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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 2000
REGISTRATION NO. 333-31434
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TRITON NETWORK SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3663 59-3434350
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(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
8529 SOUTH PARK CIRCLE
ORLANDO, FLORIDA 32819
(407) 903-0900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KENNETH R. VINES
8529 SOUTH PARK CIRCLE
ORLANDO, FLORIDA 32819
(407) 903-0900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
MICHAEL J. DANAHER, ESQ. JOCELYN M. AREL, ESQ.
MARTIN J. WATERS, ESQ. KENNETH J. GORDON, ESQ.
DAVID B. CRAWFORD, ESQ. TESTA, HURWITZ & THIBEAULT, LLP
WILSON SONSINI GOODRICH & ROSATI 125 HIGH STREET
PROFESSIONAL CORPORATION BOSTON, MA 02110
650 PAGE MILL ROAD (617) 248-7000
PALO ALTO, CA 94304
(650) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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Common Stock $0.001 par value...................... $75,000,000 $19,800
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(1) Estimated pursuant to Rule 457(o) of the Securities Act of 1933 solely for
the purpose of computing the amount of the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 7, 2000
Shares
TRITON NETWORK SYSTEMS(TM) LOGO
Common Stock
------------------
Prior to this offering, there has been no public market for our common
stock. The initial public offering price of our common stock is expected to be
between $ and $ per share. We have applied to list our common stock on The
Nasdaq Stock Market's National Market under the symbol "TNSI."
The underwriters have an option to purchase a maximum of
additional shares to cover over-allotments of shares.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 5.
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND TRITON
PUBLIC COMMISSIONS NETWORK SYSTEMS
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Per Share............................................ $ $ $
Total................................................ $ $ $
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Delivery of the shares of common stock will be made on or about
, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
U.S. BANCORP PIPER JAFFRAY
The date of this prospectus is , 2000.
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY.................. 1
RISK FACTORS........................ 5
SPECIAL NOTE REGARDING FORWARD-
LOOKING STATEMENTS................ 18
USE OF PROCEEDS..................... 19
DIVIDEND POLICY..................... 19
CAPITALIZATION...................... 20
DILUTION............................ 22
SELECTED CONSOLIDATED FINANCIAL
DATA.............................. 24
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS..................... 25
BUSINESS............................ 29
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PAGE
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MANAGEMENT.......................... 43
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS...................... 53
PRINCIPAL STOCKHOLDERS.............. 55
DESCRIPTION OF CAPITAL STOCK........ 58
SHARES ELIGIBLE FOR FUTURE SALE..... 62
UNDERWRITING........................ 64
NOTICE TO CANADIAN RESIDENTS........ 66
LEGAL MATTERS....................... 67
EXPERTS............................. 67
ADDITIONAL INFORMATION.............. 67
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS........................ F-1
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL , 2000, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
i
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read the entire prospectus carefully.
TRITON NETWORK SYSTEMS, INC.
We provide broadband wireless equipment that enables communications service
providers to deliver high-speed, cost-effective voice, video and data services
to their business customers. Our Invisible Fiber products combine high
transmission speeds and the reliability of fiber optic networks with the
flexibility, low cost and rapid deployment of wireless technologies. Our
products feature proprietary technologies that enable service providers to
install more units in a service area than would be possible with conventional
broadband wireless technologies, permitting them to serve more users and
generate additional revenues. We have designed our Invisible Fiber products for
deployment in consecutive point networks. A consecutive point network is a
series of point-to-point links that form a ring which allows communications
traffic to flow in either direction, creating redundant transmission paths and
reducing the risk of service interruptions. Service providers may use our
products to extend existing fiber optic and wireless networks or to build new
networks.
We currently offer two product lines: our Invisible Fiber Internet Protocol
product line for Internet service providers and our Invisible Fiber SONET/SDH
product line for communications service providers. We entered into three-year
supply agreements with Advanced Radio Telecom and CenturyTel in December 1999,
and we began recognizing revenues from product sales in the first quarter of
2000. We are currently engaged in field trials with other prospective customers.
Increased business use of the Internet and other communications networks
have contributed to a growing demand for high-speed, or broadband, communication
services, including integrated voice, video and data. To meet this demand,
service providers have built high-speed backbone networks of fiber optic cable
and sophisticated routers and switches, and many businesses have built
high-speed internal networks. However, the local access network, or last mile,
that connects backbone networks to internal corporate networks typically support
slower transmission speeds, creating a bottleneck.
Our Invisible Fiber products help solve the local access bottleneck and
offer service providers the following key competitive advantages:
- High Speed Network Services. Our initial Invisible Fiber Internet
Protocol products transmit data at 100 million bits per second, or 100
Mbps, and our initial Invisible Fiber SONET/SDH products transmit data at
155 Mbps.
- High Reliability and Availability of Service. We design our products to
match fiber network reliability standards, including 99.999% availability
and error rates of under 1 errored bit per trillion bits transmitted.
This level of performance meets the stringent requirements of service
providers and is referred to as carrier class reliability.
- Rapid Deployment and Return on Investment. Our Invisible Fiber units are
easily integrated with existing network equipment and can be installed in
hours, enabling service providers to begin generating revenues rapidly.
- High Density Deployment. Our proprietary technologies minimize radio
interference enabling dense deployment of our Invisible Fiber units. This
allows service providers to serve more users with their existing licensed
radio spectrum and generate more revenues.
- Highly Scalable and Flexible. Our Invisible Fiber units enable service
providers to configure, expand and relocate their networks rapidly to
meet changing subscriber demands and to match capital outlays with
subscriber growth.
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OUR STRATEGY
Our objective is to be the leading worldwide provider of broadband wireless
equipment. The key elements of our strategy include the following:
- increase sales to existing customers and promote the use of our solutions
in additional locations and applications;
- expand our customer base, particularly through our key account management
process;
- maintain and extend our product and technology leadership through the
development of new products that support higher bandwidth data
transmission and additional frequency bands; and
- continue to pursue international market opportunities, including Canada,
Australia and Japan, where our products have gained regulatory approval.
RECENT DEVELOPMENT
On February 29, 2000, we entered into an agreement with IBM to purchase
assets and hire approximately 50 employees associated with IBM's broadband modem
product line in exchange for 5.5 million shares of our series C preferred stock.
This IBM unit developed and sold custom modems to us for use in our products.
With the completion of this transaction, we will secure intellectual property
and engineering expertise for future modem development, and we believe we will
lower the cost of manufacturing our products. The closing of the transaction is
subject to customary conditions to closing, including regulatory approval.
OUR OFFICES
We were incorporated in March 1997 in Delaware. Our principal executive
offices are located at 8529 South Park Circle, Orlando, Florida 32819 and our
telephone number is (407) 903-0900. Our web site is www.triton-network.com.
Information contained on our web site is not a part of this prospectus.
OUR TRADEMARKS
We have applied for federal trademark registration of Triton Network
Systems, Invisible Fiber, Consecutive Point and our logo. This prospectus also
contains other trademarks, service marks and trade names that are the property
of other parties.
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THE OFFERING
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Common stock offered....................... shares
Common stock to be outstanding after this
offering................................. shares
Use of proceeds............................ For general corporate purposes.
Proposed Nasdaq National Market symbol..... TNSI
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The number of shares to be outstanding after this offering is based on
51,246,280 shares outstanding as of March 1, 2000, and excludes:
- 3,238,599 shares of common stock issuable upon exercise of options
outstanding as of March 1, 2000, at a weighted average exercise price of
$2.64 per share;
- 768,031 shares of common stock available for issuance at March 1, 2000,
under our 1997 Stock Plan;
- 675,000 shares of common stock issuable upon exercise of warrants
outstanding as of March 1, 2000 at a weighted average exercise price of
$0.50 per share;
- shares of common stock, assuming an initial offering price of
$ per share, issuable upon exercise of a warrant issued to the lender
under our new capital equipment financing line;
- 5.5 million shares of series C convertible preferred stock issuable to
IBM upon completion of our acquisition of IBM's broadband modem product
line; and
- 500,000 additional shares of common stock available for issuance under
our 2000 Employee Stock Purchase Plan immediately following the offering.
Except as otherwise indicated, all information in this prospectus assumes:
- the conversion of all shares of preferred stock into 37,612,938 shares of
common stock upon completion of this offering;
- the effectiveness of our amended and restated certificate of
incorporation; and
- no exercise of the underwriters' over-allotment option.
3
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SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except share and per share data)
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PERIOD FROM
MARCH 5, 1997
(INCEPTION) THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, ------------------------
1997 1998 1999
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CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues................................... $ -- $ -- $ --
Loss from operations....................... (2,558) (15,013) (31,205)
---------- ---------- ----------
Net loss................................... $ (2,475) $ (14,532) $ (30,293)
========== ========== ==========
Net loss per share -- basic and diluted.... $ (0.50) $ (2.14) $ (3.17)
========== ========== ==========
Shares used in per share
calculations -- basic and diluted........ 4,913,989 6,790,600 9,553,134
========== ========== ==========
Pro forma net loss per share:
Net loss per share -- basic and
diluted............................... $ (0.78)
==========
Shares used in per share
calculations -- basic and diluted..... 38,800,408
==========
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DECEMBER 31, 1999
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PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
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(UNAUDITED) (UNAUDITED)
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CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 46,130 $ 46,130
Working capital.................................. 44,180 44,180
Total assets..................................... 63,700 63,700
Convertible preferred stock...................... 38 --
Total stockholders' equity....................... 51,333 51,333
</TABLE>
See note 7 of notes to consolidated financial statements for an explanation
of the determination of the number of shares used in computing net loss per
share data.
The pro forma consolidated balance sheet data reflect the conversion into
common stock of all outstanding convertible preferred stock upon the closing of
this offering. The pro forma as adjusted data reflect our receipt of the net
proceeds from the sale of the shares of common stock offered by us at
an initial public offering price of $ per share, after deducting estimated
underwriting discounts and commissions and estimated offering expenses.
4
<PAGE> 8
RISK FACTORS
Any investment in our common stock involves a high degree of risk. The
risks described below are intended to highlight risks that are specific to us
and are not the only ones we face. Additional risks and uncertainties, such as
those that generally apply to our industry or to companies undertaking initial
public offerings, may also impair our business operations. You should consider
the risks described below carefully and all of the information contained in this
prospectus before deciding whether to purchase our common stock. If any of the
following risks actually occur, our business, financial condition, and results
of operations would suffer. In such case, the trading price of our common stock
could decline, and you may lose all or part of your investment in our common
stock.
RISKS RELATED TO OUR FINANCIAL RESULTS
WE ONLY RECENTLY BEGAN SELLING OUR PRODUCTS AND WE RECORDED NO REVENUES THROUGH
DECEMBER 31, 1999. AS A RESULT, YOU MAY HAVE DIFFICULTY EVALUATING OUR BUSINESS
AND ASSESSING ITS FUTURE VIABILITY.
Our company was founded in March 1997. We received orders from our first
customers in December 1999 and recorded our first revenues in the first quarter
of 2000. An investor in our common stock must consider the risks and
difficulties we may encounter as an early stage company in the new and rapidly
evolving market for broadband wireless equipment. Our limited historical
financial performance may make it difficult for you to evaluate the success of
our business to date and to assess its future viability. We cannot be certain
that our business strategy will be successful. In addition, because we have only
recently begun commercial shipment of our products, we may have limited insight
into trends that may emerge and affect our business. If we fail to respond to
such trends and execute our business strategy, our operating results will
suffer.
WE HAVE A HISTORY OF LOSSES, EXPECT TO INCUR SUBSTANTIAL LOSSES AND NEGATIVE
OPERATING CASH FLOWS AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE
FUTURE.
Since inception, we have incurred significant net losses, including net
losses of $2.5 million in the period from inception through December 31, 1997,
$14.5 million in 1998 and $30.3 million in 1999. As a result of ongoing
operating losses, we had an accumulated deficit of $47.3 million as of December
31, 1999. We have not achieved profitability. We expect to incur substantial
losses for the foreseeable future and may never become profitable. We also
expect to continue to incur significant capital expenditures and anticipate that
our expenses will increase substantially in the foreseeable future as we:
- increase our sales and marketing activities;
- acquire or develop new technology, expand our existing product lines and
develop and market additional broadband wireless products;
- acquire or develop manufacturing capabilities for components used in our
products or to address increased demand for our products;
- implement additional internal systems and infrastructure; and
- hire additional personnel.
We also expect to experience negative operating cash flow for the
foreseeable future as we fund our operating losses and capital expenditures. We
will need to generate significant revenues to achieve and maintain
profitability. We cannot be certain that we will achieve profitability in the
future. Our failure to achieve or maintain profitability could negatively impact
the market price of our common stock.
5
<PAGE> 9
BECAUSE OUR ABILITY TO FORECAST OUR QUARTERLY REVENUES IS LIMITED AND A
SIGNIFICANT PERCENTAGE OF OUR COSTS DO NOT VARY WITH REVENUES, OUR QUARTERLY
OPERATING RESULTS AND STOCK PRICE MAY FLUCTUATE.
Because of our limited operating history and because the market for
broadband wireless equipment is new and rapidly evolving, we may not be able to
forecast our quarterly shipments. Accordingly, it is difficult to predict the
quarterly revenues that we will recognize. A significant percentage of our
expenses, particularly salaries and rent, do not vary with our revenues. If we
experience a shortfall in revenues in relation to our expenses, we may be unable
to reduce our expenses quickly enough to avoid lower than anticipated quarterly
operating results. In addition, our expenses have increased, and will continue
to increase, with the anticipated growth in our business. We do not know whether
our revenues will grow rapidly enough to absorb these costs. As a result, our
quarterly operating results could fluctuate, and such fluctuation could cause
the market price of our common stock to decline. We do not believe that
period-to-period comparisons of our revenues and operating results are
necessarily meaningful. You should not rely on the results of any one quarter as
an indication of future performance.
WE EXPECT TO RELY ON SALES OF OUR INVISIBLE FIBER FAST ETHERNET AND INVISIBLE
FIBER OC-3/STM-1 PRODUCTS FOR A SIGNIFICANT PORTION OF OUR REVENUES, AND THE
FAILURE OF EITHER OF THESE PRODUCTS TO ACHIEVE MARKET ACCEPTANCE WOULD ADVERSELY
AFFECT OUR BUSINESS.
We expect to derive a significant portion of our revenues for the
foreseeable future from sales of our 38 Gigahertz and 28, 29 and 31 Gigahertz,
or Local Multipoint Distribution Service frequencies, Invisible Fiber Fast
Ethernet and OC-3/STM-1 products. Any factors adversely affecting the pricing
of, demand for or market acceptance of these products, including competition or
technological change, could negatively affect our results of operations. Factors
that may affect the market acceptance of our products, some of which are beyond
our control, include the following:
- the adoption of broadband wireless solutions over competing technologies;
- the growth and changing requirements of the market for broadband wireless
equipment;
- the successful development of our relationships with service providers;
- the ability of service providers to obtain the financing, licensed radio
spectrum and roof rights needed to deploy their networks;
- the performance, quality, price and total cost of ownership of our
products; and
- the performance, quality, price, total cost of ownership and availability
of competing products.
IF WE ARE NOT SUCCESSFUL IN DEVELOPING AND MARKETING NEW AND ENHANCED BROADBAND
WIRELESS PRODUCTS THAT KEEP PACE WITH TECHNOLOGY AND OUR CUSTOMERS' NEEDS, OUR
OPERATING RESULTS WILL SUFFER.
The market for our products is new and emerging, and is characterized by
rapid technological advances, changing customer needs and evolving industry
standards. Accordingly, to realize our expectations regarding our operating
results, we depend on our ability to:
- develop, in a timely manner, new products that keep pace with
developments in technology;
- meet evolving customer requirements; and
- enhance our current product offerings and deliver those products through
appropriate distribution channels.
We are seeking to develop new versions of our products to support
additional frequency bands and higher transmission speeds and to develop
enhancements to our existing products. Developing new products and product
enhancements requires significant additional expenditures and research and
6
<PAGE> 10
development resources. We may not be successful in developing and marketing, on
a timely and cost-effective basis, either enhancements to our products or new
products that respond to technological advances and satisfy increasingly
sophisticated customer needs. If we fail to introduce new products, or
enhancements to existing products, our operating results will suffer. In
addition, if new industry standards emerge that we do not anticipate or adapt
to, our products could be rendered obsolete and our business could be harmed.
WE DEPEND ON KEY CUSTOMERS AND THE LOSS OF ANY OF THEM COULD SIGNIFICANTLY
REDUCE OUR REVENUES.
We currently have contracts with two customers. Moreover, because we expect
to focus our sales efforts on selected service providers, we anticipate that our
operating results will continue to depend on sales to a small number of key
customers for the foreseeable future. The loss of either of our current
customers, a reduction in sales to them or the failure to sell our products to
additional service providers would significantly reduce our future revenues.
WE EXPECT THAT OUR SALES CYCLE WILL BE LONG AND UNPREDICTABLE, MAKING IT
DIFFICULT TO PREDICT THE PARTICULAR QUARTER IN WHICH SALES MAY OCCUR.
We have experienced sales cycles ranging from four to twelve months, and we
expect that our sales cycles will continue to be long and unpredictable. We
expect most potential customers will need substantial time to understand our
technology and the benefits offered by our products, including time for testing
and evaluation. In addition, we believe a typical customer is likely to
initially purchase a small number of units and then incrementally increase the
size of the installation over time. A number of factors affect the length of
time the customer needs before it selects us as a vendor or begins placing
orders for shipment. These factors include:
- the customer's ability to obtain the financing and licensed radio
spectrum needed to deploy its networks;
- the type and size of the customer and the nature of its internal decision
processes;
- the length of the customer's product testing and evaluation period;
- the time required by the customer to plan its network development;
- the time required by the customer to deploy its network, which may be
affected by the customer's ability to secure suitable roof rights;
- the size, breadth and configuration of the customer's network; and
- the customer's ability to obtain subscribers for its services.
Long and varying sales cycles make it difficult to predict the quarter in
which particular sales may occur and, therefore, to forecast revenues and budget
expenses. We do not have enough historical experience selling our products to
determine how our sales cycle will affect our revenues.
WE RELY ON THE SERVICES OF OUR KEY PERSONNEL, AND THOSE PERSONS' KNOWLEDGE OF
OUR BUSINESS AND TECHNICAL EXPERTISE WOULD BE DIFFICULT TO REPLACE.
Our ability to implement our business strategy and our future success
depends largely on the continued services of our executive officers and other
key engineering, sales, marketing and support personnel who have critical
industry or customer experience and relationships. None of our key personnel is
bound by an employment agreement. We have no key man life insurance. The loss of
the technical knowledge and management and industry expertise of any of these
key personnel could result in delays in product development, loss of customers
and sales and diversion of management resources, which could adversely affect
our operating results.
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IF WE CANNOT RAISE ADDITIONAL CAPITAL WE MAY NEED ON ACCEPTABLE TERMS, WE MAY
NOT ACHIEVE OUR BUSINESS GOALS.
If we do not have sufficient capital to fund our operations, we may be
forced to discontinue product development, reduce our sales and marketing
efforts, forego attractive business opportunities and lose the ability to
respond to competitive pressures. Although we believe that our current cash and
cash equivalents on hand, the net proceeds from this offering and availability
under our new capital equipment financing line should be sufficient to fund our
operations for at least the next 12 months, we cannot be certain that we will
not require additional financing within this time frame or that such additional
funding, if needed, will be available on terms acceptable to us, or at all. If
we raise additional funds through the issuance of equity securities, the
percentage ownership of our stockholders would be reduced. We may also require
additional capital to acquire complementary businesses, products or technologies
or obtain the right to use complementary technologies. New investors may demand
rights, preferences or privileges senior to those of existing stockholders.
RISKS RELATED TO GROWTH OF OUR INDUSTRY
THE BROADBAND WIRELESS EQUIPMENT INDUSTRY IS NEW AND ITS FUTURE IS UNCERTAIN. IF
SUFFICIENT DEMAND FOR BROADBAND WIRELESS SOLUTIONS DOES NOT DEVELOP, WE WILL NOT
BE ABLE TO GENERATE SIGNIFICANT REVENUES.
Broadband wireless technology is new and unproven. This technology may
prove unsuitable for widespread commercial deployment, in which case it is
unlikely we could generate enough revenues to achieve and sustain profitability.
Many factors will influence the success or failure of broadband wireless
technology, including:
- its capacity to handle growing demand for faster transmission of
increasing amounts of voice, video and data;
- its cost-effectiveness and performance compared to other forms of
broadband access, whose prices and performance continue to improve;
- its reliability and security;
- its availability in volumes sufficient for commercial deployment;
- the availability of sufficient frequency bands for service providers to
deploy products at commercially reasonable rates; and
- the availability of sufficient sites for service providers to install
products at commercially reasonable rates.
OUR BUSINESS WILL BE DEPENDENT ON THE RATE OF ADOPTION OF CONSECUTIVE POINT
BROADBAND WIRELESS TECHNOLOGY BY SERVICE PROVIDERS.
Substantially all of our revenues will come from sales of our consecutive
point broadband wireless products. As a result, we depend on service providers'
adoption of consecutive point broadband wireless technology to complement and
extend their existing networks or to construct new networks. If service
providers do not adopt consecutive point broadband wireless technology as we
anticipate, our sales opportunities will be limited and it will be difficult for
us to achieve profitability.
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MANY COMPETING TECHNOLOGIES MAY SERVE OUR TARGET MARKET, AND IF THE CONSECUTIVE
POINT BROADBAND WIRELESS TECHNOLOGY UPON WHICH OUR PRODUCTS IS BASED DOES NOT
SUCCEED AS A SOLUTION FOR BROADBAND ACCESS, WE WOULD NOT BE ABLE TO GROW OUR
BUSINESS.
Our consecutive point broadband wireless solutions compete with other
high-speed solutions such as digital subscriber lines, coaxial cable, fiber
optic cable, satellite and point-to-point and point-to-multipoint wireless
technologies. Many of these alternative technologies can take advantage of
existing installed infrastructure and have achieved significantly greater market
acceptance and penetration than broadband wireless technologies, including our
consecutive point broadband wireless technology. Moreover, current broadband
wireless technology, including our consecutive point broadband wireless
technology, has inherent technical limitations that may inhibit its widespread
adoption in many areas, including reduced communication distance in bad weather
and the need for line-of-sight installation. We expect broadband wireless
technologies, including our consecutive point broadband wireless technology, to
face increasing competitive pressures from both current and future alternative
technologies. In light of these factors, many service providers may be reluctant
to invest heavily in consecutive point broadband wireless solutions and,
accordingly, the market for these solutions may fail to develop or may develop
more slowly than we expect. Either outcome would limit our sales opportunities
and make it difficult for us to achieve profitability.
THE BROADBAND WIRELESS INDUSTRY IS INTENSELY COMPETITIVE, AND OUR FAILURE TO
COMPETE EFFECTIVELY COULD HURT OUR SALES.
The market for broadband wireless equipment is rapidly evolving,
fragmented, highly competitive and subject to rapid technological change. A
number of large telecommunications equipment suppliers, such as Digital
Microwave Corporation, Harris Corporation and P-Com, Inc., as well as a number
of smaller companies have developed or are developing products that compete with
ours. Some of our competitors are substantially larger than we are, have longer
operating histories and have greater financial, sales, marketing, distribution,
technical, manufacturing and other resources. Some also have greater name
recognition and a larger installed base of customers than we have. In addition,
many of our competitors have well-established relationships with our current and
potential customers and have extensive knowledge of our target markets. As a
result, our competitors may be able to respond more quickly to evolving industry
standards and changes in customer requirements, or to devote greater resources
to the development, promotion and sale of their products than we can. In
addition, current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties to
increase their ability to gain market share rapidly. We also expect that
industry consolidation could increase competition. We expect to face increasing
competitive pressures from both current and future competitors. Increased
competition could result in reduced demand for our products, price reductions
and reduced gross margins for our products, any of which could seriously harm
our business.
