<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 No.: 000-21669
DIGITAL LIGHTWAVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4313013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 CLEVELAND STREET, FIFTH FLOOR
CLEARWATER, FLORIDA 33755
(813) 442-6677
(Address, including zip code, of principal executive offices and Registrant's
telephone number, including area code)
Indicate by check mark whether 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 report (s)), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
The number of shares outstanding of the Registrant's Common Stock as of
November 12, 1997 was 26,372,065.
<PAGE> 2
DIGITAL LIGHTWAVE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Comparative Balance Sheets - September 30, 1997 and 1
December 31, 1996
Comparative Statements of Operations - Three Months 2
Ended September 30, 1997 and September 30, 1996
Comparative Statements of Operations - Nine Months 3
Ended September 30, 1997 and September 30, 1996
Comparative Statements of Cash Flows - Nine Months 4
Ended September 30, 1997 and September 30, 1996
Notes to Comparative Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and 7
Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
<PAGE> 3
PART I FINANCAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIGITAL LIGHTWAVE, INC.
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 33,480 $ 1,165
Accounts receivable, net 10,798 2,510
Inventories 1,299 850
Prepaid expenses and other current assets 551 516
------------- -------------
Total current assets 46,128 5,041
Property and equipment, net 3,824 1,292
Other assets 130 41
------------- -------------
TOTAL ASSETS $ 50,082 $ 6,374
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 3,375 $ 1,942
Notes payable -- 750
------------- -------------
Total current liabilities 3,375 2,692
Long-term liabilities 95 233
------------- -------------
Total liabilities 3,470 2,925
------------- -------------
Stockholders' equity:
Preferred stock -- --
Common stock 3 2
Additional paid-in capital 53,555 14,242
Accumulated deficit (6,946) (9,095)
------------- -------------
46,612 5,149
Note receivable from stockholder -- (1,700)
------------- -------------
Total stockholders' equity 46,612 3,449
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,082 $ 6,374
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
DIGITAL LIGHTWAVE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------
1997 1996
----------- ------------
<S> <C> <C>
Sales $ 8,340 $ 1,723
Cost of goods sold 2,787 630
----------- ------------
Gross profit 5,553 1,093
Operating expenses:
Engineering and development 1,230 667
Sales and marketing 1,799 579
General and administrative 911 354
----------- ------------
Total operating expenses 3,940 1,600
----------- ------------
Operating income (loss) 1,613 (507)
Other income (expense) 511 (215)
----------- ------------
Income (loss) before income tax 2,124 (722)
Provision for income taxes -- --
----------- ------------
Net income (loss) $ 2,124 $ (722)
=========== ============
Per Share of Common Stock:
Net income (loss) per share $ 0.08 $ (0.03)
=========== ============
Weighted average common and common
equivalent shares outstanding 27,087,802 22,083,914
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
DIGITAL LIGHTWAVE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------------
1997 1996
---------------- -------------
<S> <C> <C>
Sales $ 15,148 $ 3,037
Cost of goods sold 4,944 1,152
---------------- -------------
Gross profit 10,204 1,885
Operating expenses:
Engineering and development 3,056 1,653
Sales and marketing 3,856 1,048
General and administrative 2,485 897
---------------- -------------
Total operating expenses 9,397 3,598
---------------- -------------
Operating income (loss) 807 (1,713)
Other income (expense) 1,342 (607)
---------------- -------------
Income (loss) before income tax 2,149 (2,320)
Provision for income taxes -- --
---------------- -------------
Net income (loss) $ 2,149 $ (2,320)
================ =============
Per Share of Common Stock:
Net income (loss) per share $ 0.08 $ (0.11)
================ =============
Weighted average common and common
equivalent shares outstanding 26,374,388 21,829,235
================ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
DIGITAL LIGHTWAVE, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
---------------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,149 $ (2,320)
Adjustments to reconcile net income (loss) due to
Cash used by operating activities:
Interest expense converted to equity -- 113
Depreciation and amortization 446 128
Changes in operating assets and liabilities:
Increase in accounts receivable, net (8,288) (1,425)
Increase in inventories (449) (81)
Decrease in deferred offering expenses 427 --
Increase in prepaid expenses and other current assets (531) (345)
Increase in accounts payable and accrued expenses 1,433 406
-------------- --------------
Net cash used in operating activities (4,813) (3,524)
-------------- --------------
Cash flows from investing activities:
Purchase of property and equipment (2,998) (516)
-------------- --------------
Net cash used in investing activities (2,998) (516)
-------------- --------------
Cash flows from financing activities:
Proceeds from notes payable -- 1,750
Principal payments on notes payable (750) 2,400
Principal payments on notes payable, related party -- (202)
Repayment of stockholder receivable 1,700 --
Proceeds from sale of common stock, net of expense 39,314 --
Cash paid for common stock -- 2,624
Principal payments-capital lease obligation (138) (148)
-------------- --------------
Net cash provided by financing activities 40,126 6,424
-------------- --------------
Net increase in cash and cash equivalents 32,315 2,384
Cash and cash equivalents at beginning of period 1,165 72
-------------- --------------
Cash and cash equivalents at end of period $ 33,480 $ 2,456
============== ==============
Other supplemental disclosures:
Noncash investing and financing activities:
Capital lease obligation $ -- $ 17
Fixed asset additions included in accounts payable 233 --
Accrued interest converted to equity -- 92
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
DIGITAL LIGHTWAVE, INC.
NOTES TO COMPARATIVE FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, these statements include all
adjustments, consisting of normal and recurring adjustments, considered
necessary for a fair presentation of results for such periods. The results of
operations for the three and nine month periods ended September 30, 1997,
respectively, are not necessarily indicative of results which may be achieved
for the full fiscal year or for any future period. The unaudited interim
financial statements should be read in conjunction with the financial
statements and notes thereto contained in Digital Lightwave's Form 10-K for the
period ended December 31, 1996, File No. 000-21669.
1. INITIAL PUBLIC OFFERING:
On February 6, 1997, the Company consummated its Initial Public Offering of
3,658,860 shares issued by the Company at a price of $12.00 per share.
Aggregate net proceeds to the Company were approximately $39.5 million. On
February 28, 1997, the Company paid off all the then outstanding notes
($750,000 principal amount) with proceeds from the Initial Public Offering.
2. INVENTORIES:
Inventories at September 30, 1997 and December 31, 1996 are summarized as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(In thousands)
<S> <C> <C>
Raw materials $ 1,179 $ 336
Work-in-process 0 339
Finished goods 120 175
------------- ------------
$ 1,299 $ 850
============= ============
</TABLE>
3. COMPUTATION OF NET INCOME (LOSS) PER SHARE:
Net income (loss) per common and common equivalent shares has been computed
using the weighted average number of common and common equivalent shares
outstanding using the treasury stock method for all periods presented. Shares
used in the net income (loss) per share calculation are summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
---------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Weighted average common stock outstanding 26,177,777 21,375,584 25,680,064 21,375,584
Weighted average common stock equivalents
Outstanding 910,025 708,330 694,324 453,651
---------- ------------- ------------- --------------
Shares used in net income (loss) per share
Calculation 27,087,802 22,083,914 26,374,388 21,829,235
========== ============= ============= ==============
</TABLE>
4. NEW ACCOUNTING PRONOUNCEMENTS:
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share," which is effective for periods ending after December 15,
1997. This statement establishes standards for computing and presenting
earnings per share data. Management is currently assessing the impact of SFAS
No. 128 on the Company's presentation of earnings per share data in future
periods.
5
<PAGE> 8
5. COMMITMENTS AND CONTINGENCIES:
The Company from time to time is involved in legal actions arising in the
ordinary course of business. With respect to these matters, management
believes that it has adequate legal defenses and/or provided adequate accruals
for related costs such that the ultimate outcome will not have a material
adverse effect on the Company's future financial position.
6. LEGAL PROCEEDINGS:
On November 5, 1997, Hugh Brian Haney ("Plaintiff") commenced an action in the
United States District Court for the Southern District of Ohio against Bryan
J. Zwan, the Company's Chief Executive Officer, and the Company ("Defendants").
The complaint alleges violations of Section 10 (b) of the Securities Exchange
Act and various common law violations by Defendants in connection with
Plaintiff's sale to the Company's predecessor in November 1995, pursuant to a
previously granted option exercisable by Zwan and/or the Company's predecessor,
of 4,900 shares of stock in the Company's predecessor, an amount equivalent to
19,215,686 shares of the Company's common stock.
The complaint seeks alternative forms of relief, including, among others, (1)
rescission of the sale of the shares transferred by Plaintiff or (2) damages of
not less than $235 million, together with interest. The Company believes that
the lawsuit is without merit and intends to defend vigorously.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains certain statements of a forward-looking nature relating to
future events or the future performance of the Company. Prospective and current
investors are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such statements
as well as the future prospects of the Company generally, such investors should
specifically consider various factors identified in the Company's Report on
Form 10-K for the period ended December 31, 1996, including the matters set
forth therein under the caption "Risk Factors," which could cause actual
results to differ materially from those indicated by such forward-looking
statements. Factors that may affect the Company's results of operations
include but are not limited to customer concentration, product certifications,
dependence on single product and uncertain market acceptance of planned
products, competition, management of growth, mergers, rapid technological
change and dependence on new product introductions, substantial increase in
manufacturing operations and dependence on contract manufacturing and limited
source suppliers, government regulations, dependence on key personnel,
dependence on proprietary technology, and volatility of stock price. The
Company participates in a highly concentrated industry, and has limited
visibility with regards to customer orders and the timing of such orders. The
Company may also encounter difficulty obtaining sufficient supplies to staff
and meet production schedules. As a result, quarter-to-quarter and
year-to-year financial performance is highly dependent upon the timely receipt
of orders from its customers during fiscal periods.
OVERVIEW
The Company manufactures and sells Network Information Computers, and Remote
Access Agents and has other products in design and development. The Company's
products are based on the Company's core software, firmware and hardware
technology which was developed over a five year period. In February 1996, the
Company commenced sales of the ASA 312. To date, the Company has not entered
into long-term agreements or blanket purchase orders for the sale of its
products, but generally obtains purchase orders for immediate shipment and
other cancelable purchase commitments. The Company's sales during a particular
quarter are, therefore, highly dependent upon orders placed by customers during
the quarter. Consequently, sales may fluctuate significantly from quarter to
quarter due to the timing and amount of orders from customers, among other
factors.
The Company believes that once it completes a successful initial sale to a
customer additional orders have a reasonable degree of occurrence as the
customer becomes comfortable with the Company's technologically advanced
product offerings. The Company believes that since it participates in the
highly concentrated telecommunications industry ongoing sales to existing
customers is indicative of growing product acceptance. Since the Company's
initial deliveries in February 1996, it has delivered over 600 units to over 50
customers primarily serving the domestic telecommunications marketplace. While
the Company believes it is properly positioned to garner additional customers
and market share for the ASA 312 and its derivative products, there can be no
assurance the company will gain further product acceptance or that additional
revenue will materialize from current or future customers.
Gross profit may be affected in the future by the introduction of new products
which generate differing gross margins and by the sales mix during a given
period. The Company plans to pursue Original Equipment Manufacturer (OEM)
relationships with respect to the sale of Remote Access Agents. The Company has
not negotiated any such arrangements but anticipates that its pricing to OEMs
would be less
7
<PAGE> 10
than with respect to direct sales resulting in lower gross margins in
connection with these arrangements. However, sales and marketing expenses are
generally lower in the case of sales to OEMs.
The Company believes that its operating expenses will continue to increase as a
result of a variety of factors including: (i) increased research and
development expenses associated with the completion of the products in
development and the continued enhancement of existing products; and (ii)
increased selling, general and administrative expenses associated with
continued expansion of sales and marketing capabilities, product advertising
and promotion. The Company recognizes research and development expenses when
incurred.
RESULTS OF OPERATIONS
The following is a discussion of significant changes in the results of
operations of the Company which occurred in the quarter and nine months ended
September 30, 1997 compared to the quarter and nine months ended September 30,
1996. The following tables summarize the approximate changes in selected
operating items and include dollar changes, percentage changes and percent of
net sales to facilitate the discussions that follow. The tables compare the
quarter ended September 30, 1997 to the quarter ended September 30, 1996 and
the nine months ended September 30, 1997 to the nine months ended September 30,
1996, respectively:
<TABLE>
<CAPTION>
Quarter Ended Percent of
(In millions, except %) ------------------------ Amount Percent Net Sales
Sept. 30, Sept. 30, Change Change --------------------------
1997 1996 Fav./(Unfav) Fav./(Unfav) 1997 1996
----------- ------------- -------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 8.3 $ 1.7 $ 6.6 384 % 100 % 100 %
Cost of goods sold (2.8) (.6) (2.2) (342) (33) (37)
----------- ------------- -------------- ------------- -----------
Gross profit 5.5 1.1 4.4 408 67 63
Engineering and development expenses (1.2) (.7) (.5) (84) (15) (39)
Sales and marketing expenses (1.8) (.6) (1.2) (211) (22) (34)
General and administrative expenses (.9) (.3) (.6) (157) (11) (20)
Other income (expense) .5 (.2) .7 338 6 (12)
----------- ------------- -------------- ------------- -----------
Net income (loss) $ 2.1 $ (.7) $ 2.8 394 25 % (42) %
=========== ============= ============== ============= ===========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Percent of
(In millions, except %) -------------------------- Amount Percent Net Sales
Sept. 30, Sept. 30, Change Change --------------------------
1997 1996 Fav./(Unfav) Fav./(Unfav) 1997 1996
----------- -------------- ------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 15.1 $ 3.0 $ 12.1 399 % 100 % 100 %
Cost of goods sold (4.9) (1.1) (3.8) (329) (33) (38)
----------- ------------- -------------- ------------- -----------
Gross profit 10.2 1.9 8.3 441 67 62
Engineering and development expenses (3.0) (1.7) (1.3) (85) (20) (54)
Sales and marketing expenses (3.9) (1.0) (2.9) (268) (26) (34)
General and administrative expenses (2.5) (.9) (1.6) (177) (16) (30)
Other income (expense) 1.3 (.6) 1.9 321 9 (20)
----------- ------------- -------------- ------------- -----------
Net income (loss) $ 2.1 $ (2.3) $ 4.4 193 14 % (76) %
=========== ============= ============== ============= ===========
</TABLE>
8
<PAGE> 11
SALES
Sales for the quarter increased $6.6 million to $8.3 million from $1.7 million
in the year ago quarter. Sales to existing customers during the quarter
represented 70% of sales, or $5.8 million as compared to 23% of net sales, or
$.4 million in the year ago quarter. During the quarter, the Company shipped
262 units in varying configurations of the ASA 312 to a total of 29 customers
(including 12 new customers) at an average selling price ("ASP") of $31,832, as
compared to 48 units to a total of 16 customers (including 12 new customers) at
an ASP of $35,891 in the year ago quarter.
Sales for the nine months ended September 30, 1997, increased $12.1 million to
$15.1 million from $3.0 million in the same period last year. Sales to
existing customers for the period represented 61% of sales, or $9.3 million as
compared to 48% of net sales, or $2.9 million for the same period last year.
During the period, the Company shipped 452 units in varying configurations at
an ASP of $33,513 compared with 86 units at an ASP of $35,311 for the same
period last year.
As previously noted, the company believes repeat sales to an existing customer
is a measure of growing product acceptance in the highly concentrated
telecommunication industry. ASPs declined in the quarter primarily due to the
introduction of a new product configuration for lower bit rate (OC-3) optical
networks which could be upgraded through the sale of a software enhancement at
a later date. There can be no assurance the Company will deliver additional
products or upgrades of existing products to its current or potential
customers. To a lesser extent, ASPs were reduced through the provision of
customary discounts to an international distributor.
COST OF GOODS SOLD
Cost of goods sold for the quarter increased by $2.2 million to $2.8 million
from $.6 million in the year ago quarter.
Cost of goods sold for the nine months ended September 30, 1997, increased by
$3.8 million to $4.9 million from $1.1 million in the year ago period.
The primary reasons for the increase in cost of goods sold is the increase in
volume of units produced and the increased infrastructure and manufacturing
costs incurred in support of these efforts. These costs include management,
indirect labor, facility rental, depreciation of equipment, and other operating
expenses. While the overall cost of good sold has increased, the average cost
of goods sold per unit has declined as a result of allocating fixed production
costs over a larger volume of units produced and the component cost reductions
associated with the purchase of larger lot sizes. During the latter part of
the quarter, the company moved its manufacturing operation to a new expanded
facility. Management believes this new facility can increase production,
however, these additional fixed production costs may initially yield an
increase to cost of goods sold and average cost of goods sold per unit over the
near term until the facility achieves optimum utilization.
GROSS PROFIT
Gross profit for the quarter increased by $4.4 million to $5.5 million from
$1.1 million in the year ago quarter. As a percentage of sales, gross margin
for the quarter increased to 66.6% from 63.4%.
Gross profit for the nine months ended September 30, 1997, increased by $8.3
million to $10.2 million from $1.9 million in the year ago period. As a
percentage of sales, gross margin for the nine months ended September 30, 1997
increased to 67.4% from 62.1%.
9
<PAGE> 12
The increase in gross profit and gross margin percentage, are related to the
increase in net sales, the allocation of fixed production costs over larger
unit sales volumes, and the purchase of larger lot sizes as previously
discussed.
ENGINEERING AND DEVELOPMENT
Engineering and development expenses for the quarter increased by $.5 million
to $1.2 million from $.7 million in the year ago quarter.
Engineering and development expenses for the nine months ended September 30,
1997, increased by $1.3 million to $3.0 million from $1.7 million in the year
ago period.
The increase in both periods is primarily related to the addition of
engineering, and quality control personnel and the other expenses associated
with the Company's ongoing research and development efforts on products like
the Remote Access Agents, and enhancements to the Company's Network Information
Computers. The Company intends to hire additional personnel and expand the
infrastructure to support these ongoing research and development efforts, and
does not anticipate the rate of growth in dollar terms will subside during the
next several quarters.
SALES AND MARKETING
Sales and marketing expenses for the quarter increased by $1.2 million to $1.8
million from $.6 million in the year ago quarter.
Sales and marketing expenses for the nine months ended September 30, 1997,
increased by $2.9 million to $3.9 million from $1.0 million in the year ago
period.
The increase in both periods is related to the addition of personnel for the
Company's direct sales force and marketing functions, an increase in
commissions related to the increase in sales activity, an increase in trade
show appearances, and other customer incentives. The Company intends to hire
additional personnel to support the expansion of the existing sales channels
and the development of additional sales channels for its products, and does not
anticipate the rate of growth in dollar terms or as a percentage of sales will
diminish.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the quarter increased by $.6 million to
$.9 million from $.3 million in the year ago quarter.
General and administrative expenses for the nine months ended September 30,
1997, increased by $1.6 million to $2.5 million from $.9 million in the year
ago period.
The increase in both periods is due to the expansion of facilities, personnel,
and information systems to support the growth of the Company's business. The
Company believes these expenses generally have a large fixed component, and
anticipates the rate of growth in percentage terms will subside over the next
twelve months.
10
<PAGE> 13
OTHER INCOME OR EXPENSE
Other income for the quarter increased by $.7 million from an expense of $.2
million to income of $.5 million.
Other income for the nine months ended September 30, 1997 increased by $1.9
million from an expense of $.6 million to income of $1.3 million.
The increase in both periods primarily relates to interest income generated
from the investment of proceeds from the company's Initial Public Offering
("IPO").
NET INCOME OR LOSS
Net income for the quarter increased $2.8 million from a net loss of $.7
million or $.03 per share, to net income of $2.1 million or $.08 per share.
Net income for the nine months ended increased $4.4 million from a net loss of
$2.3 million or $.11 per share, to net income of $2.1 million or $.08 per
share.
The computation of weighted shares outstanding for the 1997 periods reflect a
higher number of shares outstanding as a result of the completion of the
Company's IPO, and the effect of common stock equivalents under the treasury
stock method for all periods presented.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at September 30, 1997 were approximately $33.5
million compared to approximately $1.2 million at December 31, 1996. The
increase was due primarily to the receipt of approximately $39.5 million from
the completion of the Company's IPO on February 6, 1997. During the quarter
ended September 30, 1997, the Company received a $1.7 million repayment of a
note receivable from its principal shareholder.
As of September 30, 1997, the Company's working capital was approximately $42.8
million. For the nine months ended September 30, 1997, capital expenditures
were approximately $3.0 million. Future capital expenditures will depend on
several factors including timing of introductions of new products and
enhancements to existing products as well as continued product development
efforts. The Company believes that its available funds and anticipated cash
flows from its operations will satisfy the Company's projected working capital
and capital expenditure requirements for at least the next 12 months.
11
<PAGE> 14
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 5, 1997, Hugh Brian Haney ("Plaintiff") commenced an action in the
United States District Court for the Southern District of Ohio against Bryan J.
Zwan, the Company's Chief Executive Officer, and the Company ("Defendants").
The complaint alleges violations of Section 10 (b) of the Securities Exchange
Act and various common law violations by Defendants in connection with
Plaintiff's sale to the Company's predecessor in November 1995, pursuant to a
previously granted option exercisable by Zwan and/or the Company's predecessor,
of 4,900 shares of stock in the Company's predecessor, an amount equivalent to
19,215,686 shares of the Company's common stock.
The complaint seeks alternative forms of relief, including, among others, (1)
rescission of the sale of the shares transferred by Plaintiff or (2) damages of
not less than $235 million, together with interest. The Company believes that
the lawsuit is without merit and intends to defend vigorously.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
10.1 Second Lease Amendment, dated 09/10/97, between Registrant and Atrium At Clearwater, Limited
10.2 Lease Agreement, dated 06/30/97 between Registrant and Pinellas Business Center, Inc.
10.3 Lease Agreement, dated 09/26/97, between Registrant and Monmouth/Atlantic Realty Associates L.P.
27.0 Financial Data Schedule (for SEC use only).
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Digital Lightwave, Inc. during
the quarter ended September 30, 1997.
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Digital Lightwave, Inc.
Date: November 13, 1997 By: /s/ Bryan J. Zwan
---------------------------------------------------
Bryan J. Zwan
Chief Executive Officer and
President
(Principal Executive Officer)
Date: November 13, 1997 By: /s/ Steven H. Grant
----------------------------------------------------
Steven H. Grant
Vice President - Finance & Chief Financial Officer
(Principal Financial and Accounting Officer)
13
<PAGE> 1
EXHIBIT 10.1
SECOND LEASE AMENDMENT
This First Lease Amendment, dated September ______, 1997
by and between ATRIUM AT CLEARWATER, LIMITED, a
Florida limited partnership,
LANDLORD
AND
DIGITAL LIGHTWAVE, INCORPORATED
(Tenant)
WITNESSETH:
WHEREAS, ATRIUM AT CLEARWATER, LIMITED, Landlord, and DIGITAL
LIGHTWAVE, INC., Tenant, did make and execute a Lease Agreement dated October
7, 1994 for space designated as Suite 500, comprising approximately 7,796
square feet located within the project known as THE SUN BANK BUILDING,
CLEARWATER SQUARE or THE ATRIUM AT SUN BANK BUILDING located on the real
property described in Exhibit "A" attached hereto with an address of 601
Cleveland Street, Clearwater, Florida (the "Property"); and
Whereas, Landlord and Tenant did make and execute a First Lease
Amendment dated February 16, 1996, whereby Tenant expanded the size of its
Original Premises (with 7,796 rentable square feet) by adding 8,028 rentable
square feet on the 5th floor of the Building which additional area represented
the balance of the 5th floor of the Building with 15,824 rentable square feet
in total ("the Existing Premises") all identified as Suite 500 as depicted on
the attached Exhibit "B-1"; and
WHEREAS, the parties hereto desire to further extend and alter and
modify said Lease the manner hereinafter set forth;
NOW THEREFORE, in consideration of the mutual and reciprocal promises
herein contained, Tenant and Landlord hereby agree that said Lease shall hereby
be amended and modified as follows:
1. EXPANSION OF PREMISES. Tenant hereby agrees to expand the
size of its Existing Premises containing 15,824 rentable square feet of area on
the 5th floor, as set forth in the Lease (hereinafter referred to as the
"Existing Premises") by adding to the Existing Premises an area comprised of
15,824 rentable square feet located on the 6th floor, 4,227 rentable square
feet located on the 2nd floor and 2,312 rentable square feet also located on
the 2nd floor (hereinafter referred to as the "Expansion Premises".) TENANT AND
LANDLORD HAVE HAD THE OPPORTUNITY TO MEASURE THE EXISTING AND EXPANSION
PREMISES
1
<PAGE> 2
AND THEREFORE, BOTH ACCEPT THE MEASUREMENTS AGREED TO IN THIS SECOND LEASE
AMENDMENT AND ALL PRIOR LEASE DOCUMENTS.
The Existing Premises and the Expansion Premises are hereinafter collectively
referred to as the Expanded Premises and any reference to the Premises as may
be set forth in the Lease shall hereinafter be meant to refer to the Expanded
Premises as referred to and defined herein. Thus, any reference after this date
to the Premises or the Expanded Premises shall be deemed to refer to the areas
constituting portions of the 2nd floor and all of the 5th and 6th floors
consisting collectively of 38,187 rentable square feet as depicted on the
attached Exhibits "B-1", "B-2" and "B-3", which set forth the dimensions,
locations and configurations (existing and proposed) of both the Existing and
Expansion Premises which together are referred to as the Expanded Premises or
the Premises. The Expanded Premises are intended to include the total rentable
office area on the 5th and 6th floors of the Building including the 5th and 6th
Floor elevator lobby areas, within which lobby areas Tenant shall be allowed to
locate a reception or other working areas provided that Tenant at all times
shall comply with all governmental codes and regulations (including fire and
building regulations) regarding the use of such lobby space and provided Tenant
shall bear and assume all risks regarding security or loss of property in this
lobby area which Tenant acknowledges cannot be locked off from the rest of the
Building or from the remaining Premises of Tenant since the lobby area is part
of the Common Area of the Building. Tenant shall include the 5th and 6th floor
lobby areas in its insurance policy regarding liability and property coverages
as required in the Lease. Tenant shall not be entitled to use any portion of
the 2nd floor common area hallways.
Notwithstanding the above, Tenant at its expense may implement an elevator
system or install added elevator equipment and/or one-way locks on the fire
stairways provided such comply with local fire, building and other regulations
so the Tenant can "lock off" access to the 5th and 6th floors after Normal
Business Hours, provided such equipment does not unreasonably interfere with
the Landlord's or any other tenant's use of and/or operations within the
Building and does not violate any local governmental codes or regulations.
2. LEASE TERM. Landlord and Tenant agree that the lease terms
for the Expansion Premises shall commence as follows: Suite 240 on September
15, 1997, Suite 260 on October 15, 1997 and Suite 600 on December 1, 1997. The
Lease Term for the Existing Premises on the fifth floor shall be extended from
January 1, 1998 through November 30, 1998. The Lease Term applicable to all
areas leased by Tenant and all suites referred to herein shall expire on
November 30, 1998, this new expiration date (November 30, 1998) shall
hereinafter be referred to as the Termination Date of the Lease. Since Tenant
is solely responsible for making any changes to the existing physical
construction of all portions of the Premises, Tenant shall not be entitled to
delay rent if construction work is not completed timely.
2
<PAGE> 3
AT THE TERMINATION OF THE LEASE OR ANY EXTENSION THEREOF, TENANT SHALL RETURN
THE PREMISES TO LANDLORD IN BROOM-CLEAN CONDITION, WITH NORMAL WEAR AND TEAR
EXCEPTED.
3. RENT. The Rent for the Expanded Premises with 38,187 rentable
square feet, plus all applicable state and local sales taxes, shall commence as
of the dates set forth above and continuing through November 30, 1998. The
current Rent and the Rent for the balance of the Lease Term are summarized in
the charts below.
<TABLE>
<CAPTION>
=================================================================================================
DIGITAL LIGHTWAVE, INC. - SUITE 240 RENTAL CALCULATIONS
- -------------------------------------------------------------------------------------------------
TENANT'S BASE RENTAL BASE RENTAL
DATES SF RATE PSF ANNUALLY MONTHLY
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
09/15/97 - 09/14/98 2,312 16.00 36,992.00 3,082.67
09/15/98 - 11/30/98 2,312 16.00 36,992.00 3,082.67
</TABLE>
<TABLE>
<CAPTION>
=================================================================================================
DIGITAL LIGHTWAVE, INC. - SUITE 260 RENTAL CALCULATIONS
- -------------------------------------------------------------------------------------------------
TENANT'S BASE RENTAL BASE RENTAL
DATES SF RATE PSF ANNUALLY MONTHLY
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97 - 10/14/98 4,227 16.00 67,632.00 5,636.00
10/15/98 - 11/30/98 4,227 16.00 67,632.00 5,636.00
</TABLE>
<TABLE>
<CAPTION>
=================================================================================================
DIGITAL LIGHTWAVE, INC. - SUITE 600 RENTAL CALCULATIONS
- -------------------------------------------------------------------------------------------------
TENANT'S BASE RENTAL BASE RENTAL
DATES SF RATE PSF ANNUALLY MONTHLY
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
12/01/97 - 11/30/98 15,824 16.00 253,188.00 21,099.00
</TABLE>
<TABLE>
<CAPTION>
=================================================================================================
DIGITAL LIGHTWAVE, INC. - SUITE 500 RENTAL CALCULATIONS
- -------------------------------------------------------------------------------------------------
TENANT'S BASE RENTAL BASE RENTAL
DATES SF RATE PSF ANNUALLY MONTHLY
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
=================================================================================================
DIGITAL LIGHTWAVE, INC. - SUITE 500 RENTAL CALCULATIONS
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
9/1/97 - 1/31/98 15,824 17.64 279,135.36 23,261.28
2/1/98 - 11/30/98 15,824 16.00 253,188.00 21,099.00
</TABLE>
Paragraph 5(b) of the Lease shall be amended by the terms of the Letter
Agreement between the parties, dated June 10, 1997, with regard to the
extension of the due date of rental invoices to the tenth (10th) of every month
and the addition of a five percent (5%) "Late Charge" for any rental payments
not received by the tenth of any month.
This rent shall be deemed on a gross basis and Tenant shall not make any
separate reimbursement to Landlord for operating expenses, except that Tenant
shall pay for overtime use of air conditioning services requested for the
Premises based on a charge of $30.00 per hour, per floor, for hourly periods
after Normal Business Hours (referred to as "Overtime Usage") as set forth in
the Lease.
The $2.00 per square foot reimbursement to Landlord for certain tenant finish
work in Suite 500 which was above building standard for the fifth floor
(Existing Premises) shall continue to be paid by Tenant on a monthly basis
through January 31, 1998 in addition to the rent as set forth above for the
period expiring January 31, 1998 as otherwise provided in the Lease and First
Lease Amendment for the 15,824 sq. ft. of the Existing Premises only. However,
this tenant reimbursement shall NOT be paid during the extension of the Lease
Term for the Existing Premises from January 31, 1998 through November 30, 1998,
as set forth in this Second Lease Amendment. Furthermore, no such reimbursement
shall be due for any portion of the Expansion Premises as defined in this
Second Lease Amendment.
4. LIMITED EXPENSE REIMBURSEMENT.
a. The Limited Reimbursement provisions of Paragraph 5 of the First
Lease Amendment shall no longer be applicable for the period from December 1,
1997 through November 30, 1998, it being the understanding that there will not
be any limited reimbursements for the calendar year 1997 or for the partial
year of 1998 for any portion of the Premises.
b. Tenant shall not be responsible for payment or reimbursement to
Landlord for any portion of the Operating Expenses of the Building or the
Premises during the initial term of this lease as extended hereby until
November 30, 1998, except that Tenant shall pay for overtime use of air
conditioning services requested for any portion of the Premises based on a
charge of $30.00 per hour, per floor, for hourly periods after Normal Business
Hours (referred to as "Overtime Usage") as set forth in the Lease. It is also
understood that all of the utilities consumed within the Premises and the
Building during Normal Business Hours shall be paid for by Landlord including
the cost of electric consumption, air conditioning, water, and other customary
office services. However, if Tenant requires the use of services not
customarily provided in a full service office building, Landlord reserves the
right to make
4
<PAGE> 5
reasonable additional charges for such unusual additional services.
c. Tenant shall provide for all Janitorial Services and Security
Services for the interior portion of its Expanded Premises and shall pay for
such services. Landlord shall provide Janitorial Services to the common
elevator areas and rest rooms for the 2nd, 5th and 6th floors (Tenant's
Premises).
5. SECURITY DEPOSIT. SECURITY DEPOSIT SHALL MEAN A SUM EQUAL TO ONE MONTH'S
GROSS RENT INCLUDING SALES TAX IN THE TOTAL AMOUNT OF $56,263.69, OF WHICH
$10,394.67 IS ALREADY PREVIOUSLY HELD BY LANDLORD AND TENANT SHALL PAY TO
LANDLORD THE DIFFERENCE OF $45,869.02, SIMULTANEOUSLY WITH THE SIGNING OF THIS
SECOND LEASE AMENDMENT. THIS SECURITY DEPOSIT IS IN ADDITION TO AND INDEPENDENT
OF THE PREPAID RENT DEPOSIT AS REFERENCED IN PARAGRAPH 6 BELOW .
6. PREPAID RENT. Tenant shall pay to Landlord the first month's gross rent
INCLUDING SALES TAX FOR THE EXPANSION AREAS ONLY AT SUITES 240, 260 AND 600 IN
THE TOTAL AMOUNT OF $31,606.73 simultaneously with the signing of this Second
Lease Amendment WHICH PREPAID RENT DEPOSIT IS IN ADDITION TO AND INDEPENDENT OF
THE SECURITY DEPOSIT AS REFERENCED IN PARAGRAPH 5 ABOVE . Tenant shall not make
any additional prepayment of the last month's rental obligations. LANDLORD
HEREBY ACKNOWLEDGES THAT A PREPAID DEPOSIT IN THE AMOUNT OF $10,394.67 IS
CURRENTLY BEING HELD FOR THE LAST MONTH'S RENT FOR SUITE 500 AND SHALL CONTINUE
TO BE HELD IN ACCORDANCE WITH THE LEASE TERMS, EXCEPT THAT THIS DEPOSIT IS NOW
EXPECTED TO BE APPLIED TO A PORTION OF THE RENT DUE FOR THE MONTH OF NOVEMBER,
1998.
7. PARKING. Tenant shall have no rights to use any portion of the Parking
Garage unless set forth herein. The following provisions shall be applied and
enforced on a non-discriminatory basis among all tenants.
a) Neither Tenant nor any of its invitees shall have any right to
access the Parking Garage except as specifically provided for herein.
b) During the Lease Term, Tenant shall have the right to use 10
covered garage parking spaces which shall be provided AT A COST OF $25.00 PER
SPACE, PER MONTH PLUS SALES TAX to tenant, plus 80 covered garage spaces at a
cost of $25.00 per space, per month plus sales tax. In addition, Tenant shall
have the right to use 30 uncovered rooftop garage spaces which shall be
PROVIDED AT A COST OF $25.00 PER SPACE, PER MONTH PLUS SALES TAX to Tenant. The
foregoing parking costs shall NOT BE SUBJECT TO INCREASE UNTIL AFTER NOVEMBER
30, 1998, AT WHICH TIME, DURING ANY OPTIONAL LEASE TERM EXTENSION PERIOD THE
PARKING CHARGES SHALL increase by five percent in each lease year assuming the
Lease is extended pursuant to the renewal terms herein of Paragraph 10 or 11.
The foregoing parking spaces which total 120, shall be available to Tenant and
shall be allocated by Tenant to employees
5
<PAGE> 6
of Tenant at the discretion of Tenant. Tenant shall provide Landlord with the
names of employees to be located in these spaces and the vehicle make and
license number for such employees who obtain their parking rights directly
through Tenant. The parking charges for "covered" and "uncovered" parking
spaces shall be paid for by Tenant as provided above and shall be due each
month as stated herein with Tenant's monthly installments of Base Rent and
shall be subject to all terms, provisions, conditions and covenants of this
Lease pertaining to defaults in the payments of Rent. LANDLORD RESERVES THE
RIGHT TO REASSIGN, CHANGE OR RELOCATE ANY OF THE 120 ABOVE PERMANENT PARKING
SPACES WITH TWENTY (20) BUSINESS DAYS PRIOR NOTICE TO TENANT.
c) In addition to the fixed parking spaces allotted to Tenant as
provided in subparagraph (b) above, which Tenant may allocate among its
employees, Landlord may provide additional "Temporary Parking" spaces to Tenant
or directly to employees of Tenant provided that Landlord reserves the right to
terminate any of these "Temporary Parking" spaces upon TWENTY (20) business
days prior notice to the respective party.
