers, saving time and preventing mistakes.
ERADS (Electronic Remittance Advice Delivery System) Module. The ERADS module allows an enterprise to convert to electronic payments immediately and to deliver the remittance detail by fax, e-mail, communications networks or the Internet, depending on the technology available to its payees. This module can be used for payments to individuals (e.g., travel reimbursements) and to enterprises (e.g., vendor payments). Whenever payments are sent electronically through the secure Automated Clearing House network, the ERADS module automatically channels the remittance details to each payee by the appropriate media and the payee receives an electronic payment directly deposited into its bank account. Enterprises can realize cost efficiencies through reduced check printing or processing and the lower cost of transmitting remittance information electronically.
PayBase Web Series (Internet/Intranet Access) Modules. The Web Series Internet/intranet access modules extend the functionality of PayBase to the Internet. PayBase Web Series allows enterprises to use the Internet or a corporate intranet to request, approve and initiate payments from remote sites, including locations that are not linked by a corporate network. Web Series can also provide automatic e-mail delivery of remittance advice both internally and to third parties such as vendors, customers and employees. Web Series incorporates administration software that maintains central payment information that can be accessed on the Internet or over an intranet by authorized users to approve payments, review payment status and correct data as appropriate.
PayView Module. The PayView module allows users to store and retrieve electronic images of printed documents from financial applications such as payroll, vendor payments, purchase order creation, claims payment and travel and expense reimbursement. These images can be automatically e-mailed or faxed to a recipient at the time of creation, reducing costs and delays associated with the printing and handling of paper documents.
LaserCheck Module. The LaserCheck module allows users to print checks, including all variable data, such as magnetic ink character recognition lines, logos and signatures, on blank paper using a laser printer. This module can be deployed over the user's network or the Internet wherever it is needed, whether in a
centralized printing facility, the issuing department or in a remote location. With the module's CheckSort feature, users can sort checks to lower postage rates and can produce copies in a specified order to simplify filing. LaserCheck also provides password protection, as well as hardware and software security features, and initiates printing of all checks, confirmation notices and reports.
Check Fraud Avoidance Module. The Check Fraud Avoidance module allows users to automatically send a digital file of all checks issued to their bank. Most commercial banks employ a "Positive Pay" system that determines when the check is presented to the bank and whether a bank customer has in fact issued it. A number of banks will only reimburse customers for check fraud losses if the customer uses Positive Pay. This module protects the user from having altered or unissued checks paid from their account and protects banks from fraudulent checks received from other institutions. The Check Fraud Avoidance software receives its data input from PayBase, but can also receive input from a non- PayBase system that uses printed checks.
BankQuest Product
Our BankQuest product allows banks to provide their corporate and institutional customers with electronic banking functions such as cash management, trade finance and custody services over a browser-based platform. This improves the processing speed and accuracy of banking functions by reducing potential delays and input errors associated with a paper-based process.
BankQuest acts as an intermediary software solution that integrates with a bank's legacy systems to enable electronic banking services to their customers without the bank having to incur the expense of rewriting the existing code and applications for their back-office functions. Additionally, banks reduce costs and resources associated with implementing and supporting hardware/software interfaces for their corporate and institutional customers. In reducing these costs, banks also have the potential to extend their electronic banking services to additional customers that were previously restricted by the costs associated with installation and maintenance.
SmARt Cash
SmARt Cash is a software product that improves the efficiency of accounts receivables transactions by automating the process of matching payments and remittance information to open invoices. SmARt Cash interfaces with the lockbox services of banks and receives a variety of source data which is processed to match more accurately with the open invoices of the customer. In this manner, the SmARt Cash software helps to automate the cash application process for accounts receivables and reduces the clerical function of data entry and the errors associated with a manual process. Our SmARt Cash product is available to both banks and corporate customers.
Professional Services
Our team of service professionals draws on extensive experience in e- commerce to provide consulting services, project implementation and training services to our clients. Consulting service professionals are available to review clients' current bill presentment and payment methods and processes, report findings and recommend changes and solutions. Project implementation professionals are available to coordinate system installation, including billing and payment design, reporting format and delivery, bank data and communication requirements, signature and authority set up and security, audit and control procedures. We offer training services to all customer personnel involved in the billing and payment cycle, including management, users and information technology personnel involved in the transition from paper-based methods to electronic methods.
Equipment and Supplies
We offer consumable products needed for payment disbursements and check printing, including magnetic ink character recognition toner and blank-paper check stock. We also provide printers and printer-related equipment, primarily through drop-ship arrangements with our hardware vendors, to enhance our software
product offerings. We have reseller agreements with the two leading secure magnetic ink character recognition printer manufacturers in the country, Troy Systems, which primarily uses Hewlett Packard printers, and Source Technology, which primarily uses Lexmark printers.
Technology
Our technology focus is on the industry standards for Internet and client server platforms. NetTransact, our web-based invoice presentment and payment system, converts an organization's existing billing file through proprietary mapping tools into a file that is accessible over the Internet. This file is transferred using file transfer protocol (FTP) to a secure hosting facility where the payer can access the invoice using standard Web-browser technology. Once the payer has reviewed the invoice and made any adjustments, either on the total invoice or on a line-by-line basis, the payer approves the amount to be paid and selects a payment date. On the payment date, NetTransact generates a payment file that contains the bank routing information and account numbers for both the payer and biller along with the remittance information. Upon receipt of the file, the biller's bank initiates a secure debit through the Automated Clearing House that transfers the funds from the payer's designated account to the biller's designated account.
The server platform for NetTransact is based on Sun Enterprise architecture. For cross platform capabilities, it is written using the Internet-standard Java programming language in conjunction with iPlanet Application Server. The data for NetTransact is stored using database servers such as Sybase Adaptive Server and Oracle 8i. Database connectivity within the system is accomplished through the use of JDBC (java database connectivity). The security architecture for NetTransact is based on sophisticated security protocols that support firewalls, Secure Socket Layer, HTTPS (hyper text transfer protocol secure) and digital certificates.
PayBase/32/, our advanced 32-bit payment processing software, has been designed using a client/server architecture. The server platform supports open database connectivity (ODBC) compliant Unix and Windows NT databases. The server platform is the warehouse for information relating to the customer's payment solution, including security tables, application form parameters and audit tables. The client workstation houses the PayBase executable programs. This design enables PayBase to be highly scaleable for both distributed and high volume centralized check printing, as well as electronic payment origination. The client workstation interacts with the database to ascertain authority, to retrieve information to create the form and to update the audit tables with transaction information and payment result information. Print output can be sent to any addressable network printer. The ESP and Check Fraud Avoidance modules are bundled with communication software that allows scripting of the data transmission. Transmission can be executed from any client workstation.
PayBase is designed to be network independent and can be implemented in leading network architectures, including Novell, Windows NT and TCP/IP. The product design creates predictable low volume network traffic in order to minimize the implementation concerns for corporate information technology. Installation of the product is highly automated using InstallShield.
PayBase development methods conform to the latest Microsoft development specifications, including extensive use of MFC (Microsoft Foundation Classes) and the DCOM/COM ((Distributed) Component Object Model) standards. Components are designed as OLE (Object Linking and Embedding) Automation Servers for ease of future development and enhancement as well as interoperability. Web enabled components of PayBase are written as ActiveX controls. The primary development tool is Visual C++.
The PayBase suite also includes PayBase DesignerPlus, a sophisticated proprietary data mapping and design tool. This tool is used to create sophisticated payment applications using multiple form designs and multiple payment methods, including all forms of electronic payments. It provides a proprietary mapping tool to transform any type of host data file into the format needed for efficient payment creation. The forms design function allows easy creation of paper output formats from checks to W-2 forms and includes design wizards to
further automate the process. The data mapping and design are securely linked to the desired business payment process.
Our electronic banking product, BankQuest, provides web-enabled information reporting and transaction initiation, supporting a bank's cash management, trade finance and custody business. The information reporting modules can receive information from multiple back-office processing systems and consolidate the information to be reported with up to eight levels of sub reporting. The transaction initiation module allows the bank to present customized instruction screens that replicate functions and features normally reserved for a workstation environment.
The BankQuest platform is made up of three main components, web servers, database servers and hub servers. The web servers are independently scalable and can be expanded for a high volume of simultaneous users. The database servers are based on industry standards such as Microsoft and Oracle servers and they are also independently scalable to service the required transaction traffic and volume. The hub servers support data reformatting and interface functions and are also scalable in order to be configured to meet the service level requirements that are committed to clients in terms of data availability and processing rates.
For security, BankQuest provides Secure Socket Layer 3 and 128-bit encryption. To meet our customer's security requirements, BankQuest also provides supplemental security infrastructures such as digital signatures and smart cards through our security partner, Ubizen. BankQuest also provides application level security through an administrative tool that allocates access levels for users along with types of information available to users.
Product Development and Engineering
Our product development and engineering organization included 92 persons as of June 30, 2000. There are three primary development groups: software engineering, quality assurance and technical support. We spent $3.2 million in fiscal year 1998, $4.0 million in fiscal year 1999 and $8.6 million in fiscal year 2000 on product development and engineering costs.
The software engineers have substantial experience in advanced software development techniques as well as extensive knowledge of the complex processes involved in business payment systems. Our engineers actively participate in the Microsoft Developer Network programs and maintain extensive knowledge of software development trends.
Our quality assurance engineers have both extensive knowledge of our products and expertise in software quality assurance techniques. Members of the quality assurance group make extensive use of automated software testing tools to facilitate comprehensive and timely testing of products. The quality assurance group members participate in all beta releases, including all tests of new products or enhancements, and provide initial training materials for customer support and service.
The technical support group provides all product documentation as well as technical support for released products. Members of the technical group include experienced technical writers, business analysts and network analysts. The technical writers are versed in current document technology and work closely with the software engineers to ensure documentation is clear, current and complete. The technical support engineers are responsible for the analysis of reported software problems and work closely with customers and customer support staff. The group's broad knowledge of our products, operating systems, communications, and printers allows them to rapidly respond to software configuration needs.
Customers
Our customer base includes over 2,500 companies in industries such as financial services, health care, communications, education, media, manufacturing and government.
Sales and Marketing
Sales
As of June 30, 2000, we employed 57 sales executives trained on Bottomline's systems. Among these sales executives, 51 were divided among six geographical markets and focused on sales to large and medium sized enterprises and six of were focused exclusively on sales to large banks and financial institutions. Eight systems engineers support our sales executives. We also have a dedicated telephone-sales team that markets new applications, software upgrades and additional services to our existing customers. In addition to our direct selling efforts, we promote our products and services through strategic relationships with our channel partners.
In support of our NetTransact product, Bottomline has relationships with leading organizations including Citibank, UPS Capital, FleetBoston Financial, The Northern Trust Company and Princeton eCom. We expect these companies to broaden our distribution channel and support our position in the market. We also promote our products and services through relationships with enterprise resource planning and accounting system vendors, such as Oracle, PeopleSoft and SAP.
Marketing
We promote products and services through conferences, seminars, direct marketing and trade publications. Our marketing partners sponsor joint mailings and seminars and issue joint press releases with us, as well as advertising our on their web sites. We also maintain membership in key industry organizations such as Financial Services Technology Consortium, Microsoft Value Chain Initiative, American Bankers Association and various operating committees of NACHA--The Electronic Payments Association. In addition, we participate in industry conferences such as the Association for Financial Professionals, NACHA--The Electronic Payments Association, Payments, American Payroll Congress and National User Conferences of Software Partners. We also promote brand awareness through our public relations program and by advertising in respected buying guides.
Competition
We encounter competition from various sources for each of our products. For NetTransact, most companies that are marketing electronic bill presentment solutions have been primarily focused on business-to-consumer applications, such as electronic presentment of utility bills, telephone bills and cable service bills. If these companies expand their focus to include business-to- business applications, we may encounter increased competition from companies in this industry such as CheckFree, eDocs, Just-In-Time, Spectrum, Derivion and Metavante.
We also expect to encounter competition for NetTransact from companies entering the business-to-business electronic bill presentment and payment market along with some financial institutions, including large banks, that are developing internal capabilities such as PNC Bank in conjunction with Perot Systems.
For PayBase, we currently compete primarily with companies that offer a broad suite of electronic data interchange products, companies that provide a broad spectrum of electronic payments solutions, such as CheckFree, and companies that offer laser check printing software and services. To a lesser extent, we compete with providers of enterprise resource planning solutions, such as SAP and PeopleSoft, and providers of traditional payment products, including check stock and check printing software and services, such as Standard Register. In addition, some financial institutions operate as outsourced providers of check printing and electronic payment services for their customers. We also experience competition from our customers and potential customers who develop, implement and maintain their own payment solutions.
For BankQuest, we primarily compete with companies, such as S1, that offer a wide range of financial services including electronic banking applications. We also encounter competition from companies that provide
traditional treasury workstation solutions. These companies include Brokat Financial Services, Magnet Communications and Politzer and Haney. In addition, we compete with a bank's internal technical development teams that develop and implement their own proprietary solution.
For all of our products, we believe we compete on a number of factors,
including:
. scope, quality and cost-effectiveness of our solutions;
. industry knowledge and expertise;
. interoperability of solutions with existing information technology and
payments infrastructure;
. product performance and technical features;
. patented and proprietary technologies; and
. customer service and support.
Although a number of our competitors may be better positioned to compete in
certain aspects of the payments industry, we believe that our market position
is enhanced by:
. our ability to provide a comprehensive e-business infrastructure for use
by businesses and financial institutions to present invoices, make
payments and conduct electronic banking;
. our relationships with our strategic partners;
. our large customer base; and
. the level of industry expertise of our development, sales and customer
service and support professionals.
Although we believe that we compete favorably in our industry, the markets for payment management, electronic bill presentment and electronic banking software are intensely competitive and characterized by rapid technological change and a number of factors could adversely affect our ability to compete in the future.
Backlog
At the end of fiscal year 2000, backlog, including deferred revenue, was $31
million compared with backlog of $8.3 million at the end of fiscal year 1999.
We do not believe that backlog is a meaningful indicator of sales that can be
expected for any period, and there can be no assurance that the backlog at any
point in time will translate into revenue in any subsequent period.
Proprietary Rights
We rely upon a combination of patents, copyrights, trademarks and trade-
secret laws to establish and maintain proprietary rights in our technology and
products. We have filed patent applications relating to our products. However,
there can be no assurance that our patent applications, or any others that may
be filed in the future will issue or will be of sufficient scope and strength
to provide meaningful protection of our technology or any commercial advantage
to us, or that the issued patents will not be challenged, invalidated or
circumvented. In addition, we rely upon a combination of copyright and
trademark laws and non-disclosure and other intellectual property contractual
arrangements to protect our proprietary rights. Given the rapidly changing
nature of the industry's technology, the competence and creative ability of our
development, engineering, programming, marketing and service personnel may be
as or more important to its competitive position as the legal protections and
rights afforded by patents. We also enter into agreements with our employees
and clients that seek to limit and protect the distribution of proprietary
information. There can be no assurance that the steps we have taken to protect
our property rights, however, will be adequate to deter misappropriation of
proprietary information, and we may not be able to detect unauthorized use and
take appropriate steps to enforce our intellectual proprietary rights.
Government Regulation
Although our operations have not been subject to any material industry- specific governmental regulation, some of our existing and potential customers are subject to extensive federal and state governmental
regulations. In addition, governmental regulation in the financial services industry is evolving, particularly with respect to payment technology, and our customers may become subject to increased regulation in the future. Accordingly, our products and services must be designed to work within the regulatory constraints under which our customers operate.
Federal regulations require that all federal payments, other than payments under the Internal Revenue Code of 1986, must be made electronically. These regulations required that the conversion from checks to electronic payments be made in two phases. During the first phase, recipients who became eligible to receive federal payments on or after July 26, 1996 were required to receive payments electronically unless they certified in writing that they did not have an account with a financial institution or an authorized payment agent. The second phase began on January 2, 1999. Beginning on that date, all federal payments, except payments made under the Internal Revenue Code, are required to be made electronically.
The National Automated Clearing House Association now requires that, upon the request of the receiver of an electronic payment, its bank must provide to each receiver all payment-related information contained within the transmitted remittance information. Banks must provide this information to their receivers by the opening of business on the second banking day following the settlement date of the entry.
Current treasury regulations require that a business that paid more than $50,000 in annual employment or other depository taxes in 1995, 1996 or 1997 now make such payments electronically. This requirement is effective for return periods beginning before January 1, 2000. The date upon which a business first becomes subject to the electronic payments requirement depends on the year in which the business first paid more than $50,000 in depository taxes. Businesses that made in excess of $200,000 of aggregate federal tax deposits in 1998 must make such deposits electronically for all return periods beginning on or after January 1, 2000. If a business first exceeds the $200,000 threshold in 1999 or in any subsequent year, the electronic deposit obligation will be imposed for the return period beginning after December 31 of the year ending after the year the threshold was surpassed and will continue for all succeeding years. Non- complying taxpayers may be subject to a 10% penalty if they fail to comply with such requirements. In addition, state and local taxing authorities have been implementing electronic solutions for collecting tax payments. The electronic payment of certain taxes is required by law in states such as New York, California, Connecticut and Arkansas.
Executive Officers of the Registrant
Our executive officers and their respective ages as of September 25, 2000, are as follows:
Name Age Positions ---- --- --------- Daniel M. McGurl........ 64 Chairman of the Board and Chief Executive Officer Joseph L. Mullen........ 47 President, Chief Operating Officer and Director Robert A. Eberle........ 39 Executive Vice President, Chief Financial Officer, Treasurer and Director Paul Bergeron........... 56 Executive Vice President and Group Executive, Global Sales Leonard J. DiIuro, Jr... 53 Executive Vice President and Group Executive, National Sales Peter Fortune........... 41 President of Checkpoint |
Daniel M. McGurl, one of our founders, has served as Chairman of the Board of Directors and Chief Executive Officer since May 1989. From May 1989 to September 2000, Mr. McGurl served as President. From 1987 to 1989, Mr. McGurl served as Senior Vice President of State Street Bank and Trust Company. Prior to 1987, Mr. McGurl held a variety of positions at IBM Corporation, including Director of Marketing Planning and Director of Far East Operations.
Joseph L. Mullen has served as a director since July 1996 and President and Chief Operating Officer since September 2000. He served as Executive Vice President of Operations from July 1996 to September 2000, and served as Vice President of Sales and Marketing from July 1991 to July 1996. From 1977 to 1989, Mr. Mullen held a variety of positions at IBM Corporation, including Marketing Manager and Northeast Area Market Planning Manager.
Robert A. Eberle has served as a director since September 2000 and Executive Vice President, Chief Financial Officer and Treasurer since September 1998. From December 1996 to September 1998, Mr. Eberle served as Executive Vice President of Telxon Corporation, a mobile computing and wireless data company, with primary responsibility for its Technical Subsidiaries Group. From August 1994 to December 1996, Mr. Eberle served as Executive Vice President and Chief Operating Officer of Itronix Corporation, a designer and manufacturer of notebook and hand-held computers and then a subsidiary of Telxon Corporation, with primary responsibility for the financial and operational performance for the company. From August 1993 to August 1994, Mr. Eberle served as Vice President of Corporate Development of Telxon Corporation, with primary responsibility for acquisitions, strategic relationships and its investment portfolio.
Paul Bergeron has served as Executive Vice President and Group Executive, Global Sales since August 2000. From December 1997 to August 2000, Mr. Bergeron served as an independent consultant. From June 1995 to November 1997, Mr. Bergeron served as President of Charter Systems, an Internet services company that offered consulting, design, implementation and support of computer networks. From March 1991 to December 1994, Mr. Bergeron served as Vice President, European Operations for Borland International, Inc. From December 1990 to March 1991, Mr. Bergeron served as President of Interbase, an independently operated relational database company and then a subsidiary of Ashton-Tate. From August 1986 to November 1990, Mr. Bergeron served as Director of International Sales for Stratus Computer , a manufacturer of computer platforms and applications. Prior to 1986, Mr. Bergeron held a variety of executive and sales positions at IBM, Wang, Interbase, Stratus Computer and Banyan Systems.
Leonard J. DiIuro, Jr. has served as Executive Vice President and Group Executive, National Sales since August 2000. He served as Executive Vice President, Sales from July 1998 to August 2000, and served as Vice President of Business Development from July 1996 to July 1998. From July 1994 to July 1996, Mr. DiIuro served as Vice President of Strategic Alliances and Area Manager, and from May 1993 to July 1994 as Vice President of Strategic Alliances. Prior to 1993, Mr. DiIuro held a variety of positions at IBM Corporation, including Business Unit Executive, Branch Manager and Area Marketing Planning Manager.
Peter Fortune has served as President of Checkpoint since August 2000. From May 1993 to August 2000, Mr. Fortune served as Executive Director of Checkpoint Security Services Limited and from March 1999 to August 2000, he served as Chief Executive Officer of Checkpoint Holdings. From January 1990 to March 1999, Mr. Fortune held a variety of positions at Checkpoint, including Managing Director for Security Print and Outsourced Services, General Manager of Security Print Operations and Head of Product Management. Prior to January 1990, Mr. Fortune held various positions at Unisys Corporation, including Director of Customer Services for UK Printing Operations.
Employees
As of June 30, 2000, we had a total of 365 employees. None of our employees is represented by a labor union. We have not experienced any work stoppages and we consider relations with our employees to be good.
Item 2. Properties.
We currently lease approximately 54,000 square feet of office space at our headquarters in Portsmouth, New Hampshire under 4 leases that expire from 2001 to 2002. We also lease offices in San Francisco, California; Lakewood, Colorado; Great Neck, New York; and New York, New York. In August 2000, we entered into a lease for approximately 83,000 square feet of space for a new headquarters facility in Portsmouth, New Hampshire. This new construction is scheduled to be completed in June 2001 with occupancy to occur in July 2001.
Item 3. Legal Proceedings.
From time to time we may be named in claims arising in the ordinary course of business. Currently, no significant legal proceedings or claims are pending.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of our stockholders, through the solicitation of proxies or otherwise, during the fourth quarter of fiscal year 2000.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
Our common stock began trading on the Nasdaq National Market under the symbol "EPAY" on February 12, 1999. Prior to that date, there was no established public trading market for our common stock. The following table sets forth the high and low sale prices of our common stock for the periods indicated, as quoted on the Nasdaq National Market.
Period High Low ------ ---- --- Fiscal 1999 Third quarter (commencing February 12, 1999).......... $98 $14 Fourth quarter........................................ $73 3/4 $32 Fiscal 2000 First quarter......................................... $56 1/4 $12 5/8 Second quarter........................................ $52 11/16 $13 3/4 Third quarter......................................... $50 1/2 $31 Fourth quarter........................................ $54 7/8 $23 3/4 Fiscal 2001 First quarter (through September 20, 2000)............ $36 3/4 $19 7/16 |
As of September 20, 2000, there were approximately 197 holders of record of our common stock.
The closing price for our common stock on September 20, 2000 was $36 1/4. For purposes of calculating the aggregate market value of the shares of our common stock held by non-affiliates, as shown on the cover page of this report, it has been assumed that all the outstanding shares were held by non-affiliates except for the shares held by our directors and executive officers. However, this should not be deemed to constitute an admission that all these persons are, in fact, affiliates of ours, or that there are not other persons who may be deemed to be affiliates of ours.
We have never paid dividends on our common stock. We intend to retain our earnings for use in our business and, therefore, do not anticipate paying any cash dividends on our common stock for at least the next fiscal year.
Sales of Unregistered Securities and Use of Proceeds
In June 2000, United Technologies Corporation purchased 307,882 shares of common stock for an aggregate consideration of $9,951,000, net of expenses. In connection with the equity investment, we issued warrants for the purchase of 307,882 shares of common stock to United Technologies Corporation at an exercise price of $38.00. The warrants were fully vested and exercisable upon date of issuance. The proceeds will be used for working capital purposes.
In April 2000, we issued warrants to Citibank for the right to purchase 324,000 shares of common stock at an exercise price of $55.00. The warrants were fully vested and exercisable upon date of issuance.
These securities were not registered under the Securities Act of 1933, as amended ("the Act") pursuant to the exemption from the registration requirements of the Act provided by Section 4(2) of the Act.
Use of Proceeds of Initial Public Offering
On February 12, 1999 we made an initial public offering of 3,910,000 shares of common stock registered under a Registration Statement on Form S-1 (Registration No. 333-67309), which was declared effective by the Securities and Exchange Commission on February 11, 1999. Proceeds of our initial public offering were used during the period between July 1, 1999 and June 30, 2000 in the amount of $14.6 million to acquire software and related proprietary intellectual property, assets and certain liabilities from The Northern Trust Company, Integrated Cash Management Services, Inc., and OLC Software, Inc.
Item 6. Selected Financial Data.
You should read the following financial data in conjunction with the Financial Statements, including the related notes, and "Item 7--Management's Discussion and Analysis of Financial Condition and Results of Operations."
Prior to our initial public offering of common stock in February 1999, there were 801,000 shares of redeemable common stock outstanding which were redeemable at the option of the holders at a redemption price that increased over time. The redemption rights terminated upon the occurrence of our initial public offering. The earnings (loss) per share available to common stockholders shown below for periods prior and up to the initial public offering have been adjusted to reflect the increase in the redemption price for each such period. The shares used in computing diluted earnings per share available to common stockholders for periods prior and up to the initial public offering include the redeemable common stock. For periods occurring after our initial public offering, such shares are included in the basic earnings per share available to common stockholders.
Fiscal Year Ended June 30,
-------------------------------------------
1996 1997 1998 1999 2000
------- ------- ------- ------- --------
(In thousands, except per share data)
Statements of Operations Data:
Revenues:
Software licenses.............. $ 4,689 $ 6,392 $ 9,887 $15,885 $ 19,483
Service and maintenance........ 4,580 6,729 9,701 12,422 19,870
Equipment and supplies......... 8,798 9,005 9,449 10,996 9,781
------- ------- ------- ------- --------
Total revenues............... 18,067 22,126 29,037 39,303 49,134
Cost of revenues:
Software licenses.............. 27 160 215 261 561
Service and maintenance........ 2,655 4,206 4,261 5,323 9,733
Equipment and supplies......... 5,361 6,410 6,526 7,999 7,252
------- ------- ------- ------- --------
Total cost of revenues....... 8,043 10,776 11,002 13,583 17,546
------- ------- ------- ------- --------
Gross profit..................... 10,024 11,350 18,035 25,720 31,588
Operating expenses:
Sales and marketing
Sales and marketing.......... 4,190 6,631 7,675 10,969 13,784
Expense associated with
warrants issued............. -- -- -- -- 11,902
Product development and
engineering
Product development and
engineering................. 1,237 2,185 3,158 3,971 8,580
In-process research and
development................. -- -- -- -- 3,900
General and administrative
General and administrative... 3,044 4,266 4,372 4,755 8,606
Amortization of intangible
assets...................... -- -- -- -- 2,311
------- ------- ------- ------- --------
Total operating expenses....... 8,471 13,082 15,205 19,695 49,083
------- ------- ------- ------- --------
Income (loss) from operations.... 1,553 (1,732) 2,830 6,025 (17,495)
Interest income (expense), net... (6) (56) (50) 726 1,830
------- ------- ------- ------- --------
Income (loss) before provision
(benefit) for income taxes...... 1,547 (1,788) 2,780 6,751 (15,665)
Provision (benefit) for income
taxes........................... 664 (536) 1,177 2,700 (1,400)
------- ------- ------- ------- --------
Net income (loss)................ $ 883 $(1,252) $ 1,603 $ 4,051 $(14,265)
======= ======= ======= ======= ========
Earnings (loss) per share
available to common
stockholders:
Basic.......................... $ 0.14 $ (0.23) $ 0.24 $ 0.50 $ (1.33)
======= ======= ======= ======= ========
Diluted........................ $ 0.11 $ (0.23) $ 0.20 $ 0.43 $ (1.33)
======= ======= ======= ======= ========
|
Fiscal Year Ended June 30,
-----------------------------------
1996 1997 1998 1999 2000
----- ------- ------ ------ ------
(In thousands, except per share
data)
Shares used in computing earnings (loss)
per share available to common
stockholders:
Basic................................... 5,693 5,986 6,314 7,988 10,744
===== ======= ====== ====== ======
Diluted................................. 7,001 5,986 7,316 9,170 10,744
===== ======= ====== ====== ======
Other Data:
Excluding non-cash charges for expense
associated with warrants issued and
acquisition-related charges:
Income (loss) after tax................. $ 883 $(1,252) $1,603 $4,051 $1,469
===== ======= ====== ====== ======
|
The other data above consists of income (loss) after tax excluding non-cash charges for expense associated with warrants issued, in-process research and development and amortization of intangible assets and goodwill associated with acquisitions. We have provided this other data as we consider it relevant to allow for comparability with other companies in similar businesses who present such information. Other companies, however, may calculate it differently than we do. The other data is not a measurement of financial performance under accounting principles generally accepted in the United States.
Fiscal Year Ended June 30,
-------------------------------------
1996 1997 1998 1999 2000
------ ------ ------- ------- -------
(In thousands)
Balance Sheet Data:
Cash and cash equivalents............... $1,080 $ 827 $ 1,362 $39,699 $27,292
Marketable securities................... -- -- -- -- 11,222
Working capital......................... 3,123 2,476 3,884 43,710 40,976
Total assets............................ 9,144 10,481 11,301 55,146 71,280
Short-term and long-term debt........... 597 1,384 75 -- --
Redeemable common stock, at redemption
value.................................. 1,148 1,246 1,353 -- --
Stockholders' equity.................... 3,708 2,680 4,368 45,915 57,128
|
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Selected Financial Data" and the financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.
Overview
We provide a complete suite of applications to help our customers leverage the Internet to reduce costs, streamline operations and improve existing processes for payments. In 1989, we released our first product, LaserCheck for DOS, to offer companies a cost-effective means to issue checks using specialized laser printers and toners, eliminating the need for pre-printed, negotiable check stock. In 1992, we entered into an arrangement with Xerox Corporation to sell an advanced laser printer and newly developed magnetic ink character recognition toners. Over the next few years we became one of the largest re-sellers of Xerox Corporation magnetic ink character recognition products. We then adapted our LaserCheck products to run on Windows 3.X and Windows 95 operating platforms and developed new check fraud avoidance software applications. Our PayBase payments software now provides a Web-interface to control, manage, and issue all payments, whether paper-based or electronic, across an enterprise.
During fiscal year 2000, in order to expand our suite of applications, we acquired NetTransact, an electronic bill presentment and payment software product from The Northern Trust Company. NetTransact allows companies to present billing information and accept payments over a secure, interactive system for complex business-to-business transactions. We also acquired certain assets and assumed certain liabilities from Integrated Cash Management, Inc. (ICM), whose BankQuest software offers powerful cash management tools
and Internet access to advanced banking applications. BankQuest provides Internet-based access to back-office banking applications such as cash management, trade finance and securities processing. We also acquired all the outstanding shares of OLC Software, Inc., whose SmARtCash product improves the efficiency of accounts receivable transactions by automating the process of matching payments and remittance information to open invoices.
On August 28, 2000 we acquired two companies, U.K.-based Checkpoint Holdings, Ltd. (Checkpoint) and Flashpoint, Inc. (Flashpoint) a professional software development company. In acquiring Checkpoint, we have opened a new distribution channel, expanded our international reach and increased our capacity to support our global customers and channel partners. We intend to leverage the acquisition by introducing our products internationally through Checkpoint and enhancing our existing products with CheckPoint's expertise.
Our goal is to be the leading provider of software solutions that enable businesses and financial institutions to create an automated e-business infrastructure to initiate, implement and manage the movements of cash resources. Our customer base, now at over 2,500 companies, are in industries such as financial services, health care, communications, education, media, manufacturing and government. We provide our products and services to the leading organizations in virtually every industry and currently include over half of the Fortune 100 companies as our customers.
Our revenues are primarily derived from the following three sources:
. Software License Fees. We derive software license revenues from our suite of software applications, which are generally based on the number of software applications and user licenses purchased, including PayBase, NetTransact and BankQuest. Fees from the sale of these software licenses are generally recognized upon delivery of the software to the customer. Certain software arrangements are recognized on a percentage of completion basis due to the fact that they require significant customization and modification.
. Service and Maintenance Fees. We derive service and maintenance revenues from (a) consulting, design, project management and training fees which are fixed on a project-to-project basis, (b) customer support and maintenance fees and (c) customer-specific customization of our BankQuest product. Revenues relating to custom consulting, design and service fees are recognized at the time services are rendered. Customer support and training fees are established as a percentage, typically 18% of the list price for the software license, and are prepaid annually. Support and maintenance agreements generally have a term of 12 months and are renewable annually. We recognize revenues related to customer support and maintenance fees ratably over the life of the agreement. Certain service contracts are recognized on a percentage of completion basis due to extensive customization and lengthy implementation.
. Equipment and Supplies Sales. We derive equipment and supplies revenues from the sales of printers, check paper and magnetic ink character recognition toners that are recognized at the time of delivery.
We expect to continue making significant investments in product development and engineering in order to enhance our current products, develop new products and further advance our Internet and payment technologies. Future investments in product development and engineering will generally be related to the hiring of additional software engineering personnel.
We record software development costs in accordance with Financial Accounting Standards Board Statement No. 86. We have not had any software development costs that were capitalized during the last fiscal year and do not currently have any software development costs that are being capitalized.
Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission published Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements" which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements. Due to a variety of implementation questions that have arisen, the Securities and Exchange Commission (SEC) has deferred the implementation of SAB 101 until no later than the fourth quarter for fiscal years beginning after December 15, 1999. The SEC is expected to issue further interpretive guidance in the fall of 2000. We will adopt SAB 101 no later than the fourth quarter of the fiscal year ending June 30, 2001. We are still assessing the impact of adopting SAB 101 and do not expect to make a definitive assessment until the further guidance is issued.
In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation" an interpretation of APB Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees". Interpretation 44 clarifies guidance for certain issues that arose in the application of APB 25. Areas of focus within Interpretation 44 include repricings, modifications to extend the option term, change of grantee status, modifications to accelerate vesting and options exchanged in a purchase business combination. Interpretation 44 will be applied prospectively to new awards, modifications to outstanding awards, and changes in employee status on or after July 1, 2000. Effective July 1, 2000, should these types of transactions occur, we will account for them under APB 25 as clarified by Interpretation 44.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities", which requires that all derivative instruments be recorded on the
balance sheet effective July 1, 2000 at their fair value. We will adopt SFAS
133, as amended by SFAS 137 effective July 1, 2000. We do not expect the
adoption of SFAS 133 to have a material impact on our results of operations or
financial position.
Recent Developments
On August 28, 2000 we acquired Checkpoint Holdings, Ltd. and Flashpoint, Inc.
Checkpoint, based in Reading, England, is an eCommerce and electronic payments software provider. By acquiring Checkpoint's technology, expertise and customer base, we opened a new distribution channel that will significantly enhance our international growth opportunities. The transaction is valued at approximately $82 million, including $15 million in cash consideration, $20 million in the form of a promissory note, 1,350,000 newly issued shares of common stock, a warrant to purchase 100,000 shares of common stock at a price of $50 per share and acquisition related costs. We will account for the transaction as a purchase and will report Checkpoint's financial results under our current revenue classifications.
Flashpoint is a professional software development company based in Boston,
MA. Flashpoint has core expertise in Windows-based software development,
leading browser applications and programming languages including C++, Java and
XML. The purchase price is approximately $14.5 million, consisting of $4.5
million in cash, 242,200 newly issued shares of common stock, the assumption of
all outstanding stock options of Flashpoint and acquisition related costs. We
will exchange all outstanding stock options of Flashpoint for our options based
on the transaction conversion ratio. We will account for the transaction as a
purchase.
The Company is evaluating and making preliminary assessments of the purchase price allocation. The Company's early assessment is that a significant amount of the purchase price will result in identifiable intangibles and goodwill and will result in significant amounts of amortization in future years, including fiscal year 2001. The Company's analysis is not yet complete but the Company estimates the expected useful life to be in the three to five year range.
In August 2000, we made a $900,000 equity investment in Princeton eCom, an electronic bill presentment and payment services provider, and a $500,000 equity investment in Magnet Corporation, a business-to-business e-finance infrastructure and services provider. Both of these investments will be accounted for on the cost basis.
Results of Operations
The following table sets forth certain financial data as a percentage of revenues for the periods indicated.
Fiscal Year Ended
June 30,
-------------------
1998 1999 2000
----- ----- -----
Revenues:
Software licenses..................................... 34.0% 40.4% 39.7%
Service and maintenance............................... 33.4 31.6 40.4
Equipment and supplies................................ 32.6 28.0 19.9
----- ----- -----
Total revenues...................................... 100.0 100.0 100.0
Cost of revenues:
Software licenses..................................... 0.7 0.7 1.1
Service and maintenance............................... 14.7 13.5 19.8
Equipment and supplies................................ 22.5 20.4 14.8
----- ----- -----
Total cost of revenues.............................. 37.9 34.6 35.7
----- ----- -----
Gross profit............................................ 62.1 65.4 64.3
Operating expenses:
Sales and marketing
Sales and marketing................................. 26.4 27.9 28.1
Expense associated with warrants issued............. -- -- 24.2
Product development and engineering
Product development and engineering................. 10.9 10.1 17.5
In-process research and development................. -- -- 7.9
General and administrative
General and administrative.......................... 15.1 12.1 17.5
Amortization of intangible assets................... -- -- 4.7
----- ----- -----
Total operating expenses.............................. 52.4 50.1 99.9
----- ----- -----
Income (loss) from operations........................... 9.7 15.3 (35.6)
Interest income (expense), net.......................... (0.1) 1.9 3.7
----- ----- -----
Income (loss) before provision (benefit) for income
taxes.................................................. 9.6 17.2 (31.9)
Provision (benefit) for income taxes.................... 4.1 6.9 (2.9)
----- ----- -----
Net income (loss)....................................... 5.5% 10.3% (29.0)%
===== ===== =====
|
Fiscal Year Ended June 30, 2000 Compared to Fiscal Year Ended June 30, 1999
Revenues
Total revenues increased by $9.8 million to $49.1 million in the fiscal year ended June 30, 2000 from $39.3 million in the fiscal year ended June 30, 1999, an increase of 25%.
Software Licenses. Software license fees increased by $3.6 million to $19.5 million in the fiscal year ended June 30, 2000 from $15.9 million in the fiscal year ended June 30, 1999, an increase of 23%. Software license fees remained constant at approximately 40% of total revenues in the fiscal years ended June 30, 2000 and June 30, 1999. The increase in software license fees was due primarily to growing market acceptance of our NetTransact software product, which was introduced in fiscal 2000.
Service and Maintenance. Service and maintenance fees increased by $7.5 million to $19.9 million in the fiscal year ended June 30, 2000 from $12.4 million in the fiscal year ended June 30, 1999, an increase of 60%. Service and maintenance fees represented 40% of total revenues in the fiscal year ended June 30, 2000 compared to 32% of total revenues in the fiscal year ended June 30, 1999. The increase was due primarily to an
increase in the number of sales of software licenses, which resulted in increased orders for services and sales of software maintenance and technical support. In addition, there were several large contracts during the fiscal year ended June 30, 2000 accounted for on a percentage of completion basis due to the required customization and modifications.
Equipment and Supplies. Equipment and supplies sales decreased by $1.2 million to $9.8 million in the fiscal year ended June 30, 2000 from $11.0 million in the fiscal year ended June 30, 1999, a decrease of 11%. Equipment and supplies sales represented 20% of total revenues in the fiscal year ended June 30, 2000 compared to 28% of total revenues in the fiscal year ended June 30, 1999. The decrease in equipment and supplies sales was due primarily to our de-emphasis of this lower margin source of revenues. We anticipate this source of revenue to continue to decline as a percentage of total revenues due to Northern Trust.
Cost of Revenues
Software Licenses. Software license costs consist of expenses incurred by us to manufacture, package and distribute our software products and related documentation, costs of licensing third-party software incorporated into our products, and royalties to Northern Trust on revenues from our NetTransact product. Software license costs increased by $300,000 to $561,000 in the fiscal year ended June 30, 2000 from $261,000 in the fiscal year ended June 30, 1999, an increase of 115%. Software license costs increased to 3% of software license fees in the fiscal year ended June 30, 2000 compared to 2% at June 30, 1999. The increase in software license costs was due primarily to the NetTransact royalties due to The Northern Trust Company.
Service and Maintenance. Service and maintenance costs include salary expense and other related costs for our customer service, maintenance and telephone support staffs, as well as third-party contractor expenses. Service and maintenance costs increased by $4.4 million to $9.7 million in the fiscal year ended June 30, 2000 from $5.3 million in the fiscal year ended June 30, 1999, an increase of 83%. Service and maintenance costs were 49% of service and maintenance revenues in the fiscal year ended June 30, 2000 compared to 43% of service and maintenance revenues in the fiscal year ended June 30, 1999. The increase in service and maintenance costs was due primarily to increased staffing and personnel related costs to support the BankQuest product.
Equipment and Supplies. Equipment and supplies costs decreased by $700,000 to $7.3 million in the fiscal year ended June 30, 2000 from $8.0 million in the fiscal year ended June 30, 1999, a decrease of 9%. Equipment and supplies costs were 74% of equipment and supplies sales in the fiscal year ended June 30, 2000, which is consistent with costs totaling 73% of equipment and supplies sales in the fiscal year ended June 30, 1999.
Operating Expenses
Sales and Marketing:
Sales and Marketing. Sales and marketing expenses consist primarily of salaries and other related costs for sales and marketing personnel, sales commissions, travel, public relations and marketing materials and trade shows. Sales and marketing expenses increased by $2.8 million to $13.8 million in the fiscal year ended June 30, 2000 from $11.0 million in the fiscal year ended June 30, 1999, an increase of 26%. Sales and marketing expenses, excluding the warrant discussed below, remained constant at 28% of total revenues in the fiscal years ended June 30, 2000 and 1999. The dollar increase was due primarily to increases in staffing and personnel related costs.
Expense Associated with Warrants Issued. Expense associated with warrants issued of $11.9 million represent non-cash charges related to the issuance of warrants, that vested immediately, to two companies. The Company valued the warrants issued using the Black-Scholes method assuming an expected life of three years and a volatility of 91%. There was no comparable amount for the year ended June 30, 1999 since no such warrants were issued in 1999. In the future we may incur such costs in connection with transactions involving other companies.
Product Development and Engineering:
Product Development and Engineering. Product development and engineering expenses consist primarily of personnel costs to support product development. Product development and engineering expenses increased by $4.6 million to $8.6 million in the fiscal year ended June 30, 2000 from $4.0 million in the fiscal year ended June 30, 1999, an increase of 116%. Product development and engineering expenses before the in-process research and development charge described below were 18% of total revenues in the fiscal year ended June 30, 2000 compared to 10% of total revenues in the fiscal year ended June 30, 1999. The dollar increase was due primarily to increases in staffing and personnel related costs to support our expanding suite of software products.
In-process Research and Development. In-process research and development of $3.9 million represents non-cash charges related to the NetTransact and ICM acquisitions for in-process research and development during the year ended June 30, 2000. The in-process research and development projects were valued using an Income Approach, which included the application of a discounted future earnings methodology. Using this methodology, the value of the in-process technology is comprised of the total present value of the future earnings stream attributable to the technology throughout its anticipated life. No alternative future uses were identified prior to reaching technological feasibility. In connection with these acquisitions, identifiable intangible assets and goodwill amounts were recorded and are being amortized over a period ranging from one to five years. There was no comparable amount for the year ended June 30, 1999 since all the acquisitions occurred in fiscal 2000.
General and Administrative. General and administrative expenses consist primarily of salaries and other related costs for operations and finance employees, legal and accounting services and certain facilities-related expenses. General and administrative expenses increased by $3.8 million to $8.6 million in the fiscal year ended June 30, 2000 from $4.8 million in the fiscal year ended June 30, 1999, an increase of 81%. General and administrative expenses were 18% of total revenues in the fiscal year ended June 30, 2000 compared to 12% of total revenues in the fiscal year ended June 30, 1999. The dollar increase was due primarily to staffing and personnel related costs, additional facility and information system requirements resulting from acquisitions and growth, and other expenses necessary to support our expanding operations.
Amortization of Intangible Assets. Amortization of intangible assets was $2.3 million for the year ended June 30, 2000. There was no comparable amount for the year ended June 30, 1999 since all the acquisitions occurred in fiscal 2000. As a result of our acquisitions, total identifiable tangible and intangible assets and goodwill approximating $10.7 million or 15% of total assets and 18.8% of stockholders equity was recorded.
The carrying value of intangible assets is periodically reviewed by the Company based on the expected future undiscounted operating cash flows of the related asset. If an impairment is indicated, the Company will adjust the carrying value of the intangible assets. No event has occurred that would impair the value of long-lived assets recorded in the accompanying consolidated financial statements.
Interest Income (Expense), Net. Interest income (expense), net consists of interest income and interest expense. Interest income (expense), net increased by $1.1 million to $1.8 million of interest income in the fiscal year ended June 30, 2000 from $726,000 of interest income in the fiscal year ended June 30, 1999. The increase in interest income was due to higher available cash, cash equivalents and short-term investment balances, as a result of our initial public offering in February 1999, on hand for the entire fiscal year 2000.
Provision (Benefit) for Income Taxes. Benefit for income taxes was $1.4 million for the fiscal year ended June 30, 2000 which represents a change of $4.1 million from a $2.7 million provision in the fiscal year ended June 30, 1999. The effective tax rate in the fiscal year ended June 30, 2000 was 9% compared to 40% in the fiscal year ended June 30, 1999. The effective tax rate of 9% in the fiscal year ended June 30, 2000 differed from the federal statutory rate due principally to the effect of expenses related to the issuance of warrants during fiscal year 2000 that are not deductible for tax purposes and acquisition related amounts which are not deductible for tax purposes. The effective tax rate of 40% in the fiscal year June 30, 1999 differed from the
federal statutory rate due principally to the effect of state income taxes. As of June 30, 2000 and 1999 we had net deferred tax assets of $2.8 million and $412,000 respectively. The realizability of the net deferred tax assets at June 30, 2000 is more likely than not as such net deferred tax assets are principally able to be carried back to taxes paid in prior years. The valuation allowance increased by $2.3 million from June 30, 1999. This increase was required to reduce the net deferred tax assets to the amount that is considered more likely than not to be realized.
Net Income (Loss). Net income decreased by $18.4 million to a $14.3 million loss in the fiscal year ended June 30, 2000 from $4.1 million of income in the fiscal year ended June 30, 1999. The decrease in net income was due primarily to the expense associated with warrants issued, acquisition related charges and the increased operating costs associated with the Company's growth.
Fiscal Year Ended June 30, 1999 Compared to Fiscal Year Ended June 30, 1998
Revenues
Total revenues increased by $10.3 million to $39.3 million in the fiscal year ended June 30, 1999 from $29.0 million in the fiscal year ended June 30, 1998, an increase of 35%.
Software Licenses. Software license fees increased by $6.0 million to $15.9 million in the fiscal year ended June 30, 1999 from $9.9 million in the fiscal year ended June 30, 1998, an increase of 61%. Software license fees represented 40% of total revenues in the fiscal year ended June 30, 1999 compared to 34% of total revenues for the fiscal year ended June 30, 1998. The increase in software license fees was due primarily to growing market acceptance of our PayBase product suite, and the delivery of software to The Federal Reserve System, which resulted in recognition of one-time software license fees of approximately $1.1 million in the fiscal year ended June 30, 1999.
Service and Maintenance. Service and maintenance fees increased by $2.7 million to $12.4 million in the fiscal year ended June 30, 1999 from $9.7 million in the fiscal year ended June 30, 1998, an increase of 28%. Service and maintenance fees represented 32% of total revenues in the fiscal year ended June 30, 1999 compared to 33% of total revenues in the fiscal year ended June 30, 1998. The dollar increase was due primarily to an increase in the number of sales of software licenses, which resulted in increased orders for services and sales of software maintenance and technical support.