AS OUR CUSTOMERS ENTER NEW MARKETS, WE SOMETIMES HAVE TO ADAPT OUR PRODUCTS
RAPIDLY TO THE LICENSED FREQUENCY BANDS AND REGULATORY REQUIREMENTS THAT EXIST
IN THOSE MARKETS, AND WE MAY INCUR SIGNIFICANT COSTS MAKING THE NECESSARY
MODIFICATIONS.
Each of our products is designed for a specific range of frequency bands.
Because different governments license different portions of the frequency
spectrum for the broadband wireless market, and because service providers
license specific frequency bands, we sometimes have to adapt our products
rapidly to use different frequency bands. This design process can be difficult
and time-consuming, and could therefore increase our costs and cause delays in
the delivery of products to our customers.
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<PAGE> 13
RISKS RELATED TO OUR PRODUCT MANUFACTURING
WE WILL BE UNABLE TO SUCCESSFULLY MARKET AND SELL OUR PRODUCTS IF WE ARE UNABLE
TO MANUFACTURE SUFFICIENT QUANTITIES TO MEET CUSTOMER DEMAND.
We currently rely on third party manufacturers to produce some components
used in our products and our own manufacturing capabilities for final assembly
and testing of our products. Except for our agreement with Lockheed Martin
described below, we do not have long-term contracts with any of our third party
manufacturers. We have experienced and may in the future experience delays in
shipments from our manufacturers, which could in turn delay product shipments to
our customers. We may in the future experience other manufacturing problems,
such as inferior quality and insufficient quantities of components or finished
product. Such delays, quality problems and shortages could cause us to lose
sales and customers, and thereby harm our business and operating results. We
intend to introduce new products and product enhancements regularly, which will
require us to achieve volume production rapidly by coordinating our efforts with
those of our third party component manufacturers. We may need to find one or
more new manufacturers that can manufacture the components used in our products
in higher volumes and at lower costs. We may be unable to secure contract
manufacturers that meet our needs. Additionally, qualifying new manufacturers
and commencing volume production is expensive and time consuming. If we are
required or choose to change manufacturers, we may lose sales and our customer
relationships may suffer.
THE CURRENT MANUFACTURER OF THE TRANSMITTER AND RECEIVER, OR TRANSCEIVER MODULE,
USED IN OUR PRODUCTS IS NEARING CAPACITY, AND WE WILL BE UNABLE TO MEET CUSTOMER
DEMAND FOR OUR PRODUCTS IF WE CANNOT BEGIN VOLUME MANUFACTURING OF TRANSCEIVER
MODULES AT OUR FACILITY IN THE FIRST HALF OF 2000.
In response to our current capacity constraints, we plan to begin
manufacturing transceiver modules at our manufacturing facility in Orlando,
Florida in the first half of 2000. We may experience problems and delays in
connection with our manufacturing initiatives. If we cannot quickly achieve
volume production of transceiver modules or if we experience related
disruptions, capacity constraints or quality control problems, then product
shipments to our customers could be delayed. Such delays would negatively impact
our revenues, competitive position and reputation.
BECAUSE WE DEPEND ON SINGLE SOURCE AND LIMITED SOURCE SUPPLIERS FOR KEY
COMPONENTS, WE ARE SUSCEPTIBLE TO SUPPLY SHORTAGES THAT COULD ADVERSELY AFFECT
OUR OPERATING RESULTS.
We currently purchase several key components used in our products from
single or limited sources and depend on supply from these sources to meet our
needs. We acquire these key components through purchase orders and, other than
our agreement with Lockheed Martin, have no long-term commitments regarding
supply or price from these suppliers. We have entered into an agreement with
Lockheed Martin to provide 3,200 transceiver modules by the end of the first
half of 2001. Lockheed Martin will be our sole supplier of transceiver modules
until we begin manufacturing them at our facility in the first half of 2000, and
Verticom and Celeritek are the only suppliers of 38 Gigahertz synthesizers. In
addition, Raytheon is the sole supplier of the high-power amplifier used in our
transceiver modules, and Polese is the sole supplier of the housings used in our
products. Additional single or limited source components may be incorporated in
our products in the future. If we encounter shortages or delays in obtaining
components for our products in sufficient quantities when required, delivery of
our products could be delayed, resulting in customer dissatisfaction and
decreased revenues. In addition, our suppliers may enter into exclusive
arrangements with our competitors, stop selling their products or components to
us at commercially reasonable prices or refuse to sell their products or
components to us at any price, which could harm our results of operations.
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<PAGE> 14
EXCESS OR INSUFFICIENT COMPONENT INVENTORY COULD NEGATIVELY IMPACT OUR BUSINESS
AND OUR RESULTS OF OPERATIONS.
We use forecasts based on anticipated product orders to determine our
component requirements. We may not be able to accurately forecast demand for our
products. In addition, lead times for materials and components that we order
vary significantly and depend on factors including specific supplier
requirements, contract terms and current market demand for a component at a
given time. If we overestimate our component requirements, we may have excess
inventory, which would increase our costs and subject us to increased risk of
obsolescence. If we underestimate our component requirements, we may have
inadequate inventory, which could interrupt our manufacturing and delay delivery
of our products to our customers. Either of these occurrences would negatively
impact our business and operating results.
RISKS RELATED TO OUR PRODUCTS
OUR PRODUCTS MAY CONTAIN DEFECTS THAT COULD HARM OUR REPUTATION, BE COSTLY TO
CORRECT, EXPOSE US TO LITIGATION AND HARM OUR OPERATING RESULTS.
Despite testing by us and our customers, errors may be found in our
products after commencement of commercial shipments. We and our customers have
from time to time discovered errors in our products. In the future, there may be
additional errors and defects in our products. If errors are discovered, we may
not be able to successfully correct them in a timely manner or at all. Errors
and failures in our products could result in a loss of or delay in market
acceptance and damage to our reputation and our ability to convince service
providers of the benefits of our products. In addition, we may need to make
significant expenditures of capital resources in order to eliminate errors and
failures.
Moreover, because our products are used in critical communications
networks, we may receive significant liability claims if our products do not
work properly. Our agreements with customers typically contain provisions
intended to limit our exposure to liability claims. However, these limitations
may not preclude all potential claims. In addition, our insurance polices may
not adequately limit our exposure with respect to such claims. We warrant to our
current customers that our products will operate in accordance with specified
customer requirements. If our products fail to conform to these specifications,
customers could require us to fix defects or assert claims for damages.
Liability claims could require us to spend significant time and money in
litigation or to pay significant damages. Any such claims, whether or not
successful, would be costly and time-consuming to defend and could seriously
damage our reputation and our business.
BROADBAND WIRELESS PRODUCTS COULD MALFUNCTION DUE TO RADIO INTERFERENCE OR
ADVERSE WEATHER CONDITIONS.
Many of our customers will provide service in large, densely populated
metropolitan areas where wireless traffic is heavy. If multiple wireless systems
are operating in these service areas concurrently with our products, the radio
frequency on which our products operate could become saturated, resulting in
signal interference. If that occurred, the quality or availability of our
customers' transmissions could decrease or our products could fail, causing
service delays and interruptions. Interference caused by severe weather
conditions could lead to similar failures. The ability of our products to
provide our customers with high quality and reliable transmissions at all times
and under a variety of adverse conditions is key to our success. If our products
fail we may suffer:
- the loss of or delay in market acceptance and sales of our products;
- cancellation of orders;
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<PAGE> 15
- diversion of development resources;
- injury to our reputation; and
- increased maintenance and warranty costs.
LINE OF SITE RESTRICTIONS INHERENT IN BROADBAND WIRELESS PRODUCTS MAY LIMIT
DEPLOYMENT OPTIONS AND HAVE AN ADVERSE AFFECT ON OUR SALES.
Broadband wireless products require a direct line of sight, potentially
limiting the ability of service providers to deploy them in a cost-effective
manner. Because of line of sight limitations, service providers will often
install broadband wireless equipment on the rooftops of buildings and on other
tall structures. Service providers must generally secure roof rights from the
owners of each building or other structure on which the equipment is to be
installed. The inability to easily and cost effectively obtain roof rights may
cause customers not to choose to install broadband wireless equipment.
WE RELY ON OUR INTELLECTUAL PROPERTY, AND ANY FAILURE BY US TO PROTECT OUR
INTELLECTUAL PROPERTY COULD ENABLE OUR COMPETITORS TO MARKET PRODUCTS WITH
SIMILAR FEATURES THAT MAY REDUCE DEMAND FOR OUR PRODUCTS.
Our success and ability to compete are substantially dependent upon our
internally developed technology and the proprietary technology we license from a
third party that is incorporated into our products. Our intellectual property
rights, and our ability to enforce those rights, may be inadequate to prevent
others from using our technology or substantially similar technology they may
independently develop. The use of that technology by others could eliminate any
competitive advantage we have, cause us to lose sales and lead to lower prices
for our products. We protect our intellectual property through a combination of
patent, copyright, trademark and trade secret laws.
We have filed twenty U.S., three Patent Cooperation Treaty and two foreign
patent applications. We cannot assure you that any of our patent applications
will result in issued patents or that any patents, if issued, will provide us
with competitive advantages. We have also applied for registration of several of
our trademarks and our logo. We also claim common law protections for other
marks we use in our business. We have received a notice from another company
with a similar name demanding that we change our name. We cannot assure you that
we will be able to continue to use our name. See "Business -- Legal
Proceedings." In addition, we cannot assure you that any of our trademark
applications will be granted. To protect our intellectual property, we also
generally limit access to our technology, treat portions of our technology as
trade secrets and obtain confidentiality or non-disclosure agreements from
persons with access to our technology. These steps may be inadequate to provide
the protection we need. A significant portion of our proprietary technology is
know-how, and employees with know-how may depart before transferring their
know-how to other employees. Moreover, the laws of some foreign countries where
we market our products and services do not protect intellectual property rights
to the same extent as do the laws of the United States. We may be required to
spend significant resources to monitor infringement of and enforce our
intellectual property rights.
Third parties could copy or otherwise obtain and use our products or
technology without our authorization. They could also independently develop
similar technology that may infringe our intellectual property rights. We may
not be able to detect infringement and may lose our competitive position in the
market before we do so. Competitors may also design around our technology or
develop competing technologies. If this occurs, our business and prospects would
be negatively impacted.
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<PAGE> 16
OUR PRODUCTS AND THE TRADE NAMES WE USE TO MARKET THEM MAY INFRINGE UPON THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS, AND ANY RESULTING CLAIMS AGAINST US
COULD BE COSTLY TO DEFEND OR SUBJECT US TO SIGNIFICANT DAMAGES.
Substantial litigation regarding intellectual property rights exists in the
telecommunications equipment and network infrastructure industries. We expect
that broadband wireless products may be increasingly subject to third-party
infringement claims as the number of competitors in our industry segment grows
and the functionality of products in different industry segments overlaps. We do
not conduct comprehensive patent searches to determine whether the technology
used in our products infringes any patents. If we were to discover that any of
our products violated the intellectual property rights of a third party, we
might be unable to redesign our product to avoid violating their rights, and we
might be unable to obtain a license on commercially reasonable terms to use
their intellectual property. We may be prevented from continuing to sell that
product, which could cause us to lose sales. We are not aware that our products
employ technology that infringes any proprietary rights of third parties.
However, third parties may claim that we infringe their intellectual property
rights. Any claims, with or without merit, could:
- be time-consuming to defend;
- result in costly litigation;
- divert our management's attention and resources;
- cause product shipment delays; and
- require us to enter into royalty or licensing agreements.
Furthermore, a party making a claim could obtain a judgement that requires
us to pay substantial damages. A judgment could also include an injunction or
other court order that could prevent us from selling our products.
RISKS RELATED TO THE EXPANSION OF OUR BUSINESS
OUR RECENT GROWTH HAS PLACED A SIGNIFICANT STRAIN ON OUR MANAGEMENT SYSTEMS AND
RESOURCES, AND OUR FAILURE TO MANAGE THIS GROWTH AND ANY FUTURE GROWTH COULD
HARM OUR BUSINESS.
We are currently experiencing a period of significant and rapid growth that
has placed, and continues to place, a significant strain on our management,
operating infrastructure and resources. Our success will depend on our ability
to:
- manage our growth effectively;
- educate customers about the competitive advantages of our products;
- meet customers' demands, specifications and volume requirements;
- complete the planned addition of in-house manufacturing capabilities for
the transceiver modules used in our products;
- complete the acquisition of IBM's broadband modem product line and
integrate these operations and the personnel responsible for them into
our overall operations;
- enhance our operational and financial control, human resources and
information systems; and
- attract, assimilate and retain additional qualified personnel.
Our failure to manage the expansion of our business and operations could
slow our development and negatively impact results of operations.
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<PAGE> 17
FUTURE EXPANSION OF OUR INTERNATIONAL OPERATIONS WILL REQUIRE SIGNIFICANT
MANAGEMENT ATTENTION AND FINANCIAL RESOURCES, AND OUR EFFORTS TO EXPAND
INTERNATIONALLY MAY NOT SUCCEED.
We plan to increase our international sales activities, but we have limited
experience in developing foreign language materials to support our products and
little direct experience marketing and distributing our products
internationally. We currently conduct limited, targeted sales activities in
Canada, Australia and Japan. To successfully expand international sales, we must
expand our international operations, recruit additional international sales and
support personnel, and expand our international distribution channels. This
expansion will require significant management attention and financial resources,
and may not be successful. Our international operations are subject to other
inherent risks, including:
- the impact of recessions in economies outside the United States;
- greater difficulty in accounts receivable collection and longer
collection periods;
- differences in local telecommunications standards;
- unexpected changes in regulatory requirements;
- difficulties and costs of staffing and managing foreign operations;
- reduced protection for intellectual property rights in some countries;
- the existence of protectionist laws and business practices that favor
local competition;
- foreign currency exchange rate fluctuations;
- import and export licensing requirements;
- seasonal reductions in business activity;
- higher personnel costs;
- potentially adverse tax consequences; and
- political and economic instability.
In international markets our success also may depend on our ability to
modify our existing products and develop new products supporting frequency bands
that are different from those used by service providers in the United States.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE NOT ABLE TO SUCCESSFULLY
INTEGRATE OUR PENDING AND ANY FUTURE ACQUISITIONS.
On February 29, 2000, we entered into an agreement to acquire IBM's
broadband modem product line. Upon completion of the transaction, we may
encounter difficulty integrating the personnel we decide to hire, and
operations, technology and software we acquire, from IBM. In addition, one or
more of the key personnel may decide not to work for us. Any difficulties could
disrupt our ongoing business, distract our management and employees, increase
our expenses and adversely affect our results of operations.
In the future, we may acquire, or invest in, complementary businesses,
products, or technologies. Acquisitions involve numerous risks, including:
- difficulties in integrating operations, technologies, products and
personnel;
- diversion of financial and management resources from existing operations;
- risks of entering new markets;
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<PAGE> 18
- potential loss of key employees; and
- inability to generate sufficient revenues to offset acquisition or
investment costs.
If we finance an acquisition by issuing additional equity securities, our
stockholders could experience dilution. In addition, acquisitions may involve
investment-related or other charges and amortization of acquired technology,
goodwill and other intangible assets, and may adversely affect our results of
operations.
COMPETITION FOR QUALIFIED PERSONNEL IN THE TELECOMMUNICATIONS EQUIPMENT INDUSTRY
IS INTENSE, AND IF WE ARE NOT SUCCESSFUL IN ATTRACTING AND RETAINING PERSONNEL,
OUR ABILITY TO GROW OUR BUSINESS MAY BE HARMED.
Our future performance depends on our ability to attract and retain highly
qualified sales, engineering, marketing, and customer support personnel.
Competition for qualified personnel in the telecommunications equipment industry
is intense, and we may not be successful in attracting and retaining such
personnel. We are actively searching for research and development engineers,
sales and marketing and customer service and support personnel, all of whom are
in short supply. If we do not succeed in retaining our personnel or in
attracting new employees, our business could suffer.
Competitors and others have in the past, and may in the future, attempt to
recruit our employees. We have in the past and may in the future attempt to
recruit employees from our competitors. Companies whose employees accept
positions with competitors frequently claim that the competitors have engaged in
unfair hiring practices. We have received such complaints in the past, and may
receive such complaints in the future as we seek to hire qualified personnel.
These complaints may result in material litigation and related disruption to our
operations.
RISKS RELATED TO THIS OFFERING
OUR STOCK PRICE COULD BE VOLATILE, WHICH MAY LEAD TO LOSSES BY INVESTORS.
Before the offering, there was no public market for our common stock. An
active public market for our common stock may not develop or be sustained after
the offering. The underwriters and we will determine the initial public offering
price of our common stock based on negotiations concerning the valuation of our
common stock. The public market may not agree with or accept this valuation.
After the offering, you may not be able to resell your shares at or above the
initial public offering price. The trading price of our common stock is likely
to be volatile. The stock market in general, and the market for technology
companies in particular, has experienced extreme volatility. This volatility has
often been unrelated to the operating performance of particular companies.
Volatility in the market price of our common stock may prevent investors from
being able to sell their common stock at or above the initial public offering
price.
WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR EXPECTED STOCK
PRICE VOLATILITY.
In the past, securities class action litigation has often been brought
against companies after periods of volatility in the market price of their
securities. Securities litigation could result in substantial costs and divert
management's attention and resources from our business. Due to the potential
volatility of our stock price, we may be the target of securities litigation in
the future.
WE HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS OF THIS OFFERING, AND WE MAY
NOT USE SUCH PROCEEDS EFFECTIVELY.
Our management will have broad discretion as to the application of the net
proceeds of this offering. Our management may spend these proceeds in ways with
which our stockholders may not
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<PAGE> 19
agree. Moreover, our net proceeds may be used for corporate purposes that do not
increase our profitability, or the market value of our common stock. Our primary
purpose in conducting this offering is to create a public market for our common
stock. As of the date of this prospectus, we plan to use the proceeds from this
offering for general corporate purposes.
OUR OFFICERS, DIRECTORS AND PERSONS OR ENTITIES AFFILIATED WITH OUR DIRECTORS
WILL RETAIN SIGNIFICANT CONTROL OVER US AFTER THE OFFERING, WHICH MAY LEAD TO
CONFLICTS WITH OTHER STOCKHOLDERS OVER CORPORATE GOVERNANCE ISSUES.
We anticipate that our officers, directors and individuals or entities
affiliated with our directors will beneficially own approximately % of our
outstanding common stock as a group after this offering closes. Acting together,
these stockholders would be able to significantly influence all matters that our
stockholders vote upon, including the election of directors and the approval of
significant corporate transactions. This concentration of ownership may also
delay, deter or prevent a change in our control and may make some transactions
more difficult or impossible to complete without the support of these
stockholders.
THE PROVISIONS OF OUR CHARTER DOCUMENTS MAY INHIBIT POTENTIAL ACQUISITION BIDS
THAT A STOCKHOLDER MAY BELIEVE ARE DESIRABLE, AND THE MARKET PRICE OF OUR COMMON
STOCK MAY BE LOWER AS A RESULT.
Upon completion of this offering, our board of directors will have the
authority to issue up to 10,000,000 shares of preferred stock. The board of
directors can fix the price, rights, preferences, privileges and restrictions of
the preferred stock without any further vote or action by our stockholders. The
issuance of shares of preferred stock may delay or prevent a change in control
transaction. As a result, the market price of our common stock and the voting
and other rights of our stockholders may be adversely affected. The issuance of
preferred stock may result in the loss of voting control to other stockholders.
We have no current plans to issue any shares of preferred stock.
Our charter documents contain anti-takeover devices including:
- a classified board whereby only one of the three classes of directors is
elected each year;
- the ability of our stockholders to remove directors without cause is
limited;
- the right of stockholders to act by written consent has been eliminated;
- the right of stockholders to call a special meeting of stockholders has
been eliminated; and
- a requirement of advance notice to nominate directors or submit proposals
for consideration at stockholder meetings.
These provisions could discourage potential acquisition proposals and could
delay or prevent a change in control transaction. They could also have the
effect of discouraging others from making tender offers for our common stock. As
a result, these provisions may prevent the market price of our common stock from
increasing in response to actual or rumored takeover attempts. These provisions
may also prevent changes in our management.
DELAWARE LAW MAY INHIBIT POTENTIAL ACQUISITION BIDS; THIS MAY ADVERSELY AFFECT
THE MARKET PRICE OF OUR COMMON STOCK, DISCOURAGE MERGER OFFERS AND PREVENT
CHANGES IN OUR MANAGEMENT.
Section 203 of the Delaware General Corporation Law may inhibit potential
acquisition bids for our company. Upon completion of this offering, we will be
subject to the anti-takeover provisions of the Delaware General Corporation Law,
which regulate corporate acquisitions. Delaware law will prevent us from
engaging, under specified circumstances, in a "business combination" with any
"interested stockholder" for three years following the date that the interested
stockholder became an interested stockholder unless our board of directors or a
supermajority of our uninterested
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<PAGE> 20
stockholders agrees. For purposes of Delaware law, a "business combination"
includes a merger or consolidation involving us and the interested stockholder
and the sale of more than 10% of our assets. In general, Delaware law defines an
"interested stockholder" as any holder beneficially owning 15% or more of the
outstanding voting stock of a corporation and any entity or person affiliated
with or controlling or controlled by the holder. Under Delaware law, a
corporation may opt out of the foregoing anti-takeover provisions. We do not
intend to opt out of the anti-takeover provisions of Delaware Law.
FUTURE SALES OF COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD CAUSE OUR STOCK
PRICE TO FALL.
If our stockholders sell substantial amounts of common stock in the public
market, the market price of our common stock could fall. The perception among
investors that these sales will occur could produce the same effect. After this
offering, we will have approximately shares of common stock outstanding.
The shares we are selling in this offering will be freely tradable in the public
market. If we take into account the lock-up agreements executed by our existing
stockholders, the remaining shares of common stock outstanding after this
offering will be available for sale in the public market as follows:
<TABLE>
<CAPTION>
PERCENT OF
TOTAL SHARES
NUMBER OF SHARES OUTSTANDING DATE OF AVAILABILITY FOR SALE
---------------- ------------ --------------------------------
<S> <C> <C>
................................ % , 2000 (date of this prospectus)
to , 2000 (180 days
after the date of this
prospectus)
................................ , 2000 (180 days after the date
of this prospectus), in some
cases under Rule 144
................................ at various times after
, 2000
</TABLE>
Our underwriters could waive the selling restrictions imposed by the
lock-up agreements at any time, which could accelerate the resale of outstanding
shares of common stock. In addition, some of our securityholders have rights to
require us to register their shares for resale in the public market. For a more
detailed description, see "Description of Capital Stock -- Registration Rights,"
"Shares Eligible for Future Sale" and "Underwriting."
YOU WILL SUFFER DILUTION BECAUSE THE NET TANGIBLE BOOK VALUE OF SHARES PURCHASED
IN THIS OFFERING WILL BE SUBSTANTIALLY LOWER THAN THE INITIAL PUBLIC OFFERING
PRICE.