As of September 30, 1997, Landlord shall provide various employees of Tenant
with UP TO 80 additional "Temporary Parking" spaces of which 41 shall
constitute uncovered rooftop parking spaces at a cost of $35.00 per space, per
month plus sales tax, plus 39 covered garage parking spaces at a cost of $35.00
per space, per month plus sales tax, all of which shall be located at
Landlord's sole discretion and all of which shall be subject to the unilateral
cancellation rights of Landlord with the above noted TWENTY (20) business days
prior notice. The spaces referred to in this subparagraph (c) "Temporary
Parking" shall also be subject to the other restrictions and conditions as set
forth in this Paragraph 7, including but not limited to the conditions
precedent set forth in subparagraph (f) below).
d) Access to such parking spaces shall be through the driveways and
walkways located in the Parking Garage and/or on the Property which shall be
used by Tenant on a non-exclusive basis with Landlord and other tenants of the
Building or other authorized users of the Parking Garage. Landlord shall have
the right, in Landlord's sole and reasonable discretion, to establish rules and
regulations for use of the driveways, elevators, skybridge, walkways, parking
spaces and areas and to designate the right for the exclusive use of particular
parking spaces to other tenants in the Building, visitors and handicapped.
Landlord reserves the right to, at any time, reassign, change or relocate any
designated parking spaces within the Property or the Parking Garage. Landlord
shall also have the right to establish or modify the methods used to control
traffic and parking on the Property and the Parking Garage, including, without
limitation, the installation of traffic control devices, security devices,
Parking Garage gate entrance controls, or the hiring of parking attendants.
LANDLORD RESERVES THE RIGHT TO ENFORCE THE RESTRICTIONS OR DESIGNATIONS SET
FORTH HEREIN BY TOWING VIOLATORS OR OTHER ENFORCEMENT ACTIONS AS LANDLORD DEEMS
NECESSARY.
e) No commercial or recreational vehicles shall be parked in the
Garage or in any parking areas on the Property.
f) In order to allow Landlord to enforce the provisions of the
Paragraph and this
6
<PAGE> 7
Lease including, but not limited to, provisions relating to designated parking
spaces, each employee of Tenant who expects to park in the garage in an
assigned parking space shall first provide Landlord with the name of each such
employee and the vehicle make and license number of such person, as a condition
precedent to each person's right to a parking space in the garage. Only those
persons so pre-registered with Landlord shall be permitted to park in the
parking spaces specifically designated and assigned to Tenant per subparagraph
(b) above, or directly to each employee as provided in subparagraph (c) herein.
Landlord may paint Tenant's name on any "covered" and/or "uncovered" parking
spaces ("Rooftop") or number such parking spaces and if any such employee or
designee does not park in such space and parks somewhere else in the Parking
Garage or elsewhere on the property of Landlord not granted to Tenant, Landlord
may tow such automobile of any employee or party violating these restriction
whether or not the Tenant or employee is financially complying with its parking
charge payments to Landlord.
g) No permanent or part time employee, invitee, agent, or
subcontractor of Tenant shall be permitted to park in any parking space
designated as "Visitor" or in any space designated (by letter identification on
such parking space) for use by another tenant ("Other Tenant") as such Other
Tenant spaces may be designated from time to time by Landlord in Landlord's
sole discretion. The Visitor Parking Spaces or other tenant spaces as
designated from time to time by Landlord shall not be occupied by any person
who conducts part-time or full-time work on or about Tenant's Premises.
Landlord may designate various ground level parking spaces on the North side of
Park Street (to the East of the Building) as Visitor Parking none of which
shall be utilized by any employees of Tenant and Landlord shall prescribe
whatever controls, charges and supervision of such Visitor Parking areas as
Landlord may establish in Landlord's sole discretion. Landlord reserves the
right to enforce the restrictions or designations set forth herein by towing
violators or other enforcement actions as Landlord deems necessary.
h) Landlord shall have the right, after reasonable notice to Tenant or
directly to Tenant's employee and in Landlord's sole and reasonable discretion,
to change the location of any designated or undesignated parking spaces whether
for visitors, other tenants, handicapped or otherwise.
i) Tenant agrees that it will collect the parking charges from its
employees who have parking spaces pursuant to subparagraph (b) above and Tenant
shall remit the monthly collections to Landlord in one single payment with a
notice in writing of any non-paying employee, should Tenant so elect to make
such notice, which notice may be relied upon by Landlord in enforcing the
parking provisions herein. Landlord may alternatively accept payments for
Temporary Parking spaces from employees directly for parking charges as
required herein according to subparagraph (c) above, provided such parking
privileges may be revoked automatically and immediately if payment is not made
and Tenant hereby consents to such termination. Tenant and Landlord agree that
such termination of a direct employee parking arrangement for Temporary Parking
space shall not affect the status of Landlord or Tenant under the Lease and
provided further that any parking agreement negotiated directly between
Landlord and an employee of Tenant under subparagraph (c) may
7
<PAGE> 8
include monthly rental rates as determined by Landlord from time to time in
Landlord's sole discretion with such parking rights in all respects being
subject to cancellation by Landlord upon THIRTY (30) business days prior notice
to such employee of Tenant.
j) Notwithstanding anything to the contrary set forth elsewhere in
this Lease, any default in the payment of monthly parking charges which is to
be paid directly by Tenant as set forth in subparagraph (b) above shall
constitute a monetary default under this Lease provided Landlord shall also
have the right to unilaterally discontinue parking privileges for any space for
which parking charges are not paid current. If parking rights are so
discontinued by Landlord for such non-payment, Landlord may enforce such
discontinuance by towing, tagging, or any other measures necessary.
LANDLORD SHALL NOT BE LIABLE FOR ANY DAMAGE TO OR ANY THEFT OF ANY VEHICLE, OR
ANY CONTENTS THEREFROM, WHILE IN OR ABOUT THE PARKING AREAS LOCATED ON OR ABOUT
THE PROPERTY OR THE PARKING GARAGE AREA.
8. SIGNAGE. Landlord at its sole cost shall provide for FOUR separate lines on
Landlord's first floor Building Directory with the Directory strips to read as
follows:
Digital Lightwave, Inc. - Executive Offices - Suite 500
Digital Lightwave, Inc. - Technical Offices - Suite 600
Digital Lightwave, Inc. - Accounting Offices - Suite 240
Digital Lightwave, Inc. - Sales and Marketing Offices - Suite 260
Tenant at its sole cost shall install signage on the doors to its Premises
after Landlord's prior approvals to the size, construction and materials to be
used by Tenant with Landlord's approval not to be unreasonably withheld. In all
instances Tenant shall be solely responsible for the removal of such signage at
the termination of the Lease and for the cost of restoring the Premises to the
conditions that existed prior to the installation of such signage. Tenant shall
also restore the Premises and repair the Premises due to any signage that may
be existing on the 5th floor as of the date this Lease Amendment is being
executed.
9. RULES AND REGULATIONS. The Rules and Regulations attached as Exhibit "C"
shall replace those Rules and Regulations attached to the Original Lease and
the First Lease Amendment to Lease.
10. OPTION TO EXTEND TERM. The Landlord hereby grants to the Tenant the right
to renew this Lease for ONE (1) additional period of THREE (3) years, which
right shall be conditional upon the Tenant's satisfying all the following
conditions:
a) The option(s) for renewal must be exercised with written notice of
that intention delivered to Landlord prior to January 15, 1998. If written
notice is not received by Landlord
8
<PAGE> 9
within the foregoing time period, the option to extend shall be considered null
and void.
b) The option to renew granted herein is only exercisable in the event
that the Tenant is not in default of the Lease or in the performance of any of
the terms and conditions of this Lease at the time of exercise or the option
and at the commencement date of the option term.
c) If the option to renew is exercised, all of the conditions in the
Lease shall remain the same, with the following exception:
(i) The Gross Rent shall be $17.00 per square foot for the
first year of the Option Period and then increased by five
percent (5%) for each year thereafter over the monthly Base
Rental payable for the preceding one year period.
(ii) IN THE EVENT TENANT EXERCISES ITS RIGHT TO EXTEND ITS
LEASE UNDER THIS PARAGRAPH 10, TENANT SHALL NOT BE ENTITLED
TO ANY CREDIT IN THE RENTAL OBLIGATION FOR ANY PORTION OF THE
PREMISES WHICH CREDIT WOULD HAVE REPRESENTED A RETURN OF
ABOUT $2.00 PER SQUARE FOOT PER YEAR IN RENT WHICH TENANT
WOULD HAVE PAID BETWEEN MAY 1, 1996 AND JANUARY 31, 1998 AS A
REIMBURSEMENT TO LANDLORD FOR UPGRADED TENANT FINISH COSTS
PAID FOR BY LANDLORD FOR SUITE 500.
(iii) TENANT SHALL AGAIN BE LIABLE FOR LIMITED EXPENSE
REIMBURSEMENTS OF THE OPERATING EXPENSES AS SET FORTH IN
PARAGRAPH 5(A) OF THE FIRST LEASE AMENDMENT, EXCEPT THAT
TENANT WILL BE PAYING FOR ANY INCREASED COSTS OF INSURANCE
OVER AND ABOVE THE AMOUNT OF SUCH COSTS FOR THE CALENDAR YEAR
1997.
d) THE OPTION WITH RESPECT TO SUITE 260, IS SUBJECT TO A RIGHT OF
FIRST REFUSAL OR LEASE OF A PORTION OF SUITE 260 WHICH LEASE RIGHTS ARE HELD BY
MCKIM & CREED AND WHICH RIGHTS GENERALLY GRANT MCKIM & CREED THE RIGHT TO
OCCUPY ABOUT 1,037 SQUARE FEET AS PART OF SUITE 260 WHICH OCCUPANCY IS TO BE
EFFECTIVE AS OF DECEMBER 1, 1998. SINCE TENANT MAY WANT TO RENEGOTIATE THE
TERMS OF MCKIM & CREED'S FUTURE USE OF PORTIONS OF SUITE 260, LANDLORD HEREBY
GRANTS TENANT THE RIGHT TO HAVE DIRECT DISCUSSIONS WITH MCKIM & CREED TO
DISCUSS PLANS FOR SUITE 260 OR PORTIONS THEREOF. IN EXERCISING THIS OPTION TO
EXTEND THE LEASE TERMS, TENANT MAY ELECT TO DELETE SUITE 260 FROM THE PREMISES
TO BE EXTENDED, AND MAY, THEREFORE, EXTEND THE LEASE TERMS FOR THE 5TH AND 6TH
FLOORS ALONE WITHOUT SUITE 260.
11. ALTERNATE OPTION TO EXTEND TERM. The Landlord hereby grants to the
Tenant the right to renew this Lease for ONE (1) additional period of NINE (9)
months, which right shall be conditional upon the Tenant's satisfying all the
following conditions:
a) The option(s) for renewal must be exercised with written notice of
that intention delivered to Landlord prior to January 15, 1998. If written
notice is not received by Landlord within the foregoing time period, the option
to extend shall be considered null and void.
9
<PAGE> 10
b) The option to renew granted herein is only exercisable in the event
that the Tenant is not in default of the Lease or in the performance of any of
the terms and conditions of this Lease at the time of exercise or the option
and at the commencement date of the option term.
c) If the option to renew is exercised, all of the conditions in the
Lease shall remain the same, with the following exception:
(i) The Gross Rent shall be $18.00 per square foot
(ii) IN THE EVENT TENANT EXERCISES ITS RIGHT TO EXTEND ITS
LEASE UNDER THIS PARAGRAPH 11, TENANT SHALL NOT BE ENTITLED
TO ANY CREDIT IN THE RENTAL OBLIGATION FOR ANY PORTION OF THE
PREMISES WHICH CREDIT WOULD HAVE REPRESENTED A
RETURN OF ABOUT $2.00 PER SQUARE FOOT PER YEAR IN RENT WHICH
TENANT WOULD HAVE PAID BETWEEN MAY 1, 1996 AND JANUARY 31,
1998 AS A REIMBURSEMENT TO LANDLORD FOR UPGRADED TENANT
FINISH COSTS PAID FOR BY LANDLORD FOR SUITE 500.
(iii) TENANT SHALL NOT BE LIABLE FOR LIMITED EXPENSE
REIMBURSEMENTS OF THE OPERATING EXPENSES AS SET FORTH IN
PARAGRAPH 5(A) OF THE FIRST LEASE AMENDMENT.
d) THE OPTION WITH RESPECT TO SUITE 260, IS SUBJECT TO A RIGHT OF FIRST REFUSAL
OR LEASE OF A PORTION OF SUITE 260 WHICH LEASE RIGHTS ARE HELD BY MCKIM & CREED
AND WHICH RIGHTS GENERALLY GRANT MCKIM & CREED THE RIGHT TO OCCUPY ABOUT 1,060
SQUARE FEET AS PART OF SUITE 260 WHICH OCCUPANCY IS TO BE EFFECTIVE AS OF
DECEMBER 1, 1998. SINCE TENANT MAY WANT TO RENEGOTIATE THE TERMS OF MCKIM &
CREED'S FUTURE USE OF PORTIONS OF SUITE 260, LANDLORD HEREBY GRANTS TENANT THE
RIGHT TO HAVE DIRECT DISCUSSIONS WITH MCKIM & CREED TO DISCUSS PLANS FOR SUITE
260 OR PORTIONS THEREOF.
12. TENANT FINISH. Tenant shall be solely responsible for the payment of all
construction costs, architectural costs, design costs and permitting costs for
any changes to the condition of the Premises as they exist as of August 22,
1997, provided that Tenant shall first obtain the written approval of Landlord
to the design, plans and construction materials to be specified, used and
installed in the Premises. LANDLORD SHALL PROVIDE TO TENANT A WRITTEN REPLY TO
TENANT'S REQUEST FOR LANDLORD'S APPROVALS BY FACSIMILE WITHIN THREE (3)
BUSINESS DAYS OF LANDLORD'S RECEIPT OF SUCH REQUEST PROVIDED THAT TENANT'S
REQUEST SHALL BE DELIVERED TO LANDLORD TO THE ATTENTION OF BOTH WALTER J.
MACKEY AND ANTHONY E. FEILBACK, BY MAIL OR OVERNIGHT DELIVERY (NOT FAXED)
TOGETHER WITH ALL DOCUMENTS, PLANS OR SPECIFICATIONS INCLUDED WHICH MAY BE
REQUIRED FOR LANDLORD'S DETERMINATION. SHOULD LANDLORD'S APPROVAL BE WITHHELD,
LANDLORD SHALL PROVIDE TO TENANT AN EXPLANATION AS TO WHY SUCH APPROVAL IS
DENIED AND, WITHIN REASON, ONE OR MORE POSSIBLE ALTERNATIVE SOLUTIONS AS
DETERMINED IN LANDLORD'S OPINION. SHOULD LANDLORD AND TENANT BE UNABLE TO AGREE
ON SUCH SOLUTIONS, THE PARTIES HEREBY AGREE TO SUBMIT SUCH DISPUTE TO
ARBITRATION.
10
<PAGE> 11
Before starting any construction work within the Premises, Tenant shall comply
with the following:
a) Tenant shall obtain written approval of the Landlord for the
identity of the general contractor suggested to be used by Tenant which
approval shall not be unreasonably withheld by Landlord provided such
contractor supplies the proof of insurance and workman's compensation, and
releases any lien rights which contractor might have against Landlord's
property.
b) Tenant shall obtain Landlord's written approval to the plans and
specifications to be used for the construction of any improvements to be made
to the Premises WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED
WITH LANDLORD'S REPLY DELIVERED TO TENANT WITHIN THREE (3) BUSINESS DAYS
SUBJECT TO THE OTHER REQUIREMENTS PROVIDED ABOVE IN THIS PARAGRAPH 12. ONCE THE
PLANS FOR THE PREMISES ARE MUTUALLY ACCEPTED BY LANDLORD AND TENANT, LANDLORD
AND TENANT AGREE THAT SUCH APPROVED PLANS AND SPECIFICATIONS SHALL BE ATTACHED
AS EXHIBITS "G".
c) Tenant shall pay all engineers, architects and planners who may
have contributed to the development or preparation of the plans and
specifications or building criteria for the Premises.
d) Tenant shall provide TO LANDLORD GENERAL CONTRACTOR'S OR
SUB-CONTRACTOR'S RISK OR OTHER INSURANCE COVERAGE WITH LANDLORD AND ITS LENDER
(PRINCIPAL MUTUAL) AS ADDITIONAL INSUREDS, as LANDLORD OR LENDER may reasonably
require for the period during which any construction work is being undertaken
by Tenant, its agents or subcontractors.
Tenant recognizes that a portion of the 6th floor expansion area may have some
smoke damage from the prior tenant "smoking" in the Premises and hereby
releases Landlord from any responsibility for such smoke damage. IT IS
EXPRESSLY AGREED BETWEEN TENANT AND LANDLORD THAT THERE SHALL BE NO LIABILITY
TO LANDLORD TO CURE ANY EXISTING CONDITION AND TENANT ACCEPTS THIS 6TH FLOOR
EXPANSION AREA, AS WELL AS ALL OTHER EXPANSION AREAS, ON AN "AS IS" BASIS.
Pursuant to a meeting between Landlord and Tenant in early 1997, Landlord
proceeded to purchase a 10 ft. double glass door with 2 glass side lights which
Tenant shall purchase from Landlord at a cost of $2,500.00 and which Tenant may
install at its option. Tenant shall also reimburse Landlord the amount of
$7,500.00 by November 1, 1997 for change orders for construction on the 5th
floor which is still outstanding (INVOICE FOR WHICH IS ATTACHED HERETO AS
EXHIBIT "F".)
Tenant shall have the right to utilize the doors, ceilings and lighting
fixtures as may be currently installed in the portion of the 6th floor which
has already received a certificate of occupancy. Tenant shall be responsible
for the demolition of any interior portion of the Premises if approved on the
plans by Landlord, but Tenant shall not change the common
11
<PAGE> 12
areas unless approved by Landlord.
Tenant shall use (not optional) the existing lighting fixtures that are part of
Landlord's existing uninstalled inventory for the lighting requirements in the
unimproved portions of the 6th and 2nd floors and Tenant shall be responsible
for retrofitting these lighting fixtures with new ballasts and lenses. Tenant
shall pay $65 for the Landlord's existing electronic ballasts, tombstone,
reflectors and new replacement paracube lenses. Tenant shall also install
Landlord's Standard unfinished wood baseboard in all of its Premises at a cost
of $1.50 per linear foot which baseboard shall be stained by Tenant in a manner
similar to that installed on the 5th floor. The cost of the lighting fixtures
is $25 per 2x4 fixture in original box (2 fixtures per box with lamps in
place), but existing tar ballasts will be replaced by Tenant with electronic
ballasts. THE FLOOR STOCK AND UNINSTALLED INVENTORY TO BE SUPPLIED BY LANDLORD
WILL BE IN WORKING ORDER, SUBJECT TO THE STATED REQUIREMENT THAT THE EXISTING
LIGHTING FIXTURES BE RETROFITTED AS PROVIDED ABOVE. TENANT WILL NOT BE
OBLIGATED TO INSTALL MORE OF THE LANDLORD'S INVENTORY OF TENANT FINISH ITEMS
THAN ARE NEEDED TO COMPLETE CONSTRUCTION OF TENANT'S PREMISES AND TO COMPLY
WITH THE APPROVED PLANS AND LOCAL CODES.
Tenant shall use USG #323 ceiling tile throughout for each floor of its
Premises.
Tenant shall be responsible for installing all fire protection systems and
complying with all governmental codes relating to the 6th floor and other
suites to be occupied by Tenant. TENANT SHALL BE RESPONSIBLE FOR INSTALLING ALL
AUDIBLE EQUIPMENT, ANNUNCIATORS, STROBES, HORNS, EXIT LIGHTS, DUCT DETECTORS,
FIRE DAMPERS, FIRE WALLS, THE RELOCATION OF SPRINKLER HEADS AND ADDING
SPRINKLER HEADS WHERE NECESSARY PER CODE OR PER APPROVED PLANS. TENANT WILL NOT
DISCONNECT OR INTERFERE WITH ANY EXISTING FIRE PROTECTION EQUIPMENT OR CHANGE
EXISTING EQUIPMENT WITHOUT LANDLORD'S APPROVAL. TENANT WILL COMPLY WITH ALL
LOCAL CODES FOR ALL OF THE IMPROVEMENTS TO BE UNDERTAKEN BY TENANT.
IN THE EVENT THAT TENANT, IN ITS SOLE DISCRETION, DETERMINES TO UTILIZE
LANDLORD'S SERVICES WITH RESPECT TO THE CARPETING OF SUITE 240, Tenant will
advance the cost of the carpeting to Landlord after which Landlord will order
such carpeting with Tenant paying its (or Landlord's) designated installer for
all installation costs and any moving or storage costs associated therewith.
REGARDLESS OF WHO ORDERS OR INSTALLS CARPETING, TENANT WILL BE RESPONSIBLE FOR
ALL COSTS OF SUCH CARPETING AND INSTALLATION.
There shall be no obligation on this Second Lease Addendum until Landlord and
Tenant agree on plans and specifications. Tenant is to pay for all design,
architectural and engineering and all permitting fees for the agreed upon
plans.
Tenant shall indemnify Landlord from any liens in conjunction with the
buildout.
The architectural and engineering plans and specifications to be prepared by
Tenant and approved by Landlord for Tenant's space will comply with all current
ADA legislation.
12
<PAGE> 13
Landlord will be responsible for the common areas being in compliance with ADA.
SINCE TENANT MAY WANT TO RENEGOTIATE THE TERMS OF MCKIM & CREED'S FUTURE USE
EFFECTIVE DECEMBER 1, 1998, OF PORTIONS OF SUITE 260, LANDLORD HEREBY GRANTS
TENANT THE RIGHT TO HAVE DIRECT DISCUSSIONS WITH MCKIM & CREED TO DISCUSS PLANS
FOR SUITE 260 OR PORTIONS THEREOF. IN AS MUCH AS MCKIM & CREED HAS THE RIGHT TO
RECOVER AND LEASE A 1,037 SQUARE FOOT PORTION OF SUITE 260 AS OF DECEMBER 1,
1998. MCKIM & CREED WILL BE RESPONSIBLE FOR OTHERWISE DIVIDING SUITE 260 AS OF
DECEMBER 1, 1998 OR LATER.
13. PROHIBITION OF LIENS
a) In accordance with the provisions of Section 713.10 of the Florida
Construction Lien Law, Landlord (Owner) has apprised the Tenant that the
Landlord (Owner) has or will be filing a Notice of Lien Prohibition in the
public records of the County in which the building is located advising the
public that any improvement work undertaken by Tenant on the subject property
shall be only for the Tenant's account and that the Landlord (Owner's) interest
in the property shall not be subject to any construction or Mechanic Liens in
connection therewith.
b) The Tenant shall promptly, at the time of or prior to undertaking
any contract for improvements for the Premises, apprise any contractor of the
Landlord's Notice of Lien Prohibition and shall require that Tenant's selected
contractor sign an Acknowledgment of the Owner's Prohibition of Mechanic Liens
in a form substantially as that set forth hereto as Exhibit "E". Tenant shall
provide the original signed Acknowledgment form to Landlord (Owner) at or
before the time that work commences in connection with any improved improvement
on the Premises.
c) The Landlord (Owner) has advised the Tenant that Tenant's failure
to notify a contractor of the Landlord's (Owner's) Lien Prohibition on the
subject property shall render any contract between the Tenant and such
contractor voidable at the option of the contractor.
d) Regardless of whether or not Landlord (Owner) approves the scope of
construction work that might be performed by Tenant, any agent or subcontractor
of Tenant, or any party working with authorization of Tenant or at the request
of Tenant, Tenant shall be solely responsible for the payment of all
construction costs associated therewith and no such party working on behalf of
Tenant shall have the right to file a lien against Landlord's (Owner's)
property and such contractor or agent shall look solely to Tenant for payment.
Tenant acknowledges and represents that any work undertaken or authorized by
Tenant shall be for the benefit of Tenant and that such work shall not be
deemed to benefit the Landlord or the Landlord's interest in the Premises or
the Building.
Tenant specifically acknowledges that Landlord (Owner) has precluded liens
against its property. Tenant also specifically acknowledges that Tenant is
precluded from creating directly or authorizing any other party to create or
file any lien against Landlord's (Owner's) interests in the Property, the
Building or the Premises as defined in the Lease.
13
<PAGE> 14
e) As a condition precedent to Tenant authorizing any construction
work to be performed (even after Landlord's prior written consent as required
in the Lease), Tenant shall provide all of its contractors with a copy of the
attached "NOTICE OF LIEN PROHIBITION IN LEASE FLORIDA CONSTRUCTION LIEN LAW
713.10 (F.S. 1995)".
f) Any violation of the foregoing covenants of Tenant shall constitute
a material breach of this Lease and be a material default in this Lease and,
therefore, provide Landlord (Owner) with all default remedies as permitted in,
but not limited to, this Paragraph 13. Similarly, if any agent or contractor
dealing with Tenant should file a lien against Landlord's (Owner's) interests
in the Property, the Buildings or the Premises, then this act of such third
party shall also constitute a material default in this Lease and entitle
Landlord (Owner) to pursue any one or more of the Default Remedies or Options
available.
14. MISCELLANEOUS.
a) Tenant is currently in possession of and is presently conducting
business at the Premises referred to in the Lease, First Lease Amendment, and
this Second Lease Amendment. There are no actions, either voluntary or
involuntary, pending against the Tenant under the bankruptcy laws of the United
States.
b) Tenant is not entitled to any credit, offset or reduction in rent
for any reason whatsoever and Tenant has no defenses to the enforcement of the
Lease, as amended, by Landlord. There exist no claims or potential claims by
Tenant against Landlord. If other than a living person, Tenant is existing and
in good standing in the jurisdiction of its formation, is qualified to do
business in Florida, and Tenant and the individual signing below has the full
power and authority to execute this Second Lease Amendment.
c) All terms in the Second Lease Amendment shall have the same meaning
ascribed to them in the Lease and/or in the First Lease Amendment, except as
expressly provided to the contrary in this Second Lease Amendment. In the event
of a conflict between the terms and conditions of the Lease or First Lease
Amendment and terms and conditions of the Second Lease Amendment, this Second
Lease Amendment shall govern and supersede.
d) Except as specifically and expressly modified herein, the Lease is
ratified and confirmed in all respects and shall remain binding on and inure to
the benefit of the parties hereto, and their successors and assigns.
e) The expenses of Cushman and Wakefield (C&W) and/or Andy May
regarding negotiation of this Second Lease Amendment, SPECIFICALLY FOR THE
EXISTING AREA IN SUITE 500 WITH 15,824 RENTABLE SQUARE FEET, shall be paid for
exclusively by LANDLORD WHICH COMMISSION SHALL BE EQUAL TO THREE PERCENT (3%)
OF THE NET RENTS TO BE RECEIVED BY LANDLORD WITH THE NET RENTS TO BE DEFINED AS
THE GROSS RENTS PAYABLE PURSUANT TO THE LEASE LESS OPERATING EXPENSES WHICH ARE
ESTIMATED AND AGREED TO BE $7.10 PER SQUARE FOOT FOR 1997 AND WHICH ARE
MUTUALLY AGREED TO ESCALATE BY FIVE PERCENT (5%) PER ANNUM THEREAFTER. WITH
REGARD TO THE EXPANSION PREMISES CONSISTING OF SUITES 240, 260
14
<PAGE> 15
AND 600 AS DEFINED ABOVE, LANDLORD SHALL PAY A COMMISSION EQUAL TO THREE
PERCENT (3%) OF THE "GROSS RENTS" FOR THE INITIAL LEASE TERM THROUGH NOVEMBER
30, 1998. THE LEASING COMMISSIONS TO C&W SHALL BE PAYABLE UPON THE MUTUAL
EXECUTION OF THIS SECOND LEASE AMENDMENT. WHEN AND IF TENANT ELECTS TO EXTEND
OR EXPAND ANY OR ALL OF ITS PREMISES AS DEFINED HEREIN, INCLUDING BUT NOT
LIMITED TO SUITES 240, 260, 500 AND 600, C&W SHALL BE ENTITLED TO AN ADDITIONAL
THREE PERCENT (3%) COMMISSION APPLIED TO THE GROSS RENTS. GROSS RENTS SHALL BE
AS DEFINED IN THE COMMISSION AGREEMENT OF JANUARY 9, 1997. THIS COMMISSION
STRUCTURE SHALL PREVAIL OVER ANY CONTRARY PROVISIONS AS MAY HAVE EXISTED IN A
PREVIOUSLY EXECUTED COMMISSION AGREEMENT BETWEEN LANDLORD AND C&W OR ANY OTHER
WRITTEN OR ORAL AGREEMENT PRIOR TO THIS DATE. Tenant, by execution of this
Second Lease Amendment shall indemnify Landlord of any other brokerage
commissions or fees incurred by Tenant or its agents OTHER THAN THE COMMISSION
TO C&W FOR SUITES 240, 260, 500 AND 600 AS AGREED ABOVE WHICH LANDLORD IS
PAYING. Landlord represents that it has not authorized any brokers OTHER THAN
C&W to act on its behalf and will similarly indemnify Tenant for any cause of
action for fees or commissions relating to agents acting on behalf of Landlord.
All other terms of the Lease and First Lease Amendment as amended to this date
shall remain in full force and effect except as provided to the contrary as set
forth herein.
IN WITNESS WHEREOF, Tenant and Landlord have caused this instrument to
be executed as of the date first above written by their respective officers or
parties thereunto duly authorized.
WITNESSES: LANDLORD:
ATRIUM AT CLEARWATER, LIMITED,
a Florida limited partnership
BY:
- ------------------------- -----------------------------------
Walter J. Mackey, Jr., President
Atrium at Clearwater, Incorporated,
- ------------------------- General Partner
Date Signed:
----------------
WITNESSES: TENANT:
DIGITAL LIGHTWAVE, INC.
BY:
- ------------------------- -----------------------------------
TITLE:
- ------------------------- --------------------------------
Date Signed:
-----------------
15
<PAGE> 16
WITNESSES: BROKER:
CUSHMAN & WAKEFIELD OF FLORIDA, INC.
BY:
- ------------------------- -----------------------------------
TITLE:
- ------------------------- --------------------------------
Date Signed:
-----------------
EXHIBITS ATTACHED:
Exhibit A - Legal Description of Property
Exhibit B-1, B-2, B-3 - Expanded Premises (including Original and Expansion
Premises)
Exhibit C - New Updated Rules and Regulations
Exhibit D - Non-Disturbance Agreement
Exhibit E - Acknowledgment of Owner's Prohibition of Mechanic's Liens
Exhibit F - Landlord's Invoice for Previous 5th Floor Construction Change
Orders
Exhibit G - Plans and Specifications
16
<PAGE> 1
EXHIBIT 10.2
PINELLAS BUSINESS CENTER, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Lease Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Permitted Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. Maintenance and Repairs by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Protective Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Care of the Premises by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12. Repairs and Alterations by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Electrical Overload; Structural Overload . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15. Building Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
16. Entry by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
18. Mechanic's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
19. Tenant's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
20. Landlord's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
21. Tenant's Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
22. Indemnity; Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
23. Waiver of Subrogation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
24. Casualty Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
25. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
26. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
27. Events of Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
28. Peaceful Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
29. Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
30. Subordination to Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
31. Encumbrance Holder's Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
32. Encumbrance Holder's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
33. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
34. Intentionally deleted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
35. Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
36. No Implied Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
37. Landlord's Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
38. Limitation of Landlord's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
39. Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
40. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
41. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
42. Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
43. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
44. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
45. Time of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
46. Transfers by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
47. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
48. Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
49. Effect of Delivery of This Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
50. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
51. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
52. Statutory Notice Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
53. Waiver of Trial by Jury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
54. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
55. Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
56. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
57. Prior Agreements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
EXHIBIT "A" - LEGAL DESCRIPTION OF PROPERTY
EXHIBIT "B" - LEGAL DESCRIPTION OF PROJECT
EXHIBIT "C" - FLOOR PLAN
EXHIBIT "D" - ADDITIONAL RENT
EXHIBIT "E" - WORK LETTER
EXHIBIT "F" - RULES AND REGULATIONS
EXHIBIT "G" - OPTION TO RENEW
-iii-
<PAGE> 5
PINELLAS BUSINESS CENTER, INC.
INDUSTRIAL LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), made and entered into on this the
_____ day of _____________, 1997, by and between PINELLAS BUSINESS CENTER,
INC., a Delaware corporation ("Landlord") and DIGITAL LIGHTWAVE, INC., a
Florida corporation ("Tenant").
W I T N E S S E T H
1. Definitions.
(a) "Building" shall mean the building known as Building 1, Phase
I, Pinellas Business Center located at 11001 Roosevelt Boulevard, St.
Petersburg, Florida 33716, and lying upon the real property (the
"Property") more particularly described in EXHIBIT "A" attached hereto
and incorporated herein by this reference. For purposes of this
Lease, the Rentable Area of the Building (as hereinafter defined)
shall be deemed to be 63,974 square feet.
(b) "Project" shall mean the industrial office park known as
Pinellas Business Center located upon the real property more
particularly described in EXHIBIT "B" attached hereto and incorporated
herein by this reference, including the buildings and improvements
thereon and all common areas appurtenant thereto. For purposes of
this Lease, the Rentable Area of the Project (as hereinafter defined)
shall be deemed to be 202,847 square feet.
(c) "Premises" shall mean Bay Number 300 of the Building and
outlined on the floor plans attached to this Lease as EXHIBIT "C" and
incorporated herein by this reference. For purposes of this Lease,
the Rentable Area of the Premises (as hereinafter defined) shall be
deemed to be 12,740 square feet.
(d) Protective Covenants shall mean those certain covenants and
restrictions set forth in the Declaration of Restrictions and
Easements recorded in Official Records Book 7153, Page 1131, of the
Public Records of Pinellas County, Florida.
(e) "Base Rental" shall mean base rental at an annual rate per
square foot of Rentable Area (RRSF) payable according to the following
schedule:
-1-
<PAGE> 6
<TABLE>
<CAPTION>
MONTHLY ANNUAL
LEASE YEAR RRSF BASE RENTAL BASE RENTAL
<S> <C> <C> <C>
08/01/97 - 07/31/98 $8.50 $ 9,024.17 $108,290
08/01/98 - 07/31/99 $9.00 $ 9,555.00 $114,660
08/01/99 - 07/31/00 $9.50 $10,085.83 $121,030
</TABLE>
(f) "Additional Rent" shall mean all other sums of money (in
addition to Base Rental) which shall become due and payable from
Tenant hereunder, including but not limited to Tenant's Share of
Increased Operating Expenses (as defined on EXHIBIT "D" attached
hereto and incorporated herein by this reference).
(g) "Rent" shall mean the Base Rental plus any Additional Rent.
(h) "Commencement Date" shall mean the earlier of (i) the date of
"Substantial Completion" (as defined in the Tenant Improvements Rider
attached hereto as EXHIBIT "E" and incorporated herein by this
reference the "Work Letter") or (ii) August 1, 1997 (the "Scheduled
Commencement Date"), except as the same may be delayed pursuant to
Section 3 hereof.
(i) "Lease Term" shall mean a term commencing on the Commencement
Date and continuing until the Termination Date (as hereinafter
defined). For purposes of this Lease, the term "Lease Year" shall
mean the twelve (12) calendar month period commencing on the
Commencement Date and each consecutive twelve (12) calendar month
period thereafter, except that (i) if the Commencement Date is a date
other than the first day of a calendar month, the first Lease Year
shall commence on the Commencement Date and expire on the last day of
the twelfth full calendar month after the Commencement Date and thus
shall include any portion of a calendar month during which the
Commencement Date occurs, and (ii) the last Lease Year shall expire on
the Termination Date (as hereinafter defined).
(j) "Permitted Use" shall mean light manufacturing, assembly,
general office and warehouse use.
(k) "Termination Date" shall mean the last day of the Lease Term.
(l) "Security Deposit" shall mean the sum of $9,024.17 deposited
by Tenant with Landlord and to be held pursuant to Section 39 of this
Lease.
(m) "Common Areas" shall mean those areas and facilities which may
be furnished by Landlord within the Project, as designated by Landlord
from time to time, intended for the
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general common use and benefit of all tenants of the Project and
their agents, representatives, licensees, employees and invitees,
including, without limitation, any and all employee's parking areas,
service roads, malls, loading facilities and sidewalks as such common
areas now exist or as such common areas may hereafter be constructed,
demolished or changed and other facilities as may be designated from
time to time by Landlord, but excluding any areas (including parking
areas and loading facilities) designated for the exclusive use of any
particular tenant(s).