Equipment and Supplies. Equipment and supplies sales increased by $1.5 million to $11.0 million in the fiscal year ended June 30, 1999 from $9.5 million in the fiscal year ended June 30, 1998, an increase of 16%. Equipment and supplies sales represented 28% of total revenues in the fiscal year ended June 30, 1999 compared to 33% of total revenues in the fiscal year ended June 30, 1998. The increase in equipment and supplies sales was due primarily to an increase in printer sales.
Cost of Revenues
Software Licenses. Software license costs consist of expenses incurred by us to manufacture, package and distribute our software products and related documentation and costs of licensing third-party software incorporated into our products. Software license costs increased by $46,000 to $261,000 in the fiscal year ended June 30, 1999 from $215,000 in the fiscal year ended June 30, 1998, an increase of 21%. Software license costs remained constant at 2% of software license fees in each of the fiscal years ended June 30, 1999 and June 30, 1998. The increase in software license costs was due primarily to third-party royalty payments of approximately $100,000 made in connection with the software delivered to The Federal Reserve System, which was offset by other small reductions.
Service and Maintenance. Service and maintenance costs include salary expense and other related costs for our customer service, maintenance and telephone support staffs, as well as third-party contractor expenses. Service and maintenance costs increased by $1.1 million to $5.3 million in the fiscal year ended June 30, 1999 from $4.3 million in the fiscal year ended June 30, 1998, an increase of 25%. Service and maintenance costs
were 43% of service and maintenance revenues in the fiscal year ended June 30, 1999 compared to 44% of service and maintenance revenues in the fiscal year ended June 30, 1998. The increase in service and maintenance costs was due primarily to increased staffing and personnel related costs.
Equipment and Supplies. Equipment and supplies costs increased by $1.5 million to $8.0 million in the fiscal year ended June 30, 1999 from $6.5 million in the fiscal year ended June 30, 1998, an increase of 23%. Equipment and supplies costs were 73% of equipment and supplies sales in the fiscal year ended June 30, 1999 compared to 69% of equipment and supplies sales in the fiscal year ended June 30, 1998. The increase in equipment and supplies costs as a percentage of equipment and supplies sales was due primarily to competitive pressure on the pricing of both hardware and supplies.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of salaries and other related costs for sales and marketing personnel, sales commissions, travel, public relations and marketing materials and trade shows. Sales and marketing expenses increased by $3.3 million to $11.0 million in the fiscal year ended June 30, 1999 from $7.7 million in the fiscal year ended June 30, 1998, an increase of 43%. Sales and marketing expenses were 28% of total revenues in the fiscal year ended June 30, 1999 compared to 26% of total revenues in the fiscal year ended June 30, 1998. The increase was due primarily to increases in staffing and personnel related costs.
Product Development and Engineering. Product development and engineering expenses consist primarily of personnel costs to support product development. Product development and engineering expenses increased by $813,000 to $4.0 million in the fiscal year ended June 30, 1999 from $3.2 million in the fiscal year ended June 30, 1998, an increase of 26%. Product development and engineering expenses were 10% of total revenues in the fiscal year ended June 30, 1999 compared to 11% of total revenues in the fiscal year ended June 30, 1998. The dollar increase was due primarily to increases in staffing and personnel related costs.
General and Administrative. General and administrative expenses consist primarily of salaries and other related costs for operations and finance employees, legal and accounting services and certain facilities-related expenses. General and administrative expenses increased by $383,000 to $4.8 million in the fiscal year ended June 30, 1999 from $4.4 million in the fiscal year ended June 30, 1998, an increase of 9%. General and administrative expenses were 12% of total revenues in the fiscal year ended June 30, 1999 compared to 15% of total revenues in the fiscal year ended June 30, 1998. The dollar increase was due primarily to staffing and personnel related costs and, to a lesser extent, facility, information system and other expenses necessary to support our expanding operations.
Interest Income (Expense), Net. Interest income (expense), net consists of interest income and interest expense. Interest income (expense), net increased by $776,000 to $726,000 of interest income in the fiscal year ended June 30, 1999 from $50,000 of interest expense in the fiscal year ended June 30, 1998. The increase in interest income was due to higher available cash and cash equivalent balances on hand as a result of our initial public offering in February 1999 and lower average balances outstanding under our revolving credit agreement.
Provision for Income Taxes. The provision for income taxes increased by $1.5 million to $2.7 million in the fiscal year ended June 30, 1999 from $1.2 million in the fiscal year ended June 30, 1998. The effective tax rate in the fiscal year ended June 30, 1999 was 40% compared to 42% in the fiscal year ended June 30, 1998.
Net Income. Net income increased by $2.5 to $4.1 million in the fiscal year ended June 30, 1999 from $1.6 in the fiscal year ended June 30, 1998.
Liquidity and Capital Resources
We have financed our operations primarily from cash provided by operating activities and the sale of our common stock. We had net working capital of $41.0 million at June 30, 2000, including cash and cash equivalents and marketable securities totaling $38.5 million.
Net cash provided by operating activities was $3.4 million in the fiscal year ended June 30, 2000, $3.7 million in the fiscal year ended June 30, 1999, and $2.6 million in the fiscal year ended June 30, 1998. Net cash provided by operating activities for each of the three fiscal years ended June 30, 2000 was primarily the result of net income and increases in deferred revenues, accounts payable and accrued expenses, partially offset by increases in accounts receivable and prepaid expenses.
Net cash used in investing activities was $29.4 million in the fiscal year ended June 30, 2000, $1.4 million in the fiscal year ended June 30, 1999, and $993,000 in the fiscal year ended June 30, 1998. Cash was used in the fiscal year ended June 30, 2000 for the acquisition of businesses and assets and marketable securities and to acquire property and equipment.
On August 28, 2000 we acquired two companies Checkpoint Holdings, Ltd. (Checkpoint) and Flashpoint, Inc. (Flashpoint) for an aggregate of approximately $20 million in cash, $20 million in the form of a promissory note, approximately $50 million in stock, and a warrant to purchase 100,000 shares of common stock at a price of $50 per share. We currently have no significant capital spending or purchase commitments, but expect to continue to engage in capital spending in the ordinary course of business.
Net cash provided by financing activities was $13.6 million in the fiscal year ended June 30, 2000, and $36.1 million in the fiscal year ended June 30, 1999. Net cash used in financing activities was $1.1 million in the fiscal year ended June 30, 1998. The net decrease was primarily the result of our initial public offering of common stock in February 1999, as compared with issuance of common stock to a subsidiary of United Technologies Corporation and proceeds from the exercise of stock options in the year ended June 30, 2000. Net cash used in financing activities during the fiscal year ended June 30, 1998 primarily represented repayment of indebtedness.
We believe that the cash generated from operations and cash and cash equivalents and marketable securities on hand will be sufficient to meet our working capital requirements for the foreseeable future. We also may receive additional investments from, and make investments in, customers or other companies.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below before purchasing our common stock. The risks and uncertainties described below are not the only ones facing our company. Additional risks and uncertainties may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations would likely suffer. In that case, the trading price of our common stock could fall, and you may lose all or part of the money you paid to buy our common stock.
A significant percentage of our revenues to date have come from our payment management offerings and our performance will depend on continued market acceptance of these offerings
A significant percentage of our revenues to date have come from the license and maintenance of our payment management offerings and sales of related products and services. Any reduction in demand for our PayBase product could have a material adverse effect on our business, operating results and financial condition. Our future performance will depend to a large degree upon the market acceptance of PayBase as a payment management solution. Our prospects will also depend upon enterprises seeking to enhance their payment functions to integrate electronic payment capabilities. In addition, our future results will depend on the continued market acceptance of desktop software for use in a departmental setting, including our LaserCheck solution, as well as our ability to introduce enhancements to meet the market's evolving needs for secure, payment management solutions.
Our future financial results will depend upon market acceptance of our NetTransact and BankQuest products
If the NetTransact and BankQuest products that we acquired in recent acquisitions do not achieve market acceptance, our future financial results will be adversely affected. We acquired NetTransact bill presentment software from The Northern Trust Company, a financial institution, in July 1999. General availability of the NetTransact product was announced in February 2000. We acquired the web-based BankQuest cash management software in our acquisition of Integrated Cash Management Services, Inc. in October 1999. BankQuest was commercially introduced in April 2000 and is now generally available. If either of these products has any unanticipated performance problems or bugs, or does not enjoy wide commercial success, our long-term business strategy would be adversely affected.
Integration of new acquisitions.
We have been actively pursuing acquisitions of other companies, including our recent acquisitions of Checkpoint and Flashpoint, and plan to continue to make such acquisitions in the future. If we are unable to integrate the operations of the companies we acquire on a timely basis, we may lose the benefit of these acquisitions. Such acquisitions may also create management dislocation or result in unexpected costs. We have limited experience with mergers and acquisitions and any such difficulties encountered as a result of any mergers or acquisition could materially affect our business, operating results and financial condition.
We must attract and retain highly skilled personnel with knowledge of electronic payments and bill presentment and the banking industry
We are dependent upon the ability to attract, hire, train and retain highly skilled technical, sales and marketing, and support personnel, particularly with expertise in electronic payment and bill presentment technology and knowledge of the banking industry. Competition for qualified personnel is intense. In addition, our corporate headquarters location in Portsmouth, New Hampshire may limit our access to skilled personnel. Any failure to attract, hire or retain qualified personnel could have a material adverse effect on our business, operating results and financial condition. In addition, we plan to expand our sales and marketing and customer support organizations. Based on our experience, it takes an average of nine months for a salesperson to become
fully productive. We cannot assure you that we will be successful in increasing the productivity of our sales personnel, and the failure to do so could have a material adverse effect on our business, operating results and financial condition.
Our fixed costs may lead to fluctuations in operating results if our revenues are below expectations, and if our operating results are below external expectations, the market price of our stock may fall.
A significant percentage of our expenses, particularly personnel costs and rent, are relatively fixed, and based in part on expectations of future revenues. We may be unable to reduce spending in a timely manner to compensate for any significant fluctuations in revenues. Accordingly, shortfalls in revenues may cause significant fluctuations in operating results in any quarter. Quarterly operating results that are below the expectations of public market analysts could adversely affect the market price for our common stock. Factors that could cause these fluctuations include the following:
. The timing of orders and longer sales cycles, particularly due to any increase in average selling prices of our software solutions;
. the timing and market acceptance of new products or product enhancements by either us or our competitors;
. the timing of product implementations, which are highly dependent on customers' resources and discretion;
. the incurrence of costs relating to the integration of software products and operations in connection with acquisitions of technologies or businesses;
. delivery interruptions relating to equipment and supplies purchased from third-party vendors, which could delay system sales; and
. economic conditions which may affect our customers' and potential customers' budgets for technological expenditures.
Because of these factors, we believe that period to period comparisons of our results of operations are not necessarily meaningful.
The market price of our common stock has experienced, and may continue to be subject to, extreme price and volume fluctuations
Stock markets in general, and The Nasdaq Stock Market in particular, have experienced extreme price and volume fluctuations. Broad market fluctuations of this type may adversely affect the market price of our common stock.
The market price of our common stock has experienced, and may continue to be subject to extreme fluctuations due to a variety of factors, including:
. public announcements concerning us, our competitors or our industry;
. fluctuations in operating results;
. introductions of new products or services by us or our competitors;
. adverse developments in patent or other proprietary rights;
. changes in analysts' earnings estimates;
. announcements of technological innovations by our competitors; and
. general and industry-specific business, economic and market conditions
We may experience accounting charges in connection with the issuance of warrants
During the quarter ended June 30, 2000, we incurred non-cash charges in connection with the issuance of warrants to Citibank and a subsidiary of United Technologies Corporation. In the future, we may experience similar accounting charges to the extent we issue warrants to channel partners or others.
Our success depends on our ability to develop new and enhanced software, services and related products
The bill presentment, payment and cash management software markets in which we compete are subject to rapid technological change and our success is dependent on our ability to develop new and enhanced software, services and related products that meet our evolving market needs. Trends which could have a critical impact on us include:
. rapidly changing technology that could require us to make our products compatible with new database or network systems;
. evolving industry standards and mandates, such as those mandated by the National Automated Clearing House Association and by the Debt Collection Improvement Act of 1996; and
. developments and changes relating to the Internet that we must address as we introduce new products.
If we are unable to develop and introduce new products, or enhancements to existing products, in a timely and successful manner, our business, operating results and financial condition could be materially adversely affected.
Our success depends on the wide-spread adoption of the internet and growth of electronic business
Our future success will in large part depend upon the willingness of businesses and financial institutions to adopt the Internet as a medium of e- commerce. These entities will probably accept this new medium only if the Internet provides substantially greater efficiency and enhances their competitiveness. There are critical issues involved in the commercial use of the Internet which are not yet fully resolved, including concerns regarding the Internet's:
. security;
. reliability;
. ease of access; and
. quality of services.
To the extent that any of these issues inhibit or limit the adoption of the Internet as a medium of e-commerce, our business prospects could be adversely affected. If electronic business does not continue to grow or grows more slowly than expected, demand for our products and services may be reduced.
If the internet infrastructure is not adequately maintained, the demand for our products and services may decrease
Our future success will depend, in part, on the maintenance of the Internet infrastructure. To the extent that the Internet continues to experience increased numbers of users, frequency of use or increased bandwidth requirements of users, the Internet infrastructure may not continue to support the demands placed on it and, as a result, the performance or reliability of the Internet may be adversely affected. In addition, the Internet could lose its viability as a form of media due to delays in the development or adoption of new standards and protocols that can handle increased levels of activity. The infrastructure and complementary products and services necessary to maintain the Internet as a viable commercial medium may not be developed or maintained. Any failure in performance or reliability of the Internet could adversely affect the demand for our products and services and, consequently, hurt our operating results.
Increased government regulation and legal uncertainties may impair the growth of the internet and decrease demand for our products and services
The laws governing the Internet remain largely unsettled, even in areas where there has been some legislative action. It may take years to determine whether and how existing laws, including those governing intellectual property, privacy, libel and taxation, apply to the Internet generally and to the e- commerce in
particular. Legislation could dampen the growth in the use of the Internet generally and decrease the acceptance of the Internet as a communications and commercial medium, which may decrease demand for our products and services and thus have a material and adverse effect on our business, results of operations and financial condition.
Our business can be adversely affected by problems with third-party hardware that we resell
Any problems with third-party hardware that we resell could harm our customer relationships, industry credibility and financial condition. In a prior fiscal year, we experienced a significant problem with a third-party printer that we were then reselling which had a material adverse effect on our operating results. Any repetition of these or similar problems with third party hardware could have a material adverse effect on our business, operating results and financial condition.
Increased competition may result in price reductions and decreased demand for our products and services
The market for bill presentment, payment and cash management software is intensely competitive and characterized by rapid technological change. Growing competition may result in price reductions of our products and services, reduced revenues and gross margins and loss of market share, any one of which could have a material adverse effect on our business, operating results and financial condition. Some competitors in our market have longer operating histories, significantly greater financial, technical, marketing and other resources, greater brand recognition and a larger installed customer base than we do. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships to expand their product offerings and to offer more comprehensive solutions. We also expect to face additional competition as other established and emerging companies enter the market for payment management solutions.
Rapid growth could strain our personnel, systems and controls
In the past, rapid growth has strained our managerial and other resources. Our ability to manage any future growth will depend in part on our ability to continue to enhance our operating, financial and management information systems. We cannot assure you that our personnel, systems and controls will be adequate to support any future growth. If we are not able to manage growth effectively, should it occur, the quality of our services, our ability to retain key personnel and our business, operating results and financial condition could be materially adversely affected.
We depend on a few key employees who are skilled in e-commerce, payment methodology and internet and other technologies
Our success depends upon the efforts and ability of our executive officers and key technical employees who are skilled in e-commerce, payment methodology and regulation, and Internet, database and network technologies. We currently do not maintain "key man" life insurance policies on any of our employees. While some of our executive officers have employment agreements with us, the loss of the services of any of our executive officers or other key employees could have a material adverse effect on our business, operating results and financial condition.
Undetected bugs in our software could adversely affect the performance of our software and demand for our products
Our software products could contain errors or "bugs" that we have not been able to detect which could adversely affect their performance and reduce demand for our products. Any defects or errors in new products, such as NetTransact or BankQuest, or enhancements could harm our customer relationships and result in negative publicity regarding us and our products, which could have a material adverse effect on our business, operating results and financial condition.
Our business could be subject to product liability claims
Because our software and hardware products are designed to provide critical payment management and invoicing functions, we may be subject to significant product liability claims. Our insurance may not be sufficient to cover us against these claims or may not be available at all. A product liability claim brought against us, even if not successful, could require us to spend significant time and money in litigation. As a result, any such claim, whether successful or not, could seriously damage our reputation and harm our business, operating results and financial condition.
Our business could be adversely affected if we are unable to protect our proprietary technology
We rely upon a combination of patent, copyright and trademark laws and non- disclosure and other intellectual property contractual arrangements to protect our proprietary rights. However, we cannot assure you that our patents, pending applications that may be issued in the future, or other intellectual property will be of sufficient scope and strength to provide meaningful protection of our technology or any commercial advantage to us, or that the patents will not be challenged, invalidated or circumvented. We enter into agreements with our employees and clients that seek to limit and protect the distribution of proprietary information. We cannot assure you that the steps we have taken to protect our intellectual property rights will be adequate to deter misappropriation of proprietary information, and we may not be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights.
We could become subject to litigation regarding intellectual property rights, which could seriously harm our business
In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. We may be a party to litigation in the future to protect our intellectual property or as a result of an alleged infringement of the intellectual property of others. These claims could require us to spend significant sums in litigation, pay damages, delay product installments, develop non-infringing intellectual property or acquire licenses to intellectual property that is the subject of the infringement claim. These claims could have a material adverse effect on our business, operating results and financial condition.
We may incur significant costs from class action litigation due to the expected volatility of our common stock
In the past, companies that have experienced volatility in the market price of their stock have been the object of securities class action litigation. If we were the object of securities class action litigation, we could incur substantial costs and experience a diversion of our management's attention and resources and such securities class action litigation could have a material adverse effect on our business, financial condition and results of operations.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Our exposure to financial risk, including changes in interest rates, relates primarily to cash and cash equivalents and marketable securities. These investments bear interest at a variable interest rate, which is subject to market changes. We have not entered into any interest rate swap agreements, or other instruments to minimize our exposure to interest rate increases. We have not had any derivative instruments in the past and do no presently plan to in the future.
For purposes of specific risk analysis we use sensitivity analysis to determine the impacts that market risk exposure may have on the fair value of our cash and cash equivalents and marketable securities. To perform sensitivity analysis, we assess the risk of loss in fair values from the impact of hypothetical changes in interest rates on market sensitive instruments. We compare the market values for interest risk based on the present value of future cash flows as impacted by the changes in the rates. We selected discount rates for the present value computations based on market interest rates in effect at June 30, 2000. We compared the market values resulting from these computations with the market values of these financial instruments at June 30, 2000. The differences in the comparison are the hypothetical gains or losses associated with each type of risk.
Our investment portfolio consists of demand deposit accounts, a money market mutual fund and investment accounts. Due to the short-term average maturity of the investment portfolio, a sudden sharp change in interest rates would not have a material adverse effect on the value of the portfolio. Based on our investment portfolio and interest rates, a 100 basis point increase or decrease in interest rates would result in an increase or decrease of approximately $400,000 and $385,000 for the years ended 1999 and 2000, respectively, in our results from operations and cash flows.
Item 8. Financial Statements and Supplementary Data.
Index to Financial Statements, Financial Statements and Supplementary Data appear on pages 37 to 56 of this Annual Report on Form 10-K.
Item 9. Changes In and Disagreements with Accountants in Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
See "Executive Officers of the Registrant" in Part I of this Annual Report on Form 10-K. We will furnish to the Securities and Exchange Commission a definitive Proxy Statement (the "Proxy Statement") not later than 120 days after the close of the fiscal year ended June 30, 2000. The information required by this item is incorporated herein by reference to the information contained under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" of the Proxy Statement.
Item 11. Executive Compensation.
The information required by this item is incorporated herein by reference to the information contained under the captions "Executive Compensation," "Director Compensation," "Compensation Committee Interlocks and Insider Participation." "Stock Performance Graph," "Employment Agreements" and "Reports of the Compensation Committee on Executive Compensation" of the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated herein by reference to the information contained under the caption "Security Ownership of Certain Beneficial Owners and Management" of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
The information required by this item is incorporated herein by reference to the information contained under the caption "Certain Relationships and Related Transactions" of the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statements and Schedule, and Reports on Form 8-K
(a) Financial Statements, Financial Statement Schedule and Exhibits
Page
----
(1) Financial Statements--see "Index to Financial Statements"..... 37
(2) Financial Statement Schedule for the Years Ended June 30,
1998, 1999 and 2000: Schedule II--Valuation and Qualifying
Accounts........................................................ 33
Financial statement schedules not included have been omitted
because of the absence of conditions under which they are
required or because the required information, where material,
is shown in the financial statements or notes
(3) Exhibits:
Exhibits submitted with the Annual Report on Form 10-K as
filed with the Securities and Exchange Commission and those
incorporated by reference to other filings are listed on the
Exhibit Index................................................ 34
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(b) Reports on Form 8-K
None.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS AND RETURNS
Years Ended June 30, 1998, 1999 and 2000
Additions
--------------------
(Charged
Balance at to Costs
Beginning and Balance at
Year ended of Year Expenses) Recoveries Deductions(1) End of Year
---------- ---------- --------- ---------- ------------- -----------
(in thousands)
June 30, 1998........ $ 644 326 -- -- $ 970
June 30, 1999........ $ 970 302 176 125 $1,323
June 30, 2000........ $1,323 413 15 654 $1,097
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EXHIBIT INDEX
Exhibit
No. Description
------- -----------
3.1* Amended and Restated Certificate of Incorporation of the
Registrant.
3.2* Amended and Restated By-Laws of the Registrant.
4.1* Specimen certificate for shares of common stock.
10.1* 1989 Stock Option Plan, as amended, including form of stock option
agreement for incentive and non-statutory stock options.
10.2* Amended and Restated 1997 Stock Incentive Plan, including form of
stock option agreement for incentive and non-statutory stock
options.
10.3* 1998 Director Stock Option Plan, including form of non-statutory
stock option agreement.
10.4* 1998 Employee Stock Purchase Plan.
10.5* First Amendment and Restatement of Stock Rights and Voting
Agreement, as amended.
10.6* Second Stock Rights Agreement, as amended.
10.7* Lease dated November 28, 1994, between the Registrant and Wenberry
Associates L.L.C.
10.8* Employment Agreement between the Registrant and Mr. McGurl.
10.9* Employment Agreement between the Registrant and Mr. Mullen.
10.10* Employment Agreement between the Registrant and Mr. Eberle.
10.11* Revolving Credit Agreement between the Registrant and Shawmut Bank
N.A., dated January 13, 1995.
10.12* Secured Revolving Time Note between the Registrant and Shawmut Bank
N.A., dated
January 13, 1995.
10.13* First Amendment of the Loan Agreement between the Registrant and
Fleet National Bank of Massachusetts, dated December 29, 1995.
10.14* Secured Revolving Time Note between the Registrant and Fleet
National Bank of Massachusetts, dated December 29, 1995.
10.15* Second Amendment of the Loan Agreement between the Registrant and
Fleet National Bank, dated December 20, 1996.
10.16* Secured Revolving Time Note between the Registrant and Fleet
National Bank, dated
December 20, 1996.
10.17* Third Amendment of the Loan Agreement between the Registrant and
Fleet National Bank, dated December 29, 1997.
10.18* Secured Revolving Time Note between the Registrant and Fleet
National Bank, dated
December 29, 1997.
10.19* Fourth Amendment of the Loan Agreement between the Registrant and
Fleet National Bank, dated December 29, 1998.
10.20* Secured Revolving Time Note between the Registrant and Fleet
National Bank, dated
December 29, 1998.
10.21* Line of Credit Agreement for the Acquisition of Equipment between
the Registrant and Shawmut Bank N.A., dated January 13, 1995.
10.22* Secured Term Note between the Registrant and Shawmut Bank N.A.,
dated June 28, 1995.
10.23* Security Agreement between the Registrant and Shawmut Bank N.A.,
dated January 13, 1995.
10.24** Asset Purchase Agreement between the Registrant and The Northern
Trust Company, dated
June 30, 1999.
10.25*** Asset Purchase Agreement between the Registrant and Integrated Cash
Management Services, Inc., dated October 25, 1999.
10.26**** Stock Purchase Agreement by and among the Registrant and Nevada
Bond Investment Corp. II, dated June 9, 2000.
10.27**** Investor Rights Agreement by and among the Registrant and Nevada
Bond Investment Corp. II, dated June 9, 2000.
10.28***** Share Purchase Agreement between the Persons named in column (A) of
Schedule 1 thereto and the Registrant dated August 28, 2000.
|
Exhibit
No. Description
------- -----------
10.29***** Form of Loan Note issued to the Persons named in column (A) of
Schedule 1 of Share Purchase Agreement between the Persons named in
column (A) of Schedule 1 thereto and the Registrant dated August
28, 2000.
10.30***** Stock Purchase Agreement by and among the Registrant, Flashpoint,
Inc. and Eric Levine dated August 28, 2000.
10.31 Common Stock Purchase Warrant for 307,882 shares of common stock,
$.001 par value of Bottomline Technologies (de), Inc, issued to
Nevada Bond Investment Corp. II on June 9, 2000 (filed herewith).
10.32 Common Stock Purchase Warrant for 324,000 shares of common stock,
$.001 par value of Bottomline Technologies (de), Inc., issued to
Citibank, N.A. on April 4, 2000 (filed herewith).
10.33 Lease dated July 20, 1999, between the Registrant and 60 Cutter
Mill Road Property Corp. (filed herewith).
10.34 Lease dated May 22, 2000, between the Registrant and 55 Broad
Street L.P. (filed herewith).
10.35 Lease dated August 31, 2000, between the Registrant and 325
Corporate Drive II, LLC (filed herewith).
23 Consent of Ernst & Young LLP (filed herewith).
27 Financial Data Schedule (filed herewith).
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bottomline Technologies (de) Inc.
By: /s/ Robert A. Eberle ____________
Robert A. Eberle
Executive Vice President,
Chief Financial Officer,
Treasurer and Director
(Principal Financial and
Accounting Officer)
Date: September 26, 2000
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on September 26, 2000 by the following persons on behalf of the Registrant and in the capacities indicated:
Signature Title
--------- -----
/s/ Daniel M. McGurl Chairman of the Board, and
______________________________________ Chief Executive
Daniel M. McGurl Officer(Principal
Executive Officer)
/s/ Joseph L. Mullen President, Chief Operating
______________________________________ Officer and Director
Joseph L. Mullen
/s/ Robert A. Eberle Executive Vice President,
______________________________________ Chief Financial Officer,
Robert A. Eberle Treasurer, and Director
(Principal Financial and
Accounting Officer)
/s/ James L. Loomis Senior Executive Advisor
______________________________________ and Director
James L. Loomis
/s/ Joseph L. Barry Jr. Director
______________________________________
Joseph L. Barry Jr.
/s/ Dianne Gregg Director
______________________________________
Dianne Gregg
/s/ James W. Zilinski Director
______________________________________
James W. Zilinski
|
BOTTOMLINE TECHNOLOGIES (de), INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Report of Independent Auditors........................................... 38
Consolidated Balance Sheets as of June 30, 1999 and 2000................. 39
Consolidated Statements of Operations for the years ended June 30, 1998,
1999 and 2000........................................................... 40
Consolidated Statements of Stockholders' Equity and Comprehensive Loss
for the years ended June 30, 1998, 1999 and 2000........................ 41
Consolidated Statements of Cash Flows for the years ended June 30, 1998,
1999 and 2000........................................................... 42
Notes to Consolidated Financial Statements............................... 43
|
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Bottomline Technologies (de), Inc.
We have audited the accompanying consolidated balance sheets of Bottomline Technologies (de), Inc. as of June 30, 1999 and 2000, and the related consolidated statements of operations, stockholders' equity and comprehensive loss, and cash flows for each of the three years in the period ended June 30, 2000. Our audits also included the consolidated financial statement schedule listed in the index at Item 14 (a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bottomline Technologies (de), Inc. at June 30, 1999 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Boston, Massachusetts
August 2, 2000, except for Note 12 as
to which the date is August 28, 2000.
|
BOTTOMLINE TECHNOLOGIES (de), INC.
CONSOLIDATED BALANCE SHEETS
June 30,
---------------
1999 2000
------- -------
(in thousands,
except per
share data)
ASSETS
Current assets:
Cash and cash equivalents................................... $39,699 $27,292
Marketable securities....................................... -- 11,222
Accounts receivable, net of allowances for doubtful accounts
and returns of $1,323 at June 30, 1999 and $1,097 at June
30, 2000................................................... 11,631 14,571
Inventory, net.............................................. 322 168
Deferred income taxes....................................... 665 1,046
Prepaid expenses and other current assets................... 371 546
------- -------
Total current assets.......................................... 52,688 54,845
Property and equipment, net................................... 2,392 5,172
Intangibles, net of accumulated amortization of $2,311........ -- 8,416
Deferred income taxes......................................... -- 2,084
Other assets.................................................. 66 763
------- -------
Total assets............................................ $55,146 $71,280
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 1,376 $ 2,004
Accrued expenses............................................ 3,478 4,930
Deferred revenue and deposits............................... 3,467 6,034
Income taxes payable........................................ 657 901
------- -------
Total current liabilities..................................... 8,978 13,869
Deferred income taxes......................................... 253 283
Commitments and contingent liabilities........................ -- --
Stockholders' equity:
Preferred Stock, $.001 par value:
Authorized shares--4,000; issued and outstanding shares--
none..................................................... -- --
Common Stock, $.001 par value:
Authorized shares--50,000; issued and outstanding shares--
10,476 at June 30, 1999, and 11,226 at June 30, 2000..... 10 11
Additional paid-in-capital.................................. 39,429 64,914
Accumulated comprehensive loss--unrealized loss on
available-for-sale securities.............................. -- (8)
Retained earnings (deficit)................................. 6,476 (7,789)
------- -------
Total stockholders' equity.................................... 45,915 57,128
------- -------
Total liabilities and stockholders' equity.............. $55,146 $71,280
======= =======
|
See accompanying notes.
BOTTOMLINE TECHNOLOGIES (de), INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended June 30,
--------------------------
1998 1999 2000
------- ------- --------
(in thousands, except
per share data)
Revenues:
Software licenses............................... $ 9,887 $15,885 $ 19,483
Service and maintenance......................... 9,701 12,422 19,870
Equipment and supplies.......................... 9,449 10,996 9,781
------- ------- --------
Total revenues.............................. 29,037 39,303 49,134
Cost of revenues:
Software licenses............................... 215 261 561
Service and maintenance......................... 4,261 5,323 9,733
Equipment and supplies.......................... 6,526 7,999 7,252
------- ------- --------
Total cost of revenues...................... 11,002 13,583 17,546
------- ------- --------
Gross profit...................................... 18,035 25,720 31,588
Operating expenses:
Sales and Marketing:
Sales and marketing........................... 7,675 10,969 13,784
Expense associated with warrants issued....... -- -- 11,902
Product development and engineering:
Product development and engineering........... 3,158 3,971 8,580
In-process research and development........... -- -- 3,900
General and administrative:
General and administrative.................... 4,372 4,755 8,606
Amortization of intangible assets............. -- -- 2,311
------- ------- --------
Total operating expenses.................... 15,205 19,695 49,083
------- ------- --------
Income (loss) from operations..................... 2,830 6,025 (17,495)
Interest income................................... 35 730 1,830
Interest expense.................................. (85) (4) --
------- ------- --------
(50) 726 1,830
------- ------- --------
Income (loss) before provision (benefit) for
income taxes..................................... 2,780 6,751 (15,665)
Provision (benefit) for income taxes.............. 1,177 2,700 (1,400)
------- ------- --------
Net income (loss)................................. $ 1,603 $ 4,051 $(14,265)
======= ======= ========
Earnings (loss) per share available to common
stockholders:
Basic........................................... $ 0.24 $ 0.50 $ (1.33)
======= ======= ========
Diluted......................................... $ 0.20 $ 0.43 $ (1.33)
======= ======= ========
Shares used in computing earnings (loss) per share
available to common stockholders:
Basic........................................... 6,314 7,988 10,744
======= ======= ========
Diluted......................................... 7,316 9,170 10,744
======= ======= ========
|
See accompanying notes.
BOTTOMLINE TECHNOLOGIES (de), INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE LOSS
Years ended June 30, 1998, 1999 and 2000
Common Stock Additional Accumulated Retained Total
------------- Paid-in Comprehensive Earnings Stockholders'
Shares Amount Capital Loss (Deficit) Equity
------ ------ ---------- ------------- --------- -------------
(in thousands)
Balances at June 30,
1997................... 6,306 $ 6 $ 1,675 -- $ 999 $ 2,680
Issuance of common
stock upon exercise
of stock options..... 54 -- 192 -- -- 192
Accretion to
redemption value on
redeemable common
stock................ -- -- -- -- (107) (107)
Net income............ -- -- -- -- 1,603 1,603
------ --- ------- --- -------- --------
Balances at June 30,
1998................... 6,360 6 1,867 -- 2,495 4,368
Issuance of common
stock upon exercise
of stock options and
warrants............. 179 -- 297 -- -- 297
Accretion to
redemption value on
redeemable common
stock................ -- -- -- -- (70) (70)
Termination of
redemption rights
upon initial public
offering............. 801 1 1,422 -- -- 1,423
Proceeds from sale of
common stock, net of
offering expenses.... 3,136 3 35,843 -- -- 35,846
Net income............ -- -- -- -- 4,051 4,051
------ --- ------- --- -------- --------
Balances at June 30,
1999................... 10,476 10 39,429 -- 6,476 45,915
Issuance of common
stock for employee
stock purchase plan
and upon exercise of
stock options........ 442 1 3,637 -- -- 3,638
Proceeds from sale of
common stock and
issuance of warrants,
net of expenses...... 308 -- 21,848 -- -- 21,848
Net loss.............. -- -- -- -- (14,265) (14,265)
Unrealized loss on
available-for-sale
securities........... -- -- -- $(8) -- (8)
--------
Comprehensive loss.... -- -- -- -- -- (14,273)
------ --- ------- --- -------- --------
Balances at June 30,
2000................... 11,226 $11 $64,914 $(8) $ (7,789) $ 57,128
====== === ======= === ======== ========
|
See accompanying notes.
BOTTOMLINE TECHNOLOGIES (de), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended Jume 30,
--------------------------
1998 1999 2000
------- ------- --------
(in thousands)
Operating activities
Net income (loss)................................. $ 1,603 $ 4,051 $(14,265)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Expense associated with warrants issued......... -- -- 11,902
In-process research and development............. -- -- 3,900
Amortization of intangible assets............... -- -- 2,311
Depreciation and amortization of property and
equipment...................................... 827 873 1,553
Provision for allowances on accounts
receivable..................................... 326 302 413
Provision for allowances for obsolescence of
inventory...................................... -- 132 --
Deferred income tax (benefit) expense........... (270) 194 (2,435)
Changes in operating assets and liabilities:
Accounts receivable........................... (1,727) (4,936) (1,986)
Inventory, prepaid expenses and other current
assets and other assets...................... 530 (538) (718)
Refundable income taxes....................... 905 -- --
Accounts payable, accrued expenses and
deferred revenue and deposits................ 392 2,993 2,449
Income taxes payable.......................... 59 598 244
------- ------- --------
Net cash provided by operating activities......... 2,645 3,669 3,368
Investing activities
Purchases of marketable securities................ -- -- (30,441)
Proceeds from sales and maturities of marketable
securities....................................... -- -- 19,211
Purchases of property and equipment, net.......... (993) (1,400) (4,148)
Acquisition of businesses and assets, net of cash
acquired......................................... -- -- (13,981)
------- ------- --------
Net cash used in investing activities............. (993) (1,400) (29,359)
Financing activities
Repayments on revolving credit arrangement........ (1,045) -- --
Repayments on note payable........................ (264) (75) --
Proceeds from exercise of stock options and
employee stock purchase plan..................... 192 297 3,638
Proceeds from sale of common stock, net........... -- 35,846 9,946
------- ------- --------
Net cash provided by (used in) financing
activities....................................... (1,117) 36,068 13,584
------- ------- --------
Increase (decrease) in cash and cash equivalents.. 535 38,337 (12,407)
Cash and cash equivalents at beginning of year.... 827 1,362 39,699
------- ------- --------
Cash and cash equivalents at end of year.......... $ 1,362 $39,699 $ 27,292
======= ======= ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest...................................... $ 85 $ 4 $ --
Income taxes.................................. $ 464 $ 2,096 $ 1,112
|
See accompanying notes.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended June 30, 1998, 1999 and 2000
1. Organization and Nature of Business
Bottomline Technologies (de), Inc. was originally incorporated as a New Hampshire corporation in 1989 and was reincorporated as a Delaware corporation in August 1997. The Company is a software company that creates an automated e- business infrastructure for use by businesses and financial institutions to make payments and present bills. The Company's products and services are sold to customers operating in many different industries throughout the world.
2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposit accounts, a money market mutual fund and an overnight investment account at a financial institution. The Company considers all highly liquid instruments with an original maturity of ninety days or less to be cash equivalents. The carrying value of these instruments approximates their fair value.
Marketable Securities
The Company accounts for marketable securities in accordance with Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). SFAS 115 establishes the accounting and reporting requirements for all debt securities and for investments in equity securities that have readily determinable fair values. All marketable securities must be classified as one of the following: held-to-maturity, available-for-sale, or trading. The Company classifies its marketable securities as available-for-sale and, as such, carries the investments at fair value, with unrealized holding gains and losses reported as a separate component of stockholders' equity.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents, marketable securities, and accounts receivable. Cash and cash equivalents subject us to concentrations of credit risk as the Company had approximately $27,300,000 invested with a single financial institution at June 30, 2000. The Company invests its excess cash and cash equivalents in high quality marketable securities. Concentration of credit risk with respect to marketable securities is limited as marketable securities are primarily investment-grade corporate bonds with high-credit, quality financial institutions.
Concentration of credit risk with respect to accounts receivable is limited due to the large number of companies and diverse industries comprising the Company's customer base. At June 30, 2000, a subsidiary of United Technologies Corporation, a related party, accounted for 14.4% of total accounts receivable. On-going credit evaluations of customer' financial condition are performed and collateral is generally not required. The Company maintains reserves for potential credit losses and such losses, in the aggregate, have not exceeded management's expectations.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Financial Instruments
The fair value of the Company's financial instruments, which include cash and cash equivalents, marketable securities, accounts receivable, and accounts payable are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk. The carrying value of these financial instruments approximated their fair value at June 30, 1999 and 2000, respectively, due to the short-term nature of these instruments.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or market.
Property and Equipment
Property and equipment are stated at cost, net of accumulated amortization and depreciation. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets (three to five years). Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the lease term.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets represent core technology, contract backlog, assembled workforce and goodwill in connection with acquisitions made during the fiscal year. In connection with the acquisitions accounted for as business combinations and the acquisition of assets, the Company recorded intangible assets based on the excess of the purchase price over the identifiable tangible assets acquired on the date of purchase. Intangible assets are reported at cost, net of accumulated amortization, and are being amortized over their estimated useful lives ranging from one to five years. Goodwill and other intangible assets, net of accumulated amortization, was $8,416,000 at June 30, 2000. Amortization expense was $2,311,000 for the year ended June 30, 2000.
The carrying value of intangible assets is periodically reviewed by the Company based on the expected future undiscounted operating cash flows of the related asset. If an impairment is indicated, the Company will adjust the carrying value of the intangible assets. No event has occurred that would impair the value of long-lived assets recorded in the accompanying consolidated financial statements.
Advertising Costs
The Company expenses advertising costs as incurred. Advertising costs were $129,000, $136,000 and $358,000 for the years ended June 30, 1998, 1999 and 2000, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates include, but are not limited to, the allowances for doubtful accounts and returns and accrued liabilities. Actual results could differ from those estimates.
Income Taxes
Deferred income taxes are provided for differences in bases of assets and liabilities for financial reporting and income tax purposes. Temporary differences relate primarily to acquisition-related intangibles, depreciation,
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
various accruals, and allowances for doubtful accounts, returns and inventory. The principal non-deductible expenses relate to the issuance of a warrant during fiscal year 2000 and certain non-deductible acquisition-related intangibles.
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation" (SFAS 123) encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has elected to continue to account for stock based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related Interpretations.
Prior to the Company's initial public offering on February 12, 1999, the Board of Directors determined the fair value of the Company's common stock in its good faith judgement at each option grant date for grants under the equity plans. In determining the fair value, the Board of Directors considered a number of factors including the financial and operating performance, recent transactions in the Company's common stock, if any, the values of similarly situated companies and the lack of marketability of the Company's common stock.
Capitalized and Acquired Software Costs
Capitalization of software development costs under SFAS No. 86 begins upon the establishment of technological feasibility. Technological feasibility is established upon the completion of a working model. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors, including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized and acquired software costs charged to operations were $253,000 for the year ending June 30, 1998. For the years ended June 30, 1999 and 2000, there were no costs capitalized since none met the definition of technological feasibility.
Revenue Recognition
In October 1997, the Accounting Standards Executive Committee of the American Institute (AcSEC) of Certified Public Accountants issued Statement of Position (SOP) 97-2 "Software Revenue Recognition", which was adopted effective July 1, 1998. SOP 98-4, "Deferral of the Effective Date of a Provision of SOP 97-2, Software Revenue Recognition" deferred the effective date of certain aspects of SOP 97-2. Effective December 15, 1998, SOP 98-9 was issued which amended SOP 98-4 and extended the deferral of the application of certain passages of SOP 97-2 to transactions entered into in fiscal years beginning after March 15, 1999. These statements superseded SOP 91-1, "Software Revenue Recognition," and provide guidance on applying generally accepted accounting principles in recognizing revenue on software transactions entered into in fiscal years beginning after December 15, 1997. The adoption of SOP 97-2, as amended by SOP 98-4 and SOP 98-9, did not have a material impact on the Company's revenues and results of operations.
Revenue recognition from software license fees is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed or determinable and collectibility is probable. The Company's software arrangements may contain multiple elements, such as software products, services, hardware and post-contract customer support (PCS). Revenue earned on software arrangements involving multiple elements which qualify for separate element treatment is allocated to each element based on the relative fair values of those elements based on vendor specific objective evidence. For the year ended June 30, 2000, vendor specific objective evidence is limited to the price charged when the element is sold separately or,
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
for an element not yet being sold separately, the price established by management having the relevant authority. Accordingly, revenue for software licenses is recognized when the product is shipped. Revenue for services is recognized as the services are provided to the customer. Revenue for PCS under software maintenance agreements is recognized ratably over the term of the agreement, generally one year. Revenue for hardware is recognized when the product is shipped.
Certain arrangements requiring significant customization and modifications and extended implementation periods are accounted for using percentage of completion contract accounting as defined by Statement of Position No. 81-1 ("SOP 81-1"), "Accounting for Performance of Construction-Type and Certain Production-Type Contracts". Under SOP 81-1, revenue is recognized based on the costs incurred during the reporting period as a percentage of the estimated total contract costs.
For the year ended June 30, 1998, revenue was recognized in accordance with SOP 91-1 and, accordingly, revenue for software was recognized when the product was shipped and there were no significant remaining company obligations.
Customer Returns
Customer returns are estimated and accrued for when known based on return authorizations and past history.
Earnings per Share
The Company computes earnings per share in accordance with Statement of Financial Accounting Standards No. 128 "Earnings Per Share" (SFAS 128). SFAS 128 requires calculation and presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted average number of common shares outstanding and excludes any dilutive effects of warrants, stock options or other type securities. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding and the dilutive effect of stock options, warrants and related securities calculated using the treasury stock method. Dilutive securities are excluded from the diluted earnings per share calculation if their effect is antidilutive.
401(k) Plan
The Company has a 401(k) Profit Sharing Plan (the Plan), whereby eligible employees may contribute up to 15% of their compensation, subject to limitations established by the Internal Revenue Code. The Company may contribute a discretionary matching contribution annually equal to 50% (30% in 1999 and 25% in 1998) of each such participant's deferred compensation up to 5% of their annual compensation. The Company charged $98,000, $129,000 and $294,000 to expense in the years ended 1998, 1999 and 2000, respectively, under the Plan.
Comprehensive Income (Loss)
The Company computes comprehensive income (loss) in accordance with Statement of Financial Accounting Standard No. 130 (SFAS 130), "Reporting Comprehensive Income". SFAS 130 establishes standards for the reporting and display of comprehensive income and its components in the financial statements. Comprehensive income, as defined, includes all changes in equity during a period from non-owner sources, such as foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. Comprehensive income was equal to net income for the years ended June 30, 1998 and 1999 since there were no elements of comprehensive income. Comprehensive loss for the year ended June 30, 2000 was
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
$14,273,000. The difference between net loss and comprehensive loss for the year ended June 30, 2000 was $8,000 of net unrealized losses on the Company's investments.
Segment Reporting
Effective July 1, 1998, the Company adopted SFAS No.131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131). SFAS 131 superseded FASB Statement No. 14, "Financial Reporting for Segments of a Business Enterprise." SFAS 131 established standards for the way that public business enterprises report information about operating segments in financial reports. SFAS 131 also established standards for related disclosures about products and services, geographic areas, and major customers. The adoption of SFAS 131 did not affect results of operations, financial position, or the footnote disclosure as the Company operates in a single industry segment.
Accounting Pronouncements
In December 1999, the Securities and Exchange Commission published Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements" which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements. Due to a variety of implementation questions that have arisen, the Securities and Exchange Commission (SEC) has deferred the implementation of SAB 101 until no later than the fourth quarter for fiscal years beginning after December 15, 1999. The SEC is expected to issue further interpretive guidance in the fall of 2000. We will adopt SAB 101 no later than the fourth quarter of the fiscal year ending June 30, 2001. We are still assessing the impact of adopting SAB 101 and do not expect to make a definitive assessment until the further guidance is issued.
In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation" an interpretation of APB Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees". Interpretation 44 clarifies guidance for certain issues that arose in the application of APB 25. Areas of focus within Interpretation 44 include repricings, modifications to extend the option term, change of grantee status, modifications to accelerate vesting and options exchanged in a purchase business combination. Interpretation 44 will be applied prospectively to new awards, modifications to outstanding awards, and changes in employee status on or after July 1, 2000. Effective July 1, 2000, should these types of transactions occur, we will account for them under APB 25 as clarified by Interpretation 44.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities", which requires that all derivative instruments be recorded on the
balance sheet effective July 1, 2000 at their fair value. We will adopt SFAS
133, as amended by SFAS 137 effective July 1, 2000. We do not expect the
adoption of SFAS 133 to have a material impact on our results of operations or
financial position.
3. Product and Business Acquisitions
NetTransact
In July 1999, the Company acquired certain software and related proprietary intellectual property, NetTransact, from The Northern Trust Company for $3,800,000 in cash and acquisition costs. NetTransact allows for the electronic presentment and payment of invoices and related dispute resolution in a business-to-business environment. In connection with this product acquisition, the Company recorded a $1,300,000 charge for acquired in-process research and development and a $2,500,000 intangible asset that is being amortized on a straight line basis over a five-year period. Accumulated amortization on intangible assets was $503,000 at June 30, 2000. In
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
connection with the acquisition, the Company is obligated to pay The Northern Trust Company a 10% royalty on all NetTransact revenue related to the software and certain other property acquired from The Northern Trust Company excluding the initial $3,500,000 in revenues.
Integrated Cash Management Services, Inc.
In October 1999, the Company acquired substantially all of the assets and assumed certain liabilities of Integrated Cash Management Services, Inc. ("ICM") for an aggregate of $9,300,000 in cash and acquisition costs.