The initial public offering price will significantly exceed the net
tangible book value per share of our common stock. Accordingly, if you purchase
common stock in this offering, you will incur immediate and substantial dilution
of your investment. If outstanding options or warrants are exercised, you will
incur additional dilution.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the sections entitled "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Business," contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by
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<PAGE> 21
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "continue" or the negative of
these terms or other comparable terminology. These statements involve known and
unknown risks, uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking statements. These risks
and other factors include those listed under "Risk Factors" and elsewhere in
this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these
forward-looking statements. We are under no duty to update any of the
forward-looking statements after the date of this prospectus to conform our
prior statements to actual results.
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<PAGE> 22
USE OF PROCEEDS
We will receive net proceeds from this offering of approximately
$ million, assuming an initial public offering price of $ per share
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses. If the underwriters exercise their over-allotment
option in full, our net proceeds will be approximately $ million.
The principal purposes of this offering are to obtain additional capital,
to create a public market for our common stock and to facilitate future access
to public equity markets. As of the date of this prospectus, we have not
allocated the net proceeds of this offering for specific uses. We expect to use
the proceeds for general corporate purposes. We may also use a portion of the
net proceeds for acquisitions of businesses, products and technologies that
complement our business. Other than our agreement with IBM, we have no present
plans, commitments, or current negotiations with respect to any acquisitions.
Pending our use of the net proceeds of this offering, we intend to invest
the proceeds in interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We
intend to retain future earnings, if any, for use in the operation and expansion
of our business, and we do not anticipate paying any cash dividends in the
foreseeable future.
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<PAGE> 23
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999:
- on an actual basis;
- on a pro forma basis to give effect to the conversion of all shares of
preferred stock into 37,612,938 shares of common stock upon completion of
this offering; and
- on a pro forma as adjusted basis to give effect to the sale of
shares of common stock assuming an initial public offering price of
$ per share and after deducting estimated underwriting discounts and
commissions and estimated offering expenses.
You should read this table in conjunction with our consolidated financial
statements and accompanying notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)
<S> <C> <C> <C>
Capital leases and notes payable, net of current
portion............................................ $ 2,155 $ 2,155 $
Stockholders' equity:
Preferred stock, $0.001 par value: no shares
authorized, issued or outstanding, actual and
pro forma; and 10,000,000 shares authorized and
no shares issued or outstanding pro forma as
adjusted........................................ -- -- --
Convertible preferred stock, $0.001 par value:
issued in series A, B and C; 37,705,000 total
shares authorized, 37,612,938 shares issued and
outstanding, actual; no shares authorized,
issued or outstanding, pro forma and pro forma
as adjusted..................................... 38 -- --
Common stock, $0.001 par value: 61,000,000 shares
authorized and 13,591,663 issued and
outstanding, actual; 61,000,000 authorized and
51,204,601 issued and outstanding, pro forma;
120,000,000 authorized and issued and
outstanding, pro forma as adjusted.............. 13 51
Additional paid-in capital......................... 99,188 99,188
Notes receivable from stockholders................. (607) (607)
Accumulated deficit................................ (47,299) (47,299)
-------- -------- --------
Total stockholders' equity...................... 51,333 51,333
-------- -------- --------
Total capitalization....................... $ 53,488 $ 53,488 $
======== ======== ========
</TABLE>
The data in the table above excludes:
- 3,238,599 shares of common stock issuable upon exercise of options
outstanding as of March 1, 2000, at a weighted average exercise price of
$2.64 per share;
- 768,031 shares of common stock available for issuance at March 1, 2000,
under our 1997 Stock Plan;
- 675,000 shares of common stock issuable upon exercise of warrants
outstanding as of March 1, 2000 at a weighted average exercise price of
$0.50 per share;
20
<PAGE> 24
- shares of common stock assuming an initial offering price of
$ per share issuable upon exercise of warrants issued to the lender
under our capital equipment financing;
- 5.5 million shares of series C convertible preferred stock issuable to
IBM upon our acquisition of IBM's broadband modem product line; and
- 500,000 additional shares of common stock available for issuance under
our 2000 Employee Stock Purchase Plan immediately following the offering.
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<PAGE> 25
DILUTION
If you invest in our common stock, your ownership interest will be diluted
by the difference between the public offering price per share of our common
stock and the pro forma as adjusted net tangible book value per share of our
common stock immediately after this offering. Our pro forma net tangible book
value at December 31, 1999 was approximately $ , or $ per share of
common stock. Pro forma net tangible book value per share represents the amount
of our total tangible assets less total liabilities, divided by the pro forma
number of shares of common stock outstanding at December 31, 1999 and assumes
the conversion of our currently outstanding shares of preferred stock into
common stock upon the closing of this offering. Dilution in pro forma net
tangible book value per share represents the difference between the amount per
share paid by investors in this offering and the pro forma net tangible book
value per share of our common stock immediately after the completion of this
offering. After giving effect to the sale of the million shares of our
common stock in this offering assuming an initial public offering price of
$ per share and after deducting estimated underwriting discounts and
commissions and estimated offering expenses, our pro forma as adjusted net
tangible book value at December 31, 1999 would have been $ , or $
per share. This represents an immediate increase in pro forma net tangible book
value of $ per share to existing stockholders and an immediate dilution of
$ per share to new investors, or approximately % of the assumed initial
public offering price of $ per share. The following table illustrates this
per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share at December
31, 1999............................................... $
Increase per share attributable to new investors..........
--------
Pro forma as adjusted net tangible book value per share
after the offering........................................
--------
Dilution per share to new investors......................... $
========
</TABLE>
The following table shows, on a pro forma basis at December 31, 1999, after
giving effect to the conversion of all outstanding shares of preferred stock
into common stock upon the closing of this offering, the total number of shares
of common stock purchased from us, the total consideration paid to us and the
average price per share paid to us by existing stockholders and by new investors
before deducting the estimated underwriting discounts and commissions and
estimated offering expenses, at an assumed initial public offering price of
$ per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........... 51,246,280 % $ % $
New investors...................
---------- ----- -------- -----
Total......................... 100.0% $ 100.0%
========== ===== ======== =====
</TABLE>
The above tables and calculations exclude the following:
- 3,238,599 shares of common stock issuable upon exercise of options
outstanding as of March 1, 2000, at a weighted average exercise price of
$2.64 per share;
- 768,031 shares of common stock available for issuance at March 1, 2000,
under our 1997 Stock Plan;
- 675,000 shares of common stock issuable upon exercise of warrants
outstanding as of March 1, 2000 at a weighted average exercise price of
$0.50 per share;
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<PAGE> 26
- shares of common stock, assuming an initial offering price of
$ per share, issuable upon exercise of warrants issued to the lender
under our capital equipment financing line;
- 5.5 million shares of series C convertible preferred stock issuable to
IBM upon our acquisition of IBM's broadband modem product line; and
- 500,000 additional shares of common stock available for issuance under
our 2000 Employee Stock Purchase Plan immediately following the offering.
To the extent any of these options or warrants are exercised, there will be
further dilution to new investors.
23
<PAGE> 27
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the following selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and the notes included
elsewhere in this prospectus. The consolidated statement of operations data for
the period from inception to December 31, 1997 and for the years ended December
31, 1998 and 1999 and the consolidated balance sheet data as of December 31,
1998 and 1999 were derived from the consolidated financial statements that have
been audited by Ernst & Young LLP, independent auditors, which are included
elsewhere in this prospectus. The consolidated balance sheet data as of December
31, 1997 are derived from our financial statements audited by Ernst & Young LLP,
independent auditors, that are not included in this prospectus. Historical
results are not necessarily indicative of results that may be expected for any
future period.
<TABLE>
<CAPTION>
PERIOD FROM MARCH 5,
1997 (INCEPTION) YEAR ENDED DECEMBER 31,
THROUGH DECEMBER 31, -----------------------
1997 1998 1999
--------------------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues....................................... $ -- $ -- $ --
Costs and expenses:
Manufacturing and operations................. -- 2,326 7,990
Research and development..................... 1,895 8,494 12,631
Selling and marketing........................ 162 2,445 6,111
General and administrative................... 501 1,748 4,473
---------- ---------- ----------
Total costs and expenses.................. 2,558 15,013 31,205
---------- ---------- ----------
Loss from operations........................... (2,558) (15,013) (31,205)
Other income (expense):
Interest income.............................. 86 1,066 1,337
Interest expense............................. -- (160) (426)
Royalty expense.............................. -- (400) --
Other income (expense)....................... (3) (25) 1
---------- ---------- ----------
Total other income (expense).............. 83 481 912
---------- ---------- ----------
Net loss....................................... $ (2,475) $ (14,532) $ (30,293)
========== ========== ==========
Net loss per share -- basic and diluted........ $ (0.50) $ (2.14) $ (3.17)
========== ========== ==========
Shares used in per share calculations -- basic
and diluted.................................. 4,913,989 6,790,600 9,553,134
========== ========== ==========
Pro forma net loss per share:
Net loss per share -- basic and diluted...... $ (0.78)
==========
Shares used in per share calculations --basic
and diluted............................... 38,800,408
==========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------
1997 1998 1999
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.......... $12,476 $21,328 $46,130
Working capital............................................ 12,271 18,963 44,180
Total assets............................................... 12,794 24,440 63,700
Convertible preferred stock................................ 14 23 38
Total stockholders' equity................................. 12,506 20,424 51,333
</TABLE>
See Note 7 of notes to consolidated financial statements for an explanation
of the determination of the number of shares used in computing net loss per
share data.
24
<PAGE> 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
our financial statements and the related notes included elsewhere in this
prospectus.
OVERVIEW
We provide broadband wireless equipment that enables communications service
providers to deliver high-speed, cost-effective voice, video and data services
to their business customers. We currently offer two product lines: our Invisible
Fiber Internet Protocol product line for Internet service providers and our
Invisible Fiber SONET/SDH product line for communications service providers.
From our inception in March 1997 through late 1999, our operations
consisted primarily of start-up activities, including raising capital,
recruiting personnel, conducting research and development, establishing the
market for our initial products and purchasing operating assets. In addition, we
developed our final product assembly and testing capabilities, entered into
manufacturing agreements with third-parties and developed our sales, marketing
and administrative organizations.
We began supplying our Invisible Fiber products for use in field trials
during the second half of 1999. Two customers placed orders with us in December
1999. We sell our products through our direct sales force to service providers
in North America who have government licenses to provide wireless services for
the Local Multipoint Distribution Service, or LMDS, and 38 Gigahertz
frequencies. In addition, we have a small direct sales force focused solely on
international customers.
Revenues. We first began recognizing revenues from sales of our products
during the first quarter of 2000. We recognize product revenues at the time of
shipment provided no significant obligations remain and collection is probable.
We have supplied products to potential customers for use in several field
trials. We have not recognized revenues from field trials since the customer can
typically return the product with no payment or further obligation to us.
Cost of Revenues. Cost of revenues consists of component and material
costs, direct labor, manufacturing, customer service and estimated warranty
costs.
Manufacturing and Operations. Historically, manufacturing and operations
consisted of procurement, assembly and support personnel, product, technical
assistance, training and documentation expenses. Concurrent with our recognition
of revenues beginning in the first quarter of 2000, we began classifying
manufacturing and operations expenses as cost of revenues.
Research and Development. Research and development expenses consist
primarily of compensation and related personnel costs, third party engineering
costs and prototype costs related to the design, development, testing and
enhancement of our products. We expense research and development costs as they
are incurred.
Selling and Marketing. Selling and marketing expenses consist primarily of
salaries and related expenses for personnel engaged in sales, marketing and
related support functions, the costs associated with customer field trials that
we fund and promotional and other marketing expenses.
General and Administrative. General and administrative expenses consist
primarily of salaries and related expenses for executive, finance, information
systems and human resources personnel, professional fees and other general
corporate expenses.
Historically, we have incurred significant losses. As of December 31, 1999,
we had an accumulated deficit of approximately $47.3 million. We expect to incur
substantial losses for the foreseeable future. We also expect to incur
significant research and development, selling, marketing and general and
administrative expenses. As a result, we will need to generate significant
revenues to achieve and maintain profitability. We may never achieve
profitability.
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<PAGE> 29
RECENT ACQUISITION
On February 29, 2000, we entered into an agreement with IBM to purchase
assets and hire approximately 50 employees associated with IBM's broadband modem
product line in exchange for 5.5 million shares of series C preferred stock.
This IBM unit developed and sold custom modems to us for use in our products.
During 1999, the majority of this unit's sales were to us, with minor sales to
one other customer. With the completion of this transaction, we will secure
intellectual property and engineering expertise for future modem development,
and we believe we will lower the cost of manufacturing our products. The closing
of the transaction is subject to customary conditions to closing, including
regulatory approval.
Assuming an initial public offering price of $ per share, the total
value of the consideration for the transaction would be $ million, with
approximately $ million being allocated to fixed assets and inventory and
approximately $ million to intangible assets. If the transaction had taken
place on January 1, 1999, our revenue and net loss for 1999 would have increased
by approximately $ million and $ million or $ per share. The
pro forma revenue and net loss does not purport to indicate what would have
occurred if the purchase had actually occurred on January 1, 1999 or to indicate
the results that may occur in the future. We plan to focus on further
development of the modem technology we acquire from IBM to improve and enhance
our products. We believe that future research and development expenses of the
broadband modem products group subsequent to our acquisition of the group will
be significantly higher than the pro forma amount for 1999.
RESULTS OF OPERATIONS -- YEARS ENDED DECEMBER 31, 1999 AND 1998 AND PERIOD MARCH
5, 1997 (INCEPTION) TO DECEMBER 31, 1997
Revenues. We recognized no revenues through December 31, 1999.
Manufacturing and Operations. Manufacturing and operations expenses
increased $5.7 million in 1999 from $2.3 million in 1998 to $8.0 million in
1999. Approximately 52% of the increase was due to higher personnel costs
related to the commencement of our final assembly and testing manufacturing
efforts and the establishment of our technical assistance center. Approximately
25% of the remaining increase was attributable to facilities, depreciation and
production costs related to our manufacturing facility and recently developed
production process. The remainder of the increase was attributable to increases
in travel, supplies and professional and other service expenses. We had no
manufacturing and operating expenses in the period from inception through 1997.
Research and Development. Research and development expenses increased $4.1
million in 1999 from $8.5 million in 1998 to $12.6 million in 1999 and increased
$6.6 million in 1998 from $1.9 million in the period from inception through
1997. These increases were due to an increase in the number of engineering
personnel and significant third party contract engineering costs during both
1999 and 1998. Personnel related costs accounted for 30% and 32% of the increase
in 1999 and 1998, respectively, while third party contract engineering expenses
represented 47% and 56% of the increase in those same periods.
Selling and Marketing. Selling and marketing expenses increased $3.7
million in 1999 from $2.4 million in 1998 to $6.1 million in 1999 and increased
$2.2 million in 1998 from $0.2 million in the period from inception through
1997. The increase was due to the establishment of a core sales and marketing
group and the increase of advertising, marketing and other costs associated with
sales and support activities. Personnel costs related to the establishment of
the sales and marketing group accounted for 43% and 56% of the expense increase
in 1999 and 1998, respectively. Advertising, marketing and other costs
associated with sales and support activities represented 41% and 21% of the
increase in the same periods.
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<PAGE> 30
General and Administrative. General and administrative expenses increased
$2.8 million in 1999 from $1.7 million in 1998 to $4.5 million in 1999 and
increased $1.2 million in 1998 from $0.5 million in the period from inception
through 1997. The increase was due to the development of the finance, human
resources and information technology groups, and, in 1999, the hiring of our
chief executive officer. Personnel related costs accounted for 57% and 65% of
the expense increase in 1999 and 1998, respectively. Depreciation and
amortization of fixed assets and legal and accounting costs represented 29% and
34% of the increase in the same periods.
Royalty Expense. In 1998, we issued a shareholder 1,600,000 shares of
common stock in satisfaction of an existing royalty agreement. As a result, we
recorded $400,000 in royalty expenses in 1998, representing the fair market
value of the common stock at that time.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through private
sales of approximately $97.7 million of convertible preferred stock as well as
through capital leases for capital equipment, furniture and software. During
1999, we raised approximately $61.0 million from private sales of convertible
preferred stock.
As of December 31, 1999, cash and cash equivalents and short-term
investments were $46.1 million, an increase of $24.8 million from cash and cash
equivalents and short-term investments of $21.3 million at the end of 1998. Cash
and cash equivalents and short-term investments increased $8.8 million in 1998
from $12.5 million at December 31, 1997. The increases were due primarily to the
private sales of convertible preferred stock.
During 1999, we used approximately $31.5 million of cash in operations
primarily due to our net loss of $30.3 million and a growth in inventory of $7.2
million. We used approximately $12.1 million of cash for operations in 1998 due
primarily to the net loss of $14.5 million, partially offset by an increase in
payables.
During 1999 and 1998, our investing activities included the purchase of
approximately $4.5 million and $1.0 million, respectively, of property and
equipment.
Cash provided by financing activities in 1999 and 1998 generated
approximately $60.8 million and $22.0 million, respectively, primarily from the
private sales of convertible preferred stock.
On February 25, 2000, we entered into an agreement with a financial
institution to borrow up to $9.0 million in 2000 for capital equipment
purchases, furniture and software. Up to $5.0 million of the borrowings are
repayable over four years and will bear interest at an annual rate of 13.16% and
up to $4.0 million is repayable over three years with an annual rate of interest
of 10.4%. The current available borrowing base under this agreement is $7.0
million. An additional $2.0 million will be available upon completion of this
offering. The agreement includes no financial covenants and the specific
equipment, furniture and software purchased with the borrowings will serve as
security for the loans. Under the agreement, we issued warrants to purchase our
common stock in the amount of 4% of the currently available borrowing base, or
$280,000. The exercise price of these warrants is 90% of the price of our
initial public offering price per share. If we do not complete an initial public
offering prior to the first anniversary of the agreement the exercise price of
these warrants will be $5.00 per share. We have also issued an additional
$80,000 worth of warrants which will become exercisable only upon completion of
this offering. The exercise price of these warrants will be 90% of the price of
our initial public offering price per share.
We are obligated to pay lease payments of approximately $9.7 million over
the lease periods of our operating leases, with $1.5 million due in 2000. We
have entered into an additional lease agreement to expand our manufacturing and
office space. We expect to occupy the new space in the first half of 2000. The
operating lease for this additional space is for seven years, and our estimated
27
<PAGE> 31
lease payments over the term of this lease are approximately $6.6 million. In
conjunction with this lease agreement, we secured a $0.8 million letter of
credit in 2000 in favor of the landlord with cash.
We expect our cash requirements will increase significantly in 2000, as we
continue our research and development efforts, hire and expand our sales,
support, marketing and product development organizations, grow our
administrative support activities, and expand our leased facilities.
Additionally as our business volumes grow we anticipate a significant cash
requirement for working capital growth and capital expenditures. The amount and
timing of cash requirements will depend on market acceptance of our products and
the resources we devote to researching and developing, marketing, selling and
supporting our products. Although we believe that our current cash and cash
equivalents on hand, the net proceeds from this offering and availability under
our new capital equipment financing line should be sufficient to fund our
operations for at least the next 12 months, we cannot be certain that we will
not require additional financing within this time frame or that such additional
funding, if needed, will be available on terms acceptable to us, or at all. If
we raise additional funds through the issuance of equity securities, the
percentage ownership of our stockholders would be reduced.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133, as recently amended, is effective for fiscal years beginning after
June 15, 2000. Management believes the adoption of SFAS No. 133 will not have a
material effect on our financial position or results of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET INTEREST RATE SENSITIVITY
The primary objective of our investment activities is to preserve principal
while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we may invest
in may be subject to market risk. This means that a change in prevailing
interest rates may cause the principal amount of the investment to fluctuate.
For example, if we hold a security that was issued with a fixed interest rate at
the then-prevailing rate and the prevailing interest rate later rises, the
principal amount of our investment will probably decline. To minimize this risk
in the future, we intend to maintain our portfolio of cash equivalents and
short-term investments in a variety of securities, including commercial paper,
money market funds, government and investment grade non-government debt
securities. In general, money market funds are not subject to market risk
because the interest paid on such funds fluctuates with the prevailing interest
rate. As of December 31, 1999, all of our cash and cash equivalents were in
money market and checking funds.
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<PAGE> 32
BUSINESS
OVERVIEW
We provide broadband wireless equipment that enables communications service
providers to deliver high-speed, cost-effective voice, video and data services
to their business customers. Our Invisible Fiber products combine high
transmission speeds and the reliability of fiber optic networks with the
flexibility, low cost and rapid deployment of wireless technologies. Our
products feature proprietary technologies that enable service providers to
install more units in a service area than would be possible with conventional
broadband wireless technologies, permitting them to serve more users and
generate more revenues. We have designed our Invisible Fiber products for
deployment in consecutive point networks. A consecutive point network is a
series of point-to-point links forming a ring which allows communication traffic
to flow in either direction, creating redundant transmission paths and reducing
the risk of service interruptions. Consecutive point architecture enables
service providers to quickly configure, expand and relocate their service
coverage, enhancing network scalability and flexibility. Our products meet the
same carrier class standard of reliability used for fiber optic networks, and
can be seamlessly incorporated into existing fiber optic and wireless networks
or used to build new networks. We currently offer two product lines: our
Invisible Fiber Internet Protocol product line for Internet service providers
and our Invisible Fiber SONET/SDH product line for communications service
providers.
INDUSTRY BACKGROUND
GROWING DEMAND FOR BROADBAND COMMUNICATIONS
The amount of data being transmitted over the Internet and other
communications networks is increasing rapidly due to the growing number of users
accessing these networks and the increasing range of data-intensive activities
for which these networks are being used. Businesses are increasingly using the
Internet to extend their reach to customers and suppliers through applications
such as electronic commerce, supply chain management, web hosting, global
marketing and customer support. Businesses are also creating data networks among
corporate sites, remote offices and telecommuters in order to facilitate
employee communications, e-mail, file sharing, and research and analysis. A
growing number of businesses are using third party application service providers
to provide web hosting for mission-critical business systems. These
network-based business activities require quick and reliable transmission of
increasingly large amounts of data. As a result, broadband access is becoming
increasingly important to business customers.
DEREGULATION AND COMPETITION ARE DRIVING DEPLOYMENT OF BROADBAND ACCESS
TECHNOLOGIES
Global telecommunications deregulation is creating significant competition
among providers of advanced communications services, thereby accelerating the
deployment of broadband access technologies. In the United States, incumbent
carriers such as Ameritech, Bell Atlantic, BellSouth, GTE, Pacific Bell, SBC
Communications and US West were, until recently, the exclusive providers of the
copper wire connections between their network backbones and subscribers,
commonly known as the access portion of the network or the last mile. The
Federal Telecommunications Act of 1996 intensified the competitive environment
in the United States by requiring incumbent carriers to lease portions of their
networks, including the access portion, to competing carriers. Additionally,
telephone companies and cable operators are seeking to expand their service
offerings by entering each others' markets. Similar deregulation and competition
is occurring in many regions of the world. To compete in this environment, many
service providers seek to differentiate themselves and maximize revenue per
subscriber by offering high-speed internet access and integrated voice, video
and data services, which require broadband access.
29
<PAGE> 33
TRADITIONAL NETWORK ACCESS SOLUTIONS ARE NOT SUITABLE FOR MANY BUSINESS
SUBSCRIBERS
In order to meet increasing demand for broadband transmission, many service
providers have constructed high-speed data highways comprised of fiber optic
cable and sophisticated routers and switches. This fiber optic backbone connects
service providers' network operations centers across the nation, transmitting
data at speeds in multiples of 10 Gbps, or 10 billion bits per second. In
addition, many businesses have installed internal networks that operate at
speeds of up to 1 Gbps, or 1 billion bits per second. However, a bottleneck
exists in the access portion of the network where subscribers connect to the
backbone. Subscribers have traditionally connected to the network backbone over
standard copper telephone lines which carry data at rates of only up to 56.6
thousand bits per second, or 56.6 Kbps. At these speeds, several minutes are
often required to access a media-rich web site, and several hours may be
required to transfer or download large files. This bottleneck frustrates
subscribers, and limits the capability of service providers to satisfy demand
for high-speed data transmission.