(n) "Rentable Area of the Building" shall mean the total gross
floor area enclosed by the surface of the exterior walls of the
Building.
(o) "Rentable Area of the Project" shall mean the sum of the total
gross floor area enclosed by the surface of the exterior walls of each
of the buildings within the Project.
(p) "Rentable Area of the Premises" shall mean, as applicable, the
total gross floor area of the Premises as measured from the outside
surface of the exterior walls to the outside surface of the opposite
exterior walls, or from the center of the partitions that separate the
Premises from adjoining space to the outside surface of the exterior
walls or the center of the opposite partitions that separate the
Premises from adjoining space and shall include columns and
projections necessary to the Building.
(q) "Tenant Improvements" shall mean those improvements
constructed or installed on the Premises by or for Tenant as provided
in the Work Letter using "Building Grade" (as hereinafter defined)
construction and materials where appropriate.
(r) "Additional Tenant Improvements" shall mean any improvements
constructed or installed on the Premises by or for Tenant in addition
to the Tenant Improvements.
(s) "Building Grade" shall mean: (i) the type, brand and/or
quality of materials Landlord designates from time to time to be the
minimum quality to be used in the Building or, as the case may be, the
exclusive type, grade or quality of material to be used in the
Building; and (ii) the standard method of construction and
installation technique to be used in the Building.
(t) "Option to Renew" shall mean Tenant's right to renew this
Lease in accordance with EXHIBIT "G" attached hereto and by this
reference made a part hereof.
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2. Lease Grant. Subject to and upon the terms herein set forth, Landlord
leases to Tenant and Tenant leases from Landlord the Premises.
3. Lease Term.
(a) This Lease shall become effective upon execution hereof but
the Lease Term shall not commence until the Commencement Date. This
Lease shall continue in force during a period commencing on the
Commencement Date and continuing until the Termination Date, unless
this Lease is sooner terminated or extended to a later date under any
other term or provision hereof.
(b) If by the Scheduled Commencement Date, Landlord has not
achieved Substantial Completion of the Tenant Improvements pursuant to
the Work Letter, then Tenant's sole remedy shall be that the
Commencement Date shall be postponed (and the Base Rental herein
provided shall not commence) until the earlier of either (i) the date
of Substantial Completion of the Tenant Improvements, or (ii) the date
immediately following the day Landlord would have achieved Substantial
Completion of such Tenant Improvements but for Tenant's Delay (as
hereinafter defined), if any. Other than postponing the Commencement
Date as provided in this Subsection 3(b), Landlord shall have no
further liability for failure to achieve Substantial Completion of the
Tenant Improvements by the Scheduled Commencement Date; provided,
however, if Landlord has not achieved Substantial Completion of the
Tenant Improvements within ninety (90) days of the Scheduled
Commencement Date, Tenant shall have the right to terminate this
Lease.
(c) The issuance of a temporary or permanent certificate of
occupancy or certificate of completion for the Premises shall be
deemed conclusive evidence of the Substantial Completion of the Tenant
Improvements; moreover, Tenant's occupancy of the Premises shall be
deemed to constitute acceptance of the Premises and acknowledgment by
Tenant that Landlord has fully complied with its obligations hereunder
with respect to the construction of the Tenant Improvements, except
for latent defects and punch list items agreed upon by Landlord and
Tenant prior to Tenant's occupancy. Tenant shall waive its right to
object to any latent defects regarding the Premises unless, no later
than sixty (60) days after the Commencement Date, Tenant, in writing,
has notified Landlord of such latent defects. Landlord shall complete
the punch list items within thirty (30) days after the Commencement
Date.
(d) Notwithstanding anything to the contrary contained herein, if,
and to the extent Landlord's Substantial Completion of the Tenant
Improvements is delayed due to any act or omission by Tenant or anyone
acting under or for Tenant (any such delay being referred to herein as
"Tenant's Delay"), then the Commencement Date shall be the Scheduled
Commencement Date, subject to any adjustment thereto pursuant to
Subsection 3(b) hereof.
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4. Common Areas.
(a) Tenant shall have the non-exclusive right to use the Common Areas
in common with Landlord, other tenants of the Building and the
Project, and others entitled to the use thereof, subject to such
reasonable rules and regulations governing the use of the Common Areas
as Landlord may from time to time prescribe and subject to such
easements therein as Landlord may from time to time grant to others,
including, but not limited to, other tenants of the Project. Tenant
shall not obstruct in any way any portion of the Common Areas or in
any way interfere with the rights of other persons entitled to use the
Common Areas and shall not, without the prior written consent of
Landlord, use the Common Areas in any manner, directly or indirectly,
for the location or display of any merchandise or property belonging
to Tenant or for the location of signs relating to Tenant's operating
in the Premises. The Common Areas shall at all times be subject to the
exclusive control and management of Landlord.
(b) Landlord reserves the right at any time and from time to time (i)
to change or alter the location, layout, nature or arrangement of the
Common Areas or any portion thereof, and (ii) to construct additional
improvements on the Property or the Project and make alterations
thereof or additions thereto and build additional stories on or in any
such buildings or build adjoining same; provided, however, that no
such change or alteration shall deprive Tenant of access to the
Premises or reduce the Rentable Area of the Premises, unless such
reduction is required by Federal, State or local laws or regulations,
in which event, a reduction in the Premises shall be permitted with an
equitable reduction in Rent. Without limiting the generality of the
foregoing, Landlord shall have the right to designate specific parking
areas for the exclusive use of particular tenants of the Building.
Landlord shall have the right to close temporarily all or any portion
of the Common Areas to such extent as may, in the reasonable opinion
of Landlord, be necessary to prevent a dedication thereof to the
public (provided that Tenant shall not be denied access to the
Premises), to permit Landlord to construct additional buildings,
additions to existing buildings and other improvements within the
Project, or to permit repairs, replacements or maintenance to the
Common Areas, provided such repairs, replacements or maintenance shall
be performed expeditiously and in such a manner as not to deprive
Tenant of access to the Premises.
5. Permitted Uses.
Tenant shall use and occupy the Premises solely for the Permitted Use
in accordance with applicable zoning regulations and for no other
purpose. Without limiting the generality of the foregoing, Tenant
shall not do anything or permit anything to be done in or on the
Premises, or bring or keep anything therein which will, in any way,
obstruct, injure, annoy or interfere with the good order of the
Building or the Project, or conflict with the laws, rules and
regulations of any Federal, State or municipal authority.
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<PAGE> 10
6. Rent.
(a) Tenant agrees to pay the Rent to Landlord during the Lease
Term, without any notice, demand, setoff, deduction or abatement
whatsoever. Except as otherwise provided herein, the annual Base
Rental for each Lease Year or portion thereof during the Lease Term,
shall be due and payable in advance in twelve (12) equal installments
on the first day of each calendar month during the Lease Term and any
extensions or renewals thereof, and Tenant hereby agrees to pay such
Base Rental to Landlord at Pinellas Business Center, Inc., P.O. Box
30343, Tampa, Florida 33630-3340 (or such other address as may be
designated by Landlord in writing from time to time) monthly, in
advance, and without any notice, demand, setoff, deduction or
abatement whatsoever. All sums due Landlord shall be payable only in
lawful money of the United States of America and shall be obtained
against a financial institution with an office in the United States of
America. If the Lease Term commences on a day other than the first day
of a calendar month or terminates on a day other than the last day of
a calendar month, then the installments of Base Rental for such month
or months shall be prorated, based on the number of days in such
month.
(b) In addition to the Base Rental, Tenant shall pay to Landlord
as Additional Rent, Tenant's Share of Increased Operating Expenses as
described in EXHIBIT "D" attached hereto and by this reference made a
part hereof.
(c) The Base Rental installment due for the first full calendar
month and any partial month occurring at the beginning of the Lease
Term shall be deposited by Tenant with Landlord simultaneously with
the execution of this Lease.
(d) Tenant shall pay to the Landlord, or at Landlord's request, to
the appropriate authority or agency, as Additional Rent, any and all
sales, use, excise and other tax (excluding, however, Landlord's
income taxes) levied, imposed or assessed by the State of Florida or
any political subdivision thereof or other taxing authority upon any
Rent payable hereunder.
(e) If Tenant fails to make any payment of Rent within five (5)
business days after the date when payment is due, Tenant shall pay to
Landlord, as Additional Rent, a late charge to cover extra
administrative costs and loss of use of funds equal to (a) six percent
(6%) of the amount due for the first month or portion thereof that
such amount is past due, plus (b) interest on the amount remaining
unpaid after the month of initial delinquency at a rate (the "Default
Rate") equal to the lesser of (i) eighteen percent (18%) per annum and
(ii) the highest rate permitted by applicable law. Landlord's
acceptance of any Rent after it has become due and payable shall not
excuse any delays with respect to future Rent payments or constitute a
waiver of any of Landlord's rights under this Lease.
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<PAGE> 11
7. Utilities.
Tenant shall be solely responsible for and shall promptly pay all
separately metered charges for gas, electricity, telephone and trash
removal or any other separately metered utility used or consumed in
the Premises. If any such charges are not paid when due, Landlord
may, at its option, pay the same, and any amount so paid by Landlord
shall thereupon become immediately due to Landlord from Tenant as
Additional Rent. In no event shall Landlord be liable for an
interruption or failure in the supply of any such utilities to the
Premises. Landlord shall have the right at any time during the Lease
Term to have separate meters installed for all utilities at the
Premises at Tenant's expense and to require Tenant to obtain separate
utility service in its own name at Tenant's expense.
8. Maintenance and Repairs by Landlord.
(a) Landlord shall maintain the exterior and load bearing walls
and the concrete finished floors of the Premises (excluding floor
coverings) and the roof of the Building (excluding exterior door and
window glass) and the grounds upon which the Building is located;
provided, however, that Tenant shall be liable for payment of Tenant's
Share of Increased Operating Expenses incurred by Landlord in
performing such work in accordance with EXHIBIT "D".
(b) Except as otherwise provided in this Section, Landlord shall
make all other ordinary and necessary repairs to the structural
portions of the Building, the expense of which shall be included in
Operating Expenses.
(c) Anything contained in this Section to the contrary
notwithstanding, Tenant shall be obligated to reimburse Landlord on
demand for the cost of any repairs to the Premises, Building or
Project, necessitated by the act or omission of Tenant, its agents,
servants, employees, licensees, guests, or by any contractor engaged
by or on behalf of Tenant. Without limiting the generality of the
foregoing, Tenant shall be obligated to reimburse Landlord on demand
for the cost of any repairs of damage to any paved surface or grounds
of the parking areas which are caused by the excessive weight of
vehicles owned or operated by Tenant, its agents, servants, employees,
contractors, licensees, or guests. The cost of these repairs shall be
deemed Additional Rent.
(d) Except as specifically provided in this Lease, Landlord shall
not be obligated to make any repairs to the Project. Anything
contained in this Lease to the contrary notwithstanding, Landlord
shall not be liable to Tenant or any other person for any injuries or
damages arising out of Landlord's failure to make any repairs under
the terms of this Lease except in the event of Landlord's gross
negligence or willful misconduct and provided that Landlord has
received notice of any necessary repairs. In no event shall Landlord
be
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<PAGE> 12
liable for any inconvenience or annoyance arising from Landlord's
making repairs, additions or improvements to the Building or the
Project.
9. Protective Covenants.
Tenant shall comply with, perform and be bound by the terms,
covenants, provisions, and conditions in the Protective Covenants.
Tenant shall abide by all of the obligations of the "Owner" as such
term is used in the Protective Covenants. In the absence of Landlord's
express written agreement to the contrary, no amendment or revocation
of the Protective Covenants shall serve to reduce or revoke Tenant's
obligation to Landlord to perform and be bound by the Protective
Covenants as presently in force.
10. Graphics.
Landlord shall provide and install, at Tenant's cost, all letters or
numerals on doors in the Premises. All such letters and numerals shall
be in the standard graphics for the Project, and no other signs or
graphic displays shall be used or permitted on the Premises without
Landlord's prior written consent.
11. Care of the Premises by Tenant.
Except as otherwise expressly provided in Section 8 of this Lease,
Tenant shall be solely responsible for maintaining the Premises.
Tenant shall, at its sole expense, keep the Premises and the
improvements and appurtenances therein in good order and in a safe,
clean and sanitary condition, and on the Termination Date or at the
sooner termination of this Lease as herein provided, deliver up the
same broom clean and in as good order and in a safe, clean and
sanitary conditions at the beginning of the Lease Term, subject to the
provisions of Sections 24 and 25 of this Lease. Tenant, at its sole
expense, shall provide or cause to be provided janitorial service to
the Premises, shall dispose of all trash and rubbish in an
appropriate manner, and shall promptly replace damaged or broken doors
and glass, including but not limited to plate glass doors and windows,
in and about the Premises and shall be responsible for the repair,
maintenance and replacement of the Tenant Improvements, the Additional
Tenant Improvements and all other improvements installed and placed
within the Premises, including but not limited to, sinks and special
plumbing, special light fixtures and special cabinetry and all Building
Service Equipment. "Building Service Equipment" shall mean any and all
electrical, plumbing, heating, air-conditioning, security, and
sprinkler and fire protection equipment, sprinkler monitoring
equipment, pipes, separate water meters, wires, ducts, fixtures and
appliances installed in or about the Premises. Tenant shall pay for
all damage sustained by other tenants or occupants of the Building
or the Project due to any waste, misuse or neglect of the Premises or
any fixtures or appurtenances related thereto or due to any breach of
this Lease by Tenant, its employees, contractors, agents,
representatives or invitees.
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<PAGE> 13
Tenant shall, at its sole expense throughout the term, carry and
maintain a full parts and labor maintenance service contract from a
qualified service company, approved in advance by Landlord, covering
the heating, ventilating, and air conditioning systems of the
Premises. Tenant shall maintain all systems in a good condition during
the Lease Term and shall be responsible, at its sole expense, for all
necessary repairs, maintenance and replacements (regardless of whether
or not the same are covered by the maintenance contract) or which are
necessitated by Tenant's failure to carry a maintenance contract.
Tenant shall submit a copy of the proposed maintenance contract to
Landlord at least thirty (30) days prior to the Commencement Date. As
of the Commencement Date, Landlord covenants that the heating,
ventilating, and air conditioning systems on the Premises shall be in
condition sufficient to enable Tenant to obtain the maintenance
service contract required hereunder.
12. Repairs and Alterations by Tenant.
(a) Except as otherwise provided in the Work Letter, all
alterations, additions, installations and improvements made to the
Premises shall be made by Tenant at its sole cost and expense;
however, Tenant shall not make or cause to be made any alterations,
additions or improvements or install or cause to be installed any
exterior signs, exterior lighting, plumbing fixtures, shades or
awnings or make any changes to the Premises, the Building or the
Common Areas without first obtaining Landlord's written approval and
consent; provided that Landlord shall not unreasonably withhold its
consent to non-structural alterations to the interior of the Premises.
Landlord may give or withhold its consent to structural alterations
and any alterations, whether structural or non-structural, to the
exterior of the Premises in its sole discretion. Tenant shall present
to Landlord plans and specifications for such work at the time
approval is sought, and simultaneously demonstrate to Landlord that
the proposed alterations comply with the requirements of all
applicable laws, including local zoning and building codes.
(b) All construction work done by Tenant within the Premises shall
be performed in a good and workmanlike manner, using Building Grade or
better materials and in compliance with all governmental requirements,
and in such manner as to cause a minimum of interference with other
construction in progress (if any) and with the transaction of business
in the Building and the Project. Without limiting the generality of
the foregoing, Landlord shall have the right to require that such work
be performed in accordance with such rules and regulations which
Landlord may, from time to time prescribe. Tenant agrees to indemnify
Landlord and hold it harmless against any loss, liability or damage,
(including attorneys fees and expenses at trial and all appellate
levels) resulting from such work, and Tenant shall, if requested by
Landlord, furnish bond or other security satisfactory to Landlord
against any such loss, liability or damage. Tenant shall be liable to
Landlord for any damages resulting from labor disputes, strikes or
demonstrations resulting from Tenant's construction or alteration work
conducted using non-union workers as employees.
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<PAGE> 14
The foregoing sentence does not apply with respect to the initial
Tenant Improvements to the Premises constructed by the Landlord
pursuant to the Work Letter.
(c) All alterations, decorations, additions and improvements made
by Tenant, or made by Landlord on Tenant's behalf by agreement under
this Lease, shall remain the property of Tenant for the Lease Term.
Such alterations, decorations, additions and improvements (including
the Tenant Improvements and Additional Tenant Improvements) shall not
be removed from the Premises without prior consent in writing from
Landlord and shall become the property of the Landlord upon
termination of this Lease (except for Tenant's Personal Property which
may be removed in accordance with Section 21 of this Lease). Landlord
may, nonetheless, require Tenant to remove all, or any portion of,
such alterations, decorations, additions and improvements, and restore
the Premises to its original condition, reasonable wear and tear
excepted; provided that Tenant shall not be required to remove the
initial Tenant Improvements to the Premises constructed by Landlord
pursuant to the Work Letter. If Tenant fails to remove such
alterations, decorations, additions and improvements and restore the
Premises, Landlord may remove such alterations, decorations, additions
and improvements and restore the Premises to its original condition.
Tenant shall be responsible for reimbursement of Landlord for the
removal and restoration costs incurred by Landlord.
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<PAGE> 15
13. Electrical Overload; Structural Overload.
Tenant's use of electrical services shall be subject to the
restrictions set forth in this Section 13(a). Tenant will not install
or connect any electrical equipment which in Landlord's opinion will
overload the wiring installations or interfere with the reasonable use
thereof by other users in the Building. Tenant will not, without
Landlord's prior written consent in each instance, connect any items
such as non-Building standard tenant lighting, vending equipment,
printing or duplicating machines, computers (other than desktop word
processors and personal computers), auxiliary air conditioners, or
other data, communications, or electronic equipment to the Building's
electrical system, or make any alteration or addition to the system.
If Tenant desires any such items, additional 208/120 volt electrical
power beyond that supplied by Landlord as provided above, or other
special power requirements or circuits, then Tenant may request
Landlord to provide such supplemental power or circuits to the
Premises, which request Landlord may grant or withhold in its
reasonable discretion. If Landlord furnishes such power or circuits,
Tenant shall pay Landlord, on demand, the cost of the design,
installation and maintenance of the facilities required to provide
such additional or special electrical power or circuits and the cost
of all electric current so provided at a rate not to exceed that which
would be charged by the utility company furnishing services to the
Building, if Tenant were a direct customer thereof. Landlord may
require separate electrical metering of such supplemental electrical
power or circuits to the Premises, and Tenant shall pay, on demand,
the cost of the design, installation and maintenance of such metering
facilities. In no event shall Tenant have access to any electrical
closets. Tenant agrees that any electrical engineering design or
contract work shall be performed at Tenant's expense by Landlord or an
electrical engineer and/or electrical contractor designated by
Landlord. All invoices respecting the design, installation and
maintenance of the facilities requested by Tenant shall be paid within
thirty (30) days of Tenant's receipt thereof. Landlord's charge to
Tenant for the cost of electric current so provided shall be paid
within thirty (30) days of receipt of invoice by Tenant.
Notwithstanding anything herein to the contrary, the Premises shall be
equipped with electrical services in accordance with the
specifications set forth in the Plans (as defined in the Work Letter).
Tenant may add additional circuits, subject to Landlord's prior
written approval (not to be unreasonably withheld), provided that such
additional circuits shall not, in Landlord's opinion, cause and
electrical overload.
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14. Laws and Regulations.
(a) Tenant agrees to comply with all applicable laws, ordinances,
rules, and regulations of any governmental entity or agency having
jurisdiction of the Premises.
(b) Tenant shall not cause or permit any Hazardous Material (as
hereinafter defined) to be brought upon, kept or used in or about the
Project by Tenant, its agents, employees, contractors or invitees
without the prior written consent of Landlord. If Tenant breaches the
obligations stated in the preceding sentence, or if the presence of
Hazardous Material on the Project caused or permitted by Tenant, or
any of Tenant's agents, employees, contractors or invitees, results in
contamination of the Project, or if contamination of the Project by
Hazardous Material otherwise occurs for which Tenant is legally liable
to Landlord for damage resulting therefrom, then Tenant shall
indemnify, defend and hold Landlord harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses
(including, without limitation, diminution in value of the Project,
damages for the loss or restriction on use of space comprising part of
the Project, damages arising from any adverse impact on marketing of
space, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees) which arise during or after the Lease
Term as a result of such contamination. This indemnification of
Landlord by Tenant includes, without limitation, costs incurred in
connection with any investigation of site conditions or any clean-up,
remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of
Hazardous Material present in the soil or ground water on or under the
Project and the defense of claims related thereto. Without limiting
the foregoing, if the presence of any Hazardous Material on the
Project caused or permitted by Tenant results in any contamination
of the Project, Tenant, at its sole cost and expense, shall promptly
take all actions as may be necessary to return the Project to the
condition existing prior to the introduction of any such Hazardous
Material to the Project; provided that, Landlord's written approval of
such actions shall first be obtained. The foregoing indemnity shall
survive the expiration or earlier termination of the Lease. As used
herein, the term "Hazardous Material" means any asbestos, PCBs,
petroleum, and any and all other hazardous or toxic substances,
materials or wastes, now or hereafter defined or regulated under the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et.
seq.), the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et. seq.), the Clean Water Act
(33 U.S.C. 1251 et. seq.), the Clean Air Act (42 U.S.C. 7401 et. seq.),
and the Toxic Substances Control Act (15 U.S.C. 2601 et. seq.) and all
similar Federal, State and local statutes, laws, rules and regulations
in connection with environmental conditions, health and safety.
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<PAGE> 17
15. Building Rules and Regulations.
Tenant will comply with the rules and regulations of the Project (the
"Rules and Regulations") as adopted and altered by Landlord from time
to time and will cause all of its agents, employees, invitees and
visitors to do so. Landlord shall give Tenant written notice of the
Rules and Regulations as adopted and revised from time to time, and
Tenant shall be obligated to comply with same as of the date of
Tenant's receipt of such notice. A true and correct copy of the Rules
and Regulations as presently in effect is attached hereto as EXHIBIT
"F" and by this reference made a part hereof.
16. Entry by Landlord.
Tenant agrees to permit Landlord, its agents and representatives to
enter into and upon any part of the Premises at all reasonable hours
(and in emergencies at all times) to inspect the same, to show the
Premises to prospective purchasers, mortgagees, tenants or insurers,
and to clean or make repairs, alterations or additions thereto, and
Tenant shall not be entitled to any abatement or reduction of Rent by
reason thereof.
17. Assignment and Subletting.
(a) Tenant may not assign, sublease, transfer or encumber this
Lease or any interest hereunder unless Tenant shall have first
obtained Landlord's prior written consent. Any attempted assignment,
sublease, transfer or encumbrance of this Lease or any interest
hereunder by Tenant in violation of the terms and covenants of this
Section shall be void ab initio. In the event Tenant is a corporation
or a partnership, the conveyance of any of the corporate stock or the
assignment of any partnership interest, as the case may be, shall be
deemed an assignment for the purposes hereof. Tenant shall reimburse
Landlord's reasonable attorneys' fees and expenses incurred in
connection with Tenant's assignment, subletting, transfer or
encumbrance of this Lease or any interest herein.
(b) All cash or other consideration received by Tenant as the
proceeds of any assignment, sale or sublease of Tenant's interest in
this Lease and/or the Premises, whether consented to by Landlord or
not, shall be paid to Landlord as Additional Rent, notwithstanding the
fact that such proceeds exceed the rentals called for hereunder,
unless Landlord agrees to the contrary in writing, and Tenant hereby
assigns all rights it might have or ever acquire in any such proceeds
to Landlord. This covenant and assignment shall benefit Landlord and
its successors in ownership of the Building and shall bind Tenant and
Tenant's heirs, executors, administrators, personal representatives,
successors and assigns. Any assignee, sublessee or purchaser of
Tenant's interest in this Lease (all such assignees, sublessees or
purchasers being hereinafter referred to as "Successors"), by
occupying the Premises and/or assuming Tenant's obligations hereunder,
shall be deemed to have assumed
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<PAGE> 18
liability to Landlord for all amounts paid in violation of the
provisions hereof to persons other than Landlord by such Successor in
consideration of any such sale, assignment or subletting, but Tenant
shall remain fully liable to Landlord for all obligations hereunder.
18. Mechanic's Liens.
Tenant will not permit any mechanic's liens or other liens to be
placed upon the Premises or the Project, and nothing in this Lease
shall be deemed or construed in any way as constituting the consent or
request of Landlord, express or implied, by inference or otherwise, to
any person for the performance of any labor or the furnishing of any
materials to the Premises or the Project or any part thereof, nor as
giving Tenant any right, power, or authority to contract for or permit
the rendering of any services or the furnishing of any materials that
would give rise to any mechanic's or other liens against the Premises
or the Project. In the event any such lien is attached to the
Premises or the Project, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to,
discharge the same. Immediately upon Landlord's demand, Tenant shall
pay to Landlord as Additional Rent such amounts as may be required to
reimburse Landlord for all payments made by Landlord in connection
with the discharge of any such liens, including but not limited to all
attorney's fees and all other expenses incurred by Landlord. Landlord
may record in the public records of Pinellas County, Florida, a public
notice containing a true and correct copy of this Section 18, and
Tenant agrees to inform all contractors and materialmen performing
work on or supplying material to the Premises of the existence of such
notice.
19. Tenant's Insurance.
Tenant, at its expense, shall obtain and maintain in effect as long as
this Lease remains in effect and during such other time as Tenant
occupies the Premises or any part thereof insurance policies in
accordance with the following provisions:
(a) Coverage.
(i) commercial general liability insurance, including
insurance against assumed or contractual liability under this
Lease, with respect to the Property, to afford protection with
limits, per occurrence, of not less than One Million Dollars
($1,000,000), combined single limit, with respect to personal
injury, bodily injury, including death, and property damage
and Two Million Dollars ($2,000,000) aggregate (occurrence
form), such insurance to provide for no deductible;
(ii) all-risk property insurance, including theft,
written at replacement cost value and with replacement cost
endorsement, covering the Tenant Improvements, the Additional
Tenant Improvements, the HVAC system and all of Tenant's
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Personal Property in the Premises, and covering loss of income
resulting from casualty, and comprehensive boiler and
machinery insurance with an endorsement covering off-Premises
service interruption (i.e. all Building Service Equipment,
including HVAC), such insurance to provide for no deductible
greater than Five Thousand Dollars ($5,000).
(iii) worker's compensation or similar insurance policy
offering statutory coverage and containing statutory limits,
which policy shall also provide Employer's Liability Coverage
of not less than Five Hundred Thousand Dollars ($500,000) per
occurrence.
(iv) Tenant shall require any construction contractor
retained by it to perform work on the Premises to carry and
maintain, at no expense to Landlord, during such times as
contractor is working in the Premises, a non-deductible (1)
commercial general liability insurance policy, including, but
not limited to, contractor's liability coverage, contractual
liability coverage, completed operations coverage, broad form
property damage endorsement and contractor's protective
liability coverage, to afford protection with limits per
person and for each occurrence, of not less than Two Million
Dollars ($2,000,000), combined single limit, and with respect
to personal injury and death and property damage, Four Million
Dollars ($4,000,000) aggregate (occurrence form) and Two
Million Dollars ($2,000,000) aggregate completed operations;
(2) automobile liability insurance in the amount of One
Million Dollars ($1,000,000) combined single limit for bodily
injury and property damage; and (3) worker's compensation
insurance or similar insurance in form and amounts as required
by law; and
(v) any other insurance reasonably required of Tenant
by Landlord or any Encumbrance Holder.
Notwithstanding anything set forth above in this Section 19 to
the contrary, all dollar limits specified herein shall be
increased from time to time as reasonably necessary to effect
economically equivalent insurance coverage, or coverage deemed
adequate in light of then existing circumstances.
(b) Policies. Such policies shall be maintained with companies
licensed to do business in the State of Florida approved by Landlord.
Such policies shall be in form reasonably acceptable to Landlord and
will be written as primary policy coverage and not contributing with,
or in excess of, any coverage which Landlord shall carry. Tenant
shall deposit the policy or policies of such required insurance or
certificates thereof with Landlord prior to the Commencement Date.
Such policy or policies shall include Landlord and its managing agent
as additional insured as to coverage under Subsections 19.A.(i), (ii),
(iv) and (v). Such policies shall also contain a waiver of
subrogation provision and a provision stating
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that the policies shall not be canceled, non-renewed, reduced in
coverage or materially altered except after thirty (30) day's written
notice, said notice to be given in the manner required by this Lease
to Landlord, Attention: Risk Management Department. All such
policies of insurance shall be effective as of the date Tenant
occupies the Premises and shall be maintained in force at all times
during the Lease Term and all other times during which Tenant shall
occupy the Premises.
(c) Tenant's Failure to Insure. If Tenant shall fail to obtain
insurance as required under this Section 19, Landlord may, but shall
not be obligated to, obtain such insurance, and in such event, Tenant
shall pay, as Additional Rent, the premium for such insurance upon
demand by Landlord.
(d) Compliance with Policies. Tenant shall not do or allow to be
done, or keep, or allow to be kept, anything in, upon or about the
Premises which will contravene Landlord's policies insuring against
loss or damage by fire, other casualty, or any other cause, including
without limitation, public liability, or which will prevent Landlord
from procuring such policies in companies acceptable to Landlord. If
any act or failure to act by Tenant in or about the Project or the
Premises shall cause the rates with respect to Landlord's insurance
policies to be increased beyond those rates that would normally be
applicable for such limits of coverage, Tenant shall pay, as
Additional Rent, the amount of any such increases upon demand by
Landlord.
20. Landlord's Insurance.
Landlord shall carry comprehensive general liability insurance with
regard to the Property and all-risk property insurance on the
Building, excluding the Tenant Improvements, the Additional Tenant
Improvements, heating, ventilating and air-conditioning system and
Tenant's Personal Property.
Landlord shall not be obligated to repair any damage to the heating,
ventilating and air-conditioning system or Tenant's Personal Property
or replace the same unless caused by Landlord's negligence or willful
misconduct and not covered by the insurance Tenant is required to
carry pursuant to this Section 19 hereof. Landlord shall not be
responsible for any loss or damage falling under any deductible
applicable to Tenant's insurance coverage.
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21. Tenant's Personal Property.
"Tenant's Personal Property" means all equipment, machinery,
furniture, furnishings and/or other property now or hereafter
installed or placed in or on the Premises by and at the sole expense
of Tenant with respect to which Tenant has not been granted any credit
or allowance by Landlord and which (e) is not used, or was not
procured for use, in connection with the operation, maintenance or
protection of the Premises or the Building; (f) is removable without
damage to the Premises or the Building; and (g) is not a replacement
of any property of Landlord, whether such replacement is made at
Tenant's expense or otherwise. Notwithstanding any other provision of
this Lease, Tenant's Personal Property shall not include Building
Service Equipment or any improvements or other property installed or
placed in or on the Premises as part of the Tenant Improvements,
whether or not installed at Tenant's expense. Provided that Tenant is
not then in default of any of its obligations under this Lease, Tenant
may remove all Tenant's Personal Property from the Premises at the
termination of this Lease. Any property belonging to Tenant or any
other person which is left in the Premises after the date the Lease is
terminated for any reason shall be deemed to have been abandoned. In
such event, Landlord shall have the right to declare itself the owner
of such property and to dispose of it in whatever manner Landlord
considers appropriate without waiving its right to claim from Tenant
all expenses and damages caused by Tenant's failure to remove such
property, and Tenant shall not have any right to compensation or claim
against Landlord as a result. Tenant shall be responsible for
payment, prior to delinquency of any and all personal property taxes
levied on the Tenant Improvements, Tenant's Personal Property, and any
equipment, machinery, furniture, furnishings and other property or
improvements located on the Premises.
22. Indemnity; Limitation of Liability.
(a) Landlord shall not be liable for, and Tenant will indemnify,
defend, and save Landlord and any Encumbrance Holder (as hereinafter
defined) and the employees, officers, shareholders, directors, and
partners of Landlord and any Encumbrance Holder (collectively, the
"Indemnified Parties") harmless of and from and against all claims,
actions, losses, costs and expenses (including attorneys' and other
professional fees), judgments, settlement payments, and, whether or
not reduced to final judgment, all liabilities, damages, and fines,
to the extent arising, directly or indirectly, from (a) any default
by Tenant under the terms of this Lease, (b) the use or occupancy
of the Property or any other area within the Project by Tenant or any
contractor, agent, employee, invitee or licensee of Tenant and/or
(c) any acts or omissions of Tenant or any contractor, agent,
employee, invitee or licensee of Tenant in or about the Property.
(h) Neither Landlord nor any other Indemnified Party shall be
liable or responsible for any loss or damage to any property or the
death or injury to any person occasioned by theft,
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fire, act of God or public enemy, injunction, riot, strike,
insurrection, war, court order, requisition of other governmental body
or authority, or due to the Project or any part thereof becoming out
of repair, or by the happening of any accident in or about the Project
or due to any act of neglect of Landlord (except to the extent of
Landlord's gross negligence or wilful misconduct) or any tenant or
occupant of the Building or the Project or of any other person. This
provision shall apply especially (but not exclusively) to damage
caused by water, frost, weather, steam, sewerage, electricity, gas,
sewer gas or odors, or by the bursting or leaking of pipes or plumbing
work, and shall apply equally whether such damage be caused by act or
neglect of Landlord, any other Indemnified Party or other tenants,
occupants, or maintenance personnel of the Building or the Project, or
of any other person.
23. Waiver of Subrogation Rights.
Except as otherwise provided in Section 24 hereof, Landlord and Tenant
each hereby waives on behalf of itself, its officers, directors,
employees, agents and contractors and its insurers (none of which
shall ever be assigned any such claim or be entitled thereto due to
subrogation or otherwise) any and all rights of recovery, claim,
action, or cause of action, against the other, its agents, officers,
or employees, for any loss or damage that may occur to the Premises,
or any improvements thereto or the Building of which the Premises are
a part, or any improvements thereto, or any personal property of such
party therein, by reason of fire, the elements, or any other causes
which are, or this Lease requires be insured against by the injured
party under the terms of the standard fire and extended coverage
insurance policies referred to in Sections 19 and 20 hereof,
regardless of whether such insurance is actually maintained and
regardless of the cause or origin of the damage involved, including
negligence of the other party hereto, its agents, officers, or
employees.
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24. Casualty Damage.
(i) If the Premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building shall be so damaged that substantial
alteration or reconstruction of the Building shall, in Landlord's sole
opinion, be required (whether or not the Premises shall have been
damaged by such casualty), or in the event any Encumbrance Holder
should require that the insurance proceeds payable as a result of a
casualty be applied to the payment of the debt owed to the Encumbrance
Holder, or in the event of any material uninsured loss to the
Building, Landlord may, at its option, terminate this Lease by
notifying Tenant in writing of such termination within ninety (90)
days after the date of such casualty. If Landlord does not thus elect
to terminate this Lease, Landlord shall commence and proceed with
reasonable diligence to restore the Building (excluding the Tenant
Improvements and Additional Tenant Improvements and other property
with respect to which it is Tenant's obligation to carry insurance),
provided that Landlord's obligation to restore shall not require
Landlord to spend for such work an amount in excess of the insurance
proceeds actually received by Landlord as a result of the casualty.
In the event Landlord has not completed the restoration within one (1)
year from the date of the casualty, Tenant shall have the right to
terminate this Lease. When the repairs described in the preceding
sentence have been completed by Landlord, Tenant shall complete the
restoration of all Tenant Improvements and Additional Tenant
Improvements which are necessary to permit Tenant's re-occupancy of
the Premises, in accordance with plans and specifications approved by
Landlord and Tenant. Landlord shall have the right, but not the
obligation, to bid such work on behalf of Tenant and shall become
Tenant's contractor in the event (i) its bid (exclusive of Landlord's
customary construction supervision or management fee and fees of
Landlord's architects and engineers) is the low bid, or (ii) Landlord
elects to match the low bid (exclusive of Landlord's customary
construction supervision or management fee and fees of Landlord's
architects and engineers) received by Tenant from any other qualified
contractor. In any event Landlord shall have the right to approve any
contractor Tenant selects to perform such work and the plans and
specifications for such work shall be subject to Landlord's approval.