In connection with this asset acquisition, the Company recorded a $2,600,000 charge for acquired in-process research and development. The Company recorded $6,700,000 of intangible assets consisting of core technology, contract backlog, assembled workforce and goodwill. The intangible assets are reported at cost, net of accumulated amortization, and are being amortized on a straight line basis over their estimated useful lives ranging from one to five years. Accumulated amortization on intangible assets was $1,637,000 at June 30, 2000.
The acquisition was accounted for as a purchase with results of operations included with those of the Company for periods subsequent to the date of acquisition.
OLC Software, Inc.
In February 2000, the Company acquired all outstanding shares of stock of OLC Software, Inc. ("OLC") for an aggregate of $1,500,000 in cash and acquisition costs. OLC was an early stage development company with limited operations prior to the acquisition. In connection with this acquisition, the Company recorded an intangible asset that is being amortized over its useful life of three years. Accumulated amortization on intangible assets was $171,000 at June 30, 2000.
The acquisition was accounted for as a purchase with results of operations included with those of the Company for periods subsequent to the date of acquisition.
In-Process Research and Development
In connection with the acquisitions of the NetTransact product and the ICM net assets, the Company recorded in-process research and development charges of $3,900,000 representing purchased in-process research and development that has not yet reached technological feasibility. The Company's management made certain assessments with respect to the determination of all identifiable assets resulting from, or to be used in, research and development activities as of the respective acquisition dates.
In the NetTransact product and ICM net asset acquisitions, the in-process research and development projects were valued using an Income Approach, which included the application of a discounted future earnings methodology. Using this methodology, the value of the in-process technology is comprised of the total present value of the future earnings stream attributable to the technology throughout its anticipated life. As a basis for the valuation process, the Company made estimates of the revenue stream to be generated in each future period and the corresponding operating expenses and other charges to apply to this revenue stream. In order to determine the value of the earnings stream that was specifically attributable to the in-process technology, the earnings attributable to the projects were calculated by deducting the earnings streams attributable to all other assets, including working capital and tangible assets. Based upon these assumptions, the future after-tax income streams relating to the in-process technologies were discounted to present value using a risk adjusted discount rate that reflected the uncertainty involved in successfully completing and commercializing the in- process technologies.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of the amounts allocated to the assets acquired for all the above
is as follows:
(in thousands)
In-process research and development............................... $ 3,900
Core technology................................................... 5,600
Assembled workforce............................................... 1,100
Net identifiable tangible assets.................................. 627
Goodwill.......................................................... 2,800
Other............................................................. 600
--------
14,627
--------
Less:
In-process research and development charges..................... (3,900)
--------
10,727
Less:
Accumulated amortization........................................ (2,311)
--------
$ 8,416
========
|
The following unaudited pro forma financial information presents the combined results of operations of the Company and ICM as if the acquisition had occurred as of the beginning of fiscal 1999 and 2000, after giving effect to certain adjustments, including amortization of goodwill and other intangible assets. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had the Company and ICM been a single entity during such period. Since NetTransact was a product acquistion and OLC had very limited operations prior to the acquisition, no amounts are included in the pro forma information below.
Pro forma year
ended June 30,
----------------
1999 2000
------- --------
(unaudited)
(in thousands)
Revenues.................................................. $45,207 $ 50,833
Net income (loss)......................................... $ 826 $(15,713)
Net income (loss) per share............................... $ 0.08 $ (1.46)
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4. Marketable Securities Marketable securities are classified as available-for-sale and are reported at fair value based on quoted market prices with net unrealized gains or losses excluded from earnings and reported as a separate component of shareholders' equity. Interest income and realized gains and losses are recognized when earned. The carrying amount of the Company's investments at June 30, 2000 is shown in the table below:
June 30, 2000
---------------
Market
Cost Value
------- -------
(in thousands)
Marketable Securities:
Corporate Bonds........................................... $10,219 $10,210
Certificates of Deposit................................... 1,011 1,012
------- -------
Total....................................................... $11,230 $11,222
======= =======
|
At June 30, 2000, marketable securities with scheduled maturities within one year were $10,221,000 and maturities between one to three years were $1,001,000. Gross unrealized losses were $9,000 and gross unrealized gains were $1,000 for the year ended June 30, 2000. Realized gains and losses were $-0- for the year ended June 30, 2000.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. Property and Equipment
Property and equipment consists of the following:
June 30,
-------------
1999 2000
------ ------
(in
thousands)
Furniture and fixtures........................................ $ 465 $ 792
Technical equipment........................................... 3,551 5,335
Software...................................................... 803 1,952
Leasehold improvements........................................ 277 458
------ ------
5,096 8,537
Less: Accumulated depreciation and amortization............... 2,704 3,365
------ ------
$2,392 $5,172
====== ======
|
6. Accrued Expenses
Accrued expenses consist of the following:
June 30,
-------------
1999 2000
------ ------
(in
thousands)
Employee compensation and benefits............................ $2,598 $2,915
Sales taxes................................................... 220 610
Royalties..................................................... -- 296
Other......................................................... 660 1,109
------ ------
$3,478 $4,930
====== ======
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7. Borrowing Arrangements
The Company had a revolving credit agreement (the revolving agreement) with a bank which provided for available borrowings of up to $5,000,000. The revolving agreement expired on December 30, 1999 and the Company chose not to renew it. There were no borrowings outstanding under the revolving agreement at June 30, 1999.
8. Commitments and Contingent Liabilities
The Company leases its principal office facility under a noncancellable operating lease expiring in 2002. In addition to the base term, the Company has two five-year options to extend the term of the lease. Rent payments are fixed for the initial two years of the lease and may be increased after that during the initial term of the lease by the Consumer Price Index. In addition, the Company is obligated to pay certain incremental operating costs over the base amount.
The Company also leases office space in other cities. All such leases expire by fiscal year 2010.
Future minimum annual rental commitments under these leases at June 30, 2000 are as follows:
(in thousands)
2001........................................................... $1,300
2002........................................................... 1,043
2003........................................................... 657
2004........................................................... 507
2005 and thereafter............................................ 2,871
------
$6,378
======
|
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Rent expense charged to operations for the years ended June 30, 1998, 1999 and 2000 was $342,000, $454,000, and $944,000 respectively.
9. Capital Transactions
Preferred Stock
On November 12, 1998, the Company's Board of Directors authorized a class of preferred stock, $.001 par value with 4,000,000 shares available for issuance.
Common Stock
In connection with the sale of its common stock in 1992, the Company agreed with certain stockholders to redeem, at the stockholders' option, 801,000 shares of common stock anytime after June 29, 1995. The initial redemption value was $1.00 per share and increased each year in accordance with the agreement. These redemption rights terminated in February 1999 upon the effectiveness of the Company's initial public offering. The redemption value at termination was $1,423,000.
In February 1999, the Company completed the sale of 3,029,466 shares of its common stock in its initial public offering for proceeds of approximately $34,874,000, net of expenses of the offering.
In June 2000, a subsidiary of United Technologies Corporation (UTC) purchased 307,882 shares of common stock for aggregate consideration of $9,951,000, net of expenses. In connection with the equity investment, the Company also issued warrants to UTC for the purchase of 307,882 shares of common stock at an exercise price of $38.00. The Company valued the warrants issued using the Black-Scholes method using assumptions of an expected life of three years and a volatility of 91%. The proceeds of the sale of the common stock and warrants were allocated to each based on the relative fair value resulting in a charge to operations of $6,041,000. The warrants were fully vested and exercisable upon issuance.
Shares reserved for future issuance were 3,468,811 at June 30, 2000.
Equity Plans
1989 Stock Option Plan
The Company adopted the Bottomline Technologies, Inc. Stock Option Plan, as amended, (the Plan) on August 1, 1989, which provides for the issuance of incentive stock options and nonstatutory stock options. The Plan is administered by the Board of Directors, which has the authority to determine to whom options may be granted, the period of exercise and what other restrictions, if any, should apply. Vesting for options granted under the Plan is principally over three years from the date of the grant. The Company has reserved up to 1,440,000 shares of its common stock for issuance under the Plan. Incentive stock options may be granted to employees at a price of no less than 100% of the fair market value of the common stock at the date of grant. Options expire a maximum of ten years from the date of grant.
1997 Stock Incentive Plan
On August 21, 1997, the Company adopted the 1997 Stock Incentive Plan (the 1997 Plan), which provides for the issuance of stock options and nonstatutory stock options. The 1997 Plan is administered by the Board of Directors which has the authority to determine to whom options may be granted, the period of exercise and what other restrictions, if any, should apply. Vesting for options granted under the 1997 Plan is principally over four years from the date of the grant. The Company has reserved up to 2,700,000 shares of its common stock for issuance under the 1997 Plan to employees at a price of no less than 100% of the fair market value of the common stock at the date of grant. Options expire a maximum of ten years from the date of grant.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1998 Non-Employee Director Stock Option Plan
On November 12, 1998, the Company adopted the 1998 Non-Employee Director Stock Option Plan (the Director Plan), which provides for the issuance of non- statutory stock options. The Company has reserved up to 300,000 shares of its common stock for issuance under the Director Plan. Under the terms of the Director Plan, each non-employee director is granted an option to purchase 15,000 shares of common stock upon his or her initial election to the Board of Directors. Such options vest ratably over four years from the date of the grant. Additionally, each non-employee director is granted an option to purchase 7,500 shares of common stock at each annual meeting of stockholders following the annual meeting of the initial year of the election. Such options principally vest over one year from the date of the grant.
1998 Employee Stock Purchase Plan
On November 12, 1998, the Company adopted the 1998 Employee Stock Purchase Plan (the Stock Purchase Plan), which provides for the issuance of up to a total of 750,000 shares of common stock to participating employees. Eligible employees may contribute between 1% and 10% of their base pay to the Stock Purchase Plan. At the end of a designated offering period, employees purchase shares of the Company's common stock with their contributions at an amount equal to 85% of the closing market price per share of the common stock on either the first day or the last day of the offering period, whichever is lower.
Stock-Based Compensation
The Company has elected to follow APB 25, and related interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under SFAS 123 requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, as the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.
Option valuation models have been developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. Such models require the input of highly subjective assumptions. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The following assumptions were made for grants in 1998, 1999 and 2000, respectively:
1998 1999 2000
---------- ---------- ----------
Dividend yield........................... 0% 0% 0%
Expected lives of options (years)........ 4 4 4
Risk-free interest rate.................. 5.65--6.20% 4.37--5.75% 5.97--6.66%
Volatility............................... -- 45.0% 91.0%
|
For purposes of the required pro forma disclosures, the estimated fair value of the options is amortized over the options' vesting period. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant dates for awards under those plans consistent with the Black-Scholes method subsequent to the Company's initial public offering in February 1999 and the minimum value method prior to February 1999, the Company's pro forma net income (loss) and pro forma earnings (loss) per share available to common stockholders would have been as follows:
Years Ended June 30,
-------------------------
1998 1999 2000
------- ------- ---------
(in thousands, except per
share data)
Pro forma net income (loss)..................... $ 1,488 $ 3,433 $ (17,759)
Pro forma earnings (loss) per share available to
common stockholders:
Basic......................................... $ 0.22 $ 0.42 $ (1.65)
Diluted....................................... $ 0.19 $ 0.37 $ (1.65)
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BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
As the provisions of SFAS 123 are effective only for fiscal years beginning
after December 15, 1994, the effects of applying SFAS 123 for pro forma
disclosures are not necessarily representative of the effects on net income
(loss) for future years.
A summary of option activity is as follows:
Year Ended June 30,
--------------------------------------------------
1998 1999 2000
---------------- ---------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------- -------- ------- -------- ------- --------
(in thousands, except per share data)
Outstanding, beginning
of year................ 339 $5.10 885 $6.69 1,561 $10.51
Options granted......... 600 7.91 756 14.05 918 28.45
Options exercised....... (54) 3.67 (54) 5.55 (393) 7.77
Options canceled........ -- -- (26) 7.44 (120) 12.85
--- ----- ----- ----- ----- ------
Outstanding, end of
year................... 885 6.69 1,561 10.51 1,966 19.30
Exercisable at end of
year................... 102 $5.20 364 $6.63 313 $ 9.81
Weighted average fair
value of options
granted during the
year................... $1.53 $5.00 $21.78
|
As of June 30, 1999 and 2000, options to purchase 1,709,000 and 871,000 shares, respectively, were available for grant under the Company's three stock option plans. The following table presents weighted-average price and life information about significant option groups outstanding at June 30, 2000:
Options Outstanding Options Exercisable
------------------------------------- --------------------
Weighted Weighted
Range of Weighted Average Average Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Life Price Exercisable Price
-------- ----------- ---------------- -------- ----------- --------
(in thousands, except per share and life data)
$5.67-$8.00 415 7.41 years $ 7.67 207 $ 7.44
$8.80-$10.00 203 6.63 years 9.65 38 9.05
$13.00-$13.00 415 8.62 years 13.00 59 13.00
$13.88-$28.88 396 9.34 years 16.60 0 0.00
$30.56-$59.00 537 9.42 years 38.78 9 47.71
----- ---
1,966 313
===== ===
|
Warrants
In connection with the sale of its common stock in March 1992, the Company issued warrants for the purchase of an aggregate 644,000 shares of common stock at exercise prices ranging from $1.00 to $2.00 per share. During 1999, the remaining warrants outstanding of 143,000 shares were exercised at a weighted average price of $1.19.
In April 2000, the Company issued warrants to a company for the right to purchase up to 324,000 shares of common stock at an exercise price of $55.00. The warrants were fully vested and exercisable upon issuance. At June 30, 2000, none of these warrants had been exercised. The Company valued the warrants issued using the Black-Scholes method using assumptions of an expected life of three years and a volatility of 91%. The value of the warrants, $5,861,000, was charged to the results of operations.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
(loss) per share:
Year Ended June 30,
------------------------
1998 1999 2000
------ ------ --------
Numerator:
Net income (loss)............................... $1,603 $4,051 $(14,265)
Accretion to redemption value on redeemable
common stock................................... (107) (70) --
------ ------ --------
Numerator for basic and diluted earnings (loss)
per share available to common stockholders....... $1,496 $3,981 $(14,265)
====== ====== ========
Denominator:
Denominator for basic earnings (loss) per share
available to common stockholders--weighted-
average shares outstanding..................... 6,314 7,988 10,744
Effect of employee stock options, warrants and
redeemable common stock........................ 1,002 1,182 --
------ ------ --------
Denominator for diluted earnings (loss) per share
available to common stockholders................. 7,316 9,170 10,744
====== ====== ========
Earnings (loss) per share available to common
stockholders:
Basic........................................... $ 0.24 $ 0.50 $ (1.33)
====== ====== ========
Diluted......................................... $ 0.20 $ 0.43 $ (1.33)
====== ====== ========
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Options for 18,000 and 1,966,000 shares for the years ended June 30, 1999 and 2000, respectively, were excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive. Warrants for 631,882 shares for the year ended June 30, 2000 were excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive.
11. Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109. SFAS No. 109 requires the use of the liability method in which income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Significant components of the Company's deferred tax assets and liabilities are as follows:
June 30,
--------------
1999 2000
----- -------
(in
thousands)
Deferred tax assets:
Allowances................................................. $ 516 $ 438
Various accrued expenses................................... 60 411
Inventory.................................................. 89 27
Deferred revenue........................................... -- 106
Goodwill amortization...................................... -- 2,148
Warrants................................................... -- 2,328
----- -------
665 5,458
Less: valuation allowance.................................. -- (2,328)
----- -------
Total deferred tax assets................................ 665 3,130
----- -------
Deferred tax liabilities:
Property, plant and equipment.............................. (253) (283)
----- -------
Total deferred tax liabilities........................... (253) (283)
----- -------
Net deferred tax assets.................................. $ 412 $ 2,847
===== =======
|
The provision (benefit) for income taxes consisted of the following:
Year Ended June 30,
----------------------
1998 1999 2000
------ ------ -------
(in thousands)
Current:
Federal............................................ $1,238 $2,021 $ 789
State.............................................. 209 485 246
------ ------ -------
1,447 2,506 1,035
------ ------ -------
Deferred:
Federal............................................ (241) 156 (1,587)
State.............................................. (29) 38 (848)
------ ------ -------
(270) 194 (2,435)
------ ------ -------
$1,177 $2,700 $(1,400)
====== ====== =======
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A reconciliation of the federal statutory rate to the effective income tax is as follows:
Year Ended June
30,
-----------------
1998 1999 2000
---- ---- -----
Tax (benefit) at federal statutory rate.................. 34.0% 34.0% (34.0)%
State taxes, net of federal benefit...................... 6.5 4.7 (5.9)
Warrant expense.......................................... -- -- 15.5
Goodwill amortization.................................... -- -- 0.4
Non-deductible expenses.................................. 0.6 0.3 0.3
Research and development tax credits..................... (3.6) -- --
Other.................................................... 4.8 1.0 --
Valuation allowance...................................... -- -- 14.8
---- ---- -----
42.3% 40.0% (8.9)%
==== ==== =====
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BOTTOMLINE TECHNOLOGIES (de), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The principal non-deductible expense for income tax purposes is a warrant that is not deductible for income tax purposes and goodwill amortization on a stock acquisition.
SFAS 109 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not, that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, management has determined that a $2,328,000 valuation allowance at June 30, 2000 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation allowance for the current year is $2,328,000.
In addition to the above deferred tax assets, the company also has available $1,308,000 of tax benefit attributable to the exercise of non-qualified stock options. When realized, the associated benefit will be recognized as an increase to additional paid-in capital.
12. Subsequent Events
On August 28, 2000, the Company acquired the stock of two companies, Checkpoint Holdings, Ltd. (Checkpoint) and Flashpoint, Inc. (Flashpoint).
Checkpoint is an eCommerce and electronic payments software provider. The purchase price for Checkpoint was approximately $82 million, with $15 million paid in cash, $20 million in the form of a promissory note, 1,350,000 newly issued shares of common stock, a warrant to purchase 100,000 shares of common stock at a price of $50 per share and acquisition related costs. The transaction will be accounted for as a purchase and Checkpoint's financial results will be included with the Company's results from the acquisition date.
Flashpoint is a professional software development company. The purchase price was approximately $14.5 million, consisting of $4.5 million in cash, 242,200 newly issued shares of common stock, the assumption of all outstanding stock options of Flashpoint and acquisition related costs. The transaction will be accounted for as a purchase and Flashpoint's results will be included in the Company's results from the acquisition date.
The Company is evaluating and making preliminary assessments of the purchase price allocation. The Company's early assessment is that a significant amount of the purchase price will result in identifiable intangibles and goodwill and will result in significant amounts of amortization in future years, including fiscal year 2001. The Company's analysis is not yet complete but the Company estimates the expected useful life to be in the three to five year range.
In August 2000, we entered into a ten-year lease for approximately 83,000 square feet of space for a new headquarters facility in Portsmouth, New Hampshire. Total lease payments for this new facility will be approximately $15 million.
In August 2000, we made a $900,000 equity investment in Princeton eCom, an electronic bill presentment and payment services provider, and a $500,000 equity investment in Magnet Corporation, a business-to-business e-finance infrastructure and services provider. Both of these investments will be accounted for on the cost basis.
Exhibit 10.31
Date of Issuance: June 9, 2000 Number of Shares: 307,882
Bottomline Technologies (de), Inc., a Delaware corporation (the "Company"), for value received, hereby certifies that Nevada Bond Investment Corp. II or its registered assigns (the "Registered Holder"), is entitled, subject to the terms and conditions set forth below, to purchase from the Company, at any time or from time to time on or after the date of issuance and on or before (i) the closing of a Sale of the Company (as defined in Section 2(e)) or (ii) the third anniversary of the date of issuance of this Warrant, 307,882 shares of Common Stock, $.001 par value per share, of the Company, at a purchase price of $38.00 per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase Price," respectively.
(b) The Registered Holder may, at its option, elect to pay some or all of the Purchase Price payable upon an exercise of this Warrant by cancelling a portion of this Warrant exercisable for such number of Warrant Shares as is determined by dividing (i) the total Purchase Price payable in respect of the number of Warrant Shares being purchased upon such exercise by (ii) the excess of the Fair Market Value per share of Common Stock (as defined below) as of the Exercise Date (as defined in subsection 1(c) below) over the Purchase Price per share. If the Registered Holder wishes to exercise this Warrant pursuant to this method of payment with respect to the maximum number of Warrant Shares purchasable pursuant to this method, then the number of Warrant Shares so purchasable shall be equal to the total number of Warrant Shares, minus the product obtained by multiplying (x) the total number of Warrant Shares by
(y) a fraction, the numerator of which shall be the Purchase Price per share and the denominator of which shall be the Fair Market Value per share of Common Stock as of the Exercise Date. The Fair Market Value per share of Common Stock shall be determined as follows:
(i) If the Common Stock is listed on a national securities exchange, the Nasdaq National Market or another nationally recognized trading system as of the Exercise Date, the Fair Market Value per share of Common Stock shall be deemed to be the average of the high and low reported sale prices per share of Common Stock thereon on the trading day immediately preceding the Exercise Date (provided that if no such price is reported on such day, the Fair Market Value per share of Common Stock shall be determined pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national securities exchange, the Nasdaq National Market or another nationally recognized trading system as of the Exercise Date, the Fair Market Value per share of Common Stock shall be deemed to be the amount most recently determined by the Board of Directors to represent the fair market value per share of the Common Stock (including without limitation a determination for purposes of granting Common Stock options or issuing Common Stock under an employee benefit plan of the Company); and, upon request of the Registered Holder, the Board of Directors (or a representative thereof) shall promptly notify the Registered Holder of the Fair Market Value per share of Common Stock. Notwithstanding the foregoing, if the Board of Directors has not made such a determination within the three-month period prior to the Exercise Date, then (A) the Board of Directors shall make a determination of the Fair Market Value per share of the Common Stock within 15 days of a request by the Registered Holder that it do so, and (B) the exercise of this Warrant pursuant to this subsection 1(b) shall be delayed until such determination is made.
(c) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in subsection 1(a) above (the "Exercise Date"). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in subsection 1(d) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant Shares to which the Registered Holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which the Registered Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the sum of (a) the number of such shares purchased by the Registered Holder upon such exercise plus (b) the number of Warrant Shares (if any) covered by the portion of this Warrant cancelled in payment of the Purchase Price payable upon such exercise pursuant to subsection 1(b) above.
(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such
record date and thereafter the Purchase Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.
Company or (ii) the acquisition of the Company by means of a reorganization, merger, consolidation or recapitalization unless the owners of the capital stock of the Company before such transaction continue to own after such transaction more than 50% of the capital stock of the acquiring or succeeding entity in substantially the same proportions as held prior to such transaction.
(a) This Warrant and the Warrant Shares shall not be sold or transferred unless either (i) they first shall have been registered under the Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall have been furnished with an opinion of legal counsel, reasonably satisfactory to the Company (it being acknowledged that Kirkpatrick & Lockhart LLP shall be deemed satisfactory), to the effect that such sale or transfer is exempt from the registration requirements of the Act.
(b) Each certificate representing Warrant Shares shall bear a legend substantially in the following form:
"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such Act or an opinion of counsel satisfactory to the Company is obtained to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144(k) under the Act. The Company shall cause the legend to be removed upon the registration of the Warrant Shares pursuant to that certain Investor Rights Agreement dated of even date herewith between the Company and the Registered Holder.
(a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or
(b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at least ten days prior to the record date or effective date for the event specified in such notice.
(a) The Company will maintain a register containing the name and address of the Registered Holder of this Warrant. The Registered Holder may change its or his address as shown on the warrant register by written notice to the Company requesting such change.
other than as set forth below, it shall give prompt written notice to the Registered Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice.
EXECUTED as of the Date of Issuance indicated above.
BOTTOMLINE TECHNOLOGIES (de), INC.
By: /s/ Robert A. Eberle
-------------------------------
[Corporate Seal] Title: Exec VP & CFO
----------------------------
ATTEST:
/s/ John R. Keller
-----------------------------
|
EXHIBIT I
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby irrevocably elects to purchase (check applicable box):
0 _____ shares of the Common Stock covered by such Warrant; or
0 the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 1(b).
The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $________. Such payment takes the form of (check applicable box or boxes):
0 $______ in lawful money of the United States; and/or
0 the cancellation of such portion of the attached Warrant as is exercisable for a total of _____ Warrant Shares (using a Fair Market Value of $_____ per share for purposes of this calculation); and/or
0 the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in Section 1(b), to exercise
this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in
Section 1(b).
Signature: _______________________
Address: _______________________
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ____) with respect to the number of shares of Common Stock covered thereby set forth below, unto:
Name of Assignee Address No. of Shares ---------------- ------- ------------- Dated:_____________________ Signature:________________________________ Signature Guaranteed: |
By: _______________________
The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
Exhibit 10.32
Warrant No. 1 Number of Shares: 324,000
(subject to adjustment)
Date of Issuance: April 4, 2000
Bottomline Technologies (de), Inc., a Delaware corporation (the "Company"),
for value received, hereby certifies that Citibank, N.A. or its registered
assigns (the "Registered Holder"), is entitled, subject to the terms and
conditions set forth below, to purchase from the Company, at any time on or
before (i) the closing of a Sale of the Company (as defined in Section 2(e)) or
(ii) the third anniversary of the date of issuance of this Warrant, 324,000
shares of Common Stock, $.001 par value per share, of the Company, at a purchase
price of $55.00 per share. The shares purchasable upon exercise of this Warrant,
and the purchase price per share, each as adjusted from time to time pursuant to
the provisions of this Warrant, are hereinafter referred to as the "Warrant
Shares" and the "Purchase Price," respectively.
(a) This Warrant may be exercised by the Registered Holder, in whole or in part, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by the Registered Holder or by the Registered Holder's duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in subsection 1(a) above (the "Exercise Date"). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in subsection 1(d) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant Shares to which the Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to
which the Registered Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise.
(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.
immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.
setting forth (i) the Purchase Price then in effect and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the exercise of this Warrant.
(a) This Warrant and the Warrant Shares shall not be sold or transferred unless either (i) they first shall have been registered under the Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall have been furnished with an opinion of legal counsel, reasonably satisfactory to the Company, to the effect that such sale or transfer is exempt from the registration requirements of the Act.
(b) Each certificate representing Warrant Shares shall bear a legend substantially in the following form:
"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such Act or an opinion of counsel satisfactory to the Company is obtained to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144(k) under the Act.
(a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or
(b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at least ten days prior to the record date or effective date for the event specified in such notice.
(a) The Company will maintain a register containing the name and address of the Registered Holder of this Warrant. The Registered Holder may change its or his address as shown on the warrant register by written notice to the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder as the absolute owner hereof for all purposes; provided, however, that if and when this Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.
EXECUTED as of the Date of Issuance indicated above.
BOTTOMLINE TECHNOLOGIES (de), INC.
By:_______________________________
Dan McGurl
Title:____________________________
President & CEO
ATTEST:
EXHIBIT I
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby irrevocably elects to purchase:
_______ shares of the Common Stock covered by such Warrant; and herewith makes payment of the full purchase price in lawful money of the United States for such shares at the price per share provided for in such Warrant, which is $________.
Signature: ______________________
Address: ______________________
EXHIBIT II
FOR VALUE RECEIVED, ________________________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ____) with respect to the number of shares of Common Stock covered thereby set forth below, unto:
Name of Assignee Address No. of Shares ---------------- ------- ------------- Dated:_____________________ Signature:________________________________ Signature Guaranteed: |
By: _______________________
The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
Exhibit 10.33
Agreement of Lease, made as of this day of March 13 1989, between GOULD INVESTORS L. P., by its Managing General Partner, GEORGETOWN PARTNERS, INC., with offices located at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
party of the first part, hereinafter referred to as OWNER* or Landlord, and INTEGRATED CASH MANAGEMENT SERVICES, INC., a New York corporation with offices presently located at 150 Nassau Street, New York, New York 10038
party of the second part, hereinafter referred to as TENANT Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner Suite No. 601, located on the sixth floor, presently occupied by AVX Corp which is approximately 9,800 gross rentable sq. ft. as per exhibit "A" in the building known as 60 Cutter Mill Road, Village of Great Neck Plaza, Town of North Hempstead, County of Nassau, Great Neck, New York 11021 for a term of Five (5) years
(or until such term shall sooner cease and expire as hereinafter provided) to commence on the 1st day of July nineteen hundred and eighty nine, and to end on the 30th day of June nineteen hundred and ninety four both dates inclusive, at an annual rental rate for the first lease year of TWO HUNDRED FORTY THOUSAND DOLLARS ($240,000.00) the "fixed rent", payable $20,000.00 per month on the first day of each and every month. For the lease years thereafter, see Paragraph 39
which Tenant agrees to pay in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, in equal monthly installments in advance on the first day of each month during said term, at the office of Owner or such other place as Owner may designate, without any set off or deduction whatsoever, except that Tenant shall pay the first monthly installment(s) on the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or thereafter, Tenant shall be in default in the payment of rent to Owner pursuant to the terms of another lease with Owner or with Owner's predecessor in interest, Owner may at Owner's option and without notice to Tenant add the amount of such arrears to any monthly installment of rent payable hereunder and the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors, administrators, legal representatives, successors and assigns, hereby convenant as follows:
Rent 1. Tenant shall pay the fixed rent and additional rent as above
Occupancy and as hereinafter provided
2. Tenant shall use and occupy demised premises for executive
and general offices for a computer software company
Tenant 3. Tenant shall make no changes in or to the demised premises
Alterations: of any nature without Owner's prior written consent. Subject to
the prior written consent of Owner, and to the provisions of
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this article, Tenant at Tenant's expense, may make alterations, installations, additions or improvements which are non-structural and which do not affect utility services or plumbing and electrical lines, in or to the interior of the demised premises by using contractors or mechanics first approved by Owner. Tenant shall, before making any alterations, additions, installations or improvements, at its expense, obtain all permits, approvals and certificates required by any governmental or quasi-governmental bodies and (upon completion) certificates of final approval thereof and shall deliver promptly duplicates of all such permits, approvals and certificates to Owner and Tenant agrees to carry and will cause Tenant's contractors and sub-contractors to carry such workman's compensation, general liability, personal and property damage insurance as Owner may require. If any mechanic's lien is filed against the demised premises, or the building of which the same forms a part, for work claimed to have been done for, or materials furnished to, Tenant, whether or not done pursuant to this article, the same shall be discharged by Tenant within thirty days thereafter, at Tenant's expense, by filing the bond required by law. All fixtures and all paneling, partitions, railings and like installations, installed in the premises at any time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation, become the property of Owner and shall remain upon and be surrendered with the demised premises unless Owner, by notice to Tenant no later than twenty days prior to the date fixed as the termination of this lease, elects to relinquish Owner's right thereto and to have them removed by Tenant, in which event the same shall be removed from the premises by Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in this Article shall be construed to give Owner title to or to prevent Tenant's removal of trade fixtures, moveable office furniture and equipment, but upon removal of any such from the premises or upon removal of other installations as may be required by Owner, Tenant shall immediately and at its expense, repair and restore the premises to the condition existing prior to installation and repair any damage to the demised premises or the building due to such removal. All property permitted or required to be removed, by Tenant at the end of the term remaining in the premises after Tenant's removal shall be deemed abandoned and may, at the election of Owner, either ?? retained as Owner's property or may be removed from the premises by Owner, at Tenant's expense.
Maintenance 4. Tenant shall, throughout the term of this lease, take good
and care of the demised premises and the fixtures and appurtenances
Repairs therein. Tenant shall be responsible for all damage or injury to
the demised premises or any other part of the building and the
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systems and equipment thereof, whether requiring structural or nonstructural repairs caused by or resulting from carelessness, omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents, employees, invitees or licensees, or and for no other purpose which arise out of any work, labor, service or equipment done for or supplied to Tenant or any subtenant or arising out of the installation, use or operation of the property or equipment of Tenant or any subtenant. Tenant shall also repair all damage to the building and the demised premises caused by the moving of Tenant's fixtures, furniture and equipment. Tenant shall promptly make, at Tenant's expense, all repairs in and to the demised premises for which Tenant is responsible, using only the contractor for the trade or trades in question, selected from a list of at least two contractors per trade submitted by Owner. Any other repairs in or to the building or the facilities and systems thereof for which Tenant is responsible shall be performed by Owner at the Tenant's expense. Owner shall maintain in good working order and repair the exterior and the structural portions of the building, including the structural portions of its demised premises, and the public portions of the building interior and the building plumbing, electrical, heating and ventilating systems (to the extent such systems presently exist) serving the demised premises. Tenant agrees to give prompt notice of any defective condition in the premises for which Owner may be responsible hereunder. There shall be no allowance to Tenant for diminution of rental value and no liability on the part of Owner by reason of inconvenience, annoyance or injury to business arising from Owner or others making repairs, alterations, additions or improvements in or to any portion of the building or the demised premises or in and to the fixtures, appurtenances or equipment thereof. It is specifically agreed that Tenant shall not be entitled to any setoff or reduction of rent by reason of any failure of Owner to comply with the covenants of this or any other article of this Lease. Tenant agrees that Tenant's sole remedy at law in such instance will be by way of an action for damages for breach of contract. The provisions of this Article 4 shall not apply in the case of fire or other casualty which are dealt with in Article 9 hereof.
Window 5. Tenant will not clean nor require, permit, suffer or allow
Cleaning: any window in the demised premises to be cleaned from the
outside in violation of Section 202 of the Labor Law or any
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other applicable law or of the Rules of the Board of Standards and Appeals, or of any other Board or body having or assetting jurisdiction.
Requirements 6. Prior to the commencement of the lease term, if Tenant is then in possession, and at all times thereafter, Tenant, at Fire Insurance, Tenant's sole cost and expense, shall promptly comply with all Floor Loads: present and future laws, orders and regulations of all state, federal municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters, Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant with respect to the demised premises, whether or not arising out of Tenant's use or manner of use thereof, (including Tenant's permitted use) or, with respect to the building if arising out of Tenant's
use of manner of use of the premises of the building including the use permitted under the lease). Nothing herein shall require Tenant to make structural repairs or alterations unless Tenant has by its manner of use of the demised premises or method of operation therein, violated any such laws, ordinances, orders, rules, regulations or requirements with respect thereto Tenant may, after securing, Owner to Owner, satisfaction against all damages, interest, penalties and expenses, including, but not limited to, reasonable attorney's fees, by cash deposit or by surety bond in an amount and in a company satisfactory to Owner, contest and appeal any such laws, ordinances, orders, rules, regulations or requirements provided same is done with all reasonable promptness and provided such appeal shall not subject Owner to prosecution for a criminal offense or constitute a default under any lease or mortgage under which Owner may be obligated, or cause the demised premises or any part thereof to be condemned or vacated Tenant shall not do or permit any act or thing to be done in or to the demised premises which is contrary to law, or which will invalidate or be in conflict with public liability, fire or other policies of insurance at any time carried by or for the benefit of Owner with respect to the demised premises or the building of which the demised premises form a part, or which shall or might subject Owner to any liability or responsibility to any person or for property damage. Tenant shall not keep anything in the demised premises except as now or hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization or other authority having jurisdiction, and then only in such manner and such quantity so as not to increase the rate for fire insurance applicable to the building, nor use the premises in a manner which will increase the insurance rate for the building or any property located therein over that in effect prior to the commencement of Tenant's occupancy. Tenant shall pay all costs, expenses, fines, penalties, or damages, which may be imposed upon Owner by reason of Tenant's failure to comply with the provisions of this article and if by reason of such failure the fire insurance rate shall, at the beginning of this lease or at any time thereafter, be higher than it otherwise would be, then Tenant shall reimburse Owner, as additional rent hereunder, for that portion of all fire insurance premiums thereafter paid by Owner which shall have been charged because of such failure by Tenant. In any action or proceeding wherein Owner and Tenant are parties, a schedule or "make- up" of rate for the building or demised premises issued by the New York Fire Insurance Exchange, or other body making fire insurance rates applicable to said premises shall be conclusive evidence of the facts therein stated and of the several items and charges in the fire insurance rates then applicable to said premises. Tenant shall not place a load upon any floor of the demised premises exceeding the floor load per square foot area which it was designed to carry and which is allowed by law. Owner reserves the right to prescribe the weight and position of all safes, business machines and mechanical equipment. Such installations shall be placed and maintained by Tenant, at Tenant's expenses, in settings sufficient, in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
Subordination: 7. This lease is subject and subordinate to all ground or underlying leases and to all mortgages which may now or hereafter affect such leases or the real property of which demised premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages. This clause shall be self-operative and no further instrument of subordination shall be required by any ground or underlying lessor or by any mortgagee, affecting any lease or the real property of which the demised premises are a part. In confirmation of such subordination, Tenant shall execute promptly any certificate that Owner may request.
Property- 8. Owner or its agents shall not be liable for any damage to
Loss, Damage, property of Tenant or of others entrusted to employees of the
Reimbursement building, nor for loss of or damage to any property of Tenant by
Indemnity: theft or otherwise, nor for any injury or damage to persons or
property resulting from any cause of whatsoever nature, unless
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caused by or due to the negligence of Owner, its agents, servants or employees. Owner or its agents will not be liable for any such damage caused by other tenants or persons in, upon or about said building or caused by operations in construction of any private, public or quasi public work. If at any time any windows of the demised premises are temporarily closed, darkened or bricked up (or permanently closed, darkened or bricked up, if required by law) for any reason whatsoever including, but not limited to Owner's own acts, Owner shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement or diminution of rent nor shall the same release. Tenant from its obligations hereunder nor constitute an eviction. Tenant shall indemnify and save harmless Owner against and from all liabilities, obligations, damages, penalties, claims, costs and expenses for which Owner shall not be reimbursed by insurance, including reasonable attorneys fees, paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents, contractors, employees, invitees, or licensees, of any covenant or condition of this lease, or the carelessness, negligence or improper conduct of the Tenant, Tenant's agents, contractors, employees, invitees or licensees. Tenant's liability under this lease extends to the acts and omissions of any sub-tenant, and any agent, contractor, employee, invitee or licensee of any sub- tenant. In case any action or proceeding is brought against Owner by reason of any such claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist or defend such action or proceeding by counsel approved by Owner in writing, such approval not to be unreasonably withheld.
Destruction, 9. (a) If the demised premises or any part thereof shall be
Fire and Other damaged by fire or other casualty, Tenant shall give
Casualty: immediate notice thereof to Owner and this lease shall
[illegible] force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other casualty, then the
rent shall be proportionately paid up to the time of the casualty and
thenceforth shall cease until the date when the premises shall have been
repaired and restored [illegible] subject to Owner's right to elect not to
restore the same as herein provided (d) If the demised premises are rendered
wholly [illegible] whether; or not the demised premises are damaged in whole or
in part the building shall be so damaged that Owner shall decide to demolish or
to rebuild it, then, in any of such events. Owner may elect to terminate this
lease by written notice to Tenant, given within 90 days after [illegible] or
casualty, specifying a date for the expiration of the lease, which shall not be
more than 60 days after the giving of such notice, and the date specified in
such notice the term of this lease shall expire as and completely as if such
date were the date set forth above for the termination of this lease and Tenant
shall forthwith quit, surrender, vacate the premises without prejudice however,
to Landlord's right to remedies against Tenant under the lease provisions in
effect prior to termination, and any rent owing shall be paid up to such date
and payments of rent made by Tenant which were on account of any [illegible]
subsequent to such date shall be returned to Tenant. Unless Owner [illegible]
serve a termination notice as provided for herein, Owner shall make repairs and
restorations under the conditions of (b) and (c) hereof, [illegible] all
reasonable expedition, subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner's control. [illegible] any such casualty,
Tenant shall cooperate with Owner's restoration removing from the premises as
promptly as reasonably possible, [illegible] Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days [illegible] written notice from Owner that the
premises are substantially ready after Tenant's occupancy. (e) Nothing contained
hereinabove shall relieve Tenant from liability that may exist as a result of
damage from fire or [illegible] casualty. Notwithstanding the foregoing, each
party shall look first to insurance in its favor before making any claim against
the other party recovery for loss or damage resulting from fire or other
casualty, and the extent that such insurance is in force and collectible and to
the [illegible] permitted by law, Owner and Tenant each hereby releases and
waives [illegible] right of recovery against the other or any one claiming
through or [illegible] each of them by way of subrogation or otherwise. The
foregoing release and waiver shall be in force only if both releasors' insurance
policies contain a clause providing that such a release or waiver shall not
invalidate the insurance, if, and to the extent, that such waiver can be
obtained on by the payment of additional premiums, then the party benefitting
from the waiver shall pay such premium within ten days after written demand or
shall be deemed to have agreed that the party obtaining insurance coverage shall
be free of any further obligation under the provisions herein with respect to
waiver of subrogation. Tenant acknowledges that Owner will not carry insurance
on Tenant's furniture and/or furnishings or any fixtures or equipment,
improvements, or appurtenances removable by Tenant and agrees that Owner will
not be obligated to repair any damage thereto or replace the same. (f) Tenant
hereby waives the provisions of Section 227 of the Real Property Law and agrees
that the provisions of this article shall govern and control in lieu thereof.
Eminent 10. If the whole or any part of the demised premise shall be
Domain: acquired or condemned by Eminent Domain for any public or quasi
public use or purpose, then and [illegible] that event, the
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term of this lease shall cease and terminate from the date of title vesting in such proceeding and Tenant shall have no claim for the value of any unexpired term of said lease and assigns to Owner, Tenant's entire interest in any such award.
Assignment, 11. Tenant, for itself, its heirs, distributees, executors,
Mortgage, administrators, legal representatives, successors and assigns,
Etc.: expressly covenants that it shall not assign mortgage or encumber
this agreement, nor underlet, or suffer or permit the demised
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premises or any part thereof to be used by others, without the prior written consent of Owner in each instance. Transfer of the majority of the stock of a corporate Tenant shall be deemed an assignment. If this lease be assigned, or if or - any part thereof be underlet or occupied by anybody other than Tenant, Owner may, after default by Tenant, collect rent from the assignee under-tenant or occupant, and apply the net amount collected to the [illegible] herein reserved, but no such assignment, underletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. The consent by Owner to an assignment or underletting shall not in any wise be construed to relieve Tenant from obtaining the express consent in writing of Owner to any further assignment or underletting. (See Rider #63)
Electric 12. Rates and conditions in respect to submetering of rent
Current: inclusion, as the case may be, to be added in RIDER attached
hereto. Tenant covenants and agrees that at all times its use of
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electric current shall not exceed the capacity of existing feeders to the building or the risers or wiring installation and Tenant may not use any electrical equipment which, in Owner's opinion, reasonably exercised, will overload such installations or interfere with the use thereof by other tenants of the building. The change at any time of the character of the electric service shall in no wise make Owner liable or responsible to Tenant, for any loss, damages or expenses which Tenant may sustain. (See Rider No. 38)
Access to 13. Owner or Owner's agents shall have the right (but shall not
Premises: be obligated) to enter the demised premises in any emergency at
any time, and, at other reasonable times, to examine the same and
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to make such repairs, replacements and improvements as Owner may deem necessary and reasonably desirable to the demised premises or to any other portion of the building or which Owner may elect to perform. Tenant shall permit owner to use and maintain and replace pipes and conduits in and through the demised premises and to erect new pipes and conduits therein provided they are concealed within the walls, floor, or ceiling. Owner may, during the progress of any work in the demised premises, take all necessary materials and equipment into said premises without the same constituting an eviction nor shall the Tenant be entitled to any abatement of rent while such work is in progress nor to any damages by reason of loss or interruption of business or otherwise. Throughout the term hereof Owner shall have the right to enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the last six months of the term for the purpose of showing the same to prospective tenants. If Tenant is not present to open and permit an entry into the premises, Owner or Owner's agents may enter the same whenever such entry may be necessary or permissible by master key or forcibly and provided reasonable care is exercised to safeguard Tenant's property, such entry shall not render Owner or its agents liable therefor, nor in any event shall the obligations of Tenant hereunder be affected. If during the last month of the term Tenant shall have removed all or substantially all of Tenant's property therefrom. Owner may immediately enter, alter, renovate or redecorate the demised premises without limitation or abatement or rent, or incurring liability to Tenant for any compensation and such act shall have no effect on this lease or Tenant's obligations hereunder.
Vault, 14. No Vaults, vault space or area, whether or not enclosed or
Vault Space, covered, not within the property line of the building is leased
Area: hereunder, anything contained in or indicated on any sketch, blue
print or plan, or anything contained elsewhere in this lease to
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the contrary notwithstanding. Owner makes no representation as to the location of the property line of the building. All vaults and vault space and all such areas not within the property line of the building, which Tenant may be permitted to use and/or occupy, is to be used and/or occupied under a revocable license, and if any such license be revoked, or if the amount of such space or area be diminished or required by any federal, state or municipal authority or public utility, Owner shall not be subject to any liability nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such revocation, diminution or requisition be deemed constructive or actual eviction. Any tax, fee or charge of municipal authorities for such vault or area shall be paid by Tenant.
Occupancy: 15. Tenant will not at any time use or occupy the demised premises in violation of the certificate of occupancy issued for the building of which the demised premises are a part. Tenant has inspected the premises and accepts them as is, subject to the riders annexed hereto with respect to Owner's work, if any. In any event, Owner makes no representation as to the condition of the premises and Tenant agrees to accept the same subject to violations, whether or not of record.
Bankruptcy: 16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this lease may be cancelled by Owner by the sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (1) the commencement of a case in bankruptcy or under the laws of any state naming Tenant as the debtor; or (2) the making by Tenant of an assignment or any other arrangement for the benefit or creditors under any state statute. Neither Tenant nor any person claiming through or under Tenant, or by reason of any statute or order of court, shall thereafter be entitled to possession of the premises demised but shall forthwith quit and surrender the premises. If this lease shall be assigned in accordance with its terms, the provisions of this Article 16 shall be applicable only to the party then owning Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other provisions of this lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the difference between the rent reserved hereunder for the unexpired portion of the term demised and the fair and reasonable rental value of the demised premises for the same period. In the computation of such damages the difference between any installment of rent becoming due hereunder after the date of termination and the fair and reasonable rental value of the demised premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of four percent (4%) per annum. If such premises or any part thereof be relet by the Owner for the unexpired term of said lease, or any part thereof, before presentation of proof of such liquidated damages to any court, commission or tribunal, the amount of rent reserved upon such reletting shall be deemed to be the fair ad reasonable rental value for the part or the whole of the premises so re-let during the term of the re-letting. Nothing herein contained shall limit or prejudice the right of the Owner to prove for and obtain as liquidated damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule or law in effect at the time when, and governing the proceedings in which, such damages are to be proved, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above.
Default: 17. (1) If Tenant defaults in fulfilling any of the covenants of this lease other than the covenants for the payment of rent or additional rent; or if the demised premises becomes vacant or deserted; or if any execution or attachment shall be issued against Tenant or any of Tenant's property whereupon the demised premises shall be taken or occupied by someone other than Tenant; or if this lease be rejected under (S) 235 of Title 11 of the U.S. Code (bankruptcy code); or if Tenant shall fail to move into or take possession of the premises within fifteen (15) days after the commencement of the term of this lease, then, in any one or more of such events, upon Owner serving a written five (5) days notice upon Tenant specifying the nature of said default and upon the expiration of said five (5) days, if Tenant shall have failed to comply with or remedy such default, or if the said default or omission complained of shall be of a nature that the same cannot be completely cured or remedied within said five (5) day period, and if Tenant shall not have diligently commenced during such [illegible] period, and shall not thereafter with reasonable diligence and in good faith, proceed to remedy or cure such default, then Owner may serve a written three (3) days' notice of cancellation of this lease upon Tenant, and upon the expiration of said three (3) days this lease and the term thereunder shall end and expire as fully and completely as if the expiration of such three (3) day period were the day herein definitely fixed for the end and expiration of this lease and the term thereof and Tenant shall then quit and surrender the demised premises to Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof [illegible]
have been given, and the term shall expire as aforesaid, or if Tenant
[illegible] make default in the payment of the rent reserved herein or any item
additional rent herein mentioned or any part of either or in making other
payment herein required: then and in any of such events Owner may without
notice, re-enter the demised premises either by force or otherwise, and
dispossess Tenant by summary proceedings or otherwise, [illegible] the legal
representative of Tenant or other occupant of demised premises and remove their
effects and hold the premises as if this lease had [illegible] been made, and
Tenant hereby waives the service of notice of intention re-enter or to institute
legal proceedings to that end. If Tenant shall [illegible] default hereunder
prior to the date fixed as the commencement of a renewal or extension of this
lease, Owner may cancel and terminate the renewal or extension agreement by
written notice.