Many business subscribers require higher speed network connections, and
have traditionally used copper-based T1 services in the United States and E1
services internationally. A T1 line is a dedicated telecommunications connection
that supports data transmission rates of up to 1.5 million bits per second, or
1.5 Mbps; an E1 line supports data transmission rates of up to 2.0 Mbps. T1 and
E1 services, however, cannot meet the increasing broadband access requirements
of many business subscribers. In addition, T1 and E1 services are costly and
cumbersome access strategies for emerging service providers, who must lease
lines from incumbent carriers and forego control over their network facilities.
EMERGING ACCESS SOLUTIONS HAVE LIMITATIONS
Because T1 and E1 services cannot satisfy the high-speed broadband access
requirements of business subscribers, a number of alternative access solutions
have been developed, including:
Digital Subscriber Line. Digital subscriber line, or DSL, technology
improves the data transmission rate of copper wire lines. Most DSL deployments
offer either high-speed asymmetrical services or slower symmetrical services.
Asymmetrical data services provide higher transmission speeds from the network
to the subscriber and lower speeds from the subscriber to the network. This is
suitable for most non-business users who typically need bandwidth to download
web pages, but not to transmit large amounts of data. Symmetrical data services
provide equal transmission speed to and from the subscriber. The speed, however,
is substantially below peak asymmetrical DSL rates and does not meet the
bandwidth requirements of most business users. Moreover, new service providers
who offer DSL services must lease existing copper lines from incumbent carriers,
increasing the cost of their DSL deployment. Service providers who choose to
install their own networks and avoid paying access charges will not install
copper wire lines.
Cable. Cable modems enable asymmetrical data services to be delivered over
a network originally designed to provide television service to residential
subscribers. Cable networks connect to the home using coaxial cable, which has
greater transmission capacity than copper lines used by telephone companies.
These networks, however, often require costly upgrades to support symmetrical
data services. In addition, cable does not currently serve as a high-speed
broadband access alternative for business subscribers.
Point-to-Multipoint Wireless. Point-to-multipoint wireless technology
enables symmetrical transmission of data between a centrally located hub and
multiple subscriber locations. This technology offers the low installation cost
and rapid deployment benefits characteristic of wireless solutions. In addition,
it provides higher-speed symmetrical access than either DSL or cable. However,
many business subscribers require more bandwidth than can be supported by
existing point-to-multipoint
30
<PAGE> 34
wireless solutions. The technological limitations of this solution also limit
the number of customers that a service provider may serve within their licensed
radio spectrum.
Point-to-Point Wireless. Point-to-point wireless technology enables
symmetrical data services using a dedicated link between a subscriber and the
service provider. Because this technology cannot easily be scaled,
point-to-point wireless technology has generally not been used as a local access
solution.
Fiber. Fiber offers the highest data transmission rate of any access
solution, but deploying fiber is slow and costly. Building a wireline network in
a major metropolitan area requires digging up miles of city streets. Such
projects often require many months to obtain the necessary permits and several
more months to complete installation, and service cannot begin until
construction is completed. Construction costs for fiber networks in metropolitan
areas are extremely high, and rights of way, if available, often carry
additional governmental tariffs. Maintenance is also costly because fiber optic
cable sometimes must be dug up to be repaired. Fiber is not a flexible solution
because fiber lines cannot be easily redeployed if the customer relocates
outside of the fiber network. These problems have generally limited the use of
fiber in access networks to those areas generating the highest levels of
communications traffic.
The chart below compares network-to-subscriber and subscriber-to-network
data transmission speeds for various technologies in the backbone, access and
corporate networks:
[BANDWIDTH CHART]
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<PAGE> 35
As a result of the limitations of traditional broadband wireless
technologies and the costs and inefficiencies of deploying fiber networks, a
significant market opportunity exists for a cost-effective, high-speed broadband
wireless solution capable of efficiently serving business customers.
THE TRITON NETWORK SYSTEMS SOLUTION
Our Invisible Fiber solutions offer service providers high transmission
speeds, the reliability of fiber optic networks and the flexibility, low cost
and rapid deployment of wireless technologies. We have designed our solutions
for deployment in consecutive point networks comprised of a series of
point-to-point links forming a fiber-like ring that connects subscribers to the
network backbone. Each link consists of two Invisible Fiber units, both of which
transmit and receive broadband wireless traffic. We believe that our consecutive
point architecture addresses the limitations inherent in point-to-point and
point-to-multipoint technologies.
THE TRITON NETWORK SYSTEMS CONSECUTIVE POINT SOLUTION
[CHART]
We believe that our solution provides service providers with the following
key competitive advantages:
High Speed Network Service. Our products enable the delivery of high-speed
voice, video and data services. Our current Invisible Fiber Internet Protocol
products provide Fast Ethernet service, an industry standard for transmission
speeds of 100 Mbps, enabling business users to download in
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<PAGE> 36
seconds media-rich files that would require minutes to download using a
dedicated T1 line. Our current Invisible Fiber OC-3/STM-1 products transmit data
at 155 Mbps, and offer the capacity of 83 T1/63 E-1 lines. Such high speed
facilitates the adoption of emerging on-line business models such as the use of
application service providers.
High Reliability and Availability of Service. We design our products to
match fiber network reliability standards, including 99.999% availability and
error rates of less than one error per trillion bits transmitted. This enables
our customers to provide their subscribers the same high-reliability and
availability offered by incumbent carriers. Our consecutive point networks use
redundant transmission paths to minimize service interruptions. If a
transmission path is disrupted, signals immediately reroute in the opposite
direction around our consecutive point network and no interruption of service
occurs. Other broadband wireless products are more vulnerable to service
interruptions because they do not provide redundant data paths, and therefore
their transmissions fail if the line of sight between units is temporarily
blocked by moving objects or environmental conditions.
Rapid Deployment and Return on Investment. Service providers can deploy our
products and begin providing their subscribers with broadband access in
significantly less time and at a lower cost than they would be able to using
fiber networks or point-to-point or point-to-multipoint wireless networks.
Service providers can install Invisible Fiber units on rooftops or sides of
buildings in a matter of hours. Each of our products includes a standard fiber
data interface that enables service providers to easily integrate our products
into their networks. As a result, they can rapidly acquire subscribers and
generate revenue to offset the fixed costs associated with entering new markets.
Our solutions also use radio spectrum efficiently and maximize the reuse of a
service provider's licensed radio spectrum. This enables service providers to
reach more subscribers with their licensed radio spectrum, generating greater
revenue by spreading the fixed cost of the spectrum over a larger subscriber
base. Lifecycle costs are further reduced because carriers can easily redeploy
and reuse our products as customer needs change.
High Density Deployment. Our solutions enable service providers to maximize
the number of subscribers served within their licensed radio spectrum. Our
technology combines a wide range of variable power output with an adaptive
transmit power control algorithm. This algorithm uses our proprietary software
to automatically adjust the power output of each unit to the minimum level
necessary for reliable transmission. In addition, our antenna design ensures
that transmissions between Invisible Fiber units travel across highly focused
pathways. By controlling transmit power and focusing transmission pathways, we
are able to minimize radio interference among Invisible Fiber units, as well as
interference caused by other wireless equipment operating in a service area. By
minimizing radio interference, we enable service providers to deploy more of our
products within a service area and to support more customers with their licensed
radio spectrum.
We believe that no other broadband wireless products match our adaptive
transmit power control capability. In particular, point-to-multipoint systems
cannot do so because the base station must transmit at power levels high enough
to communicate with the most hard-to-reach subscriber unit, which, due to
geography and weather, means the signal may be broadcast further than necessary
in other directions. The excess transmission power increases interference
between wireless links and reduces the number of customers that may be served by
a service provider within its licensed radio spectrum.
Highly Scalable and Flexible. We design our products to enable service
providers to quickly configure, expand and relocate their networks. Our
consecutive point architecture is highly scalable. Service providers can deploy
Invisible Fiber units incrementally as demand for their services increases,
allowing them to match capital outlays with subscriber growth. Additionally, our
consecutive point network can take any shape, including a ring or a mesh,
allowing service providers to connect both broadly dispersed subscribers as well
as those in dense service areas. If a ring reaches
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capacity, the service provider can easily split the ring in two or add a ring by
deploying a small number of additional Invisible Fiber units without
interrupting services to existing customers.
THE TRITON NETWORK SYSTEMS STRATEGY
Our objective is to be the leading worldwide provider of broadband wireless
equipment. The key elements of our strategy include the following:
INCREASE SALES TO EXISTING CUSTOMERS
We recently entered into three-year contracts with two service providers
which we believe will result in large-scale deployments of our products. Our
sales and engineering personnel work closely with our customers to ensure that
they are using our solutions to maximum benefit, and to promote the use of our
solutions in additional locations and applications. We intend to build upon the
acceptance of our products to become the leading provider of broadband wireless
access equipment to these and other service providers. We intend to increase our
visibility as a provider of broadband wireless access equipment and believe that
our increased visibility will generate additional sales.
EXPAND OUR CUSTOMER BASE
We plan to increase sales of our products to new customers. Our products
provide capabilities not previously available from wireless vendors. We will
continue to utilize our sales force to inform potential customers about the
competitive advantages offered by consecutive point architecture and our
Invisible Fiber products. We believe it is important to take a targeted approach
to the implementation of our sales strategy and have identified a number of key
accounts as having the potential for large-scale deployment of our products. We
assign each key account to a single manager, who is responsible for managing the
overall customer relationship. Our key account managers work closely with our
current and potential customers to coordinate network design, ensure successful
installation and provide continuous customer support.
MAINTAIN AND EXTEND PRODUCT AND TECHNOLOGY LEADERSHIP
We believe that we are currently the technology leader in developing
broadband wireless solutions for consecutive point networks. We intend to
maintain and extend our technology leadership through continued research and
development and, where appropriate, acquisitions of complimentary businesses,
products and technologies, such as our recent agreement to acquire broadband
modem technology from IBM. We will continue to develop products that address the
competitive demands of service providers and enable them to deploy
differentiated, profitable services to their subscribers. In this regard, we are
enhancing the performance of our existing products and developing new products
that operate at different frequency bands and higher bandwidths.
CONTINUE TO PURSUE INTERNATIONAL MARKET OPPORTUNITIES
We believe that there is a significant market opportunity for our products
in international markets where government authorities have granted or have
indicated that they intend to grant licenses in the millimeterwave spectrum. We
employ a focused approach in our international expansion and we are currently
targeting Canada, Australia and Japan. We have obtained regulatory approval to
deploy our products in each of these markets and have formulated a sales and
marketing strategy for each market. To support our international expansion, we
may enter into strategic relationships and joint ventures with third-parties. In
this regard, in February 2000 we entered into a value-added reseller agreement
with CommVerge Solutions to market our products.
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PRODUCTS AND TECHNOLOGY
KEY TECHNICAL FEATURES
We design our products for deployment in consecutive point networks. We
currently offer two product lines: our Invisible Fiber Internet Protocol product
line for Internet service providers and our Invisible Fiber SONET/SDH product
line for communications service providers. Both product lines utilize our
proprietary technology. Key technical features common to our products include:
- 99.999% Availability at 1 Bit per Trillion Error Rate. We have designed
all of our products to operate at 99.999% link availability,
corresponding to approximately five minutes of down time per year, with
bit error rates of one bit per trillion or better, even under adverse
weather conditions. This means that only one error bit is detected for
every approximately 2.8 hours of operation of our Invisible Fiber Fast
Ethernet products, and for every approximately 1.7 hours of operation of
our Invisible Fiber OC-3/STM-1 products. Bit error rate is a measurement
of transmission quality expressed as a ratio of the average number of
bits containing errors in the total number of bits transmitted. Our bit
error rate performance is equivalent to the bit error rates typically
found in fiber optic networks. Our products also feature redundant
transmission paths, which minimize service interruptions.
- High Bandwidth Data Rate. Our current Invisible Fiber OC-3/STM-1 products
transmit data at speeds of 155 Mbps and our Invisible Fiber Fast Ethernet
products transmit data at speeds of 100 Mbps. This provides service
providers the capacity needed to support broadband applications, such as
simultaneous voice, video and data services.
- 50 Decibels Adaptive Transmit Power Control. Our proprietary adaptive
transmit power control dynamically modifies our products' transmitter
output to minimize the power employed while maintaining bit error rates
of one bit per trillion or better. Our products accomplish this through
dual feedback loops between Invisible Fiber units, compensating for
adverse weather conditions and interference from radio frequency sources.
This automatically reduces the power level to the minimum amount needed
for reliable transmission, enabling dense urban deployments of our
products and maximizing reuse of licensed frequency spectrum. Our
products feature 50 decibels of power control range, which means the
maximum power strength is 100,000 times the minimum power strength. This
power control range is up to 1,000 times greater than is typically found
in traditional broadband wireless equipment.
- Narrow Beam Transmission Technology. Our products utilize our adaptive
transmit power control together with advanced antennas to transmit
signals along extremely narrow, direct pathways. By so confining
transmissions, we minimize interference among Invisible Fiber units and
are able to deliver a high quality, reliable and secure signal, while
significantly extending the distance between transmitters and receivers.
This further enables dense urban deployments and flexible network
configurations.
- High System Gain. All of our products have a linear radio frequency
output power range of up to two watts with minimal system noise,
typically less than 5 decibels. These capabilities yield a system gain
for our products of between 162 and 177 decibels. System gain refers to
the sum of transmit power, receiver sensitivity and antenna gains, as
expressed in decibels. Higher system gain means a better ability to
maintain transmission quality. Our high system gain preserves link
availability in adverse weather conditions, such as rain, snow and ice,
and overcomes interference caused by other wireless systems operating in
a common service area.
- Java-Based Simple Network Management Protocol Software. We support our
products with a full suite of network management tools designed to be
easily integrated with our customers' overall network platforms. Our tool
suite supports the Simple Network Management Protocol, or SNMP, and is
designed to be operated with SNMP-based network management software
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such as HP OpenView. This allows customers to monitor network performance
and troubleshoot difficulties remotely from multiple locations using
different industry standard computing platforms.
- Single Outdoor Unit. Each of our products is a single outdoor unit, not
separate indoor and outdoor units connected via coaxial cable, a
configuration that is typical of other broadband wireless systems.
Because our products do not have an indoor unit, service providers avoid
the expense of leasing equipment space inside the buildings they use to
deploy our products. Within a building, fiber optic cable connects our
products directly to a customer's network. Fiber is more flexible and can
be pulled and operated over longer distances than coaxial cable, making
network connections easier and more cost-effective and enabling corporate
campuses to use our products to complement existing fiber networks. The
use of fiber also eliminates the possibility that a voltage surge caused
by lightning striking one of our units will damage a customer's equipment
or interrupt service.
- Standard Fiber Data Interface. A standard fiber data interface is
imbedded in each of our products. This interface enables customers to
connect industry-standard add/drop multiplexers, switches or routers
directly to our products using standard fiber optic cable and any
SONET/SDH or Internet Protocol network equipment. This capability allows
service providers to easily integrate our equipment into their networks
and eliminates the need for expensive interface equipment at each point
in a network.
- Superior External Packaging and Ease of Installation. Our products are
designed to blend with the architectural design of the sites to which
they are fixed. The antenna and all other components of the radio are
packaged inside the unit's compact, streamlined, paint-ready housing. Our
patent-pending mounting hardware permits direct mounting of units to a
pole or the wall of a building. These design features provide advantages
to operators when they pursue roof rights and make installation and
maintenance quick and inexpensive.
INVISIBLE FIBER INTERNET PROTOCOL PRODUCT LINE
Our current Invisible Fiber Internet Protocol product line consists of our
Invisible Fiber Fast Ethernet products which enable service providers to offer
their subscribers redundant Internet access at higher speeds than all other
technologies except dedicated fiber and at cost levels comparable to or better
than those associated with other technologies. We have designed these products
to support low-latency, high-bandwidth data applications over the Internet, such
as large file transfers, video conferencing, live video streaming and electronic
commerce, as well as business networking among local area networks, metropolitan
area networks and wide area networks. We currently offer Invisible Fiber Fast
Ethernet products for the LMDS and 38 Gigahertz frequencies, and we are
developing additional products for other frequency bands above 20 Gigahertz.
We have designed our Invisible Fiber Internet Protocol products for dense
deployment in consecutive point networks comprised of a series of point-to-point
links forming a fiber-like ring. Each link consists of two Invisible Fiber
Internet Protocol units, both of which transmit and receive broadband wireless
traffic. Each Invisible Fiber Internet Protocol unit contains a transmitter, a
receiver, a modem and our proprietary network interface card. Each Invisible
Fiber Internet Protocol unit forwards data without regard to content. Our
Invisible Fiber Internet Protocol units are able to examine incoming Fast
Ethernet packets from the network to determine if data is addressed to customers
at that location. The unit delivers traffic to the local customers and inserts
traffic from these customers into the transmission stream. Non-local traffic is
switched through the unit and forwarded across the consecutive point network
bypassing the local building where the unit is located. This switching
functionality ensures that only data destined for a specific location will be
transmitted
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to that location's local network, thereby reducing bandwidth consumption on the
local network and improving response times.
Our current Invisible Fiber Fast Ethernet products use a 100 Megahertz
channel pair consisting of a 50 Megahertz transmit channel and a 50 Megahertz
receive channel, to carry data at a rate of approximately 120 Mbps in each
direction over a link. The user's traffic accounts for 100 Mbps of the total
data rate. Error correction and our proprietary adaptive transmit power control
account for the remaining 20 Mbps. This is a differentiating feature of our
Invisible Fiber Fast Ethernet products, as we deliver a full 100 Mbps dedicated
to service providers' customer traffic.
INVISIBLE FIBER SONET/SDH PRODUCT LINE
Our current Invisible Fiber SONET/SDH product line consists of our
Invisible Fiber OC-3/STM-1 products, which enable service providers to build and
extend networks more quickly and cost-effectively than they would be able to
using fiber. We have designed our products so that they can be connected
directly and transparently to standard SONET/SDH equipment, such as add/drop
multiplexers. This enables rapid integration of our products into existing
networks. We currently offer Invisible Fiber OC-3/STM-1 products for the LMDS
and 38 Gigahertz frequencies. In addition, we are developing additional products
for other frequency bands above 20 Gigahertz.
As in the case of our Internet Protocol products, each Invisible Fiber
SONET/SDH unit consists of a transmitter, a receiver, a modem and our
proprietary network interface card. Each Invisible Fiber SONET/SDH unit forwards
data without regard to content. Our Invisible Fiber SONET/SDH units utilize
proprietary technology to maintain high-quality synchronization timing signals.
Synchronization ensures lower bit error rates and high availability. Our high
quality synchronization enables more efficient deployment of a large network.
Because our synchronization capabilities are imbedded in our Invisible Fiber
SONET/SDH units, our customers do not have to rely on costly external
synchronization solutions such as global positioning systems or stratum clocks.
Our current Invisible Fiber OC-3/STM-1 products use a 100 Megahertz channel
pair consisting of a 50 Megahertz transmit channel and a 50 Megahertz receive
channel, to carry data at a rate of approximately 190 Mbps in each link. The
core network traffic accounts for 155 Mbps of the total data rate. Error
correction and our proprietary adaptive transmit power control and radio network
management account for the remaining 35 Mbps. This is a differentiating feature
of our Invisible Fiber SONET/SDH products, as we deliver a fully dedicated 155
Mbps for use by service providers.
CUSTOMERS AND MARKETS
We target service providers worldwide that have rights to wireless spectrum
suitable for high-speed services or are planning to acquire rights to deliver
high-speed services to subscribers.
Our targeted customers are typically planning to commence large scale
deployments of wireless broadband equipment during the next two years. In
December 1999, we entered into contracts with Advanced Radio Telecom for our 38
Gigahertz Invisible Fiber Fast Ethernet and OC-3/STM-1 products and with
CenturyTel for our LMDS Invisible Fiber Fast Ethernet and OC-3/STM-1 products.
In addition, we are currently conducting evaluation trials with potential new
customers.
Advanced Radio Telecom. Advanced Radio Telecom (NASDAQ: ARTT), a provider
of broadband Internet services to businesses not served by fiber-optic networks,
holds an estimated 333 licenses in the 38 Gigahertz frequency band for 194
markets in the United States, including 49 of the 50 largest markets. In
December 1999, we entered into a three-year agreement with Advanced Radio
Telecom. Under this agreement, Advanced Radio Telecom has agreed to purchase
2000 38 Gigahertz Invisible Fiber Fast Ethernet units for delivery before
December 31, 2000.
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CenturyTel. CenturyTel (NYSE: CTL) is a large regional diversified
communications company engaged primarily in providing local exchange telephone
services and cellular telephone services to an estimated 2 million customers in
twenty states. CenturyTel holds approximately 36 licenses for the LMDS
frequencies. In December 1999, we entered into a three-year agreement with
CenturyTel. Under this agreement, CenturyTel has agreed to purchase 1,000 of our
LMDS Invisible Fiber Fast Ethernet or OC-3/STM-1 units over a three-year period.
CenturyTel is obligated to purchase 500 of these units by December 31, 2000.
SALES AND MARKETING
Direct Sales. We currently utilize a direct sales force to serve customers
in the U.S. As of March 1, 2000, our U.S. sales force consisted of 13 employees
each of whom has significant experience in the telecommunications industry. Our
sales personnel have extensive contacts with existing and potential customers.
We sell our products directly to international customers. As of March 1,
2000, our international sales team consisted of 4 employees each of whom has
significant international telecommunications industry experience. We intend to
expand our international direct selling efforts principally in Canada, Australia
and Japan. We have already received regulatory approval to market our products
in each of these markets. We are currently developing products for additional
markets and expect to increase our sales force as we gain regulatory approvals
in these markets. In addition, we recently entered into an agreement with
CommVerge Solutions a value added reseller of communications solutions, under
which CommVerge Solutions will resell our products.
Key Account Management. We rely on key account management teams to drive
sales to those domestic and international customers who have the greatest
potential for large-scale network deployments of our products. Once we identify
a key account, we organize a key account management team to oversee and
coordinate all aspects of our relationship with the customer. Each key account
management team consists of a vice president who reports directly to our chief
executive officer, an account manager, technical support personnel, including
engineers, and a program manager. The account manager focuses on understanding
the customer's business needs and positioning our products as solutions for
those needs, and is responsible for coordinating order flow, revenue, new
market/product penetration and management of competitive risks. The account
manager ensures that technical support personnel are available as necessary to
address the customer's technical questions and to assist with product
evaluations and demonstrations and the integration of our products into the
customer's network. The technical support personnel are available to assist the
customer in the design, architecture, planning and deployment of the customer's
network. The program manager is responsible for executing contracts with the
customer, developing appropriate project schedules and working with
manufacturing to ensure that our products are shipped to the customer on time
and to the correct locations.
As the number of our key accounts increases, we intend to deploy key
account teams to customer locations. We believe that this will enable our key
account teams to build closer relationships with their key accounts and capture
additional sales of our products by positioning themselves to assist customers
in the design, planning and deployment of the customer's network. We believe
that this focused sales approach will enable us to maximize new market and new
product sales to service providers, generating higher sales with lower
corresponding costs.
Marketing Efforts. The principal goal of our marketing program is to inform
existing and potential customers about the capabilities and benefits of our
products and consecutive point networks. We are also committed to developing and
enhancing brand awareness of our company and products. Our marketing efforts
include advertising, public relations, participation in and organization of
industry trade shows and conferences, and our web site.