In addition, Landlord shall be entitled to receive its customary
construction supervision or management fee and fees of Landlord's
architects and engineers incurred by Landlord in examining Tenant's
work and the plans and specifications therefor. Tenant shall also be
responsible for the restoration of Tenant's furniture, equipment and
fixtures.
(b) Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in
any way from such casualty damage or the repair thereof; except that,
subject to the provisions of the next sentence, Landlord shall allow
Tenant a fair diminution of Rent during the time and to the extent the
Premises are unfit for occupancy. If the Premises or any other portion
of the Building be damaged by fire or other casualty resulting from
the fault or negligence of Tenant or any of Tenant's agents,
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<PAGE> 24
contractors, employees, or invitees, the Rent hereunder shall not be
diminished during the repair of such damage, and Tenant shall be
liable to Landlord for the cost of the repair and restoration of the
Building caused thereby to the extent such cost and expense is not
covered by insurance proceeds. Notwithstanding anything to the
contrary contained in this Section, Landlord shall not have any
obligation whatsoever to repair, reconstruct or restore the Premises
when the damage resulting from any casualty contained under this
Section occurs during the last twelve (12) months of the Lease Term.
25. Condemnation.
If the whole or substantially the whole of the Building or the
Premises should be taken for any public or quasi-public use, by right
of eminent domain or otherwise or should be sold in lieu of
condemnation, then this Lease shall terminate as of the date when
physical possession of the Building or the Premises is taken by the
condemning authority. If less than the whole or substantially the
whole of the Building or the Premises is thus taken or sold, Landlord
(whether or not the Premises are affected thereby) may, at its option
terminate this Lease by giving written notice thereof to Tenant; in
which event this Lease shall terminate as of the date when physical
possession of such portion of the Building or Premises is taken by
condemning authority. If this Lease is not so terminated upon any such
taking or sale which reduces the Rentable Area of the Premises, the
Base Rental payable hereunder shall be diminished by an equitable
amount, and Landlord shall, to the extent Landlord deems feasible,
restore the Building and the Premises to substantially their former
condition, but such work shall not exceed the scope of the work done
by Landlord in originally constructing the Building and all the Tenant
Improvements in the Premises, nor shall Landlord in any event be
required to spend for such work an amount in excess of the amount
received by Landlord as compensation for such taking. All amounts
awarded upon a taking of any part or all of the Project, Property,
Building or the Premises shall belong to Landlord, Tenant hereby
acknowledging that it is not entitled to and expressly waiving all
claim to any such compensation.
26. Bankruptcy.
(a) For purposes of this Lease, each of the following shall be
deemed an "Event of Tenant's Bankruptcy":
(1) if Tenant becomes insolvent, as defined in the
Bankruptcy Code (as hereinafter defined), or under
the Insolvency Laws (as hereinafter defined);
(2) the commencement of any action or proceeding for
the dissolution or liquidation of Tenant or for
the appointment of a receiver or trustee of the
property of Tenant, whether instituted by or
against Tenant, if not bonded
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or discharged within thirty (30) days of the date
of the commencement of such proceeding or action;
(3) if Tenant files a voluntary petition under the
Bankruptcy Code or Insolvency Laws;
(4) if there is filed an involuntary petition against
Tenant as the subject debtor under the Bankruptcy
Code or Insolvency Laws, which is not dismissed
within sixty (60) days of filing, or results in
issuance of an order for relief against the
debtor; and
(5) if Tenant makes or consents to an assignment of
its assets, in whole or in part, for the benefit
of creditors, or to a common law composition of
creditors.
(b) As used herein, (i) "Bankruptcy Code" means title 11 of the
United States Code, 11 U.S.C. Section 101 et seq. as amended or any
successor statute and (ii) Insolvency Laws means the insolvency laws
of any state or territory of the United States.
(c) If Tenant becomes the subject debtor in a case pending under
the Bankruptcy Code, Landlord's right to terminate this Lease under
Section 27 hereof shall be subject to the applicable rights (if any)
of the Trustee in Bankruptcy to assume or assign this Lease as then
provided for in the Bankruptcy Code. However, the Trustee in
Bankruptcy must give to Landlord and Landlord must receive proper
written notice of the Trustee's assumption or rejection of this Lease,
within sixty (60) days (or such other applicable period as is provided
for in the Bankruptcy Code) after the date of the Trustee's
appointment. The failure of the Trustee to give notice of the
assumption within the period shall conclusively and irrevocably
constitute the Trustee's rejection of this Lease and waiver of any
rights of the Trustee to assume or assign this Lease. The Trustee
shall not have the right to assume or assign this Lease unless the
Trustee (i) promptly and fully cures all defaults under this Lease,
(ii) promptly and fully compensates Landlord for all monetary damages
incurred as a result of such default, and (iii) provides to Landlord
adequate assurance of future performance. In the event Tenant is
unable to: (i) cure its defaults, (ii) reimburse Landlord for its
monetary damages, or (iii) pay the Rent due under this Lease on time,
then Tenant hereby agrees in advance that it has not met its burden to
provide adequate assurance of future performance, and this Lease may
be terminated by Landlord in accordance with Section 27.
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27. Events of Default; Remedies.
(a) The following events shall be deemed to be "Events of Default"
by Tenant under this Lease: (i) Tenant shall fail to pay any Rent or
other sum of money due hereunder and such failure shall continue for a
period of five (5) business days after the date such sum is due; (ii)
Tenant shall fail to comply with any provision of this Lease or any
other agreement between Landlord and Tenant not requiring the payment
of money (all of which terms, provisions and covenants shall be deemed
material) and such failure shall continue for a period of ten (10)
days after written notice of such default is delivered to Tenant or in
the event such failure cannot reasonably be cured within such ten (10)
day period, then so long as Tenant commences and diligently pursues a
cure of such failure within such ten (10) day period, such period
shall be extended for a reasonable period of time not to exceed an
additional ninety (90) days; (iii) the leasehold hereunder demised
shall be taken by execution or other process of law in any action
against Tenant; (iv) Tenant shall become insolvent or unable to pay
its debts as they become due, or Tenant notifies Landlord that it
anticipates either condition; (v) an Event of Tenant's Bankruptcy
occurs or Tenant or any creditor of Tenant notifies Landlord that it
knows or expects such an event will occur; or (vi) a receiver or
trustee shall be appointed for Tenant's leasehold interest in the
Premises or for all or a substantial part of the assets of Tenant.
(b) Upon the occurrence of any one or more Events of Default by
Tenant, whether enumerated in this Section or not, Landlord shall have
the option to pursue any one or more of the following remedies without
any notice (except for that expressly required by Subsection 27(a)) or
demand for possession whatsoever (and without limiting the generality
of the foregoing, Tenant hereby specifically waives notice and demand
for payment of Rent or other obligations due and waives any and all
other notices or demand requirements imposed by applicable law): (i)
terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord; (ii) terminate Tenant's right to
occupy the Premises and re-enter and take possession of the Premises
(without terminating this Lease); (iii) Landlord shall have the right,
without terminating or canceling this Lease, to declare all Rent due
under this Lease for the remainder of the Lease Term (or any extension
or renewal thereof) to be immediately due and payable, and thereupon
all Rent and other charges due hereunder to the end of the Lease Term
(or any extension or renewal term, if applicable) shall be
accelerated; (iv) Landlord may elect to enter and repossess the
Premises and relet the Premises for Tenant's account, holding Tenant
liable in damages for all expenses incurred in any such reletting,
including without limitation all amounts incurred by Landlord in
recovering possession, renovations and repairs to the Premises and
broker's fees and commissions in order to relet same, and for any
difference between the amount of rent received from such reletting and
the Rent due and payable under the terms of this Lease; (v) enter upon
the Premises and do whatever Tenant is obligated to do under the terms
of this Lease, and Tenant agrees to reimburse Landlord on demand for
any expense which
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Landlord may incur in effecting compliance with Tenant's obligations
under this Lease, and Tenant further agrees that Landlord shall not be
liable for any damages resulting to the Tenant from such action; and
(vii) exercise all other remedies available to Landlord at law or in
equity, including, without limitation, injunctive relief of all
varieties. In the event Landlord elects to re-enter or take possession
of the Premises after Tenant's default, Tenant hereby waives notice of
such re-entry or repossession. Landlord may, without prejudice to any
other remedy which it may have for possession or arrearages in Rent,
expel or remove Tenant and any other person who may be occupying said
Premises or any part thereof. All Landlord's remedies shall be
cumulative and not exclusive. Forbearance by Landlord to enforce one
or more of the remedies herein provided upon an Event of Default shall
not be deemed or construed to constitute a waiver of such default.
(c) This Section shall be enforceable to the maximum extent not
prohibited by applicable law, and the unenforceability of any portion
thereof shall not thereby render unenforceable any other portion. To
the extent any provision of applicable law requires some action by
Landlord to evidence or effect the termination of this Lease or to
evidence the termination of Tenant's right of occupancy, Tenant and
Landlord hereby agree that notice, either oral or by telephone, or by
any act of Landlord that comes to the attention of Tenant, its agents,
servants or employees, which reflects Landlord's intention to
terminate, shall be sufficient to evidence and effect the termination
herein provided for, but Tenant hereby agrees that, as between
Landlord and Tenant, its successors and assigns, no such notice shall
ever be necessary to effect a termination hereunder.
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28. Peaceful Enjoyment.
Tenant shall, and may peacefully have, hold, and enjoy the Premises,
subject to the other terms hereof including, without limitation,
Section 30 hereof, provided that Tenant pays the Rent and other sums
herein recited to be paid by Tenant and performs all of Tenant's
covenants and agreements herein contained. This covenant and all other
covenants of Landlord shall be binding upon Landlord and its
successors only with respect to breaches occurring during its or their
respective periods of ownership of Landlord's interest hereunder.
Landlord shall be entitled to cause Tenant to relocate from the
Premises to a reasonably equivalent space comparable in size and
layout ("Relocation Space") within the Building at any time upon
reasonable written notice to Tenant (Tenant acknowledging that notice
of ninety (90) days shall be deemed reasonable notice for purposes
hereof). Any such relocation shall be entirely at the expense of
Landlord or the third party tenant replacing Tenant in the Premises.
Such a relocation shall not terminate or otherwise affect or modify
this Lease except that from and after the date of such relocation, the
"Premises" shall refer to the Relocation Space into which Tenant has
been moved, rather than the original Premises as herein defined. In
addition, Landlord shall have the right in its sole discretion, at any
time and from time to time, without notice to Tenant, to undertake
(viii) renovation or (ix) further development of the Project by way of
expansion of the existing buildings and construction of additional
buildings on the Property; provided that such renovation or
development by Landlord shall not unreasonably interfere with Tenant's
use and occupancy of the Premises or access to the Building.
29. Holding Over.
In the event of holding over by Tenant after expiration or other
termination of this Lease, Tenant shall, throughout the entire
holdover period, pay Rent equal to one hundred fifty percent (150%) of
the Base Rental and Additional Rent which would have been applicable
had the term of this Lease continued through the period of such holding
over by Tenant. No holding over by Tenant after the expiration of the
Lease Term shall be construed to extend the Lease Term, and Tenant
shall be deemed to be a tenant at sufferance during such holdover
period. If as a direct result of Tenant's holding over in the Premises
after expiration or other termination of this Lease, Landlord suffers
damages or incurs additional obligations to any third party who has
leased part or all of the Premises, Tenant shall indemnify Landlord to
the extent of such damages or additional obligations, including without
limitation Landlord's attorneys fees.
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30. Subordination to Mortgage.
Tenant accepts this Lease subject and subordinate to any mortgage,
deed of trust, ground lease or other lien or encumbrance presently
existing or hereafter arising upon the Premises, or upon the Building
or the Property and to any renewals, refinancings, modifications and
extensions thereof, but Tenant agrees that the holder of any such
mortgage, deed of trust, ground lease or other lien or encumbrance (an
"Encumbrance Holder") shall have the right at any time to subordinate
such mortgage, deed of trust, ground lease or other lien or
encumbrance to this Lease on such terms and subject to such conditions
as such Encumbrance Holder may deem appropriate in its sole
discretion. The provisions of this Section 30 are self operative;
however Tenant agrees that upon Landlord's demand Tenant shall execute
such further instruments subordinating this Lease or agreeing to
attorn to an Encumbrance Holder as Landlord may request; provided that
such Encumbrance Holder agrees to attorn to Tenant so long as no Event
of Default has occurred hereunder. In the event that Tenant should
fail to execute any subordination or other agreement required by this
Section, promptly as requested, Tenant hereby irrevocably constitutes
Landlord as its attorney-in-fact to execute such instrument in
Tenant's name, place and stead, it being agreed that such power is one
coupled with an interest.
31. Encumbrance Holder's Performance.
If requested by any Encumbrance Holder, Tenant shall give such
Encumbrance Holder written notice of any default by Landlord under
this Lease and a reasonable opportunity to cure such default. The
Tenant shall accept performance of any of Landlord's obligations
hereunder by any Encumbrance Holder.
32. Encumbrance Holder's Liability.
No Encumbrance Holder not in possession of the Premises or the
Building, shall have any liability whatsoever hereunder.
33. Estoppel Certificate.
Tenant agrees that it will within five (5) days of Landlord's request
execute and deliver to such persons as Landlord shall request a
statement in recordable form 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 so modified), stating the
dates to which Rent has been paid, stating that Landlord is not in
default hereunder (or if Tenant alleges a default stating the nature
of such alleged default), and further stating such other matters as
Landlord shall reasonably require.
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34. Intentionally deleted.
35. Attorney's Fees.
In the event either party defaults in the performance of any of the
terms of this Lease and the other party employs an attorney in
connection with the enforcement of any remedy of such default, the
prevailing party shall be entitled to receive from the other party
full reimbursement of such prevailing party's reasonable attorney's
fees and costs incurred therewith (including fees and expenses of
legal assistants), whether such fees are incurred before, during or
after any trial or administrative proceeding or on appeal.
36. No Implied Waiver.
The failure of Landlord to insist at any time upon the strict
performance of any covenant or agreement contained herein or to
exercise any option, right, power or remedy contained in this Lease
shall not be construed as a waiver or a relinquishment thereof for the
future. No payment by Tenant or receipt by Landlord of a lesser amount
than the Rent due under this Lease shall be deemed to be other than on
account of the earliest Rent due hereunder, nor shall any endorsement
or statement on any check or any letter accompanying any check or
payment as Rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to
recover the balance of such Rent (including Additional Rent due
pursuant to Subsection 6(e) of this Lease) or pursue any other remedy
in this Lease provided.
37. Landlord's Consent.
Whenever the consent of the Landlord is required pursuant to a
provision of this Lease, unless expressly provided otherwise, such
consent may be granted or withheld by Landlord in the exercise of its
sole discretion.
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38. Limitation of Landlord's Liability.
The term "Landlord", as used in the Lease, shall mean only the owner
or owners, at the time in question, of the fee title to the Property
owned by Landlord in fee simple and the ground lessee's interest in
any portion of the Building presently subject to a ground lease. In
the event of any transfer of such title or interest, Landlord as named
in the Lease (and in the case of any subsequent transfers, the then
grantor) shall be relieved from and after the date of such transfer of
all liability in respect of Landlord's obligations thereafter to be
performed, provided that any funds received by Landlord (or the then
grantor) in which Tenant has an interest shall be delivered to the
grantee at the time of transfer. The obligations contained in the
Lease to be performed by Landlord shall, subject to the above, be
binding on Landlord's successors and assigns, only during their
respective periods of ownership. Except for the obligation of
Landlord to deliver to a subsequent grantee all sums received by
Landlord in which Tenant has an interest, the obligations of Landlord
under the Lease do not constitute personal obligations of Landlord or
the individual partners, shareholders, directors, officers, and
property managers of Landlord; and Tenant shall look solely to
Landlord's then existing interest in the Property, and to no other
assets of Landlord, for satisfaction of any liability in respect of
the Lease, and will not seek recourse against the Landlord's
individual partners, shareholders, directors, officers, property
managers or any of their personal assets for such satisfaction. No
other properties or assets of Landlord shall be subject to levy,
execution, or other enforcement procedures for the satisfaction of any
judgment (or other judicial process) or for the satisfaction of any
other remedy of Tenant arising out of or in connection with the Lease,
the relationship of landlord and tenant, or Tenant's use of the
Premises.
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<PAGE> 32
39. Security Deposit.
The Security Deposit, if any, shall be held by Landlord without
liability for interest and as security for the performance by Tenant
of Tenant's covenants and obligations under this Lease, it being
expressly understood that the Security Deposit shall not be considered
an advance payment of rental or a measure of Tenant's liability for
damages in case of default by Tenant. Landlord shall deposit the
Security Deposit in an interest bearing account. Landlord shall have
no responsibility or liability for the amount of interest earned on
the Security Deposit. All interest earned on the Security Deposit
shall be added to and become a part of the Security Deposit. Landlord
may commingle the Security Deposit with Landlord's other funds.
Landlord may, from time to time, without prejudice to any other
remedy, use the Security Deposit to the extent necessary to make good
any arrearages of Rent or to satisfy any other covenant or obligation
of Tenant hereunder. Following any such application of the Security
Deposit, Tenant shall pay to Landlord on demand the amount so applied
in order to restore the Security Deposit to its original amount. If
Tenant is not in default at the termination of this Lease, the balance
of the Security Deposit remaining after any such application shall be
returned by Landlord to Tenant following settlement of Tenant's Share
Share of Increased Operating Expenses for the final calendar year of
the Lease Term as provided in EXHIBIT "D" hereof. If Landlord
transfers its interest in the Premises during the term of this Lease,
Landlord may assign the Security Deposit to the transferee and
thereafter shall have no further liability for the return of such
Security Deposit.
40. Notice.
Any notice in this Lease provided for must, unless otherwise expressly
provided herein, be in writing, and may, unless otherwise in this
Lease expressly provided, be given or be served by depositing the same
in the United States mail, postpaid and certified and addressed to the
party to be notified, with return receipt requested, or by delivering
the same in person to an officer of such party to be notified at the
address stated in this Lease or such other address, notice of which
has been given to the other party in accordance with this Section.
Notice deposited in the mail in the manner hereinabove described shall
be effective from and after the expiration of three (3) calendar days
after it is so deposited. Notice delivered in person shall be
effective upon delivery. Until further notice, the address for the
parties hereto shall be the address set forth below:
<TABLE>
<S> <C>
As to Landlord: Pinellas Business Center, Inc.
c/o Hogan # Burt
600 North Westshore Boulevard, Suite 202
Tampa, Florida 33609
Attn: Ronald E. Massey
</TABLE>
-28-
<PAGE> 33
<TABLE>
<CAPTION>
<S> <C>
With a required
copy to: J. P. Morgan Investment Management, Inc.
522 Fifth Avenue
New York, New York 10036
Attn: William N. Cinnamond, Jr.
and Stroock & Stroock & Lavan LLP
Seven Hanover Square
New York, New York 10004-2696
Attn: Brian Diamond
As to Tenant: Digital Lightwave, Inc.
601 Cleveland Street, 5th Floor
Clearwater, Florida 34615
Attn: Administration Division Manager
</TABLE>
Once Tenant has taken occupancy of the Premises, any notice from
Landlord to Tenant shall be effective if delivered to the Premises
address in the manner provided in this Section.
41. Severability.
If any term or provision of the Lease, or the application thereof to
any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such
term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be otherwise
valid and enforced to the fullest extent permitted by law.
42. Recordation.
Tenant agrees not to record this Lease or any memorandum hereof. At
Landlord's request, Tenant agrees to promptly execute a memorandum of
this Lease in recordable form, and Landlord may, at its option, record
such memorandum in the Public Records of Pinellas County, Florida.
43. Governing Law.
This Lease and the rights and obligations of the parties hereto shall
be interpreted, construed, and enforced in accordance with the laws of
the State of Florida.
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<PAGE> 34
44. Force Majeure.
(a) Whenever a period of time is herein prescribed for the taking
of any action by Landlord, Landlord shall not be liable or responsible
for, and there shall be excluded from the computation of such period
of time, any delays due to strikes, riots, acts of God, shortages of
labor, fuel or materials, war, governmental laws, regulations or
restrictions, or any other cause whatsoever beyond the Landlord's
reasonable control.
(b) Whenever a period of time is herein prescribed for the taking
of any action by Tenant pursuant to this Lease, Tenant shall not be
liable or responsible for, and there shall be excluded from the
computation of such period of time, any delays due to strikes, riots,
acts of God, shortages of labor, fuel or materials, war, governmental
laws, regulations or restrictions, or any other cause whatsoever
beyond the reasonable control of Tenant. Nothing in this Section
44(b) shall be deemed to excuse Tenant from its obligation to timely
pay Rent and all of its other monetary obligations under this Lease in
accordance with the provisions contained herein.
45. Time of Performance.
Except as expressly otherwise herein provided, with respect to all
required acts of Tenant, time is of the essence of this Lease.
46. Transfers by Landlord.
Landlord shall have the right to transfer and assign, in whole or in
part, all its rights and obligations hereunder and in the Project, the
Building and the Property referred to herein. Upon such a transfer,
Landlord shall be released from any further obligations hereunder, and
Tenant agrees to look solely to such successor in interest of Landlord
for the performance of such obligations.
47. Brokers.
Landlord and Tenant each represent and warrant one to the other that
except as may be hereinafter set forth, neither of them has employed
any broker in connection with the negotiations of the terms of this
Lease or the execution thereof. Landlord and Tenant hereby agree to
indemnify and to hold each other harmless against any loss, expense or
liability with respect to any claims for commissions or brokerage fees
arising from or out of any breach of the foregoing representation and
warranty. Landlord recognizes Hogan # Burt and Cushman & Wakefield as
the sole brokers with whom Landlord has dealt in this transaction.
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<PAGE> 35
48. Joint and Several Liability.
In the event that two (2) or more persons (i.e., natural persons,
corporations, partnerships, associations and other legal entities)
shall sign this Lease as Tenant, the liability of each such party to
pay Rent due hereunder and perform all the other covenants of this
Lease shall be joint and several. In the event Tenant is a general
partnership or a limited partnership with two or more partners, the
liability of each partner under this Lease shall be joint and several.
49. Effect of Delivery of This Lease.
Landlord has delivered a copy of this Lease to Tenant for Tenant's
review only, and the delivery hereof does not constitute an offer to
Tenant or option to lease. This Lease shall not be effective until a
copy executed by both Landlord and Tenant is delivered to and accepted
by Landlord.
50. Captions.
The Section captions used herein are for convenience and reference
only and in no way add to or detract from the interpretation of the
provisions of this Lease.
51. Binding Effect.
This Lease shall be binding upon and inure to the benefit of Landlord,
its successors and assigns, and Tenant, its successors and, to the
extent assignment is permitted under the provisions hereof, Tenant's
assigns.
52. Statutory Notice Requirement.
Tenant hereby acknowledges receipt of the following notice as required
by Chapter 88-285, Laws of Florida:
RADON GAS: Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
-31-
<PAGE> 36
53. Waiver of Trial by Jury.
It is mutually agreed by and between Landlord and Tenant that the
respective parties hereto shall and they do hereby waive trial by jury
in any action, proceeding or counterclaim brought by either of the
parties hereto against the other on any matter arising out of or in
any way connected with this Lease, the relationship of Landlord and
Tenant and Tenant's use or occupancy of the Premises. Tenant further
agrees that it shall not interpose any counterclaim or counterclaims
in a summary proceeding or in any action based upon nonpayment of Rent
or any other payment required of Tenant hereunder.
54. Authority.
If Tenant is a corporation, partnership or other business entity, the
person executing this Lease on behalf of Tenant represents and
warrants that Tenant is duly organized and validly existing; that this
Lease has been authorized by all necessary parties, is validly
executed by an authorized officer, partner or agent of Tenant and is
binding upon and enforceable against Tenant in accordance with its
terms. The undersigned agent of Landlord represents and warrants that
it is authorized and empowered to enter into this Lease on behalf of
the Landlord.
55. Third Party Beneficiary.
Except as expressly provided elsewhere in this Lease, nothing
contained in this Lease shall be construed so as to confer upon any
other party the rights of a third party beneficiary.
56. Survival.
All obligations of Tenant accruing prior to the expiration of the
Lease Term or earlier termination of this Lease shall survive the
expiration of this Lease or the earlier termination thereof.
57. Prior Agreements and Amendments.
All prior agreements, understandings, representations and/or promises
made or entered into by the parties hereto are superseded by and
replaced with this Lease, so that this Lease is the sole agreement
between the parties. The provisions of this Lease may not be modified
or amended, except by an instrument in writing and signed by both
parties hereto.
58. Parking. Tenant shall have the non-exclusive right to the use of 70
parking spaces in the Project. Landlord shall have the right from
time to time to designate areas within the Project for Tenant's
parking as Landlord determines in its sole discretion including
without
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<PAGE> 37
limitation, the truck court area located directly behind the Premises.
Landlord shall have no liability whatsoever for any property damage or
personal injury which might occur as a result of or in connection with
the use of the parking areas by Tenant, its employees, agents, invitees
and licensees, and Tenant hereby agrees to indemnify and hold Landlord
harmless from and against any and all costs, claims, expenses, or
causes of action which Landlord may incur in connection with or arising
out of Tenant's use of the parking areas.
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<PAGE> 38
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
multiple original counterparts as of the day and year first above written.
<TABLE>
<S> <C>
LANDLORD
Witnesses as to Landlord: PINELLAS BUSINESS CENTER, INC., a Delaware corporation
By:
- ------------------------------------------- -------------------------------------------------------------------
Name:
-----------------------------------------------------------------
Title:
- ------------------------------------------- ----------------------------------------------------------------
Print Name
- -------------------------------------------
- -------------------------------------------
Print Name
Witnesses as to Tenant: TENANT
DIGITAL LIGHTWAVE, INC., a Florida corporation
By:
- ------------------------------------------- -------------------------------------------------------------------
Name:
-----------------------------------------------------------------
Title:
- ------------------------------------------- ----------------------------------------------------------------
Print Name
- -------------------------------------------
- -------------------------------------------
Print Name
</TABLE>
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<PAGE> 39
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
<PAGE> 40
EXHIBIT "B"
LEGAL DESCRIPTION OF PROJECT
Lot 1, Block 1, ROOSEVELT CENTRE REPLAT FOURTH ADDITION, as recorded in Plat
Book 89, Pages 12 and 13.
Lots 1 and 2, Block 1, ROOSEVELT CENTRE REPLAT, FIFTH ADDITION, as recorded in
Plat Book 89, Pages 49 through 51, all of the Public Records of Pinellas
County, Florida.
<PAGE> 41
EXHIBIT "C"
FLOOR PLAN
<PAGE> 42
EXHIBIT "D"
ADDITIONAL RENT
I. PAYMENT OF TENANT'S SHARE OF INCREASED OPERATING EXPENSES
1. Operating Expenses shall mean all expenses and costs of every
kind and nature which Landlord shall pay or become obligated to pay because of
or in connection with owning, operating, managing, repairing, and insuring of
the Property and all appurtenances thereto, as determined in accordance with
generally accepted accounting principles consistently applied. Operating
Expenses shall include, but not be limited to, the following:
(a) cost of all supplies and materials used, and labor
charges incurred, in the operation, maintenance and repair of
the Project;
(b) cost of all equipment purchased or rented which is
utilized in the performance of Landlord's obligations
hereunder, and the cost of maintenance and operation of any
such equipment;
(c) cost of all maintenance and service agreements
entered into by the Landlord in connection with the
performance of its obligations hereunder;
(d) accounting costs (including the cost of audits by
certified public accountants), outside legal and engineering
fees and expenses incurred in connection with the operation
and management of the Project;
(e) wages, salaries, payroll costs, payroll taxes and
related expenses of all on-site and off-site agents or
employees engaged in the operation, maintenance, security and
management of the Project; provided, however, the wages,
salaries and related expenses of any agents or employees not
exclusively engaged in the operation, maintenance, security
and management of the Project shall be apportioned as deemed
appropriate by Landlord;
(f) cost of all insurance coverage for the Project
from time to time maintained by Landlord, including but not
limited to the costs of premiums for insurance with respect to
personal injury, bodily injury, including death, property
damage, business interruption, workmen's compensation
insurance covering personnel and such other insurance as
Landlord shall deem necessary, which insurance Landlord may
maintain under policies covering other properties owned by
Landlord in which event the premium shall be reasonably
allocable;
(g) cost of repairs, replacements and general
maintenance to the Building and
<PAGE> 43
the Common Areas made by the Landlord;
(h) any and all Common Area maintenance, repair or
redecoration (including repainting) and exterior and interior
landscaping;
(i) cost of removal of trash, rubbish, garbage and
other refuse from the Project, to the extent that said cost is
not directly billed to tenants by Landlord or the service
provider;
(j) all charges for electricity, gas, water, sewerage
service, heating, ventilation and air-conditioning and other
utilities furnished to the Project (including legal,
architectural and engineering fees incurred in connection
therewith) which are not separately metered and billed
directly to tenants of the Project;
(k) amortization of capital improvements (over useful
life) made to the Building or the Common Areas, which
improvements were undertaken by Landlord with the reasonable
expectation that the same would result in more efficient
operation of the Project;
(l) costs of all repairs, alterations, additions,
changes, replacements and other items required by any law or
governmental regulation imposed after the date of completion
of the Building or Common Areas, regardless of whether such
costs, when incurred, are classified as capital expenditures,
provided that the cost of capital expenditures shall be
amortized over the useful life of the capital items;
(m) a management fee for the operation and management
of the Building and Common Areas;
(n) costs and expenses incurred in order to comply
with covenants and conditions contained in liens, encumbrances
and other matters of public record affecting the Project; and
(o) all real estate and personal property taxes,
assessments (special or otherwise), levies, ad valorem
charges, benefit charges, water and sewer rents, rates and
charges, privilege permits and any other governmental liens,
impositions or charges of a similar or dissimilar nature, and
any payments in lieu of such charges, regardless of whether
any such items shall be extraordinary or ordinary, general or
special, foreseen or unforeseen, levied, assessed, or imposed
on or with respect to all or any part of the Property or upon
the rent due and payable hereunder by any governmental
authority (all of the aforesaid being hereinafter referred to
as "Taxes"); provided, however, that if at any time during the
Lease Term or any extension thereof the method of taxation
prevailing at the commencement of the
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<PAGE> 44
Lease Term shall be altered or eliminated so as to cause the
whole or any part of the above items which would otherwise be
included in Taxes to be replaced by a levy, assessment or
imposition, which is (A) a tax assessment, levy, imposition or
charge based on the rents received from the Property whether
or not wholly or partially a capital levy or otherwise, or (B)
a tax, assessment, levy, imposition or charge measured by or
based in whole or in part upon all or any portion of the
Property and imposed on Landlord, or (C) a license fee
measured by the Rent payable by Tenant to Landlord, or (D) any
other tax, levy, imposition, charge or license fee, however
described or imposed, then such levy, assessment or imposition
shall be included in Taxes; provided, however, in no event
shall Tenant be required to pay any inheritance, estate,
succession, income, profits or franchise taxes unless they are
in lieu of or in substitution for any of the above items which
would otherwise be included in Taxes. (It is agreed that
Tenant shall be responsible for ad valorem taxes on its
personal property and on the value of its leasehold
improvements).
Notwithstanding the foregoing, Operating Expenses shall not
include:
(a) Leasing commissions.
(b) Interest or amortization of mortgages secured by
the Building, Property and/or the Project and ground rents on
any ground leases encumbering the Project.
(c) Any expense fully reimbursed to Landlord by Tenant
or any other tenant of the Building, the Property or the
Project (other than as a result of a tenant's payment of its
proportionate share of Increased Operating Expenses), or any
expense billed to and paid directly by same for their own
account or on Landlord's behalf.
(d) Expenses for repairs or replacements to the
Building, Property and the Project to the extent that such
repairs or replacements are reimbursed by insurance proceeds.
(e) Legal expenses incurred in connection with leasing
the Building, Property or the Project or enforcement of
Building leases.
2. To the extent that Operating Expenses are incurred by Landlord
with respect to the ownership, operation, management, insurance, maintenance,
repair and replacement of the Building and other buildings within the Project
and such Operating Expenses of the Property are not subject to separate
assessment or billing on a building by building basis, such Operating Expenses
shall be allocated equitably amongst the Tenant and the other tenants of the
Project.
3. "Operating Year" means each respective calendar year or part
thereof during the
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<PAGE> 45
Lease Term or any renewal thereof.
4. "Base Year" shall mean 1997.
5. "Base Year Operating Expenses" shall mean the Operating
Expenses for the Base Year.
6. "Increased Operating Expenses" shall mean the excess, if any,
of Operating Expenses for an Operating Year over the Operating Expenses for the
Base Year. Notwithstanding the fact that Operating Expenses for an Operating
Year may be lower than the Operating Expenses for the Base Year, in no event
shall the Base Rental due under the Lease be reduced. In addition, in no event
shall the reductions in Operating Expenses be accumulated as a credit against
the Tenant's obligation for payment of Tenant's Share of Increased Operating
Expenses (as hereinafter defined) for subsequent Operating Years.
7. "Tenant's Share of Increased Operating Expenses" shall mean
the product obtained by multiplying the Increased Operating Expenses by a
fraction, the numerator of which shall be the Rentable Area of the Premises and
the denominator of which shall be the Rentable Area of the Building.
II. For each Operating Year, Tenant shall pay to Landlord, in the manner
provided herein, Tenant's Share of Increased Operating Expenses; provided,
however, that for the Operating Years during which the Lease Term begins and
ends, Tenant's Share of Increased Operating Expenses shall be prorated based
upon the actual number of days of the Lease Term falling within such Operating
Year.
III. Tenant's Share of Increased Operating Expenses shall be paid in
advance on the first day of each month during the Lease Term without notice,
demand, abatement, deduction or set-off, said monthly amounts to be determined
on the basis of estimates prepared by Landlord on an annual basis and delivered
to Tenant prior to the commencement of each Operating Year. If, however,
Landlord fails to furnish any such estimate prior to the commencement of an
Operating Year, then (a) until the first day of the month following the month
in which such estimate is furnished to Tenant, Tenant shall pay to Landlord on
the first day of each month an amount equal to the monthly sum payable by
Tenant to Landlord an account of Increased Operating Expenses in respect of the
last month of the preceding Operating Year; (b) promptly after such estimate is
furnished to Tenant, Landlord shall give notice to Tenant whether the
installments of Tenant's Share of Increased Operating Expenses paid by Tenant
for the current Operating Year have resulted in a deficiency or overpayment
compared to payments which would have been paid under such estimate, and
Tenant, within ten (10) days after receipt of such estimate, shall pay any
deficiency to Landlord and any overpayment shall be credited against future
payments required by Tenant under such estimate; and (c) on the first day of
the month following the month in which such estimate is furnished to Tenant and
monthly thereafter throughout the remainder of the Operating Year, Tenant shall
pay to
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<PAGE> 46
Landlord the monthly payment shown on such estimate. Landlord may at any time
or from time to time furnish to Tenant a revised estimate of Tenant's Share of
Increased Operating Expenses for such Operating Year, and in such case,
Tenant's monthly payments shall be adjusted and paid or credited, as the case
may be, substantially in the same manner as provided in the preceding sentence.
IV. After the end of each Operating Year, Landlord shall determine actual
Operating Expenses for such Operating Year and shall provide to Tenant an
"Operating Expenses Statement" setting forth the actual Tenant's Share of
Increased Operating Expenses for such Operating Year. Within thirty (30) days
after delivery of the Operating Expenses Statement, Tenant shall pay Landlord
any deficiency between the amount shown as Tenant's Share of Increased
Operating Expenses in the Operating Expenses Statement and the total of the
estimated payments made by Tenant during the Operating Year. In the event of
overpayment, such amount shall be credited against future payments required on
account of Tenant's Share of Increased Operating Expenses, or if the Lease Term
has expired, Landlord shall refund to Tenant the amount of any overpayment.
V. The Security Deposit shall be held by Landlord as security for the
performance by Tenant of its obligation to promptly pay Tenant's Share of
Increased Operating Expenses for the final Operating Year as provided above.
In the event Tenant fails to make such payment within thirty (30) days of
delivery of the invoice for Tenant's Share of Increased Operating Expenses for
such Operating Year, the amount of the invoice shall be deducted from the
Security Deposit; however, Tenant shall remain liable for any deficiency.