Remedies of 18. In case of any such default, re-entry, expiration and/or
Owner and dispossess by summary proceedings or otherwise, (a) the rent
Waiver of shall become due thereupon [illegible] and [illegible] paid up
Redemption: to the time of such re-entry, dispossess and expiration, (b)
Owner may re-let the premises or any part or parts thereof,
either in the name of Owner or otherwise, for a term or terms,
which may at Owner's option be less than or exceed the period
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which would otherwise have constituted the balance of the term of [illegible]
lease and may grant concessions or free rent or charge a higher rental
[illegible] that in this lease, and/or (c) Tenant or the legal representatives
of Tenant shall also pay Owner as liquidated damages for the failure of Tenant
to observe and perform said Tenant's convenants herein contained, any deficiency
between the rent hereby reserved and/or convenated to be paid and the net
amount, if any, of the rents collected on account of the lease or leases of the
demised premises for each month of the period, which would otherwise have
constituted the balance of the term of this lease. The failure of Owner to re-
let the premises or any part or parts thereof shall not release or affect
Tenant's liability for damages. In computing such liquidated damages there shall
be added to the said deficiency such xpenses as Owner may incur in connection
with re-letting, such as legal expenses, attorneys' fees, brokerage, advertising
and for keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any month shall not prejudice in
any way the rights of Owner to collect the deficiency of any subsequent month by
a similar proceeding. Owner, in putting the demised premises in good order or
preparing the same for re-rental may, at Owner's option, make such alterations,
repairs, replacements, and or decorations in the demised premises as Owner, in
Owner's sole judgment considers advisable and necessary for the purpose of re-
letting the demised premises, and the making of such alterations, repairs,
replacements and/or decorations shall not operate or be construed to release
Tenant from liability hereunder as aforesaid. Owner shall in no event be liable
in any way whatsoever for failure to re-let the demised premises, or in the
event that the demised premises are re-let, for failure to collect the rent
thereof under such re-letting, and in no event shall Tenant be entitled to
receive any excess, if any, of such net rents collected over the sum payable by
Tenant to Owner hereunder. In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions hereof, Owner shall have the right
of injunction and the right to invoke any remedy allowed at law or in equity as
if re-entry, summary proceedings and other remedies were not herein provided
for. Mention in the lease of any particular remedy, shall not preclude Owner
from any other remedy, in law or in equity. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present or future laws in
the event of Tenant being evicted or dispossessed for any cause, or in the event
of Owner obtaining possession of demised premises, by reason of the violation by
Tenant of any of the covenants and conditions of the lease, or otherwise.
Fees and 19. If Tenant shall default in the observance of performance of
Expenses any term or covenant on Tenant's part to be observed or performed
under or by virtue of any of the terms or provisions in any
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article of this lease, then, unless otherwise provided elsewhere in this lease, Owner may immediately or at any time thereafter and without notice perform the obligation of Tenant thereunder. If Owner, in connection with the foregoing or in connection with any default by Tenant in the covenant to pay rent hereunder, make any expenditures or incurs any obligations for the payment of money, including but not limited to attorney's fees, in instituting, prosecuting or defending any action or proceeding, then Tenant will reimburse Owner for such sums so paid or obligations incurred with interest and costs. The foregoing expenses incurred by reason of Tenant's default shall be deemed to be additional rent hereunder and shall be paid by Tenant to Owner within five (5) days of rendition of any bill or statement to Tenant therefor. If Tenant's lease term shall have expired at the time of making of such expenditures or incurring of such obligations, such sums shall be recoverable by Owner as damages.
Building 20. Owner shall have the right at any time without the same
Alterations constituting an eviction and without incurring liability to
and Tenant therefor to change the arrangement and/or location of
Management: public entrances, passageways, doors, doorways, corridors,
elevators, stairs, toilets or other public parts of the building
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and to change the name number or designation by which the building may be known. There shall be no allowance to Tenant for diminution of rental value and no liability on the part of Owner by [illegible] annoyance or injury to business arising from Owner or other Tenants making any repairs in the building or any such alterations, additions and improvements. Furthermore, Tenant shall not have any claim against Owner by reason of Owner's imposition of such controls of the manner of access to the building by Tenant's social or business visitors as the Owner may deem necessary for the security of the building and its occupants.
No Repre- 21. Neither Owner nor Owner's agents have made any sentations by representations or promises with respect to the physical Owner: condition of the building, the land upon which |
it is erected or the demised premises, the rents, leases,
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expenses of operation or any other matter or thing affecting or related to the premises except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease. Tenant has inspected the building and the demised premises and is thoroughly acquainted with their condition and agrees to take the same "as is" and acknowledges that the taking of possesion of the demised premises by Tenant shall be conclusive evidence that the said premises and the building of which the same form a part were in good and satisfactory condition at the time such possesion was so taken, except as to latent defects. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Owner and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.
End of 22. Upon the expiration or other termination of the term of this
Term: lease, Tenant shall quit and surrender to Owner the demised
premises, broom clean, in good order and condition, ordinary
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wear and damages which Tenant is not required to repair as provided elsewhere in this lease excepted, and Tenant shall remove all its property. Tenant's obligation to observe or perform this covenant shall survive the expiration or other termination of this lease. If the last day of the term of this Lease or any renewal thereof, falls on Sunday, this lease shall expire at noon on the preceding Saturday unless it be a legal holiday in which case it shall expire at noon on the preceding business day.
Quiet 23. Owner covenants and agrees with Tenant that upon Tenant
Enjoyment: paying the rent and additional rent and observing and performing
all the terms, covenants and conditions, on Tenant's part to be
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observed and performed, Tenant may peaceably and quietly enjoy the premises hereby demised, subject, nevertheless, to the terms and conditions of this lease including, but not limited to, Article 30 hereof and to the ground leases, underlying leases and mortgages hereinbefore mentioned.
Failure 24. If Owner is unable to give possession of the demised
to Give premises on the date of the commencement of the term hereof,
Possession: because of the holding-over or retention of possession of any
tenant, undertenant or occupants or if the demised premises are
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located in a building being constructed, because such building has not been sufficiently completed to make the premises ready for occupancy or because of the fact that a certificate of occupancy has not been procured or for any other reason. Owner shall not be subject to any liability for failure to give possession on said date and the validity of the lease shall not be impaired under such circumstances, nor shall the same be construed in any wise to extend the term of this lease, but the rent payable hereunder shall be abated (provided Tenant is not responsible for Owner's inability to obtain possession) until after Owner shall have given Tenant written notice that the premises are substantially ready for Tenant's occupancy. If permission is given to Tenant to enter into the possession of the demised premises or to occupy premises other than the demised premises prior to the date specified as the commencement of the term of this lease, Tenant covenants and agrees that such occupancy shall be deemed to be under all the terms, covenants, conditions and provisions of this lease, except as to the covenant to pay rent. The provisions of this article are intended to constitute "an express provision to the contrary" within the meaning of Section 223-a of the New York Real Property Law.
No 25. The failure of Owner to seek redress for violation of, or to
Waiver: insist upon the strict performance of any covenant or condition
of this lease or of any of the Rules or Regulations, set forth or
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hereafter adopted by Owner, shall not prevent a subsequent act which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Owner of rent with knowledge of the breach of any covenant of this lease shall not be deemed a waiver of such breach and no provision of this lease shall be deemed to have been waived by Owner unless such waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement of any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Owner may accept such check or payment without prejudice to Owner's right to recover the balance of such rent or pursue any other remedy in this lease provided. No act or thing done by Owner or Owner's agents during the term hereby demised shall be deemed an acceptance of a surrender of said premises, and no agreement to accept such surrender shall be valid unless in writing signed by Owner. No employee of Owner or Owner's agent shall have any power to accept the keys of said premises prior to the termination of the lease and the delivery of keys to any such agent or employee shall not operate as a termination of the lease or a surrender of the premises.
Waiver 26. It is mutually agreed by and between Owner and Tenant that
of Trial the respective parties hereto shall and they hereby do waive
by Jury: trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other (except for
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personal injury or property damage) on any matters whatsoever arising out of or
in any way connected with this lease, the relationship of Owner and Tenant
[illegible] of said premises, and any emergency statutory or any other statutory
remedy. It is further mutually agreed that in the event Owner commences any
summary proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding including
a counterclaim under Article 4.
Inability to 27. This Lease and the obligation of Tenant to pay rent Perform: hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in no wise be affected, impaired or excused because Owner is unable to fulfill any of its obligations under this lease or to supply or delayed in supplying any service expressly or impliedly to be supplied or unable to make, or is delayed in making any repair, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Owner is prevented or delayed from so doing by reason of strike or labor troubles or any cause whatsoever including, but not limited to, government preemption in connection with a National Emergency or by reason of any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by [illegible] or other emergency.
Bills and 28. Except as otherwise in this lease provided, a bill
Notices: statement, notice or communication which Owner may desire or be
required to give to Tenant, shall be deemed sufficiently given or
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rendered if, in writing, delivered to Tenant personally or sent by registered or certified mail addressed to Tenant at the building of which the demised premises form a part or at the last known residence address or business address of Tenant or left at any of the aforesaid premises addressed to Tenant, and the time of the rendition of such bill or statement and of the giving of such notice or communication shall be deemed to be the time when the same is delivered to Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant to Owner must be served by registered or certified mail addressed to Owner at the address first hereinabove given or at such other address as Owner at the address first hereinabove given or at such other address as Owner shall designate by written notice.
Services 29. As long as Tenant is not in default under any of the
Provided by covenants of this lease, Owners shall provide: (a) necessary
Owners elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m and have one elevator subject to
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call at all other times; (b) heat to the demised premises when and as required
by law, on business days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1
p.m.; (c) water for ordinary lavatory purposes, but if Tenant uses or consumes
water for any other purposes or in unusual quantities (of which fact Owner shall
be the sole judge), Owner may install a water meter at Tenant's expense which
Tenant shall thereafter maintain at Tenant's expense in good working order and
repair to register such water consumption and Tenant shall pay for water
consumed as shown on said meter as additional rent as and when bills are
rendered; (d) cleaning service for the demised premises on business days at
Owner's expense provided that the same are kept in order by Tenant. If, however,
said premises are to be kept clean by Tenant, it shall be done at Tenant's sole
expense, in a manner satisfactory to Owner and no one other than persons
approved by Owner shall be permitted to enter said premises or the building of
which they are a part for such purpose. Tenant shall pay Owner the cost of
removal of any of Tenant's refuse and rubbish from the building; (e) If the
demised premises is serviced by Owner's air conditioning cooling and ventilating
system, air conditioning cooling will be furnished to tenant from May 15th
through September 30th on business days (Mondays through Fridays, holidays
excepted) from 8.00 a.m. to 6.00 p.m., and ventilation will be furnished on
business days during the aforesaid hours except when air conditioning/cooling is
being furnished as aforesaid. If Tenant requires air conditioning/cooling or
ventilation for more extended hours or on Saturdays, Sundays or on holidays, as
defined under Owner's contract with Operating Engineers Local 94-94A, Owner will
furnish the same at Tenant's expense, RIDER to be added in respect to rates and
conditions for such additional service; (1) Owner reserves the right to stop
services of the heating, elevators, plumbing, air-conditioning, power systems or
cleaning or other services if any, when necessary by reason of accident or for
repairs, alterations, replacements or improvements necessary or desirable in the
judgment of Owner for as long as may be reasonably required by reason thereof.
If the building of which the demised premises are a part supplies manually
operated elevator service, Owner at any time may substitute automatic control
elevator service and upon ten days' written notice to Tenant, proceed with
alterations necessary therefor without in any wise affecting this lease or the
obligation of Tenant hereunder. The same shall be done with a minimum of
inconvenience to Tenant and Owner shall pursue the alteration with due
diligence.
Captions: 30. The Captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this lease nor the intent of any provisions thereof.
Definitions: 31. The term "office", or "offices", wherever used in this lease, shall not be construed to mean premises used as astore or stores, for the sale or display, at any time, of goods, wares or merchandise, of any kind, or as a restaurant, shop, booth, bootblack or other stand, barber shop, or for other similar purposes or for manufacturing. The term "Owner" means a landlord or lessor, and as used in this lease means only the owner, or the mortgagee in possession, for the time being of the land and building (or the owner of a lease of the building or of the land and building) of which the demised premises form a part, so that in the event of any sale or sales of said land and building or of said lease, or in the event of a lease of said building, or of the land and building, the said Owner shall be and hereby is entirely freed and relieved of all covenants and obligations of Owner hereunder, and it shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and the purchaser, at any such sale, or the said lessee of the building, or of the land and building, that the purchaser or the lessee of the building has assumed and agreed to carry out any and all covenants and obligations of Owner, hereunder. The words "re- enter" and "re-entry" as used in this lease are not restricted to their technical legal meaning. The term "business days" as used in this lease shall exclude Saturdays (except such portion thereof as is covered by specific hours in Article 29 hereof), Sundays and all days observed by the State or Federal Government as legal holidays and those designated as holidays by the applicable building service union employees service contract or by the applicable Operating Engineers contract with respect to HVAC service.
Adjacent 32. If an excavation shall be made upon land adjacent to the
Excavation- demised premises, or shall be authorized to be made, Tenant
Sharing: shall afford to the person causing or authorized to cause such
excavation, license to enter upon the demised premises for the
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purpose of doing such work as said person shall deem necessary to preserve the wall or the building of which demised premises form a part from injury or damage and to support the same by proper foundations without any claim for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and 33. Tenant and Tenant's servants, employees, agents, visitors,
Regulations and licensees shall observe faithfully, and comply strictly
with, the Rules and Regulations and such other and further
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reasonable Rules and Regulations as Owner or Owner's agents may from time to time adopt. Notice of any additional rules or regulations shall be given in such manner as Owner may elect. In case Tenant disputes the reasonableness of any additional Rule or Regulation hereafter made or adopted by Owner or Owner's agents, the parties hereto agree to submit the question of the reasonableness of such Rule or Regulation for decision to the New York office of the American Arbitration Association, whose determination shall be final and conclusive upon the parties hereto. The right to dispute the reasonableness of any additional Rule or Regulation upon Tenant's part shall be deemed waived unless the same shall be asserted by service of a notice, in writing upon Owner within ten (10) days after the giving of notice thereof. Nothing in this lease contained shall be construed to impose upon Owner any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease, as against any other tenant and Owner shall not be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees.
Security: 34. Tenant has deposited with Owner the sum of $40,000.00* as
security for the faithful performance and observance by Tenant
of the terms, provisions and conditions of this lease; it is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of rent and additional
rent, Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which Tenant is in default or for any sum which Owner may
expend or may be required to expend by reason of Tenant's default in respect any
of the terms, covenants and conditions of this lease, including but not limited
to, any damages or deficiency in the re-letting of the premises whether such
damages or deficiency accrued before or after summary proceedings or other re-
entry by Owner. In the event that Tenant has fully and faithfully comply with
all of the terms, provisions, covenant and conditions of this lease, the
security shall be returned to Tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the demised premises to Owner.
In the event of a sale of the land and building or leasing of the building, of
which the demised premise form a part, Owner shall have the right to transfer
the security to the vendee or lessee and Owner shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Owner solely for the return of said security, and it is agreed
that the provisions hereof shall apply to every transfer or assignment made
[illegible] the security to a new Owner. Tenant further covenants that it will
not assign or encumber or attempt to assign or encumber the money deposited
herein as security and that neither Owner nor its successors or assigns shall be
bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
Estoppel 35. Tenant, at any time, and from time to time, upon at least 10
Certificate days' prior notice by Owner, shall execute acknowledge and
deliver to Owner, and/or to any other person, firm or
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corporation specified by Owner, a statement certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates to which the rent and additional rent have been paid, and stating whether or not there exists any default by Owner under this Lease, and, if so, specifying each such default.
Successors 36. The covenants, conditions and agreements contained in this
and Assigns: lease shall bind and inure to the benefit of Owner and Tenant
and their respective heirs, distributees, executors,
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administrators, successors, and except as otherwise provided in this lease, their assigns.
(SEE RIDERS NO. 37 THROUGH 63 ATTACHED HERETO AND MADE A PART HEREOF)
In Witness Whereof, Owner and Tenant have respectively signed and sealed this lease as of the day and year first above written.
GOULD INVESTORS L. P.
By its Managing General Partner
GEORGETOWN PARTNERS, INC.
Witness for Owner: ................................... [SEAL]
.............................. By: /s/ Matthew J. Gould
................................... [L.S.]
Matthew J. Gould, Vice President
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Witness for Tenant: INTEGRATED CASH MANAGEMENTS SERVICES, [SEAL]
INC.
/s/ [ILLEGIBLE]^^ By: /s/ [ILLEGIBLE]^^
.............................. ................................... [L.S.]
ACKNOWLEDGEMENTS
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CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me
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personally came
to me known, who being by me duly sworn, did depose and say that he resides
in
that he is the of
the corporation described in and which executed the foregoing instrument, as OWNER, that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal, that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order.
.................................
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me
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personally came
to me known and known to me to be the individual described in and who, as OWNER, executed the foregoing instrument and acknowledged to me that he executed the same.
.................................
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
[STAMP]
On this day of , 19 , before me
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personally came
to me known, who being by me duly sworn, did depose and say that he resides
in
[STAMP]
that he is the of
the corporation described in and which executed the foregoing instrument, as TENANT; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order.
/s/ Barbara Verrale
.................................
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
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On this day of , 19 , before me
personally came
to me known and known to me to be the individual described in and who, as TENANT, executed the foregoing instrument and acknowledged to me that he executed the same.
.................................
*The security on deposit is to earn pass book interest payable to the Tenant, less 1% administration expense to Landlord. Interest payable at the end of the five year term.
FOR VALUE RECEIVED, and in consideration for, and as an inducement to Owner making the within Lease with Tenant, the undersigned guarantees to Owner, Owner's successors and assigns, the full performance and observance of all the covenants, conditions and agreements, therein provided to be performed and observed by Tenant, including the "Rules and Regulations" as therein provided, without requiring any notice of non-payment, non-performance, or non-observance, or pro-of, or notice, or demand, whereby to charge the undersigned therefor, all of which the undersigned hereby expressly waives and expressly agrees that the validity of this agreement and the obligations of the guarantor hereunder shall in no wise be terminated, affected or impaired by reason of the assertion by Owner against Tenant of any of the rights or remedies reserved to Owner pursuant to the provisions of [illegible] within lease. The undersigned further covenants and agrees that this guaranty [illegible] remain and continue in full force and effect as to any renewal, modification or [illegible] of this lease and during any period when Tenant is occupying the premises as a "statutory tenant". As a further inducement to Owner to make this lease and in consideration thereof, Owner and the undersigned covenant and agree that in any action or proceeding brought by either Owner or the undersigned against the other on any matters whatsoever arising out of, under, or by virtue of the terms of this lease or this guaranty that Owner and the undersigned shall and do hereby waive trial by a jury.
Dated New York City................................. 19..................
WITNESS:
...............................................................................
STATE OF NEW YORK ) ss.:
County of )
On this day of , 19 , before me personally
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came , to me known and known to me to be the individual described in, and who executed the foregoing Guaranty and acknowledged to me that he executed the same
..............................
Notary
............................................................................[L S
Residence......................................................................
Business Address...............................................................
Firm Name.......................................................................
[LOGO] IMPORTANT - PLEASE READ [LOGO]
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE
WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by any Tenant or used for any purpose other than for ingress or egress from the demised premises and for delivery of merchandise and equipment in a prompt and efficient manner using elevators and passageways designated for such delivery by Owner. There shall not be used in any space, or in the public hall of the building, either by any Tenant or by jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and sideguards. If said premises are situated on the ground floor of the building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk and curb in front of said premises clean and free from ice, snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any purposes other than those for which they were designed or constructed and no sweepings, rubbish, rags, acids or other substances shall be deposited therein, and the expense of any breakage, stoppage, or damage resulting from the violation of this rule shall be borne by the Tenant who, or whose clerks, agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of the building, and no Tenant shall sweep or throw or permit to be swept or thrown from the demised premises any dirt or other substances into any of the corridors or halls, elevators, or out of the doors or windows or stairways of the building and Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the demised premises, or permit or suffer the demised premises to be occupied or used in a manner offensive or objectionable to Owner or other occupants of the buildings by reason of noise, odors, and/or vibrations, or interfere in any way with other Tenants or those having business therein, nor shall any animals or birds be kept in or about the building. Smoking or carrying lighted cigars or cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted of affixed by any Tenant on any part of the outside of the demised premises of the building or on the inside of the demised premises if the same is visible from the outside of the premises without the prior written consent of Owner, except that the name of Tenant may appear on the entrance door of the premises. In the event of the violation of the foregoing by any Tenant, Owner may remove same without any liability, and may charge the expense incurred by such removal to Tenant or Tenants violating this rule. Interior signs on doors and directory tables shall be inscribed, painted or affixed for each Tenant by Owner at the expense of such Tenant, and shall be of a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the demised premises of the building of which they form a part. No boring, cutting or stringing of wires shall be permitted, except with the prior written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other similar floor covering, so that the same shall come in direct contact with the floor of the demised premises, and, if linoleum or other similar floor covering is desired to be used an interlining of builder's deadening felt shall be first affixed to the floor, by a paste or other material, soluble in water, the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the doors, or windows by any Tenant, nor shall any changes be made in existing locks or mechanism thereof. Each Tenant must, upon the termination of his Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by, such Tenant, and in the event of the loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any description shall be delivered to and removed from the premises only on the freight elevators and through the service entrances and corridors, and only during hours and in a manner approved by Owner. Owner reserves the right to inspect all freight to be brought into the building and to exclude from the building all freight which violate any of these Rules and Regulations of the lease or which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building between the hours of 6 P.M and 8 A.M and at all hours on Sundays, and legal holidays all persons who do not present a pass to the building signed by Owner. Owner will furnish passes to persons for whom any Tenant requests same in writing. Each Tenant shall be responsible for all persons for whom he requests such pass and shall be liable to Owner for all acts of such persons.
11. Owner shall have the right to prohibit any advertising by any Tenant which in Owner's opinion, tends to impair the reputation of the building or its desirability and as a building for offices, and upon written notice from Owner, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised premises, any inflammable, combustible or explosive fluid, material, chemical or substance, or cause objectionable odors to permeate in or emanate from the demised premises.
13. If the building contains central air conditioning and ventilation, Tenant agrees to keep all windows closed at all times and to abide by all rules and regulations issued by the Owner with respect to such services. If Tenant requires air conditioner or ventilation after the usual hours, Tenant shall give notice in writing to the building superintendent prior to 3:00 P.M in the case of services required on week days, and prior to 3:00 P.M on the day prior in the case of after hours service required on weekends or on holidays.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky matter, or fixtures into or out of the building without Landlord's prior written consent. If such safe, machinery, equipment, bulky matter or fixtures requires special handling, all work in connection therewith shall comply with the Administrative Code of the City of New York and all other laws and regulations applicable thereto and shall be done during such hours as Owner may designate.
Address
TO
STANDARD FORM OF
[REAL ESTATE BOARD OF Office [REAL ESTATE BOARD OF
NEW YORK STAMP] Lease NEW YORK STAMP]
The Real Estate Board of New York, Inc.
(C)Copyright 983. All rights Reserved.
Reproduction in whole or in part prohibited.
===================================== =======================================
Dated 19
Rent per Year
Rent per Month
Term
From
To
Drawn by ..................................Checked by ..........................
Entered by ................................Approved by .........................
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March, 1989 BY AND BETWEEN GOULD INVESTORS L. P., BY ITS MANAGING GENERAL PARTNER, GEORGETOWN PARTNERS, INC., AS LANDLORD AND INTEGRATED CASH MANAGEMENT SERVICES, INC., AS TENANT, PERTAINING TO SUITE 601 LOCATED ON THE 6th FLOOR OF BUILDING KNOWN AS 60 CUTTER MILL ROAD, GREAT NECK, NEW YORK 11021.
(1) The term "fixed rent" shall mean that rent at the annual rental rate or rates provided for in the granting clause appearing at the beginning of this lease.
(2) The term "additional rent" shall mean all sums of money, other than fixed rent, as shall become due and payable from Tenant to Landlord hereunder, and Landlord shall have the same remedies therefor as for a default in payment of fixed rent.
(3) The term "rents" shall mean fixed rent and additional rent hereunder.
(4) The terms "Commencement Date" and "Expiration Date" shall mean the dates fixed in this lease, or to be determined pursuant to the provisions of this lease, respectively, as the beginning and the end of the term for which the Demised Premises are hereby leased.
(5) Tenant's obligation hereunder shall be construed in every instance as conditions as well as covenants.
(6) The term "Tenant" shall mean Tenant herein named or any assignee or other successor in interest (immediate or remote) of Tenant herein named when Tenant herein named or such assignee or other successor in interest, as the case may be is in possession of the Demised Premises as Owner of the Tenant's estate and interest granted by this lease, and also if Tenant is not an individual or corporation, all of the individuals, firms and/or corporations or other entities comprising Tenants.
(7) Any transfer by operation of law or otherwise, of Tenant's interest in this lease or of a 50% or greater interest in Tenant (whether stock, partnership interest or otherwise) shall be deemed an assignment of this lease within the meaning of Article II.
(8) All references in this lease to numbered Articles and lettered Exhibits are references to Articles of this lease and Exhibits annexed to (and thereby made part of) this lease, as the case may be, unless expressly otherwise designated in the context.
(9) The term "Land" shall mean that certain parcel of land located at 60 Cutter Hill Road, Great Neck, New York, County of Nassau, and the term "Building" shall mean the commercial building presently, existing on the Land.
(10) For the purposes of this Lease, the period of time commencing with the Commencement Date through and including the last day of the 11th calendar month following the calendar month of the Commencement Date shall be deemed the First Lease Year. Each successive 12 calendar months (or part thereof) shall be deemed a Lease Year. The Lease Year following the First Lease Year shall be deemed the Second Lease Year, etc.
The fixed rent as set forth in Paragraph No. 39, includes the contemplated costs of electricity, which the Tenant will consume in the demised premises. The aforesaid estimated costs are based upon the representation by Tenant to Landlord that Tenant will utilize in the demised premises during the term, the normal office machines and equipment for an office which will maintain a maximum capacity of 45 persons and will consume energy for 70 personal computers and one Tandem mini-computer. If during the term, Tenant's contemplated usage or persons regularly in the demised premises is in excess then a survey is needed and will be obtained and that Landlord shall be entitled to an increase in the fixed rent as a result of Tenant's consumption of electricity in excess of the contemplated usage as provided hereinbefore. The regular office hours are from 8 A.M. to 6 P.M. Monday through Friday provided there are occasional overtime/work and weekend.
Landlord may install a meter or submeter to measure Tenant's
actual consumption. The cost of installing such meter or submeter
shall be shared equally by Landlord.
FIXED RENT: 39. For the second lease year, Tenant's obligation for the fixed
rent shall be at the annual rate of TWO HUNDRED FIFTY FOUR
THOUSAND FOUR HUNDRED DOLLARS ($254,400.00), payable the first
day of each month at the rate of TWENTY ONE THOUSAND TWO HUNDRED
DOLLARS ($21,200.00) per month.
For the third lease year, Tenant's obligation for the fixed rent
shall be at the annual rate of TWO HUNDRED SIXTY NINE THOUSAND
FOUR HUNDRED DOLLARS ($269,400.00), payable the first day of each
month at the rate of TWENTY TWO THOUSAND FOUR HUNDRED FIFTY
DOLLARS ($22,450.00) per month.
For the fourth lease year, Tenant's obligation for the fixed rent
shall be at the annual rate of TWO HUNDRED EIGHTY FIVE THOUSAND
DOLLARS ($285,000.00), payable the first day of each month at the
rate of TWENTY THREE THOUSAND SEVEN HUNDRED FIFTY DOLLARS
($23,750.00) per month.
For the fifth lease year, Tenant's obligation for the fixed rent
shall be at the annual rate of THREE HUNDRED ONE THOUSAND TWO
HUNDRED DOLLARS ($301,200.00), payable the first day of each
month at the rate of TWENTY FIVE THOUSAND ONE HUNDRED DOLLARS
($25,100.00) per month.
REAL ESTATE 40.
FEES:
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SIGNS: 41. The Landlord has determined to operate the building with no signs
on any doors, but rather with individual tenant's space designated
only by Suite number with a directory board on each floor, as well as
in the lobby. In the event the Tenant places any signs in any portion
of the building, the Landlord may remove said sign. By execution
hereof, Tenant acknowledges and agrees that the aforementioned
decision is binding and agreeable to tenant.
LIABILITY 42. Throughout the term of the within lease, Tenant, at its own cost
INSURANCE: and expense, shall procure and maintain public liability insurance in
the amount of $500,000/$1,000,000 for damages or injury to a person
or persons, and $25,000 for property damage, which said policy shall
name the Landlord as an additional insured. A certified copy of said
policy or other evidence of coverage satisfactory to Landlord shall
be delivered to the Landlord within twenty (20) days after the
commencement of the demised term, and renewals at least ten (10) days
prior to expiration of each policy period. Said policy shall also
provide that it shall not be cancelled, unless thirty (30) days
written notice thereof is given to Landlord. Should Tenant fail to
procure or maintain said insurance as hereinabove required, Landlord
shall have the
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right to obtain such insurance at Tenant's cost and expense, and
such charge shall be collectible by the Landlord as additional
rental hereunder. The company writing such insurance shall be
licensed to do business in New York State and shall be reasonably
satisfactory to Landlord. The amount of insurance required to be
maintained shall be increased should Landlord determine that,
conditions warrant such increase. Tenant agrees to indemnify and
hold harmless Landlord from any liability for damages to any
person or property in, or on the demised premises from any cause
whatsoever.
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RELATIONSHIP 43. The relationship of the parties to this lease shall be that OF PARTIES: of Landlord and Tenant and nothing herein shall be deemed to constitute a relationship of joint venture, partner, or any other relationship other than that of Landlord and Tenant.
RENT 44.
CONTROL:
SUMMARY 45. Tenant waives any and all rights to interpose any
PROCEEDING: counterclaim in any summary proceeding for the non-payment of
rent; and any and all claims that may be asserted by tenant shall
only be made the subject of a separate action.
ABANDONED 46.
PROPERTY:
INVALIDITY: 47. If any term or provision of this lease or the application
thereof to any person or circumstance shall to any extent, be
invalid or unenforceable, the remainder of this lease shall not be
affected thereby, and each term and provision of this lease shall
be valid and be enforced to the fullest extent permitted by law,
and such invalid or unenforceable provision shall be replaced by a
valid and enforceable provision as similar to the original
provision as possible.
DEFAULT IN 48.
OTHER LEASE:
BROKER: 49. Tenant represents that no broker was involved in its
negotiations concerning the demised premises except Majestic
Property Management Corp. Tenant further represents that it dealt
with no other persons concerning the demised premises.
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of Tenant, Tenant shall nonetheless remain liable for the rent
reserved in this lease and payment of all future rents and other
payments which would otherwise become due for the balance of the
lease term had it not been terminated shall become immediately
due and payable. Tenant hereby waives any rights it may have
under existing or future laws. Landlord shall have at all times
the right to distrain for rent due. Landlord shall have a valid
and first lien upon all property of Tenant whether exempt by law
or not, as security for the payment of rent herein reserved,
subordinate only to liens granted to finance the initial purchase
or installation of fixtures, equipment or inventory.
PARTNERSHIP 51. Pursuant to the provisions of the Limited Partnership
LIABILITY: Agreement of Gould Investors L. P. and the policies established
by its General Partners, Tenant acknowledges that this lease is
enforceable only against and payable only out of the interest of
Landlord in the premises demised hereby and that neither
Landlord nor any partner, officer or shareholder of Landlord
assumes or shall be held for any personal liability therefor and
that all persons dealing with Landlord pursuant to this lease
agreement, shall look only to the interest in the aforementioned
premises for payment or performance of any debts, obligations,
claims or liabilities.
ESTOPPEL 52. Tenant agrees that on ten (10) days notice, it will execute
CERTIFICATE: a document stating that this lease is in full force and effect,
has not been amended and is not in default, or specifying
amendments and defaults, also stating the date to which rent has
been paid. Such requests shall not be made more than four (4)
times in a calendar year.
RELOCATION: 53.
NOTICE TO 54. If in connection with the procurement, continuation or
SUPERIOR renewal of any financing for which the land and/or the building
LESSORS & or the interest of the lessee therein under a superior lease
MORTGAGEES: represents collateral in whole or in part, an institutional
lender shall request reasonable modifications of this lease as
a condition of such financing; Tenant will not withhold its
consent thereto provided that such modifications do not
materially increase the obligations of Tenant under this lease or
materially and adversely affect any rights of Tenant under this
lease. Any change which increases the rents or costs payable by
Tenant shall be deemed to materially affect Tenant's rights under
this lease.
LANDLORD'S 55.
WORK:
PARKING 56. Landlord shall provide at least 40* on premises parking
SPACES: spaces for use of Tenant, its employees and invitees. Landlord
reserves the right to alter its parking plan and assignments, and
to make reasonable rules for use of the garage and parking areas.
Landlord shall not be liable for temporary loss of parking
spaces due to causes beyond Landlord's control. *20 grade level
non-reserved and 20 lower level reserved.
NOTICE OF 57. Tenant agrees to give any Mortgagees and/or Trust Deed
DEFAULT TO Holders, by Registered Mail, a copy of any Notice of Default
MORTGAGEE: served upon the Landlord, provided that prior to such notice
Tenant has been notified, in writing, (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the address of
such Mortgagees and or Trust Deed Holders. Tenant further agrees
that if Landlord shall have failed to cure such
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default within the time provided for in this lease, then the
Mortgagees and/or Trust Deed Holders shall have an additional
sixty (60) days within which to cure such default or if such
default cannot be cured within that time, then such additional
time as may be necessary if within sixty (60) days, any Mortgagee
and/or Trust Deed Holder has commenced and is diligently pursuing
the remedies necessary to cure such default, (including, but not
limited to, commencement of foreclosure proceedings, if necessary
to effect such cure) in which event this lease shall not be
terminated while such remedies are being so diligently pursued.
LATE RENTAL 58. In addition to the provisions of Paragraph 19 of the printed
PAYMENT: form, Landlord and Tenant agree that if Tenant shall fail to make
payment of any installment of rent or any additional rent within
fifteen (15) days after the date when such payment is due, Tenant
shall pay to Landlord, in addition to such installment of rent or
such additional rent, as the case may be, as a late charge and as
additional rent, a sum equal to the lesser of (i) six (6%)
percent per annum above the then current prime rate charged by
Banker's Trust Company, or its successor and (ii) the maximum
rate permitted by applicable law on the amount unpaid computed
from the date such payment was due to and including the date of
payment.
In the event any check, or voucher payment made by Tenant to the
Landlord in payment of the rent or additional rent is returned.
by the financial institution to the Landlord marked "insufficient
funds", "uncollected funds" or if the Landlord is debited by
its bank as a result of a "bad" check previously delivered to
Landlord by Tenant in payment of rent or additional rent, then a
bookkeeping or administrative charge in the amount of SEVENTY
FIVE DOLLARS ($75.00) shall become due and payable by Tenant to
Landlord as additional rent. Landlord and Tenant agree, that the
aforesaid charge is the agreed reasonable expense incurred by
Landlord as a result of such "bad" check.
In addition to the foregoing, if Landlord utilizes the services
of "in-house counsel" or of an attorney which Landlord has on an
annual retainer, then Landlord and Tenant agree, upon the
execution hereof, than an hourly rate of ONE HUNDRED TWENTY FIVE
DOLLARS ($125.00) per hour shall be deemed the reasonable costs
of any such legal services employed by Landlord to enforce any of
the terms; conditions and covenants of this lease, including but
not limited to the payment of rent or additional rent.
FINANCIAL 59. Tenant agrees that if Landlord requires financial
INFORMATION: information from the Tenant in Landlord's negotiations for any
financing covering the building in which the demised premises
form a part, Tenant will, upon Landlord's written request,
furnish to Landlord or Landlord's designee, any and all financial
statements, reports or relevant information as may be reasonably
requested by the lending institution. Said information to be
furnished ten (10) days after the request therefor is made.
WORK: 60. Landlord has submitted to Tenant plans and specifications,
(hereinafter collectively referred to as "Plan") setting forth,
but not limited to, the layouts of partitions (including
openings) ceilings, lights and other layouts necessary to
complete the demised premises. Such Plan has been approved by
Tenant and has been initialed thereon. Landlord will supply the
electrical outlets needed for the plan including special outlets
for the tandem mini-computer
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(c) Landlord shall perform the work set forth in accordance with the Plan, as provided, however, that Landlord shall have the right to make any changes required by any governmental department or bureau having jurisdiction of the premises. Said work shall be performed by Landlord only once, it being understood, that Landlord's obligation to perform the work is a single, non-recurring obligation.
(d) Tenant further agrees that if Tenant makes any changes in the Plan subsequent to its approval by Landlord and if Landlord consents to such changes, Tenant shall pay to Landlord all costs and damages which Landlord may incur or sustain by reason of such changes, it being understood and agreed, however, that Landlord shall have the right for any reason to refuse to consent to any changes. Any damages payable under this subparagraph (d) shall be paid by Tenant from time to time upon demand as additional rent, whether or not the lease term shall have commenced.
(e) Landlord shall give Tenant twenty (20) days' written notice of the anticipated date of substantial completion of the work and Tenant shall have the right during said twenty (20) day period to enter into the premises for the purpose of installing its property and equipment and preparing the premises for its occupancy, provided that (i) neither
Tenant nor its agents or employees shall interfere with the work being done by Landlord and its agents and employees, (ii) Tenant shall comply with any reasonable work schedule, rules and regulations proposed by Landlord, its agents or employees, (iii) the labor employed by Tenant shall be harmonious and compatible with the labor employed by Landlord in the building containing the demised premises, it being agreed that if in Landlord's judgment the labor is incompatible, Tenant shall forthwith, upon Landlord's demand, withdraw such labor from the premises, (iv) Tenant shall procure and deliver to Landlord workmen's compensation, public liability, property damage and such other insurance policies, in such amounts, as shall be reasonably acceptable to landlord in connection with Tenant's work in the premises, and shall, upon Landlord's request, cause Landlord to be named as an insured thereunder, (v) Tenant shall hold Landlord harmless from and against any and all claims arising from or in connection with any act or omission of Tenant or its agents orders, rules and regulations of any governmental department or bureau having jurisdiction of the premises.
COMMENCEMENT61. (a) The term of this lease shall commence on July 1, 1989.
DATE: Within three (3) days after the commencement date, Landlord's
representative and Tenant's representative shall jointly examine the
demised premises and shall compile a list of any remaining items of
work which Landlord may be obligated to complete (said remaining
items being hereinafter referred to as "punch list items"). The
taking of possesion of the demised premises by Tenant shall be
deemed an acceptance of the premises, but Landlord shall thereafter
proceed expeditiously to complete the punch list items.
(b) Tenant waives any right to rescind this lease under Section
223 (a) of the Real Property Law of the State of New York and
further waives any damages which may result from any delay in the
substantial completion of the aforementioned work or delivery of
possession of the premises.
PAYMENT OF 62. (a) Tenant's obligation to pay rent shall commence on the date
RENT: set forth in the preceding paragraph 61 (a). The term of the lease
shall expire five (5) years from the date of commencement of the
term.
(b) If on July 1, 1989 Landlord is unable to deliver possession
of the demised premises to the Tenant, then upon Tenant's written
request, Landlord will deliver at least 3,000 square feet of office
space for "temporary offices" in the building in which the demised
premises are located.* Tenant shall redeliver the temporary office
space back to the Landlord in "broom-clean" condition at the time
that Landlord delivers possession of the demised premises to the
Tenant.
(d) The work set forth in the approved plans and specifications
shall be deemed to have been substantially completed even though
minor details or adjustments may not then have been completed. The
taking of possession of the demised premises by Tenant shall be
deemed an acceptance of the premises and substantial completion by
Landlord of the work to be performed. Nothing herein contained shall
be construed to release Landlord from its obligation to complete the
punch list items.
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* at the same square foot rent.
(e) Tenant shall, upon the demand of the Landlord, promptly execute, acknowledge and deliver to Landlord an instrument in form reasonably satisfactory to Landlord confirming the dates of commencement and expiration of the lease term.
COULD INVESTORS L. P.
By its Managing General Partner
GEORGETOWN PARTNERS, INC
By: /s/ Matthew J. Gould, -------------------------------- Matthew J. Gould, Vice President |
INTEGRATED CASH MANAGEMENT SERVICES, INC.
By: /s/ [SIGNATURE ILLEGIBLE] 3/13/89 ------------------------------ |
63. Tenant may sublet the space for office use provided tenant gets landlord's written approval which written consent shall not be unreasonably withheld, however, it is understood that landlord will not permit a stock brokerage, real estate company or executive suites. Landlord may at his option recapture the space and release tenant from its obligation. In any event tenant will, prior to any sublet furnish landlord in writing the name, terms and conditions including financial credit information and any other requested information to enable landlord to evaluate the sublessee. Landlord's consent to any one sublet shall not be deemed a waiver or consent to any other future sublet.
64. Landlord acknowledges receipt of $30,000.00 from Tenant upon execution, $20,000 of which to be applied towards payment of 1/st/ month's rent as required herein, $10,000.00 towards Security Deposit leaving an unpaid balance of $30,000.00 for Security to be paid by Tenant, ten (10) days prior to commencement of the term.
AGREEMENT made this 15 day of August, 1989 by and between GOULD INVESTORS L. P., by its Managing General Partner, GEORGETOWN PARTNERS, INC., with offices located at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021 (hereinafter referred to as "Landlord") and INTEGRATED CASH MANAGEMENT SERVICES, INC., with offices presently located at 60 Cutter Mill Road, Suite 601, Great Neck, New York 11021 (hereinafter referred to as "Tenant').
WHEREAS, on March 13, 1989, Landlord and Tenant entered into a written agreement of lease (hereinafter referred to as the "Lease") for approximately 9,800 gross rentable square feet of space as per Exhibit A attached to the Lease (hereinafter referred to as the "Original Demised Premises") in the building known as 60 Cutter Mill Road, Great Neck, New York (the "Building"); and
WHEREAS, Tenant has taken possession of the Original Demised Premises and upon execution of this First Amendment and Modification of Lease, is in occupancy of the Original Demised Premises under the terms, conditions and covenants of the Lease; and
WHEREAS, Tenant desires to lease 600 additional square feet of rentable space, said 600 additional square feet being presently occupied and a part of that suite currently identified as Suite 609 in the Building; and
WHEREAS; Landlord and Tenant have agreed to amend and modify the Lease to reflect the addition of the 600 square feet (hereinafter referred to as the "Additional Space") to the Original Demised Premises.
NOW, THEREFORE, in consideration of the mutual covenants herein and other valuable consideration, the sufficiency and receipt of which Landlord and Tenant acknowledge each to the other, it is agreed that the Lease be amended and modified as follows:
1. Attached hereto is a copy of a plan (hereinafter referred to as "Additional Plan") setting forth the work to be performed by Landlord to add the 600 square feet to the Original Demised Premises, making same one single unit as per the Additional Plan.
2. Tenant acknowledges that the Additional Plan delineates the work to be performed by Landlord. All work will be in accordance with and pursuant to Landlord's "Building Standard".
If Tenant desires work to be performed which is above or deviates from Landlord's Building Standard, then the cost of such additional work, material, installation or deviation will be at Tenant's sole cost and expense. Any changes in the work to be performed as delineated by the Additional Plan must be consented to by Landlord.
3. The Additional Plan provides for removal of the existing double glass doors at the entrance to Suite 601 and the replacement of the aforesaid doors with double oak doors. The Additional Plan sets forth the painting to be done and carpeting installed by Landlord.
4. Landlord will give at least ten (10) day's prior written notice to Tenant that Landlord anticipates that the work required to be performed pursuant to the Additional Plan for the Additional Space will be substantially completed (said date hereinafter referred to as the "Date of Substantial Completion"). Within three (3) days after the Date of Substantial Completion as set forth in Landlord's notice, Landlord's representative and Tenant's representative shall jointly examine the Additional Space and shall compile a list of any remaining items of work which Landlord may be obligated to complete (said remaining items deemed a "Punch List Item"). The taking of possession of the Additional Space by Tenant shall be deemed an acceptance of the Additional Space, but Landlord shall thereafter proceed expeditiously to complete the Punch List Items.
5. Upon execution of this First Amendment and Modification of Lease the term Lease Year shall mean, for all purposes, as follows:
(i) First Lease Year, July 1, 1989 through June 30, 1990.
(ii) Second Lease Year, July 1, 1990 through June 30, 1991.
(iii) Third Lease Year, July 1, 1991 through June 30, 1992.
(iv) Fourth Lease Year, July 1, 1992 to June 30, 1993.
(v) Fifth Lease Year, July 1, 1993 to June 30, 1994.
6. Upon the execution of this First Amendment and Modification of Lease and subject to the Landlord receiving possession of the Additional Space from the present occupant, the Lease shall be amended so that the Demised Premises shall be the Original Demised Premises and the Additional Space; i.e., rentable square feet of approximately 10,400, instead of approximately 9,800.
7. Effective from the Date of Substantial Completion, the "Fixed Rent" for the Additional Space for the balance of the First Lease Year shall be at the annual rate of FOURTEEN THOUSAND FOUR HUNDRED ($14,400). Accordingly, effective from the Date of Substantial Completion the Fixed Rent for the entire Demised Premises for the balance of the First Lease Year
shall be at the annual rate of 254,400 payable in equal monthly installments of $21,200.00 on the first day of each month. Appropriate adjustment shall be made if the Date of Substantial Completion is not on the last day of the month. Until the Date of Substantial Completion, Tenant shall pay Fixed Rent for the Original Demised Premises as provided in the Lease. The following is given for illustration purposes only. If the Date of Substantial Completion is August 15, 1989, the Tenant's obligation for Fixed Rent under the Lease and this First Amendment and Modification of Lease for the First Lease Year shall be as follows:
Fixed Rent July 1, 1989 to September 30, 1989, TWENTY THOUSAND DOLLARS ($20,000,00).
Fixed Rent October 1, 1989 through June 30, 1990, TWENTY ONE THOUSAND TWO HUNDRED ($21,200.00) each month.
8. Paragraph 39 of the Lease shall be deemed amended to provide for the payment of Fixed Rent subsequent to the First Lease Year as follows:
For the Second Lease Year, Tenant's obligation for Fixed Rent shall be at the annual rate of TWO HUNDRED SIXTY NINE THOUSAND FIVE HUNDRED FORTY FOUR DOLLARS ($269,544.00) payable on the first day of each month at the rate of TWENTY TWO THOUSAND FOUR HUNDRED SIXTY TWO DOLLARS ($22,462.00)
For the Third Lease Year, Tenant's obligation for Fixed Rent shall be at the annual rate of TWO HUNDRED EIGHTY FIVE THOUSAND EIGHT HUNDRED NINETY THREE DOLLARS AND 93/100 ($285,893.93) payable on the first day of each month at the rate of TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY FOUR DOLLARS AND 50/100 ($23,824.50).
For the Fourth Lease Year, Tenant's obligation for Fixed Rent shall be at the annual rate of THREE HUNDRED TWO THOUSAND FOUR HUNDRED FORTY NINE DOLLARS AND 94/100 ($302,449.94) per annum, payable on the first day of each month at the rate of TWENTY FIVE THOUSAND TWO HUNDRED FOUR DOLLARS AND 16/100 ($25,204.16).