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CUSTOMER SERVICE AND SUPPORT
We are committed to providing our customers with high levels of service and
support. We support our products with documentation and training courses
tailored to our customers' various needs and operate a technical assistance
center located in Orlando, Florida. Our sales and network field engineering
services personnel work closely with customers, third party contractors and
others to coordinate network design, ensure successful installation and provide
continuous customer support. As of March 1, 2000, our customer service and
support team consisted of 10 full-time and 6 part-time employees, who provide
technical assistance and customer support 24 hours a day, 7 days a week.
Our network operations control center gives us and our customers the
capability to remotely monitor the in-network performance of our products and
diagnose and address problems that may arise. We assist our customers in
utilizing our network operations control software within their own internal
network operations control centers.
MANUFACTURING AND OPERATIONS
We currently purchase the majority of the components used in our products
from third parties, who manufacture the components based on our proprietary
designs and specifications. We assemble these components at our manufacturing
facility in Orlando, Florida and conduct extensive testing of the finished
products. Our proprietary test procedures require skilled technicians and
customized equipment.
The technology underlying our transceiver module was developed by Lockheed
Martin for use in advanced radar systems. We currently purchase transceiver
modules from Lockheed Martin on a cost-plus basis. We have decided to develop an
internal manufacturing capability for transceiver modules in order to meet
anticipated demand for our products. We have commenced construction of a new
manufacturing facility adjacent to our current facility, and we expect
production of transceiver modules to begin in the first half of 2000. However,
we will continue to rely on Lockheed Martin as an additional source of
transceiver modules even after our manufacturing operations achieve volume
production. In addition, Raytheon is the sole supplier of the high-power
amplifier used in our transceiver modules, and Polese is the sole supplier of
the housings used in our products. Additional single or limited source
components may be incorporated in our products in the future.
We are working with additional vendors to establish multiple sources for
each component. We seek to outsource manufacturing whenever it is cost effective
to do so and there is no risk of compromising our proprietary technologies and
processes.
RESEARCH AND DEVELOPMENT
We have organized the components used in our products into proprietary
modules that are designed to incorporate the flexibility we will need to develop
future generations of products without significant design changes. Our
proprietary software, which is common to all our products, can be used, with
minor modification, to extend our product lines. We are pursuing several
development projects, including:
- adapting our products to additional frequency bands;
- increasing data transmission speeds;
- continuing to improve our adaptive transmit power control technology;
- continuing to improve the ease of deployment of our products;
- minimizing production cost; and
- developing additional software functionality.
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As of March 1, 2000, our multi-disciplinary research and development team
consisted of 43 employees with an average fifteen years of experience, including
engineers and scientists whose specialties include microwave engineering,
millimeter-wave engineering, electrical engineering, mechanical engineering,
systems engineering, computer science and materials science. Upon completion of
our pending acquisition of IBM's broadband modem product line, we expect to add
additional engineers. We extend our research and development capabilities
through relationships with the third party contractors that manufacture
components used in our products.
COMPETITION
The market for broadband wireless equipment is rapidly evolving,
fragmented, highly competitive and subject to rapid technological change. A
number of large telecommunications equipment suppliers, such as Digital
Microwave Corporation, Harris Corporation and P-Com Inc., as well as a number of
smaller companies have developed or are developing products that compete with
ours. Some of our competitors are substantially larger than we are, have longer
operating histories and have greater financial, sales, marketing, distribution,
technical, manufacturing and other resources. Some also have greater name
recognition and a larger installed base of customers than we have. In addition,
many of our competitors have well-established relationships with our current and
potential customers and have extensive knowledge of our target markets. As a
result, our competitors may be able to respond more quickly to evolving industry
standards and changes in customer requirements, or to devote greater resources
to the development, promotion and sale of their products than we can. In
addition, current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties to
increase their ability to gain market share rapidly. We also expect that
industry consolidation could increase competition. We expect to face increasing
competitive pressures from both current and future competitors. Increased
competition could result in reduced demand for our products, price reductions
and reduced gross margins for our products, any of which could seriously harm
our business.
The rapid technological developments within the broadband wireless
equipment industry result in frequent changes to our group of competitors. The
principal competitive factors in our market include:
- product availability;
- relationships with network service providers;
- product performance, features and inter-operability;
- product development and enhancement;
- price;
- ability to manufacture and distribute products; and
- technical support and customer service.
Although we believe that our products compete favorably on these factors, our
market is relatively new and is developing rapidly. We may not be able to
maintain our competitive position against current and potential competitors,
especially those with significantly greater financial, marketing, services,
technical and other resources.
Our broadband wireless solutions also compete with other high-speed
solutions such as digital subscriber lines, coaxial cable, fiber optic cable,
satellite and point-to-multipoint and point-to-point wireless technologies. Many
of these alternative technologies utilize existing installed infrastructure and
have achieved significantly greater market acceptance and penetration than
broadband wireless
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access technologies. We expect to face increasing competitive pressures from
both current and future technologies in the broadband access market.
INTELLECTUAL PROPERTY
Our success and ability to compete are substantially dependent upon our
internally developed technology and the proprietary technology we license from
Lockheed Martin. To protect our proprietary technology, we generally limit
access to our technology, treat portions of our technology as trade secrets and
obtain confidentiality or non-disclosure agreements from persons with access to
our technology. All of our employees have signed our standard confidentiality
agreement. This agreement prohibits the employees from disclosing our
confidential information, technology developments, and business practices and
from disclosing any confidential information entrusted to us by other parties.
All of our consultants who have access to our confidential information have
signed an agreement requiring them to keep confidential and not disclose our
non-public, confidential information.
To date, we have filed twenty U.S., three Patent Cooperation Treaty and two
foreign patent applications. We cannot assure you that any of our patent
applications will result in issued patents or that any patents, if issued, will
provide us with competitive advantages. We have also applied for registration of
several of our trademarks and our logo. We also claim common law protections for
other marks we use in our business. We have received a notice from another
company with a similar name demanding that we change our name. We cannot assure
you that we will be able to continue to use our name. See "Business -- Legal
Proceedings." In addition, we cannot assure you that any of our trademark
applications will be granted.
Our intellectual property rights, and our ability to enforce those rights,
may be inadequate to prevent others from using our technology or substantially
similar technology they may independently develop. The use of that technology by
others could eliminate any competitive advantage we have, cause us to lose sales
and otherwise harm our business. A significant portion of our proprietary
technology is know-how, and employees with know-how may depart before
transferring their know-how to other employees. Moreover, the laws of other
countries where we market our products may afford even less protection for our
intellectual property. If we resort to legal proceedings to enforce our
intellectual property rights, the proceedings could be burdensome and costly,
even if we were to prevail.
Our industry is characterized by the existence of a large number of patents
and frequent claims and related litigation regarding patent and other
intellectual property rights. In particular, leading companies in the broadband
access market have extensive patent portfolios with respect to
telecommunications technology. Disputes in this area are frequent and subject to
inherent uncertainties. We cannot assure you that we will not be involved in
such a dispute, nor can we assure you that such a dispute will not result in
litigation or that an adverse result or judgment will not adversely affect our
financial condition.
From time to time, other third parties, including leading companies, have
asserted against others and may assert against us exclusive patent, copyright,
trademark and other intellectual property rights to technologies and related
standards that are important to us. Third parties may assert claims or initiate
litigation against us or our manufacturers, suppliers or customers alleging
infringement of their proprietary rights with respect to our existing or future
products. Any of these claims, with or without merit, could be time-consuming,
result in costly litigation and diversion of technical and management personnel,
or require us to develop non-infringing technology or enter into royalty or
license agreements. These royalty or license agreements, if required, may not be
available on acceptable terms, if at all. If there is a successful claim of
infringement or if we fail to develop non-infringing technology or license the
proprietary rights on a timely basis, our business would be harmed.
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EMPLOYEES
As of March 1, 2000 we had a total of 182 employees in our operations, all
of whom were based in the United States, including 43 in research and
development, 32 in selling and marketing, 76 in manufacturing and operations and
31 in finance and administration. We are not party to any collective bargaining
agreement. We believe that our relations with our employees are good.
FACILITIES
Our corporate headquarters are located in Orlando, Florida and comprise
approximately 37,000 square feet. The lease for our headquarters expires in
February 2007. We currently lease approximately 23,000 square feet of
manufacturing space located in Orlando, Florida. The lease for this facility
expires in March 2000. We plan to move our manufacturing and engineering
functions into a new approximately 75,000 square-foot leased facility, also in
Orlando, Florida, in the first quarter of 2000. The new lease expires in
February 2007. Upon completion of our acquisition of IBM's broadband modem
product line we will sublease approximately 17,000 square feet of engineering
space located near San Diego. We believe that our existing facilities are
adequate to meet our current requirements and that suitable additional space
will be available as needed.
LEGAL PROCEEDINGS
We have received notice from Triton International, Inc. demanding that we
change our name because the similarity in the names of our respective companies
will likely cause confusion in the telecommunications marketplace. We have
responded to the notice by indicating that given the differences between their
and our product offerings and customer base, we do not perceive that the name
similarity would present confusion. In August 1999, we brought a cause of action
in the United States District Court for the Middle District of Florida, Orlando
Division, establishing jurisdiction in Florida and seeking a declaratory
judgment that our use of our name does not infringe the trademark rights of
Triton International, Inc. In September 1999, Triton International, Inc.
responded by filing a counterclaim alleging that our use of our name and related
service marks constitute service mark infringement, false designation of origin,
unfair competition and deceptive practices.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information with respect to our executive
officers and directors as of March 1, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Howard "Skip" Speaks................. 52 President, Chief Executive Officer and Director
Kenneth R. Vines..................... 55 Senior Vice President and Chief Financial Officer
Michael A. Clark..................... 39 Vice President of Engineering
Douglas R.B. Campbell................ 43 Vice President of Sales and Marketing
Philip C. Gulliford 41 Vice President of Advanced Technology
Robert P. Goodman.................... 39 Chairman of the Board
Brian J. Andrew...................... 42 Director
Joseph D. Antinucci.................. 59 Director
Bandel L. Carano..................... 38 Director
James F. Gibbons..................... 68 Director
Arjun Gupta.......................... 39 Director
James Wei............................ 32 Director
</TABLE>
Howard "Skip" Speaks has served as our President and Chief Executive
Officer and as a member of our board of directors since September 1999. Prior to
joining us he held various positions at Ericsson, a telecommunications company,
from August 1986 through September 1999, most recently as Executive Vice
President and General Manager of the network operators group. Mr. Speaks
received his B.S. degree in civil engineering from the West Virginia Institute
of Technology.
Kenneth R. Vines has served as our Senior Vice President and Chief
Financial Officer since October 1998. Prior to joining us he was Vice President
of Finance for DSC Communications, a telecommunications equipment and software
development company, from July 1986 through September 1998. Mr. Vines received
his B.B.A. degree from the University of Texas at Arlington and his M.B.A.
degree from North Texas State University.
Michael A. Clark, one of our founders, has served as our Vice President of
Engineering since April 1997. Prior to joining us he was a Hardware Engineering
Manager at Texas Instruments, a semiconductor company, from June 1983 through
March 1997. Mr. Clark received his B.S. degree in electrical engineering from
the Lawrence Institute of Technology and his M.S. degree in electrical
engineering from the University of Texas at Arlington.
Douglas R.B. Campbell has served as our Vice President of Sales and
Marketing since March 1999. Prior to joining us he was employed at Nortel
Networks, a provider of communications products and services, as Vice President,
Account Management (Asia) from April 1997 through March 1999 and as Assistant
Vice President, Broadband Networks Business from December 1994 through April
1997. Mr. Campbell received his Bachelor of Engineering Physics degree from the
Royal Military College of Canada and his M.B.A. degree from the University of
Lausanne.
Philip C. Gulliford, one of our founders, has served as Vice President of
Advanced Technology since April 1997. Prior to joining us he was Director of
Engineering at Phoenix Wireless Group, a wireless local loop company, from April
1993 through February 1997. Mr. Gulliford received his B.S. degree in physics
and electronics from Brunel University in London.
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Robert P. Goodman is Chairman of the board of directors and has served as a
director since January 1998. He is a general partner at Bessemer Venture
Partners, a venture capital firm. Prior to joining Bessemer he was a managing
member of Cove Road Associates, a venture capital firm, from March 1998 through
December 1999. Prior to that, he was Chairman and Chief Executive Officer of
Celcore, a developer and supplier of cellular telephone switching and
infrastructure equipment, from June 1993 through December 1997. Mr. Goodman
received his B.A. degree in Latin American studies from Brown University and his
M.B.A. degree from Columbia University.
Brian J. Andrew, one of our founders, has served on our board of directors
since April 1997 and currently serves as a consultant to us. He has been
President and Chief Executive Officer of CAVU, a broadband wireless service
provider, since December 1999. He served as our President and Chief Executive
Officer from March 1997 to September 1999. Prior to that, Mr. Andrew was Vice
President of Engineering at Phoenix Wireless Group, a wireless local loop
company, from August 1995 through January 1997. Mr. Andrew received his B.S.
degree in electronics and electrical engineering from Auckland University in New
Zealand.
Joseph D. Antinucci has served on our board of directors since November
1998. He has been President of Lockheed Martin Naval Electronics & Surveillance
Systems, a defense contractor, since December 1998. Prior to that, Mr. Antinucci
was President of Lockheed Martin Electronics & Missiles, a defense contractor,
from May 1993 through December 1998. Mr. Antinucci received his B.S. degree in
electrical engineering from the University of Rhode Island, his M.S. degree in
aeronautical engineering from the Massachusetts Institute of Technology and
completed the Advanced Management Program at the Harvard Business School.
Bandel L. Carano has served on our board of directors since November 1997.
He has been a general partner of Oak Investment Partners, a venture capital
firm, since 1985. Mr. Carano serves as a member of the investment advisory board
of the Stanford University Engineering Venture Fund. Mr. Carano received his
B.S. and M.S. degrees from Stanford University. Mr. Carano also serves as a
director of Advanced Radio Telecom, Netopia, Polycom, Pulsepoint Communications
and WFI.
James F. Gibbons, Ph.D. has served on our board of directors since November
1997. He has been a professor of electrical engineering since 1957 and Special
Counsel to the President for Industry Relations at Stanford University since
July 1996. Dr. Gibbons was Dean of the School of Engineering at Stanford
University from September 1984 to June 1996. Dr. Gibbons received his B.S.
degree in electrical engineering from Northwestern University and his M.S. and
Ph.D. degrees in electrical engineering from Stanford University. He currently
serves as a director of Cisco Systems, Lockheed Martin and El Paso Energy.
Arjun Gupta has served on our board of directors since May 1998. He has
been the managing partner of TeleSoft Partners, a venture capital firm, since
January 1997. From August 1994 to December 1996 Mr. Gupta was a Vice President
of The Chatterjee Group, an investment advisory company. Mr. Gupta received his
B.A. degree in economics from St. Stephen's College, Delhi University, his B.S.
and M.S. degrees in computer science from Washington State University and an
M.B.A. degree from Stanford University. Mr. Gupta currently serves as a director
of Omnipoint.
James Wei has served on our board of directors since November 1997. He has
been a general partner at Worldview Technology Partners, a venture capital firm,
since April 1996. Prior to that, Mr. Wei was a Fund Manager at JAFCO Co., Ltd.,
a venture capital firm, from October 1991 through April 1996. Mr. Wei received
his B.S. degree in systems design engineering from the University of Waterloo in
Ontario, Canada.
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BOARD OF DIRECTORS
Our board of directors currently consists of eight members. Each director
holds office until his or her term expires or until his or her successor is duly
elected and qualified. Upon completion of this offering, our amended and
restated certificate of incorporation and amended and restated bylaws will
provide for a classified board of directors. In accordance with the terms of our
amended and restated certificate, our board of directors will be divided into
three classes whose terms will expire at different times. The three classes will
be comprised of the following directors:
- Class I consists of directors Andrew, Antinucci and Speaks, who will
serve until the annual meeting of stockholders to be held in 2001;
- Class II consists of directors Gibbons, Gupta and Wei, who will serve
until the annual meeting of stockholders to be held in 2002; and
- Class III consists of directors Carano and Goodman, who will serve until
the annual meeting of stockholders to be held in 2003.
At each annual meeting of stockholders beginning with the 2001 annual
meeting, the successors to directors whose terms will then expire will be
elected to serve from the time of election and qualification until the third
annual meeting following election and until their successors have been duly
elected and qualified. Any additional directorships resulting from an increase
in the number of directors will be distributed among the three classes so that,
as nearly as possible, each class will consist of an equal number of directors.
COMMITTEES
Our board of directors has an executive committee, an audit committee and a
compensation committee. The executive committee consists of directors Carano,
Goodman and Speaks. The executive committee may act on behalf of the board of
directors between meetings. The audit committee consists of directors Antinucci,
Gupta and Wei. The audit committee reviews our internal accounting procedures,
consults with and reviews the services provided by our independent accountants
and makes recommendations to the board of directors regarding the selection of
independent accountants. The compensation committee consists of directors
Carano, Goodman and Gupta. The compensation committee reviews and recommends to
the board of directors the salaries, incentive compensation and benefits of our
officers and employees and administers our stock plans and employee benefit
plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to establishing the compensation committee, the executive committee
of our board of directors performed the functions now delegated to the
compensation committee. No member of our compensation committee has served as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of directors
or compensation committee.
DIRECTOR COMPENSATION
In September 1999, we granted options to purchase 100,000 shares of common
stock to Mr. Goodman in consideration of his services as a member of our board
of directors. In October 1999, our stockholders approved grants of options to
purchase 20,000 shares of common stock vesting annually in equal installments
over four years to each of our non-employee directors, other than Mr. Goodman.
In October 1999, the stockholders also approved guidelines for future grants of
stock
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<PAGE> 49
options under our 1997 Stock Plan to non-employee directors. These guidelines
provide that non-employee directors will receive the following option grants:
- 20,000 shares vesting annually in equal installments over four years
which are to be granted as of the effective date of this offering; and
- 10,000 shares vesting annually in equal installments over four years
which are to be granted on the date of each annual meeting of
stockholders meeting following the effective date of this offering.
EXECUTIVE OFFICERS
Our executive officers are appointed by our board of directors and serve
until their successors are elected or appointed.
COMPENSATION
The following table sets forth all compensation accrued during the year
ended December 31, 1999 to our President and Chief Executive Officer, our former
President and Chief Executive Officer, and each of our four other most highly
compensated officers whose compensation exceeded $100,000 for the period. In
accordance with the rules of the Securities and Exchange Commission, the
compensation described in this table does not include perquisites and other
personal benefits received by the executive officers named in the table below
which do not exceed the lesser of $50,000 or 10% of the total salary and bonus
reported for these officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION($) SECURITIES
------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY BONUS OTHER OPTIONS(#) COMPENSATION
---------------------------- -------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Howard "Skip" Speaks(1).......... $ 92,273 $ 60,000 $ 274,050 1,250,000 --
President and Chief Executive
Officer
Brian J. Andrew(2)............... 150,517 -- -- 100,000 --
Former President and Chief
Executive Officer
Kenneth R. Vines................. 150,000 6,000 72,951(3) 100,000 --
Senior Vice President and Chief
Financial Officer
Douglas R.B. Campbell(4)......... 106,250 5,000 39,855(3) 300,000 --
Vice President of Sales and
Marketing
Michael A. Clark(5).............. 140,625 5,000 -- 100,000 --
Vice President of Engineering
Philip C. Gulliford.............. 130,000 5,000 -- -- --
Vice President of Advanced
Technology
</TABLE>
- -------------------------
(1) Mr. Speaks joined us in September 1999. His annual salary is $290,000. Other
annual compensation listed includes a signing bonus Mr. Speaks earned in
1999 in the amount of
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<PAGE> 50
$250,000, reimbursement for relocation expenses and temporary housing
expenses for which we reimbursed Mr. Speaks in 1999.
(2) Mr. Andrew served as our President and Chief Executive Officer during 1999.
Presently, Mr. Andrew is a consultant to us and continues to serve on our
board of directors.
(3) Represents reimbursement for relocation expenses.
(4) Mr. Campbell joined us in March 1999. His annual salary in 1999 was
$150,000.
(5) In June 1999, Mr. Clark's annual salary increased to $150,000.
OPTION GRANTS IN 1999
The following table sets forth information concerning grants of stock
options to each of the executive officers named in the table above during 1999.
All options granted to these executive officers in 1999 were granted under our
1997 Stock Plan. Except as otherwise noted, one-quarter of the shares subject to
each option vest and become exercisable on the first anniversary of the vesting
commencement date, and an additional one-forty-eighth of the shares subject to
each option vest each month thereafter. In addition, options granted to these
executive officers may be exercised prior to vesting if the individual
exercising options enters into a restricted stock purchase agreement providing
that the shares acquired may be repurchased by us in the event that the
individual ceases to be employed by us. We will pay a per share repurchase price
equal to the exercise price per share paid by the individual. Shares shall be
released from our repurchase option at the same times and in the same amounts as
shares would have become vested and exercisable under the provisions of the
individual's option agreement with us. The percent of the total options granted
figures set forth below are based on an aggregate of 2,783,149 options granted
to employees during 1999. All options were granted at a fair market value as
determined by our board of directors on the date of grant.
Potential realizable value represents hypothetical gains that could be
achieved for the options if exercised at the end of the option term assuming
that the initial public offering price of our common stock appreciates at a rate
of 5% and 10% over the option term. The assumed 5% and 10% rates of stock price
appreciation are provided in accordance with rules of the Securities and
Exchange Commission and do not represent our estimate or projection of our
future common stock price.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM($)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED DURING PERIOD(%) PER SHARE DATE 5% 10%
---- ---------- ---------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Howard "Skip" Speaks.... 1,000,000(1) 35.9% $2.50 8/15/09
250,000(1)(2) 9.0 2.50 8/15/09
Brian J. Andrew......... 100,000(3) 3.6 2.50 7/1/09
Kenneth R. Vines........ 100,000(1) 3.6 5.00 12/17/09
Douglas R.B. Campbell... 250,000(1) 9.0 0.50 3/16/09
50,000(1) 1.8 1.00 4/29/09
Michael A. Clark........ 100,000(1) 3.6 2.50 7/1/09
Philip C. Gulliford..... -- -- -- -- -- --
</TABLE>
- -------------------------
(1) These options are subject to acceleration provisions more fully described in
the section "Employment Agreements and Change of Control Provisions" below.
(2) These options shall vest in full on September 7, 2005 but are subject to
accelerated vesting in the event that specified corporate financial targets
are achieved.
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<PAGE> 51
(3) These options vest fully on August 1, 2001 and are subject to acceleration
provisions more fully described in the section "Employment Agreements and
Change of Control Provisions" below.
AGGREGATED OPTION EXERCISES IN 1999 AND VALUES AT DECEMBER 31, 1999
The following table sets forth information concerning stock options held by
the executive officers named in the summary compensation table at December 31,
1999. All stock options have been reported as exercisable because our 1997 Stock
Plan allows options to be exercised prior to vesting if the individual
exercising options enters into a restricted stock purchase agreement. The value
realized upon exercise and the value of unexercised in-the-money options is
based on an assumed initial offering price of $ per share minus the actual
exercise prices. All options were granted under our 1997 Stock Plan. Except as
otherwise noted, these options vest over four years and otherwise generally
conform to the terms of our 1997 Stock Plan. The shares acquired by Mr. Campbell
remain subject to a right of repurchase in favor of us which is more fully
described in the section "Option Grants in 1999" above.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1999
AT DECEMBER 31, 1999(#) ($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Howard "Skip" Speaks... -- $ 1,250,000 -- $ $ --
Brian J. Andrew........ -- 100,000 -- --
Kenneth R. Vines....... -- 100,000 -- --
Douglas R.B.