VI. Each Operating Expenses Statement provided by Landlord shall be
conclusive and binding upon Tenant unless within sixty (60) days after receipt
thereof, Tenant notifies Landlord that it disputes the correctness thereof,
specifying those respects in which it claims the Operating Expenses Statement
to be incorrect. Unless resolved by the parties, such dispute shall be
determined by arbitration in accordance with the then prevailing rules of the
American Arbitration Association. If the arbitration proceedings result in a
determination that the Operating Expenses Statement contained an aggregate
discrepancy of less than five percent (5%), Tenant shall bear all fees and
costs in connection with such arbitration; and if such aggregate discrepancy is
five percent (5%) or more, Landlord shall bear all fees and costs in connection
with such arbitration. Pending determination of the dispute, Tenant shall pay
any amounts due from Tenant in accordance with the Operating Expenses
Statement, but such payment shall be without prejudice to Tenant's claims.
Tenant, for a period of sixty (60) days after delivery of the Operating
Expenses Statement in each Operating Year and upon at least ten (10) days
written notice to Landlord, shall have reasonable access during Normal Business
Hours to the books and records of Landlord relating to Operating Expenses for
the purpose of verifying the Operating Expenses Statement, Tenant to bear all
costs relating to such inspection. Tenant shall reimburse Landlord for any
cost for photocopying that it desires.
-5-
<PAGE> 47
EXHIBIT "E"
WORK LETTER
This Rider shall be subject to all of the same terms, definitions and
conditions of the foregoing Lease. Landlord and Tenant agree as follows:
1. Tenant Improvements
1.1 Definition. "Tenant Improvements" shall mean all required
Base Building Work and all tenant improvements in the Premises necessary to
prepare the Premises for occupancy by the Tenant. Base Building Work includes
work relating to and modifications of the HVAC system, lighting, ceiling grid
and tile, life safety systems (including the addition and/or relocation of
demising walls, sprinkler heads, exit lights, emergency lighting, fire horns
and the like), finishes and all other work in the Building for Tenant's use and
occupancy thereof, but only to the extent reflected on the Final Plans (as
described hereinbelow). All labor, material and other costs shall be charged
to the cost of the Tenant Improvements. Certain items of work such as ceiling
grid and tile, blinds, light fixtures and mechanical work that are hereafter
supplied and/or installed by the Landlord shall be for the benefit of the
Tenant. These items will be charged to the cost of the Tenant Improvements on
a unit cost basis.
1.2 Plans and Specifications. An architect licensed by the State
of Florida approved by Landlord (the "Architect") shall prepare the
architectural, mechanical and electrical plans and specifications for the
layout and improvements of the Premises ("Plans"). Landlord hereby approves
ASD, Inc. as the Architect hereunder. The Plans shall be in such form and
detail as required by the Landlord in order to determine (a) if the materials
requested by the Tenant meet the quality standards prescribed by the Landlord
for Building Standard materials; and (b) the effect of improvements on the
structural components and service systems and facilities of the Building. The
Plans will include:
(a) Space Plan. The "Space Plan" shall be schematic
space plan for the Premises, including a description of the size and location
of all partitions, doors as well as equipment that could affect structural
components and service systems and facilities of the Building. A preliminary
Space Plan for the Premises and finish schedule if available is attached
hereto.
(b) Final Plans. The "Final Plans" shall consist of
all plans and specifications necessary to construct the Tenant Improvements,
including mechanical and electrical working drawings. The Final Plans will be
certified by the Architect and will be in a form in which building and
occupancy permits can be obtained.
1.3 Permits. The Final Plans will be approved by Landlord and
Tenant and submitted to
<PAGE> 48
applicable governmental authority (the "Authority") for the plan check and
permit. The improvements shown on the Final Plans together with any changes
required by the Authority shall constitute the "Tenant Improvements." Tenant
shall approve the Final Plans or provide specific changes to same within three
(3) business days of receipt of same from Landlord. Any changes shall be
subject to Landlord's approval. If changes are made, Tenant shall respond to
same within two (2) business days of receipt of same. Any changes required by
the Authority will be incorporated into the Final Plans and any costs related
thereto will be charged to the cost of the Tenant Improvements.
2. Construction.
2.1 Landlord's Contractor. Landlord will enter into a contract
with a contractor or contractors to perform the work for the Tenant
Improvements. Landlord will submit final drawings to three (3) qualified
licensed and bonded interior contractors approved by Landlord and Tenant,
requesting a competitive bid from each. Should Landlord and Tenant fail to
agree on the selection of a contractor, then Landlord shall have the right to
appoint the contractor of its choice, provided the bid price is adjusted to
reflect the low bidder's cost, qualified to meet the specifications as set
forth in the Final Plans. The cost of the Tenant Improvements shall include
all construction supervision fees due Landlord's construction supervision agent
(the "Agent"). All requests for extras or changes to the work in addition to
instructions regarding the work to be performed by the contractor shall be
furnished to Landlord and be subject to Landlord's approval.
2.2 Performance. All work shall be performed in accordance with
the Final Plans and in conjunction with Base Building as-built conditions.
2.3 Landlord's Services. Landlord shall provide at Landlord's
expense to contractor all necessary utilities, elevators or hoisting, general
security and access during Normal Business Working Hours.
2.4 Deliveries. The scheduling of deliveries of materials will be
coordinated with the Landlord. In the event that Landlord reasonably
determines that a delivery during Normal Business Hours would disrupt the
normal operation of the Building, Landlord may require that such delivery be
made at a time after Normal Business Hours.
2.5 Inspection by Landlord. Landlord shall have the right to
inspect the Tenant Improvements at any time, and may reject work that does not
(a) strictly conform with code or with the Final Plans as to any matter that
might affect the exterior appearance of the Premises or the structural
components or service systems and facilities of the Building, or (b)
substantially conform with the Final Plans in all other aspects.
2.6 Long Lead Time Items. Should any material (such as wall
covering, carpet, special equipment, special fixtures, or the like) specified
by Tenant have an unusually long delivery date or
-2-
<PAGE> 49
cannot be located within a reasonable time in order for Landlord to complete
the Tenant Improvements on a timely basis or Landlord reasonably finds that any
of the specified materials would delay completion of the Tenant Improvements,
Landlord will provide Tenant with written notification of that fact. Tenant
shall have seven (7) calendar days to change the specifications to materials
which are readily available. If Tenant fails to change the specifications by
written notice delivered to Landlord within seven (7) calendar days, then the
Premises will be deemed to be substantially complete without those items (and
other items delayed as a result of such long lead time items) not having been
installed.
2.7 Materials supplied by Tenant. Any material or items that
Tenant may be supplying to Landlord for Landlord's installation in the Premises
must be delivered on site when reasonably directed by Landlord or its
contractor or the Premises will be deemed substantially complete without
installation of those items or other items delayed as a result of late delivery
by Tenant.
2.8 Substantial Completion. The "Substantial Completion of the
Tenant Improvements" shall be defined as the date of the substantial completion
of the Tenant Improvements in substantial compliance with the Final Plans and
availability of the Premises for its intended use, subject only to punch list
items not affecting the function of the Premises. The Substantial Completion
Date shall be determined by Landlord's Architect and such determination shall
be binding upon Landlord and Tenant, provided that the issuance of a
certificate of occupancy or completion for the Premises shall constitute
conclusive evidence of the Substantial Completion of the Tenant Improvements.
2.8.1 Change Orders. If Tenant requests any changes in the
specification for the Building Standard Improvements or in the approved Final
Plans for Tenant Improvements, Tenant shall present Landlord with revised plans
and specifications. If Landlord approves such changes, Landlord shall
incorporate such changes in the Tenant Improvements. In the event any change
increases the anticipated Tenant Costs (as hereinafter defined), prior to
proceeding with any changes Landlord may require that Tenant pay to Landlord in
cash the amount of the anticipated increase in the Tenant's Costs.
2.8.2 The Tenant may request the Landlord to substitute
alternate materials for the specified Building Standard materials, provided
such substitutes are new and are of quality at least comparable to those
replaced as approved by the Landlord. In the event that Tenant chooses not to
use or to substitute for the Building Standard Materials, the cost of the
Tenant Improvement will include the value of the materials purchased by
Landlord for the Tenant Improvements. The purchase of all Building Standard
Materials, whether installed by the Landlord or not, shall be coordinated
through the Landlord.
2.8.3 If Tenant requests changes in the Building Standard
Improvements or in the Final Plans and if such changes delay the work to be
performed hereunder, or if Tenant shall otherwise delay the completion of the
work, the same shall constitute Tenant Delay.
-3-
<PAGE> 50
3. Payment for Tenant Improvements.
3.1 Tenant Costs. All costs and expenses incurred for the
construction of the Tenant Improvements less credit to the Tenant from the
Landlord for the Allowance (as hereinafter defined) given by Landlord to Tenant
(the "Tenant Costs") shall be paid by Tenant.
3.2 Payment of Tenant Costs. Tenant Costs shall be payable as
follows:
(a) Tenant shall pay to Landlord prior to the
commencement of construction of the Tenant
Improvements, an amount equal to fifty percent
(50%) of the Tenant's Costs (as then estimated by
Landlord).
(b) Upon Substantial Completion, Tenant shall pay to
Landlord the unpaid balance (as such amount can
then be reasonably estimated based on available
data) of Tenant's Costs, plus any approved
modifications thereto. Any balance remaining
after final determination of the Tenant Costs
shall be paid by Tenant to Landlord upon demand.
3.3 Payment as Additional Rent. The amounts payable hereunder
shall constitute Additional Rent due under the Lease and shall be due at the
time specified herein. Tenant's failure to make any such payments when due
shall constitute a default under the Lease, entitling Landlord to all of its
remedies thereunder.
3.4 Allowance. The Tenant shall receive an allowance from
Landlord (the "Allowance") equal to the lesser of (i) $63,700 and (ii) the
actual cost of the Tenant Improvements shown on the approved Final Plans. In
no event shall Landlord be obligated to expend more than the Allowance or make
any payment to Tenant of any unused portion of the Allowance.
4. Delay
4.1 Force Majeure. Landlord's obligation to complete the Tenant
Improvements within the time provided in the Lease shall be subject to
extension due to Force Majeure (as defined in the Lease). The Commencement
Date shall be postponed by the number of days that completion of the Tenant
Improvements was actually delayed by event of Force Majeure.
4.2 Other Delays. Except for delays caused by the acts or
omissions of Landlord or by events of Force Majeure, no delays in completion of
the Tenant Improvements for any reason whatsoever shall postpone the
Commencement Date. Specifically without limiting the generality of the
foregoing, the Commencement Date shall not be postponed on account of any
delays caused by Tenant's requirements for the Tenant Improvements, including
delays caused by shortages, unavailability of long lead procurement items of
unusual or non-Building Standard Materials, or on
-4-
<PAGE> 51
account of any other delay caused by Tenant.
5. Warranties
To the extent that any warranties with respect to the Tenant
Improvements, which inure to the benefit of Landlord, are assignable to Tenant,
Landlord hereby assigns said warranties to Tenant, provided, however that
Landlord shall not be obligated to incur any costs or take any actions with
respect to the enforcement of said warranties. Notwithstanding anything
contained herein to the contrary, Landlord makes no representations or
warranties with respect to the assignability or enforceability of the
aforementioned warranties.
6. Conflicts
In the event of a conflict between the terms and conditions of the
Rider and the Lease, the provisions of this Rider shall control.
-5-
<PAGE> 52
EXHIBIT "F"
RULES AND REGULATIONS
1. Tenant shall not obstruct or encumber the Common Areas, and the
sidewalks, driveways, and other public portions of the Project (herein
"Public Areas") and such Public Areas shall not be used for any
purpose other than ingress and egress to and from its Premises. Tenant
shall not permit any of its employees, agents, licensees or invitees
to congregate or loiter in any of the Public Areas. Tenant shall not
invite to, or permit to visit, its Premises persons in such numbers or
under such conditions as may interfere with the use and enjoyment by
others of the Public Areas. Fire exits and stairways are for emergency
use only, and they shall not be used for any other purpose. Landlord
reserves the right to control, operate, restrict and regulate the use
of the Common Areas, public facilities, and any facilities furnished
for the common use of the tenants in such manner as it deems best for
the benefit of the tenants.
2. No awnings or other projections shall be attached to the outside walls
of the Building. No curtains, blinds, shades or screens shall be
attached to, hung in, or used in connection with any window or door of
its Premises, without the consent of Landlord. Such window or door
coverings must be of a quality, type, design and color approved by
Landlord and further they must be installed in a manner approved by
Landlord. In order that the Building can and will maintain a uniform
appearance to those persons outside of the Building, each tenant
occupying the perimeter areas of the Building shall (a) use only
Building standard lighting in areas where lighting is visible from the
outside of the Building and (b) use only building standard blinds in
window areas which are visible from the outside of the Building.
3. Except as otherwise provided in the Lease, no sign, insignia,
advertisement, lettering, notice or other object shall be exhibited,
inscribed, painted or affixed by Tenant on any part of the exterior or
interior of the Premises, the Building or the remainder of the Project
(including the doors for such areas) without the prior approval of
Landlord. Landlord shall review the size, color, style, content and
location of any proposed signage. Landlord shall have the right to
prohibit any advertising or identifying sign by Tenant which, in the
sole judgment of Landlord, impairs the appearance, reputation, or the
desirability of the Building. Upon Landlord's approval, Tenant shall
obtain all necessary approvals and permits from governmental or
quasi-governmental authorities in connection with such signs.
Further, approved signs shall be inscribed, painted or affixed by
signmakers approved by landlord at Tenant's sole cost. In the event
of a violation of the foregoing by Tenant, upon written notice from
Landlord, Tenant shall refrain from and discontinue such advertising
or identifying sign. In the event that Tenant does not promptly
correct said violation, Landlord may remove such signs without an
liability, and may charge the expense incurred in such removal to the
Tenant violating this Rule and Tenant hereby agrees to pay any such
expense as Additional Rent.
<PAGE> 53
4. No bicycles, vehicles, animals (except seeing eye dogs), fish or birds
of any kind shall be brought into or kept in or about the Premises
within the Building.
5. Nothing shall be done or permitted by Tenant which would impair or
interfere with the use or enjoyment by any other occupant of the
Building, including the playing of music.
6. Nothing shall be done or permitted in the Premises and nothing shall
be brought into, installed or kept in or about the Premises, which
would impair or interfere with any of the HVAC, plumbing, electrical,
structural components of the Project, Building or the services of the
Project, Building or the Premises. Neither Tenant nor its employees,
agents, licensees or invitees shall at any time bring or keep upon the
Premises any flammable, combustible or explosive fluid, chemical or
substance.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant, nor shall any changes be made in locks
or the mechanism thereof. Duplicate keys for the Premises shall be
procured only from Landlord and Landlord may make a reasonable charge
therefor. Tenant shall, upon the termination of the Lease, turn over
to Landlord all keys to the Premises. In the event of the loss of any
keys furnished by Landlord, Tenant shall pay to Landlord the cost of
replacement locks and Tenant hereby agrees to pay said cost as
Additional Rent.
8. Any delivery or moving of any safes, freight, furniture, packages,
boxes, crates or any other such object shall take place at such time
and in such manner so as not to interfere with other occupants of the
Building. Tenant hereby agrees to reimburse Landlord for extra costs
incurred by Landlord including, but not limited to, Landlord's right
to inspect all objects to be brought into the Building and to exclude
from the Building any objects which may in Landlord's sole discretion
violate the Lease and/or any of these Rules and Regulations. Tenant
hereby agrees to pay any such costs as Additional Rent.
No hand trucks shall be used for such moving activities except for
those equipped with rubber tires, side guards and such other
safeguards as Landlord shall require.
9. If Tenant shall request Landlord to perform any work on the Premises
or Property, Tenant shall make such request at the management office
for the Project. Tenant shall not request employees of Landlord to
perform any work or do anything outside of their regular duties,
unless under special instructions from Landlord.
10. Canvassing, soliciting and peddling in the Project are prohibited and
Tenant shall cooperate to prevent the same.
11. Tenant shall not cause or permit any odors of cooking or other
processes, or any unusual or
-2-
<PAGE> 54
objectionable odors, to emanate from its premises which would annoy
other tenants or create a public or private nuisance. No cooking
shall be done in Tenant's Premises, except for a household microwave
oven or as is expressly permitted in the Lease, or otherwise consented
to in writing by the Landlord.
12. All paneling, doors, trim or other wood products not considered
furniture shall be treated with fire-retardant materials. Before
installation of any such materials, certification of the materials'
fire-retardant characteristics shall be submitted to and approved by
Landlord, and all such materials shall be installed in a manner
approved by Landlord.
13. Whenever Tenant submits any plan, agreement or other document for the
consent or approval of Landlord, Landlord may charge, on demand, a
reasonable processing fee for the review thereof, which shall include
the cost of any services of an architect, engineer or attorney
employed by Landlord to review such plan, agreement or document.
Tenant hereby agrees to pay any such processing fee as Additional
Rent.
14. When electric wiring of any kind is introduced, it must be connected
as directed by Landlord, Landlord may charge, on demand, a reasonable
processing fee for the review thereof, which shall include the cost of
any services of an architect, engineer or attorney employed by
Landlord to review such plan, agreement or document. Tenant hereby
agrees to pay any such processing fee as Additional Rent.
15. Landlord hereby reserves to itself any and all rights not granted to
Tenant hereunder, including, but not limited to, the following rights
which are reserved to Landlord for its purposes in operating the
Building:
(a) the exclusive right to use of the name of the Project and
Building for all purposes, except that Tenant may use the name as its
business address and for no other purpose;
(b) the right to change the name or address of the Project and
Building, without incurring any liability to Tenant for so doing;
(c) the right to install and maintain a sign or signs on the
exterior of the Building or on the Project;
(d) the exclusive right to use or dispose of the use of the roof
of the Building;
(e) the right to limit the space on the directory of the Building
to be allotted to Tenant; and
(f) the right to grant anyone the right to conduct any particular
business or undertaking in the Project or Building.
-3-
<PAGE> 55
16. Tenant and its employees shall park their cars only in those portions
of the parking area designated by Landlord.
17. Tenant shall not permit undue accumulations of garbage, trash, rubbish
or any other refuse, and will keep such refuse in proper containers in
the interior of the Tenant's Premises or other places designated by
the Landlord.
18. Tenant shall not conduct or permit any bankruptcy sales, unless
directed by order of a court of competent, jurisdiction, or any fire
or going out of business sale, whether real or fictitious.
19. Landlord reserves the right to rescind, alter, waive or add any rule
or regulations any time prescribed for the Building when Landlord
deems it necessary or desirable for the reputation, safety, character,
security, care, appearance or interests of the Project, the Building,
the preservation of good order therein, the operation or maintenance
of the Project, the Building or the equipment thereof, or the comfort
of tenants or others in the Project. No rescission, alteration,
waiver or addition or any rule or regulation with respect to one
tenant shall operate as a rescission, alteration or waiver in respect
of any other tenant.
-4-
<PAGE> 56
EXHIBIT "G"
OPTION TO RENEW
A. Landlord hereby grants Tenant the option to renew ("Renewal
Option") the term of this Lease for one (1) additional term(s) of thirty-six
(36) months each (the "Renewal Terms"), commencing as of the date immediately
following the expiration of the Lease Term, such option to be subject to the
covenants and conditions hereinafter set forth in this Exhibit.
B. Tenant shall give Landlord written notice (the "Renewal
Notice") of Tenant's election to exercise its Renewal Option not later than one
hundred eighty (180) days prior to the expiration of the then current term of
this Lease: provided that Tenant's failure to give the Renewal Notice by said
date, whether due to Tenant's oversight or failure to cure any existing
defaults or otherwise, shall render this Renewal Option null and void.
C. Tenant shall not be permitted to exercise this Renewal Option
at any time during which Tenant is in default under this Lease, subject to
applicable notice and grace periods (if any). In the event Tenant commits an
event of Default following exercise of this Renewal Option but before
commencement of the Renewal Term and fails to cure any default under this Lease
prior to the commencement of any Renewal Term, subject to applicable notice and
grace periods, such Renewal Term may be immediately canceled by Landlord or
Landlord may elect to waive such default or Landlord may consider the Renewal
Term to have been part of the Lease Term and immediately declare the Lease in
Default and Tenant shall forthwith deliver possession of the Premises to
Landlord as of the expiration or earlier termination of the then current term
of this Lease.
D. Tenant shall be deemed to have accepted the Premises in
"as-is" condition as of the commencement of each Renewal Term, subject to any
other repair and maintenance obligations of Landlord under this Lease, it being
understood and agreed that Landlord shall have no additional obligation to
renovate or remodel the Premises or any portion of the Building as a result of
Tenant's renewal of this Lease.
E. The covenants and conditions of this Lease in force during the
original Lease Term, as the same may be modified from time to time, shall
continue to be in effect during any Renewal Term, except as follows:
1. The "Commencement Date" for the purposes of this
Lease shall be the first day of each Renewal Term.
2. The "Base Rental" for the first year of each
Renewal Term shall be the greater of: (i) the Base Rental as provided for the
original Lease Term; or (ii) the Base Rental as determined for any previous
Renewal Term; or (iii) an amount determined by Landlord on the basis
<PAGE> 57
of the then prevailing market rental rate for office space comparable to the
Premises as reflected in one or more leases executed by Landlord with new
Building tenants within the twelve month period immediately preceding
commencement of such Renewal Term. If Landlord has not executed any lease with
new Building tenants in the preceding twelve month period, the prevailing
market rental rate determination shall be based on new leased for premises
comparable to the Premises herein, as execute within said twelve month period
of owners of other office building properties located in St. Petersburg,
Florida, that are comparable to the Building.
3. The "Base Year" for each Renewal Term shall be the
calendar year during which such Renewal Term commences.
4. Following expiration of the final Renewal Term as
provided herein, Tenant shall have no further right to renew or extend this
Lease.
F. Tenant's option to renew this Lease shall not be transferable
by Tenant, except in conjunction with a permissible assignment of Tenant's
interest in this Lease in accordance with the applicable provisions hereof.
G. The number of parking spaces for Tenant's non-exclusive use
under the Lease shall not exceed four (4) parking spaces per 1,000 square feet
of rentable area.
-2-
<PAGE> 1
EXHIBIT 10.3
LEASE
MONMOUTH/ATLANTIC REALTY ASSOCIATES, L.P.
LESSOR
TO:
DIGITAL LIGHTWAVE, INC.
LESSEE
BUILDING:
1340 CAMPUS PARKWAY
WALL TOWNSHIP, NEW JERSEY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DESCRIPTION.........................................................3
2. TERM................................................................3
3. FIXED BASIC RENT....................................................3
4. USE AND OCCUPANCY...................................................3
5. CARE AND REPAIR OF PREMISES/ENVIRONMENTAL COMPLIANCE................3
6. ALTERATIONS, ADDITIONS OR IMPROVEMENTS..............................6
7. ACTIVITIES INCREASING FIRE INSURANCE RATES..........................7
8. ASSIGNMENT AND SUBLEASE.............................................7
9. COMPLIANCE WITH RULES AND REGULATIONS..............................10
10. DAMAGES TO BUILDING................................................10
11. EMINENT DOMAIN.....................................................11
12. INSOLVENCY OF LESSEE...............................................11
13. LESSOR'S REMEDIES ON DEFAULT.......................................11
14. DEFICIENCY.........................................................11
15. SUBORDINATION OF LEASE.............................................12
16. SECURITY DEPOSIT...................................................13
17. RIGHT TO CURE LESSEE'S BREACH......................................13
18. MECHANIC'S LIENS...................................................13
19. RIGHT TO INSPECT AND REPAIR........................................13
20. SERVICES TO BE PROVIDED BY LESSOR/LESSOR'S EXCULPATION.............13
21. INTERRUPTION OF SERVICES OR USE....................................15
22. ELECTRICITY/GAS....................................................15
23. ADDITIONAL RENT....................................................16
24. COMMON AREA CHARGES................................................19
25. LESSEE'S ESTOPPEL..................................................19
26. HOLDOVER TENANCY...................................................19
27. RIGHT TO SHOW PREMISES.............................................20
28. LESSOR'S WORK - LESSEE'S DRAWINGS..................................20
29. WAIVER OF TRIAL BY JURY............................................20
30. LATE CHARGE........................................................20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
31. LESSEE'S INSURANCE.................................................20
32. NO OTHER REPRESENTATIONS...........................................22
33. QUIET ENJOYMENT....................................................22
34. INDEMNITY..........................................................22
35. ARTICLE HEADINGS...................................................23
36. APPLICABILITY TO HEIRS AND ASSIGNS.................................23
37. PARKING............................................................23
38. LESSOR'S LIABILITY FOR LOSS OF PROPERTY............................23
39. PARTIAL INVALIDITY.................................................23
40. BROKER.............................................................23
41. PERSONAL LIABILITY.................................................23
42. NO OPTION..........................................................24
43. DEFINITIONS........................................................24
44. LEASE COMMENCEMENT.................................................25
45. NOTICES............................................................25
46. ACCORD AND SATISFACTION............................................25
47. EFFECT OF WAIVERS..................................................25
48. LEASE CONDITION....................................................26
49. MORTGAGEE'S NOTICE AND OPPORTUNITY TO CURE.........................26
50. LESSOR'S RESERVED RIGHT............................................26
51. CORPORATE AUTHORITY................................................26
52. LESSEE'S EXPANSION/RELOCATION......................................26
53. MISCELLANEOUS......................................................27
54. TERMINATION OPTION.................................................28
</TABLE>
-- END --
<PAGE> 4
LEASE, is made the _____ day of _________, 1997 between
MONMOUTH/ATLANTIC REALTY ASSOCIATES L.P. ("Lessor") whose address is c/o Cali
Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016 and DIGITAL
LIGHTWAVE, INC. ("Lessee") whose address is 601 Cleveland Street, 5th floor,
Clearwater, Florida 34615
PREAMBLE
BASIC LEASE PROVISIONS AND DEFINITIONS
In addition to other terms elsewhere defined in this Lease, the following terms
whenever used in this Lease shall have only the meanings set forth in this
section, unless such meanings are expressly modified, limited or expanded
elsewhere herein.
1. ADDITIONAL RENT shall mean all sums in addition to Fixed Basic Rent
payable by Lessee to Lessor pursuant to the provisions of the Lease.
2. BROKER shall mean Black & Company
3. BUILDING shall mean 1340 Campus Parkway, Building B, Monmouth Shores
Corporate Park, Wall, New Jersey.
4. BUILDING AREA shall mean Building B, C, and D totaling 72,500 square
feet.
5. COMMENCEMENT DATE is December 1, 1997 and subject to Articles 28 and
Article 44 hereof.
6. DEMISED PREMISES OR PREMISES shall be deemed to be 8,044 rentable
square feet in the Building, as shown on Exhibit A hereto.
7. EXHIBITS shall be the following, attached to this Lease and
incorporated herein and made a part hereof.
Rider A Renewal Option
Exhibit A Location of Premises
Exhibit A-1 Property
Exhibit A-2 Business Park
Exhibit B Rules and Regulations
Exhibit C Lessor's Work
Exhibit D Permitted Encumbrances
Exhibit E Tenant Estoppel Certificate
Exhibit F Commencement Date Agreement
Exhibit G Letter of Credit
8. EXPIRATION DATE shall be midnight on the day before the fifth (5th)
anniversary of the Commencement Date plus the number of days, if any,
to have the lease expire on the end of a calendar month, unless
extended or modified pursuant to any option contained herein.
9. FIXED BASIC RENT shall mean: FOUR HUNDRED EIGHT-TWO THOUSAND SIX
HUNDRED FORTY AND 00/100 DOLLARS ($482,640.00) for the Term payable as
follows:
<TABLE>
<CAPTION>
Monthly Yearly
Installments Installments
------------ ------------
<S> <C> <C>
Years 1-5: $8,044.00 $ 96,528.00
</TABLE>
10. LESSEE'S BUSINESS PARK SHARE ("Business Park" being defined in Article
43) shall mean 8.17% subject to adjustment as provided for in Article
43(f).
11. LESSEE'S PERCENTAGE shall be 11.10%, subject to adjustment as provided
for in Article 43(e).
<PAGE> 5
12. PARKING SPACES shall mean a total of twenty-eight (28) unassigned
spaces.
13. PERMITTED USE, subject to the issuance of a use and occupancy permit
from the Township of Wall, shall be general office use, as well as
those ancillary uses related to computer hardware and software
development, and for no other purpose.
14. PROPERTY shall be as shown on Exhibit A-1.
15. SECURITY DEPOSIT shall be $137,550.00 to be provided to Lessor upon
Lease execution, initially in the form of an unconditionally, clean
non-cancelable commercial Letter of Credit in the form set forth as
Exhibit G equal to $121,462.00 with the balance of $16,088.00 in cash,
the latter to be retained for the entire Term.
16. TENANT'S Standard Industrial Classification ("SIC") Number is 5065.
17. TERM shall mean sixty (60) months from the Commencement Date, plus the
number of days, if any, to have the lease expire on the end of a
calendar month, unless extended pursuant to any option contained herein
or unless terminated earlier in accordance with the terms hereof.
END OF PREAMBLE
<PAGE> 6
W I T N E S S E T H
For and in consideration of the covenants herein contained,
and upon the terms and conditions herein set forth, Lessor and Lessee agree as
follows:
1. DESCRIPTION: Lessor hereby leases to Lessee, and Lessee hereby hires
from Lessor, the Premises as defined in the Preamble as shown on the
plan or plans, initialed by the parties hereto, marked Exhibit A
attached hereto and made part of this Lease in the Building as defined
in the Preamble, (hereinafter called the "Building") which is situated
on that certain parcel of land (hereinafter called "Property") as
described on Exhibit A-1 attached hereto and made part of this Lease,
together, with the non-exclusive right to use the Common Areas with
Lessor and other lessees of the Business Park, subject however, to the
Permitted Encumbrances set forth in Exhibit D hereto.
2. TERM: The Premises are leased for a term to commence on the
Commencement Date, and to end at 12:00 midnight on the Expiration Date,
all as defined in the Preamble.
3. FIXED BASIC RENT: The Lessee shall pay to the Lessor during the Term,
the Fixed Basic Rent as defined in the Preamble (hereinafter called
"Fixed Basic Rent") payable in such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts. The Fixed Basic Rent shall
accrue at the Yearly Rate as defined in the Preamble and shall be
payable, in advance, on the first day of each calendar month during the
Term at the Monthly Installments as defined in the Preamble, except
that a proportionately lesser sum may be paid for the first month of
the Term of this Lease if the Term commences on a day other than the
first day of the month, in accordance with the provisions of this Lease
herein set forth. Lessor acknowledges receipt from Lessee of the first
monthly installment by check, subject to collection, for Fixed Basic
Rent for the first month of the Lease Term. Lessee shall pay Fixed
Basic Rent, and any Additional Rent as hereinafter provided, to Lessor
at Lessor's above stated address, or at such other place as Lessor may
designate in writing, without demand and without counterclaim,
deduction or set off.
4. USE AND OCCUPANCY: The Lessee shall use and occupy the Premises for the
use set forth in the Preamble and for no other purpose. Such Permitted
Uses are further subject that they shall be consistent with the
Certificate of Use and Occupancy to be issued by the Township of Wall.
Such Permitted Uses shall not permit or cause any odor, sound,
vibration, effluent, pollution or other condition that is, either in
Lessor's opinion, or by law, noxious or offensive. It being a
reasonable consideration of this Lease, that the use of the Premises
shall be limited, to those uses as otherwise hereinbefore specified,
and Lessee may not, use the Premises for manufacturing or for retail
sales. The Lessee shall not permit the stacking of merchandise or
materials against the walls, so as to create a load or weight factor
upon the walls, or to tie in, Lessee's racking systems with such walls,
nor shall Lessee permit the hanging of equipment from (or otherwise
loading) the roof or structural members of the Building without the
express written consent of the Lessor. The Lessee shall not use or
occupy or permit the Premises to be used or occupied, nor do or permit
anything to be done in or on the Building Area, in a manner which will
in any way violate any certificate of occupancy affecting the Premises.
Nothing herein contained shall be deemed or construed to constitute a
representation or guaranty by the Lessor that any specific business may
be conducted in the Premises or is lawful under the certificate of
occupancy.
5. CARE AND REPAIR OF PREMISES/ENVIRONMENTAL COMPLIANCE:
a. All improvements made by Lessee to the Premises, which are so
attached to the Premises, shall become the property of Lessor
upon installation. Not later than the last day of the Term,
Lessee shall, at Lessee's expense, remove all Lessee's
personal property and those improvements made by Lessee which
have not become the property of Lessor, including trade
fixtures, cabinetwork, movable paneling, partitions and the
like; repair all injury done by or in connection with the
installation or removal of said property and improvements; and
surrender the Premises in as good condition as they were at
the beginning of the Term, reasonable wear and damage by fire,
the elements, casualty or other cause not due to the misuse or
neglect by Lessee, Lessee's agents, servants, visitors or
licensees. All other property of Lessee remaining on the
Premises after the last day of the Term of this Lease shall be
conclusively
<PAGE> 7
deemed abandoned and may be removed by Lessor, and Lessee
shall reimburse Lessor for the cost of such removal. Lessor
may have any such property stored at Lessee's risk and
expense.
b. Lessee shall keep, replace and maintain in good order,
condition and repair the Premises and each and every part
thereof (except for repairs specifically required of Lessor
pursuant to subparagraph a. of this Article 5) including,
without limitation, any air conditioning units and systems,
heating units and systems, plumbing units and systems;
sprinkler systems; electrical systems; equipment; facilities
and fixtures. The aforesaid obligation of Lessee shall also
include without limitation, all necessary painting and
decorating and the replacement of any glass which may be
damaged or broken. Notwithstanding the foregoing, all damage
or injury to the Premises or to any other part of the Building
and the Property, or to its fixtures or appurtenances, whether
requiring structural or non-structural repairs, caused by the
negligence, willful or intentional misconduct of Lessee, or
its employees, invitees, licensees or agents, shall be
repaired promptly by Lessee at its sole cost and expense. If
Lessee refuses or neglects to make such repairs within fifteen
(15) days, or fails to diligently commence curing said damage
or injury within thirty (30) days, after written notice from
Lessor to Lessee of the need therefor, Lessor may make such
repair at the expense of Lessee and such expense shall be
collectible as Additional Rent. Lessee shall obtain a
maintenance contract for the HVAC systems servicing the
Premises. Such contract shall provide for semi-annual
maintenance of the HVAC systems, and copies of the maintenance
agreement shall be submitted to Lessor, together with an
annual report of the maintenance company as to the condition
and repairs made to the systems. The firm or person
maintaining the HVAC systems shall be a person who is
certified and licensed to service refrigerating equipment as
such certification or licenses may be required by law or any
governmental agency.
c. Subject to force majeure and the acts, omissions or negligence
of Lessor, Lessee shall, at all times, maintain a minimum
temperature of 40 degrees Fahrenheit throughout the Demised
Premises. Lessee shall save harmless and indemnify Lessor for
any and all damages incurred by Lessor as the result of
Lessees's failure to comply with this requirement.
d. Lessor represents that, as of the Commencement Date of the
Lease, the HVAC system and other Building Systems (as defined
in Article 6 hereof) shall be in good working order.
e. Lessor shall deliver the Premises in compliance with the
Americans with Disabilities Act of 1990 and such other rules
and regulations as are in effect promulgated thereunder (the
"ADA") as of the Commencement Date. Prior to the Commencement
Date, if Lessee is then in possession of the Premises, and at
all times during the Term, Lessee, at Lessee's sole cost and
expense, shall promptly comply with all present and future
Legal Requirements and all other orders, rules and regulations
of any Government Entity which shall impose any violation,
order or duty upon Lessor or Lessee with respect to the
Premises or with respect to the use or manner of use of the
Premises, whether or not any such Legal Requirement shall
necessitate alterations or improvements or interfere with the
use or enjoyment of the Premises; provided, however, that
Lessee shall not be required to make structural alterations or
improvements to the Premises in order to comply with Legal
Requirements, all of which shall be the responsibility of
Lessor, unless the necessity therefor arises as a result of
Lessee's specific manner of use of the Premises (as
distinguished from the mere use of the Premises for general
office purposes), or as a result of Lessee's failure to comply
with any obligation of Lessee under this Lease. Lessee shall
also procure, pay for and maintain all permits, approvals,
licenses and other authorizations needed for the conduct of
Lessee's business in the Premises and shall provide true and
complete copies thereof upon demand by Lessor. Lessee shall
make or cause to be made all Alterations subsequent to Lease
Commencement (including, without limiting the generality of
the requirement in this sentence, removing such barriers and
providing such alternative services), as shall be required by
the Americans with Disabilities Act of 1990 and such rules and
regulations as shall be from time to time promulgated
thereunder (the "ADA").