For the Fifth Lease Year, Tenant's obligation for Fixed Rent shall be THREE HUNDRED NINETEEN THOUSAND SIX HUNDRED FORTY FOUR DOLLARS AND 65/l00 ($319,644.65), payable on the first day of each month at the rate of TWENTY SIX THOUSAND SIX HUNDRED THIRTY SEVEN DOLLARS AND 05/100 ($26,637.05).
9. Tenant, upon the completion & acceptance of the space shall deposit with the Landlord, additional security in the amount of TWO THOUSAND FOUR HUNDRED ($2,400.00), thereby bringing the total of Tenant's security to be held by Landlord, pursuant to the terms,
conditions and covenants of the Lease, to FORTY TWO THOUSAND FOUR HUNDRED
FORTY EIGHT DOLLARS AND 98/100 ($42,400.00).
10. Except as amended and modified herein, all other terms, conditions and covenants of the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment and Modification of Lease the day and year first above written.
GOULD INVESTORS L. P.
By its Managing General Partner
GEORGETOWN PARTNERS, INC.
By:_________________________________
Matthew J. Gould, Vice President
INTEGRATED CASH MANAGEMENT SERVICES, INC.
By: /s/ [ILLEGIBLE]^^ 8/15/89
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M A J E S T I C
-------------------------------------------------------------------- [LOGO]
Property Affiliates, Inc.
November 4, 1993
Mr. Ben Massuda
Integrated Cash Mgmt. Services Inc.
60 Cutter Mill Road/Suite #601
Great Neck, NY 11021
Dear Ben:
We enclose herewith a duly executed Second Amendment and Modification of Lease covering the subject premises for your records.
Sincerely,
MAJESTIC PROPERTY AFFILIATES, INC.
/s/ Rose Wagner Rose Wagner /rw enc. |
SECOND AMENDMENT AND MODIFICATION OF LEASE
AGREEMENT entered into this 28 day of October, 1993 by and between 60 CUTTER MILL ROAD PROPERTY CORP. ("Landlord") with offices at Suite 303, 60 Cutter Mill Road, Great Neck, New York 11021 and INTEGRATED CASH MANAGEMENT SERVICES, INC., with offices at Suite 601, 60 Cutter Mill Road, Great Neck, New York 11021. ("Tenant").
WHEREAS, Landlord's predecessor in interest and Tenant entered into a lease dated March 13, 1989, and a First Amendment and Modification of Lease dated August 15, 1989 for premises known as Suite 601, 60 Cutter Mill Road, Great Neck, New York ("Demised Premises") (said lease and First Amendment being referred to collectively herein as "Lease"); and
WHEREAS, Tenant desires to extend the term of the Lease and modify, certain other terms of the Lease;
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
1. The term of the Lease is extended to June 30, 1999.
2. Notwithstanding anything in the Lease to the contrary: during the period from October 1, 1993 to September 30, 1994, Tenant shall pay to Landlord Fixed Rent at an annual rental rate of TWO HUNDRED TWENTY-THREE THOUSAND SIX HUNDRED DOLLARS ($223,600.00), payable in equal monthly installments of EIGHTEEN THOUSAND SIX HUNDRED THIRTY-THREE AND 33/100 DOLLARS ($18,633.33), in advance, on the first day of each month without any notice, deduction or setoff whatever.
3. During the period from October 1, 1994 to September 30, 1995, Tenant shall pay to Landlord Fixed Rent at an annual rate of TWO HUNDRED THIRTY- TWO THOUSAND FIVE HUNDRED FORTY-FOUR DOLLARS ($232,544.00), payable in equal monthly installments of NINETEEN THOUSAND THREE HUNDRED SEVENTY-EIGHT AND 66/100 DOLLARS ($19,378.66), in advance, on the first day of each month without any notice, deduction or setoff whatever.
4. During the period from October 1, 1995 to September 30, 1996, Tenant shall pay to Landlord Fixed Rent at an annual-rate of TWO HUNDRED FORTY- ONE THOUSAND EIGHT HUNDRED FORTY-FIVE AND 76/100 DOLLARS ($241,845.76), payable in equal monthly installments of TWENTY THOUSAND ONE HUNDRED FIFTY- THREE AND 81/100 DOLLARS ($20,153.81), in advance, on the first day of each month without any notice, deduction or setoff whatever.
5. During the period from October 1, 1996 to September 30, 1997, Tenant shall pay to Landlord Fixed Rent at an annual rate of TWO HUNDRED FIFTY- ONE THOUSAND FIVE HUNDRED NINETEEN AND 59/100
DOLLARS ($251,519.59), payable in equal monthly installments of TWENTY THOUSAND NINE HUNDRED FIFTY-NINE AND 96/100 DOLLARS ($20,959.96), in advance, on the first day of each month without any notice, deduction or setoff whatever.
6. During the period from October 1, 1997 to September 30, 1998, Tenant shall pay to Landlord Fixed Rent at an annual rate of TWO HUNDRED SIXTY- ONE THOUSAND FIVE HUNDRED EIGHTY AND 37/100 DOLLARS ($261,580.37), payable in equal monthly installments of TWENTY-ONE THOUSAND SEVEN HUNDRED NINETY-EIGHT AND 36/100 DOLLARS ($21,798.36), in advance, on the first day of each month without any notice, deduction or setoff whatever.
7. During the period from October 1, 1998 to June 30, 1999, Tenant shall pay to Landlord Fixed Rent at an annual rate in the amount of TWO HUNDRED SEVENTY-TWO THOUSAND FORTY-THREE AND 58/100 DOLLARS ($272,043.58), payable in equal monthly installments of TWENTY-TWO THOUSAND SIX HUNDRED SEVENTY AND 29/100 DOLLARS ($22,670.29), in advance, on the first day of each month without any notice, deduction or setoff whatever.
8. In addition to the Fixed Rent set forth above, Tenant shall also pay Additional Rent as set forth in the Lease.
9. Tenant shall have the option to terminate the Lease provided the following occurs:
a) Tenant notifies Landlord (pursuant to the notice requirements of paragraph 28 of the March 13, 1989 lease between Landlord and Tenant) ("Additional Space Notification") that Tenant requires additional space in the Building ("Additional Space"), the amount of which additional space shall be specified in the Additional Space Notification and which Additional Space shall not be less than 1,000 square feet and not more than 6,000 square feet ("Additional Space Notification");
b) Landlord does not, within 9 months of the Additional Space Notification, offer to Tenant Additional Space which is at least 85% but no more than 115% of the Additional Space requested by Tenant in the Additional Space Notification;
c) No sooner than 9 months and no later than 9 months and 10 days from the date of the Additional Space Notification, Tenant notifies Landlord (pursuant to the notice requirements of paragraph 28 of the March 13, 1989 lease between Landlord and Tenant) that Tenant is terminating the lease, ("Termination Notice") provided:
i) The date of termination given in the Termination Notice is the final day of a calendar month and is no less than 6 months after the date of the Termination Notice, and
ii) Tenant is not in default under any of the terms of the Lease either on the date of the Termination Notice or on the date of termination given in the Termination Notice;
d) Tenant pays to Landlord on the date of the Termination Notice an amount ("Termination Consideration") equal to the product of a) $72,033.48 (said amount being the difference in Fixed Rent (for the period from October 1, 1993 to June 30, 1994) between the Lease as agreed to prior to this amendment and the Lease as amended by this amendment) and b) a fraction, the numerator of which is the number of months between the date of termination given in the Termination Notice and June 30, 1999, and the denominator of which is 68;
e) Tenant employs Majestic Property Affiliates as its sole broker for relocating as a result of the termination herein described; and
f) Tenant demonstrates to Landlord's satisfaction that Tenant has leased space equivalent to that space requested in the Additional Space Notification.
9. If Landlord offers Tenant Additional Space in the Building in accordance with subparagraphs 8(a) and 8(b) above, Tenant shall lease the Additional Space pursuant to the following:
a) The Fixed Annual Rent for the Additional Space shall be at the rate of Fixed Rent (per square foot) which is the market rate for the Building at the time the lease for the Additional Space is executed, but in no event shall the Fixed Annual Rent for the Additional Space be less than the rate (per square foot) in effect for the Demised Premises at the time Tenant executes a lease for the Additional Space; and
b) The lease for the Additional Space shall be for a term of no less than five (5) years, and the Lease for the Demised Premises shall be amended so that it is coterminous with any lease for Additional Space.
10. If Tenant shall be acquired in its entirety (either by merger, consolidation, asset purchase or stock acquisition) by entity/ies or person(s) unaffiliated, directly or ndirectly, with Tenant or Tenant's officers or directors, Tenant may terminate the Lease upon six (6) months' prior notice (given pursuant to the notice requirements of the Lease) provided:
a) On the date of said Termination Notice, Tenant pays to Landlord:
i) the Termination Consideration computed pursuant to subparagraph 8(d) hereof,
plus ii) 30% of the amount which would be due to Landlord as Fixed Rent under
this Second Amendment and Modification of Lease from the effective date of
termination specified in the Termination Notice to the date of expiration of the
Lease, had the Lease not terminated by Tenant's notice hereunder:
b) The date of termination specified in the Termination Notice is the final day of a calendar month; and
c) Tenant is not in default under any of the terms of the Lease on the date the Termination Notice is given or on the date of termination specified in the Termination Notice.
11. Except as amended by this agreement, all other terms and conditions of the Lease shall continue in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have set their hands as of the day and year first above written.
LANDLORD:
60 CUTTER MILL ROAD PROPERTY CORP.
By: /s/ Matthew J. Gould ------------------------------------ Matthew J. Gould, Vice President |
TENANT:
INTEGRATED CASH MANAGEMENT SERVICES, INC.
By: /s/ [ILLEGIBLE]^^ President 10/28/93
------------------------------------
Name:
Title:
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Suite 601/609 60 Cutter Mill Road Great Neck, New York
THIRD AMENDMENT AND EXTENSION OF LEASE
AGREEMENT entered into as of the 3/rd/ day of April 1998 by and between 60 CUTTER MILL ROAD PROPERTY CORP. ("Landlord") with offices at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, and INTEGRATED CASH MANAGEMENT SERVICES, INC. ("Tenant"), with offices at Suite 601, 60 Cutter Mill Road, Great Neck, New York.
WHEREAS, Landlord's predecessor in interest and Tenant entered into a lease dated March 13, 1989 ("Original Lease"), pursuant to which Lease Landlord's predecessor in interest leased to Tenant and Tenant leased from Landlord's predecessor in interest certain premises known as Suite 601, 60 Cutter Mill Road, Great Neck, New York ("Suite 601");
WHEREAS, the Original Lease was amended and modified by First Amendment and Modification of Lease dated August 15, 1989 ("First Amendment") and the Original Lease was further amended and modified and the term of the Original Lease extended by Second Amendment and Modification of Lease dated October 28, 1993 ("Second Amendment") (Original Lease, as so amended, modified and extended is referred to herein as "Lease");
WHEREAS, Tenant desires to lease additional space pursuant to the terms of the Lease, extend the term of the Lease and to modify certain other terms of the Lease;
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
1. The term of the Lease is extended for a period of five (5) years commencing July 1, 1999 and ending June 30, 2004.
2. (a) Effective the Substantial Completion Date (as that term is defined below), "Demised Premises," (as that term is used in the Lease) shall mean both Suite 601 and Suite 609, 60 Cutter Mill Road, Great Neck, New York ("Suite 609," comprised of 620 square feet). The Substantial Completion Date is estimated to be on or about April 15, 1998, but Landlord makes no warranty or representation as to what date the Substantial Completion Date will be.
(b) Attached hereto and made a part hereof as Exhibit A is a plan ("Plan"), setting forth the work to be performed by Landlord to combine Suite 601 and Suite 609 ("Landlord's Work"). Landlord's Work shall be in accordance with and pursuant to Landlord's building standard. Landlord shall endeavor to minimize the disruption of Tenant's business during such construction, but shall not be liable for any temporary disturbance or interruption of Tenant's business. If Tenant desires work to be performed which is in addition to or deviates from Landlord's building standard, then the cost of such additional work, material, installation or deviation will be at Tenant's sole cost and expense. Any changes in Landlord's Work must be consented to by Landlord. Landlord shall give Tenant not less than ten (10) days' prior written notice to Tenant of the date Landlord's Work shall be substantially completed ("Substantial Completion Date"). Within three (3) days of the Substantial Completion Date, Landlord and Tenant (or their representatives) shall jointly examine the Demised Premises and shall compile a list of any remaining items of work which Landlord shall be obligated to complete pursuant to the Lease, as hereby amended ("Punch List Items"). The taking of possession of Suite 609 by Tenant shall be deemed an acceptance of Suite 609, and Landlord shall thereafter proceed expeditiously to complete the Punch List Items.
(c) If Landlord is unable to give possession of Suite 609 because of the holding-over or retention of possession of any tenant, undertenant or occupants, or if Landlord's Work has not been substantially completed because of a holding over or retention of possession of any tenant, undertenant or occupant or due to force majeure, or for any other reason, Landlord shall not be subject to any liability for failure to give possession on said date and the validity of the lease shall not be impaired under such circumstances, nor shall the same be construed in any way to extend the term of this lease, but the rent payable hereunder for Suite 609 shall be abated (provided Tenant is not responsible for Landlord's inability to obtain possession) until after Landlord shall have given Tenant written notice that Suite 609 is ready for Tenant's occupancy. The provisions of this Paragraph are intended to constitute "an express provision to the contrary" within the meaning of Section 223-a of the New York Real Property Law.
3. (a) During the period from the Substantial Completion Date through June 30, 1999, Tenant shall pay Landlord Basic Rent (previously referred to as "Fixed Rent") for Space 609 at the rate of FIFTEEN THOUSAND THREE HUNDRED SIXTEEN AND 35/100 DOLLARS ($15,316.35) per annum, payable in advance on the first day of each month in monthly installments of ONE THOUSAND TWO HUNDRED SEVENTY-SIX AND 36/100 DOLLARS ($1,276.36) without notice, demand or setoff. The Basic Rent for Space 609 for any partial month during such period shall be at the rate of $41.17 per diem and shall be payable on the Substantial Completion Date. The Basic Rent for Suite 609 set forth in this Subparagraph 3(a) is in addition to the Basic Rent for Suite 601 set forth in Paragraph 7 of the Second Amendment.
(c) During the period from July 1, 2000 through June 30, 2001, Tenant shall pay
Landlord Basic Rent for the Demised Premises at the rate of THREE HUNDRED
ONE THOUSAND NINE HUNDRED NINETY-TWO AND 08/100 DOLLARS ($301,992.08) per annum,
payable in advance on the first day of each month in monthly installments of
TWENTY-FIVE THOUSAND ONE HUNDRED SIXTY-SIX AND 0l/l00 DOLLARS ($25,166.01)
without notice, demand or setoff.
(d) During the period from July 1, 2001 through June 30, 2002, Tenant shall pay
Landlord Basic Rent for the Demised Premises at the rate of THREE HUNDRED
FOURTEEN THOUSAND SEVENTY-ONE AND 76/100 DOLLARS ($314,071.76) per annum,
payable in advance on the first day of each month in monthly installments of
TWENTY-SIX THOUSAND ONE HUNDRED SEVENTY-TWO AND 65/100 DOLLARS ($26,172.65)
without notice, demand or setoff.
(e) During the period from July 1, 2002 through June 30, 2003 Tenant shall pay
Landlord Basic Rent for the Demised Premises at the rate of THREE HUNDRED
TWENTY-SIX THOUSAND SIX HUNDRED THIRTY-FOUR AND 63/100 DOLLARS ($326,634.63) per
annum, payable in advance on the first day of each month in monthly installments
of TWENTY-SEVEN THOUSAND TWO HUNDRED NINETEEN AND 55/100 DOLLARS ($27,219.55)
without notice, demand or setoff.
(f) During the period from July 1, 2003 through June 30, 2004, Tenant shall pay
Landlord Basic Rent for the Demised Premises at the rate of THREE HUNDRED
THIRTY-NINE THOUSAND SEVEN HUNDRED AND 01/100 DOLLARS ($339,700.01) per annum,
payable in advance on the first day of each month in monthly installments of
TWENTY-EIGHT THOUSAND THREE HUNDRED EIGHT AND 33/100 DOLLARS ($28,308.33)
without notice, demand or setoff.
4. Simultaneously with the execution of this amendment, Tenant
shall deposit with Landlord an additional $2,552.73 to be held by Landlord as security pursuant to Paragraph 34 of the Original Lease, so that total security held by Landlord pursuant to the Lease shall be $44,952.73.
5. Upon the Substantial Completion Date, Tenant shall be allotted one additional reserved parking space and one additional non-reserved parking space in addition to the parking spaces allotted pursuant to Paragraph 56 of the Original Lease.
6. As soon as is practicable after the execution of this amendment, Landlord shall: (a) paint the Demised Premises in a color selected by Tenant which conforms to building standard; (b) carpet the Demised Premises in a style and color selected by Tenant which conforms to building standard; (c) repair or paint damaged ceiling tiles in the Demised Premises. Landlord's obligation to perform according to the terms of this Paragraph is a one-time-only, non- recurring obligation.
7. Landlord and Tenant acknowledge that there are two paragraphs of the
Second Amendment which are designated "Paragraph 9." The references in the
second Paragraph 9 and Paragraph 10 of the Second Amendment to Subparagraphs
8(a), 8(b) and 8(d) are deemed to refer to Subparagraphs (a), (b) and (d) of the
first Paragraph 9 of the Second Amendment.
8. Subparagraph (d) of the first Paragraph 9 of the Second Amendment is deleted and the following inserted in its place:
"(d) Tenant pays to Landlord on the date of the Termination Notice an amount ("Termination Consideration") equal to the product of (i) $122,731.00 and (ii) a fraction, the numerator of which is the number of months between the date of termination given in the Termination Notice and June 30, 2004, and the denominator of which is 75."
9. Subparagraph 10(a) of the Second Amendment is deleted, and the following inserted in its place:
"(a) On the date of said Termination Notice, Tenant pays to Landlord: (i) the Termination Consideration computed pursuant to subparagraph (d) of the first Paragraph 9 hereof, plus (ii) 30% of the amount which would be due to Landlord as Basic Rent under the Third Amendment of Lease from the effective date of termination specified in the Termination Notice to the date of expiration of the Lease, had the Lease not terminated by Tenant's notice hereunder."
10. Except as amended hereby, all other terms and conditions of the Lease remain in full force and effect and shall be binding upon Landlord and Tenant in all respects.
IN WITNESS WHEREOF, Landlord and Tenant have set their hands as of the day and year first above written.
LANDLORD:
60 CUTTER MILL ROAD PROPERTY CORP.
By: /s/ Matthew J. Gould
----------------------------------
Matthew J. Gould, President
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TENANT:
INTEGRATED CASH MANAGEMENT SERVICES, INC.
By: /s/ [ILLEGIBLE]^^ 4/3/98
----------------------------------
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[DIAGRAM]
L
Suite 601/609/614/615/616 60 Cutter Mill Road Great Neck, New York
FOURTH AMENDMENT AND EXTENSION OF LEASE
AGREEMENT entered into as of the 20/th/ day of July, 1999 by and between 60 CUTTER MILL ROAD PROPERTY CORP. ("Landlord"), with offices at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, and INTEGRATED CASH MANAGEMENT SERVICES, INC. ("Tenant"), with offices at Suite 601, 60 Cutter Mill Road, Great Neck, New York 11021.
WHEREAS, Landlord's predecessor in interest and Tenant entered into an Agreement of Lease dated March 13, 1989 ("Original Lease"), pursuant to which Lease Landlord leased to Tenant and Tenant leased from Landlord certain premises in the building located at 60 Cutter Mill Road, Great Neck, New York 11021;
WHEREAS, the Original Lease was amended by (1) First Amendment and Modification of Lease dated August 15, 1989, (2) Second Amendment and Modification of Lease dated October 28, 1993 and (3) Third Amendment and Extension of Lease dated as of April 3, 1998 (the Original Lease as so amended is referred to herein as the "Lease");
WHEREAS, pursuant to the Lease, Tenant is currently occupying Suite 601 and Suite 609 at the Building, comprising a total of approximately 11,020 square feet; and
WHEREAS, Landlord and Tenant desire to extend the term of the Lease, add certain additional space to the Demised Premises leased thereunder and modify certain other terms of the Lease;
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
the Substantial Completion Date and shall expire at 11:59 p.m. on the day before the tenth (10/th/) anniversary of the Substantial Completion Date (the "Expiration Date"). At the request of either party, the other party shall execute and deliver a commencement date acknowledgement notice, confirming the Substantial Completion Date and the Expiration Date, as amended and extended hereby.
(b) On each of July 1, 2000, July 1, 2001, July 1, 2002 and July 1 2003, the annual Basic Rent payable pursuant to the Lease shall be increased to an amount equal to the Basic Rent for the immediately preceding lease year plus four (4%) percent of such amount. On July 1, 2004 and on each succeeding July 1 thereafter during the term, the annual Basic Rent payable pursuant to the Lease shall be equal to the lesser of (1) the annual Basic Rent for the immediately preceding lease year plus five (5%) percent of such amount and (2) the annual Basic Rent for the immediately preceding lease year "As Increased By CPI" (as such phrase is defined below). In no event shall the Basic Rent payable hereunder be subject to decrease.
(c) As used herein, the phrase "As Increased By CPI" shall mean the amount resulting from taking the Basic Rent in effect as at the preceding month of June and multiplying same by the CPI (as defined below) for said June, then dividing the result by the CPI for June of the year before said July 1 (i.e., the adjustment will reflect a one-year June change). In the event that such increase is not known at a given July 1, then any adjustments relating back shall be paid within 15 days following receipt by Tenant of a bill therefor. The term "CPI" shall mean the Consumer Price Index for All Urban Consumers, New York, New York, Northeastern New Jersey for All Items, as published by the Bureau of Labor Statistics of the United States Department of Labor. If such index is changed in its make-up or application, it shall be appropriately adjusted to reflect the intent herein. If such index is discontinued, then the most nearly comparable index shall be used.
(d) Modifying Paragraph 38 of the Original Lease, Tenant acknowledges that the Basic Rent payable hereunder includes an amount for Tenant's consumption of electricity in the Demised Premises, and that such included amount is based upon the assumption that (1) the Demised Premises shall be used as general offices for a computer software company and (2) all of the electrically-operated equipment in the Demised Premises shall be
operated for an average of no more than sixty (60) hours a week plus useage for
computer servers, telephone systems, fax machines and security systems (the "24
x 7 Equipment"), which are operated 168 hours per week. If the Demised Premises
or any portion thereof is used in excess of such assumptions, then Tenant shall
pay for such overtime use as determined by a survey of an electrical consultant
to be chosen by Landlord, to be billed monthly and to be paid as additional rent
(or, at Landlord's option, to be included in the Basic Rent payable hereunder),
and Landlord shall have all rights and remedies for the collection thereof as
Landlord has for the collection of rents under the Lease. In the event a survey
is conducted by an electrical consultant chosen by Landlord as provided in the
immediately preceding sentence, then Tenant, within sixty (60) days after
notification from Landlord of the determination of said consultant, shall have
the right to contest, at Tenant's sole cost and expense, such determination by
submitting to Landlord within said sixty (60) day period a survey determination
prepared by an electrical consultant chosen by Tenant, which determination shall
highlight the differences between Landlord's survey and Tenant's survey. If the
determination of Tenant's consultant does not vary from the determination of
Landlord's consultant by more than ten (10%) percent, then the determination of
Landlord's consultant shall be binding and conclusive. If the determination of
Tenant's consultant shall vary from the determination from the determination of
Landlord's consultant by more than ten (10%) percent, and if Landlord's
consultant and Tenant's consultant shall be unable to reach agreement with
respect to such variance within thirty (30) days after the determination of
Tenant's consultant, then said consultants to make the determination, and the
determination of such third consultant shall mutually select in good faith a
third consultant shall be binding and conclusive. Landlord and Tenant shall
share the cost of such third consultant. In the event that said consultants
shall be unable to select a mutually acceptable third (30) day period, then
either party shall have the right to request the American Arbitration
Association in Nassau County to designate an additional consultant, the cost of
which shall be shared equally by the parties and whose determination shall be
binding and conclusive.
and improvements and appurtenances, or any part thereof, the use of which is available to Tenant (hereinafter jointly "Property"), and all taxes and assessments upon any leasehold interests, to the extent that such taxes and assessments exceed the Base Year total as hereinafter defined; provided, however, for the tax years in which the Lease commences or expires the amount of any excess for such tax year payable hereunder shall be pro rated between Landlord and Tenant on the basis of the Commencement Date and the Expiration Date.
(b) "Base Year" shall mean (i) for a taxing authority whose tax year is the calendar year, the 1999 calendar year, and (ii) for a taxing authority whose tax year is not the calendar year, that taxing authority's fiscal tax year 1999/2000.
(c) If any kind of tax or assessment whatsoever shall be charged against Landlord partially or totally in substitution for real estate taxes and/or assessments, same shall be deemed as a real estate tax for purposes of this section of the Lease.
(d) should any governmental authority having jurisdiction impose a tax and/or assessment (other than franchise tax) upon or against the Rents payable hereunder by Tenant to Landlord, or the occupancy by Tenant, such tax shall be Tenant's obligation and responsibility, but if paid by Landlord, shall be deemed Additional Rent and reimbursed to Landlord by Tenant within ten (10) days after submission of a bill for same.
(e) Tenant shall pay Tenant's Proportionate Share of such increase in taxes and
assessments to Landlord within fifteen (15) days after the submission of a bill
for same, provided however, upon written request of Landlord or mortgagee to
escrow such increases in taxes, Tenant shall pay Tenant's Proportionate Share of
such increase in taxes and assessments requested to be escrowed on a monthly
basis in amounts as determined by Landlord in good faith or in amounts as
determined by Landlord's mortgagee. If the monthly payments made by Tenant shall
be less than Tenant's Proportionate Share of the increase in such taxes and
assessments, then Tenant shall pay such deficiency to Landlord within fifteen
(15) days after written request. If Tenant's monthly payments shall exceed
Tenant's actual proportionate share of the increase in such taxes and
assessments, then such excess shall be applied against the next payment(s) due
pursuant to this Paragraph. Upon Tenant's request Landlord shall provide Tenant
with copies of tax bills which relate to any bill provided by Landlord to Tenant
pursuant to this Paragraph.
(f) Tenant shall pay as aforesaid Tenant's Proportionate Share of all assessments which may be levied, assessed, charged or imposed by a governmental authority or other taxing authority upon the Land and Building or any part thereof by reason of any public works or construction, provided that whenever assessments or special assessments may be paid in installments, Landlord shall enter into such agreement or agreements as are permitted by law to secure the right and privilege of paying such assessments or special
assessments in installments. In such case, the last such installment paid prior to commencement or termination of this lease shall be pro rated between Landlord and Tenant.
(g) Tenant shall pay all personal property taxes levied on the merchandise, equipment, appliances, fixtures, machinery, inventory, furniture and other personal property and contents and leasehold value of the Demised Premises.
Notice shall be null and void and of no further force or effect. In the event that such conditions 1 through 3 shall have been satisfied, such available additional space shall be added to the Demised Premises and all of the terms and provisions of the Lease shall be applicable thereto, except that:
(a) The Basic Rent for such additional space shall be at the rental rate per square foot which is the market rate for the Building at the time such space is added to the Demised Premises, as determined by Landlord (but in no event less than the rental rate per square foot then in effect for the Demised Premises), and such amount shall be added to the Basic Rent payable under the Lease with respect to the Demised Premises (and shall be subject to increase as provided in the Lease as amended hereby); and
(b) Tenant's Proportionate Share shall be increased to take into account the addition to the Demised Premises of such additional space, in an amount to be determined by Landlord.
(b) The "first" Paragraph 9 of the Second Amendment and Modification of Lease, dated October 28, 1993, relating to Tenant's option to terminate the Lease upon certain conditions, is hereby deleted in its entirety.
(b) Landlord shall give Tenant at least seven (7), days notice prior to any sheet-rocking of the walls Landlord may perform in connection with Landlord's Work, and Landlord shall give at least ten (10) days prior written notice to Tenant, setting forth the date on which Landlord anticipates that Landlord's Work will be substantially completed and the Additional Space will be ready for occupancy and available for delivery to Tenant (the date on which such Landlord's Work shall have been substantially completed is hereinafter referred to as the "Substantial Completion Date"). Within three (3) days after the Substantial Completion Date, Landlord's representative and Tenant's representative shall jointly examine Landlord's Work and shall compile a list of any remaining items thereof which Landlord may be obligated to complete (i.e., so-called "punchlist" items). The taking of possession of the Additional Space by Tenant shall be deemed to be Tenant's acceptance of same, but Landlord shall thereafter diligently proceed to complete said punchlist items.
Landlord's Work with respect to such space (if applicable) and subject to Landlord's other obligations under the Lease.
(b) Tenant hereby acknowledges that Suites 614 and 616 are currently leased to and occupied by other tenants of the Building. Notwithstanding anything to the contrary contained in this Amendment or in the Lease, in the event that Landlord is unable to deliver possession of Suites 614, 615 and/or 616 to Tenant in the condition required hereby on or prior to the date which is nine (9) months after the date hereof, whether because of the holding-over or retention of possession of any such tenant, undertenant or occupants, or if Landlord's Work cannot be completed by Landlord because of a holding over or retention of possession of any such tenant, undertenant or occupant or due to force majeure, or for any other reason (provided Tenant is not responsible for same), then (1) this Amendment shall automatically be null and void and of no further force or effect, and the Lease shall continue in accordance with its terms without regard to this Amendment and (2) Landlord shall not be subject to any liability for such failure to give possession, and the validity of the Lease (without regard to this Amendment) shall not be impaired under such circumstances, nor shall the same be construed in any wise to extend the term of the Lease. The provisions of this Paragraph are intended to constitute "an express provision to the contrary" within the meaning of Section 223-a of the New York Real Property Law.
to the operation of Tenant's business in Suite 206, any potential tenant for said Suite shall have the right, following notice to Tenant from Landlord and during the period of Tenant's occupancy of Suite 206, to enter said Suite in order to prepare same for such tenant's occupancy. Tenant shall have the right to have its representative present during any such entry, and if requested by Tenant Landlord shall use reasonable efforts to cause any such entry to be performed by such prospective tenant during non-regular business hours.
(b) If and to the extent the terms and provisions of this Agreement conflict with or are inconsistent with the Original Lease as previously amended, the terms and provisions of this Agreement shall prevail and be controlling.
IN WITNESS WHEREOF, Landlord and Tenant have set their hands as of the day and year first above written.
LANDLORD:
60 CUTTER MILL ROAD PROPERTY CORP.
By:_____________________________________ Matthew J. Gould, President
TENANT:
INTEGRATED CASH MANAGEMENT SERVICES, INC.
By: /s/ Peter C. Erich ------------------------------------- Name: PETER C. ERICH Title: VP |
EXHIBIT A
Floor Plan
[FLOOR PLAN APPEARS HERE]
EXHIBIT B
The Plan
EXHIBIT B
1. LOCATION OF ALL WALLS AND DOORS AS SHOWN ON PLAN
2. ALL WALLS SHALL BE CEILING HEIGHT WITH ONE LAYER OF 5/8" GYP. BD. EACH
SIDE OF 2-1/2" METAL STUDS 24" O.C.
3. ALL EXISTING CEILINGS EXCEPT IN "AREA 51" SHALL BE REMOVED AND NEW 24 X 48
SECOND LOOK II #1761 (OR EQUAL) LAY-IN ACOUST. TILE BE INSTALLED. WITH
NEW 15/16" LAY-IN GRID.
PATTERN SHALL FOLLOW GRID PATTERN IN "AREA 51".
4. ALL PENDANT MOUNTED LIGHTING SHALL BE REPLACED WITH 145- 24 X 48 18-CELL
PARABOLIC FLUORESCENT LIGHT FIXTURES W/ 3-T8 3800K. BULBS AND ELECTRONIC
BALLASTS
5. ALL COMMON AREAS & OFFICES.(REUSE 41 EXISTING PARABOLIC LIGHT FIXTURES.
RE-BULB TO MATCH NEW FIXTURES.)
6. INSTALL 50 NEW DUPLEX RECEPTACLES
7. INSTALL 4 NEW ISOLATED GROUND 115V. 20A. CIRCUITS
8. INSTALL 2- PLUG MOULD (12" O.C.) WITH 2- CIRCUITS IN LAB
9. INSTALL 1- COMBO FLOOR RECEPTACLE IN WAITING ROOM
10. ALL AREAS EXCEPT LOUNGE, LAB, COMPUTER ROOM & LAVATORY SHALL RECEIVE NYLON
28 OZ. LOOP PILE CARPET, DIRECT GLUE DOWN INSTALLATION. A POURED SELF-
LEVELING SYSTEM (ARDEX OR EQUAL) SHALL BE INSTALLED OVER EXISTING CERAMIC
TILE PRIOR TO CARPET INSTALLATION.
11. LOUNGE AND TEST LAB SHALL RECEIVE BLDG STD V.C.T. (LAVATORY TILE TO REMAIN
AND BE CLEANED.)
12. ALL COMMON AREA WALLS IN AREA "A" (THE COMMON AREA BETWEEN AREA 51 AND THE
SOUTHEASTERN SECTOR) SHALL RECEIVE TYPE 1 VINYL WALLCOVERING;
ALL WALLS THAT NOW HAVE CARPET SHALL HAVE CARPET REMOVED AND 1/8" LUAN
FASTENED TO WALLS PRIOR TO INSTALLATION OF THE VWC
13. ALL OTHER WALLS SHALL BE PAINTED W/ FLAT LATEX BENJ. MOoRE PAINT
14. ALL HOLLOW METAL DOOR BUCKS SHALL BE PAINTED W/ SEMI-GLOSS ENAMEL BENJ.
MOORE PAINT
(EXISTING OAK FRAMES SHALL REMAIN & RECEIVE A COAT OF CLEAR SATIN
POLYURETHANE SEALANT
15. ALL IN AREA "A" SHALL BE REUSED. ALL OTHER DOORS SHALL BE BLDG STANDARD
FULL-HEIGHT OAK DOORS.
ALL NEW HARDWARE SHALL MATCH EXISTING
16. ENTRY AND WAITING ROOM DOORS SHALL BE REPLACED WITH DOUBLE 6' WIDE 1/2"
TEMPERED GLASS DOORS WITH POLISHED CHROME PULLS, LOCK, CLOSERS AND HOLD
OPEN DEVICE
A FULL HEIGHT GLASS WALL AT THE WAITING AREA SHALL MATCH GLASS DOORS
17. PROVIDE AND INSTALL 2- SINGLE 3' X 8' 1/2" TEMPERED GLASS DOORS W/ HDWRE
AS LOCATED ON PLAN
18. PROVIDE & INSTALL 2- 6' DIAMETER METAL CONDUIT W/ PULL STRINGS FROM WAITING
AREA ACROSS ELEVATOR LOBBY INTO THE NORTH SIDE OF TENANT'S SPACE (AREA 51)
19. PROVIDE AND INSTALL A ELECTRIC ROLL-UP SHADE AT CONFERENCE ROOM SKYLIGHT
20. EXIT AND EMERGENCY LIGHTING AND HVAC MODIFICATIONS SHALL BE PROVIDED IN
ACCORDANCE WITH DESIGN INTENT INDICATED ON PLAN. DIFFUSERS SHALL BE REUSED
OR REPLACED AT LANDLORD'S SOLE DESCRIPTION.
21. 16- HI-HATS SHALL BE PROVIDED & INSTALLED IN THE WAITING AREA(10) AND MAIN
ENTRY HALL(6)
22. PLASTIC LAMINATE CABINETRY IN LOUNGE SHALL BE MODIFIED AS PER NEW LAYOUT -
BY TENANT
23. WAITING AREA CEILING SHALL BE DEMOLISHED: UPON INSPECTION AFTER DEMOLITION
IT SHALL BE DETERMINED IF ANY ADJUSTMENTS IN HEIGHT CAN BE MADE AND IF
MODIFICATION TO SPECIFICATION OF LIGHTING SHALL BE MADE.
24. NEW ELECTRICAL TRANSFORMER TO BE SIZED AND INSTALLED
ALL TELEPHONE & COMPUTER WIRING TO BE INSTALLED BY TENANT
(TENANT'S CONTRACTOR TO CO-ORDINATE WITH LANDLORD.
25. ALL FURNISHINGS, EQUIPMENT AND INSTALLATION AND/OR MOVING THEREOF IS
TENANT'S RESPONSIBILITY
26. INSTALL 2 NEW SPRINKLER HEADS AT GLASSS ENTRY DOOR
I.C.M.
SUITE 600
60 CUTTERMILL ROAD
GREAT NECK, NEW YORK
DATE: JUN 15, 1999
SCALE: 1/16" =1'-0'
JOB NUMBER: 86-419-5L
PRELIM6-ANNOTATED
[LOGO OF OMNITECH]
[FLOOR PLAN APPEARS HERE]
Exhibit 10.34
AGREEMENT OF LEASE
Between
55 BROAD STREET L.P.,
Owner
and
BOTTOMLINE TECHNOLOGIES, INC.,
Tenant
Premises
New York Information Technology Center
55 Broad Street
New York, New York
Dated May _____________, 2000
TABLE OF CONTENTS
-----------------
ARTICLE 1 Demised Premises, Term, Rents
ARTICLE 2 Use and Occupancy
ARTICLE 3 Alterations
ARTICLE 4 Ownership of Improvements
ARTICLE 5 Repairs
ARTICLE 6 Compliance With Laws
ARTICLE 7 Subordination, Attornment, Etc.
ARTICLE 8 Property Loss, Etc.
ARTICLE 9 Destruction-Fire or Other Casualty
ARTICLE 10 Eminent Domain
ARTICLE 11 Assignment and Subletting
ARTICLE 12 Existing Conditions/Present Occupant
ARTICLE 13 Access to Demised Premises
ARTICLE 14 Vault Space
ARTICLE 15 Certificate of Occupancy
ARTICLE 16 Default
ARTICLE 17 Remedies
ARTICLE 18 Damages
ARTICLE 19 Fees and Expenses; Indemnity
ARTICLE 20 Entire Agreement
ARTICLE 21 End of Term
ARTICLE 22 Quiet Enjoyment
ARTICLE 23 Escalation
ARTICLE 24 No Waiver
ARTICLE 25 Mutual Waiver of Trial by Jury
ARTICLE 26 Inability to Perform
ARTICLE 27 Notices
ARTICLE 28 Partnership Tenant
ARTICLE 29 Utilities and Services
ARTICLE 30 Table of Contents, Etc.
ARTICLE 31 Miscellaneous Definitions, Severability and Interpretation
Provisions
ARTICLE 32 Adjacent Excavation
ARTICLE 33 Building Rules
ARTICLE 34 Broker
ARTICLE 35 Security
ARTICLE 36 Arbitration, Etc.
ARTICLE 37 Parties Bound
SCHEDULE A Building Rules
EXHIBIT 1 Plan of Demised Premises
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W I T N E S S E T H:
Owner and Tenant hereby covenant and agree as follows:
ARTICLE 1
C. Tenant waives any right to rescind this Lease under Section 223-a of the New York Real Property Law or any successor statute of similar import then in force and further waives the right to recover any damages which may result from Owner's failure to deliver possession of the Demised Premises on the date set forth in Subsection A of this Section, whether or not due to the holding over of the Present Occupant (defined in Article 12), for the commencement of the Demised Term.
B. The Fixed Rent, any increases in the Fixed Rent and any additional rent payable pursuant to the provisions of this Lease shall be payable by Tenant to Owner at its office (or at such other place as Owner may designate in a notice to Tenant) in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment or by Tenant's good check drawn on a bank or trust company whose principal office is located in New York City and which is a member of the New York Clearinghouse Association, without prior demand therefor and without any offset or deduction whatsoever except as otherwise specifically provided in this Lease. The Fixed Rent shall be payable in equal monthly installments of NINE THOUSAND NINE HUNDRED SEVENTY-TWO and 00/100 ($9,972.00) DOLLARS, in advance, on the first (1st) day of each month during the Demised Term (except as otherwise provided in Subsection C of this Section).
C. The sum of NINETEEN THOUSAND NINE HUNDRED FORTY- FOUR and 00/100 ($19,944.00) DOLLARS, representing the installment of Fixed Rent for the first (1st) and second (2/nd/) full calendar months of the Demised Term, is due and payable on or before July 1, 2000. In the event that the Commencement Date shall occur on a date other than the first (1st) day of any calendar month, Tenant shall pay to Owner, on the first (1st) day of the month next succeeding the month during which the Commencement Date shall occur, a sum equal to THREE HUNDRED THIRTY-TWO and 40/100 ($332.40) DOLLARS, multiplied by the number of calendar days in the period from the Commencement Date to the last day of the month in which the Commencement Date shall occur, both inclusive. Such payment, together with the sum paid by Tenant upon the execution of this Lease, shall constitute payment of the Fixed Rent for the period from the Commencement Date to and including the last day of the next succeeding calendar month.
A. A portion of the twenty-eighth (28th) floor of the Building is presently affected by a license dated May 24, 1998 between Owner, as licensor, and Tenant, as licensee, for a term which expired on February 29, 2000, and Tenant, as licensee, continues to occupy the premises affected thereby (said license, as may have been modified by any written agreements, including an agreement dated March 24, 1998 is referred to as "Tenant's Existing License"). Tenant's Existing License and the term demised therein shall terminate and come to an end on the date (referred to as the "Surrender Date") one (1) day prior to the Commencement Date of this Lease, unless sooner terminated pursuant to any of the terms, covenants or conditions of Tenant's Existing License or pursuant to law. Tenant agrees to vacate and surrender to Owner the entire premises demised in Tenant's Existing License free of all tenancies and occupancies on or prior to the Surrender Date, as if the Surrender Date were the date originally fixed for the expiration of the term demised in Tenant's Existing License, and Tenant shall fully comply with the provisions of Tenant's Existing License on or prior to the Surrender Date. If requested by Owner, Tenant agrees to execute and deliver to Owner after the Surrender Date, a further agreement, in form reasonably satisfactory to Owner, evidencing the surrender to Owner of the premises demised in Tenant's Existing License; however, neither Owner's failure to request such execution nor Tenant's failure to execute and deliver such instrument shall vitiate the provisions of this Section 1.06.
B. Provided Tenant, as licensee, is not then in default under any of its obligations under Tenant's Existing License or this Section, Tenant shall be released from its obligations under Tenant's Existing License accruing after the Surrender Date, except as otherwise provided in this Section. If Tenant shall vacate
the premises demised in Tenant's Existing License or any part thereof at any time prior to the Surrender Date, such premises or such part thereof shall be deemed surrendered to Owner at such time. Nothing contained in this Section, shall be deemed to affect Tenant's obligation to pay the license fee reserved in Tenant's Existing License, and any increases therein, accruing with respect to all periods to and including the Surrender Date, and regardless of when Tenant shall vacate the premises demised in Tenant's Existing License, Tenant shall not be entitled to any refund, abatement or apportionment of the License Fee or annual rental rate reserved in Tenant's Existing License or any such increases for such periods.
C. All unpaid portions of the License Fee and any increases therein and any additional fees due under Tenant's Existing License with respect to all periods to and including the later of (i) the Surrender Date or (ii) the date upon which Tenant shall vacate and surrender the premises demised in Tenant's Existing License in accordance with the provisions of this Section and Tenant's Existing License shall, at Owner's election, be payable by Tenant to Owner as additional rent under this Lease.
D. Tenant represents and warrants to Owner that Tenant is not in default under any of the terms, covenants or conditions of Tenant's Existing License and that Tenant has not at any time heretofore committed or suffered, and will not at any time hereafter commit or suffer, any act, deed, matter or thing whatsoever whereby the premises demised in Tenant's Existing License or any part thereof are or shall be at any time hereafter in any way impeached, charged, affected or encumbered. Tenant's obligations under the applicable provisions of Tenant's Existing License shall survive the expiration of the term thereof.
E. Except to the extent expressly modified by the foregoing provisions of this Section, Tenant's Existing License is hereby ratified and confirmed in respects.
ARTICLE 2
ARTICLE 3
A. All Alterations and decorations, shall be made and performed at Tenant's sole cost and expense and at such time and in such manner as Owner may, from time to time, designate;
B. No Alteration shall adversely affect the structural integrity of the Building;
C. Alterations and decorations shall be made only by contractors or mechanics approved by Owner, such approval not unreasonably to be withheld (notwithstanding the foregoing, all Alterations requiring mechanics in heating, ventilation, air conditioning, electrical, plumbing, sprinkler and other mechanical trades with respect to which Owner has adopted or may hereafter adopt a list or lists of approved contractors shall be made only by contractors selected by Tenant from such list or lists provided there are at least three (3) contractors on each such list and the prices charged by such contractors are competitive for similar work in the Borough of Manhattan in comparable first class office buildings);
D. No Alteration or decoration shall affect any part of the Building other than the Demised Premises or adversely affect any service required to be furnished by Owner to Tenant or to any other tenant or occupant of the Building (including, without limitation, the Building-wide standard systems required to provide elevator, heat, ventilation, air-conditioning and electrical and plumbing services in the Building);
E. No Alteration shall reduce the value or utility of the Building or any portion thereof;
F. No Alteration shall affect the Certificate of Occupancy for the Building or the Demised Premises;
G. No Alteration or decoration shall affect the outside appearance of the Building or the color or style of any venetian blinds (except that Tenant may remove any venetian blinds provided that they are promptly replaced by Tenant with blinds of a similar type, material and color);
H. All business machines and mechanical equipment shall be placed and maintained by Tenant in settings sufficient, in Owner's judgment, to absorb and prevent vibration, noise and annoyance to other tenants or occupants of the Building;
I. Tenant shall submit to Owner detailed plans and specifications stamped by Tenant's architect (including layout, architectural, mechanical and structural drawings) for each proposed Alteration and shall not commence any such Alteration without first obtaining Owner's approval of such plans and specifications, such approval not unreasonably to be withheld or delayed, notwithstanding the foregoing, Tenant shall not be required to submit any detailed plans and specifications for any Alterations unless such plans and specifications are, in the ordinary course, prepared for such Alterations or are required to be prepared in connection with any filings or other applicable requirements of any law, order, rule or regulation of any Federal, State, County or Municipality, including but not limited to, the Department of Buildings of the City of New York, and in those cases where Tenant shall not be
required to submit such detailed plans and specifications, Tenant shall submit to Owner, in lieu thereof, information with respect to such Alterations in reasonably sufficient detail so as to enable Owner to determine the nature and extent of the work to be performed, and following the completion of each Alteration, Tenant shall submit to Owner a computerized "as built" drawing file for the Demised Premises (or if the Demised Premises comprise more than one (1) floor, for each floor of the Demised Premises being altered) and in those cases where Tenant shall not be so required to submit such detailed plans and specifications, Tenant shall submit to Owner, in lieu thereof, information with respect to such Alterations in reasonably sufficient detail so as to enable Owner to determine the nature and extent of the work to be performed; such file will be in DXF format and contain, on a separate layer, all ceiling-height partitions and doors within the Demised Premises (or if the Demised Premises comprise more than one (1) floor, within each floor of the Demised Premises being altered);
J. Prior to the commencement of each proposed Alteration, Tenant shall have procured and paid for and exhibited to Owner, so far as the same may be required from time to time, all permits, approvals and authorizations of all Governmental Authorities (as defined in Section 6.01.) having or claiming jurisdiction;
K. Prior to the commencement of each proposed Alteration and decoration, Tenant shall furnish to Owner duplicate original policies of workmen's compensation insurance covering all persons to be employed in connection with such Alteration or decoration, including those to be employed by all contractors and subcontractors, and of comprehensive public liability insurance (including property damage coverage) in which Owner, its agents, the holder of any Mortgage (as defined in Section 7.01.) and any lessor under any Superior Lease (as defined in Section 7.01.) shall be named as parties insured, which policies shall be issued by companies, and shall be in form and amounts, satisfactory to Owner and shall be maintained by Tenant until the completion of such Alteration;
L. In the event Owner or its agents employ any independent architect or engineer to examine any plans or specifications submitted by Tenant to Owner in connection with any proposed Alteration, Tenant agrees to pay to Owner a sum equal to any reasonable out-of-pocket fees incurred by Owner in connection therewith.