Campbell............. 300,000 -- -- --
Michael A. Clark....... -- 225,000 -- --
Philip C. Gulliford.... -- -- -- --
</TABLE>
SEVERANCE AGREEMENTS AND CHANGE OF CONTROL PROVISIONS
In August 1999, we issued an employment offer letter to Mr. Speaks that
provides that if he is terminated without cause or involuntarily terminated by
us he will receive twelve months salary and benefits and six months of
accelerated vesting of his stock options. These severance benefits will cease if
Mr. Speaks is employed by another company within twelve months of his
termination. Additionally, if Mr. Speaks is terminated without cause or
involuntarily terminated by us, dies or becomes disabled within six months of
the commencement of his employment, a total of 100,000 options shall become
immediately vested.
Also, we have entered into a stock option agreement under our 1997 Stock
Plan with Mr. Speaks that includes a provision providing that all options and
shares of restricted stock granted thereunder will accelerate and become fully
vested in the event of our merger with or into another corporation or a sale of
substantially all of our assets, a change of control. Mr. Speaks has agreed that
for one year after a change of control he will not directly or indirectly engage
in the financing, operation, management or control of any business that competes
with us.
In September 1999, we entered into an agreement with Mr. Andrew that
provided that he would be an employee of ours through the earlier to occur of
May 1, 2000 or the effective date of our initial public offering and that
thereafter he would be retained by us as a consultant. By agreement with us in
January 2000, Mr. Andrew resigned from his position as an employee to become
Chief Executive Officer of CAVU. Mr. Andrew is currently a consultant to us and
serves on our board of directors. If we terminate Mr. Andrew's services as a
consultant, all options and shares of restricted stock held by him will be
immediately vested and exercisable. In addition, if there is a change of control
within six
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months of Mr. Andrew becoming a consultant to us, he will continue to receive a
consulting fee for the balance of this six month period.
In September 1998, we issued an employment offer letter to Mr. Vines that
provides that in the event that he is terminated without cause he will receive
six months salary and 25% of his annual bonus. Mr. Vines' options and shares of
restricted stock will continue to vest during this six month period. These
severance benefits will cease if Mr. Vines is employed by another company within
six months of his termination. Also, Mr. Vines would receive six months salary,
benefits and bonus in the event that he is terminated without cause within one
year of a change in control. We have entered into stock option agreements under
our 1997 Stock Plan with Mr. Vines that include a provision providing that the
options and shares of restricted stock granted thereunder, excluding 100,000
shares subject to an option granted in 1999, will accelerate and become fully
vested upon a change in control.
We have entered into stock option agreements under our 1997 Stock Plan with
each of Mr. Vines, Mr. Campbell and Mr. Clark that include a provision providing
that options and shares of restricted stock granted thereunder will accelerate
and become fully vested upon a change in control, unless the successor
corporation assumes the options or restricted stock or substitutes equivalent
securities for them. Additionally, these agreements provide that if an optionee
is terminated within twelve months of a change of control all assumed or
substituted options and shares of restricted stock will accelerate and become
fully vested. These provisions apply only to the options granted to Mr. Vines in
1999.
In July 1999, we entered into an amendment to the original employment offer
letters of Mr. Campbell and Mr. Clark. These amendments provide that in the
event of their termination without cause they will receive six months salary and
25% of their annual bonus. The options and shares of restricted stock held by
Mr. Campbell and Mr. Clark will continue to vest during this six month period.
These severance benefits will cease if they are employed by another company
within six months of their termination. Also, Mr. Campbell and Mr. Clark would
receive six months salary, benefits and bonus in the event that they are
terminated without cause within one year of a change in control.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION
Our amended and restated certificate of incorporation to be filed upon
completion of this offering limits the liability of our directors to the maximum
extent permitted by Delaware law. Delaware law provides that directors of a
corporation will not be personally liable for monetary damages for breach of
their fiduciary duties as directors, except liability associated with any of the
following:
- any breach of their duty of loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
- any transaction from which the director derived an improper personal
benefit.
The limitation of our director's liability does not apply to liabilities
arising under the federal securities laws and does not affect the availability
of equitable remedies such as injunctive relief or rescission.
Our amended and restated certificate of incorporation and amended and
restated bylaws also provide that we shall indemnify our directors and executive
officers and may indemnify our other officers, employees and agents to the
fullest extent permitted by law. We believe that indemnification under our
amended and restated bylaws covers at least negligence and gross negligence on
the part of
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indemnified parties. Our amended and restated bylaws also permit us to secure
insurance on behalf of any officer, director, employee or other agent for any
liability arising out of his or her actions in such capacity, regardless of
whether our amended and restated bylaws would permit indemnification.
We intend to enter into indemnification agreements with each of our
officers and directors containing provisions that require us to, among other
things, indemnify such officers and directors against liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to cover our directors and officers under any of
our liability insurance policies applicable to our directors and officers. We
believe that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.
STOCK PLANS
1997 STOCK PLAN
Our 1997 Stock Plan was approved by our board of directors and stockholders
in 1997 and was subsequently amended in October 1997, April 1998, September 1998
and February 2000. As of March 1, 2000, we had authorized a total of 10,540,000
shares of our common stock for issuance under the plan. The 1997 Stock Plan
provides for the granting to our employees of incentive stock options within the
meaning of Section 422 of the United States tax code, and for the granting to
employees, non-employee directors and consultants of non-statutory stock options
and stock purchase rights. Unless terminated sooner, the 1997 Stock Plan will
terminate automatically in 2007.
Our 1997 Stock Plan is administered by the compensation committee of our
board of directors. Our board of directors determines the terms of the options
or stock purchase rights granted, including the exercise price, the number of
shares subject to each option or stock purchase right, the vesting and the form
of consideration payable upon such exercise. In addition, the board of directors
has the authority to amend, suspend or terminate the plan, provided that no such
action may affect any share of common stock previously issued and sold or any
option previously granted and then outstanding under the plan. The board of
directors has the exclusive authority to interpret and apply the provisions of
the 1997 Stock Plan.
Options and stock purchase rights granted under our 1997 Stock Plan are not
generally transferable by the optionee, and each option and stock purchase right
is exercisable during the lifetime of the optionee only by the optionee. Options
granted under the 1997 Stock Plan must generally be exercised within three
months of the end of the optionee's status as our employee or consultant, or
within twelve months after his or her termination by death or disability, but in
no event later than the expiration of the option's ten year term. In the case of
stock purchase rights, unless the board of directors determines otherwise, the
agreement evidencing the grant shall provide that we have a repurchase option
exercisable upon the voluntary or involuntary termination of his or her
employment for any reason (including death or disability). In this event, the
purchase price per share will be equal to the original price paid per share and
may be paid by cancellation of his or her outstanding indebtedness to us, if
any. Our repurchase option shall lapse at a rate determined by the board of
directors. The exercise price of any incentive stock options granted under the
1997 Stock Plan and any non-statutory stock options intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
United States tax code, must be at least equal to the fair market value of our
common stock on the date of grant. With respect to any participant who owns
stock possessing more than 10% of the voting power of all classes of our
outstanding capital stock, the exercise price of any incentive stock option
granted must equal at least 110% of the fair market value on the grant date and
the term of such incentive stock option must not exceed five years. The term of
all other options granted under the 1997 Stock Plan may not exceed ten years.
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Our 1997 Stock Plan provides that in the event of our merger with or into
another corporation or a sale of substantially all of our assets, each option or
right will accelerate and become vested unless the successor corporation assumes
or substitutes an equivalent option in its place. If the outstanding options or
rights are not assumed or substituted, the option or stock purchase right will
vest in full. Following the assumption or substitution of the options or stock
purchase rights, our 1997 Stock Plan provides for full acceleration of vesting
in the event that the successor corporation in a "Change of Control Merger,"
defined below, terminates a holder of an option or stock purchase right as a
result of an "Involuntary Termination," defined below, in the twelve month
period following a Change of Control Merger.
A Change in Control Merger is defined as our merger with or into another
corporation or sale of substantially all of our assets in which our shareholders
immediately prior to such transaction hold less than 50% of the outstanding
equity securities of the successor corporation (or a parent or subsidiary of the
successor corporation) subsequent to the completion of the transaction. An
Involuntary Termination is defined as a termination not effected for disability
or for Cause. Cause is defined as any act of personal dishonesty taken by the
holder in connection with his or her responsibilities as a service provider and
intended to result in substantial personal enrichment to the holder, the
holder's conviction of a felony, a willful act by the holder which constitutes
gross misconduct and which is injurious to the successor corporation, or
continued violations by the holder of the holder's obligations to the successor
corporation which are demonstrably willful and deliberate on the holder's part,
following delivery to the holder of a written demand for performance from the
successor corporation which describes the basis for the successor corporation's
belief that the holder has not substantially performed his duties.
2000 EMPLOYEE STOCK PURCHASE PLAN
Our 2000 Employee Stock Purchase Plan was adopted by our board of directors
in February 2000. A total of 500,000 shares of common stock have been reserved
for issuance under our 2000 Employee Stock Purchase Plan.
Our 2000 Employee Stock Purchase Plan, which is intended to qualify under
Section 423 of the United States tax code, contains consecutive six month
offering and purchase periods. The offering periods generally start on the first
trading day on or after May 1, and November 1, of each year, except for the
first offering period which commences on the first trading day on or after the
effective date of this offering and ends on the last trading day on or before
November 30, 2000.
Employees are eligible to participate if they are customarily employed by
us or any participating subsidiary for at least 20 hours per week and more than
five months in any calendar year. However, any employee who immediately after
grant owns stock possessing 5% or more of the total combined voting power or
value of all classes of our capital stock may not be granted an option to
purchase stock under this plan. Employees' participation in this plan and any
other stock purchase plans may not exceed an aggregate $25,000 per calendar
year. The 2000 Employee Stock Purchase Plan permits participants to purchase
common stock through payroll deductions of up to 10% of the participant's
"compensation." Compensation is defined as the participant's base straight time
gross earnings and commissions but is exclusive of payments for overtime, shift
premium payments, incentive compensation, incentive payments, bonuses and other
compensation. The maximum number of shares a participant may purchase during a
single purchase period is 1,250 shares.
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each purchase period. The price of stock
purchased under the 2000 Employee Stock Purchase Plan is generally 85% of the
lower of the fair market value of the common stock (i) at the beginning of the
offering period or (ii) at the end of the offering period. Participants may
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end their participation at any time during an offering period, and they will be
paid their payroll deductions to date. Participation ends automatically upon
termination of employment with us.
Rights granted under the 2000 Employee Stock Purchase Plan are not
transferable by a participant other than by will, the laws of descent and
distribution, or as otherwise provided under the plan. The 2000 Employee Stock
Purchase Plan provides that, in the event of our merger with or into another
corporation or a sale of substantially all our assets, each outstanding option
may be assumed or substituted for by the successor corporation. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened and a new exercise date will
be set. The 2000 Employee Stock Purchase Plan will terminate automatically in
2010, unless terminated earlier. The board of directors has the authority to
amend or terminate the purchase plan, except that no such action may adversely
affect any outstanding rights to purchase stock under the purchase plan. The
board of directors has the exclusive authority to interpret and apply the
provisions of the purchase plan.
401(K) PLAN
In October 1998, we adopted the Triton Network Systems 401(k) Savings Plan.
The Triton Network Systems 401(k) Savings Plan is intended to qualify under
Section 401(k) of the United States tax code, so that contributions to the
Triton Network Systems 401(k) Savings Plan by employees or by us and the
investment earnings thereon are not taxable to employees until withdrawn. If the
Triton Network Systems 401(k) Savings Plan qualifies under Section 401(k) of the
United States tax code, our contributions will be deductible by us when made.
Our employees may elect to reduce their current compensation by up to the
statutorily prescribed annual limit of $10,500 in 2000 and to have those funds
contributed to the Triton Network Systems 401(k) Savings Plan. The Triton
Network Systems 401(k) Savings Plan permits us, but does not require us, to make
additional matching contributions on behalf of all participants. To date, we
have not made any contributions to the Triton Network Systems 401(k) Savings
Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PREFERRED STOCK
In November 1997, we sold an aggregate 14,400,000 shares of our series A
preferred stock at a price of $1.00 per share. In May 1998, July 1998 and
January 1999 we sold an aggregate 13,107,938 shares of our series B preferred
stock at a price of $2.50 per share. In October 1999 and November 1999, we sold
an aggregate 10,105,000 shares of our series C preferred stock at a price of
$5.00 per share. The following officers, directors and 5% stockholders purchased
shares in these financings:
<TABLE>
<CAPTION>
SHARES OF SHARES OF SHARES OF
PURCHASER SERIES A STOCK SERIES B STOCK SERIES C STOCK
--------- -------------- -------------- --------------
<S> <C> <C> <C>
OFFICERS AND DIRECTORS
Robert P. Goodman............................. 100,000 160,000 --
Kenneth R. Vines.............................. -- 10,000 3,000
FIVE PERCENT STOCKHOLDERS
Entities affiliated with Oak Investment
Partners.................................... 5,000,000 1,860,570 1,000,000
Entities affiliated with Worldview Technology
Partners.................................... 3,000,000 1,116,342 900,000
Entities affiliated with Bessemer Venture
Partners.................................... 2,355,000 940,000 600,000
Lockheed Martin Corporation................... -- 2,400,000 --
Entities affiliated with TeleSoft Partners.... -- 1,770,470 560,957
Entities affiliated with MeriTech Capital
Partners.................................... -- -- 3,893,925
</TABLE>
OTHER MATERIAL TRANSACTIONS
In June 1997, we entered into a license agreement with Lockheed Martin
pursuant to which we received an exclusive, perpetual license for the use of
Lockheed Martin's monolithic millimeterwave integrated circuit, or MMIC,
technology in our products. In exchange, we agreed to make royalty payments to
Lockheed Martin and to issue 50,000 shares of our common stock to the Central
Florida Innovation Corporation, a business development entity that helped
facilitate our relationship with Lockheed Martin. Our agreement with Lockheed
Martin may be terminated by either party upon a material breach or following a
party's filing of bankruptcy, its making of an assignment for the benefit of
creditors or its seeking legal protection from creditors' claims. In July 1998,
Lockheed Martin relinquished its rights to royalty payments under this agreement
in exchange for 1,600,000 shares of our common stock.
We have entered into agreements with Lockheed Martin relating to the design
and development of the MMIC technology and transceiver module in our products.
Under these agreements we will pay Lockheed Martin on a cost reimbursable basis,
including its fee, for production services performed thereunder. Additionally,
we will pay Lockheed Martin for specified costs related to the continued
development of our products. In 1999, the value of these payments to Lockheed
Martin was approximately $5,500,000. Lockheed Martin is a holder of more than 5%
of our capital stock. James Gibbons, one of our directors is a director of
Lockheed Martin. Joseph Antinucci, one of our directors, is an officer of
Lockheed Martin Naval Electronics & Surveillance Systems, a division of Lockheed
Martin.
In December 1999, we entered into a supply agreement with Advanced Radio
Telecom under which Advanced Radio Telecom is obligated to purchase and we are
obligated to supply our products under the terms and conditions described in the
agreement. Entities associated with Oak Investment Partners, of which Bandel
Carano, one of our directors, is a general partner, Worldview Technology
Partners, of which James Wei, one of our directors, is a general partner, and
other stockholders of
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<PAGE> 57
ours have invested in Advanced Radio Telecom. Mr. Carano, one of our directors,
is a director of Advanced Radio Telecom.
In 1999, we paid an aggregate of approximately $70,000 to Brian Andrew and
Mr. Andrew's wife pursuant to consulting agreements with us. Mr. Andrew is one
of our directors.
In February 2000, we entered into a value added reseller agreement with
CommVerge Solutions. Entities associated with Oak Investment Partners, of which
Bandel Carano, one of our directors, is a general partner and Worldview
Technology Partners, of which James Wei, one of our directors, is a general
partner and other stockholders of ours have invested in CommVerge Solutions. Mr.
Wei, one of our directors, is a director of CommVerge Solutions.
INVESTOR RIGHTS AGREEMENT
We have entered into an agreement with our preferred stockholders pursuant
to which these and other preferred stockholders will have registration rights
with respect to their shares of common stock following this offering. For a
description of these registration rights, see "Description of Capital Stock."
Upon the completion of this offering, all shares of our outstanding preferred
stock will be automatically converted into an equal number of shares of common
stock.
INDEBTEDNESS OF MANAGEMENT
In October 1999, we made an interest free loan in the principal amount of
$300,000 to Mr. Speaks, our President and Chief Executive Officer, which is
secured by Mr. Speaks' options and specified real estate. The loan is payable on
September 30, 2004 or within one year of the termination of his employment with
us, and is to be payable prior to this date on a dollar for dollar basis out of
any proceeds received by Mr. Speaks as a result of sale of shares of common
stock by him.
In November 1997, we made a loan in the principal amount of $89,984 to Mr.
Andrew, one of our directors, which accrues interest at a rate equal to 5.81%
per annum compounded annually. Each loan is secured by shares of our restricted
stock purchased by Mr. Andrew using the proceeds of the loan. The loan is
payable on December 31, 2000, or, at our option, within thirty days of the
termination of his employment with us. Upon Mr. Andrew's termination of his
employment, we did not exercise this option.
In June 1999, we made two separate loans in the principal amounts of
$62,500 and $25,000, respectively, to Mr. Campbell, one of our executive
officers, each of which accrues interest at a rate equal to 5.1% per annum
compounded annually. Each loan is secured by shares of our restricted stock
purchased by Mr. Campbell using the proceeds of the loans. The loans are payable
on June 30, 2004, or, at our option, within thirty days of the termination of
his employment with us.
In January 1999, we made a loan in the principal amount of $18,750 to Mr.
Goodman, the Chairman of our board of directors. In December 1999, we made a
second loan to Mr. Goodman in the principal amount of $150,000. Both loans
accrue interest at a rate equal to 5.1% per annum compounded annually and each
of which is secured by shares of our restricted stock purchased by Mr. Goodman
using the proceeds of the loans. The loan made in January 1999 is payable on
January 31, 2004, or, at our option, within thirty days of his ceasing to be
Chairman of our board of directors. The loan made in December 1999 is payable in
December 31, 2004, or, at our option, within thirty days of his ceasing to
provide services to us.
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<PAGE> 58
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of March 1, 2000, and as adjusted to
reflect the sale of common stock offered hereby, by the following:
- each stockholder known by us to own beneficially more than 5% of our
common stock;
- each of our executive officers named in the compensation table above;
- each of our directors; and
- all directors and executive officers as a group.
As of March 1, 2000, there would have been 51,246,280 shares of our common
stock outstanding, assuming that all outstanding preferred stock had been
converted into common stock. Except as otherwise indicated, we believe that the
beneficial owners of the common stock listed below, on the information furnished
by such owners, have sole voting power and investment power with respect to such
shares. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percent ownership of that person, shares
of common stock subject to options or warrants held by that person that are
currently exercisable or that will become exercisable within 60 days after March
1, 2000 are deemed outstanding, while such shares are not deemed outstanding for
purposes of computing percent ownership of any other person. Unless otherwise
indicated in the footnotes below, the persons and entities named in the table
have sole voting and investment power with respect to all shares beneficially
owned, subject to community property laws where applicable. The address for
those individuals for which an address is not otherwise indicated is c/o Triton
Network Systems, Inc., 8529 South Park Circle, Orlando, Florida 32819.
<TABLE>
<CAPTION>
PERCENT OF SHARES
OUTSTANDING
SHARES BENEFICIALLY --------------------
OWNED PRIOR PRIOR TO AFTER
NAME OR GROUP OF BENEFICIAL OWNERS TO OFFERING OFFERING OFFERING
---------------------------------- ------------------- -------- --------
<S> <C> <C> <C>
Bandel L. Carano(1)............................... 7,880,570 15.4%
Entities affiliated with Oak Investment
Partners(2)..................................... 7,860,570 15.3
525 University Avenue, Suite 1300
Palo Alto, CA 94301
James Wei(3)...................................... 5,036,342 9.8
Entities affiliated with Worldview Technology
Partners(4)..................................... 5,016,342 9.8
435 Tasso Street, Suite 120
Palo Alto, CA 94301
James F. Gibbons(5)............................... 4,220,000 8.2
Lockheed Martin Corporation....................... 4,000,000 7.8
5600 Sand Lake Road
Orlando, FL 32819
Entities affiliated with MeriTech Capital
Partners(6)..................................... 3,893,925 7.6
90 Middlefield Road, Suite 201
Menlo Park, CA 94025
Entities affiliated with Bessemer Venture
Partners(7)..................................... 3,859,313 7.5
83 Walnut Street
Wellesley Hills, MA 02481
Arjun K. Gupta(8)................................. 3,151,427 6.1
</TABLE>
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<PAGE> 59
<TABLE>
<CAPTION>
PERCENT OF SHARES
OUTSTANDING
SHARES BENEFICIALLY --------------------
OWNED PRIOR PRIOR TO AFTER
NAME OR GROUP OF BENEFICIAL OWNERS TO OFFERING OFFERING OFFERING
---------------------------------- ------------------- -------- --------
<S> <C> <C> <C>
Entities affiliated with TeleSoft Partners(9)..... 3,131,427 6.1
1450 Fashion Island Boulevard, Suite 610
San Mateo, CA 94404
Brian J. Andrew(10)............................... 1,387,432 2.7
Howard "Skip" Speaks(11).......................... 1,250,000 2.4
Robert P. Goodman(12)............................. 860,000 1.7
Michael A. Clark(13).............................. 604,994 1.2
Kenneth R. Vines(14).............................. 413,000 *
Philip C. Gulliford(15)........................... 379,994 *
Douglas R.B. Campbell(16)......................... 300,000 *
Joseph D. Antinucci(17)........................... 20,000 *
All directors and executive officers as a group
(12 persons).................................... 25,503,759 48.1
</TABLE>
- -------------------------
(1) Includes 7,860,570 shares held by the entities listed in note 2 below. Mr.
Carano is a general partner of the entities listed in note 2 below. Mr.
Carano disclaims beneficial ownership of the shares held by the entities
listed in note 2 below except to the extent of his direct pecuniary
interest in these shares. Includes 20,000 shares issuable upon the
exercise of options exercisable within sixty days of March 1, 2000; all of
which are subject to our right of repurchase which lapses over time.
(2) Includes 7,667,986 shares held by Oak Investment Partners VII, Limited
Partnership and 192,584 shares held by Oak VII Affiliates Fund, Limited
Partnership.
(3) Includes 5,016,342 shares held by the entities listed in note 4 below. Mr.
Wei is a general partner of the general partner of the entities listed in
note 4 below. Mr. Wei disclaims beneficial ownership of the shares held by
the entities listed in note 4 below except to the extent of his direct
pecuniary interest in these shares. Includes 20,000 shares issuable upon
the exercise of options exercisable within sixty days of March 1, 2000;
all of which are subject to our right of repurchase which lapses over
time.
(4) Includes 2,789,056 shares held by Worldview Technology Partners I, L.P.,
1,087,048 shares held by Worldview Technology International I, L.P.,
240,238 shares held by Worldview Strategic Partners I, L.P., 667,373
shares held by Worldview Technology Partners II, L.P., 204,298 shares held
by Worldview Technology International II, L.P. and 28,329 shares held by
Worldview Strategic Partners II, L.P.