<PAGE> 8
f. Lessee shall, at Lessee's own expense, comply with the
Industrial Site Recovery Act, 1993 N.J. Laws 139 ("ISRA") and
the regulations promulgated thereunder, with respect to
Lessee's obligations under this Lease, which may now or
hereafter arise; and Lessee shall further comply with all
applicable requirements of, the Bureau of Industrial Site
Evaluation (the "Bureau") of the New Jersey Department of
Environmental Protection ("NJDEP") to the extent such
compliance is required as a result of: (i) Lessee's use of or
operations at the Premises or (ii) a spill or discharge of any
hazardous substance or wastes by Lessee or Lessee's
Affiliates, employees and agents. Should the Bureau or any
other division or agency of NJDEP determine that a cleanup
plan be prepared and that a cleanup be undertaken because of
any spills or discharges of hazardous substances or wastes at
the Premises which occur during the Term of this Lease and
which are caused by Lessee or Lessee's Affiliates, employees
and agents, then Lessee shall prepare and submit the required
plans and financial assurances, and carry out the approved
plans at Lessee's expense (provided, however, that if such
plan or cleanup is required as a result of the acts or
omissions of any other person or entity, including but not
limited to Lessor or Lessor's Affiliates, employees and
agents, then Lessor shall prepare and submit the required
plans and financial assurances and carry out the approved
plans at Lessor's expense). Lessee, shall promptly provide all
information reasonably available and within Lessee's control
requested by Lessor for preparation of non-applicability
affidavits and shall promptly sign such affidavits when
requested by Lessor. Lessee's obligations and liabilities
under this Section shall survive the Term without limitation.
Lessee's failure to abide by the terms of this Section shall
be restrainable by injunction. Lessee hereby agrees that only
"sanitary sewage" (as defined in N.J.S.A. 7:14A-1.9) shall be
discharged into the sewer or septic system and that no
"industrial pollutants" (as defined in the Clean Water Act of
1977 and any amendments thereto) shall be discharged into such
system. Lessor shall, at Lessor's own expense, comply with
ISRA with respect to Lessor's obligations under this Lease,
which may now or hereafter arise; and Lessor shall further
comply with all applicable requirements of, the Bureau.
g. Lessee hereby covenants and agrees, at its sole cost and
expense, to indemnify, protect and save Lessor and Lessor's
Affiliates, harmless against and from any and all damages,
losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings,
costs, disbursements or expenses (including, without
limitation, reasonable attorneys' and experts' fees and
disbursements and court and transcript costs) which may at any
time be imposed upon, incurred by, or asserted or awarded
against Lessor and Lessor's Affiliates to the extent the same
result from the acts or omissions of Lessee, Lessee's
Affiliates, employees and agents and/or Lessee's sub-lessees
or assignees, and/or any of Lessee's contractors while on the
Premises with respect to the storage, maintenance, use,
discharge, spillage, or disposal of any Hazardous Materials
on, in, under or affecting any portion of the Property, or any
surrounding areas and including indemnification with respect
to (x) the costs of removal of any and all such Hazardous
Materials from all or any portion of the Premises, the
Property or the Business Park or any surrounding areas, (y)
the costs required to take necessary precautions to protect
against any additional release of such Hazardous Materials on,
in, under or affecting the Premises, the Building Area or the
Business Park into the air, any body of water, any other
public domain or any surrounding areas, and (z) costs incurred
to comply, in connection with all or any portion of the
Premises, the Property or the Business Park or any surrounding
areas, with all applicable Legal Requirements with respect to
such Hazardous Materials (including ISRA, the Clean Water Act,
the Safe Drinking Water Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Toxic Substances
Control Act, the Resource Conservation and Recovery Act, and
the Federal Insecticide, Fungicide and Rodenticide Act).
h. Notwithstanding anything to the contrary herein, Lessee shall
not be responsible for any damages, losses, liabilities,
obligations, penalties, claims, litigations, demands,
defenses, judgments, suits, proceedings, costs, or expenses
with respect to the presence, generation, storage,
maintenance, use, discharge, release, spillage or disposal of
any Hazardous Materials on, in, under or affecting all or any
portion of the Premises or any surrounding areas at any time
resulting from (i) any acts or omissions of Lessor or Lessor's
Affiliates or other tenants of the Property; and/or
<PAGE> 9
(ii) which occurred or were present on the Premises prior to
the Commencement Date.
6. ALTERATIONS, ADDITIONS OR IMPROVEMENTS: , Lessee shall not, without
first obtaining the written consent of Lessor, make any Building System
alterations, additions or improvements in, to or about the Premises.
Lessee shall not, without first obtaining the written consent of Lessor
(which shall not be unreasonably withheld or delayed) make any
non-Building System alterations, additions or improvements in, to or
about the Premises. "Building Systems" shall mean the entire, or any
component of, any life safety, structural, plumbing, electrical,
heating ventilation or air conditioning system. Notwithstanding the
foregoing, Lessee shall have the right to install additional office
space in the Premises necessary for the conduct of Lessee's business,
provided:
a. Lessee shall first obtain requisite permits and authorizations
from governmental authorities having jurisdiction;
b. Lessee obtains Lessor's, and if required, the fee mortgagee's
prior written consent (which Lessor's consent not to be
withheld if the change or alteration would not, in the
reasonable opinion of the Lessor, impair the value or
usefulness of the Premises and with respect to the mortgagee's
consent, Lessor shall use its commercially reasonable efforts
to assist Lessee in obtaining same);
c. any such alteration shall be made promptly (unavoidable delays
excepted) in a workmanlike manner in accordance with any
alteration plans and in compliance with applicable laws and
governmental regulations;
d. the cost of the alteration shall be paid by Lessee so that the
Premises remain free of any liens;
e. if requested by Lessor at the time Lessor grants its consent
to the proposed alterations, Lessee shall post with Lessor,
adequate security to assure restoration of the Premises at the
end of the term;
f. Lessee maintain proper insurance as stated in Article 31
hereof;
g. no alteration for offices shall be undertaken until detailed
plans and specifications have first been submitted to and
approved in writing by Lessor and if required, by the fee
mortgagee. At completion of the alteration "as built" plans
and a CAD file of same shall be delivered to Lessor; and
h. Lessee shall agree in writing, if directed by Lessor at the
time Lessor grants its consent to the proposed alterations, to
remove such alteration and to restore the Premises upon such
removal.
Lessee shall not:
i. Change (whether by alteration, replacement, rebuilding or
otherwise) the exterior color and/or architectural treatment
of the Premises or of the Building or Building Area.
j. Use the plumbing facilities for any purpose other than that
for which they were constructed, or dispose of any garbage or
other foreign substance therein, whether through the
utilization of so-called "disposal", or similar units or
otherwise.
k. Subject any fixtures, furnishings or equipment in or on the
Premises which are fixtures, affixed to the realty, to any
mortgages, liens, conditional sales agreements, security
interests or encumbrances.
l. Perform any act or carry on any practice which may damage, mar
or deface the Premises or any other part of the Building.
m. Place a load on any floor in the Premises, or in any area of
the Building, exceeding the floor load which such floor was
designated to carry; or install, operate or maintain
<PAGE> 10
therein any heavy item or equipment except in such manner as
to achieve a proper distribution of weight.
n. Install, operate or maintain in the Premises, any electrical
equipment which does not bear underwriters' approval, and
would overload the electrical system therein, or any part
thereof, beyond its reasonable capacity for proper and safe
operation.
o. Suffer, allow or permit any offensive or obnoxious vibration,
noise, odor or other undesirable effect to emanate from the
Premises, or any machine or other installation therein, or
otherwise suffer, allow or permit the same to constitute a
nuisance or otherwise unreasonably interfere with the safety,
comfort or convenience of Lessor or any other occupants of the
Building; upon notice by Lessor to Lessee that any of the
aforesaid is occurring, Lessee shall forthwith (but in all
events within five (5) days) remove or control the same.
p. Use or occupy the Premises or do or permit anything to be done
thereon in any manner which might cause structural injury to
the Building, or which would constitute a public or private
nuisance or which would violate any present or future laws,
regulations, ordinances or requirements (ordinary or
extraordinary, foreseen or unforeseen) of the federal, state
or municipal governments, or of any department, subdivisions,
bureaus or offices thereof, or of any other governmental
public or quasi public authorities now existing or hereafter
created having jurisdiction in the Premises or the Building.
7. ACTIVITIES INCREASING FIRE INSURANCE RATES: Lessee shall not do or
suffer anything to be done on the Premises which will increase the rate
of fire insurance on the Building.
8. ASSIGNMENT AND SUBLEASE: Lessee may assign or sublease the within Lease
to any party subject to the following:
a. In the event Lessee desires to assign this Lease or sublease
all or part of the Premises to any other party, the terms and
conditions of such assignment or sublease shall be
communicated to the Lessor in writing prior to the effective
date of any such sublease or assignment, and, prior to such
effective date, the Lessor shall have the option, exercisable
in writing to the Lessee, to: (i) sublease such space from
Lessee at the lower rate of (a) the rental rate per rentable
square foot of Fixed Basic Rent and Additional Rent then
payable pursuant to this Lease or (b) the terms set forth in
the proposed sublease, (ii) recapture in the case of
subletting, that portion of the Premises to be sublet or all
of the Premises in the case of an assignment ("Recapture
Space") so that such prospective sublessee or assignee shall
then become the sole Lessee of Lessor hereunder, or (iii)
recapture the Recapture Space for Lessor's own use and the
within Lessee shall be fully released from any and all
obligations hereunder with respect to the Recapture Space.
b. In the event that the Lessor elects not to recapture the Lease
as hereinabove provided, the Lessee may nevertheless assign
this Lease or sublet the whole or any portion of the Premises,
subject to the Lessor's prior written consent, which consent
shall not be unreasonably withheld or delayed, on the basis of
the following terms and conditions:
i. The Lessee shall provide to the Lessor the name and
address of the assignee or sublessee.
ii. So long as the occupancy rate of the Business Park is
less than ninety-five percent (95%), the proposed
assignee or subtenant shall not be a tenant or
occupant of any part of the Building, Business Park
or building within a three (3) mile radius, operated
by Cali Realty Corporation or any of its affiliates,
or is any corporation which controls or is controlled
by such tenant or occupant or is under common control
with such tenant or occupant.
iii. The assignee or sublessee shall assume, by written
instrument, all of the obligations of this Lease, and
a copy of such assumption agreement shall be
<PAGE> 11
furnished to the Lessor within ten (10) days of its
execution. Any sublease shall expressly acknowledge
that said sublessee's rights against Lessor shall be
no greater than those of Lessee. Lessee further
agrees that notwithstanding any such subletting, no
other and further subletting of the Premises by
Lessee or any person claiming through or under Lessee
shall or will be made except upon compliance with and
subject to the provisions of this Article 8.
iv. If this Lease is assigned, or if the Premises or any
part thereof is sublet or occupied by anybody other
than Lessee, Lessor may, after default by Lessee,
collect rent from the assignee, subtenant, or
occupant and apply the net amount collected to the
Fixed Basic Rent and Additional Rent herein reserved,
but no such collection or the acceptance of the
assignee, subtenant, or occupant as Lessee shall be
deemed a waiver by Lessor of any of Lessee's
covenants contained in this Article or a release of
Lessee from the further performance by Lessee of
covenants on the part of Lessee herein contained.
v. The Lessee and each assignee shall be and remain
liable for the observance of all the covenants and
provisions of this Lease, including, but not limited
to, the payment of Fixed Basic Rent and Additional
Rent reserved herein, through the entire Term of this
Lease, as the same may be renewed, extended or
otherwise modified.
vi. Any rentals or any other economic consideration
received by Lessee as a result of any assignment or
subletting whether denominated rental under the
sublease or otherwise which in aggregate exceed the
total sums which Lessee is obligated to pay Lessor
under this Lease (prorated to reflect obligations
allocable to that portion of the Premises in the case
of a sublease) shall, provided Lessee is not in
default hereunder, be divided equally between Lessor
and Lessee.
vii. In any event, the acceptance by the Lessor of any
rent from the assignee or from any of the subtenants
or the failure of the Lessor to insist upon a strict
performance of any of the terms, conditions and
covenants herein shall not release the Lessee herein,
nor any assignee assuming this Lease, from any and
all of the obligations herein during and for the
entire Term of this Lease.
viii. Lessor shall require Lessee to reimburse Lessor its
actual expenses and costs up to FIVE HUNDRED AND
00/100 DOLLARS ($500.00) to cover its handling
charges for each request for consent to any sublet or
assignment prior to its consideration of the same.
Lessor shall respond within fifteen (15) days of
receipt of Lessee's request for consent, otherwise
said request for consent shall be deemed denied.
Lessee acknowledges that its sole remedy with respect
to any assertion that Lessor's failure to consent to
any sublet or assignment is unreasonable shall be the
remedy of specific performance and Lessee shall have
no other claim or cause of action against Lessor as a
result of Lessor's actions in refusing to consent
thereto.
c. If Lessee is a corporation other than a corporation whose
stock is listed and traded on a nationally recognized stock
exchange, the provisions of Sub-section a. shall apply to a
transfer (however accomplished, whether in a single
transaction or in a series of related or unrelated
transactions) of stock (or any other mechanism such as, by way
of example, the issuance of additional stock, a stock voting
agreement or change in class(es) of stock) which results in a
change of control of Lessee as if such transfer of stock (or
other mechanism) which results in a change of control of
Lessee were an assignment of this Lease, and if Lessee is a
partnership or joint venture, said provisions shall apply with
respect to a transfer (by one or more transfers) of an
interest in the distributions of profits and losses of such
partnership or joint venture (or other mechanism, such as, by
way of example, the creation of additional general partnership
or limited partnership interests) which results in a change of
control of such a partnership or joint venture, as if such
transfer of an interest in the distributions of profits and
losses of such partnership or joint venture which results in a
change of control of such partnership or joint venture were an
assignment of this Lease; but said provisions shall not apply
to transactions with a corporation into or
<PAGE> 12
with which Lessee is merged or consolidated or to which all or
substantially all of Lessee's assets are transferred or to any
corporation which controls or is controlled by Lessee or is
under common control with Lessee, provided that in the event
of such merger, consolidation or transfer of all or
substantially all of Lessee's assets (i) the successor to
Lessee has a net worth computed in accordance with generally
accepted accounting principles at least equal to the greater
of (1) the net worth of Lessee immediately prior to such
merger, consolidation or transfer, or (2) the net worth of
Lessee herein named on the date of this Lease, and (ii) proof
satisfactory to Lessor of such net worth shall have been
delivered to Lessor at least 10 days prior to the effective
date of any such transaction.
d. Any sublet or assignment to a parent, subsidiary or an
affiliated company shall not be subject to the provisions of
sub-sections (a.) and (b.)(vi.), hereof and shall not require
Lessor's prior written consent, but all other provisions of
this paragraph shall apply.
e. In the event that any or all of Lessee's interest in the
Premises and/or this Lease is transferred by operation of law
to any trustee, receiver, or other representative or agent of
Lessee, or to Lessee as a debtor in possession, and
subsequently any or all of Lessee's interest in the Premises
and/or this Lease is offered or to be offered by Lessee or any
trustee, receiver, or other representative or agent of Lessee
as to its estate or property (such person, firm or entity
being hereinafter referred to as the "Grantor", for
assignment, conveyance, lease, or other disposition to a
person, firm or entity other than Lessor (each such
transaction being hereinafter referred to as a "Disposition"),
it is agreed that Lessor has and shall have a right of first
refusal to purchase, take, or otherwise acquire, the same upon
the same terms and conditions as the Grantor thereof shall
accept upon such Disposition to such other person, firm, or
entity; and as to each such Disposition the Grantor shall give
written notice to Lessor in reasonable detail of all of the
terms and conditions of such Disposition within twenty (20)
days next following its determination to accept the same but
prior to accepting the same, and Grantor shall not make the
Disposition until and unless Lessor has failed or refused to
accept such right of first refusal as to the Disposition, as
set forth herein.
Lessor shall have sixty (60) days next following its receipt
of the written notice as to such Disposition in which to
exercise the option to acquire Lessee's interest by such
Disposition, and the exercise of the option by Lessor shall be
effected by notice to that effect sent to the Grantor; but
nothing herein shall require Lessor to accept a particular
Disposition or any Disposition, nor does the rejection of any
one such offer of first refusal constitute a waiver or release
of the obligation of the Grantor to submit other offers
hereunder to Lessor. In the event Lessor accept such offer of
first refusal, the transaction shall be consummated pursuant
to the terms and conditions of the Disposition described in
the notice to Lessor. In the event Lessor rejects such offer
of first refusal, Grantor may consummate the Disposition with
such other person, firm, or entity; but any decrease in price
of more than two percent (2%) of the price sought from Lessor
or any change in the terms of payment for such Disposition
shall constitute a new transaction requiring a further option
of first refusal to be given to Lessor hereunder.
f. Without limiting any of the provisions of Articles 10 and 11,
if pursuant to the Federal Bankruptcy Code (herein referred to
as the "Code"), or any similar law hereafter enacted having
the same general purpose, Lessee is permitted to assign this
Lease notwithstanding the restrictions contained in this
Lease, adequate assurance of future performance by an assignee
expressly permitted under such Code shall be deemed to mean
the deposit of cash security in an amount equal to the sum of
one year's Fixed Basic Rent plus an amount equal to the
Additional Rent for the calendar year preceding the year in
which such assignment is intended to become effective, which
deposit shall be held by Lessor for the balance of the Term,
without interest, as security for the full performance of all
of Lessee's obligations under this Lease, to be held and
applied in the manner specified for security in Article 16.
g. Except as specifically set forth above, no portion of the
Premises or of Lessee's interest in this Lease may be acquired
by any other person or entity, whether by
<PAGE> 13
assignment, mortgage, sublease, transfer, operation of law or
act of the Lessee, nor shall Lessee pledge its interest in
this Lease or in any security deposit required hereunder.
9. COMPLIANCE WITH RULES AND REGULATIONS: Lessee shall observe and
comply with the rules and regulations hereinafter set forth in Exhibit
B attached hereto and made a part hereof and with such further
reasonable rules and regulations as Lessor may prescribe, on written
notice to the Lessee, for the safety, care and cleanliness of the
Building and the comfort, quiet and convenience of other occupants of
the Building. The Rules and Regulations shall be prescribed and
enforced in a non-discriminatory manner except in any instance arising
out of Lessee's particular manner of use or manner of occupation (as
distinguished from mere use or occupation) of the Premises for general
and executive purposes. Lessee shall not place a load upon any floor of
the Premises exceeding the floor load which it was designed to carry
and which is allowed by law. Lessor 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 Lessee,
at Lessee's expense, in settings sufficient, in Lessor's judgement, to
absorb and prevent vibration, noise and annoyance.
10. DAMAGES TO BUILDING: If the Building is damaged by fire or any other
cause to such extent the cost of restoration, as reasonably estimated
by Lessor, will equal or exceed twenty-five percent (25%) of the
replacement value of the Building (exclusive of foundations) just prior
to the occurrence of the damage, then Lessor may, no later than the
sixtieth (60th) day following the damage, give Lessee a notice of
election to terminate this Lease, or if the cost of restoration will
equal or exceed fifty percent (50%) of such replace ment value and if
the Premises shall not be reasonably usable for the purpose for which
they are leased hereunder, then Lessee may, no later than the sixtieth
(60th) day following the damage, give Lessor a notice of election to
terminate this Lease. In either said event of election, this Lease
shall be deemed to terminate on the thirtieth (30th) day after the
giving of said notice, and Lessee shall surrender possession of the
Premises within a reasonable time thereafter, and the Fixed Basic Rent,
and any Additional Rent, shall be apportioned as of the date of said
surrender and any Fixed Basic Rent or Additional Rent paid for any
period beyond said date shall be repaid to Lessee. If the cost of
restoration shall not entitle Lessor to terminate this Lease, or if,
despite the cost, Lessor does not elect to terminate this Lease, Lessor
shall restore the Building and the Premises with reasonable promptness,
subject to Force Majeure, and Lessee shall have no right to terminate
this Lease except as otherwise provided herein. In the event Lessor
elects to restore, Lessor shall commence to restore the Building and
Premises no later than the ninetieth (90th) day following damage. In
the event that Lessor has not completed such restoration within two-
hundred seventy (270) days following such damage, Lessee may terminate
this Lease upon thirty (30) days prior written notice to Lessor
coinciding with the end of a calendar month. Lessor need not restore
fixtures and improvements owned by Lessee.
In any case in which use of the Premises is affected by any damage to
the Building, there shall be either an abatement or an equitable
reduction in Fixed Basic Rent, depending on the period for which and
the extent to which the Premises are not reasonably usable for the
purpose for which they are leased hereunder. The words "restoration"
and "restore" as used in this Article 10 shall include repairs. If the
damage results from the fault of the Lessee, Lessee's agents, servants,
visitors or licensees, Lessee shall not be entitled to any abatement or
reduction in Fixed Basic Rent, except to the extent of any rent
insurance received by Lessor.
11. EMINENT DOMAIN: If Lessee's use of the Premises is materially affected
due to the taking by eminent domain of (a) the Premises or any part
thereof or any estate therein; or (b) any other part of the Building;
then, in either event, this Lease shall terminate on the date when
title vests pursuant to such taking. The Fixed Basic Rent, and any
Additional Rent, shall be apportioned as of said termination date and
any Fixed Basic Rent or Additional Rent paid for any period beyond said
date, shall be repaid to Lessee. Lessee shall not be entitled to any
part of the award for such taking or any payment in lieu thereof, but
Lessee may file a separate claim for any taking of fixtures and
improvements owned by Lessee which have not become the Lessor's
property, and for moving expenses, provided the same shall, in no way,
affect or diminish Lessor's award. In the event of a partial taking
which does not effect a termination of this Lease but does deprive
Lessee of the use of a portion of the Premises,
<PAGE> 14
there shall either be an abatement or an equitable reduction of the
Fixed Basic Rent, depending on the period for which and the extent to
which the Premises so taken are not reasonably usable for the purpose
for which they are leased hereunder.
12. INSOLVENCY OF LESSEE: Either (a) the appointment of a receiver to take
possession of all or substantially all of the assets of Lessee, or, (b)
a general assignment by Lessee for the benefit of creditors, or, (c)
any action taken or suffered by Lessee under any insolvency or
bankruptcy act, shall constitute a default of this Lease by Lessee, and
Lessor may terminate this Lease forthwith and upon notice of such
termination Lessee's right to possession of the Premises shall cease,
and Lessee shall then quit and surrender the Premises to Lessor but
Lessee shall remain liable as hereinafter provided in Article 14
hereof.
13. LESSOR'S REMEDIES ON DEFAULT: If Lessee defaults in the payment of
Fixed Basic Rent, or any Additional Rent, or defaults in the
performance of any of the other covenants and conditions hereof or
permits the Premises to become deserted, abandoned or vacated, Lessor
may give Lessee notice of such default, and if Lessee does not cure any
Fixed Basic Rent or Additional Rent default within five (5) business
days or other default within thirty (30) days after giving of such
notice (or if such other default is of such nature that it cannot be
completely cured within such period, if Lessee does not commence such
curing within such thirty (30) days and thereafter proceed with
reasonable diligence and in good faith to cure such default), then
Lessor may terminate this Lease on not less than ten (10) days notice
to Lessee, and on the date specified in said notice, Lessee's right to
possession of the Premises shall cease but Lessee shall remain liable
as hereinafter provided. If this Lease shall have been so terminated by
Lessor pursuant to Articles 12 or 13 hereof, Lessor may at any time
thereafter resume possession of the Premises by any lawful means and
remove Lessee or other occupants and their effects. Lessee shall pay to
Lessor, on demand, such expenses as Lessor may incur, including,
without limitation, court costs and reasonable attorney's fees and
disbursements, in enforcing the performance of any obligation of Lessee
under this Lease.
14. DEFICIENCY: In any case where Lessor has recovered possession of the
Premises by reason of Lessee's default, Lessor may, at Lessor's option,
occupy the Premises or cause the Premises to be redecorated, altered,
divided, consolidated with other adjoining premises or otherwise
changed or prepared for reletting, and may relet the Premises or any
part thereof, as agent of Lessee or otherwise, for a term or terms to
expire prior to, at the same time as or subsequent to, the original
Expiration Date of this Lease, at Lessor's option and receive the rent
therefor. Rent so received shall be applied first to the payment of
such expenses as Lessor may have incurred in connection with the
recovery of possession, redecorating, altering, dividing, consolidating
with other adjoining premises, or otherwise changing or preparing for
reletting, and the reletting, including brokerage and reasonable
attorney's fees, and then to the payment of damages in amounts equal to
the Fixed Basic Rent and Additional Rent hereunder and to the costs and
expenses of performance of the other covenants of Lessee as herein
provided. Lessee agrees, in any such case, whether or not Lessor has
relet, to pay to Lessor damages equal to the Fixed Basic Rent and
Additional Rent from the date of such default to the date of expiration
of the term demised and other sums herein agreed to be paid by Lessee,
less the net proceeds of the reletting, if any, received by Lessor
during the remainder of the unexpired term hereof, as ascertained from
time to time, and the same shall be payable by Lessee on the several
rent days above specified. Lessee shall not be entitled to any surplus
accruing as a result of any such reletting. In reletting the Premises
as aforesaid, Lessor may grant rent concessions, and Lessee shall not
be credited therewith. No such reletting shall constitute a surrender
and acceptance or be deemed evidence thereof. If Lessor elects,
pursuant hereto, actually to occupy and use the Premises or any part
thereof during any part of the balance of the Term as originally fixed
or since extended, there shall be allowed against Lessee's obligation
for rent or damages as herein defined, during the period of Lessor's
occupancy, the reasonable value of such occupancy, not to exceed, in
any event, the Fixed Basic Rent and Additional Rent herein reserved and
such occupancy shall not be construed as a release of Lessee's
liability hereunder.
Alternatively, in any case where Lessor has recovered possession of the
Premises by reason of Lessee's default, Lessor may at Lessor's option,
and at any time thereafter, and without notice or other action by
Lessor, and without prejudice to any other rights or remedies it might
have hereunder or at law or equity, become entitled to recover from
Lessee, as Damages for such breach, in addition to such other sums
herein agreed to be paid by Lessee,
<PAGE> 15
to the date of re-entry, expiration and/or dispossess, an amount equal
to the difference between the Fixed Basic Rent and Additional Rent
reserved in this Lease from the date of such default to the date of
Expiration of the original Term demised and the then fair and
reasonable rental value of the Premises for the same period. Said
Damages shall become due and payable to Lessor immediately upon such
breach of this Lease and without regard to whether this Lease be
terminated or not, and if this Lease be terminated, without regard to
the manner in which it is terminated. In the computation of such
Damages, the difference between an installment of Fixed Basic Rent and
Additional Rent thereafter becoming due and the fair and reasonable
rental value of the Premises for the period for which such installment
was payable shall be discounted to the date of such default at the rate
of not more than eight percent (8%) per annum.
Lessee hereby waives all right of redemption to which Lessee or any
person under Lessee might be entitled by any law now or hereafter in
force.
Lessor's remedies hereunder are in addition to any remedy allowed by
law.
15. SUBORDINATION OF LEASE: This Lease shall, at Lessor's option, or at the
option of any holder of any underlying lease or holder of any mortgage
or trust deed (hereinafter sometimes collectively referred to as
"Senior Encumbrances"), be subject and subordinate to any such
underlying leases and to any such mortgage or trust deed which may now
or hereafter affect the real property of which the Premises form a
part, and also to all renewals, modifications, consolidations and
replacements of said underlying leases and said first mortgage or trust
deed. Although no instrument or act on the part of Lessee shall be
necessary to effectuate such subordination, Lessee will, nevertheless,
execute and deliver such further instruments confirming such
subordination of this Lease as may be desired by the holders of said
mortgage or trust deed or by any of the Lessor's under such underlying
leases. If any underlying lease to which this Lease is subject
terminates, Lessee shall, on timely request, attorn to the owner of the
reversion.
Lessor agrees to use its commercially reasonable efforts on behalf of
Lessee to obtain a non-disturbance agreement from the holder of any of
the aforesaid underlying leases or mortgages or trust deeds; however,
this Lease is not conditioned upon the same being granted and any
charges assessed by the holders of such underlying leases or mortgages
or trust deeds in connection with the obtaining of the aforesaid
non-disturbance agreement shall be paid by Lessee.
16. SECURITY DEPOSIT: Lessee shall deposit with Lessor on the signing of
this Lease, the Security Deposit as defined in the Preamble for the
full and faithful performance of Lessee's obligations under this Lease,
including without limitation, the surrender of possession of the
Premises to Lessor as herein provided. If Lessor applies any part of
said Security Deposit to cure any default of Lessee, Lessee shall, on
demand, deposit with Lessor the amount so applied so that Lessor shall
have the full Security Deposit on hand at all times during the Term of
this Lease. In the event a bona fide sale, subject to this Lease,
Lessor shall have the right to transfer the Security Deposit to the
vendee, and Lessor shall be considered released by Lessee from all
liability for the return of the Security Deposit; and Lessee agrees to
look solely to the new lessor for the return of the Security Deposit,
and it is agreed that this shall apply to every transfer or assignment
made of the Security Deposit to the new lessor, provided, however, the
new vendee agrees to hold the Security Deposit under the same basis as
Lessor. Provided this Lease is not in default, the Security Deposit
(less any portions thereof used, applied or retained by Lessor in
accordance with the provisions of this Article 16), shall be returned
to Lessee after the expiration or sooner termination of this Lease and
after delivery of the entire Premises to Lessor in accordance with the
provisions of this Lease. Lessee covenants that it will not assign or
encumber or attempt to assign or encumber the Security Deposit and
Lessor shall not be bound by any such assignment, encumbrance or
attempt thereof.
In the event of the insolvency of Lessee, or in the event of the entry
of a judgement in any court against Lessee which is not discharged
within thirty (30) days after entry, or in the event a petition is
filed by or against Lessee under any chapter of the bankruptcy laws of
the State of New Jersey or the United States of America, then in such
event, Lessor may require the Lessee to deposit additional security in
an amount which in Lessor's sole judgement would be sufficient to
adequately assure Lessee's performance of all of its obligations under
this Lease including all payments subsequently accruing. Failure of
Lessee to deposit the
<PAGE> 16
security required by this Article 16 within ten (10) days after
Lessor's written demand shall constitute a material breach of this
Lease by Lessee.
17. RIGHT TO CURE LESSEE'S BREACH: If Lessee breaches any covenant or
condition of this Lease, Lessor may, on reasonable notice to Lessee
(except that no notice need be given in case of emergency), cure such
breach at the expense of Lessee and the reasonable amount of all
expenses, including attorney's fees, incurred by Lessor in so doing
(whether paid by Lessor or not) shall be deemed Additional Rent payable
on demand.
18. MECHANIC'S LIENS: Lessee shall, within fifteen (15) days after notice
from Lessor, discharge or satisfy by bonding or otherwise any mechanic
liens for materials or labor claimed to have been furnished to the
Premises on Lessee's behalf.
19. RIGHT TO INSPECT AND REPAIR: Lessor may enter the Premises but shall
not be obligated to do so (except as required by any specific provision
of this Lease) at any reasonable time during business hours of Lessee
on reasonable notice to Lessee (except that no notice need be given in
case of emergency) for the purpose of inspection or the making of such
repairs, replacement or additions in, to, on and about the Premises or
the Building, as Lessor deems necessary or desirable. Lessee shall have
no claims or cause of action against Lessor by reason thereof. In no
event shall Lessee have any claim against Lessor for interruption of
Lessee's business, however occurring, including but not limited to that
arising from the negligence of Lessor, its agents, servants or
invitees, or from defects, errors or omissions in the construction or
design of the Premises and/or the Building, including the structural
and non-structural portions thereof.
20. SERVICES TO BE PROVIDED BY LESSOR/LESSOR'S EXCULPATION: Subject
to intervening laws, ordinances, regulations and executive orders,
Lessor agrees as part of Operating Costs, to furnish the following:
a. Lessor shall furnish hot and cold water to the Premises for
ordinary lavatory, drinking, and office cleaning purposes.
Lessor shall install or arrange to have the water company
install a water meter at Lessee's expense which Lessee shall
thereafter maintain at Lessee's expense and Lessee shall pay
for water consumed as shown on said meter. Additionally,
Lessor shall furnish rubbish removal services as required (as
distinguished from janitorial services and Premises cleaning,
which shall be arranged and paid for directly by Lessee) and
shall maintain and repair, as required, the exterior areas of
the Building and, in connection therewith, furnish landscaping
and snow removal services and otherwise keep such areas
adequately lighted, reasonably clean and in good order,
condition and repair.
b. Lessor shall provide Lessee with conduits, pipes, tubes and
wiring for the supply of electricity, gas, water, sewer and
telephone service to the point of connection to the Premises.
All services other than as provided pursuant to Section a.
hereof to be provided to, or which shall be necessary for the
conduct of, Lessee's operations within the Premises,
including, without limitation and for purposes of
illustration, the furnishing of electric current and gas
energy (subject, however, to the provisions of Article 6),
telephone, janitorial, cleaning, security and any other
utility or service which Lessee shall deem necessary or
desirable, shall be separately arranged, metered, maintained
and paid for by Lessee. Lessee's utilities shall be separately
metered, except as otherwise provided in this Lease, and all
costs of any utilities not separately metered shall be
reasonably apportioned by Lessor and shall constitute
Additional Rent. Lessor shall not provide cleaning services to
any portion of the Premises. Lessee, at its sole cost and
expense, shall cause the Premises to be kept clean and in a
good and orderly condition as befits similar buildings in the
Business Park. In the event Lessee shall employ a contractor
to provide any services to the Premises, such contractor (and
any subcontractors) shall agree to employ only such labor as
will not result in jurisdictional disputes or strikes. Lessee
shall inform Lessor of the names of any contractor or
subcontractor Lessee proposes to use in the Premises at least
fifteen (15) days prior to the beginning of work by such
contractor or subcontractors.
c. Notwithstanding any provisions of this Lease, neither party
shall be liable for failure to perform its obligations
(excluding Lessee's obligations to pay Fixed Basic Rent
<PAGE> 17
and Additional Rent) when such failure is due to Force
Majeure, as hereinafter defined. Lessor shall not be liable,
under any circumstances, including, but not limited to, that
arising from the negligence of Lessor, its agents, servants or
invitees, or from defects, errors or omissions in the
construction or design of the Premises and/or the Building,
including the structural and non-structural portions thereof,
for loss of or injury to Lessee or to property, however
occurring, through or in connection with or incidental to the
furnishings of, or failure to furnish, any of the aforesaid
services or for any interruption to Lessee's business, however
occurring.
Lessor shall not be liable in damages or otherwise, for any
delay or failure in Lessee's receiving any such utilities and
in no event shall such delay or failure, regardless of cost,
constitute an eviction of Lessee or termination of this Lease.
d. Lessee with access to the Premises 24 hours per day each day
of the year.
e. Lessor shall keep, replace and maintain in good order and
condition and repair the Common Areas and the roof, roofdeck,
outside walls, foundations, footings, load bearing walls and
concrete floors, subject, however, the cost of same to the
extent applicable shall be paid by the Lessee, as the Lessee's
Percentage share, pursuant to the provisions of Article 23
hereof.
21. INTERRUPTION OF SERVICES OR USE: Interruption or curtailment of any
service maintained in the Building or at the Property, if caused by
Force Majeure, as hereinafter defined, shall not entitle Lessee to any
claim against Lessor or to any abatement in rent, and shall not
constitute a constructive or partial eviction, unless Lessor fails to
take measures as may be reasonable under the circumstances to restore
the service without undue delay. If the Premises are rendered
untenantable in whole or in part, for a period of five (5) consecutive
business days, by the making of repairs, replacements or additions,
other than those made with Lessee's consent or caused by misuse or
neglect by Lessee, or Lessee's agents, servants, visitors or licensees,
there shall be a proportionate abatement of Fixed Basic Rent from and
after said fifth (5th) consecutive business day and continuing for the
period of such untenantability. In no event, shall Lessee be entitled
to claim a constructive eviction from the Premises unless Lessee shall
first have notified Lessor in writing of the condition or conditions
giving rise thereto, and if the complaints be justified, unless Lessor
shall have failed, within a reasonable time after receipt of such
notice, to remedy, or commence and proceed with due diligence to remedy
such condition or conditions, all subject to Force Majeure as
hereinafter defined.