M. All fireproof wood test reports, electrical and air conditioning certificates, and all other permits, approvals and certificates required by all Governmental Authorities shall be timely obtained by Tenant and submitted to Owner;
N. All Alterations and decorations, once commenced, shall be made promptly and in a good and workmanlike manner;
O. Notwithstanding Owner's approval of plans and
specifications for any Alteration, all Alterations and decorations shall be made
and performed in full compliance with all Legal Requirements (as defined in
Section 6.01.) and with all applicable rules, orders, regulations and
requirements of the New York Board of Fire Underwriters and the New York Fire
Insurance Rating Organization or any similar body;
P. All Alterations and decorations shall be made and performed in accordance with the Building Rules and Building Rules for Alterations;
Q. All materials and equipment to be installed, incorporated or located in the Demised Premises as a result of all Alterations shall be new and first quality;
R. No materials or equipment shall be subject to any lien, encumbrance, chattel mortgage or title retention or security agreement of any kind;
S. Tenant, before commencement of each Alteration, the estimated cost of which constituting a single project shall exceed ONE HUNDRED THOUSAND and 00/100 ($100,000.00) DOLLARS shall furnish to Owner a performance bond or other security satisfactory to Owner, in an amount at least equal to the estimated cost of such Alteration, guaranteeing the performance and payment thereof;
T. No Alteration shall be commenced unless any preceding Alteration shall have been fully paid for and proof of such payment furnished to Owner;
U. Following the completion of each Alteration, Tenant, at Tenant's expense, shall obtain certificates of final approval of such Alteration required by any Governmental Authority and shall furnish Owner with copies thereof.
V. Tenant agrees that Tenant will not install, affix, add or paint in or on, nor permit, any work of visual art (as defined in the Federal Visual Artists' Rights Act of 1990 or any successor law of similar import) or other Alteration to be installed in or on, or affixed, added to, or painted on, the interior or exterior of the Demised Premises, or any part thereof, including, but not limited to, the walls, floors, ceilings, doors, windows, fixtures and on land included as part of the Demised Premises, which work of visual art or other Alteration would, under the provisions of the Federal Visual Artists' Rights Act of 1990, or any successor law of similar import, require the consent of the author or artist of such work or Alteration before the same could be removed, modified, destroyed or demolished.
W. Under no circumstances shall Tenant be permitted to locate any telecommunications facilities in the telecommunications closets of the Building. With respect to Tenant's telecommunications facilities, (i) Tenant, without separate additional cost by Tenant payable to Owner, shall contract separately with all providers of Tenant's telecommunications facilities (each of which is referred to as a "Provider") and pay each Provider for all services provided by it to Tenant, and (ii) each Provider shall use, exclusively, the telecommunications cable distribution system in the Building designated by Owner and shall contract separately with the company providing cable distribution service in the Building (referred to as the "Telecommunications Cable Distribution Company") for the supply and maintenance of distribution cables. The Provider and Tenant shall comply with all reasonable rules and regulations adopted by Owner and the Telecommunications Cable Distribution Company. Owner shall not be liable to Tenant or anyone claiming through or under Tenant for any damages, including, but not limited to, special, incidental, remote or consequential damages, including, without limitation, lost revenue, lost profits and additional operating or personnel expenses arising from any acts, omissions or negligence of the Provider and the Telecommunications Cable Distribution Company.
practices adopted by Owner for fire safety in the Building. No Alteration shall affect all or any part of any Class E Fire Alarm and Communication system installed in the Demised Premises, except that in connection with any such Alteration Tenant may relocate certain components of such system, provided (i) such relocation shall be performed in a manner first reasonably approved by Owner, (ii) the new location of any such component shall be first reasonably approved by Owner, (iii) prior to any such relocation Tenant shall submit to Owner detailed plans and specifications therefor which shall be first reasonably approved by Owner and (iv) Owner shall have the election of relocating such components either by itself or by its contractors, in which event all reasonable expenses incurred by Owner shall be reimbursed by Tenant upon demand of Owner, as additional rent.
A. Speakers in excess of 4 per
floor of the Demised Premises (or
if the Demised Premises contain
less than one (1) floor, in excess
of four in the Demised Premises) $500.00 per device
B. Strobe Lights (single unit) $100.00 per device
C. Combination Speaker/Strobe
light $250.00 per device
7
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D. Duct Detectors (supplementary
air conditioning systems) $500.00 per point
E. Smoke Detectors (multi-purpose) $500.00 per point
F. Preaction Sprinkler System:
waterflow $500.00 per point
tamper $500.00 per point
G. Warden Phone (additional) $1,000.00 per unit
H. Fail Safe Door Release $250.00 per connection
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Section 3.09. A. In the event that, at any time during the Demised Term, in connection with any Alterations proposed to be performed by Tenant in the Demised Premises Tenant is unable to obtain a New York City Department of Environmental Protection Form ACP5 dated 10/88 (or any successor form), signed by a certified asbestos investigator, or any other form or approval required by Federal, State, County or Municipal authorities, indicating that said Alterations do not constitute an asbestos project, Owner agrees, upon notice from Tenant to such effect, to perform such work as shall be required to enable Tenant to obtain any such form or approval.
B. If any laws, orders, rules or regulations of any Federal, State, County or Municipal authority require that any asbestos or other hazardous material contained in or about the Demised Premises be removed or dealt with in any particular manner, then it shall be Owner's obligation, at Owner's expense, to remove or so deal with such asbestos or other hazardous material in accordance with such laws, orders, rules and regulations.
C. Notwithstanding the provisions of subsections A and B of this Section, in the event any work performed by Owner pursuant to the provisions of either or both of such subsections is in any way disturbed or damaged by Tenant or any person claiming through or under Tenant, or asbestos or other hazardous material is installed in the Demised Premises by or on behalf of Tenant, or any person claiming through or under Tenant, Owner shall have no responsibility in connection with the disturbed or damaged work or the asbestos or other hazardous material so installed by Tenant or any person claiming through or under Tenant and no obligation to perform any work with respect to the disturbed or damaged work or the asbestos or other hazardous material so installed by Tenant or any person claiming through or under Tenant, but it shall be Tenant's obligation, at Tenant's expense, to (i) perform such work with respect to such disturbed or damaged work or the asbestos or other hazardous material so installed by Tenant or any person claiming through or under Tenant as shall be required to enable Tenant to obtain any form or approval referred to in subsection A, and (ii) remove or so deal with such asbestos or other hazardous material in accordance with all such laws, orders, rules and regulations referred to in subsection B.
ARTICLE 4
ARTICLE 5
Section 5.02. Supplementing the provisions of Section 5.01, Owner, at Owner's sole cost and expense, shall timely make (i) all structural repairs to the Demised Premises and the Building as and when required, (ii) all repairs necessary to furnish the plumbing, electrical, air conditioning, ventilating, heating and elevator services required to be furnished by Owner to Tenant under the provisions of Article 29, and (iii) all necessary repairs to the public portions of the Building which affect Tenant's use and enjoyment of the Demised Premises, except that Owner
shall not be required to make any of the repairs referred to in subdivision (i),
(ii) or (iii) of this sentence if Tenant is obligated to make such repairs
pursuant to the provisions of Section 5.01. Notwithstanding the foregoing
provisions of this Section, Owner shall have no obligation to make any repairs
unless and until specific actual notice of the necessity therefor shall have
been given to Owner.
ARTICLE 6
and of the several items and charges in the fire insurance rates then applicable to the Building or property located therein.
ARTICLE 7
of the foregoing provisions of this Section, satisfactory to any such owner, holder, or lessee, acknowledging such attornment and setting forth the terms and conditions of its tenancy. Nothing contained in this Section shall be construed to impair any right otherwise exercisable by any such owner, holder, or lessee. Notwithstanding anything to the contrary set forth in this Article no such owner, holder or lessee shall be bound by (i) any payment of any instalment of Fixed Rent or increases therein or any additional rent which may have been made more than thirty (30) days before the due date of such instalment (except prepayments in the nature of security for the performance of Tenant's obligations under this Lease), or (ii) any amendment or modification to this Lease which is made without its consent.
ARTICLE 8
Section 8.01. Any Building employee to whom any property shall be
entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant's
agent with respect to such property and neither Owner nor Owner's agents shall
be liable for any loss of or damage to any such property by theft or otherwise.
Except as otherwise expressly set forth in this Lease, neither (i) the
performance by Owner, Tenant or others of any decorations, repairs, alterations,
additions or improvements in or to the Building or the Demised Premises, nor
(ii) the failure of Owner or others to make any such decorations, repairs,
alterations, additions or improvements, nor (iii) any damage to the Demised
Premises or to the property of Tenant, nor any injury to any persons, caused by
other tenants or persons in the Building, or by operations in the construction
of any private, public or quasi-public work, or by any other cause, nor (iv) any
latent defect in the Building or in the Demised Premises, nor (v) any temporary
(i.e., six [6] months or less) or permanent closing, darkening or bricking up of
any windows of the Demised Premises for any reason whatsoever beyond Owner's
reasonable control, nor any permanent closing, darkening or bricking up of any
such windows if required by law or in connection with any construction upon
adjacent property, nor (vi) any inconvenience or annoyance to Tenant or injury
to or interruption of Tenant's business by reason of any of the events or
occurrences referred to in the foregoing subdivisions (i) through (v), shall
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of rent, or relieve Tenant from any of its
obligations under this Lease, or impose any liability upon Owner, or its agents,
or any lessor under any Superior Lease, other than such liability as may be
imposed upon Owner by law for Owner's negligence or the negligence of Owner's
agents, servants or employees
in the operation or maintenance of the Building or for the breach by Owner of any express covenant of this Lease on Owner's part to be performed. Tenant's taking possession of the Demised Premises shall be conclusive evidence, as against Tenant, that, at the time such possession was so taken, the Demised Premises and the Building were in good and satisfactory condition.
ARTICLE 9
contractors, for any loss occasioned by fire or other casualty which is an insured risk under such policies and Owner shall look solely to such policies to compensate Owner for any such loss. In the event that at any time Owner's fire insurance carriers shall not include such or similar provisions in Owner's fire insurance policies, and substantially all New York State Insurance Companies no longer include such provisions as a matter of course, the waivers set forth in the foregoing sentence shall, upon notice given by Owner to Tenant, be deemed of no further force or effect and Owner shall have Tenant named in said policies as an assured party, but not as a loss payee, provided that if at any time Owner's fire insurance carriers shall exact an additional premium for naming Tenant as an assured party, Tenant shall agree, in writing, to reimburse Owner for such additional premium for the remainder of the Demised Term for so long as Tenant shall elect to be an assured party. In the event Tenant shall be named in such policies as an assured party in accordance with the foregoing provisions of this Section, Tenant agrees to endorse promptly, without recourse, any check, draft or order for the payment of money representing the proceeds of any such policies or representing any other payment growing out of or in connection with any such policies, and in the event Tenant does not promptly endorse such check, draft or order, then Owner shall have the right as Tenant's attorney-in-fact, to make such endorsement on behalf of Tenant, and Tenant does hereby irrevocably waive any rights to participate in any settlement proceedings and further hereby waives any and all rights in and to any such proceeds and payments.
Section 9.05. Owner agrees, during the Demised Term, to obtain and keep in full force and effect insurance against loss or damage by fire or other casualty to the Building and to all of Owner's property referred to in Article 4 as may be insurable under then obtainable standard forms of "all-risk" insurance policies in an amount equal to not less than (i) the amount sufficient to avoid coinsurance or (ii) eighty (80%) percent of the replacement value of the Building and such property exclusive of footings and foundations, whichever is greater.
ARTICLE 10
ARTICLE 11
(2) Without Owner's prior consent, Tenant shall not (a) negotiate or enter into a proposed subletting with any tenant, subtenant or occupant of any space in the Building or (b) list or otherwise publicly advertise the Demised Premises or any part thereof for subletting at a rental lower than the rental at which the Owner is then offering to rent comparable space in the Building.
(4) Owner may withhold consent to a proposed subletting if,
(a) in Owner's reasonable judgment, the occupancy of the proposed subtenant will
tend to impair the character or dignity of the Building or impose any additional
burden upon Owner in the operation of the Building, or (b) in Owner's reasonable
judgment, the occupancy of the proposed subtenant will tend to impair the
reputation of (i) the Building as an information technology center or (ii) the
floor on which the Demised Premises are located as a floor devoted to
information technology tenants or (c) the proposed subtenant shall be a person
or entity with whom Owner is then negotiating or discussing to lease space in
the Building or (d) if Owner shall have any other reasonable objections to such
subletting.
(5) In the event of any dispute between Owner and Tenant as to the reasonableness of Owner's failure or refusal to consent to any subletting, such dispute shall be submitted to arbitration in accordance with the provisions of Article 36.
(6) Tenant shall reimburse Owner on demand for any reasonable costs or expense that may be incurred by Owner's review of any Proposed Sublet Statement or in connection with any sublease consented to by Owner, including, without limitation, any reasonable processing fee, reasonable attorneys' fees and disbursements and the reasonable costs of making investigations as to the acceptability of the proposed subtenant.
B. Notwithstanding the foregoing provisions of this Section 11.03, Owner shall have the following rights with respect to each proposed subletting by Tenant:
the proposed commencement date of the term of the proposed subletting, as set forth in the Proposed Sublet Statement, and ending on the proposed expiration date of the term of the proposed subletting, as set forth in the Proposed Sublet Statement, and in the event such notice is given the following shall apply:
(a) The Demised Premises shall be recaptured by Owner during the Recapture Period;
(b) Tenant shall surrender the Demised Premises to Owner on or prior to the Recapture Date in the same manner as if said Date were the Expiration Date;
(c) During the Recapture Period Tenant shall have no rights with respect to the Demised Premises nor any obligations with respect to the Demised Premises, including, but not limited to, any obligations to pay Fixed Rent or any increases therein or any additional rent, and any prepaid portion of Fixed Rent allocable to the Recapture Period shall be refunded by Owner to Tenant;
(d) There shall be an equitable apportionment of any increase in the Fixed Rent pursuant to Article 23 for the Escalation Year and Tax Escalation Year (as defined in Article 23) in which said Recapture Date shall occur;
(f) There shall be an equitable apportionment of any increase in the Fixed Rent pursuant to Article 23 for the Escalation Year and Tax Escalation Year in which the Recapture Restoration Period shall commence.
At the request of Owner, Tenant shall execute and deliver an instrument or instruments, in form satisfactory to Owner, setting forth any modifications to this Lease contemplated in or resulting from the operation of the foregoing provisions of this Subsection 11.03; however, neither Owner's failure to request any such instrument nor Tenant's failure to execute or deliver any such instrument shall vitiate the effect of the foregoing provisions of this Section. The failure by Owner to exercise any option under this Section 11.03 with respect to any subletting shall not be deemed a waiver of such option with respect to any extension of such subletting or any subsequent subletting of the premises affected thereby
or any other portion of the Demised Premises. Tenant shall indemnify Owner from all loss, cost, liability, damage and expense, including, but not limited to, reasonable counsel fees and disbursements, arising from any claims against Owner by any broker or other person, for a brokerage commission or other similar compensation in connection with any such proposed subletting, in the event (a) Owner shall (i) fail or refuse to consent to any proposed subletting, or (ii) exercise any of its options under this Section 11.03, or (b) any proposed subletting shall fail to be consummated for any reason whatsoever.
D. Neither Owner's consent to any subletting nor anything contained in this Section shall be deemed to grant to any subtenant or other person claiming through or under Tenant the right to sublet all or any portion of the Demised Premises or to permit the occupancy of all or any portion of the Demised Premises by others. Neither any subtenant referred to in this Section nor its heirs, distributees, executors, administrators, legal representatives, successors nor assigns, without the prior consent of Owner in each instance, shall (i) assign, whether by merger, consolidation or otherwise, mortgage or encumber its interest in any sublease, in whole or in part, or (ii) sublet, or permit the subletting of, that part of the Demised Premises affected by such subletting or any portion thereof,
or (iii) permit such part of the Demised Premises affected by such subletting or any part thereof to be occupied or used for desk space, mailing privileges or otherwise, by any person other than such subtenant and any sublease shall provide that any violation of the foregoing provisions of this sentence shall be an event of default thereunder. The sale, pledge, transfer or other alienation of (a) a controlling interest in the issued and outstanding capital stock of any corporate subtenant (unless such stock is publicly traded on any recognized security exchange or over-the-counter market) or (b) a controlling interest in any partnership or joint venture subtenant, however accomplished, and whether in a single transaction or in a series of related or unrelated transactions, shall be deemed for the purposes of this Section to be an assignment of such sublease which shall require the prior consent of Owner in each instance and any sublease shall so provide.
shall not be discharged, released or impaired by (i) such assignment, (ii) any amendment or modification of this Lease, whether or not the obligations of Tenant are increased thereby, (iii) any further assignment or transfer of Tenant's interest in this Lease, (iv) any exercise, non-exercise or waiver by Owner of any right, remedy, power or privilege under or with respect to this Lease, (v) any waiver, consent, extension, indulgence or other act or omission with respect to any other obligations of Tenant under this Lease, (vi) any act or thing which, but for the provisions of such assignment, might be deemed a legal or equitable discharge of a surety or assignor, to all of which Tenant shall consent in advance, it being the purpose and intent of Owner and Tenant that the obligations of Tenant hereunder as assignor shall be absolute and unconditional under any and all circumstances, and (II) an instrument, in form and substance reasonably satisfactory to Owner and such assignee, duly executed by the assignee, in which such assignee shall assume the observance and performance of, and agree to be bound by, all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed.
B. As long as Tenant is not in default under any of the
terms, covenants or conditions of this Lease on Tenant's part to be observed and
performed, Tenant named herein shall have the right without the prior consent of
Owner, to sublet to, or permit the use or occupancy of, all or any part of the
Demised Premises by any subsidiary or affiliate (as said terms are defined in
Section 11.05A.) of Tenant named herein for the use permitted in this Lease
provided that such subsidiary or affiliate is in the same general line of
business as the Tenant named herein and only for such period as it shall remain
such subsidiary or affiliate and in the same general line of business as the
Tenant named herein. However, no such subletting shall be valid unless, prior to
the execution thereof, Tenant shall give notice to Owner of the proposed
subletting, and within ten (10) days prior to the commencement of said
subletting, Tenant shall deliver to Owner an agreement, in form and substance
reasonably satisfactory to Owner and Tenant, duly executed by Tenant and said
subtenant, in which said subtenant shall assume performance of and agree to be
bound by, all of the terms, covenants and conditions of this Lease which are
applicable to said subtenant and such subletting. Tenant shall give prompt
notice to Owner of any such use or occupancy of all or any part of the Demised
Premises and such use or occupancy shall be subject and subordinate to all of
the terms, covenants and conditions of this Lease. No such use or occupancy
shall operate to vest in the user or occupant any right or interest in this
Lease or the Demised Premises. For the purposes of determining the number of
subtenants or occupants in the Demised Premises, the occupancy of any such
permitted subsidiary or affiliate of Tenant shall be deemed the occupancy of
Tenant and such subsidiary or affiliate shall not be counted as a subtenant or
occupant for the purposes of Section 11.03 and the provisions of Section 11.03
relating to Owner's option to terminate this Lease and recapture any portions of
the Demised Premises and the provisions of Section 11.03 relating to Subletting
Profits shall not be applicable to any proposed subletting to any such
subsidiary or affiliate of Tenant pursuant to the provisions of this Section.
in the City of New York in accordance with the provisions of Section 36.01. Any
such determination shall be final and binding upon the parties whether or not a
judgment shall be entered in any court. If the determination of any such
arbitration shall be adverse to Owner, Owner, nevertheless, shall not be liable
to Tenant and Tenant's sole remedy in such event shall be to have the proposed
assignment deemed valid. Other than with respect to any instance where Tenant
named herein, Bottomline Technologies, Inc., is merged into another entity, no
such assignment shall be valid, unless, within ten (10) days after the execution
thereof, Tenant shall deliver to Owner (I) a duplicate original instrument of
assignment in form and substance reasonably satisfactory to Owner duly executed
by Tenant, acknowledged before a notary public, in customary and reasonable form
and substance in which Tenant shall (a) waive all notices of default given to
the assignee and all other notices of every kind or description, now or
hereafter provided in this Lease, by statute or by rule of law; (b) acknowledge
that Tenant's obligations with respect to this Lease shall not be discharged,
released or impaired by (i) such assignment; (ii) any amendment or modification
of this Lease (whether or not the obligations of Tenant are increased thereby);
(iii) any further assignment or transfer of Tenant's interest in this Lease;
(iv) any exercise, non- exercise or waiver by Owner of any right, remedy, power
or privilege under or with respect to this Lease; (v) any waiver, consent,
extension, indulgence or other act or omission with respect to any of the
obligations of Tenant under this Lease; (vi) any act or thing which, but for the
provisions of such assignment, might be deemed a legal or equitable discharge of
a surety or assignor, to all of which Tenant shall consent in advance; it being
the purpose and intent of Owner and Tenant that the obligations of Tenant
hereunder as assignor shall be absolute and unconditional under any and all
circumstances; and (II) an instrument in form and substance reasonably
satisfactory to Owner, duly executed by the proposed assignee, acknowledged
before a notary public, in which such proposed assignee shall assume observance
and performance of, and agree to be bound by, all of the terms, covenants and
conditions of this Lease on Tenant's part to be performed.
ARTICLE 12
ARTICLE 13
or upon any lessor under any Superior Lease or upon the holder of any Mortgage, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business, or otherwise.
Section 13.05. Supplementing the provisions of Sections 13.01, 13.02
and 13.03, Owner agrees that except in cases of emergency, any entry upon the
Demised Premises pursuant to the provisions of said Sections shall be made at
reasonable times, and only after reasonable advance notice (which may be mailed,
delivered or left at the Demised Premises, notwithstanding any contrary
provisions of Article 27), and any work performed or installation made pursuant
to said Section shall be made with reasonable diligence and any such entry, work
or installations shall be made in a manner designed to minimize interference
with Tenant's normal business operations (however, nothing contained in this
Section shall be deemed to impose upon Owner any obligation to employ
contractors or labor at so-called overtime or other premium pay rates).
Section 13.06. Further supplementing the provisions of Sections 13.01 and 13.03, Owner's right to exhibit the Demised Premises to others shall be limited to insurance carriers and representatives thereof, prospective purchasers of the Real Property or the Building, holders or prospective holders of any mortgage affecting the Real Property or the Building or any ground or underlying lease, and other legitimate business visitors, and, during the last eighteen (18) months of the Demised Term, any prospective tenant of the Demised Premises.
Section 13.07. Further supplementing the provisions of Section 13.01, Owner agrees that any pipes, ducts or conduits installed in or through the Demised Premises during the Demised Term pursuant to the provisions of Section 13.01, shall either be concealed behind, beneath or within partitioning, columns, ceilings or floors, or completely furred at points immediately adjacent to partitioning, columns or ceilings, and that when the installation of such pipes, ducts or conduits shall be completed, such pipes, ducts or conduits shall not materially reduce the usable area of the Demised Premises.
ARTICLE 14
Section 14.01. The Demised Premises do not contain any vaults, vault space or other space outside the boundaries of the Real Property, notwithstanding anything contained in this Lease or indicated on any sketch, blueprint or plan. Owner makes no representation as to the location of the boundaries of the Real Property. All vaults and vault space and all other space outside the boundaries of the Real Property which Tenant may be permitted to use or occupy are to be used or occupied under a revocable license, and if any such license shall be revoked, or if the amount of such space shall be diminished or required by any Federal, State or Municipal Authority or by any public utility company, such revocation, diminution or requisition shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner. Any fee, tax or charge imposed by any governmental authority for any such vault, vault space or other space shall be paid by Tenant.
ARTICLE 15
Section 15.01. Tenant will not at any time use or occupy, or permit the use or occupancy of, the Demised Premises in violation of any Certificate(s) of Occupancy covering the Demised Premises. Owner agrees that a temporary or permanent Certificate(s) of Occupancy covering the Demised Premises will be in force on the Commencement Date permitting the Demised Premises to be used as "offices". However, neither such agreement, nor any other provision of this Lease, nor any act or omission of Owner, its agents or contractors, shall be deemed to constitute a representation or warranty that the Demised Premises, or any part thereof, may be lawfully used or occupied for any particular purpose or in any particular manner, in contradistinction to mere "office" use.
ARTICLE 16
(a) if Tenant shall default in the payment when due of any installment of Fixed Rent or any increase in the Fixed Rent or in the payment when due of any additional rent and such default shall continue for a period of five (5) days after notice by Owner to Tenant of such default; or
(b) if Tenant shall default in the observance or performance of any term, covenant or condition of this Lease on Tenant's part to be observed or performed (other than the covenants for the payment of Fixed Rent, any increase in the Fixed Rent and additional rent) and Tenant shall fail to remedy such default within thirty (30) days after notice by Owner to Tenant of such default, or if such default is of such a nature that it cannot be completely remedied within said period of thirty (30) days and Tenant shall not commence, promptly after receipt of such notice, or shall not thereafter diligently prosecute to completion, all steps necessary to remedy such default; or
(c) if Tenant shall file a voluntary petition in bankruptcy or insolvency, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law, or shall make an assignment for the benefit of creditors, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of all or any part of Tenant's property; or
(d) if, within sixty (60) days after the commencement of any proceeding against Tenant, whether by the filing of a petition or otherwise, seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law, such proceeding shall not have been dismissed, or if, within sixty (60) days after the appointment of any trustee, receiver or liquidator of Tenant, or of all or any part of Tenant's property, without the consent or acquiescence of Tenant, such appointment shall not have been vacated or otherwise discharged, or if any execution or attachment shall be issued against Tenant or any of Tenant's property pursuant to which the Demised Premises shall be taken or occupied or attempted to be taken or occupied; or
(e) if Tenant shall default in the observance or performance of any term, covenant or condition on Tenant's part to be observed or performed under any other lease with Owner of space in the Building and such default shall continue beyond any grace period set forth in such other lease for the remedying of such default; or
(f) if the Demised Premises shall become deserted or abandoned; or
(g) if (i) Tenant's interest in this Lease shall devolve upon or pass to any person, whether by operation of law or otherwise, or (ii) there shall be any sale, pledge, transfer or other alienation described in Section 11.01 of this Lease which is deemed an assignment of this Lease for purposes of said Section 11.01, except as expressly permitted under Article 11;
then, during such time as such Event(s) of Default is/are continuing, Owner may at any time, at Owner's option, give to Tenant a five (5) days' notice of termination of this Lease and, in the event such notice is given, this Lease and the Demised Term shall come to an end and expire (whether or not said term shall have commenced) upon the expiration of said five (5) days with the same effect as if the date of expiration of said five (5) days were the Expiration Date, but Tenant shall remain liable for damages and all other sums payable pursuant to the provisions of Article 18.
ARTICLE 17
(a) Owner and its agents and servants may immediately, or at any time after such default or after the date upon which this Lease and the Demised Term shall expire and come to an end, re-enter the Demised Premises or any part thereof, without notice, either by summary proceedings or by any other applicable action or proceeding, or by force or otherwise (without being liable to indictment, prosecution or damages therefor), and may repossess the Demised Premises and dispossess Tenant and any other persons from the Demised Premises and remove any and all of their property and effects from the Demised Premises; and
(b) Owner, at Owner's option, may relet the whole or any part or parts of the Demised Premises, from time to time, either in the name of Owner or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Owner, in its sole discretion, may determine. Owner shall have no obligation to relet the Demised Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Demised Premises or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise to affect any such liability; Owner, at Owner's option, may make such repairs,
replacements, alterations, additions, improvements, decorations and other physical changes in and to the Demised Premises as Owner, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.
ARTICLE 18
(a) Tenant shall pay to Owner all Fixed Rent, additional rent and other charges payable under this Lease by Tenant to Owner to the date upon which this Lease and the Demised Term shall have expired and come to an end or to the date of re-entry upon the Demised Premises by Owner, as the case may be; and
term "Fixed Rent" shall mean the Fixed Rent in effect immediately prior to the date upon which this Lease and the Demised Term shall have expired and come to an end, or the date of re-entry upon the Demised Premises by Owner, as the case may be, adjusted, from time to time, to reflect any increases which would have been payable pursuant to any of the provisions of this Lease including, but not limited to, the provisions of Article 23 of this Lease if the term hereof had not been terminated; and
(c) At any time after the Demised Term shall have expired and come to an end or Owner shall have re-entered upon the Demised Premises, as the case may be, as a result of any Event of Default as set forth in subsection (c) or (d) of Section 16.01 whether or not Owner shall have collected any monthly Deficiencies as aforesaid, Owner shall be entitled to recover from Tenant, and Tenant shall pay to Owner, on demand, as and for liquidated and agreed final damages, a sum equal to the amount by which the Fixed Rent reserved in this Lease for the period which otherwise would have constituted the unexpired portion of the Demised Term exceeds the then fair and reasonable rental value of the Demised Premises for the same period, both discounted to present worth at the rate of eight (8%) percent per annum less the aggregate amount of Deficiencies theretofore collected by Owner pursuant to the provisions of subsection (b) of this Section for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, the Demised Premises, or any part thereof, shall have been relet by Owner for the period which otherwise would have constituted the unexpired portion of the Demised Term, or any part thereof, the amount of rent reserved upon such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Demised Premises so relet during the term of the reletting. Solely for the purposes of this Subsection (c), the term "Fixed Rent" shall mean the Fixed Rent in effect immediately prior to the date upon which this Lease and the Demised Term shall have expired and come to an end, or the date of re-entry upon the Demised Premises by Owner, as the case may be, adjusted to reflect any increases pursuant to the provisions of Article 23 for the Escalation Year and Tax Escalation Year immediately preceding such event.
ARTICLE 19
B. Throughout the Demised Term Tenant shall maintain comprehensive public liability and water legal liability insurance against any claims by reason of personal injury, death and property damage occurring in or about the Demised Premises covering, without limitation, the operation of any private air conditioning equipment and any private elevators, escalators or conveyors in or serving the Demised Premises or any part thereof, whether installed by Owner, Tenant or others, and shall furnish to Owner duplicate original policies of such insurance at least ten (10) days prior to the Commencement Date and at least ten (10) days prior to the expiration of the term of any such policy previously furnished by Tenant, in which policies Owner, and Owner's Indemnitees shall be named as parties insured, which policies shall be issued by companies, and shall be in form and amounts, reasonably satisfactory to Owner.
Section 19.05. Owner agrees to indemnify and save Tenant harmless of and from all loss, cost, liability, damage and expense, including, but not limited to, reasonable counsel fees, penalties and fines incurred in connection with or arising from (i) any default by Owner in the performance or observance of any of the terms, covenants or conditions of this Lease on Owner's part to be observed or performed, or (ii) any acts, omissions or negligence of Owner or its employees, agents, contractors or servants in or about the Demised Premises or the Building either prior to, during, or after, the expiration of the Demised Term. Owner further agrees to indemnify and save harmless Tenant and its agents of and from all loss, cost, liability, damage, and expense, including, but not limited to, reasonable counsel fees incurred in connection with or arising from any claims by any persons or damage to property occasioned by any act, omission or negligence referred to in the preceding sentence. If any action or proceeding shall be brought against Tenant or Tenant's agents based upon any such claim and if Owner, upon notice from Tenant, shall cause such action or proceeding to be defended at Owner's expense by counsel acting for Owner's insurance carriers in connection with such defense or by other counsel reasonably satisfactory to Tenant, without any disclaimer of liability by Owner in connection with such claim, Owner shall not be required to indemnify Tenant or Tenant's agents for counsel fees in connection with such action or proceeding.
ARTICLE 20
ARTICLE 21
ARTICLE 22
ARTICLE 23
(a) salaries, wages, medical, surgical and general welfare and other so-called "fringe" benefits (including group insurance and retirement benefits) for employees (including, but not limited to, employees who provide twenty four (24) hour services, seven (7) days per week throughout the year) of Owner or any contractor of Owner engaged in the cleaning, operation, maintenance or management of the Real Property, or engaged for security purposes and/or for receiving or transmitting deliveries to and from the Building, and payroll taxes and workmen's compensation insurance premiums relating thereto,
(b) gas, steam, water and sewer rental,
(c) thirty five (35%) percent of all electrical costs incurred in the operation of the Building, provided, however, in the event that Owner discontinues the redistribution or furnishing of electrical energy to the tenants and occupants of the Building, then the cost and expense incurred by Owner for electricity shall thereafter be deemed to be one hundred (100%) percent of (i) the total cost and expense to Owner of purchasing electricity for the Building less (ii) any reimbursement to Owner by the tenants in the Building for the payment for the Floor HVAC Units and the Floor Public Light and Power (as said terms are defined in Section 29.05).
(d) utility taxes,
(e) rubbish removal,
(f) fire, casualty, liability, rent and other insurance carried by Owner,
(g) repairs, repainting, replacement, maintenance of grounds, and Included Improvements (as provided in Paragraph (2) of this Subsection 23.01.G),
(h) Building supplies,
(i) uniforms and cleaning thereof,
(j) snow removal,
(k) window cleaning,
(l) service contracts with independent contractors for any of the foregoing (including, but not limited to, elevator, heating, air conditioning, ventilating, sprinkler system, fire alarm and telecommunication equipment maintenance),
(m) management fees (whether or not paid to any person, firm or corporation having an interest in or under common ownership with Owner or any of the persons, firms or corporations comprising Owner) in the amount of one ($1.00) dollar per rentable square foot of the Building Area in the first Escalation Year which amount for management fees shall increase in each Escalation Year subsequent to the first Escalation Year by the same percentage of increase as the percentage of increase in the aggregate of all other Operating Expenses,
(n) legal fees and disbursements and other expenses (excluding, however, legal fees and expenses incurred in connection with any (i) application or proceeding brought for reduction of the assessed valuation of the Real Property or any part thereof, or (ii) the negotiation of leases or any proceedings brought for collection of rent or additional rents),
(o) auditing fees,
(p) deleted,
(q) all costs of compliance under the provisions of any present or future Superior Lease other than the payment of rental and impositions thereunder and increases in the basic rent under such leases as a result of adjustments in such basic rent, and
(r) all other costs and expenses incurred in connection with the operation, maintenance, management and security of the Real Property, and any plazas, sidewalks and curbs adjacent thereto.
(2) The cost and expense of the following shall be excluded from the calculation of operating expenses:
(a) leasing commissions;
(b) executives' salaries above the grade of building
manager and superintendent;
(d) any other item which under generally accepted accounting principles and practice would not be regarded as an operating, maintenance or management expense;
(e) any item for which Owner is compensated through proceeds of insurance;
(f) any specific compensation which Owner receives from any tenant for services rendered to such tenant by Owner above and beyond those services generally rendered by Owner to tenants in the Building without specific compensation therefor;
(g) sixty-five (65%) percent of all electrical costs incurred in the operation of the Building, provided however, in the event that Owner discontinues the redistribution or furnishing of electrical energy to the tenants and occupants of the Building, then the aforesaid exclusion of sixty-five (65%) percent of such electrical costs shall not apply;
(h) interest and principal payments for mortgages;
(i) any ground or underlying lease rental;
(j) bad debt expenses, and interest, principal, points and fees on debts or amortization on any mortgage or other debt instrument encumbering the Building or the Real Property;
(k) cost incurred by Owner to the extent that Owner is reimbursed by insurance proceeds or is otherwise reimbursed;
(l) advertising and promotional expenditures, and costs or acquisition and maintenance of signs in or on the Building identifying the Owner of the Building or other tenants;
(m) marketing costs, including leasing commissions, attorneys' fees (in connection with the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and /or assignments), space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Building;
(n) costs, including permit, license and inspection costs, incurred with respect to the installation of tenants' or other occupants' improvements or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building;
(o) expenses in connection with services or other benefits which are not offered to Tenant or for which Tenant is charged for directly;
(p) Costs incurred by Owner due to the violation by Owner or any tenant of the terms and conditions of any lease of space in the Building;
(q) amounts paid to Owner or to subsidiaries or affiliates of Owner for goods and/or services in the Building to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis;
(r) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Owner;
(s) services provided, taxes, attributable to, and costs incurred in connection with the operation of any retail, restaurant and garage operations for the Building, and any replacement garages or parking facilities and any shuttle services;
(t) costs arising from the negligence or willful misconduct of Owner or other tenants or occupants of the Building or their respective agents, employees, licensees, vendors, contractors or providers of materials or services;
(u) costs arising from Owner's charitable or political contributions;
(v) costs for sculpture, paintings or other objects of art;
(w) costs incurred in connection with the original construction of the Building or in connection with any major change in the Building, such as adding or deleting floors which under generally accepted accounting principles consistently applied, are properly classified as capital expenditure;
(x) costs associated with the operation of the business of the partnership or entity which constitutes the Owner, as the same are distinguished from the costs of operation of the Building, including partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Owner's interest in the Building, costs (including attorney's fees and costs of settlement judgments and payments in lieu thereof) arising from the claims, disputes or potential disputes in connection with potential or actual claims, litigation or arbitrations pertaining to Owner and/or the Building and/or the site upon which the Building is situated;
(y) the wages and benefits of any executive or administrative employee above building manager or supervisor or any non- executive employee to the extent it does not devote substantially all of his or her time to the Building; and
(z) Owner's general corporate overhead and general and administrative expenses;
N. Owner and Tenant acknowledge that Tenant may apply for a certificate of abatement from the Department of Finance of the City of New York pursuant to the provisions of Title 4 of the Real Property Law of the State of New York (the "Tax Abatement Program"). Owner agrees, at no cost or expense to Owner, to cooperate with Tenant in its efforts to procure a certificate of abatement including, if necessary, and if Owner
approves of its contents, co-signing Tenant's application for a certificate of abatement. Pursuant to the Tax Abatement Program, Owner hereby informs Tenant that:
"(1) an application for abatement of real property taxes pursuant to this title will be made for the premises;
(2) the rent, including amounts payable by the tenant for real property taxes, will accurately reflect any abatement of real property taxes granted pursuant to this title for the premises;
(3) at least ten dollars per square foot or thirty-five
dollars per square foot must be spent on improvements to the premises and the
common areas, the amount being dependent upon the length of the lease and
whether it is a new or a renewal lease, provided, however, that with respect to
a lease commencing on or after April 1, 1997, if, by the sixtieth (60th) day
following the rent commencement date, the tenant employs one hundred twenty-five
(125) or fewer employees in the relevant premises, at least five dollars per
square foot must be spent on improvements to the premises and the common areas;
and
(4) all abatements granted with respect to a building pursuant to this title will be revoked if, during the benefit period, real estate taxes or water or sewer charges or other lienable charges are unpaid for more than one year, unless such delinquent amounts are paid as provided in subdivision four of section four hundred ninety-nine-f of this title."
Tenant agrees that Owner shall have no liability to Tenant nor shall Tenant be entitled to any abatement or diminution of rent if Tenant fails to obtain a certificate of abatement under the Tax Abatement Program.
B. Unless the Commencement Date shall occur on a July 1st, any increase in the Fixed Rent pursuant to the provisions of Subsection A of this Section 23.02 for the Tax Escalation Year in which the Commencement Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to June 30th of such Tax Escalation Year, both inclusive, bears to the total number of days in such Tax Escalation Year. Unless the Demised Term shall expire on a June 30th, any increase in the Fixed Rent pursuant to the provisions of said Subsection A for the Tax Escalation Year in which the date of the expiration of the Demised Term shall occur shall be apportioned in that percentage which the number of days in the period from July 1st of such Tax Escalation Year to such date of expiration, both inclusive, bears to the total number of days in such Tax Escalation Year.
respect to such Tax Escalation Year as shown on such Owner's Tax Statement. Tenant further acknowledges that it is the purpose and intent of this Section 23.03 to provide Owner with Tenant's Proportionate Share of Taxes thirty (30) days prior to the time such installment of Taxes is required to be paid by Owner without penalty or interest. Accordingly, Tenant agrees if the number of such installments and/or the date of payment thereof and/or the fiscal year used for the purpose of Taxes shall change then (a) at the time that any such revised installment is payable by Owner, Tenant shall pay to Owner the amount which shall provide Owner with Tenant's Proportionate Share of Taxes applicable to the revised installment of Taxes then required to be paid by Owner, and (b) this Article shall be appropriately adjusted to reflect such change and the time for payment to Owner of Tenant's Proportionate Share of Taxes as provided in this Article shall be appropriately revised so that Owner shall always be provided with Tenant's Proportionate Share of Taxes thirty (30) days prior to the installment of Taxes required to be paid by Owner. Notwithstanding the foregoing provisions of this subsection A to the contrary, in the event the holder of any mortgage affecting the Real Property shall require Owner to make monthly deposits on account of real estate taxes, then this Article shall be appropriately adjusted to reflect the requirement that Owner make monthly deposits on account of real estate taxes so that Owner shall always be provided with one-twelfth (1/12th) of Tenant's Proportionate Share of Taxes with respect to any Tax Escalation Year thirty (30) days prior to the payment by Owner of such monthly deposits on account of real estate taxes.
B. If, as a result of any application or proceeding
brought by or on behalf of Owner for reduction of the assessed valuation of the
Real Property there shall be a decrease in Taxes for any Tax Escalation Year
with respect to which Owner shall have previously rendered an Owner's Tax
Statement, the next monthly installment or installments of Fixed Rent following
such decrease shall include an adjustment of the Fixed Rent for such Tax
Escalation Year reflecting a credit to Tenant equal to the amount by which (i)
the Fixed Rent actually paid by Tenant with respect to such Tax Escalation Year
(as increased pursuant to the operation of the provisions of subsection A of
Section 23.02), shall exceed (ii) the Fixed Rent payable with respect to such
Tax Escalation Year (as increased pursuant to the operation of the provisions of
subsection A of Section 23.02) based upon such reduction of the assessed
valuation. Tenant shall pay to Owner within thirty (30) days after demand, as
additional rent under this Lease, a sum equal to Tenant's Proportionate Share of
all costs and expenses, including, without limitation, counsel fees, paid or
incurred by Owner in connection with any application or proceeding brought for
reduction of the assessed valuation of the Real Property or any other contest of
Taxes upon the Real Property for any Tax Escalation Year, whether or not such
application, proceeding or other contest was commenced and/or settled and/or
determined prior to the Tax Escalation Year in question. Any outstanding credit
as of the Expiration Date as a result of the operation of the foregoing
provisions hereof shall be paid as cash to Tenant.
B. Unless the Commencement Date shall occur on a January 1st, any increase in the Fixed Rent pursuant to the provisions of Subsection A of this Section 23.04 for the Escalation Year in which the Commencement Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31st of such Escalation Year, both dates inclusive, bears to the total number of days in such Escalation Year. Unless the Demised Term shall expire on December 31st any increase in the Fixed Rent pursuant to the provisions of Subsection A of this Section 23.04 for the Escalation Year in which the date of the expiration of the Demised Term shall occur shall be apportioned in that percentage which the number of days in the period from January 1st of such Escalation Year to such date of expiration, both dates inclusive, bears to the total number of days in such Escalation Year.
C. In the determination of any increase in the Fixed Rent pursuant to the foregoing provisions of this Section 23.04, if the Building shall not have been fully occupied during any Escalation Year, Operating Expenses for such Escalation Year shall be equitably adjusted (by including such additional expenses as Owner would have incurred) to the extent, if any, required to reflect full occupancy.
B. Within fifteen (15) days next following rendition
of the first Owner's Operating Expense Statement which shows an increase in the
Fixed Rent for any Escalation Year, Tenant shall pay to Owner the entire amount
of such increase. In order to provide for current payments on account of future
potential increases in the Fixed Rent which may be payable by Tenant pursuant to
the provisions of Subsection 23.04.A, Tenant shall also pay to Owner at such
time, provided Owner has given to Tenant a Monthly Escalation Installment
Notice, a sum equal to the product of (i) the Monthly Escalation Installment set
forth in such Notice multiplied by (ii) the number of months or partial months
which shall have elapsed between January 1st of the Escalation Year in which
such payment is made and the date of such payment, less any amounts theretofore
paid by Tenant to Owner on account of increases in the Fixed Rent for such
Escalation Year pursuant to the provisions of the penultimate sentence of this
Subsection 23.05.B; thereafter Tenant shall make payment of a Monthly Escalation
Installment throughout each month of the Demised Term. Monthly Escalation
Installments shall be added to and payable as part of each monthly installment
of Fixed Rent. Notwithstanding anything to the contrary contained in the
foregoing provisions of this Article, prior to the rendition of the first
Owner's Operating Expense Statement which shows an increase in the Fixed Rent
for any Escalation Year, Owner may render to Tenant a pro-forma Owner's
Operating Expense Statement containing a bona fide estimate of the increase in
the Fixed Rent for the Escalation Year in which the Commencement Date shall
occur and/or the subsequent Escalation Year. Following the rendition of such
pro-forma Owner's Operating Expense Statement, Tenant shall pay to Owner a sum
equal to one twelfth (1/12th) of the estimated increase in the Fixed Rent shown
thereon for such Escalation Year or Years multiplied by the number of months
which may have elapsed between the Commencement Date and the month in which such
payment is made and thereafter pay to Owner, on the first day of each month of
the Demised Term (until the rendition by Owner of the first Owner's Operating
Expense Statement) a sum equal to one twelfth (1/12th) of the increase in the
Fixed Rent shown on such pro-forma Owner's Operating Expense Statement. Any sums
paid pursuant to the provisions of the immediately preceding sentence shall be
credited against the sums required to be paid by Tenant to Owner pursuant to the
Owner's Operating Expense Statement for the first Escalation Year for which
there is an increase in the Fixed Rent pursuant to the provisions of Subsection
A.
C. Following rendition of the first Owner's Operating Expense Statement and each subsequent Owner's Operating Expense Statement a reconciliation shall be made as follows: Tenant shall be debited with any increase in the Fixed Rent shown on such Owner's Operating Expense Statement and credited with the aggregate amount, if any, paid by Tenant in accordance with the provisions of Subsection B of this Section on account of future increases in the Fixed Rent pursuant to Subsection 23.04 A. which has not previously been credited against increases in the Fixed Rent shown on Owner's Operating Expense Statements. Tenant shall pay any net debit balance to Owner within fifteen (15) days next following rendition by Owner, either in accordance with the provisions of Article 27 or by personal delivery at the Demised Premises of an invoice for such net debit balance; any net credit balance shall be applied as an adjustment against the next accruing Monthly Escalation Installment as provided in Subsection L of Section 23.01 or paid promptly, to Tenant, on or about the Expiration Date.
accruing installments of Fixed Rent due under this Lease. However, if there are
no such installments, such amounts shall be paid by Owner to Tenant within ten
(10) days following such determination.
B. In the event Tenant disagrees with any computation or other
matter contained in any Owner's Operating Expense Statement or any Monthly
Escalation Installment Notice, Tenant shall have the right to give notice to
Owner within ninety (90) days next following rendition of such Statement or
Notice setting forth the particulars of such disagreement. If the matter is not
resolved within thirty (30) days next following the giving of such notice by
Tenant, it shall be deemed a dispute which either party may submit to
arbitration pursuant to the provisions of Subsection A of this Section. If (i)
Tenant does not give a timely notice to Owner in accordance with the foregoing
provisions of this Subsection disagreeing with any computation or other matter
contained in any Owner's Operating Expense Statement or any Monthly Escalation
Installment Notice and setting forth the particulars of such disagreement, or
(ii) if any such timely notice shall have been given by Tenant, the matter shall
not have been resolved and neither party shall have submitted the dispute to
arbitration within thirty (30) days next following the giving of such notice by
Tenant, Tenant shall be deemed conclusively to have accepted such Owner's
Operating Expense Statement or Monthly Escalation Installment Notice, as the
case may be, and shall have no further right to dispute the same.