(5) Includes 4,000,000 shares held by Lockheed Martin Corporation, of which
Mr. Gibbons is a director. Mr. Gibbons disclaims beneficial ownership of
the shares held by Lockheed Martin Corporation. Includes 20,000 shares
issuable upon the exercise of options exercisable within sixty days of
March 1, 2000; all of which are subject to our right of repurchase which
lapses over time.
(6) Includes 62,303 shares held by MeriTech Capital Affiliates L.P. and
3,831,622 shares held by MeriTech Capital Partners L.P.
(7) Includes 329,500 shares held by Bessemer Venture Investors L.P., 1,400,532
shares held by Bessemer Venture Partners IV, L.P., 1,400,535 shares held
by Bessec Ventures IV L.P. and 131,097 shares held by BVP IV Special
Situations L.P. Also includes 597,649 shares beneficially held by
individuals, or entities affiliated with these individuals, that are
affiliated
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<PAGE> 60
with Bessemer. In specified circumstances, Bessemer can direct the voting
of these 597,649 shares.
(8) Includes 3,131,427 shares held by the entities listed in note 9 below. Mr.
Gupta is a general partner of TeleSoft Partners, which is affiliated with
TeleSoft Partners IA, L.P. The shares held by BT Holdings (New York), Inc.
and the Goel Family Partnership are held pursuant to a management
agreement with TeleSoft Management, L.L.C. Mr. Gupta is the executive
manager of TeleSoft Management, L.L.C. Mr. Gupta disclaims beneficial
ownership of the shares held by the entities listed in note 9 below except
to the extent of his direct pecuniary interest in these shares. Includes
20,000 shares issuable upon the exercise of options exercisable within
sixty days of March 1, 2000; all of which are subject to our right of
repurchase which lapses over time.
(9) Includes 2,731,427 shares held by TeleSoft Partners IA, L.P., 107,000
shares held by BT Holdings (New York), Inc., 133,000 shares held by
TeleSoft Coinvestments, L.P. and 160,000 shares held by Goel Family
Partnership.
(10) Includes 349,528 shares held by affiliates of Mr. Andrew. Includes 460,928
shares subject to our right of repurchase which lapses upon the completion
of this offering. Includes 100,000 shares of common stock issuable upon
the exercise of options exercisable within sixty days of March 1, 2000;
all of these shares are subject to our right of repurchase which lapses
over time.
(11) Includes 1,250,000 shares issuable upon the exercise of options
exercisable within sixty days of March 1, 2000; all of which are subject
to our right of repurchase which lapses over time.
(12) Mr. Goodman is a member of the management company that manages the
entities listed in note 7 above. However, Mr. Goodman is not listed as the
beneficial owner of the shares held by the entities listed in note 7 above
because he has no pecuniary or voting interest in the shares as they are
held by entities established prior to his becoming affiliated with
Bessemer. Includes 100,000 shares held by trust entities established for
the benefit of Mr. Goodman's children. Mr. Goodman disclaims beneficial
ownership of these shares. 389,584 of these shares are subject to our
right of repurchase which lapses over time.
(13) Includes 122,910 shares subject to our right of repurchase which lapses
upon the completion of this offering. Includes 225,000 shares of common
stock issuable upon the exercise of options exercisable within 60 days of
March 1, 2000; 188,542 of these shares are subject to our right of
repurchase which lapses over time.
(14) Includes 88,000 shares held by entities affiliated with Mr. Vines.
Includes 200,000 shares subject to our right of repurchase which lapses
over time. Includes 100,000 shares of common stock issuable upon the
exercise of options exercisable within sixty days of March 1, 2000; all of
these shares are subject to our right of repurchase which lapses over
time.
(15) Includes 122,910 shares subject to our right of repurchase which lapses
upon the completion of this offering.
(16) All of these shares are subject to our right of repurchase which lapses
over time.
(17) Includes 20,000 shares issuable upon the exercise of options exercisable
within sixty days of March 1, 2000; all of which are subject to our right
of repurchase which lapses over time.
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<PAGE> 61
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, we will be authorized to issue
130,000,000 shares, $0.001 par value per share, to be divided into two classes
to be designated common stock and preferred stock. Of the shares authorized,
120,000,000 shares will be designated as common stock and 10,000,000 shares will
be designated as preferred stock. The following description of our capital stock
is only a summary. You should refer to our amended and restated certificate of
incorporation and amended and restated bylaws as in effect upon the completion
of this offering, which are included as exhibits to the registration statement
of which this prospectus forms a part, and the provisions of applicable Delaware
law.
COMMON STOCK
As of March 1, 2000, assuming the conversion of all outstanding shares of
preferred stock into common stock, there were 51,246,280 shares of common stock
outstanding which were held by approximately 371 stockholders. Assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options after March 1, 2000, there will be shares of
common stock outstanding after giving effect to the sale of our common stock in
this offering. There are a total of 768,031 shares reserved for issuance, and
3,238,599 shares issuable upon exercise of outstanding options, under our 1997
Stock Plan. There are an aggregate of 500,000 shares reserved for issuance under
our 2000 Employee Stock Purchase Plan. See "Management -- Stock Plans" for a
description of our stock plans.
The holders of our common stock are entitled to one vote per share held of
record on all matters submitted to a vote of the stockholders. Our amended and
restated certificate of incorporation, to be filed concurrently with completion
of this offering, does not provide for cumulative voting in the election of
directors. Subject to preferences that may be applicable to any outstanding
preferred stock, the holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by our board of
directors out of funds legally available for that purpose. In the event of our
liquidation, dissolution or winding up, holders of our common stock are entitled
to share ratably in all assets remaining after payment of liabilities, subject
to prior distribution rights of preferred stock, if any, then outstanding.
Holders of our common stock have no preemptive or other subscription or
conversion rights. There are no redemption or sinking fund provisions applicable
to our common stock. All outstanding shares of common stock are fully paid and
non-assessable, and the shares of common stock to be issued upon the completion
of this offering will be fully paid and non-assessable.
PREFERRED STOCK
Upon the completion of this offering and filing of our amended and restated
certificate of incorporation, our board of directors will be authorized, without
action by the stockholders, to issue 10,000,000 shares of preferred stock in one
or more series and to fix the rights, preferences, privileges and restrictions
thereof. These rights, preferences and privileges may include dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of any series, all or any of which may be greater than the rights of
the common stock.
The issuance of preferred stock could adversely affect the voting power of
holders of common stock and the likelihood that the holders of common stock will
receive dividend payments and payments upon liquidation. In addition, the
issuance of preferred stock could have the effect of delaying or preventing a
change in our control without further action by the stockholders. We have no
present plans to issue any shares of preferred stock.
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<PAGE> 62
WARRANTS TO PURCHASE COMMON STOCK
As of March 1, 2000, we had the following warrants outstanding to purchase
a total of 675,000 shares of our common stock:
- An aggregate 500,000 shares pursuant to three separate warrants, each at
an exercise price of $0.50 per share, and each terminating November 14,
2004.
- 45,000 shares at an exercise price of $0.50 per share, terminating on the
later of January 20, 2005 or three years following the effective date of
our initial public offering.
- 100,000 shares at an exercise price of $0.50 per share, terminating
January 31, 2003.
- 30,000 shares at an exercise price of $0.50 per share, terminating March
25, 2003.
On February 25, 2000, we entered into an agreement with a financial
institution to borrow up to $9.0 million in 2000 for capital equipment
purchases, furniture and software. Up to $5.0 million of the borrowings are
repayable over four years and will bear interest at an annual rate of 13.16% and
up to $4.0 million is repayable over three years with an annual rate of interest
of 10.4%. The current available borrowing base under this agreement is $7.0
million. An additional $2.0 million will be available upon completion of this
offering. The agreement includes no financial covenants and the specific
equipment, furniture and software purchased with the borrowings will serve as
security for the loans. Under the agreement, we issued warrants to purchase our
common stock in the amount of 4% of the currently available borrowing base, or
$280,000. The exercise price of these warrants is 90% of the price of our
initial public offering price per share. If we do not complete an initial public
offering prior to the first anniversary of the agreement the exercise price of
these warrants will be $5.00 per share. We have also issued an additional
$80,000 worth of warrants which will become exercisable only upon completion of
this offering. The exercise price of these warrants will be 90% of the price of
our initial public offering price per share.
REGISTRATION RIGHTS
Pursuant to a registration rights agreement we entered into with holders of
43,294,828 shares of our common stock, assuming conversion of all outstanding
shares of preferred stock, and the holders of all outstanding warrants, the
holders of these shares are entitled to registration rights regarding these
shares. The registration rights provide that if we propose to register any
securities under the Securities Act, either for our own account or for the
account of other security holders exercising registration rights, they are
entitled to notice of the registration and are entitled to include shares of
their common stock in the registration. This right is subject to conditions and
limitations, including the right of the underwriters in an offering to limit the
number of shares included in the registration. The holders of these shares may
also require us to file up to two registration statements under the Securities
Act at our expense with respect to their shares of common stock. We are required
to use our best efforts to effect this registration, subject to conditions and
limitations. Furthermore, the holders of these shares may require us to file
additional registration statements on Form S-3, subject to conditions and
limitations. These rights terminate on the earlier of five years after the
effective date of this offering, the date on which all securities holding
registration rights have been sold, or when a holder is able to sell all its
shares pursuant to Rule 144 under the Securities Act in any 90-day period.
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<PAGE> 63
DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS
Provisions of Delaware law and our amended and restated certificate of
incorporation and amended and restated bylaws could make the following
transactions more difficult:
- the acquisition of us by means of a tender offer;
- the acquisition of us by means of a proxy contest or other; and
- the removal of our incumbent officers and directors.
These provisions, summarized below, are expected to discourage coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of us to first negotiate with us. We believe that the
benefits of increased protection of our potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us
outweighs the disadvantages of discouraging such proposals because, among other
things, negotiation of such proposals could result in an improvement of their
terms. The amendment of any of the following provisions would require approval
by holders of at least 66 2/3% of our outstanding common stock.
Election and Removal of Directors. Effective with the first annual meeting
of stockholders following completion of this offering, our amended and restated
bylaws provide for the division of our board of directors into three classes, as
nearly equal in number as possible, with the directors in each class serving for
a three-year term, and one class being elected each year by our stockholders.
This system of electing and removing directors may tend to discourage a third
party from making a tender offer or otherwise attempting to obtain control of us
and may maintain the incumbency of the board of directors, as it generally makes
it more difficult for stockholders to replace a majority of the directors.
Further, our amended and restated certificate of incorporation filed in
connection with this offering and restated bylaws do not provide for cumulative
voting in the election of directors.
Stockholder Meetings. Under our amended and restated certificate of
incorporation and amended and restated bylaws, only our board of directors,
Chairman of the Board or Chief Executive Officer may call special meetings of
stockholders. Our amended and restated bylaws establish advance notice
procedures with respect to stockholder proposals and the nomination of
candidates for election as directors, other than nominations made by or at the
direction of the board of directors or a committee thereof. In addition, our
amended and restated certificate of incorporation eliminates the right of
stockholders to act by written consent without a meeting, eliminates the right
of stockholders to call a special meeting and eliminates cumulative voting.
Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of us. These and other provisions may have the effect
of deferring hostile takeovers or delaying changes in control or management.
Section 203. We are subject to Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a
period of three years following the date that the stockholder became an
interested stockholder unless:
- prior to the date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
- upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding those shares owned by persons who
are directors and also officers, and employee stock plans in which
employee
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<PAGE> 64
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or
- on or subsequent to the date, the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least two-thirds of the outstanding voting stock that is not owned by the
interested stockholder.
Section 203 defines business combination to include:
- any merger or consolidation involving the corporation and the interested
stockholder;
- any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;
- subject to exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder; or
- the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by the entity or person.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is .
THE NASDAQ STOCK MARKET'S NATIONAL MARKET LISTING
We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "TNSI."
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<PAGE> 65
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our stock.
Future sales of substantial amounts of our common stock in the public market
following this offering or the possibility of such sales occurring could
adversely affect market prices for our common stock or could impair our ability
to raise capital through an offering of equity securities. Furthermore, since no
shares will be available for sale shortly after this offering because of
contractual and legal restrictions on resale as described below, sales of
substantial amounts of our common stock in the public after these restrictions
lapse could adversely affect the prevailing market price and our ability to
raise equity capital in the future.
After the offering, shares of our common stock will be
outstanding, assuming that the underwriters do not exercise the over-allotment
option. Of these shares, all of the shares sold in this offering will
be freely tradable without restriction or further registration under the
Securities Act, unless these shares are purchased by "affiliates" as that term
is defined in Rule 144 under the Securities Act. The remaining shares of common
stock held by existing shareholders are "restricted securities" as that term is
defined in Rule 144 under the Securities Act. Restricted securities may be sold
in the public market only if registered or if they qualify for an exemption from
registration under Rules 144 or 701 under the Securities Act, which rules are
summarized below.
All of our executive officers, directors, stockholders and option holders
have entered into lock-up agreements in which they have agreed that, for a
period of 180 days after the date of this prospectus, they will not offer, sell,
contract to sell, pledge or otherwise dispose of any shares of our common stock
or any securities convertible into or exchangeable or exercisable for any shares
of our common stock, or publicly disclose their intention to make any offer,
sale, contract, pledge or disposal, without the prior written consent of Credit
Suisse First Boston Corporation. In addition, we have agreed in the underwriting
agreement that, for a period of 180 days after the date of this prospectus, we
will not offer, sell, contract to sell, pledge or otherwise dispose of any
shares of our common stock, or any securities convertible into or exchangeable
or exercisable for any shares of our common stock, or publicly disclose our
intention to make any offer, sale, contract, pledge or disposal, without the
prior written consent of Credit Suisse First Boston Corporation, unless the
transaction is specifically permitted in the underwriting agreement. We have
similarly agreed that, with limited exceptions, we will not file a registration
statement with the Securities and Exchange Commission or publicly disclose our
intention to do so. Credit Suisse First Boston Corporation may, at any time and
without notice, waive any of the terms of these lock-up agreements.
Under these lock-up agreements, our outstanding shares of common stock will
be available for sale in the public market as follows:
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL SHARES
SHARES OUTSTANDING DATE OF AVAILABILITY FOR SALE
--------- ------------ -----------------------------
<C> <C> <S>
% , 2000 (date of this prospectus) to , 2000 (180
days after the date of this prospectus)
, 2000 (180 days after the date of this prospectus), in some
cases under Rule 144
at various times after , 2000
</TABLE>
Stock Options. Immediately after this offering we intend to file a
registration statement under the Securities Act covering 10,540,000 shares of
common stock reserved for issuance under our stock option plans and 500,000
shares of common stock under our 2000 Employee Stock Purchase Plan. Each year as
the number of shares reserved for issuance under our 1997 Stock Plan increases,
we will file an amendment to the registration statement covering the additional
shares. As of March 1, 2000, options to purchase 3,238,599 shares of common
stock were issued and outstanding. This registration
62
<PAGE> 66
statement is expected to be filed and become effective as soon as practicable
after the effective date of this offering. Accordingly, shares registered under
that registration statement will, subject to vesting provisions and Rule 144
volume limitations applicable to our affiliates, be available for sale in the
open market immediately after the 180 day lock-up agreements expire.
Resale of most of the restricted shares that will become available for sale
in the public market starting 181 days after the effective date will be limited
by volume and other resale restrictions under Rule 144 because the holders are
our affiliates.
Rule 144. In general, under Rule 144 as currently in effect, beginning 90
days after the date of this prospectus, a person who has beneficially owned
shares of our common stock for at least one year is entitled to sell, within any
three-month period, a number of shares that is not more than the greater of:
- 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering; or
- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks before a notice of the
sale on Form 144 is filed.
Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about us.
Rule 144(k). Under Rule 144(k), a person who has not been one of our
affiliates at any time during the 90 days before a sale, and who has
beneficially owned the restricted shares for at least two years, is entitled to
sell the shares without complying with the manner of sale, public information,
volume limitation or notice provisions of Rule 144.
Rule 701. In general, under Rule 701 of the Securities Act as currently in
effect, any of our employees, consultants or advisors who purchase shares from
us under a stock option plan or other written agreement can resell those shares
90 days after the effective date of this offering in reliance on Rule 144, but
without complying with some of the restrictions, including the holding period,
contained in Rule 144.
Registration Rights. Upon completion of this offering, the holders of
43,294,828 shares of our common stock and the holders of all outstanding
warrants will be entitled to rights with respect to the registration of their
shares under the Securities Act. See "Description of Capital Stock --
Registration Rights" for a more detailed description of these registration
rights. After registration, these shares will become freely tradable without
restriction under the Securities Act. Any sales of securities by these
shareholders could have a material adverse effect on the trading price of our
common stock.
63
<PAGE> 67
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc. and U.S. Bancorp Piper Jaffray Inc. are acting as
representatives, the following respective numbers of shares of common stock:
<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
Credit Suisse First Boston Corporation......................
Deutsche Bank Securities Inc. ..............................
U.S. Bancorp Piper Jaffray Inc. ............................
-------
Total.....................................................
=======
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that, if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering
price less the underwriting discounts and commissions. The option may be
exercised only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation and estimated expenses we
will pay:
<TABLE>
<CAPTION>
Per Share Total
--------------------------------- -------------------------------
Without With Without With
Over-Allotment Over-Allotment Over-allotment Over-allotment
--------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting Discounts and
Commissions paid by us.......... $ $ $ $
Expenses payable by us............ $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus except
issuances pursuant to the exercise of employee stock options outstanding on the
date hereof.
Our officers, directors and other stockholders have agreed that they will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, enter into a
transaction which would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership or our common stock, whether any such aforementioned
transaction is to be settled by delivery of our
64
<PAGE> 68
common stock or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or disposition, or
to enter into any such transaction, swap, hedge or other arrangement, without,
in each case, the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus.
The underwriters have reserved for sale, at the initial public offering
price, up to shares of the common stock for some of our employees, directors and
certain other persons associated with us who have expressed an interest in
purchasing common stock in the offering. The number of shares available for sale
to the general public in the offering will be reduced to the extent these
persons purchase the reserved shares. Any reserved shares not so purchased will
be offered by the underwriters to the general public on the same terms as the
other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be required
to make in that respect.
The shares of common stock have been approved for listing on The Nasdaq
Stock Market's National Market under the symbol "TNSI."
Deutsche Bank Securities Inc. and its affiliates beneficially own an
aggregate of 440,000 shares of our preferred stock which will automatically
convert into 440,000 shares of common stock upon the closing of this offering.
Deutsche Bank Securities Inc. holds a 5.97% interest in Telesoft Partners IA,
L.P. which holds 2,731,427 shares of our preferred stock which will
automatically convert into 2,731,427 shares of common stock upon the closing of
this offering.
Prior to this offering, there has been no public market for the common
stock. The initial public offering price has been determined by negotiation
between us and the representatives. The principal factors considered in
determining the public offering price included:
- the information set forth in this prospectus and otherwise available to
the representatives;
- the history and the prospects for the industry in which we will compete;
- the ability of our management;
- the prospects for our future earnings;
- the present state of our development and our current financial condition;
- the general condition of the securities markets at the time of this
offering; and
- the recent market prices of, and the demand for, publicly-traded common
stock of generally comparable companies.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934, as amended.
- Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.
- Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by such
syndicate member is purchased in a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
65
<PAGE> 69
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common stock
in Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the common stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom the
purchase confirmation is received that (i) the purchaser is entitled under
applicable provincial securities laws to purchase the common stock without the
benefit of a prospectus qualified under the securities laws, (ii) where required
by law, that the purchaser is purchasing as principal and not as agent, and
(iii) the purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or these persons. All or a substantial portion of the assets of the
issuer and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons in
Canada or to enforce a judgment obtained in Canadian courts against the issuer
or these persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser in this offering. Such report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from us. Only one report must be filed
in respect of common stock acquired on the same date and under the same
prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of common stock should consult with their own legal and
tax advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.
66
<PAGE> 70
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Legal matters will be passed upon for the underwriters by Testa,
Hurwitz & Thibeault, LLP. As of the date of this prospectus, investment
partnerships composed of members of and persons associated with Wilson Sonsini
Goodrich & Rosati, Professional Corporation, in addition to current and former
individual members of and persons associated with Wilson Sonsini Goodrich &
Rosati, Professional Corporation, beneficially own an aggregate of 130,426
shares of Triton Network Systems, Inc. preferred and common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1999 and 1998, and for each of the two
years in the period ended December 31, 1999 and for the period March 5, 1997
through December 31, 1997, as set forth in their report. We have included our
financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission, Washington,
D.C., a registration statement on Form S-1 under the Securities Act with respect
to the shares of common stock offered hereby. This prospectus does not contain
all the information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to us and our common
stock, reference is made to the registration statement and to the exhibits and
schedules filed therewith. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of the contract or
other document filed as an exhibit to the registration statement, each statement
being qualified in all respects by this reference. A copy of the registration
statement may be inspected by anyone without charge at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of all or any portion of the registration
statement may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed fees.
The Commission maintains a Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission.
67
<PAGE> 71
TRITON NETWORK SYSTEMS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets at December 31, 1998 and 1999... F-3
Consolidated Statements of Operations for the period from
March 5, 1997 (date of inception) through December 31,
1997 and for the years ended December 31, 1998 and 1999... F-4
Consolidated Statements of Stockholders' Equity for the
period from March 5, 1997 (date of inception) through
December 31, 1997 and for the years ended December 31,
1998 and 1999............................................. F-5
Consolidated Statements of Cash Flows for the period from
March 5, 1997 (date of inception) through December 31,
1997 and for the years ended December 31, 1998 and 1999... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 72
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Triton Network Systems, Inc.
We have audited the accompanying consolidated balance sheets of Triton
Network Systems, Inc. as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period March 5, 1997 (date of inception) through December 31, 1997 and, for
each of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Triton Network
Systems, Inc. at December 31, 1998 and 1999, and the consolidated results of
their operations and their cash flows for the period from March 5, 1997 (date of
inception) through December 31, 1997 and for each of the two years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
Ernst & Young LLP
Orlando, Florida
February 11, 2000, except for Note 10, as to
which the date is February 29, 2000
F-2
<PAGE> 73
TRITON NETWORK SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 10,323,758 $ 46,130,279
Short-term investments.................................... 11,003,876 --
Inventory................................................. -- 7,244,874
Other current assets...................................... 194,221 1,017,565
------------ ------------
Total current assets................................. 21,521,855 54,392,718
Property and equipment, net................................. 2,754,230 7,970,374
Restricted cash............................................. -- 650,000
Other non-current assets.................................... 163,844 687,353
------------ ------------
Total assets......................................... $ 24,439,929 $ 63,700,445
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 1,140,397 $ 5,207,524
Accrued compensation...................................... 830,757 1,338,156
Other accrued expenses.................................... 145,436 2,227,802
Current portion of capital leases......................... 442,080 1,279,862
Current portion of notes payable.......................... -- 159,140
------------ ------------
Total current liabilities............................ 2,558,670 10,212,484
Capital leases, net of current portion.................... 1,457,073 1,967,690
Notes payable, net of current portion..................... -- 187,440
Commitments and contingencies
Stockholders' equity:
Series A, voting, convertible preferred stock, $.001 par
value; 14,400,000 shares authorized, issued and
outstanding at December 31, 1998 and 1999.............. 14,400 14,400
Series B, voting, convertible preferred stock, $.001 par
value; 13,200,000 shares authorized, 8,926,000 issued
and outstanding at December 31, 1998 and 13,107,938
issued and outstanding at December 31, 1999............ 8,926 13,108
Series C, voting, convertible preferred stock, $.001 par
value; 10,105,000 shares authorized, issued and
outstanding at December 31, 1999....................... -- 10,105
Common stock, $.001 par value; 61,000,000 shares
authorized, 12,482,097 shares issued and outstanding at
December 31, 1998 and 13,591,663 shares issued and
outstanding at December 31, 1999....................... 12,482 13,592
Additional paid-in capital................................ 37,595,268 99,187,726
Notes receivable from stockholders........................ (200,474) (606,624)
Accumulated deficit....................................... (17,006,416) (47,299,476)
------------ ------------
Total stockholders' equity........................... 20,424,186 51,332,831
------------ ------------
Total liabilities and stockholders' equity........... $ 24,439,929 $ 63,700,445
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 74
TRITON NETWORK SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 5, 1997
(INCEPTION)
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, ---------------------------
1997 1998 1999
------------- ------------ ------------
<S> <C> <C> <C>
Revenues......................................... $ -- $ -- $ --
Costs and expenses:
Manufacturing and operations................... -- 2,325,681 7,989,575
Research and development....................... 1,894,644 8,494,207 12,631,231
Selling and marketing.......................... 162,475 2,444,802 6,111,074
General and administrative..................... 500,911 1,747,956 4,473,094
----------- ------------ ------------
2,558,030 15,012,646 31,204,974
----------- ------------ ------------
Loss from operations............................. 2,558,030 15,012,646 31,204,974
Other income (expenses):
Interest income................................ 85,934 1,065,805 1,336,744
Interest expense............................... (310) (160,363) (425,905)
Royalty expense................................ -- (400,000) --
Other income (expenses)........................ (2,295) (24,511) 1,075
----------- ------------ ------------
83,329 480,931 911,914
----------- ------------ ------------
Net loss......................................... $(2,474,701) $(14,531,715) $(30,293,060)
=========== ============ ============
Net loss per share -- basic and diluted.......... $ (0.50) $ (2.14) $ (3.17)
=========== ============ ============
Shares used in per share calculations -- basic
and diluted.................................... 4,913,989 6,790,600 9,553,134
=========== ============ ============
Pro forma net loss per common share (unaudited):
Net loss per share -- basic and diluted........ $ (0.78)
============
Shares used in per share calculations -- basic
and diluted................................. 38,800,408
============
</TABLE>
See accompanying notes.