22. ELECTRICITY/GAS: Lessor shall cause electricity and gas to be supplied
to the Building and to permit Lessee to receive electricity for
Lessee's use of the heating, ventilation and air conditioning ("HVAC")
system ("Building Standard Office Electrical Service"). Lessee shall
obtain and pay for Lessee's separate supply of electric current and gas
energy by direct application to, and arrangement with, the public
utility companies servicing the Building. Lessor or the applicable
utility company shall provide such meters used to measure such
electricity and gas service. Lessee shall pay all charges with respect
to consumption of electricity and gas applicable to the Premises
directly to the public utility servicing the Building. If, pursuant to
a Legal Requirement or the policies or operating practices of the
public utility company servicing the Building, Lessee is no longer
permitted to obtain electrical energy or gas directly from the public
utility company, Lessor will furnish electrical energy and/or gas to
the Premises either, at Lessor's option, on a "check-metering" basis or
a rent inclusion basis. Lessor shall give Lessee notice at least thirty
(30) days prior to the date on which Lessor shall commence furnishing
electrical energy and/or gas to the Premises (unless such notice is not
feasible under the circumstances, in which event Lessor will give
Lessee such notice as is reasonably possible), which notice will set
forth the terms on which Lessor will so furnish electrical energy
and/or gas to the Premises. If any utilities are not (or cannot be)
separately metered or assessed or are only partially separately metered
or assessed and are used in common with other lessees of the Building,
Lessee will pay to Lessor an equitable apportionment of such charges
for utilities used in common with other lessees of the Building, based
on the square footage of floor space leased to each lessee using such
common facilities, the average electrical or gas consumption of each
lessee and other pertinent considerations, in addition to Lessee's
payment of the separately metered charges. Lessee shall defend,
indemnify and hold Lessor harmless from and reimburse Lessor for all
liability, damages, costs, fees, expenses, penalties and charges
(including, but not limited to,
<PAGE> 18
attorneys' fees and disbursements) incurred in connection with (i)
Lessee's failure to pay for any electricity or gas provided to Lessee
hereunder or (ii) misuse or neglect by Lessee of the meters(s) and
equipment supplying the electricity or gas.
a. Lessee's use of electric current in the Premises shall not
exceed the capacity of any electrical conductors and equipment
in or otherwise serving the Premises.
b. Lessee shall not, without the prior consent of Lessor make or
perform or permit any alteration to wiring installations or
other electrical facilities or to any gas mains, gas lines or
other facilities for the supply of electric current or gas
energy located in or serving the Premises. If Lessor grants
such consent, all additional conduit, feeders and wiring and
other equipment and all gas mains, lines or other facilities
required therefor shall be provided and/or installed by Lessor
and the reasonable cost thereof shall be paid by Lessee as
Additional Rent within fifteen (15) days after demand
therefor.
c. Lessor shall not be liable in any way to Lessee for any loss,
damage or expense which Lessee may sustain or incur as a
result of any failure, defect or change in the quantity or
character of electrical or gas energy available for
redistribution to the Premises pursuant to this Paragraph nor
for any interruption in the supply and Lessee agrees that such
supply may be interrupted for inspection, repairs and
replacement and in emergencies. In any event, the full measure
of Lessor's liability for any interruption in the supply due
to Lessor's acts or omissions shall be an abatement of rent
and additional rent. In no event shall Lessor be liable for
any business interruption suffered by Lessee.
23. ADDITIONAL RENT: It is expressly agreed that Lessee will pay in
addition to the Fixed Basic Rent provided in Article 3 above,
Additional Rent equal to Lessee's Percentage (as defined in the
Preamble) of the cost for each of the categories of expenses set forth
in this Article 23.
For purposes of this Article 23, a "Lease Year" shall mean the Calendar
Year, except that the First Lease Year shall commence on the
Commencement Date and end on December 31 of such Calendar Year and the
Last Lease Year shall end upon the expiration of the Term.
a. TAXES.
i. During the Term, Lessee shall pay to Lessor as
Additional Rent, Lessee's Percentage, as defined in
the Preamble, of all taxes, assessments, general and
special, ordinary as well as extraordinary, charges,
levies and impositions or payments required to be
made in lieu thereof, including, but not limited to,
water and sewer rents and charges (collectively
referred to hereinafter as the "Taxes") presently or
hereinafter in effect, which are or may be made liens
upon or against the Building and the Property and
which are allocable to the Term.
ii. If any Taxes are levied, assessed, or imposed on the
Building or the Property or on the income or rents
derived therefrom as a substitute, in whole or in
part, for the current ad valorem real estate tax,
Lessee shall pay the same, measured however, as
though the Premises were the sole asset of Lessor.
iii. Commencing on the Commencement Date, Lessee shall pay
Lessee's Percentage of Lessor's estimate of Taxes for
the First Lease Year and as set forth in Lessor's
itemized statement for each Lease Year thereafter in
equal monthly installments, in advance, as Additional
Rent, together with Fixed Basic Rent. Following the
expiration of each Lease Year, Lessor shall furnish
Lessee with a written statement of the actual Taxes
levied against the Building and Property for such
Lease Year and Lessee shall, within thirty (30) days
after receipt of Lessor's statement, pay, as
Additional Rent, the deficiency, if any, in Taxes
payable by Lessee for such Lease Year; and if, at the
end of such Lease Year, the total amount paid by
Lessee as Lessee's Percentage is greater than the
actual amount required to be paid for such Lease
Year, then the amount of such excess will be applied
by Lessor to the
<PAGE> 19
next succeeding monthly installment of Fixed Basic
Rent due hereunder; and if there is any such excess
during the Last Lease Year, then the amount of such
excess will be refunded to Lessee by Lessor within
ninety (90) days after Lessor's statement is
furnished. All such adjustments shall be subject to
verification pursuant to Article 23g). If the First
Lease Year and Last Lease Year is less than a period
of 365 days, then Additional Rent payable during
these respective lease years shall be the amount
equal to (i) Lessee's Percentage (as defined herein),
multiplied by (ii) the Taxes for the calendar year
which includes the First Lease Year or Last Lease
Year, as the case may be, divided by the number of
months (including any portion of a month) during the
First Lease Year or Last Lease Year, as the case may
be.
iv. Receipts. Lessor shall, upon Lessee's request,
furnish to Lessee copies of the official receipts
from relevant taxing authorities or billing entities
or other evidence reasonably satisfactory to Lessee
evidencing the payment of any Taxes.
b. OPERATING COSTS.
i. Operating Costs shall mean any or all expenses
incurred by Lessor in connection with the operation
of the Building and the Property, including all
expenses incurred as a result of Lessor's compliance
with any of its obligations hereunder other than
Lessor's Work, and such expenses shall include: (1)
salaries, wages, medical, surgical and general
welfare benefits, (including group life insurance)
pension payments and other fringe benefits of
employees of Lessor engaged in the operation and
maintenance of the Building (the salaries and other
benefits aforesaid of such employees servicing the
Building shall be comparable to those of employees
servicing similar Buildings located in the County of
Monmouth); (2) payroll taxes, worker's compensation,
uniforms and dry cleaning for the employees referred
to in subdivision (1); (3) the cost of all charges
for steam, heat, ventilation, air conditioning and
water (including sewer charges) furnished to the
common areas of the Building and/or used in the
operation of all of the service and facilities of the
Building and the cost of all charges for electricity
furnished to the public and common areas of the
Building and/or used in the operation of all of the
service and facilities of the Building including any
taxes on any such utilities; (4) the cost of all
charges for rent, casualty, war risk insurance (if
obtainable from the United States government) and of
liability insurance for the Building and the Property
to the extent that such insurance is required to be
carried by Lessor under any superior lease or
superior mortgage or if not required under any
superior lease or superior mortgage then to the
extent such insurance is carried by owners of
buildings comparable to the Building; (5) the cost of
all building supplies; (6) Repair and Maintenance
Expenses, Common Area Expenses and Common Utility
Expenses; (7) the cost of all charges for management,
window cleaning and service contracts for the
Building and the other service facilities related
thereto; (8) the cost of rentals of capital equipment
designed to result in savings or reductions in
Operating Costs. If the Building is not at least one
hundred percent (100%) occupied during any Lease
Year, or proportionate part thereof, Operating Costs
shall be equitably adjusted (by including such net
additional Operating Costs as Lessor would have
incurred) to the extent required to reflect one
hundred percent (100%) occupancy of the Building. The
aforesaid adjustment shall only be made with respect
to those items that are in fact affected by
variations in occupancy levels. Operating costs shall
not include; (a) ad ministrative wages and salaries;
(b) real estate brokerage commissions; franchise
taxes or income taxes of Lessor; (d) Taxes on the
Building and Building Area; (e) cost of painting and
decoration for any occupant's space; (f) interest and
amortization under mortgages; (g) rent payable under
any superior lease; and (h) expenditures for capital
improvements except (x) those which under generally
applied real estate practice are expensed or regarded
as deferred expenses and (xx) for capital
improvements required by law or (xxx) for capital
improvements which are designed to result in a saving
in the amount of Operating Costs. In the case of (xx)
and
<PAGE> 20
(xxx) above, the cost for capital improvements
thereof shall be amortized (using an interest rate
equal to two percent (2%) over the prime rate as
published by the Wall Street Journal) over the useful
life of said item or ten (10) years, whichever shall
be less, and the amortized costs thereof shall be
included in Operating Costs for each Lease Year
beginning in which the costs are incurred.
ii. During the Term, Lessee shall pay to Lessor, Lessee's
Percentage of Operating Costs. Commencing on the
Commencement Date, Lessee shall pay Lessee's
Percentage of Lessor's estimate of operating costs
for the First Lease Year and as set forth in Lessor's
itemized statement for each Lease Year thereafter, in
equal monthly installments, in advance as Additional
Rent, together with Fixed Basic Rent. Following the
expiration of each Lease Year, Lessor shall furnish
Lessee with an itemized statement of the actual
Operating Costs for such Lease Year and Lessee shall,
within thirty (30) days after receipt of such
itemized statement, pay, as Additional Rent, the
deficiency, if any, in charges payable by Lessee for
such Lease Year; and if, at the end of such Lease
Year, the total amount paid by Lessee as Lessee's
Percentage is greater than the amount required to be
paid for such Lease Year, then the amount of such
excess will be applied by Lessor to the next
succeeding monthly installment of Fixed Basic Rent
hereunder; and if there is any such excess during the
Last Lease Year, then the amount of such excess will
be refunded to Lessee by Lessor within ninety (90)
days after Lessor's itemized statement is finished.
All such adjustments shall be subject to verification
pursuant to Article 23(d) hereof. If the First Lease
Year or Last Lease Year is less than a period of 365
days, then Additional Rent payable during these
respective lease years shall be the amount equal to
(i) Lessee's Percentage (as defined herein),
multiplied by (ii) the Operating Costs for the
calendar year which includes the First Lease Year or
Last Lease Year, as the case may be, divided by the
number of months (including any portion of a month)
during the First Lease Year or Last Lease Year, as
the case may be.
c REPAIR AND MAINTENANCE EXPENSES.
Repair and Maintenance Expenses shall mean all costs and
expenses incurred by Lessor for replacement, repair and
maintenance of all or any part of the Building and Property
(including the roof, roofdeck, outside walls & concrete
floor), except: (i) any portion of the Building which is not
otherwise the obligation to repair of any lessee of the
Building, (ii) any portion of the Building related to or any
vacant space unless said repair and maintenance expense is
necessary for the benefit of the Building and Property
overall.
d COMMON AREA EXPENSES.
Common Area Expenses shall mean all costs and expenses
incurred by Lessor for operating, maintaining, repairing,
and/or replacing any and all, or any part of the Common Areas
(or any installation therein, thereon, thereunder or there
over) associated with the Property including, but not limited
to, parking areas, sidewalks, curbs, grounds, on site water
lines, electric lines, gas lines, sanitary sewer lines and
storm water lines, and the total costs and expenses incurred
by Lessor for landscaping, rubbish removal, and the removal of
snow, ice and debris.
e COMMON UTILITY EXPENSES.
Common Utility Expenses shall mean all costs and expenses
incurred by Lessor for water, sewer, gas and electricity,
standby sprinkler and other utility charges for utilities
servicing the Common Areas.
f BOOKS AND REPORTS.
For the protection of Lessee, Lessor shall maintain books of
account for one (1) year which shall be open to Lessee and its
representatives at all reasonable times so Lessee can
determine that Operating Costs and Taxes have, in fact, been
paid or incurred.
<PAGE> 21
For the purposes of this article, Lessee's representatives
shall mean only (y) Lessee's employees or (z) a certified
public accounting firm. At Lessor's request, Lessee shall
execute a confidentiality agreement reasonably acceptable to
Lessor prior to any examination of Lessor's books and records.
Any disagreement with respect to any one or more of said
charges if not satisfactorily settled between Lessor and
Lessee shall be referred by either party to an independent
certified public accountant to be mutually agreed upon, and if
such an accountant cannot be agreed upon, The American
Arbitration Association may be asked by either party to select
an arbitrator, whose decision on the dispute will be final and
binding upon both parties, who shall jointly share any cost of
such arbitration. Pending resolution of said dispute the
Lessee shall pay to Lessor the sum so billed by Lessor subject
to ultimate resolution as aforesaid.
g RIGHT OF REVIEW.
Once Lessor shall have finally determined Taxes and Operating
Costs at the expiration of a Lease Year, then as to the item
so established, Lessee shall only be entitled to dispute said
charge as finally established for a period of one (1) year
after such charge is finally established, and Lessee
specifically waives any right to dispute any such charge at
the expiration of said one (1) year period.
24 COMMON AREA CHARGES: The Premises and the Building in which it is
located are within an office/industrial park known as Monmouth Shores
Corporate Park (the "Business Park"). Lessor from time to time will
incur various expenses to maintain the Business Park for the benefit of
all lessees. The Lessee shall pay Lessor, as Additional Rent, Lessee's
Business Park Share (as defined in the Preamble) of the total cost and
expenses incurred by Lessor maintaining certain areas of the Business
Park for the following items:
a The cost of maintaining Business Park signs and lessee
directories; and
b the cost of water, electricity and other utilities used in
connection with the operation and maintenance of the Business
Park and that part of any area demised to a lessee; and
c other costs reasonably incurred by Lessor to maintain the
Business Park or cost incurred for services benefiting all
lessees or occupants of the Business Park which, in the
reasonable opinion of the Lessor are services desirable to
operate the Business Park and not otherwise included or
specifically prohibited under paragraph 23 of this Lease; and
d the cost of maintaining common facilities used by all lessees
such as common grass areas, boulevard dividers, curbing and
lighting.
Nothing herein shall obligate Lessor to incur any expense or render any
services as to the Business Park, the Lessee acknowledging that Lessor
may sell any part or parcels of land located within the Business Park
and Lessor shall not be obligated to undertake at any time any service
for the Business Park. The foregoing provisions are solely to enable
Lessor to equitably allocate charges and costs, if incurred, at
Lessor's sole election.
25 LESSEE'S ESTOPPEL: Lessee shall, from time to time, on not less that
ten (10) days prior written request by Lessor, execute, acknowledge and
deliver to Lessor a written statement certifying that the Lease is
unmodified and in full force and effect, or that the Lease is in full
force and effect as modified and listing the instruments of
modification; the dates to which the rents and charges have been paid;
and, to the best of Lessee's knowledge, whether or not Lessor is in
default hereunder, and if so, specifying the nature of the default. It
is intended that any such statement delivered pursuant to this Article
25 may be relied on by a prospective purchaser of Lessor's interest or
mortgagee of Lessor's interest or assignee of any mortgage of Lessor's
interest. Lessee shall also execute and deliver the form "Estoppel
Certificate" attached hereto as Exhibit E.
26 HOLDOVER TENANCY: If Lessee holds possession of the Premises after the
Term of this Lease, Lessee shall become a tenant from month to month
under the provisions herein provided, but at a monthly basic rental
equal to 150% of the then monthly basic rental for the
<PAGE> 22
first month of such holdover and thereafter as provided for pursuant to
N.J.S.A. 2A:42-6 and without the requirement for demand or notice by
Lessor to Lessee demanding delivery of possession of said Premises (but
Additional Rent shall continue as provided in this Lease), which sum
shall be payable in advance on the first day of each month, and such
tenancy shall continue until terminated by Lessor, or until Lessee
shall have given to Lessor, at least sixty (60) days prior to the
intended date of termination, a written notice of intent to terminate
such tenancy, which termination date must be as of the end of a
calendar month.
27 RIGHT TO SHOW PREMISES: Lessor may show the Premises to prospective
purchasers and mortgagees; and during the six (6) months prior to
termination of this Lease, to prospective tenants, during business
hours of Lessee on reasonable notice to Lessee.
28 LESSOR'S WORK - LESSEE'S DRAWINGS:
a Lessor agrees that, prior to the commencement of the Term of
this Lease, it will do substantially all of the work in the
Premises in accordance with Exhibit C attached hereto and made
a part hereof.
b Lessee will timely supply such drawings and information to
Lessor as set forth in Exhibit C. Any delay occasioned by
Lessee's failure to timely supply such drawings and
information shall not delay the Commencement Date of the Term
and Lessee's obligations hereunder, and the same shall
commence on the date the Premises would have been delivered to
Lessee pursuant to Article 2, but for Lessee's delay.
c Lease commencement shall occur and the Commencement Date is
defined as that date when Lessor has done substantially all of
the work to be done by Lessor in accordance with Exhibit C,
unless Lessor has been precluded from completing said work as
a result of Lessee's acts or omissions including, but not
limited to, its failure to comply with Article 27(b) hereof.
Occupancy by Lessee or the delivery of a Certificate of
Occupancy by Lessor (if required pursuant to local law) shall
be prima facie evidence that Lessor has done substantially all
of the work.
29 WAIVER OF TRIAL BY JURY: To the extent such waiver is permitted by law,
the parties waive trial by jury in any action or proceeding brought in
connection with this Lease or the Premises.
30 LATE CHARGE: Anything in this Lease to the contrary notwithstanding, at
Lessor's option, Lessee shall pay a Late Charge of eight percent (8%)
of any installment of Fixed Basic Rent or Additional Rent paid more
than five (5) days after the due date thereof, to cover the extra
expense involved in handling delinquent payments, said Late Charge to
be considered Additional Rent. The amount of the Late Charge to be paid
by Lessee shall be reassessed and added to Lessee's obligations for
each successive monthly period until paid.
31 LESSEE'S INSURANCE:
a. Lessee covenants to provide at Lessee's cost and expense on or
before the earlier of (i) the Commencement Date, or (ii)
Lessee's taking actual possession for the purpose of
completing any improvement work, and to keep in full force and
effect during the entire Term and so long thereafter as
Lessee, or anyone claiming by, through or under Lessee, shall
occupy the Premises, insurance coverage as follows:
i.) Commercial General Liability Insurance with
contractual liability endorsements with respect to
the Premises and the business of Lessee in which
Lessee shall be adequately covered under limits of
liability of not less than $2,000,000 for injury or
death to any one person and $5,000,000 for injury or
death to more than one person and $1,000,000 with
respect to property damage.
ii.) Fire and Extended Coverage, Vandalism, Malicious
Mischief, Sprinkler Leakage and Special Extended
Coverage Insurance in an amount adequate to cover the
cost of replacement of all personal property,
decoration, trade fixtures, furnishings, equipment in
the Premises and all contents therein. Lessor shall
not be liable for any damage to such property of
Lessee by fire
<PAGE> 23
or other peril includable in the coverage afforded by
the standard form of fire insurance policy with
extended coverage endorsement attached (whether or
not such coverage is in effect), no matter how
caused, it being understood that the Lessee will look
solely to its insurer for reimbursement.
iii.) Worker's Compensation Insurance in the minimum
statutory amount covering all persons employed by
Lessee.
iv.) Said limits shall be subject to periodic review and
Lessor reserves the right to increase said coverage
limits if, in the reasonable opinion of Lessor, said
coverage becomes inadequate and is less than that
commonly maintained by tenants in similar buildings
in the area by tenants making similar uses. On or
before the Commencement Date, and thereafter at
Lessor's request, Lessee shall provide Lessor
evidence of the insurance coverage required herein in
the form of an insurance certificate.
v.) If at any time during the term of this Lease, Lessee
owns or rents more than one location, its liability
policy shall contain an endorsement to the effect
that the aggregate limit in the policy shall apply
separately to each location owned or rented by
Lessee.
b. All of the aforesaid insurance shall (i) name Lessor as an
additional insured (except with respect to the coverages set
forth in clause 31(a)(ii) and 31(a)(iii)); (ii) shall be
written by one or more responsible insurance companies
licensed in the State of New Jersey satisfactory to Lessor and
in form satisfactory to Lessor; (iii) contain endorsements
substantially as follows:
"It is understood and agreed that the insurer will
give to Lessor (or any successor Lessor), c/o Cali
Realty Corporation, 11 Commerce Drive, Cranford, New
Jersey, ten (10) days prior written notice of any
material change in or cancellation of this policy."
and (iv) shall be written on an "occurrence" basis and not on
a "claims made" basis.
c. Lessee shall be solely responsible for payment of premium and
Lessor (or its designee) shall not be required to pay any
premium for such insurance. Lessee shall deliver to Lessor on
or before the Commencement Date and at least fifteen (15) days
prior to the expiration of such policy, either a duplicate
original or an insurance certificate it being the intention of
the parties hereto that the insurance required under the terms
hereof shall be continuous during the entire Term of this
Lease and any other period of time during which pursuant to
the Term hereof, said insurance is required. Any insurance
carried by Lessee shall be in excess of and will not
contribute with the insurance carried by Lessor for injuries
or damage arising out of the Premises.
d. Lessee agrees, at its own cost and expense, to comply with all
rules and regulations of the National Fire Protection
Association (NFPA) National Fire Code which are applicable to
the Premises regarding it's use and occupancy of the Premises.
e. Lessor makes no representation that the limits of liability
specified to be carried by Lessee or Lessor under the terms of
this Lease are adequate to protect Lessee against Lessee's
undertaking under this Article 31, and in the event Lessee
believes that any such insurance coverage called for under
this Lease is insufficient, Lessee shall provide, at is own
expense, such additional insurance as Lessee deems adequate.
f. During the Term, Lessor shall maintain the following
insurance, insuring Lessor and any mortgagee, as their
respective interests may appear: (x) insurance against damage
to the Building and Property by all risks of direct physical
loss in an amount equivalent to the full replacement cost
thereof; (y) comprehensive general liability insurance against
claims for bodily injury and property damage occurring on or
about the Property in amounts customarily carried by owners of
similar buildings in the Township of Wall; and (z) insurance
against such other hazards as, from time to time, are then
commonly insured against for buildings similarly situated in
amounts
<PAGE> 24
normally carried with respect thereto. All insurance
maintained pursuant to this Paragraph may be effected by
blanket insurance policies.
g. In the event the Premises or its contents are damaged or
destroyed by fire or other insured casualty, (i) Lessor, to
the extent of the coverage of Lessor's policies of fire
insurance, hereby waives its rights, if any, against Lessee
with respect to such damage or destruction, even if said fire
or other casualty shall have been caused, in whole or in part,
by the negligence of Lessee, and (ii) Lessee, to the extent of
the coverage of Lessee's policies of fire insurance with
extended coverage, hereby waives its rights, if any, against
Lessor with respect to such damage, or destruction, even if
said fire or other casualty shall have been caused, in whole
or in part, by the negligence of Lessor; provided, however,
such waivers of subrogation shall only be effective with
respect to loss or damage occurring during such time as
Lessor's or Lessee's policies of fire insurance (as the case
may be) shall contain in clause or endorsement providing in
substance that the aforesaid waiver of subrogation shall not
prejudice the type and amount of coverage under such policies
or the right of Lessor or Lessee (as the case may be) to
recover thereunder. If, at any time, Lessor's or Lessee's
insurance carrier refuses to write insurance which contains a
consent to the foregoing waiver of subrogation, Lessor or
Lessee, as the case may be, shall notify the party thereof in
writing, and upon the giving of such notice, the provisions of
this Section shall be null and void as to any casualty which
occurs after such notice. If Lessor's or Lessee's insurance
carrier shall make a charge for the incorporation of the
aforesaid waiver of subrogation in its policies, then the
party requesting the waiver shall promptly pay such charge to
the other party upon demand. In the event the party requesting
their waiver fails to pay such charge upon demand, the other
party shall be released of its obligation to supply such
waiver.
32. NO OTHER REPRESENTATIONS: No representations or promises shall be
binding on the parties hereto except those representations and promises
contained herein or in some future writing signed by the party making
such representation(s) or promise(s).
33. QUIET ENJOYMENT: Lessor covenants that if, and so long as, Lessee pays
Fixed Basic Rent, and any Additional Rent as herein provided, and
performs Lessee's covenants hereof, Lessor shall do nothing to affect
Lessee's right to peaceably and quietly have, hold and enjoy the
Premises for the Term herein mentioned, subject to the provisions of
this Lease.
34. INDEMNITY: Lessee shall indemnify and save harmless Lessor and its
agents against and from; (a) any and all claims (i) arising from (x)
the conduct or management by Lessee, its subtenants, licensees, its or
their employees, agents, contractors or invitees on the Premises or of
any business therein, or (y) any work or thing whatsoever done, or any
condition created (other than by Lessor for Lessor's or Lessee's
account) in or about the Premises during the Term of this Lease or
during the period of time, if any, prior to the Commencement Date that
Lessee may have been given access to the Premises, or (ii) arising from
any negligent or otherwise wrongful act or omission of Lessee or any of
its subtenants or licensees or its or their employees, agents,
contractors or invitees, and (b) all costs, expenses and liabilities
incurred in or in connection with each such claim, action or proceeding
brought thereon. In case any action or proceeding be brought against
Lessor by reason of any such claim, Lessee, upon notice from Lessor,
shall resist and defend such action or proceeding.
35. ARTICLE HEADINGS: The article headings in this Lease and position of
its provisions are intended for convenience only and shall not be taken
into consideration in any construction or interpretation of this Lease
or any of its provisions.
36. APPLICABILITY TO HEIRS AND ASSIGNS: The provisions of this Lease shall
apply to, bind and inure to the benefit of Lessor and Lessee, and their
respective heirs, successors, legal representatives and assigns. It is
understood that the term "Lessor" as used in this Lease means only the
owner, a mortgagee in possession or a term lessee of the Building, so
that in the event of any sale of the Building or of any lease thereof,
or if a mortgagee shall take possession of the Premises, the Lessor
herein shall be and hereby is entirely freed and relieved of all
covenants and obligations of Lessor hereunder accruing thereafter, and
it shall be deemed without further agreement that the purchaser, the
term lessee of the Building, or the mortgagee in possession has assumed
and agreed to carry out any and all covenants and obligations of Lessor
hereunder.
<PAGE> 25
37. PARKING: Lessee's occupancy of the Premises shall include the use of
the outside parking spaces only as set forth in the Preamble, all of
which will be unassigned. The parking spaces may be used only by the
Lessee and invitees of Lessee when conducting business at the Building.
Lessee shall, upon request, promptly furnish to Lessor the license
numbers of the cars operated by Lessee and its subtenants, licensees,
invitees, concessionaires, officers and employees. Lessee agrees that
it and its employees and invitees shall not park their automobile in
parking spaces allocated to others by Lessor and shall comply with such
rules and regulations for use of the parking area(s) as Lessor may from
time to time prescribe. Lessor shall not be responsible for any damage
or theft of any vehicle in the parking area and shall not be required
to keep parking spaces clear of unauthorized vehicles or to otherwise
supervise the use of the parking area. If any vehicle of the Lessee, or
of any subtenant, licensee, concessionaire, or of their respective
officers, agents or employees, is (i) parked in any part of the Common
Areas other than the employee parking area(s) designated therefor by
Lessor, or (ii) using the parking space(s) when not conducting business
at the Building then Lessee shall pay to Lessor such reasonable penalty
as may be fixed by Lessor from time to time, provided Lessor has given
Lessee notice of such violation. All amounts due under the provisions
of this Article 37 shall be deemed to be Additional Rent.
38. LESSOR'S LIABILITY FOR LOSS OF PROPERTY: Lessor shall not be liable for
any loss of property from any cause whatsoever, including but not
limited to theft or burglary from the Premises, and any such loss
arising from the negligence of Lessor, its agents, servants or
invitees, or from defects, errors or omissions in the construction or
design of the Premises and/or the Building, including the structural
and non-structural portions thereof, and Lessee covenants and agrees to
make no claim for any such loss at any time.
39. PARTIAL INVALIDITY: If any of the provisions of this Lease, or the
application thereof to any person or circumstances, shall to any
extent, be invalid or unenforceable, the remainder of this Lease, or
the application of such provision or provisions to persons or
circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of
this Lease shall be valid and enforceable to the fullest extent
permitted by law.
40. BROKER: Lessee represents and warrant to Lessor that the Broker, as
defined in the Preamble is the sole broker with whom Lessee has
negotiated in bringing about this Lease and Lessee agrees to indemnify
and hold Lessor and its mortgagee(s) harmless from any and all claims
of other brokers and expenses in connection therewith arising out of or
in connection with the negotiation of or the entering into this Lease
by Lessor and Lessee. In no event shall Lessor's mortgagee(s) have any
obligation to any broker involved in this transaction.
41. PERSONAL LIABILITY: Notwithstanding anything to the contrary provided
in this Lease, it is specifically understood and agreed, such agreement
being a primary consideration for the execution of this Lease by
Lessor, that there shall be absolutely no personal liability on the
part of Lessor, its constituent members (to include but not be limited
to, officers, directors, partners and trustees) their respective
successors, assigns or any mortgagee in possession (for the purposes of
this Article, collectively referred to as "Lessor"), with respect to
any of the terms, covenants and conditions of this Lease, and that
Lessee shall look solely to the equity of Lessor in the Building for
the satisfaction of each and every remedy of Lessee in the event of any
breach by Lessor of any of the terms, covenants and conditions of this
Lease to be performed by Lessor, such exculpation of liability to be
absolute and without any exceptions whatsoever.
42. NO OPTION: The submission of this Lease Agreement for examination does
not constitute a reservation of, or option for, the Premises, and this
Lease Agreement becomes effective as a Lease Agreement only upon
execution and delivery thereof by Lessor and Lessee.
43. DEFINITIONS:
a. AFFILIATE -- Affiliate shall mean any corporation related to
Lessee as a parent, subsidiary or brother-sister corporation
so that such corporation and such party and other corporations
constitute a controlled group as determined under Section 1563
of the Internal Revenue Code of 1986, as amended and as
elaborated by the Treasury
<PAGE> 26
Regulations promulgated thereunder or any business entity in
which Lessee has more than a fifty percent (50%) interest.
b. BUSINESS PARK -- means all of the improved and unimproved
property as shown on Exhibit A-2, together with all buildings,
structures and improvements now or hereafter constructed
thereon and together with any appurtenances thereto.
c. COMMON AREAS -- shall include all that area outside the
Building including but not limited to parking areas,
sidewalks, curbs, grounds, on site water lines, electric
lines, gas lines, sanitary sewer lines and storm water lines,
and roadways associated with the Property and the Business
Park.
d. FORCE MAJEURE -- Force Majeure shall mean and include those
situations beyond Lessor's reasonable control, including by
way of example and not by way of limitation, acts of God;
accidents; repairs; strikes; shortages of labor, supplies or
materials; inclement weather; or, where applicable, the
passage of time while waiting for an adjustment or insurance
proceeds. Any time limits required to be met by either party
hereunder, whether specifically made subject to Force Majeure
or not, except those related to the payment of Fixed Basic
Rent or Additional Rent, shall, unless specifically stated to
the contrary elsewhere in this Lease, be automatically
extended by the number of days by which any performance called
for is delayed due to Force Majeure.
e. LESSEE'S PERCENTAGE -- The parties agree that Lessee's
Percentage, as defined in the Preamble, reflects and will be
continually adjusted to reflect the ratio of the gross square
feet of the area rented to Lessee [the numerator] as compared
with the total number of gross square feet of the Building
Area (or additional buildings that may be constructed within
the Property) [the denominator] measured outside wall to
outside wall. Lessor shall also have the right to construct
additional buildings in the Property for such purposes as
Lessor may deem appropriate, and subdivide the lands for that
purpose if necessary, and upon so doing, the Property shall
become the subdivided lot on which the Building in which the
Premises is located.
f. LESSEE'S BUSINESS PARK SHARE -- The parties agree that
Lessee's Business Park Share, as defined in the Preamble,
reflects and will be continually adjusted to reflect the ratio
of the gross square foot of the area rented to Lessee [the
numerator] as compared with the total number of gross square
feet of the buildings contained in the Business Park [the
denominator] measured outside wall to outside wall. Lessor
shall also have the right to construct additional buildings in
the Business Park for such purposes as Lessor may deem
appropriate, and subdivide the lands for that purpose if
necessary.
44. LEASE COMMENCEMENT: Notwithstanding anything contained herein to the
contrary, if Lessor, for any reason whatsoever, including Lessor's
negligence except as provided for in Article 28(b), cannot deliver
possession of the Premises, as provided for in Article 28(a), to Lessee
at the commencement of the agreed Term as set forth in Article 2, this
Lease shall not be void or voidable, nor shall Lessor be liable to
Lessee for any loss or damage resulting therefrom, but in that event,
the Term shall be for the full term as specified above to commence from
and after the date Lessor shall have delivered possession of the
Premises to Lessee or from the date Lessor would have delivered
possession of the Premises to Lessee but for Lessee's failure to timely
supply to Lessor such drawings and/or information required by Exhibit C
or for any other reason attributable to Lessee (herein the
"Commencement Date") and to expire midnight of the day immediately
preceding Term anniversary of the Commencement Date, and if requested
by Lessor, Lessor and Lessee shall within thirty (30) days , by a
writing signed by the parties, ratify and confirm said Commencement.
Expiration Dates, and Fixed Basic Rent due hereunder in the form
attached hereto as Exhibit F.
So long as this Lease is fully-executed by October 1, 1997 and
notwithstanding anything contained herein to the contrary, if Lessor
shall not have completed the tenant improvements within the Premises on
or before the Commencement Date as set forth in paragraph 7 of the
Preamble and provided the reason therefor has not been as a result of
Lessee's acts or omissions, then, and in such event, Lessee may cancel
this Lease upon thirty (30) days notice to Lessor, which notice may be
given on or after the thirtieth (30th) day after the
<PAGE> 27
Commencement Date as set forth in paragraph 7 of the Preamble.
Thereafter, unless Lessor delivers possession of the Demised Premises
within thirty (30) days after Lessee's notice to Lessor, this Lease
shall terminate upon the expiration of said thirty (30) day period and
the parties shall be released from obligation under this Lease except
that Lessor shall reimburse to Lessee any prepaid rent, security
deposit and any and all amounts paid by Lessee for improvements
pursuant to Exhibit C. However, in the event Lessor's ability to
complete the tenant improvements within the Premises is delayed because
of long-lead and/or non-standard Building items ordered by Lessee, then
the Commencement Date shall not be delayed as a result thereof, Lessee
shall have no right to cancel as provided above, and the term will
start on the date that Lessor would have been able to so deliver
possession but for each long-lead and/or non-standard Building items.
However, Lessee shall be entitled to take possession of the Premises
prior to completion of such long-lead and/or, non-standard building
items, if Lessor is able to obtain a Certificate of Occupancy from the
required governmental authorities. Lessor shall use its reasonable
efforts to obtain said Certificate of Occupancy.
45. NOTICES: Any notice by either party to the other shall be in writing
and shall be deemed to have been duly given only if delivered
personally or sent by registered mail, certified mail or nationally
recognized overnight delivery service return receipt requested in a
postage paid envelope addressed, if to Lessee, at the above described
Building; if to Lessor, at Lessor's address as set forth above; or, to
either at such other address as Lessee or Lessor, respectively, may
designate in writing. Notice shall be deemed to have been duly given,
if delivered personally or by a nationally recognized overnight courier
service, on delivery thereof, and if mailed, upon the tenth (10th) day
after the mailing thereof.
46. ACCORD AND SATISFACTION: No payment by Lessee or receipt by Lessor of a
lesser amount than the rent and additional charges payable hereunder
shall be deemed to be other than a payment on account of the earliest
stipulated Fixed Basic Rent and Additional Rent, nor shall any
endorsement or statement on any check or any letter accompanying any
check or payment for Fixed Basic Rent or Additional Rent be deemed an
accord and satisfaction, and Lessor may accept such check or payment
without prejudice to Lessor's right to recover the balance of such
Fixed Basic Rent and Additional Rent or pursue any other remedy
provided herein or by law.