C. (1) Tenant or its usual auditors of its normal books and records (provided same are certified public accountants) in each case at Tenant's expense, shall have the right to examine those portions of Owner's records which are reasonably required to verify the accuracy of any amounts shown on any Owner's Operating Expense Statement provided Tenant shall notify Owner of its desire to so examine such records within sixty (60) days next following rendition of such Owner's Operating Expense Statement. Owner shall maintain such records for a period of three (3) years following the expiration of the Escalation Year to which they relate. Upon Tenant's timely request, Owner shall make such records available and any such examination shall be conducted at the office of Owner's accountants or at such other reasonable place designated by Owner during normal office hours.
(2) Tenant acknowledges and agrees that not more than three (3) of its employees or three (3) persons employed by such auditors shall be entitled to entry to the offices of Owner at any one time for the purposes of such review and inspection. Tenant hereby recognizes the confidential, privileged and proprietary nature of such records and the information and data contained therein, as well as any compromise, settlement or adjustment reached between Owner and Tenant relating to the results of such examination, and Tenant covenants and agrees for itself, and its employees, agents and representatives (including, but not limited to, such auditors, and any attorneys or consultants retained by Tenant as hereinafter provided), that such books, records, information, data, compromise, settlement and adjustment will be held in the strictest confidence and not be divulged, disclosed or revealed to any other person except (x) to the extent required by law, court order or directive of any Governmental Authority or (y) to such auditors or any attorneys retained by Tenant or consultants retained by Tenant in connection with any action or proceeding between Owner and Tenant as to Operating Expenses or Owner's Operating Expense Statement and no examination of any such records shall be permitted unless and until such auditors, attorneys and consultants affirmatively agree and consent to be bound by the provisions of this Section 23.06C.
(3) Tenant agrees that this Section 23.06C is of material importance to Owner and that any violation thereof shall result in immediate harm to Owner and Owner shall have all rights allowed by law or equity if Tenant, its employees, agents, and representatives (including, but not limited to, such auditors, attorneys or consultants) violate the terms of this Section 23.06C, including, but not limited to, the right to terminate Tenant's right to audit Owner's records in the future pursuant to this Section 23.06C, and Tenant shall indemnify and hold Owner harmless of and from all loss, cost, damage, liability and expense (including, but not limited to counsel fees and disbursements) arising from a breach of the foregoing obligations of Tenant or any of its employees, agents and representatives, (including but not limited to, such auditors, attorneys or consultants). This obligation of Tenant and its employees, agents and representatives (including, but not limited to, any such auditors, attorneys or consultants) shall survive the expiration or sooner term of the Demised Term.
be entitled, shall survive the expiration or any sooner termination of the Demised Term. All sums payable by Tenant under this Article shall be collectible by Owner in the same manner as Fixed Rent.
ARTICLE 24
ARTICLE 25
Section 25.01. Owner and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by Owner or Tenant against the other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of landlord and tenant, the use or occupancy of the Demised Premises by Tenant or any person claiming through or under Tenant, any claim of injury or damage, and any emergency or other statutory remedy; however, the foregoing waiver shall not apply to any action for personal injury or property damage. The provisions of the foregoing sentence shall survive the expiration or any sooner termination of the Demised Term. If Owner commences any summary proceeding, or any other proceeding of like import, Tenant agrees: (i) not to interpose any counterclaim of whatever nature or description in any such summary proceeding, or any other proceeding of like import, unless failure to interpose such counterclaim would preclude Tenant from asserting such claim in a separate action or proceeding; and (ii) not to seek to remove to another court or jurisdiction or consolidate any such summary proceeding, or other proceeding of like import, with any action or proceeding which may have been, or will be, brought by Tenant. In the event that Tenant shall breach any of its obligations set forth in the immediately preceding sentence, Tenant agrees (a) to pay all of Owner's attorneys' fees and disbursements in connection with Owner's enforcement of such obligations of Tenant and (b) in all events, to pay all accrued, present and future Fixed Rent and increases therein and additional rent payable pursuant to the provisions of this Lease.
ARTICLE 26
Section 26.01. If, by reason of strikes or other labor disputes, fire or other casualty (or reasonable delays in adjustment of insurance), accidents, any Legal Requirements, any orders of any Governmental Authority or any other cause beyond Owner's reasonable control, whether or not such other cause shall be similar in nature to those hereinbefore enumerated, Owner is unable to furnish or is delayed in furnishing any utility or service required to be furnished by Owner under the provisions of Article 29 or any other Article of this Lease or any collateral instrument, or is unable to perform or make or is delayed in performing or making any installations, decorations, repairs, alterations, additions or improvements, whether or not required to be performed or made under this Lease or under any collateral instrument, or is unable to fulfill or is delayed in fulfilling any of Owner's other obligations under this Lease or any collateral instrument, no such inability or delay shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business, or otherwise. Owner shall employ reasonable diligence to attempt to eliminate the cause of such inability referred to in this Section (however, the foregoing provisions of this sentence shall not apply in the event of any strike or labor dispute and Owner shall not be required to employ labor at overtime or other premium pay rates).
ARTICLE 27
Section 27.01. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by registered or certified mail (return receipt requested optional), addressed as follows:
possession of the Demised Premises, or (iii) at any place where Tenant or any agent or employee of Tenant may be found if mailed subsequent to Tenant's vacating, deserting, abandoning or surrendering the Demised Premises, with copies to Bottomline Technologies, Inc., 155 Fleet Street, Portsmouth, NH 03801- 4050, Attention: Controller and Hale and Dorr, LLP, 60 State Street, Boston, MA 02109, Attention Joel H. Sirkin, Esq., or
(c) addressed to such other address as either Owner or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Section. Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date when it shall have been mailed as provided in this Section.
Nothing contained in this Section 27.01 shall preclude, limit or modify Owner's service of any notice, statement, demand or other communication in the manner required by law, including, but not limited to, any demand for rent under Article 7 of the New York Real Property Actions and Proceedings Law or any successor law of like import.
ARTICLE 28
ARTICLE 29
B. Owner, at Owner's expense, shall clean the public portions of the Building at regular intervals in accordance with practices and standards adopted by Owner for the Building.
C. The removal of refuse and rubbish and the furnishing of office cleaning services to Tenant by persons other than Owner and its contractors shall be performed in accordance with such regulations and requirements as, in Owner's judgment, are necessary for the proper operation of the Building, and Tenant
agrees that Tenant will not permit any person to enter the Demised Premises or the Building for such purposes, or for the purpose of providing extermination services required to be performed by Tenant pursuant to Subsection A of this Section, other than persons first approved by Owner, such approval not unreasonably to be withheld.
B. Owner represents that the electrical feeder or riser capacity serving the Demised Premises on the Commencement Date shall be adequate to serve the lighting fixtures and electrical receptacles installed in the Demised Premises on the Commencement Date. Any additional feeders or risers to supply Tenant's additional electrical requirements, and all other equipment proper and necessary in connection with such feeders or risers shall be installed by Owner upon Tenant's request, at the sole cost and expense of Tenant, provided, that, in Owner's reasonable judgment, such additional feeders or risers are necessary and are permissible under applicable laws and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Demised Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or repairs to or interfere with or disturb other tenants or occupants of the Building. Tenant covenants that at no time shall the use of electrical energy in the Demised Premises exceed the capacity of the existing feeders or risers or wiring installations then serving the Demised Premises.
D. Owner may, at any time, elect to discontinue the redistribution or furnishing of electrical energy. In the event of any such election by Owner, (i) Owner agrees to give reasonable advance notice of any such discontinuance to Tenant, (ii) Owner agrees to permit Tenant to receive electrical service directly from the corporation(s) and/or other entity(ies) selected by Owner to supply electrical service to the Building and to permit the existing feeders, risers, wiring and other electrical facilities serving the Demised Premises to be used by Tenant for such purpose to the extent they are suitable and safely capable, (iii) Owner agrees to pay such charges and costs, if any, as such corporation(s) and/or other entity(ies) may impose in connection with the installation of Tenant's meters, (iv) the provisions of Subsection C of this Section 29.05 shall be deemed deleted from this Lease, and (v) this Lease shall remain in full force and effect and such discontinuance shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business, or otherwise.
E. Notwithstanding anything to the contrary set forth in this Lease, any sums payable or granted in any way by the corporation(s) and/or other entity(ies) selected by Owner to supply electricity to the Building resulting from the installation in the Demised Premises of energy efficient lighting fixtures, lamps, special supplemental heating, ventilation and air conditioning systems or any other Alterations, which sums are paid or given by way of rebate, direct payment, credit or otherwise, shall be and remain the property of Owner, and Tenant shall not be entitled to any portion thereof, unless such lighting fixtures, lamps, supplemental heating, ventilation and air conditioning systems or other Alterations were installed by Tenant, solely at Tenant's expense, without any contribution, credit or allowance by Owner, in accordance with all of the provisions of this Lease. Nothing contained in the foregoing sentence, however, shall be deemed to obligate Owner to supply or install in the Demised Premises any such lighting fixtures, lamps, supplemental heating, ventilation and air conditioning systems or other Alterations.
F. Tenant acknowledges that the Building heating, ventilating and air conditioning system unit serving the floor of the Building on which the Demised Premises are located (referred to herein as the "Floor HVAC Unit") shall not be connected to the submeter(s) serving the Demised Premises, but, instead, shall be connected to a separate meter(s) measuring the electrical energy consumed by such Floor HVAC Unit. Accordingly, Tenant agrees that during the Demised Term, Tenant shall pay to Owner, from time to time upon demand of Owner and submission by Owner to Tenant of invoices or bills therefor, thirty- three and 24/100 (33.24%) percent (hereinafter "Tenant's Electrical Share") of all amounts shown on said separate meter(s) for such Floor HVAC Unit.
G. Tenant acknowledges that the light and power systems serving the public areas of the floor of the Building on which the Demised Premises are located (referred to herein as the "Floor Public Light and Power") shall not be connected to the submeter(s) serving the Demised Premises but, instead, shall be connected to a separate meter(s) measuring the electrical energy consumed by such Floor Public Light and Power. Accordingly, Tenant agrees that during the Demised Term, Tenant shall pay to Owner, from time to time upon demand of Owner and submission by Owner to Tenant of invoices or bills therefor, Tenant's Electrical Share of all amounts shown on said separate meter(s) for such Floor Public Light and Power.
been consumed at the rate of consumption of such water during the most comparable period when such meters were in good working order.
B. If the regular hourly wage rate of operating engineers employed in the Building shall be increased in any Escalation Year (as defined in Article 23) over the rate in effect on the January 1/st/ immediately preceding such hookup, the Fixed Rent for such Escalation Year shall be increased by a sum equal to that proportion of Tenant's Cooling Tower Use Charge which such increase in said hourly wage rate bears to the hourly wage rate in effect on the January 1/st/ immediately preceding such hookup. The increase in Fixed Rent for any Escalation Year pursuant to the provisions of the immediately preceding sentence shall be shown on the Owner's Operating Expense Statement with respect to such Escalation Year rendered by Owner pursuant to the provisions of said Article 23, and shall be payable by Tenant as if it were an increase in the Fixed Rent pursuant to the provisions of said Article 23.
C. Any increase in Fixed Rent for Tenant's Cooling Tower Use Charge shall be effective as of the date Tenant's Supplemental A/C Unit is hooked up to the Cooling Tower and shall be retroactive to such date if necessary.
D. Tenant's Supplemental A/C Unit shall be repaired and maintained by Tenant at Tenant's cost and expense, pursuant to a service contract.
ARTICLE 30
ARTICLE 31
Section 31.04. If any term, covenant or condition of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such term, covenant or condition shall not be affected thereby.
Section 31.05. This Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Lease to be drafted. In the event of any action, suit, dispute or proceeding affecting the terms of this Lease, no weight shall be given to any deletions or striking out of any of the terms of this Lease contained in any draft of this Lease and no such deletion or strike out shall be entered into evidence in any such action, suit or dispute or proceeding given any weight therein.
Section 31.06. Subject to the provisions of this Lease including, but not limited to, Article 3 hereof Owner shall make available reasonably sufficient telecommunication riser access at a riser terminating at the telecommunications closets located on the floor of which the Demised Premises are a part. The riser shall provide reasonably sufficient access to allow Tenant to bring T3 lines to the Demised Premises. Tenant shall be responsible, at its sole cost and expense (including the cost of installing any required conduits) of installing such T3 lines.
ARTICLE 32
Section 32.01. If an excavation shall be made upon land adjacent to the Real Property, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation license to enter upon the Demised Premises for the purpose of doing such work as said person shall deem necessary to preserve the walls and other portions of the Building from injury or damage and to support the same by proper foundations and no such entry shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or said person.
ARTICLE 33
Section 33.02. Any Building Rule not enforced generally against other tenants of the Building shall not be enforced against Tenant. Wherever the Building Rules provide for a matter to be determined by Owner or its agents, Owner or its agents shall exercise their reasonable judgment with respect thereto and any determination to be made by Owner or its agents thereunder shall not be unreasonably withheld or delayed.
ARTICLE 34
Section 34.01. Tenant represents and warrants to Owner that this Lease was negotiated directly between Owner and Tenant and that no broker was responsible for bringing about this Lease. Tenant shall indemnify
Owner from all loss, cost, liability, damage and expenses, including, but not limited to, reasonable counsel fees and disbursements, arising from any breach of the foregoing representation and warranty.
ARTICLE 35
ARTICLE 36
Section 36.01. Any dispute (i) with respect to the reasonability of any failure or refusal of Owner to grant its consent or approval to any request for such consent or approval pursuant to the provisions of Sections 3.01 or 11.03 with respect to which request Owner has agreed, in such Sections, not unreasonably to withhold such consent or approval, or (ii) arising out of the application of the Operating Expenses provisions of Article 23, (iii) as to the validity of any assignment in accordance with the provisions of Section 11.06 which is submitted to arbitration shall be finally determined by arbitration in the City of New York in accordance with the rules and regulations then obtaining of the American Arbitration Association or its successor. Any such determi-
nation shall be final and binding upon the parties, whether or not a judgment shall be entered in any court. In making their determination, the arbitrators shall not subtract from, add to, or otherwise modify any of the provisions of this Lease. Owner and Tenant may, at their own expense, be represented by counsel and employ expert witnesses in any such arbitration. Any dispute with respect to the reasonability of any failure or refusal of Owner to grant its consent or approval to any request for such consent or approval pursuant to any of the provisions of this Lease (other than Sections 3.01 and 11.03) with respect to which Owner has covenanted not unreasonably to withhold such consent or approval, and any dispute arising with respect to the increases in Fixed Rent due to the provisions of Section 23.02 shall be determined by applicable legal proceedings. If the determination of any such legal proceedings, or of any arbitration held pursuant to the provisions of this Section with respect to disputes arising under Sections 3.01, 11.03 and 11.06 or the Operating Expense provisions of Article 23, shall be adverse to Owner, Owner shall be deemed to have granted the requested consent or approval, or be bound by any determination as to Taxes and Operating Expenses and the increases in Fixed Rent relating thereto, or the validity of any assignment, but that shall be Tenant's sole remedy in such event and Owner shall not be liable to Tenant for a breach of Owner's covenant not unreasonably to withhold such consent or approval, or otherwise. Each party shall pay its own counsel and expert witness fees and expenses, if any, in connection with any arbitration held pursuant to the provisions of this Section and the parties will share all other expenses and fees of any such arbitration.
ARTICLE 37
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this Lease as of the day and year first above written.
55 BROAD STREET L.P.
By: 55 Broad Street LLC, its general partner
Witness:
_____________________________ By:_____________________________
Owner
Name:
Title: Managing Member
BOTTOMLINE TECHNOLOGIES, INC.
Witness:
_____________________________ By:_____________________________
Tenant
Name:
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Title:
UNIFORM FORM CERTIFICATE OF ACKNOWLEDGMENT
(Within New York State)
State of New York )
:ss.:
County of _______ )
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On the ____________ day of _________________, in the year ___________, before me, the undersigned, personally appeared _________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
UNIFORM FORM CERTIFICATE OF ACKNOWLEDGMENT
(Outside of New York State)
State, District of Columbia, Territory,
Possession or Foreign Country
_______________________________):ss.:
On the ______ day of _________________ in the year _________, before me, the undersigned, personally appeared _______________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument, and that such individual made such appearance before the undersigned in the _____________________. (Insert the city or other political subdivision and the state or country or other place the acknowledgment was taken.)
SCHEDULE A
BUILDING RULES
1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways, corridors or halls of the Building shall not be obstructed or encumbered or used for any purpose other than ingress and egress to and from the premises demised to any tenant or occupant. Any tenant whose premises are situate on the ground floor of the Building shall, at said tenant's own expense, keep the sidewalks and curb directly in front of said premises clean and free from ice and snow.
2. No awnings or other projections shall be attached to the outside walls or windows of the Building without the prior consent of Owner. No curtains, blinds, shades, or screens shall be attached to or hung in, or used in connection with, any window or door of the premises demised to any tenant or occupant, without the prior consent of Owner. Such awnings, projections, curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and color, and attached in a manner, approved by Owner.
3. No sign, advertisement, object, notice or other lettering shall be exhibited, inscribed, painted or affixed on any part of the outside or inside of the premises demised to any tenant or occupant or of the Building without the prior consent of Owner. Interior signs on doors and directory tablets, if any, shall be of a size, color and style approved by Owner.
4. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Building shall not be covered or obstructed, nor shall any bottles, parcels, or other articles be placed on any window sills.
5. No showcases or other articles shall be put in front of or affixed to any part of the exterior of the Building, nor placed in the halls, corridors, vestibules or other public parts of the Building.
6. The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags, or other substances shall be thrown therein. No tenant shall bring or keep, or permit to be brought or kept, any inflammable, combustible or explosive fluid, material, chemical or substance in or about the premises demised to such tenant.
7. No tenant or occupant shall mark, paint, drill into, or in any way deface any part of the Building or the premises demised to such tenant or occupant. No boring, cutting or stringing of wires shall be permitted, except with the prior consent of Owner, and as Owner may direct. No tenant or occupant shall install any resilient tile or similar floor covering in the premises demised to such tenant or occupant except in a manner approved by Owner.
8. No bicycles, vehicles or animals of any kind shall be brought into or kept in or about the premises demised to any tenant. No cooking shall be done or permitted in the Building by any tenant without the approval of Owner. No tenant shall cause or permit any unusual or objectionable odors to emanate from the premises demised to such tenant.
9. No space in the Building shall be used for manufacturing, for the storage of merchandise, or for the sale of merchandise, goods or property of any kind at auction.
10. No tenant shall make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with other tenants or occupants of the Building or neighboring buildings or premises whether by the use of any musical instrument, radio, television set or other audio device, unmusical noise, whistling, singing, or in any other way. Nothing shall be thrown out of any doors or windows.
11. No additional locks or bolts of any kind shall be placed upon any of the doors or windows, nor shall any changes be made in locks or the mechanism thereof. Each tenant must, upon the termination of its tenancy, restore to Owner all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by, such tenant.
12. All removals from the Building, or the carrying in or out of the Building or the premises demised to any tenant, of any safes, freight, furniture or bulky matter of any description must take place at such time and in such manner as Owner or its agents may determine, from time to time. Owner reserves the right to inspect all freight to be brought into the Building and to exclude from the Building all freight which violates any of the Building Rules or the provisions of such tenant's lease.
13. No tenant shall use or occupy, or permit any portion of the premises demised to such tenant to be used or occupied, as an office for a public stenographer or typist, or as a barber or manicure shop, or as an employment bureau. No tenant or occupant shall engage or pay any employees in the Building, except those actually working for such tenant or occupant in the Building, nor advertise for laborers, giving an address at the Building.
14. No tenant or occupant shall purchase spring water, ice, food, beverage, lighting maintenance, cleaning, towels, or other like service, from any company or persons not approved by Owner, such approval not unreasonably to be withheld.
15. Owner shall have the right to prohibit any advertising mentioning the Building or Owner by any tenant or occupant which, in Owner's opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon notice from Owner, such tenant or occupant shall refrain from or discontinue such advertising.
16. Owner reserves the right to exclude from the Building, between the hours of 6 P.M. and 8 A.M. on business days and at all hours on Saturdays, Sundays and holidays, all persons who do not present a pass to the Building signed by Owner. Owner will furnish passes to persons for whom any tenant requests such passes. Each tenant shall be responsible for all persons for whom it requests such passes and shall be liable to Owner for all acts of such persons.
17. Each tenant, before closing and leaving the premises demised to such tenant at any time, shall see that all entrance doors are locked and all windows closed.
18. Each tenant shall, at its expense, provide artificial light in the premises demised to such tenant for Owner's agents, contractors and employees while performing janitorial or other cleaning services and making repairs or alterations in said premises.
19. No premises shall be used, or permitted to be used, for lodging or sleeping or for any immoral or illegal purpose.
20. The requirements of tenants will be attended to only upon application at the office of Owner. Building employees shall not be required to perform, and shall not be requested by any tenant or occupant to perform, any work outside of their regular duties, unless under specific instructions from the office of Owner.
21. Canvassing, soliciting and peddling in the Building are prohibited and each tenant and occupant shall cooperate in seeking their prevention.
22. There shall not be used in the Building, either by any tenant or occupant or by their agents or contractors, in the delivery or receipt of merchandise, freight or other matter, any hand trucks or other means of conveyance except those equipped with rubber tires, rubber side guards and such other safeguards as Owner may require.
23. If the premises demised to any tenant become infested with vermin, such tenant, at its sole cost and expense, shall cause its premises to be exterminated, from time to time, to the satisfaction of Owner, and shall employ such exterminators therefor as shall be approved by Owner.
24. No premises shall be used, or permitted to be used, at any time, as a store for the sale or display of goods, wares or merchandise of any kind, or as a restaurant, shop, booth, bootblack or other stand, or for the conduct of any business or occupation which predominantly involves direct patronage of the general public in the premises demised to such tenant, or for manufacturing or for other similar purposes.
25. No tenant shall clean, or permit to be cleaned, any window of the Building from the outside in violation of Section 202 of the New York Labor Law or any successor law or statute, or of the rules of the Board of Standards and Appeals or of any board or body having or asserting jurisdiction.
26. No tenant shall move, or permit to be moved, into or out of the Building or the premises demised to such tenant, any heavy or bulky matter, without the specific approval of Owner. If any such matter requires special handling, only a person holding a Master Rigger's license shall be employed to perform such special handling. No tenant shall place, or permit to be placed, on any part of the floor or floors of the premises demised to such tenant, a load exceeding the floor load per square foot which such floor was designed to carry and which is allowed by law. Owner reserves the right to prescribe the weight and position of safes and other heavy matter, which must be placed so as to distribute the weight.
Exhibit 10.35
SUBLEASE
BETWEEN
325 CORPORATE DRIVE II, LLC
AS
"SUBLESSOR"
AND
BOTTOMLINE TECHNOLOGIES, INC.
AS
"SUBLESSEE"
OFFICE BUILDING FACILITY
PEASE INTERNATIONAL TRADEPORT
PORTSMOUTH, NEW HAMPSHIRE 03801
DATED AS OF ________________, 2000
TABLE OF CONTENTS
ARTICLE PAGE
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SUBLEASE...................................................................... 5
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RECITALS...................................................................... 6
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ARTICLE 1. PREMISES........................................................... 7
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ARTICLE 2. CONDITION OF SUBLEASED PREMISES - SUBLESSEE'S IMPROVEMENTS........ 8
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[ARTICLE 2A. SUBLESSOR'S IMPROVEMENTS........................................ 11
------------------------
ARTICLE 3. TERM.............................................................. 11
----
ARTICLE 4. BASIC RENT........................................................ 12
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ARTICLE 5. IMPOSITIONS....................................................... 17
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ARTICLE 6. SURRENDER OF SUBLEASED PREMISES................................... 18
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ARTICLE 7. INSURANCE......................................................... 19
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ARTICLE 8. USE OF SUBLEASED PREMISES......................................... 22
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ARTICLE 9. LIENS............................................................. 25
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ARTICLE 10. ALTERATIONS - SIGNS.............................................. 26
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ARTICLE 11. RIGHT OF SUBLESSOR TO INSPECT AND REPAIR......................... 28
----------------------------------------
ARTICLE 12. GENERAL INDEMNIFICATION BY SUBLESSEE............................. 29
------------------------------------
ARTICLE 13. UTILITIES........................................................ 30
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ARTICLE 14. SERVICES TO BE FURNISHED BY SUBLESSOR AND SUBLESEE'S AGREEMENTS.. 31
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ARTICLE 15. INTENTIONALLY LEFT BLANK..................... ................... 34
ARTICLE 16. DAMAGE OR DESTRUCTION............................................ 34
ARTICLE 17. EMINENT DOMAIN................................................... 35
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ARTICLE 18. DEFAULT........................................................... 36
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ARTICLE 19. SUBORDINATION TO MORTGAGES........................................ 37
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ARTICLE 20. CERTIFICATE...................................................... 38
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ARTICLE 21. ASSIGNMENT,SUBLEASES, MORTGAGE, RIGHT OF FIRST OFFER............. 38
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ARTICLE 22. ENVIRONMENTAL PROTECTION......................................... 42
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ARTICLE 23. HOLDING OVER..................................................... 48
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ARTICLE 24. WAIVERS.......................................................... 48
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ARTICLE 25. QUIET ENJOYMENT.................................................. 49
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ARTICLE 26. INTENTIONALLY LEFT BLANK......................................... 49
------------------------------------
ARTICLE 27. INTERPRETATIONS.................................................. 49
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ARTICLE 28. NOTICES.......................................................... 50
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ARTICLE 29. DISPUTES AND LITIGATION.......................................... 50
-----------------------------------
ARTICLE 30. MISCELLANEOUS.................................................... 51
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45
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1. PRIMARY SUBLEASE
2. A. PLANS DESIGNATING THE SUBLEASED PREMISES -
LEASEHOLD WORK AND BASE BUILDING PLANS LABELED AS:
325 CORPORATE DRIVE, LLC
New Office Building at:
325 Corporate Drive
Portsmouth, NH
Project #300042
Design Document
Dated: 8/9/00
By: PCI Architecture
B. BASE BUILDING SPECIFICATIONS AND PLANS LABELLED AS:
Preliminary Specifications with Addendum #1
New Office Building
325 Corporate Drive, LLC
Dated: 8/9/00
By: PCI Architecture
Project #300042
3. AMENITIES
4. LIST OF ENVIRONMENTAL LAWS AND REGULATIONS
5. SUBLEASE PROVISIONS REQUIRED BY FEDERAL AVIATION ADMINISTRATION
6. RULES AND REGULATIONS
7. LANDLORD SERVICES
8. LIST OF APPROVALS AND MILESTONES
THIS SUBLEASE ("Sublease") is made by and between 325 CORPORATE DRIVE II, LLC, ("Sublessor") and BOTTOMLINE TECHNOLOGIES, INC. ("Sublessee"); (Sublessor and Sublessee may be referred to jointly as the "Parties.")
Sublessor: 325 Corporate Drive II, LLC
---------- 170 Commerce Way, Suite 202
Portsmouth, NH 03801
Sublessee: Bottomline Technologies, Inc.
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---------- Fleet Street
Portsmouth, NH 03801
See 4.1
the New Hampshire Department of Environmental Services ("NHDES") and the United States Environmental Protection Agency ("EPA") regarding certain contamination at Pease and that FFA also imposes certain requirements upon Sublessor and Sublessee which are addressed in the terms and conditions of this Sublease. A copy of the FFA is attached to the Primary Sublease. The term FFA shall include any amendments to said document.
C. Sublessor is 325 Corporate Drive II, LLC and is duly organized and existing under the laws of the State of New Hampshire with a principal place of business at 170 Commerce Way, Suite 101, Portsmouth, New Hampshire, and is qualified to do business in the State of New Hampshire.
D. Sublessee BOTTOMLINE TECHNOLOGIES, INC. is duly organized and existing under the laws of the State of New Hampshire with a principal place of business at Fleet Street, Portsmouth, NH and is qualified to do business in the State of New Hampshire.
NOW, THEREFORE, in consideration of the covenants herein contained and other valuable consideration, the receipt of which is hereby acknowledged, Sublessor and Sublessee hereby agree as follows:
ARTICLE 1.
1.1. Description of Subleased Premises
---- ---------------------------------
Sublessor, for and in consideration of the rents and covenants herein
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1.2. Easements - Rights-of-Way
---- -------------------------
This Sublease is subject to existing easement and rights of way of record
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and to (i) the Utility Sublease and License Agreement dated July 31, 1992 by and
between PDA and Public Service Company of New Hampshire ("PSNH"); (ii) the Utility Sublease and License Agreement dated May 10, 1995 by and between PDA and New England Telephone and Telegraph Company ("NETEL"); (iii) the Wastewater Disposal and Water Service Facilities Sublease and License Agreement dated as of January 1, 1993 and amended July 1, 1998 by and between PDA and the City of Portsmouth ("COP") and (iv) and to the Pipeline Easement and Transfer Agreement dated August 12, 1998 by and between PDA< Portland Natural Gas Transmission System and Maritimes & Northeast Pipeline, LLC. The Government reserves for the use and benefit of the public, an avigation easement and a right of way for the free and unobstructed passage of aircraft in the airspace above the surface of the Airport, together with the right to cause in such airspace such sound, vibrations, fumes, dust, fuel particles, and all other effects as may be caused by the operation of aircraft, now known or hereafter used, for the navigation through or flight in the said airspace, and for use of said airspace for landing on, taking off from, or operating on the Airport.
1.3. Access
---- ------
Sublessee shall have in common with other Airport tenants and authorized
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Airport users the right to use the entrances, exits and roadways designated by PDA for common use at the Airport, subordinate, however, to PDA's rights to manage the common areas and roadways, which rights of PDA shall include, without limitation, the right to impose reasonable rules and regulations, and to add, delete, alter, or otherwise modify the designation and use of all parking areas, entrances, exits, roadways and other areas of the Airport.
The rights of Sublessee under this Section 1.3 shall be subordinate to PDA's rights, to manage the common areas and roadways which rights shall include, without limitation, the right to impose reasonable rules and regulations relating to use of the common areas and roadways and the right to add, delete, alter or otherwise modify the designation and use of all parking areas, entrances, exits, roadways and other areas of the Airport, provided, however, that during the term of this Sublease, Sublessee shall have reasonable access the Premises.
Sublessor shall at Sublessor's request exercise any and all rights and remedies available to it under the primary Sublease to ensure that Sublessee's use and enjoyment of the Premises and access thereto are protected.
2.3 Sublessor shall perform all of the Work diligently and continuously to completion, in accordance with all plans and specifications therefor and first- class construction and engineering practice, the requirements of all Documents and all Approvals, and pursuant to all applicable laws, codes and regulations, including without limitation the requirements of the Americans with Disabilities Act.
2.4 Sublessor shall use diligent efforts to obtain all Approvals by the dates therefor set forth in Exhibit 8, and to commence and perform the Work so as to achieve the construction milestones set forth in Exhibit 8 by the dates therefor set forth in such Exhibit. In the event Sublessor fails to obtain an Approval by the "drop dead date" therefor set forth in Exhibit 8, or, except for the "Tenant Floorplan Finalized" and the "Bottomline Approval of (TI) Pricing" matters and excepting any delays in Tenant Floorplan Finalized which shall cause delay in the "Tenant Improvement Construction Document Completed", the Sublessor fails to achieve a construction milestone by the date set forth in Exhibit 8, then Sublessee shall have the right, exercisable by notice of Sublessor given at any time while such failure persists, to terminate this Sublease. The construction milestone dates set forth in Exhibit 8 shall be extended one day up to a maximum of 180 days for each day of delay caused by the occurrence of an event of "Force Majeure" defined as follows:
Force Majeure. Except for the performance of any monetary payment obligations hereunder, the duties of Sublessor or Sublessee to observe or perform any of the provisions of this Sublease on its part to be performed or observed shall be excused for a period equal to the period of prevention, delay or stoppage due to causes beyond the control of the affected party, by reason of strikes, civil riots, shortages of materials (except in the event materials of like kind or quality are available), war, invasion, fire or other casualty, labor unrest (unless such labor unrest solely affects the Premises and is not a result of Sublessee's acts, omission or negligence but is caused by the acts, omissions or negligence of Sublessor), actions of public utilities, Acts of God, unforeseen or unknown conditions in, on or under the Premises, adverse environmental conditions or contamination, adverse seasonal or weather conditions beyond those normally experienced in the Portsmouth area, or other events beyond the reasonable control of the affected party, provided that
(a) the affected party has taken steps that are reasonable under the
circumstances to mitigate the effects of such Force Majeure situation, and
(b) the affected party notifies the other party in writing of the event of
Force Majeure within five (5) days after the occurrence thereof.
2.5 "Substantial completion" as used in this Article 2 and Exhibit 8 shall mean that (a) the Base Building Work or Leasehold Improvement Work, as applicable, is complete except for so-called "punchlist items" which do not interfere with Sublessee's use and enjoyment of the Premises, and which Sublessor shall complete within the time agreed upon by the Sublessor and Sublessee after the Term Commencement Date, (b) Sublessor's architect has certified to Sublessee that the Base Building Work or Leasehold Improvement Work, as applicable, has been substantially completed in accordance with the plans and specifications therefor and all applicable law, and all requirements of the Sublease and (c) a final Unconditional Certificate of Occupancy has been issued for the base building or Premises, as applicable, which shall allow use of the Premises by Sublessee for its business. Sublessor shall notify Sublessee at least (15) days prior to Substantial Completion of the date upon which Substantial Completion is expected to be achieved. All warranties shall be deemed to commence as of the Substantial Completion date, except those as specified on the "punch list".
2.6 Sublessor shall provide a warranty to Sublessee with respect to all work performed by or on behalf of Sublessor for a period of one year after the Term Commencement Date, and shall, at Sublessor's sole cost and expense, promptly correct any defect of which it is notified within such one-year period. Thereafter, Sublessor agrees that it shall assign to Sublessee or exercise on Sublessee's behalf any and all warranties available to it from contractors, subcontractors or suppliers. Notwithstanding the foregoing, latent defects in the Base Building Work shall be repaired by Sublessor at Sublessor's sole cost and expense whenever the same are discovered, whether or not within the one-year warranty period and the cost of such repairs shall not be included within Operating Expenses.
2.7 Provided that Sublessee and its employees, agents and contractors do not unreasonably interfere with Sublessor's work in the Premises, Sublessor shall allow Sublessee access to the Premises to install cabling, furniture and equipment during construction of the Leasehold Improvement Work.
2.8 Sublessor shall pay the entire cost of the Base Building Work. Sublessor shall pay the following with respect to the Leasehold Improvement Work.
If the actual fit up cost is greater than $2,436,496, then the difference shall be paid by the Sublessee on a pro rata basis, monthly as construction of the Leasehold Improvement Work progresses, provided however, that if such increases shall have accumulated from the commencement of construction and not have been billed by Sublessor, upon the discovery of any such unbilled increases, the Sublessee shall make payment thereof within 10 days of Sublessor's notice. Any unused allowance amount shall be applied against rent
first becoming due.
2.9 The amenities to be provided by the Sublessee are listed or described on Exhibit 4.
ARTICLE 3.
ARTICLE 4.
Year Annual Amount Per Sq. Ft. Monthly Payment 1 $1,312,636.50 $15.75/RSF $109,386.37 2 $1,354,307.50 $16.25/RSF $112,858.95 3 $1,395,978.50 $16.75/RSF $116,331.54 4 $1,437,649.50 $17.25/RSF $119,804.08 5 $1,480,987.34 $17.77/RSF $123,415.60 6 $1,525,158.60 $18.30/RSF $127,096.55 7 $1,570,996.70 $18.85/RSF $130,916.39 8 $1,618,501.64 $19.42/RSF $134,875.13 9 $1,666,840.00 $20.00/RSF $138,903.33 10 $1,706,845.20 $20.60/RSF $143,070.41 |
(i) Operating Year: Each calendar year in which any part of the Term of this Sublease shall fall.
(ii) Operating Expenses: The aggregate costs or expenses reasonably incurred by Sublessor with respect to the operation, administration, insuring, repair, maintenance, janitorial and management of the Property (but specifically excluding Sublessee's Utility Expenses). The estimated annual operating expense cost is $3.20 per square foot, for the 12 month period beginning with the commencement of this Lease.
Notwithstanding anything to the contrary set forth in the Sublease, Operating Expenses shall not include the following:
(a) Any ground or underlying lease rental;
(b) Bad debt expenses and interest, principal, points and fees on debts or amortization on any mortgage or other debt instrument encumbering the Building or the Lot;
(c) Costs which may be considered capital improvements, capital repairs, capital changes or any other capital costs as determined under generally accepted accounting principles except for capital improvements required by any laws not in existence and not in effect as of the Term Commencement Date and capital expenditures occasioned by ordinary wear and tear or resulting from excess use by Sublessor, in which case such costs shall be capitalized and amortized over their useful life determined in accordance with generally accepted accounting principles, and the Sublessee shall be responsible for the pro rata share of those costs based on the remaining length of the term of this Lease.
(d) Rental for items which if purchased, rather than rented, would constitute a capital cost;
(e) Costs incurred by Sublessor to the extent that Sublessor is reimbursed by insurance proceeds or is otherwise reimbursed.
(f) Depreciation, amortization and interest payments, except on equipment, materials, tools, supplies and vendor-type equipment purchased by Sublessor to enable Sublessor to supply services Sublessor might otherwise contract for with a third party where such depreciation, amortization and interest payments would otherwise have been included in the charge for such third party's services, all as determined in accordance with generally accepted accounting principles, consistently applied, and when depreciation or amortization is permitted or required, the item shall be amortized over its reasonably anticipated useful life;
(g) Advertising and promotional expenditures, and costs of acquisition and maintenance of signs in or on the Building identifying the owner of the Building or other Sublessees;
(h) Marketing costs, including leasing commissions, attorneys' fees (in connection with the negotiation and preparation of letters, deal memos, letters of intent, leases, subleases and/or assignments), space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions
with present or prospective Sublessees or other occupants of the Building;
(i) Costs, including permit, license and inspection costs, incurred with respect to the installation of Sublessees' or other occupants' improvements or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for Sublessees or other occupants of the Building;
(j) Expenses in connection with services or other benefits which are not offered to sublessee or for which Sublessee is charged for directly;
(k) Costs incurred by Sublessor due to the violation by Sublessor or any sublessee of the terms and conditions of any sublease of space in the Building;
(l) Management fees paid or charged by Sublessor in connection with the management of the building to the extent such management fee is in excess of the management fee customarily paid or charged by sublessors of the comparable buildings in the vicinity of the Building;
(m) Salaries and other benefits paid to the employees of Sublessor to the extent customarily included in or covered by a management fee, provided that in no event shall Operating Expenses include salaries and/or benefits attributable to personnel above the level of Building manager;
(n) Rent for any office space occupied by Building management personnel
(o) Amounts paid to Sublessor or to subsidiaries or affiliates of Sublessor for goods and/or services in the Building to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis;
(p)Sublessor's general corporate overhead and general and administrative expenses;
(q)Any compensation paid to clerks, attendants or other persons in commercial concessions operated by Sublessor'
(r)Costs incurred in connection with upgrading the Building to comply with laws, rules, regulations and codes in effect prior to the Term Commencement Date;
(s)Costs arising from the negligence or willful misconduct of Sublessor or other Sublessees or occupants of the building or their respective agents, employees, licensees, vendors, contractors or providers of materials or services;
(t)Costs arising from Sublessor's charitable or political contributions;
(u)Costs arising from latent defects or repair thereof;
(v)Costs for sculpture, paintings or other objects of art;
(w)Costs associated with the operation of the business of the entity which constitutes Sublessor as the same are distinguished from the costs of operation of the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Sublessee may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Sublessor's interest in the Building.
(x) Costs incurred in connection with any disputes between Sublessor and its employees, between Sublessor and Building management, or between Sublessor and other Sublessees or occupants
(iii) Utility Expenses: The aggregate costs or expenses reasonably incurred by Sublessor with respect to supplying electricity, oil, steam, gas, water and sewer and other utilities supplied to the Property and not paid for directly by the Sublessee. Where possible, separate meters shall be installed for each Sublessor of the building. Common utility expenses shall be shared pro rata by the sublessees.
(b) At the commencement of this Lease, the Sublessor shall estimate the Operating Expenses, and utility expenses. As of each anniversary date the Sublessor shall reconcile the estimated expenses with the actual expenses, and determine the estimated payments for the next 12 month period. Estimated payments by Sublessee on account of Sublessee's Proportionate Share of Operating Expenses shall be made monthly and at the time and in the fashion herein provided for the payment of Base Rent. After the end of each Operating Year, Sublessor shall submit to Sublessee a reasonably detailed accounting of Operating Expenses for such Year, and Sublessor shall certify to the accuracy thereof. If estimated payments theretofore made for such Year by Sublessee exceed Sublessee's required payment on account thereof for such Year, according to such statement, Sublessor shall credit the amount of overpayment against subsequent obligations of Sublessee with respect to Operating Expenses (or refund such overpayment if the Term of this Sublease has ended and Sublessee has no further obligation to Sublessor), but, if the required payments on account thereof for such Year are greater than the estimated payments (if any) theretofore made on account thereof for such Year, Sublessee shall make payment to Sublessor within thirty (30) days after being so advised by Sublessor. Sublessor shall have the same rights and remedies for the nonpayment by
Sublessee of any payments due on account of Operating Expenses as Sublessor has hereunder for the failure of Sublessee to pay Base Rent.
(c) "Sublessee's Proportionate Share" shall mean a fraction, the numerator of which is the number of rentable feet in the Premises, and the denominator of which is the number of rentable square feet in the Building as determined in accordance with BOMA Methodology
4.3.3 Sublessee's Audit Right. Sublessor shall keep, in the Building manager's office, complete books and records regarding Operating Expenses and real estate taxes (collectively, "Charges"). All such records shall be retained for at least three (3) years. Sublessee shall have the right to audit such records at any time upon reasonable written notice to Sublessor. If such audit reveals that Sublessee's pro rata share of any Charges has been overstated, then Sublessor shall immediately refund the overpayment plus interest at the Lease Interest Rate and if overstated by more than five percent (5%) cumulatively, Sublessor shall promptly upon demand reimburse Sublessee for the costs of such audit.
In the event that the Sublessee shall exercise its option to renew for either additional five (5) year period, the annual rent during that period shall be 95% of the then Current Market Rent Rate for the premises but in no case shall the rent be less than the previous years Base Rent. The term "Current Market Rent Rate" for purposes of this Sublease shall mean the annual amount per rentable square foot that a willing, comparable, new, non-renewal, non-equity, nonexpansion Sublessee of credit quality similar to Sublessee would pay, and a willing comparable Sublessor of the Building or a comparable office building in the immediate vicinity of the Building would accept, at arms length, giving appropriate consideration to annual rental rates per rentable square foot, escalation clauses (including type, gross or net, and if gross, whether base year or expense stop), and abatement provisions reflecting free rent, tenant improvement allowances, length of lease term, size, condition and location of premises being leased.
If Sublessee exercises the extension option, Sublessor and Sublessee shall
attempt to agree upon the Current Market rental Rate using their best good-faith
efforts. If Sublessor and Sublessee fail to reach an agreement within thirty
(30) days following Sublessee's exercise of such extension option (the "Outside
Agreement Date"), then each party shall make a separate determination of the
current Market Rental Rate which shall be submitted to each other and to
arbitration in accordance with the following items (i) through (vii):
(i) Sublessor and Sublessee shall each appoint, within ten (10) business days of the Outside Agreement Date, one arbitrator who shall by profession be a licensed, qualified MAI appraiser of comparable properties in the immediate vicinity of the Building, and who has been active in such field over the last five (5) years. The determination of the arbitrators shall be limited solely to
the issue of whether Sublessor's or Sublessee's submitted Current Market Rental Rate is the closes to the actual Current Market Rental Rate as determined by the arbitrators.
(ii) The two arbitrators so appointed shall within five (5) business days of the date of the appointment of the last appointed arbitrator agree upon and appoint a third arbitrator who shall be qualified under the same criteria set forth hereinabove for qualification of the initial tow arbitrators.
(iii) The third arbitrator shall within fifteen (15) days of the appointment reach a decision as to whether the parties shall use Sublessor's or Sublessee's submitted current Market Rent Rate, or such other Rent Rate as determined by the third appraiser and shall notify Sublessor and Sublessee thereof.
(iv) If either Sublessor or Sublessee fails to appoint an arbitrator within ten (10) business days after the applicable outside Agreement Date, the arbitrator appointed by one of them shall reach a decision, notify Sublessor and Sublessee thereof, and such arbitrator's decision shall be binding upon Sublessor and Sublessee.
(v) If the two arbitrators fail to agree upon and appoint a third arbitrator, parties fail to appoint an arbitrator, then the appointment of the third arbitrator or any arbitrator shall be dismissed and the matter to be decided shall be forthwith submitted to arbitration under the provisions of the American Arbitration Association, but subject to the instruction set forth in this Section 3.3.
(vi) The cost of arbitration shall be paid by Sublessor and Sublessee equally.
The exercise of the first five (5) year prior by the Sublessee shall entitle the Sublessee up to a $10.00 per square foot allowance to improve or renovate the leased premises. The exercise of the second five (5) year option shall entitle the Sublessee up to a $2.00 per square foot carpeting allowance.
All other additional rent shall also be paid, as provided in Section 4.5 above.
ARTICLE 5
5.2 Abatements.
Sublessor reserves the right to make partial payments and/or file tax abatement proceedings in which case the Sublessor shall be responsible for any costs, interest or penalties associated therewith, and the Sublessee shall not be responsible for any amounts beyond the tax payment obligation under Paragraph 5.1 above. Sublessee shall have the right at its sole cost and expenses to file tax abatement proceedings after providing a 10 day notice of such action with the Sublessor and after a consultation discussion with the Sublessor which shall occur not later than 10 days after the Sublessee's notice. Sublessee's rights hereunder shall not alter the Sublessee's obligation under Paragraph 5.1 above.
ARTICLE 6.
acknowledge and deliver to Sublessor such instruments of further assurance as in the opinion of Sublessor are necessary or desirable to confirm or perfect Sublessor's right, title and interest in and to the Subleased Premises including said improvements and fixtures. On or before the end of the Sublease term, Sublessee shall remove all of Sublessee's personal and other property allowed to be removed hereunder, and all such property not removed shall be deemed abandoned by Sublessee and may be utilized or disposed of by Sublessor without any liability to Sublessee. Sublessee's obligation under this Article 6 shall survive the expiration or termination of this Sublease.
ARTICLE 7.
(1) Comprehensive general liability insurance to a limit of not less than three million ($3,000,000) dollars, endorsed for products and completed operations liability insurance, on an "occurrence basis" against claims for "personal injury", including without limitation, bodily injury, death or property damages, occurring upon, in or about the land and buildings of which the Subleased Premises are a part as required pursuant to the Primary Sublease.
(2) Worker's compensation and employer's liability insurance in an amount and form which meets all applicable requirements of the labor laws of the State of New Hampshire, as amended from time to time, and which specifically covers the persons and risks involved in this Sublease.
(3) Automobile liability insurance in amounts approved from time to time by Sublessor, but not less than one million ($1,500,000) dollars combined single limit for owned, hired and non-owned automobiles.
knowledge of such violation or attempted violation, to remedy or prevent the same as the case may be.
against. Sublessor shall supply to Sublessee from time to time upon request of Sublessee certificates of all such insurance issued by or on behalf of the insurers named therein by a duly authorized agent. All policies of insurance maintained by Sublessor shall contain the same waiver of subrogation provisions for the benefit of Sublessee as Sublessee is required to obtain in its insurance policies for the benefit of Sublessor.
ARTICLE 8.
suspensions or revocations. In the use and occupation of the Subleased Premises and the conduct of such business thereon, Sublessee, at its sole cost and expense, shall promptly comply with all present and future laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments, courts, departments, commissions and boards, any national, state or local Board of Fire Underwriters, or any other body exercising functions similar to those of any of the foregoing. Notwithstanding the foregoing or any other provision of this Lease, however, Sublessee shall not be responsible for compliance with any such laws, regulations, or the like requiring (I) structural repairs or modifications or (ii) repairs or modifications to the utility or building service equipment or (iii) installation of new building service equipment, such as fire detection or suppression equipment, unless such repairs, modifications, or installations shall (a) be due to Sublessee's particular manner of use of the Premises (as opposed to office use generally), or (b) be due to the negligence or willful misconduct of Sublessee or any agent, employee, or contractor of Sublessee.
Sublessor and PDA shall not be required to join in any proceedings referred to in this Section unless the provisions of any applicable laws, rules or regulations at the time in effect shall require that such proceedings be brought by and/or in the name of Sublessor and/or PDA and Sublessor and/or PDA determines that such action is in its best interests, in which event Sublessor and/or PDA shall join in the proceedings, or permit the same to be brought in its name, if Sublessee shall pay all expenses in connection therewith.
such laws, regulations, or the like requiring (I) structural repairs or modifications or (ii) repairs or modifications to the utility or building service equipment or (iii) installation of new building service equipment, such as fire detection or suppression equipment, unless such repairs, modifications, or installations shall (a) be due to Sublessee's particular manner of use of the Premises (as opposed to office use generally), or (b) be due to the negligence or willful misconduct of Sublessee or any agent, employee, or contractor of Sublessee.
Building, or cause offensive odors or loud noise or constitute a nuisance or
menace to any other sublessee or sublessees or other persons in the Building;
(iii) sublessee shall, at its sole cost and expense: (x) in its use of the
Premises, the Building or the Land, comply with the requirements of all
applicable governmental laws, rules and regulations including, without
limitation, the Americans with Disabilities Act of 1990, as amended (the "ADA")
and (y) in the event of any Sublessee's work or improvements, pay for and
perform any work necessary to bring the Premises, the Building or the Land into
compliance with the ADA which work is required due to the Sublessee's use of the
Premises, the Building or the Land for retail purpose.The Sublessor hereby
certifies that the initial construction of the building and Sublessor's fit up
of the leased premises conform to all ADA requirements.
ARTICLE 9
ARTICLE 10
ALTERATIONS - SIGNS
(1) All work and Alterations shall be done in compliance with all applicable governmental regulations, codes, standards or other requirements, including fire, safety and building codes and Land Use Regulations promulgated by PDA and with the provisions of Article 22 of this Sublease. This obligation shall include compliance with all applicable provisions of the FFA (as defined in Article 22), including obligations imposed upon Sublessor in respect to construction and construction related work.
(2) All Alterations shall be of such a character as not to materially reduce the value and usefulness of any of the buildings or other improvements below their value and usefulness immediately before such Alteration. All work performed hereunder shall be performed in a good and workmanlike manner, shall conform to drawings and specifications approved by Sublessor and shall not be disruptive of the overall operation of the Airport. All contractors engaged by Sublessee to perform such work shall employ labor that can work in harmony with all elements of labor at the Airport.
(3) During the period of construction of any alteration, Sublessee or any contractor, subcontractor or Sublessee of Sublessee shall maintain or cause to be maintained the following insurance:
(i) The comprehensive general liability and automobile insurance provided for in Article 7 and shall be maintained for the limits specified
thereunder and shall provide coverage for the mutual benefit of Sublessor, PDA, the United States of America and Sublessee as named or additional insured (as is appropriate) in connection with any Alteration permitted pursuant to this Article 10.
(ii) Fire and any other applicable insurance provided for in Article 7 which if not then covered under the provisions of existing policies shall be covered by special endorsement thereto in respect to any Alteration, including all materials and equipment therefor incorporated in, on, or about the Subleased Premises (including excavations, foundations, and footings) under broad form all risk builder's risk completed value form or equivalent thereof; and
(iii) Worker's compensation insurance covering all persons employed in connections with the work and with respect to whom death or bodily injury claims could be asserted against PDA, Sublessor, Sublessee or the Subleased Premises, with statutory limits as then required under the laws of the State of New Hampshire.
(4) Sublessee shall provide Sublessor and PDA with MYLAR as-built drawings when any Alteration authorized hereunder is completed.
ARTICLE 11
under the Master Lease (or any other agency having a right of entry under the Federal Facilities Agreement (FFA) as defined in Section 22.8) or PDA as Sublessor under the Primary Lease determines that immediate entry is required for safety, environmental, operations or security purposes they may effect such entry without prior notice. The Sublessee shall have no claim against PDA or against the United States or any officer, agent, employee or contractor thereof on account of any such entries.
ARTICLE 12
(1) from any condition of the Premises resulting from the negligent use of the Premises by the Sublessee;
(2) from any breach or default on the part of Sublessee in the performance of any covenant or agreement on the part of Sublessee to be performed pursuant to the terms of this Sublease, or from any act or omission of Sublessee, or any of its agents, contractors, servants, employees, sublessees, licensees or invitees; or
(3) from any accident, injury, loss or damage whatsoever caused by any act or omissions of Sublessee, or any of its agents, contractors, servants, employees, Sublessees, licensees or invitees, to any person or property occurring during the term of this Sublease, on or about the Subleased Premises (including ramp and parking areas), or upon the land, streets, curbs or parking areas adjacent thereto.
In the event that any action or proceeding is brought against Sublessor by reason of any matter for which Sublessee has hereby agreed to indemnify, defend, or hold harmless Sublessor, Sublessee, upon notice from Sublessor, covenants to resist or defend such action or proceeding with counsel acceptable to Sublessor.
ARTICLE 13
last sentence of Section 14.5 of the Primary Sublease.
PDA under the Primary Sublease also reserves the right to run such utility lines as it deems necessary in connection with the development of the Airport to, from, or through the Subleased Premises, provided, however, that PDA in exercising such reserved right shall provide reasonable prior notice and the opportunity to confer with PDA and shall exercise reasonable efforts to avoid or minimize interference with use of the Subleased Premises.
PDA under the Primary Sublease, at its sole discretion, shall have the right from time to time, to alter the method and source of supply of the above enumerated utilities to the Subleased Premises and Sublessee agrees to execute and deliver to PDA such documentation as may be required to effect such alteration. Sublessee agrees to pay all charges for the above enumerated utilities supplied by Sublessor, public utility or public authority, or any other person, firm or corporation which are separately metered to the Subleased Premises.
PDA under the Primary Sublease, shall have the option to supply any of
the above-enumerated utilities to the Subleased Premises. If PDA shall elect to
supply any of such utilities to the Subleased Premises, Sublessee will purchase
its requirements for such services tendered by PDA, and Sublessee will pay PDA,
within ten (10) days after mailing by PDA to Sublessee of statements therefor,
at the applicable rates determined by PDA from time to time which PDA agrees
shall not be in excess of the public utility rates for the same service, if
applicable, to other aviation tenants at the Airport. If PDA so elects to supply
any of such utilities, Sublessee shall execute and deliver to PDA, within ten
(10) days after request therefor, any documentation reasonably required by PDA
to effect such change in the method of furnishing of such utilities.
ARTICLE 14
mechanical equipment, including safes, which shall be placed so as to distribute the weight. Business machines and mechanical equipment shall be placed and maintained by Sublessee at Sublessee's expense in settings sufficient, in Sublessor's judgment, to absorb and prevent vibration, noise and annoyance. Sublessee shall not move any safe, heavy machinery, heavy equipment, freight, bulky matter or fixtures into or out of the Building without Sublessor's prior consent, which consent may include a requirement to provide insurance, naming Sublessor as an insured, in such amounts as Sublessor may deem reasonable.
(b) If such safe, machinery, equipment, freight, bulky matter or fixtures requires special handling, Sublessee agrees to employ only persons holding a Master Rigger's License to do such work, and that all work in connection therewith shall comply with applicable laws and regulations. Any such moving shall be at the sole risk and hazard of Sublessee, and Sublessee will exonerate, indemnity and save Sublessor harmless against and from any liability, loss, injury, claim or suit resulting directly or indirectly from such moving.
(b) In order to insure that the foregoing requirements are not exceeded and to avert possible adverse affect on the Building's electrical system, Sublessee shall not, without Sublessor's prior consent, connect any fixtures, appliances or equipment to the Building's electrical distribution system which operates on a
voltage in excess of 120 volts nominal. If Sublessor shall consent to the
connection of any such fixtures, appliances or equipment, all additional risers
or other electrical facilities or equipment required therefor shall be provided
by Sublessor and the cost thereof shall be paid by Sublessee upon Sublessor's
demand as Additional Rent. From time to time during the Term of this Sublease,
Sublessor shall have the right to have an electrical consultant selected by
Sublessor make a survey of Sublessee's electric usage, the result of which shall
be conclusive and binding upon Sublessor and Sublessee. In the event that such
survey shows that Sublessee has exceeded the requirements set forth in paragraph
(a), in addition to any other rights Sublessor may have hereunder, Sublessee
shall, upon demand, reimburse Sublessor for the costs of such survey.
During the period of such restoration, if the Sublessee shall not have reasonable use and occupancy of the premises, the rent shall be equitably abated during that period or portion thereof.
ARTICLE 17
ARTICLE 18
Sublessee shall be credited towards the rents and payment obligations that would have been due from the original Sublessee on a monthly pro-rata basis. At the end of the original Sublessee's term the Sublessor shall render an accounting of all rents and other obligation payments made by the new Sublessee against the account fund and the Sublessor shall render an accounting and make such adjustments with the original Sublessee as shall be appropriate.
In addition to the rents and other obligations of the Sublessee under this Sublease, the Sublessee shall be liable for any expenses incurred by the Sublessor in connection with obtaining the premises, or with removing the property of the Sublessee, with putting the Subleased Premises into a condition similar to the condition at the commencement of the Sublease, reasonable wear and tear excepted, and with any reletting, including without limitation any reasonable attorneys fees and brokers fees.
ARTICLE 19
Provided that Sublessor delivers a commercially reasonable Non-Disturbance Agreement, Sublessee agrees that upon the request of Sublessor it will subordinate this Sublease and the lien hereof to the lien of any present or future mortgage or mortgages upon the Subleased Premises, any property of which the Subleased Premises are a part, or upon any ground lease of such property or upon any part thereof, irrespective of the time of execution or time of recording of any sub mortgage or mortgages. Sublessee agrees that it will, upon the request of Sublessor, execute, acknowledge and deliver any and all instruments deemed by Sublessor necessary or desirable to give effect or notice of such subordination. The word "mortgage" as used herein includes mortgages, deeds of trust, or other similar instruments and modifications, consolidations, extensions, renewals, replacements and substitutes thereof. At the request of the holder of any mortgage upon the Subleased Premises or any property of which the Subleased Premises is a part may subordinate the lien of such mortgage to this Sublease, thereby making this Sublease superior to such mortgage, by recording in the Rockingham County Registry of Deeds, a Notice of Subordination or other document of like effect, executed unilaterally by such mortgage. Whether the lien of any mortgage are a part shall be superior or subordinate to this Sublease and the lien hereof, Sublessee agrees that , if requested by Sublessor or the holder of such mortgage, it will attorn to the holder of such mortgage or anyone claiming under such holder and their respective successors and assigns in the event of foreclosure of or similar action taken under such mortgage.
ARTICLE 20
Within ten (10) business days after written request therefor by Sublessor, Sublessee agrees to deliver to Sublessor or to any mortgagee a certificate stating (if such be the case) that Sublessee has entered into occupancy of the Subleased Premises in accordance with the provisions of this Sublease, that this Sublease is in full force and effect (if such be the case), that Sublessor has performed the construction required of Sublessor, and any other information reasonably requested. Sublessor agrees to provide Sublessee with any similar certificate upon request by the Sublessee, including a statement that no default exists under the Primary Sublease, and that the Primary Sublease is in full force and effect.
ARTICLE 21
If Sublessor shall fail to respond to the Sublessee's request within 15 days after receipt of the request, such request shall be deemed approved.
In the event that the rent for the Subleases Premises shall exceed the per square foot rent charged to the Sublessee under this lease, Sublessee shall remit 50% of the excess to Sublessor upon receipt by Sublessee. In calculating any excess rent payable by Sublessee to Sublessor pursuant to this provision, Sublessee shall first be entitled to deduct all out of pocket direct expenses incurred by the sublessee, including but not limited to brokerage and legal fees, tenant allowances and tenant improvements. Excepting leases to affiliates and subsidiaries, in no event shall the rent charged by the Sublessee be less than the 75% of the Market Rent as defined in this Sublease.
Sublessee shall not employ a broker to market the Subleased Premises or any portion thereof other than Sublessor's agent The Kane Company, Inc. (or its successor). This provision shall not apply in the event that 85% of the ownership interest in the Sublessor shall change, in which event the Sublessor shall so notify the Sublessee. The foregoing shall not be construed to prevent Sublessee from procuring subtenants by itself or through non-broker representatives. Sublessor shall cause The Kane Company, Inc. to use its best efforts to market the Subleased Premises if called upon under this subparagraph.
(a) Sublessor agrees that it will not execute any lease, sublease or other agreement for occupancy of all or any portion of the premises demised under the Primary Sublease (the "Primary Premises") prior to January 15, 2001 without the prior written consent of Sublessee, which consent may be withheld in Sublessee's sole and absolute discretion.
(b) Sublessor and Sublessee agree that Sublessee shall have the option and right to sublease additional portions of the Building by providing one or more written notices to Sublessor designating the portion of the Building which Sublessee desires to sublease (the "Expansion Space"), provided however that any such notices shall be given prior to January 15, 2001 ("Option Notices"). In the event that Sublessee timely delivers an Option Notice, Sublessor and Sublessee shall promptly execute an amendment to this Sublease with the terms and conditions described in paragraph (d) below.
(c) During the period from January 15, 2001 through January 15, 2003 (the "First Offer Period"), Sublessor shall not lease, sublease or otherwise permit occupancy of all or any portion of the Primary Premises except in accordance with this paragraph (c). If, during the First Offer Period, Sublessor desires to sublease all or any portion of the Primary Premises, Sublessor shall first offer to sublease such portion to Sublessee by giving Sublessee written notice identifying the space which Sublessor desires to sublease (the "Offer Space"). Sublessee shall then have the right, within fifteen (15) days after receiving Sublessor's notice, to exercise its right to sublease such space by providing written notice to
Sublessor. If Sublessee so exercises said right, then Sublessor and Sublessee shall promptly execute an amendment to this Sublease with the terms and conditions described in paragraph (d) below. If Sublessee does not timely exercise said right, then Sublessor shall be free for a period of one hundred eighty (180) days thereafter to sublease the Offer Space to a third party or parties on such terms as Sublessor deems appropriate. In the event Sublessor has not executed a sublease with a third party within such one hundred eighty (180) day period, Sublessee's right of first offer described in this paragraph (c) shall again apply to the Offer Space.
(d) In the event Sublessee shall exercise its option rights under paragraph
(b) or paragraph (c) above:
(1) The per square foot rental rate shall be the same per square foot charge paid by the Sublessee under Article 4.1 of this Sublease plus any other additional charges payable by the Sublessee under this Lease.
(2) The Sublessor shall provide the Sublessee an allowance of $27.00 per square foot for Leasehold Improvement Work.
(3) Other terms and conditions of the amendment to the Sublease shall be as negotiated between the parties provided however that the following shall apply.
(I) Sublessor shall promptly prepare plans and specifications for the work necessary to build out the interior of the Expansion Space or the Offer Space, as the case may be (the "Expansion Improvement Work"), which plans shall be subject to Sublessee's approval, not to be unreasonably withheld.
(II) After the plans and specifications for the Expansion Improvement Work have been approved by Sublessee, Sublessor shall prepare a list of all permits, approvals, consents and licenses (collectively, the "Expansion Approvals") required for construction of the Expansion Improvement Work, and shall represent and warrant that the list of Expansion Approvals is complete and accurate. Thereafter, Sublessor and Sublessee shall promptly and in good faith agree upon a schedule for the construction of the Expansion Improvement Work (the "Expansion Schedule"), which schedule shall be substantially in the form of Exhibit 8 , provided however that a reasonable allowance shall be made for (i) any delay between the date of this Sublease and the date Sublessee approves the plans and specifications for the Expansion Improvement Work and (ii) any difference in scope or nature between the Leasehold Improvement Work and the Expansion Improvement Work.
(III) The provisions of Sections 2.3 through 2.7 shall apply to the construction of the Expansion Improvement Work, provided that (A) all references in such sections to the "Work" "Base Building Work" or "Leasehold Improvement Work" shall be deemed to refer to the "Expansion Improvement
Work"; and (B) all references in such sections to the "Term Commencement Date" shall be deemed to refer to the "Expansion Date" (as hereafter defined).
(IV) Effective as of the date ("The Expansion Date") which is the later of the Term Commencement Date or the date on which the Expansion Improvement Work is Substantially Complete, the Premises shall be amended to include the Expansion Space or the Offer Space, as the case may be, and the Base Rent and Sublessee's Proportionate Share shall be amended proportionately.
(e) From and after January 15, 2003 through the remainder of the Term of this Sublease (as the same may be extended) (the "Second Option Period"), Tenant shall have a continuing right of first offer as follows:
(1). Prior to offering the Offer Space for lease to third parties, Sublessor shall first advise Sublessee in writing (the "Offer Notice") of the terms and conditions upon which Sublessors prepared to lease the Offer Space (the "Offered Terms").
(2). Sublessee shall accept or reject the offer made in the Offer Notice within thirty (30) days after the date of delivery of the Offer Notice (Sublessee's failure to accept such offer in writing within such thirty (30) day period shall be deemed an election to reject such offer).
(3). In the event Sublessee timely accepts the offer set forth in the Offer Notice, Sublessor and Sublessee shall within fifteen (15) days after the date of acceptance enter into an amendment to this Lease incorporating the Offer Space into the Premises on the Offered Terms.
(4). In the event Sublessee rejects or is deemed to have rejected the offer set forth in the Offer Notice, Sublessor shall be free for a period of 90 days after the date of rejection or deemed rejections (the "Marketing Period") to lease the Offer space to a third party or parties on terms not materially more favorable to such party or parties than the Offered Terms (with respect to rental rate, "materially" as used herein shall mean a rental rate that is more than five percent (5%) lower than the rental rate set forth in the Offer Notice).
In the event Sublessor has not by expiration of the Marketing Period executed a lease with a third party complying with the provisions of clause (e) above, then Sublessee's right of first offer shall again apply to the Offer Space. In the event Sublessor executes such a Lease prior to the expiration of the Marketing Period, Sublessee's right of offer shall not apply to the applicable Offer Space, until the expiration or earlier termination of such Lease.
ARTICLE 22
not caused by Sublessee or its agents.
This indemnification of Sublessor and PDA and Air Force by Sublessee includes, without limitation, any and all claims, judgment, damages, penalties, fines, costs and expenses, liabilities and losses incurred by Sublessor or PDA or Air Force in connection with any investigation of site conditions, or any remedial or removal action or other site restoration work required by any federal, state or local governmental unit or other person for or pertaining to any discharges, emissions, spills, releases, storage or disposal of Hazardous Substances arising or resulting from any act or omission of the Sublessee or any sublessee or assignee of the Sublessee at the Subleased Premises after the Occupancy Date. "Occupancy Date" as used herein shall mean the earlier of the first day of Sublessee's occupancy or use of the Subleased Premises or the date of execution of this Sublease. "Occupancy" or "Use" shall mean any activity or presence including preparation and construction in or upon the Subleased Premises.
The provisions of this Section shall survive the expiration or termination of the Sublease, and the Sublessee's obligations hereunder shall apply whenever the Sublessor or the Air Force incurs costs or liabilities for the Sublessee's actions of the types described in this Article.
units against the Air Force, because of any use of, or release from, any portion of the Airport (including the Subleased Premises) of any Hazardous Substances prior to the Occupancy Date, Sublessee's liability being limited to matters relating to its own activities.
As used in this Sublease, the terms "release" and "storage" shall have the meanings provided in RSA 147-B:2, as amended, and the term "disposal" shall have the meaning provided in RSA 147-A:2.
sole cost and expense. The Sublessor hereby certifies that the leased premises and the building containing the leased premises are free of any asbestos materials.
(1) to conduct investigations and surveys, including, where necessary, drilling, testpitting, borings and other activities related to the Pease Installation Restoration Program ("IRP") or the FFA;
(2) to inspect field activities of the Air Force and its contractors and subcontractors in implementing the IRP or the FFA;
(3) to conduct any test or survey required by the EPA or NHDES relating to the implementation of the FFA or environmental conditions at the Subleased Premises or to verify any data submitted to the EPA or NHDES by the Air Force relating to such conditions;
(4) to construct, operate, maintain or undertake any other response or remedial action as required or necessary under the IRP or the FFA, including, but not limited to monitoring wells, pumping wells and treatment facilities.
remedial action will, to the extent practicable, be coordinated with representatives designated by the Sublessee and any sublessee or assignee. Sublessee and any sublessee or assignee shall have no claim on account of such entries against the State as defined in FFA or any officer, agent, employee, contractor, or subcontractor thereof.
regulatory agencies, as required by applicable law. The Sublessee, its Sublessees or assignees shall be liable for the payment of any fines and penalties or costs which may accrue to the United States of America or PDA as a result of the actions of Sublessee, its Sublessees or assignees, respectively.
22.15 Sublessor hereby represents and warrants to Sublessee that to the best of its knowledge and belief the property is free from contamination by Hazardous Materials or Hazardous Substances and complies with all environmental laws. Sublessor represents and warrants to Sublessee that Sublessor has delivered to Sublessee all environmental site assessments and similar reports known to Sublessor affecting the Property. Sublessor agrees to indemnify, defend and hold Sublessee harmless from all loss, cost, damage, claims or expenses incurred by Sublessor as result of the inaccuracy of the above representations.
22.16 Notwithstanding any provisions of this Sublease to the contrary, Sublessor shall be solely responsible for maintaining and operating the emergency generator to be installed as part of the Base Building Work (the costs of such maintenance and operation to be reimbursed by Sublessee) and, accordingly, all risk and responsibility for handling, storing and disposing of fuel for the generator, and all other environmental risks associated with the generator, shall be borne by the Sublessor.
ARTICLE 23
ARTICLE 24
Failure of Sublessor to complain of any act or omission on the part of Sublessee, no matter how long the same may continue, shall not be deemed to be a waiver by Sublessor of any of its rights hereunder. No waiver by Sublessor at any time, express or implied, or any breach of any provision of this Sublease shall be deemed a waiver of a breach of any other provision of this Sublease or a consent of any subsequent breach of the same or any other provision. If any action by Sublessee shall require Sublessor's consent or approval, Sublessor's consent to or approval of such action on any one occasion shall not be deemed a consent to or approval of said action on any subsequent occasion or a consent to or approval of any other action on the same or any subsequent occasion. No payment by Sublessee or acceptance by Sublessor of a lesser amount than shall be due from Sublessee to Sublessor shall be deemed to be anything but payment on account, and the acceptance by Sublessor of a check for a lesser amount with an endorsement or statement thereon, or upon letter accompanying said check that said lesser amount is payment in full, shall not be deemed an accord and satisfaction, and Sublessor may accept said check without prejudice to recover the balance due or pursue any other remedy. Any and all rights and remedies which Sublessor may have under this Sublease or by operation of law, either at law or in equity, upon any breach, shall be distinct, separate and cumulative, and shall not be deemed inconsistent with each other; and no one of them, whether exercised by Sublessor or not, shall be deemed to be in exclusion of any other; and any two or more of all such rights and remedies may be exercised at the same time.
ARTICLE 25
Sublessor agrees that upon Sublessee's paying the rent and performing and observing the agreements, conditions and other provisions on its part to be performed and observed, Sublessee shall and may peaceably and quietly have, hold, and enjoy the Subleased Premises during the term of this Sublease without any manner of hindrance or molestation from Sublessor or anyone claiming under Sublessor, subject, however, to the terms of this Sublease and any instruments having a prior lien.
ARTICLE 26 -
INTENTIONALLY LEFT BLANK
ARTICLE 27
27.2. In the event of a breach of this Sublease by either party, the prevailing party shall be entitled to reasonable attorneys fees and costs.
This Sublease shall be governed by the laws of the State of New
Hampshire.
27.3 Reasonableness. Regardless of any reference to the words "sole" or
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"absolute" (but except for matters which will have an adverse effect on the (a)
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structural integrity of the Building (b) the Building's plumbing, heating, life safety, ventilating, air conditioning, mechanical or electrical systems, or (c) the exterior appearance of the Building, whereupon in each such case Sublessor's duty is to act in good faith and in compliance with the Sublease), any time the consent of Sublessor or Sublessee is required, such consent shall not be unreasonably withheld, conditioned or delayed. Whenever the Sublease grants Sublessor or Sublessee the right to take action, exercise discretion, establish rules and regulations or make allocations or other determinations, Sublessor and Sublessee shall act reasonably and in good faith.
ARTICLE 28
All notices and other communications authorized or required hereunder shall be in writing and shall be given by mailing the same certified or registered mail, return receipt requested, postage prepaid, or first class mail, postage prepaid or by mailing the same by Express Mail or by having the same delivered by a commercial delivery service to the following address:
If to Sublessor: 325 Corporate Drive II, LLC
170 Commerce Way, Suite 202
Portsmouth, NH 03801
with copy to:
John J. Ryan, Esq.
Casassa and Ryan
459 Lafayette Road
Hampton, NH 03842
If to Sublessee: Prior to Term Commencement Date
Bottomline Technologies, Inc.
Fleet Street
Portsmouth, NH 03801
with copy to:
Paul Jakubowski, Esq.
Hale and Dorr
60 State Street
Boston, MA 02109
After Term Commencement Date
Bottomline Technologies, Inc.
325 Corporate Drive
Portsmouth, NH 03801
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ARTICLE 29
In the event that mediation is unsuccessful, the parties shall then submit the dispute to arbitration (binding if the parties agree) in accordance with the Rules of the American Arbitration Association. In the event that arbitration fails, and provided that the parties have participated in the alternative dispute resolution, provisions hereof in good faith, the aggrieved party may then commence litigation.
ARTICLE 30
requirements of any agreement between PDA and the United States or the Air Force applicable to the Subleased Premises or Sublessee's activities at the Airport and shall consent to amendments and modifications of this Sublease if required by such agreements or as a condition of Sublessor's entry into such agreements.
This Sublease is further subject and subordinate to the Primary Sublease between PDA and Sublessor, and Sublessee shall abide by the provisions of the Primary Sublease applicable to the Subleased Premises or Sublessee's activities at the Airport and shall consent to amendments and modifications of this Sublease if required by the Primary Sublease.
That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Premises herein leased nor shall the Sublessee, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, Sublessees, subtenants, or vendees in the Subleased Premises herein leased.
reasonable control, or for any cause due to any act or neglect of Sublessee or Sublessee's servants, agents, employees, licensees or any person claiming by, through or under Sublessee; nor shall any such failure give rise to any claim in Sublessee's favor that Sublessee has been evicted, either constructively or actually, partially or wholly.
(b) In no event shall Sublessor ever be liable to Sublessee for any loss of business or any other indirect or consequential damages suffered by Sublessee from whatever cause.
(c) With respect to any repairs or restoration which are required or permitted to be made by Sublessor, the same may be made during normal business hours and Sublessor shall have no liability for damages to Sublessee for inconvenience, annoyance or interruption of business arising therefrom.
(d) An "Abatement Event" shall be defined as an event or circumstance (other
than those addressed in Articles 16 and 17 or by reason of some other event or
circumstance beyond the control of the Sublessor, that prevents Sublessee from
using the Premises or any portion thereof, as a result of any failure to provide
services or access to the Premises. Sublessee shall give Sublessor notice
("Abatement Notice") of any such Abatement Event, and if such Abatement Event
continues beyond the "eligibility Period" as that term is defined below), then
the Base Rent and Sublessee's other monetary obligations to Sublessor shall be
abated entirely or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Sublessee continues to be so prevented
from using, and does not use, the Premises or a portion thereof, in the
proportion that the rentable area of the portion of the Premises that Sublessee
is prevented from using, and does not use, bears to the total rentable area of
the Premises; provided, however, in the event that Sublessee is prevented from
using, and does not use, a portion of the premises for a period of time in
excess of the Eligibility Period and the remaining portion of the Premises is no
sufficient to allow Sublessee to effectively conduct its business therein, and
if Sublessee does not conduct its business from such remaining portion, then for
such time after expiration of the Eligibility Period during which Sublessee is
so prevented from effectively conducting its business therein, Base Rent and
Sublessee's other monetary obligations to Sublessor shall be abated entirely for
such time as Sublessee continues to be so prevented from using, and does not
use, the Premises. The term "Eligibility period" shall mean a period of three
(3) consecutive days after Sublessor's receipt of any Abatement Notice(s). In
addition, if an Abatement Event continues for thirty (30) consecutive days after
any Abatement Notice, Sublessee may terminate this sublease by written notice to
Sublessor at any time prior to the date such Abatement Event is cured by
Sublessor.
Sublessor shall perform the Base Building Work and Leasehold Improvement Work in accordance with all provisions of the Primary Sublease, Master Lease, Application, Acceptance and FFA (collectively, the "Documents") and all other applicable laws, and requirements, and shall during the Term operate the premises leased under the Primary Sublease in accordance with the Documents and all other applicable laws, codes and requirements. Sublessor shall deliver to Sublessee copies of all correspondence sent or received by Sublessor to or from any party to any of the Documents alleging a default by any party thereto or otherwise setting forth matters which might reasonably be expected to have an adverse impact on the leasehold interest created by this Sublease or on Sublessee's use and enjoyment of the Subleased Premises.
obligation, to cure such default itself, and the costs incurred by Sublessee in curing such default shall be offset against the Base Rent next coming due until satisfied in full.
325 CORPORATE DRIVE, LLC
By:___________________________
Its:__________________________
"Sublessor"
BOTTOMLINE TECHNOLOGIES, INC.
On this _____ day of _________________, 2000, personally appeared ________________________________, known to me (or proved to me on the basis of satisfactory evidence) to be the ____________________ of 325 CORPORATE DRIVE, LLC, and on oath stated that he was authorized to execute this instrument and acknowledged it to be his free and voluntary act for the uses and purposes set forth herein.
My Commission Expires:
STATE OF NEW HAMPSHIRE
COUNTY OF ROCKINGHAM
On this ____ day of _____, 2000, personally appeared _________________________, known to me (or proved to me on the basis of satisfactory evidence) to be the_____________________________ of BOTTOMLINE TECHNOLOGIES, INC. and on oath stated that he was authorized to execute this instrument and acknowledged it to be his free and voluntary act for the uses and purposes set forth herein.
Name:
My Commission Expires:
EXHIBIT 1
EXHIBIT 2
EXHIBIT 3
1. 1,000 square foot fitness facility to be provided by the Sublessor to include cardio equipment, stretching machines, weights and two televisions. In addition, Sublessee employees shall have a corporate membership at the new Planet Fitness/PF Gym in Portsmouth, NH for a monthly fee of $10.00 per employee with a nominal initiation charge.
2. Building is adjacent to a 171 acre resource conservation preserve where the employees of Sublessee shall have the right to run, bike and recreate. (See aerial and side plan).
3. Sublessor shall on or before the Term Commencement date construct a basketball court and volleyball area as well as an outdoor seating arena on the site (see site plan).
4. Sublessor shall on or before the Term Commencement date construct an onsite pond.
EXHIBIT 4
Air Quality: (a) Clean Air Act & Amendments, 42 U.S.C. 7401-7642
(b) 40 CFR Parts 50-52, 61, 62, 65-67, 81
(c) RSA ch. 125-C, Air Pollution Control, and rules
adopted thereunder
(d) RSA ch. 125-H, Air Toxic Control Act, and rules
adopted thereunder
Hazardous Materials: (a) Hazardous Materials Transportation Act', 49 U.S.C.
1801-1813, and Department of Transportation
Regulations thereunder
(b) Emergency Planning and Community Right-To-Know Act,
42 U.S.C. 11001-11050
(c) 49 CFR Parts 100-179
(d) 40 CFR Part 302
(e) RSA ch. 277-A, Toxic Substances in the Workplace, and
rules adopted thereunder
Hazardous Waste: (a) Resource Conservation and Recovery Act (RCRA) of 1976
and RCRA Amendments of 1984, 42 U.S.C. 6901-6991i
(b) Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA) of 1980, as amended, 42
U.S.C. 9601-9675
(c) 40 CFR Parts 260-271, 300, 302
(d) RSA ch. 147-A, Hazardous Waste
Management and rules adopted thereunder
Water Quality: (a) Federal Water Pollution Control Act (Clean Water Act)
and Amendments, 33 U.S.C. 1251-1387
(b) Safe Drinking Water Act, as amended, 42 U.S.C. 300f-
300j-26 40 CFR Title 100-143, 401 and 403
(c) RSA ch. 146-A, Oil Spillage in Public Waters, and
rules adopted thereunder
(d) RSA ch. 485, New Hampshire Safe Drinking Water Act,
and rules adopted thereunder
(e) RSA ch. 485-A, Pollution and Waste Disposal, and
rules adopted thereunder
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EXHIBIT 5
1. To the extent applicable to Sublessee under the terms of this Sublease, and the Primary Sublease, Sublessee, for himself, his heirs, personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby agree that in the event facilities are constructed, maintained, or otherwise operated on the Subleased Premises, for a purpose for which a United States Department of Transportation ("DOT") program or activity is extended or for another purpose involving the provision of similar services or benefits, Sublessee shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended.
2. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessee, for himself, his personal representative, successors in interest, and assigns, as a part of the consideration hereof, does hereby agree that: (I) no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination in the use of said facilities; (ii) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination; and (iii) that the Sublessee shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulation may be amended.
3. That in the event of breach of any of the above nondiscrimination covenants, Sublessor shall have the right to terminate the Sublease, and to reenter and repossess said land and the facilities thereon, and hold the same as if said lease, had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are allowed and completed including expiration of appeal rights.
4. To the extent applicable to Sublessee under the terms of this Sublease, and the Primary Sublease, Sublessee shall furnish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service; PROVIDED THAT the Sublessee may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers.
5. Non-compliance with Provision 4 above shall constitute a material breach thereof and in the event of such noncompliance Sublessor shall have the right to terminate this Sublease, and the estate hereby created without liability therefore or at the election of the Sublessor or the United States either or both of Sublessor or the United States shall have the right to judicially enforce provisions.
6. Sublessee agrees that it shall insert the above five provisions in any lease agreement, by which said Sublessee grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the Subleased Premises.
7. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessee assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no person shall on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. Sublessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. Sublessee assures that it will require that its covered suborganizations provide assurance to the Sublessor, that they similarly will undertake affirmative action programs and that they will require assurances from their suborganizations, as required by 14 CFR Part 152, Subpart E, to the same effect.
8. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessor reserves the right to further develop or improve the landing area of the airport as it sees fit, regardless of the desires or view of the Sublessee and without interference or hindrance.
9. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessor reserves the right, but shall not be obligated to the Sublessee to maintain and keep in repair the landing area of the airport and all publicly-owned facilities of the airport, together with the right to direct and control all activities of the Sublessee in this regard.
10. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, this Sublease shall be subordinate to the provisions and requirements of any existing or future agreement between the Sublessor and the United States, relative to the development, operation or maintenance of the airport.
11. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, there is hereby reserved to Sublessor, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Subleased Premises. This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from or operation on the airport.
12. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessee agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future construction of building is planned for the Subleased Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on Subleased Premises.
13. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessee, by accepting this Sublease expressly agrees for itself, its successors and assigns that it shall not erect nor permit the erection of any structure or object nor permit the growth of any tree on the land leased hereunder above the mean sea level elevation of 251feet. In the event the aforesaid covenants are breached, Sublessor reserves the right to enter upon the Premises and to remove the offending structure or object and cut the offending tree, all of which shall be at the expense of the Sublessee.
14. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, Sublessee, by accepting this Sublease, agrees for itself, its successors and assigns that it will not make use of the Subleased Premises in any manner which might interfere with the landing and taking off of aircraft from the airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached, Sublessor reserves the right to enter upon the Subleased Premises, and cause the abatement of such interference at the expense of the Sublessee.
15. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, it is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S C. 1349a).
16. To the extent applicable to Sublessee under the terms of this Sublease and the Primary Sublease, this Sublease and all the provisions hereof shall be subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said airport or the exclusive or non-exclusive use of the airport by the United States during the time of war or national emergency.
EXHIBIT 6
1. Except as specifically provided in the Sublease to which these Rules and Regulations are attached, no sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the building or Project without the prior written consent of Sublessor, which shall not be unreasonably withheld. Sublessor shall have the right to remove, at Sublessee's expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Sublessee by a person approved by Sublessor.
2. If Sublessor reasonably objects in writing to any curtains, blinds, shades, screens or hanging plants or other similar objects attached to or used in connection with any window or door of the Premises, or placed on any windowsill, which is visible from the exterior of the Premises, Sublessee shall immediately discontinue such use. Sublessee shall not place anything against or near glass partitions or doors or windows, which may appear unsightly from outside the Premises.
3. Sublessee shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, escalators or stairways of the Project. The halls, passages, exits, entrances, shopping malls, elevators, escalators and stairways are not open to the general public, but are open, subject to reasonable regulations, to Sublessee's business invitees. Sublessor shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of Sublessor would be prejudicial to the safety, character, reputation and interest of the Project and its Sublessees: provided that nothing herein contained shall be construed to prevent such access to persons with whom any Sublessee normally deals in the ordinary course of its business, unless such persons are engaged in illegal or unlawful activities.
4. The directory of the building or Project will be provided exclusively for the display of the name and location of Sublessees only and Sublessor reserves the right to exclude any other names therefrom.
5. All cleaning and janitorial services for the Project and the Premises shall be provided exclusively through Sublessor, and except with the written consent of Sublessor, no person or persons other than those approved by Sublessor shall be employed by Sublessee or permitted to enter the Project for the purpose of cleaning the same. Sublessee shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Premises.
6. Sublessor will furnish Sublessee, free of charge, with two keys to each door lock in the Premises. Sublessor may make reasonable charge for any additional keys. Sublessee shall not make or have made additional keys, and Sublessee shall not alter any lock or install a new additional lock or bolt on any door of its Premises without Sublessor's consent not to be unreasonably withheld. Sublessee, upon the termination of its tenancy, shall deliver to Sublessor the keys of all doors which have been furnished to Sublessee, and in the event of loss of any keys so furnished, shall pay Sublessor therefor.
7. If Sublessee requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain, and comply with, Sublessor's instructions in their installation, which shall not be unreasonable.
8. Freight elevator(s) shall be available for use by all Sublessees in the building, subject to such reasonable scheduling as Sublessor, in its discretion, shall deem appropriate. No equipment, materials, furniture, packages, supplies, merchandise or other property will be received in the building or carried in the elevators except between such hours and in such elevators as may be designated by Sublessor. Sublessee initial move in and subsequent deliveries of bulky items, such as furniture, safes and similar items shall, unless otherwise agreed in writing by Sublessor, be made during the hours of 8:00 p.m. to 6:00 a.m. or on Saturday or Sunday. No deliveries shall be made which impede or interfere with other Sublessees or the operation of the building.
9. Sublessee shall not place a load upon any floor of the Premises, which exceeds the load per square foot, which such floor was designed to carry and which is allowed by law. Sublessor shall have the right to prescribe the weight, size and position of all equipment; materials, furniture or other property brought into the building. Heavy objects shall, if necessary by Sublessor, stand on such platforms as determined by Sublessor to be necessary to properly distribute the weight, which platforms shall be provided at Sublessee's expense. Business machines and mechanical equipment belonging to Sublessee, which cause noise or vibration that may be transmitted to the structure of the building or to any space therein to such a degree as to be objectionable to Sublessor or to any Sublessees in the building, shall be placed and maintained by Sublessee, at Sublessee's expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. The persons employed to move such equipment in or out of the building must be acceptable to Sublessor. Sublessor will not be responsible for loss of, or damage to, any such equipment or other property from any cause, and all damage done to the building by maintaining or moving such equipment or other property shall be repaired at the expense of Sublessee.
10. Sublessee shall not use or keep in the Premises any kerosene, gasoline or inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment. Sublessee shall not use or permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Sublessor or other occupants of the building by reason of noise, odors or vibrations, nor shall Sublessee bring into or keep in or about the Premises any birds or animals.
11. Sublessee shall not use any method of heating or air conditioning other than that supplied by Sublessor.
12. Sublessee shall not waste electricity, water or air conditioning and shall not tape any ducts and agrees to cooperate fully with Sublessor to assure the most effective operation of the building's heating and air conditioning and to comply with any governmental energy-saving rules, laws or regulations of which Sublessee has actual notice, and shall refrain from attempting to adjust controls. Sublessee shall keep corridor doors closed, and shall close window coverings at the end of each business day. Sublessee shall have the control over the thermostat in the Subleased Premises.
13. Sublessor reserves the right, exercisable without notice and without liability to Sublessee, to change the name and street address of the building.
14. Sublessor reserves the right to exclude from the building between the hours of 8:00 p.m. and 7:00 a.m. the following day, or such other hours as may be established from time to time by Sublessor, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the building and has a pass or is properly identified. Sublessee shall be responsible for all persons for whom it requests passes and shall be liable to Sublessor for all acts of such persons. Sublessor shall not be liable for damages for any error with regard to the admission to or exclusion from the building of any person. Sublessor reserves the right to prevent access to the building in case of invasion, mob, riot, public excitement or other commotion by closing the doors or by other appropriate action.
15. Sublessee shall close and lock the doors of its Premises and entirely shut off all water faucets or other apparatus, and electricity, gas or air outlets before Sublessee and its employees leave the Premises. Sublessee shall be responsible for any damage or injuries sustained by other Sublessees or occupants of the building or by Sublessor for noncompliance with this rule.
16. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein.
The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Sublessee who, or whose employees or invitees shall have caused it.
17. Sublessee shall not sell, or permit the sale at retail of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise to the general public in or on the Premises. Sublessee shall not make any room-to-room solicitation of business from other Sublessees in the Project. Sublessee shall not use the Premises for any business or activity other than that specifically provided for in Sublessee's Sublease.
18. Sublessee shall not install any radio or television antenna, loudspeaker or other devices on the roof(s) or exterior walls of the building or Project, except in accordance with the provisions of Section 1.1 of the Sublease. Sublessee shall not interfere with radio or television broadcasting or reception from or in the Project or elsewhere, without Sublessor's prior consent, not to be unreasonably withheld.
19. Sublessee shall not mark, drive nails, screw or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof, except in accordance with the provisions of the Sublease pertaining to alterations. Pictures, artwork and bulletin boards may be hung provided proper materials are used. Sublessor reserves the right to direct electricians as to where and how telephones and telegraph wires are to be introduced to the Premises. Sublessee shall not affix any floor covering to the floor of the Premises in any manner except as approved by Sublessor. Sublessee shall repair any damage resulting from noncompliance with this rule.
20. Canvassing, soliciting and distribution of handbills or any other written material and peddling in the Project are prohibited, and Sublessee shall cooperate to prevent such activities.
21. Sublessor reserves the right to exclude or expel from the Project any person whom, in Sublessor's judgement, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Rules and Regulations of the Building.
22. Sublessee shall store all its trash and garbage within its premises or in other facilities provided by Sublessor. Sublessee shall not place in any trash box or receptacle any material, which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Sublessor.
23. The Premises shall not be used for the storage of merchandise held for sale to the general public, or for lodging or for manufacturing of any kind,
nor shall the Premises be used for any improper, immoral or objectionable purpose. All cooking on the Premises shall be done in accordance with all applicable, federal, state, county and city laws, codes, ordinances, rules and regulations.
24. Sublessee shall not use in any space or in the public halls of the Project any hand truck except those equipped with rubber tires and side guards or such other material-handling equipment as Sublessor may approve. Sublessee shall not bring any other vehicles of any kind into the building or Project.
25. Sublessee shall comply with all safety, fire protection and evacuation procedures and regulations established by Sublessor or any governmental agency.
26. Sublessee assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.
27. Sublessee's requirements will be attended to only upon appropriate application to the Project management office by an authorized individual. Employees of Sublessor shall not perform any work or do anything outside of their regular duties unless under special instructions from Sublessor, and no employee of Sublessor will admit any person (Sublessee or otherwise) to any office without specific instructions from Sublessor.
28. Sublessor may waive any one or more of these Rules and Regulations for the benefit of Sublessee or any other Sublessee, but no such waiver by Sublessor shall be construed as a waiver of such Rules and Regulations in favor of Sublessee or any other Sublessee, nor prevent Sublessor from thereafter enforcing any such Rules and Regulations against any or all of the Sublessees of the Project.
29. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend in whole or in part, the terms, covenants, agreements and conditions of the Sublease.
30. Sublessor reserves the right to make such other and reasonable Rules and Regulations as, in its reasonable judgment, may from time to time be needed for safety and security, for care and cleanliness of the Project and for the preservation of good order therein. Sublessee agrees to abide by all such Rules and Regulations herein above stated and any additional rules and regulations which are adopted.
31. Sublessee shall be responsible for the observance of all the foregoing rules by Sublessee's employees, agents, clients, customers, invitees and guests.
32. Sublessor shall furnish, free of charge, a reasonable number of access cards to Sublessee for the purpose of accessing exterior doors to the Building. Sublessee, upon termination of its tenancy, shall return all access cards, which have been furnished, to the Sublessor and in the event of loss of any cards so furnished, Sublessee shall pay Sublessor therefore.
33. Sublessee shall have the right to install roof top telecommunications facilities provided that such facilities shall be used only in connection with the Sublessee's business at the Subleased Premises and for no other commercial purposes.
EXHIBIT 7
LANDLORD SERVICES
EXHIBIT 8
LIST OF APPROVALS AND MILESTONES
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-78471, 333-78467, 333-78469 and 333-78473) pertaining to the 1998 Employee Stock Purchase Plan, the Amended and Restated 1997 Stock Incentive Plan, the Amended and Restated 1989 Stock Option Plan and the 1998 Director Stock Option Plan of Bottomline Technologies (de), Inc. of our report dated August 2, 2000 (except for Note 12, as to which the date is August 28, 2000), with respect to the consolidated financial statements and schedule of Bottomline Technologies (de), Inc. included in the Annual Report (Form 10-K) for the year ended June 30, 2000.
Boston, Massachusetts
September 22, 2000
/s/ ERNST & YOUNG LLP |
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30, 2000 BALANCE SHEET OF OPERATIONS FOR THE TWELVE-MONTH PERIOD ENDED JUNE 30, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE FOOTNOTE THERETO. |
| MULTIPLIER: 1,000 |
| CURRENCY: U.S. DOLLARS |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 2000 |
| PERIOD START | JUL 1 1999 |
| PERIOD END | JUN 30 2000 |
| EXCHANGE RATE | 1 |
| CASH | 27,292 |
| SECURITIES | 11,222 |
| RECEIVABLES | 15,668 |
| ALLOWANCES | 1,097 |
| INVENTORY | 168 |
| CURRENT ASSETS | 54,845 |
| PP&E | 8,537 |
| DEPRECIATION | 3,365 |
| TOTAL ASSETS | 71,280 |
| CURRENT LIABILITIES | 13,869 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 11 |
| OTHER SE | 57,117 |
| TOTAL LIABILITY AND EQUITY | 71,280 |
| SALES | 0 |
| TOTAL REVENUES | 49,134 |
| CGS | 17,546 |
| TOTAL COSTS | 49,083 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | (15,665) |
| INCOME TAX | (1,400) |
| INCOME CONTINUING | (14,265) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (14,265) |
| EPS BASIC | (1.33) |
| EPS DILUTED | (1.33) |