47. EFFECT OF WAIVERS: No failure by Lessor to insist upon the strict
performance of any covenant, agreement, term or condition of this
Lease, or to exercise any right or remedy consequent upon a breach
thereof, and no acceptance of full or partial rent by Lessor during the
continuance of any such breach, shall constitute a waiver of any such
breach or of such covenant, agreement, term or condition. No consent,
or waiver, express or implied, by Lessor to or of any breach of any
covenant, condition or duty of Lessee be construed as a consent or
waiver to or of any other breach of the same or any other covenant,
condition or duty, unless in writing signed by Lessor.
48. LEASE CONDITION: This Lease is expressly conditioned upon Lessor
receiving the consent and approval of Lessor's mortgagee to its term
and provisions not later than thirty (30) days after its execution by
Lessee, and delivery to Lessor. Should said consent not be received
within the aforesaid time period, Lessor may, at Lessor's sole option,
cancel this Lease and return the first month's Fixed Basic Rent and
Security Deposit to Lessee, which Lessee has deposited with Lessor upon
execution of this Lease, and thereafter the parties shall have no
further obligations to each other with respect to this Lease.
49. MORTGAGEE'S NOTICE AND OPPORTUNITY TO CURE: Lessee agrees to give any
mortgagees and/or trust deed holders, by registered mail, a copy of any
notice of default served upon Lessor, provided that, prior to such
notice, Lessee 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. Lessee further agrees that, if
Lessor shall have failed to cure such default within the time provided
for in this Lease, then the mortgagees and/or trust deed holders shall
have an additional thirty (30) 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 such thirty (30) 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
<PAGE> 28
diligently pursued. The provisions of this paragraph 49 shall no affect
in any manner the termination rights given to Lessee under the
provisions of paragraphs 10 and 11 of this Lease.
50. LESSOR'S RESERVED RIGHT: Lessor and Lessee acknowledge that the
Premises are in a Building which is not open to the general public.
Access to the Building is restricted to Lessor, Lessee, their agents,
employees and contractors and to their invited visitors. In the event
of a labor dispute including a strike, picketing, informational or
associational activities directed at Lessee or any other tenant, Lessor
reserves the right unilaterally to alter Lessee's ingress and egress to
the Building or make any change in operating conditions to restrict
pedestrian, vehicular or delivery ingress and egress to a particular
location.
51. CORPORATE AUTHORITY: If Lessee is a corporation, Lessee represents and
warrants that this Lease and has been duly authorized and approved by
the corporation's Board of Directors. The undersigned officers and
representatives of the corporation represent and warrant that they are
officers of the corporation with authority to execute this Lease on
behalf of the corporation, and if so notified by Lessor within ninety
(90) days of execution hereof, Lessee will provide Lessor with a
corporate resolution confirming the aforesaid.
52. LESSEE'S EXPANSION/RELOCATION: The Lessor, in its sole discretion,
shall have the right one time during the initial lease Term or from
time to time thereafter to change the location of the Premises to other
space (the "Substituted Leased Premises") within the Business Park,
subject to the terms and conditions set forth below.
a. The Substituted Leased Premises shall contain a minimum floor
area of approximately the same number of square feet as are
contained in the Premises.
b. If the total square footage comprised by the Substituted
Leased Premises and its attributable Common Facilities exceed
the total of the Premises, the Lessee shall not be required to
pay any increase in the Fixed Basic Rent and Lessee's
Percentage shall not be increased. If, however, such total
square footage shall be less, Lessee's Fixed Basic Rent and
Lessee's Percentage shall be decreased proportionately.
c. The Lessor shall give the Lessee not less than forty-five (45)
days prior notice of Lessor's decision to relocate the Lessee;
and the Lessee agrees that no later than forty-five (45) days
from the date of its receipt of such notice it shall relocate
to the Substituted Leased Premises.
d. The Lessor shall bear and pay for the reasonable cost and
expense of any such relocation, including but not limited to,
reinstalling telephones, wiring, computers, furniture,
reprinting of stationary and moving expenses; provided,
however, that the Lessee shall not be entitled to any
compensation for damages for any interference with or
interruption of its business during or resulting from such
relocation. The Lessor shall make reasonable efforts to
minimize such interference.
e. In connection with any such relocation, the Lessor shall, at
its own cost and expense, furnish and install in (or, if
practicable, relocate to) the Substituted Leased Premises all
walls, partitions, floors, floor coverings, ceilings,
fixtures, wiring and plumbing, if any, (as distinguished from
trade fixtures, equipment, furniture, furnishings and other
personal property belonging to Lessee) required for the
Lessee's proper use and occupancy thereof, all of which items
shall be comparable in quality to those situated in the
Premises.
f. The payments of new monthly minimum rent shall commence on the
earlier of ten (10) days after Lessor has completed the
physical relocation and installation of permanent improvements
in the Substituted Leased Premises or the date that Lessee
first opens for business in the Substituted Leased Premises.
g. Lessor and Lessee shall promptly execute an amendment to this
Lease reciting the relocation of the Premises and any changes
in the monthly minimum rent payable hereunder.
<PAGE> 29
53. MISCELLANEOUS:
a. No Underground Storage Tanks: Lessee warrants and represents
that it will, at no time, install any underground storage
tanks anywhere in the Premises or on the Property. A breach of
this covenant shall be deemed a default under the Lease, and
Lessor shall have the right to terminate the Lease upon the
happening of such event.
b. Window Treatment: Lessee shall, not without Lessor's prior
consent, install any window coverings, blinds, curtains,
shades, except, as may be otherwise consented to by Lessor.
Lessee acknowledging that Lessor intends to have all Lessees
in the building in which the Demised Premises are located use
a uniform window treatment.
c. Refuse Removal: Lessee shall be responsible for removal of its
own trash from the Premises and discharge of same to the
dumpsters located in the rear parking lot. Lessor shall,
subject to the same being included in Common Area Expenses, be
responsible for having the trash removed from dumpsters
located in the Common Areas.
d. Lessor's Consent: If Lessee believes that the Lessor has
unreasonably withheld its consent and/or delayed its consent,
then Lessee's sole remedy shall be to seek specific
performance. The Lessee shall have no right to seek money
damages.
e. Corporate Authority: If Lessee is a corporation, each
individual executing this Lease on behalf of said corporation
represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of said corporation.
f. Use Permit: Lessee in cooperation with Lessor will apply to
the Planning Board of the Township of Wall for a use permit.
Lessee recognizes that the procurement of the use permit is a
condition precedent to Lessor obtaining a building permit to
undertake the construction contemplated to effectuate the
purposes of this Lease. This Lease is subject and contingent
upon Lessor obtaining either a temporary or permanent
certificate of occupancy as otherwise provided in paragraph 28
hereof. In the event Lessor does not obtain a use permit, or
having obtained a use permit, does not obtain a Certificate of
Occupancy, then Lessor shall notify Lessee of such fact, and
thereafter this Lease shall be void, without further liability
of either party to the other except to return to Lessee the
prepaid rent, if any, and the security deposit
54. TERMINATION OPTION: Lessee shall have the one-time right, as of the
third Lease Commencement Date anniversary, with six (6) months prior
written notice, to terminate this Lease if Lessee requires at least
fifty-percent (50%) more space and Lessor cannot accommodate Lessee's
expansion needs. Lessee must notify Lessor at least nine (9) months
prior to the third Lease Commencement Date anniversary of Lessee's need
for additional space. As consideration for this Termination Option,
Lessee shall reimburse Lessor the amount of SEVENTY ONE THOUSAND ONE
HUNDRED EIGHT AND 00/100 DOLLARS ($71,108.00) due and payable by Lessee
to Lessor at time of Lessee's notice to Lessor exercising its
Termination Option.
EACH PARTY AGREES that it will not raise or assert as a defense to any
obligation under the Lease or make any claim that the Lease is invalid or
unenforceable due to any failure of this document to comply with ministerial
requirements including, but not limited to, requirements for corporate seals,
attestations, witnesses, notarizations, or other similar requirements, and each
party hereby waives the right to assert any such defense or make any claim of
invalidity or unenforceability due to any of the foregoing.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year first above written.
MONMOUTH/ATLANTIC REALTY DIGITAL LIGHTWAVE, INC.,
ASSOCIATES L.P., LESSOR LESSEE
By: Cali Sub VII, Inc.,
Managing General Partner
By: By:
------------------------ ------------------------
James G. Nugent Name:
Vice President - Leasing Title:
<PAGE> 30
RIDER A
RENEWAL OPTION: Lessee is hereby granted an option to renew this Lease upon the
following terms and conditions:
1. At the time of the exercise of the option to renew and at the time of
the said renewal, the Lessee shall not be in default in accordance with
the terms and provisions of this Lease, and shall be in possession of
the Premises pursuant to this Lease.
2. Notice of the exercise of the option shall be sent to the Lessor in
writing at least six (6) months before the expiration of the Term of
this Lease.
3. The renewal term shall be for the term of one (1) year, to commence at
the expiration of the term of this Lease, and all of the terms and
conditions of this Lease, other than the Fixed Basic Rent, shall apply
during any such renewal term.
4. The annual Fixed Basic Rent to be paid during the renewal term shall
not be less than that paid for the Premises during the last year of the
original Term of the Lease. If the fair rental value per square foot at
the commencement of the renewal term shall exceed the rent during the
last year of the original Term, the Lessee shall pay such fair rental
value. In determining the fair rental value, the Lessor shall notify
Lessee of the fair rental value as established by Lessor. Should Lessee
dispute Lessor's determination, then the Lessee shall be free to, at
the Lessee's sole cost and expense, employ the services of an appraiser
familiar with Buildings located within the Wall, New Jersey area
comparable to the Building, who shall be a member of MAI and who shall
render an appraisal. If the Lessor and the Lessee's appraiser cannot
agree on the fair rental value, or in such case, on an independent
appraiser acceptable to both, either party may request the American
Arbitration Association in Somerset, New Jersey to appoint such
independent appraiser who shall be a member of MAI familiar with
Buildings in the area of the Building and in such event the judgement
of a majority of the two appraisers and Lessor shall be final and
binding upon the parties. The parties shall share equally in the cost
of any such independent appraiser. Pending resolution of the issue of
fair rental value, the Lessee shall pay the Lessor as of commencement
of the renewal term, the Fixed Basic Rent as established by Lessor,
subject to retroactive adjustment upon final determination of this
issue.
--END--
Rider A - Page 1
<PAGE> 31
EXHIBIT A
LOCATION OF PREMISES
Exhibit A - Page 1
<PAGE> 32
EXHIBIT A-1
PROPERTY
<PAGE> 33
EXHIBIT A-2
BUSINESS PARK
<PAGE> 34
EXHIBIT B
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors and public parts of the Property shall not be
obstructed or encumbered by Lessee or used by Lessee for any purpose
other than ingress and egress to and from the Premises. The Lessee will
not use or permit to be used the sidewalk area by motor vehicles, and
will limit such vehicles to the driveway and parking areas.
2. No awnings, air conditioning units or other projections shall be
attached to the outside walls or window sills of the building on the
Property or otherwise project from the building.
3. The Lessee shall not erect, make or maintain on or attach or affix to
any part of the Premises including the windows and doors, any sign,
picture or other representation or advertisement or notice of any kind,
without the express written consent of the Lessor obtained in advance.
Lessee shall have the right to apply on the main entrance door to the
Premises lettering of approved type, size and style as well as company
logo where applicable.
4. The windows in the Premises shall not be covered or obstructed by
Lessee, nor shall articles be placed on the window sills or in the
halls or in any other part of the building, nor shall any articles be
thrown out of the doors or windows of the Premises.
5. Lessee shall not lay linoleum or other similar floor covering so that
the same shall come in direct contact with the floor of the Premises,
and if linoleum or other similar floor covering is desired to be used,
an interlining of builder's deadening felt shall first be fixed to the
floor by a paste or other material that may easily be removed with
water, the use of cement or other similar adhesive material being
expressly prohibited.
6. Lessee shall not make, or permit to be made, any unseemly or disturbing
noises nor interfere with other Lessees or those having business with
them. Lessee shall not place office machines or other equipment against
walls which divide the Premises from space leased to other Lessees.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Lessee, and Lessee shall upon the termination
of this tenancy, deliver to Lessor all keys to the Premises either
furnished to, or otherwise procured by, Lessee and in the event of the
loss of any keys so furnished, Lessee shall pay to Lessor the cost
thereof.
8. Lessee shall not keep in the Premises any explosives, cleaning fluid or
any inflammable material. Lessee shall not bring or place any bed or
bedding in the Premises and shall not use the Premises as a lodging
place.
9. Lessor shall not be responsible to Lessee for the non-observance or
violation of any of these Rules and Regulations by any other Lessee.
10. Lessee shall have the right, provided same is done in accordance with
the zoning ordinance of the municipality, to park trucks on the
property along the area wherein are located the loading docks. The
Lessee shall not park trucks in any other portion of the premises
demised.
11. The Lessee shall advise Lessor, if Lessee's S.I.C. number is changed
from that otherwise indicated in Article 16 of the Preamble to Lease
attached hereto.
12. Lessee agrees that Lessee will supply the names, addresses and
telephone numbers of at least two representatives of the Lessee who can
be contacted in the event of an emergency.
Upon notice by the Lessor to the Lessee of a breach of any of the rules
and regulations, Lessee shall, within five (5) days thereafter, comply
with such rule and regulation and in the event Lessee shall not comply,
then the Lessor may, at its discretion, either: (1) cure such condition
and add any cost and expense incurred by the Lessor therefore to the
next installment of rental due under this lease and the Lessee shall
then pay such amount, as
<PAGE> 35
additional rent hereunder; or (2) treat such failure of the part of the
Lessee to remedy such condition as a material default of this Lease on
the part of the Lessee hereunder. If under Article 21 Lessee would have
a longer time period to cure, or to receive a notice, then, such longer
time period to cure, or to receive a notice, then such longer time
period shall be applicable to this paragraph and shall take precedence
over those as otherwise hereinbefore stated.
-- END--
<PAGE> 36
EXHIBIT C
LESSOR'S WORK
Workletter Agreement for office space on the ground floor, at 1340 Campus
Parkway, Wall Township, New Jersey between MONMOUTH/ATLANTIC REALTY ASSOCIATES,
L.P., as Lessor, and DIGITAL LIGHTWAVE, INC., as Lessee.
Dated: September 15, 1997
<TABLE>
<CAPTION>
COST OF IMPROVEMENTS:
<S> <C>
PARTITIONS $ 24,650.00
DOORS, BUCKS, HARDWARE 5,000.00
ELECTRICAL 21,680.00
VENTILATION, AIR-CONDITIONING 5,175.00
PAINTING & VINYL WALL COVER 4,935.00
BASE, FLOORING & CARPET 18,445.00
FIRE SPRINKLER 8,600.00
MISCELLANEOUS 15,150.00
OTHER 9,783.00
SUBTOTAL $113,418.00
10% OVERHEAD 11,341.80
SUBTOTAL $124,759.80
10% GENERAL CONDITION 12,475.98
TOTAL $137,235.78
------------
RENTABLE AREA = 8,044 S.F.
TOTAL COST $137,235.78
LESS: LESSORS ALLOWANCE ($137,235.78)
------------
NET COST TO BE PAID BY LESSEE
PRIOR TO OCCUPANCY $0.00
-----
</TABLE>
AGREED AND ACCEPTED:
DIGITAL LIGHTWAVE, INC., LESSEE
By:
--------------------------
Name:
Title:
<PAGE> 37
DESCRIPTION OF MATERIALS
<TABLE>
<CAPTION>
UNIT QUANTITY
---- --------
PARTITIONS:
- -----------
<S> <C> <C>
* Demolition LF 50
* Ceiling high partition (no SAB) LF 120
* 12 foot ceiling high partition (no SAB) LF 150
* New 2 x 2 lay-in ceiling with grid (warehouse) SF 5,300
* Rework existing ceiling grid (office) SF 1,400
* Finish on mullions EA 3
DOORS, BUCKS, HARDWARE:
- -----------------------
* New interior doors; s/c birch, stain grade EA 8
* New ADA lever set passage locks EA 15
* Master keying (building entrance) LS 1
ELECTRICAL:
- -----------
* Electrical demolition/rewiring LS 1
* New light switches EA 5
* Three-way light switched EA 1
* New duplex receptacles (convenience) EA 20
* Separate circuits 20 AMP, 110V EA 20
* Additional exit lights EA 6
* Provide J-Box in ceiling for power pole EA 6
* Battery Pack emergency lights EA 5
* Re-locate and re-lamp light fixtures EA 27
* Additional 2 x 4 lay-in prismatic fixtures EA 50
VENTILATION AND AIR CONDITIONING:
- ---------------------------------
* Additional HVAC diffusers (warehouse) EA 18
* Re-balance HVAC system LS 1
* Additional HVAC returns (warehouse) EA 15
PAINTING AND WALL COVERING:
- ---------------------------
* Paint walls SF 10,500
* Stain new doors EA 8
* Refinish existing doors EA 7
* Paint jambs EA 15
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C>
BASE, FLOORING AND CARPET:
- --------------------------
* Demo existing carpet SF 600
* Miscellaneous floor patching LS 1
* Install building standard VCT in technician room
(allowance of $2.50 psf, furnished and installed) SF 510
* Install building standard carpet
(allowance of $15.00 psy, furnished and installed) SY 1,000
* Vinyl cove base LF 1,000
FIRE SPRINKLER SYSTEM:
- ----------------------
* Additional sprinkler heads in office LS 1
* Drop riser and add heads in warehouse SF 5,400
MISCELLANEOUS:
- --------------
* New glass panels/remove overhead doors LS 1
* Disconnect slop sink and water heater LS 1
* Install 4 x 5 vision panel/wood casing EA 13
OTHER:
- ------
* Sales tax LS 1
* Architect SF 8,044
* Relocate fire extinguishers LS 1
* Final clean up and cartage LS 1
* Permits, inspections and Certificate of Occupancy LS 1
* Janitorial clean-up SF 8,044
ASSUMPTIONS AND CLARIFICATIONS:
- -------------------------------
* Office partitions or any wiring of same is not included.
J-Box in ceiling were noted.
* No allowance for computer wiring.
* No allowance for office furniture.
* No allowance for telephone system or wiring.
* All glass panels are 4 x 5 safety glass in wood casing.
* Entire plan is subject to architectural review and code requirements.
</TABLE>
--End of "Description of Materials"--
(Exhibit C continued on next page)
<PAGE> 39
EXHIBIT C
NOTES
RE: Workletter Agreement for office space on the ground floor at 1340 Campus
Parkway, Wall Township, New Jersey.
September 15, 1997
DIGITAL LIGHTWAVE, INC., LESSEE
You ("Lessee") and we ("Lessor") are executing simultaneously with this
Workletter Agreement a written lease ("Lease"), covering the space referred to
above, as more particularly described in the Lease ("Premises").
To induce Lessee to enter into the Lease (which is hereby incorporated by
reference) and in consideration of the covenants hereinafter contained, Lessor
and Lessee mutually agree as follows:
1. Lessor shall have its architect prepare the following architectural and
mechanical drawings and specifications based upon the sketch layout
supplied to Lessor by Lessee, attached hereto and made a part hereof,
and further information, finish samples, and descriptions to be
supplied to Lessor, by Lessee upon full execution of this Lease.
a. Architectural drawings and specifications for Lessee's
partition layout, reflected ceiling, placement of electrical
outlets and other installations for the work to be done by
Lessor.
b. Mechanical plans and specifications where necessary for
installation of air conditioning systems, ductwork and
heating.
All such plans and specifications are expressly subject to Lessor's
written approval, which Lessor covenants it will not unreasonably
withhold.
2. Lessor agrees to cause the partition plan, electrical plan and the
reflected ceiling plan to be delivered to Lessee on or before the
fifteenth (15th) day after Lease execution. Lessee agrees to approve
said plans by initialing and returning same to Lessor within three (3)
days of receipt of each plan. Upon approval of the plans initialed by
Lessee, Lessor shall file said plans with the appropriate governmental
agencies.
3. Lessor agrees, at its expense and without charge to Lessee (unless
otherwise provided), to do the work in the Premises as shown on the
preliminary plan approved by Lessee attached hereto and described on
the "Description of Materials" schedule attached hereto, which shall
hereinafter be referred to as "The Work". "Building Standard" shall
mean the type and grade of material, equipment and/or device designated
by Lessor as standard for the Building. All items are Building Standard
unless otherwise noted. The provisions of Article 5 of the Lease shall
apply to any alterations made to the Premises after the initial work to
be performed herein.
4. Lessor has estimated the cost of The Work based upon the plans and
specifications submitted to Lessor by Lessee. Against such estimated
cost, Lessor shall credit an allowance of $137,235.78 and the remaining
balance, if any, shall be paid by Lessee prior to occupancy. Lessor
represents that the above allowance shall be sufficient to complete The
Work, as shown on the preliminary plan and as described on the
"Description of Materials" attached hereto, at no additional expense to
Lessee so long as there are no Change Orders by Lessee in accordance
with paragraph 7 herein.
5. All low partitioning, work station modules, bankscreen partitions and
prefabricated partition systems shall be furnished and installed by
Lessee.
6. The installation or wiring of telephone and computer (data) outlets is
not part of The Work. Lessee shall bear the responsibility to provide
its own telephone and data systems at Lessee's
<PAGE> 40
sole cost and expense. Lessor's electrical contractor shall be made
available to Lessee to install, at Lessee's sole cost and expense,
telephone and computer (data) conduit, wiring and outlet boxes as
designated on the above-referenced plans or alternatively by Lessee.
Upon expiration or sooner termination of the Lease, Lessee shall remove
all telephone and data equipment and wiring from the Premises and the
Building risers prior to vacation of same.
7. Changes in The Work, if necessary or requested by the Lessee, shall be
accomplished after the execution of the Lease and this Workletter
Agreement, and without invalidating any part of the Lease or Workletter
Agreement, by written agreement between Lessor and Lessee hereinafter
referred to as a Change Order. Each Change Order shall be prepared by
Lessor and signed by both Lessee and Lessor stating their agreement
upon all of the following:
a. The scope of the change in The Work; and
b. The cost of the change; and
c. Manner in which the cost will be paid or credited; and
d. The estimated extent of any adjustment to the Commencement
Date as a result of the change in The Work.
Each and every Change Order shall be signed by Lessor's and Lessee's
respective construction representatives. In no event shall any Change
Order(s) be permitted without such authorizations. A 10% supervision
plus 10% overhead charge will be added to the cost of any Change Order.
If Lessee shall fail to approve any such Change Order within one (1)
week, the same shall be deemed disapproved in all respects by Lessee
and Lessor shall not be authorized to proceed thereon. Any increase in
the cost of The Work or the change in The Work stated in a Change Order
which results from Lessee's failure to timely approve and return said
Change Order shall be paid by the Lessee. Lessee agrees to pay to
Lessor the cost of any Change Order promptly upon receipt of an invoice
for same.
8. If Lessee elects to use the architect suggested by Lessor, this
architect becomes the Lessee's agent solely with respect to the plans,
specifications and The Work. If any change is made prior to completion
of schematic drawings and final construction documents which result in
a Change Order and additional costs, such costs shall be the
responsibility of the Lessee. Similarly, any cost savings resulting
from such Change Order(s) shall be credited to the Lessee.
9. Prior to Lessee's occupancy of the Premises, Lessee shall identify and
list any portion of The Work which does not conform to this Workletter
Agreement ("Punch List"). The Lessor shall review with the Lessee all
of the items so listed and correct or complete within thirty (30) days
of occupancy any portion of The Work which fails to conform to the
requirements of this Workletter Agreement.
10. The terms contained in the Lease (which include all exhibits attached
thereto) constitute Lessor's agreement with Lessee with respect to the
work to be performed by Lessor on Lessee's behalf. If the architectural
drawings are in conflict with the terms of the Lease, then the Lease
shall be deemed the controlling document.
11. All materials and installations constructed for the Lessee within the
Premises shall become the property of the Lessor upon installation. No
refund, credit or removal of said items is to be permitted at the
termination of the Lease. Items installed that are not integrated in
any such way with other common building materials do not fall under
this provision (e.g. shelving, furniture, telephone and computer
equipment, etc.).
12. It is agreed that notwithstanding the date provided in the Lease for
the Commencement Date, the term shall not commence until Lessor has
"substantially completed" all work to be performed by Lessor as
hereinbefore set forth in paragraph 3 above and as set forth in the
Lease; provided, however, that if Lessor shall be delayed in
substantially completing said work as a result of:
<PAGE> 41
a. Lessee's failure to approve the plans and specifications in
accordance with paragraph 2 hereof; or
b. Lessee's failure to furnish interior finish specifications,
i.e., paint colors, carpet selection, etc., to Lessor by the
fifth (5th) working day after Lessor has approved the plans
and specifications submitted by Lessee referred to in
paragraph 2 hereof; or
c. Lessee's request for materials, finishes or installations
other than Lessor's Building Standard; or
d. Lessee's changes in The Work; or
e. The performance of a person, firm, partnership or corporation
employed by Lessee and the completion of the said work by said
person, firm, partnership or corporation;
then the Commencement Date of the term of said Lease shall be
accelerated by the number of days of such delay and Lessee's obligation
to pay Fixed Basic Rent and Additional Rent shall commence as of such
earlier date.
13. Lessor shall permit Lessee and its agents to enter the Premises prior
to the Commencement Date in order that Lessee may perform through its
own union contractors or employees such other work and decorations as
Lessee may desire at the same time Lessor's contractors are working in
the Premises. The foregoing license to enter prior to the Commencement
Date, however, is conditioned upon:
a. Lessee's workmen and mechanics working in harmony and not
interfering with the labor employed by Lessor, Lessor's
mechanics or contractors or by any other Lessee or its
mechanics or contractors; and
b. Lessee providing Lessor with evidence of Lessee's contractors
and subcontractors carrying such worker's compensation,
general liability, personal and property insurance as required
by law and in amounts no less than the amounts set forth in
Article 30 of the Lease. If at any time such entry shall cause
disharmony or interference therewith, this license may be
withdrawn by Lessor upon forty-eight (48) hours written notice
to Lessee. Such entry shall be deemed controlled by all of the
terms, covenants, provisions and conditions of said Lease,
except as to the covenant to pay Fixed Basic Rent and
Additional Rent. Lessor shall not be liable in any way for any
injury, loss or damage which may occur to any of Lessee's
decorations or installations so made prior to the Commencement
Date, the same being solely at Lessee's risk.
14. No part of the Premises shall be deemed unavailable for occupancy by
the Lessee, or shall any work which the Lessor is obligated to perform
in such part of the Premises be deemed incomplete for the purpose of
any adjustment of Fixed Basic Rent payable hereunder, solely due to the
non-completion of details of construction, decoration or mechanical
adjustments which are minor in character and the non-completion of
which does not materially interfere with the Lessee's use of such part
of the Premises.
15. Lessee is responsible for all costs related to the repairs and
maintenance of any additional or supplemental HVAC systems, appliances
and equipment installed to meet Lessee's specific requirements. Lessee
shall purchase a service contract for this equipment so that the
equipment is covered by such service contract each year of the term of
the Lease.
16. If construction is to occur in a space occupied by Lessee's employees,
Lessee shall be liable for all costs associated with a delay if Lessee
shall fail to comply with a submitted construction schedule to relocate
personnel, furniture, or equipment. These costs shall include, but not
be limited to the following:
a. cost of construction workers time wasted; and
b. cost of any overtime work necessary to meet schedule
deadlines; and
<PAGE> 42
c. any other costs associated with delays in final completion.
17. This Workletter is based on the quantities and specifications listed
herein. Any change to these specifications shall require the
recalculation of the construction costs. Such recalculation shall not
negate any other section of this Lease.
18. With respect to the construction work being conducted in or about the
Premises, each party agrees to be bound by the approval and actions of
their respective construction representa tives. Unless changed by
written notification, the parties hereby designate the following
individuals as their respective construction representatives:
FOR LESSOR: Chris Guderian FOR LESSEE:
c/o Cali Realty Corporation ---------------------
11 Commerce Drive ---------------------
Cranford, New Jersey 07016 ---------------------
---------------------
If the foregoing correctly sets forth our understanding, kindly sign this letter
agreement where indicated.
MONMOUTH/ATLANTIC REALTY DIGITAL LIGHTWAVE, INC.
ASSOCIATES, L.P., LESSOR: LESSEE:
By: Cali Sub VII, Inc.
Managing General Partner
By: By:
-------------------------- ------------------------
James G. Nugent Name:
Vice President - Leasing Title:
<PAGE> 43
EXHIBIT C
PRELIMINARY PLAN
<PAGE> 44
EXHIBIT D
PERMITTED ENCUMBRANCES
The following are "Permitted Encumbrances" to which this Lease (and Lessee's
estate hereunder) are and shall be subject and subordinate:
1. any and all Senior Encumbrances now or at any time hereafter in effect
or constituting liens on or against the Premises; and
2. all zoning regulations and ordinances of the State or the City and all
other laws of every kind whatsoever, whensoever enacted; and
3. utility company rights, licenses, and/or easements to maintain poles,
lines, wires, towers, stations, cables, pipes, boxes and/or other
fixtures or installations presently serving, crossing, existing, or
granted on, under or with respect to the Building Area (none of which
unreasonably or materially adversely affect Lessee's rights under this
Lease); and
4. all covenants, restrictions, easements, or reservations (if any) of
record against the Building Area (none of which unreasonably or
materially adversely affect Lessee's rights under this Lease); and
5. encroachments, overlaps, boundary line disputes and other matters which
would be disclosed by an accurate survey and inspection of the
Premises.
--END--
<PAGE> 45
EXHIBIT E
ESTOPPEL CERTIFICATE
TO: MORTGAGEE and/or its affiliates and/or whom else it may concern:
1. The undersigned is the Lessee (Tenant) under that certain Lease dated
__________, ___, 199__ by and between _____________________________, as
Lessor (Landlord) and _____________________________, as Lessee,
covering those certain premises commonly known and designated as
__________ r.s.f. on the ________________ floor of
_________________________, New Jersey.
2. The Lease has not been modified, changed, altered or amended in any
respect (except as indicated following this sentence) and is the only
Lease or agreement between the undersigned and the Lessor affecting
said premises. If none, state "none".
3. The undersigned has made no agreements with Lessor or its agents or
employees concerning free rent, partial rent, rebate of rental payments
or any other type of rental concession (except as indicated following
this sentence). If none, state "none".
4. The undersigned has accepted and now occupies the premises, and is and
has been open for business since _______________, l9___. The Lease term
began __________________, 19___, and the rent for said premises has
been paid to and including _________________ in conformity with the
Lease agreement. No rent has been prepaid for more than two (2) months.
The fixed minimum rent being paid as above is ________________, per
month.
5. The Lease is not in default and is in full force and effect. As of the
date hereof, the undersigned is entitled to no credit, no free rent and
no offset or deduction in rent.
6. The undersigned has received or will receive payment or credit for
tenant improvement work in the total amount of __________________ (or
if other than cash, described below). If none state "none".
7. The Lease does not contain and the undersigned doesn't have any
outstanding options or rights of first refusal to purchase the premises
or any part thereof or the real Building Area of which the premises are
a part.
8. No actions, whether voluntary or otherwise, are pending against the
undersigned under the bankruptcy laws of the United States or any State
thereof.
9. The undersigned acknowledges that all the interest of Lessor in and to
the above-mentioned Lease is being duly assigned to MORTGAGEE or one of
its affiliates hereunder and that pursuant to the terms thereof all
rental payments under said Lease shall continue to be paid to Lessor in
accordance with the terms of the Lease unless and until you are
otherwise notified in writing by MORTGAGEE, or its successor or
assigns.
10. The Lessee acknowledges all the interest of the Lessor in and to the
Lease is being duly assigned to MORTGAGEE, and pursuant to the terms
thereof, all rent payments under the Lease shall continue to be paid to
the Lessor in accordance with the terms of the Lease unless and until
the Lessee is notified otherwise in writing by MORTGAGEE or its
successors or assigns.
It is particularly noted that:
A. Under the provisions of said assignment, the Lease cannot be
terminated (either directly or by the exercise of any option
which could lead to termination) or modified in any of its
terms, or consent be given to the release of any party having
liability thereon, without the prior written consent of
MORTGAGEE, or its successors and assigns, and without such
consent no rent may be collected or accepted more than two (2)
months in advance.
B. The interest of the Lessor in said Lease has been assigned to
MORTGAGEE, for the purposes specified in the assignment.
MORTGAGEE, or its successors and assigns, assumes no duty,
liability or obligation whatever under said Lease or any
extension or renewal thereof.
C. Any notices sent to MORTGAGEE or one of its affiliates should
be sent by registered mail and addressed to:
_____________________________________.
11. The undersigned is authorized to execute this Tenant Estoppel
Certificate on behalf of the Lessee.
Dated this day of , 19 .
-------- ------------------ ---
LESSEE:
By:
---------------------------------
Exhibit E - Page (1)
<PAGE> 46
EXHIBIT F
(COMMENCEMENT DATE AGREEMENT)
1. PARTIES
1.1 THIS AGREEMENT made the _________day of ________, 199__ is by
and between ________________ (hereinafter "Lessor") whose
address is c/o Cali Realty Corporation, 11 Commerce Drive,
Cranford, New Jersey 07016 and _________________________
(hereinafter "Lessee") whose address is
________________________________________.
2. STATEMENT OF FACTS
2.1 Lessor and Lessee entered into a Lease dated ____________,
199__ (hereinafter "Lease") setting forth the terms of
occupancy by Lessee of approximately ________ rentable square
feet on the _____ (___) floor (hereinafter "Premises") at
_____________________________ (hereinafter "Building"); and
2.2 The Term of the Lease is for ____________ (__) months with the
Commencement Date of the initial Term being defined in the
Preamble to the Lease as being subject to change under
Articles 27 and 43 thereof; and
2.3 It has been determined in accordance with the provisions of
Articles 27 and 43 of the Lease that ___________, 199__ is the
Commencement Date of the Term of the Lease.
3. AGREEMENT
NOW, THEREFORE, in consideration of the Premises and the
covenants hereinafter set forth, Lessor and Lessee agree as follows:
3.1 The Commencement Date of the Term of the Lease is ___________ ,
199__ and the Expiration Date thereof is _____________ , 199__
and Articles 5 and 8 of the Preamble to the Lease shall be deemed
amended accordingly.
3.2 Article 9 of the Preamble to the Lease shall be deemed amended to
reflect the actual total Fixed Basic Rent to be paid by Lessee
during the Term as follows:
3.3 This Agreement is executed by the parties hereto for the purpose
of providing a record of the Commencement and Expiration Dates of
the Lease, adjust the Term of the Lease and Fixed Basic Rent
amount accordingly.
EXCEPT as amended herein, the Lease covering the Premises shall
remain in full force and effect as if the same were set forth in full
herein and Lessor and Lessee hereby ratify and confirm all the terms
and conditions thereof.
THIS AGREEMENT shall be binding upon and inure to the benefit of
the parties hereto and their respective legal representatives,
successors and permitted assigns.
EACH PARTY AGREES that it will not raise or assert as a defense
to any obligation under the Lease or this Agreement or make any claim
that the Lease or this Agreement is invalid or unenforceable due to any
failure of this document to comply with ministerial requirements
including, but not limited to, requirements for corporate seals,
attestations, witnesses, notarizations, or other similar requirements,
and each party hereby waives the right to assert any such defense or
make any claim of invalidity or unenforceability due to any of the
foregoing.
IN WITNESS THEREOF, Lessor and Lessee have hereunto set their
hands and seals the date and year first above written and acknowledge
one to the other they possess the requisite authority to enter into
this transaction and to sign this Agreement.
------------------------------- ---------------------------
LESSOR LESSEE
By: Cali Sub VII, Inc.
Managing General Partner
By: By:
--------------------------- ------------------------
James G. Nugent Name:
Vice President - Leasing Title:
Exhibit F - Page (2)
<PAGE> 47
EXHIBIT G
LETTER OF CREDIT FORM
Exhibit G - Page (1)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DIGITAL LIGHTWAVE FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 33,480
<SECURITIES> 0
<RECEIVABLES> 10,798
<ALLOWANCES> 0
<INVENTORY> 1,299
<CURRENT-ASSETS> 46,128
<PP&E> 4,650
<DEPRECIATION> 826
<TOTAL-ASSETS> 50,082
<CURRENT-LIABILITIES> 3,375
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 46,609
<TOTAL-LIABILITY-AND-EQUITY> 50,082
<SALES> 8,340
<TOTAL-REVENUES> 8,340
<CGS> 2,787
<TOTAL-COSTS> 2,787
<OTHER-EXPENSES> 3,940
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,613)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,124
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