F-4
<PAGE> 75
TRITON NETWORK SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK NOTES
--------------------- --------------------- ADDITIONAL RECEIVABLE
SHARES PAR SHARES PAR PAID-IN FROM ACCUMULATED
OUTSTANDING VALUE OUTSTANDING VALUE CAPITAL STOCKHOLDERS DEFICIT TOTAL
----------- ------- ----------- ------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Series A
preferred stock, net
of expenses.......... 14,400,000 $14,400 -- $ $13,555,236 $ -- $ -- $ 13,569,636
Issuance of common
stock................ -- -- 8,499,972 8,500 136,594 (137,974) -- 7,120
Forgiveness of debt by
stockholder.......... -- -- -- -- 1,403,973 -- -- 1,403,973
Net loss............... -- -- -- -- -- -- (2,474,701) (2,474,701)
---------- ------- ---------- ------- ----------- --------- ------------ ------------
Balances at December 31,
1997................... 14,400,000 14,400 8,499,972 8,500 15,095,803 (137,974) (2,474,701) 12,506,028
Issuance of Series B
preferred stock, net
of expenses.......... 8,926,000 8,926 -- -- 21,726,116 -- -- 21,735,042
Issuance of common
stock................ -- -- 1,600,000 1,600 398,400 -- -- 400,000
Issuance of common
stock upon exercise
of stock options..... -- -- 2,382,125 2,382 374,949 (62,500) -- 314,831
Net loss............... -- -- -- -- -- -- (14,531,715) (14,531,715)
---------- ------- ---------- ------- ----------- --------- ------------ ------------
Balances at December 31,
1998................... 23,326,000 23,326 12,482,097 12,482 37,595,268 (200,474) (17,006,416) 20,424,186
Issuance of Series B
preferred stock, net
of expenses.......... 4,181,938 4,182 -- -- 10,427,407 -- -- 10,431,589
Issuance of Series C
preferred stock, net
of expenses.......... 10,105,000 10,105 -- -- 50,464,895 -- -- 50,475,000
Issuance of common
stock upon exercise
of stock options..... -- -- 1,365,150 1,365 764,947 (441,150) -- 325,162
Repurchase of common
stock................ -- -- (255,584) (255) (64,791) 35,000 -- (30,046)
Net loss............... -- -- -- -- -- -- (30,293,060) (30,293,060)
---------- ------- ---------- ------- ----------- --------- ------------ ------------
Balances at December 31,
1999................... 37,612,938 $37,613 13,591,663 $13,592 $99,187,726 $(606,624) $(47,299,476) $ 51,332,831
========== ======= ========== ======= =========== ========= ============ ============
</TABLE>
See accompanying notes.
F-5
<PAGE> 76
TRITON NETWORK SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 5, 1997
(INCEPTION)
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, ----------------------------
1997 1998 1999
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................................. $(2,474,701) $(14,531,715) $(30,293,060)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................ 16,019 454,733 1,444,608
Extinguishment of royalty agreement...................... -- 400,000 --
Changes in operating assets and liabilities:
Increase in inventory.................................. -- -- (7,244,874)
Increase in other current assets....................... (83,037) (111,184) (823,344)
Increase in restricted cash............................ -- -- (650,000)
Increase in other non-current assets................... -- (163,844) (565,266)
Increase in accounts payable, accrued compensation and
other accrued expenses............................... 1,367,961 1,828,155 6,656,892
----------- ------------ ------------
Net cash used in operating activities................ (1,173,758) (12,123,855) (31,475,044)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment........................ (175,464) (1,042,529) (4,501,112)
Sales (purchases) of short-term investments................ -- (11,003,876) 11,003,876
----------- ------------ ------------
Net cash provided by (used in) investing activities........ (175,464) (12,046,405) 6,502,764
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of preferred and common stock... 13,576,756 22,049,873 61,201,706
Proceeds from notes payable................................ -- -- 461,789
Borrowings from stockholder................................ 248,501 -- --
Payments on capital leases and notes payable............... -- (31,890) (884,694)
----------- ------------ ------------
Net cash provided by financing activities.................. 13,825,257 22,017,983 60,778,801
Net increase (decrease) in cash and cash equivalents....... 12,476,035 (2,152,277) 35,806,521
Cash and cash equivalents at beginning of period........... -- 12,476,035 10,323,758
----------- ------------ ------------
Cash and cash equivalents at end of period................. $12,476,035 $ 10,323,758 $ 46,130,279
=========== ============ ============
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid.............................................. $ -- $ 160,363 $ 425,905
=========== ============ ============
NON-CASH FINANCING AND INVESTING ACTIVITIES
Fixed assets acquired under capital lease obligations...... $ 3,706 $ 1,931,043 $ 2,117,842
=========== ============ ============
Common stock issued in connection with extinguishment of
royalty agreement........................................ $ -- $ 400,000 $ --
=========== ============ ============
Common stock issued for notes receivable from
stockholders............................................. $ 137,974 $ 62,500 $ 441,150
=========== ============ ============
Common stock warrants issued in connection with lease and
credit agreements........................................ $ -- $ 87,500 $ --
=========== ============ ============
Common stock warrants issued for services in connection
with Series A offering................................... $ 250,000 $ -- $ --
=========== ============ ============
Forgiveness of accounts payable for expenses paid by
stockholder.............................................. $ 1,079,526 $ -- $ --
=========== ============ ============
Forgiveness of accounts payable for purchase of property
and equipment by stockholder............................. $ 75,946 $ -- $ --
=========== ============ ============
Forgiveness of accounts payable for borrowings from
stockholder.............................................. $ 248,501 $ -- $ --
=========== ============ ============
</TABLE>
See accompanying notes.
F-6
<PAGE> 77
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Triton Network Systems, Inc., a Delaware corporation (the Company), was
incorporated on March 5, 1997 and is based in Orlando, Florida. The Company
operates in one business segment as defined by Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise, and provides
broadband wireless equipment that enables communications service providers to
deliver voice, video and data services to their business customers. Through
December 31, 1998, the Company was in the development stage. As of December 31,
1998, the Company had an accumulated deficit of $17,006,416. The Company emerged
from the development stage in 1999 when it began to produce its products for
commercial sales.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, TNS Finance Company, Inc. All intercompany
transactions have been eliminated.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid instruments with a maturity of
three months or less at the date of purchase to be cash equivalents. Short-term
investments generally mature between 3 - 12 months from the purchase date. All
cash equivalents and short-term investments are classified as held to maturity
and are recorded at amortized cost, which approximates market. Restricted cash
exclusively secures letters of credit obtained by the Company.
The cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in interest
income.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated on a
straight-line basis over their estimated useful lives as follows:
<TABLE>
<S> <C>
Manufacturing, development, and test equipment.............. 3 - 7 years
Computer equipment and software............................. 3 - 5 years
Leasehold improvements...................................... 5 years
Office furniture and other.................................. 3 - 7 years
</TABLE>
REVENUE RECOGNITION
The Company will recognize revenue upon shipment, provided no significant
obligations remain and collection is probable. The Company will not recognize
revenue on the shipment of product for field trials where the customer has the
option of returning the equipment at no cost. Revenue from service and support
arrangements will be recognized ratably over the service period.
F-7
<PAGE> 78
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
WARRANTY COSTS
The Company will provide for estimated future warranty costs at the time
revenue is recognized.
INVENTORY
Inventory is stated at the lower of cost, determined based on an average
cost basis, or market. The inventory balance at December 31, 1999 consists of
the following:
<TABLE>
<S> <C>
Raw materials............................................... $3,347,540
Work in process............................................. 1,535,916
Finished goods.............................................. 2,361,418
----------
$7,244,874
==========
</TABLE>
RESEARCH AND DEVELOPMENT EXPENDITURES
Expenditures for research and development are expensed as incurred.
INCOME TAXES
Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
LONG-LIVED ASSETS
The Company periodically evaluates the recoverability of its long-lived
assets based on expected undiscounted cash flows and will recognize impairment
of the carrying value of long-lived assets, if any is indicated, based on the
fair value of such assets.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's cash and cash equivalents, accounts payable
and accrued expenses approximate their carrying values due to their short-term
nature. The fair value of the Company's capital lease and note payable
obligations approximates their carrying value based on interest rates currently
available for instruments with similar terms.
EMPLOYEE STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation under the
provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and complies with the disclosure provisions of
Statement of Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation (FAS 123). Accounting for the issuance of stock options under the
provisions of APB 25 does not result in compensation expense for the Company
when the exercise price of options granted equals the fair value of the
Company's common stock on the date of award.
F-8
<PAGE> 79
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE
Basic income (loss) per share is computed by dividing net income (loss)
available to common stockholders by the weighted average common shares
outstanding for the period. Diluted income (loss) per share is computed giving
effect to all potentially dilutive common shares. Potentially dilutive common
shares may consist of incremental shares issuable upon the exercise of stock
options, adjusted for the assumed repurchase of the Company's common stock, at
the average market price, from the exercise proceeds and also may include
incremental shares issuable in connection with convertible securities. In
periods in which a net loss has been incurred, all potentially dilutive common
shares are considered antidilutive and thus are excluded from the calculation.
DERIVATIVES
The Financial Accounting Standards Board Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities (FAS 133), as amended, is
effective for financial statements for all fiscal years beginning after June 15,
2000. FAS 133 requires the recognition of all derivatives in the consolidated
balance sheet as either assets or liabilities measured at fair value. Management
does not anticipate the adoption of FAS 133 will have a material impact on
results of operations, cash flows, or financial position of the Company.
COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, Reporting Comprehensive Income (FAS 130). FAS 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net loss or stockholders' equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company's financial instruments that are exposed to concentrations of
credit risk consist of cash, cash equivalents and short-term securities. The
Company places its cash, cash equivalents and short-term securities with high
credit quality institutions. Securities held at these institutions may exceed
the amount of insurance provided for such securities.
F-9
<PAGE> 80
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (CONTINUED)
Cash, cash equivalents and short-term investments are composed of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Cash and cash equivalents:
Cash................................................. $ 4,351,380 $ 543,690
Money market funds................................... -- 45,586,589
Commercial paper and government securities 90 days or
less.............................................. 5,972,378 --
----------- -----------
$10,323,758 $46,130,279
=========== ===========
Short-term investments:
Commercial paper..................................... $ 5,992,114 $ --
Government securities................................ 5,011,762 --
----------- -----------
$11,003,876 $ --
=========== ===========
</TABLE>
3. PROPERTY AND EQUIPMENT
The Company's property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1999
---------- -----------
<S> <C> <C>
Manufacturing, development, and test equipment........ $ 717,510 $ 4,997,206
Computer equipment and software....................... 936,339 2,439,256
Leasehold improvements................................ 362,332 473,078
Office furniture and other............................ 1,205,075 1,929,745
---------- -----------
3,221,256 9,839,285
Less accumulated depreciation and amortization........ (467,026) (1,868,911)
---------- -----------
$2,754,230 $ 7,970,374
========== ===========
</TABLE>
Depreciation of capital lease assets is included in depreciation expense.
The total cost and accumulated depreciation related to capital lease purchases
were $1,931,043 and $238,632, respectively for 1998 and $4,048,885 and
$1,060,125, respectively for 1999.
4. DEBT
During 1998, the Company entered into four lease agreements which provide
up to $8,000,000 to finance manufacturing, development, and test equipment and
furniture purchases during 1998 and 1999. At December 31, 1998 and 1999,
$1,899,153 and $3,247,552, respectively, was outstanding under the lease
agreements. In connection with the 1998 leases, the Company issued warrants to
the lessors, entitling them to purchase an aggregate of 145,000 shares of common
stock at an exercise price of $0.50 per share. The warrants are exercisable at
any time up to their expiration date. The expiration date of 100,000 of the
warrants is January 2003, and the balance of the warrants expires in January
2005 or three years after the effective date of a "Qualified Initial Public
Offering," whichever is longer.
F-10
<PAGE> 81
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
4. DEBT (CONTINUED)
Future minimum lease payments under capital leases at December 31, 1999
were as follows:
<TABLE>
<S> <C>
Year ending December 31:
2000....................................................... $ 1,621,118
2001....................................................... 1,594,519
2002....................................................... 559,954
-----------
Total minimum lease payments............................... 3,775,591
Less imputed interest...................................... (528,039)
-----------
Present value of lease payments............................ 3,247,552
Less current portion....................................... (1,279,862)
-----------
Long-term capital lease obligations........................ $ 1,967,690
===========
</TABLE>
In 1999, the Company entered into a note payable with a third party in the
amount of $379,500. The note bears interest at 11% per annum and is payable over
36 months. As of December 31, 1999, remaining principal payments on all notes
payable of $159,140 and $187,440 are due in 2000 and 2001, respectively.
The Company had an unsecured $1.0 million revolving credit agreement with a
bank which expired in September 1999. There were no borrowings under this
agreement. The bank issued a letter of credit for $650,000 under this agreement
which remains outstanding as of December 31, 1999, as a security deposit for the
Company's facilities. The Company collateralized the letter of credit with a
$650,000 certificate of deposit, which is held in escrow. In connection with
this credit agreement, the Company issued warrants to the lessor, entitling them
to purchase an aggregate of 30,000 shares of common stock at an exercise price
of $0.50 per share. In accordance with the agreement, the warrants are
exercisable at any time up to March 2003.
5. INCOME TAXES
In accordance with Statement of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes, a valuation allowance has been
recorded to reduce the deferred tax assets to zero, as the Company is presently
not able to conclude that it is probable that the deferred taxes will be
realized. At December 31, 1999, the Company has available net operating loss
carryforwards of $1,427,000 which expire in 2012, $8,097,000 which expire in
2018, and $11,869,000 which expire in 2019. As a result of equity transactions
that have occurred since the Company's inception, an "ownership change" as
defined under Section 382 of the Internal Revenue Code may have occurred which
may limit the use of the Company's net operating loss carryforwards and
deductions for capitalized start-up costs in the future. Management has not
completed the complex analysis to determine the amounts subject to limitation
and the amount of the limitation.
F-11
<PAGE> 82
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
5. INCOME TAXES (CONTINUED)
A reconciliation of income tax computed at the U.S. federal statutory rates
to income tax benefit is as follows:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 5, 1997
(INCEPTION)
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, ---------------------------
1997 1998 1999
------------- ----------- ------------
<S> <C> <C> <C>
Income tax benefits computed at the federal
statutory rate of 34%....................... $(841,398) $(4,940,783) $(10,296,240)
State income tax benefits, net of federal
benefit..................................... (89,832) (525,947) (1,094,393)
Nondeductible items........................... 1,969 14,561 45,723
Increase in valuation allowance............... 929,261 5,452,169 11,344,910
--------- ----------- ------------
Total......................................... $ -- $ -- $ --
========= =========== ============
</TABLE>
The components of the deferred tax balances are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1999
----------- ------------
<S> <C> <C>
Deferred tax assets:
Capitalized start-up costs.......................... $ 3,005,011 $ 9,675,875
Net operating loss carryforwards.................... 3,376,419 8,050,066
----------- ------------
Total deferred tax assets......................... 6,381,430 17,725,941
Valuation allowance............................... (6,381,430) (17,725,941)
----------- ------------
Total net deferred taxes.......................... $ -- $ --
=========== ============
</TABLE>
6. STOCKHOLDERS' EQUITY
COMMON AND PREFERRED STOCK
The Company has been authorized, by approval of the Board of Directors in
October 1999, to issue 61,000,000 shares of common stock, $0.001 par value, and
37,705,000 shares of preferred stock, $0.001 par value. Since inception, the
Company has not declared or paid a cash dividend.
The holders of the Company's Series A preferred stock are entitled to
receive dividends at the rate of $0.08 per share, noncumulative, if declared by
the Board of Directors. Each share of Series A preferred stock is convertible at
any time into one share of common stock (subject to adjustment in the event of
future dilution). The liquidation value of each share of Series A preferred
stock is $1.00 plus an amount equal to all declared but unpaid dividends.
The holders of the Company's Series B preferred stock are entitled to
receive dividends at the rate of $0.20 per share, noncumulative, if declared by
the Board of Directors. Each share of Series B preferred stock is convertible at
any time into one share of common stock (subject to adjustment in the event of
future dilution). The liquidation value of each share of Series B preferred
stock is $2.50 plus an amount equal to all declared but unpaid dividends.
F-12
<PAGE> 83
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
6. STOCKHOLDERS' EQUITY (CONTINUED)
The holders of the Company's Series C preferred stock are entitled to
receive dividends at the rate of $0.40 per share, noncumulative, if declared by
the Board of Directors. Each share of Series C preferred stock is convertible at
any time into one share of common stock (subject to adjustment in the event of
future dilution). The conversion rate increases to 1.43 shares of common stock
for every share of Series C preferred stock if the Company does not recognize
net revenues of at least $50 million for the year ending December 31, 2000. The
liquidation value of each share of Series C preferred stock is $5.00 plus an
amount equal to all declared but unpaid dividends.
Holders of each share of Series A, B, and C preferred stock have voting
rights and powers equal to the voting rights and powers of the common stock. The
holder of each share of Series A, B, and C preferred stock is entitled to the
number of votes equal to the largest number of full shares of common stock into
which each share of preferred stock can be converted. In the event the Company
completes an initial public offering, each share of Series A, B, and C preferred
stock automatically converts to common stock on a one for one basis.
In April and November 1997, the Company issued 805,264 and 1,379,736
shares, respectively, of common stock to certain members of management at $0.01
and $0.10 per share, respectively, for aggregate proceeds of $138,779. The
amount paid per share was determined by the Board of Directors to be fair market
value of the stock at the date of issuance. The shares issued in November 1997
were to three members of management who issued promissory notes for the
aggregate purchase price of $137,974. The notes bear interest at 5.81% per annum
and are due from December 31, 2000 to December 31, 2002 or within 30 days of
termination of employment from the Company. The shares issued to these
individuals are subject to the Company's right to repurchase at the original
purchase price. The Company's right to repurchase expires over a four year
period with 25% expiring one year from the grant date, and 1/48 each month
thereafter.
In November 1997, the Company sold 14,400,000 shares of Series A
convertible preferred stock at a price of $1.00 per share for an aggregate of
$14,400,000. In May and July 1998, the Company sold 8,926,000 shares of Series B
convertible preferred stock at a price of $2.50 per share for an aggregate of
$22,315,000. In January 1999, the Company sold 4,181,938 shares of Series B
convertible preferred stock at a price of $2.50 per share for an aggregate of
$10,455,000. In October 1999, the Company sold 10,105,000 shares of Series C
convertible preferred stock at a price of $5.00 per share for an aggregate of
$50,525,000.
STOCK OPTIONS
The Company has a stock option plan (Plan), as amended, that provides for
the issuance of up to 7,540,000 shares of common stock to employees and
directors. The Company's Plan provides for the issuance of both incentive stock
options and nonqualified stock options exercisable for a period of 10 years. The
exercise prices of stock options which have been granted were at amounts which
management determined to approximate the fair value of the Company's common
stock at the date of grant. The options vest over a four-year period with 25%
vesting one year from the date of grant or issuance, and 1/48 vesting monthly
thereafter. The Plan provides for the issue of restricted stock if options are
exercised prior to their vesting date. In the event of discontinuation of
service by option holders, the Company has a right, at its option, to repurchase
any unvested restricted shares at their original purchase price. During 1999,
the Company repurchased 255,584 shares of restricted common
F-13
<PAGE> 84
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
6. STOCKHOLDERS' EQUITY (CONTINUED)
stock. At December 31, 1997, 1998, and 1999 the Company had the right to
repurchase 2,248,531, 5,168,491 and 3,107,245 shares of outstanding common
stock, respectively.
In 1998, two members of management exercised stock options to purchase
500,000 restricted shares of the Company's common stock at the exercise price of
$0.25 per share, for an aggregate purchase price of $125,000 which was paid by
cash of $62,500 and delivery of promissory notes for $62,500. The notes, along
with accrued interest (5.1% per annum), are due the earlier of December 31, 2003
or within 30 days of termination of employment from the Company.
In 1999, three members of management exercised stock options to purchase
830,000 restricted shares of the Company's common stock at exercise prices
ranging from $0.25 to $3.00 per share, for an aggregate purchase price of
$582,500 which was paid by cash of $141,350 and delivery of promissory notes of
$441,150. The notes, along with accrued interest (5.1% per annum), are due at
various dates in 2004 or within 30 days of termination of employment from the
Company. A promissory note in the amount of $35,000 was repaid in conjunction
with the repurchase by the Company of 255,584 shares of restricted common stock
associated with a management resignation.
Outstanding options are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED-
NUMBER OF AVERAGE
OPTIONS EXERCISE PRICE
---------- --------------
<S> <C> <C>
Balance at March 5, 1997 (date of inception).......... -- --
Granted............................................. 515,000 $0.10
----------
Balance at December 31, 1997.......................... 515,000 0.10
Granted............................................. 3,666,875 0.20
Forfeited........................................... (23,000) 0.25
Exercised........................................... (2,382,125) 0.16
----------
Balance at December 31, 1998.......................... 1,776,750 0.24
Granted............................................. 2,983,149 2.56
Cancelled........................................... (251,225) 0.26
Exercised........................................... (1,365,150) 0.56
----------
Balance at December 31, 1999.......................... 3,143,524 $2.29
==========
</TABLE>
The following table summarizes information about stock options outstanding
and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
RANGE OF REMAINING CONTRACTUAL WEIGHTED-AVERAGE
EXERCISE PRICES NUMBER OUTSTANDING LIFE IN YEARS EXERCISE PRICE
--------------- ------------------ --------------------- ----------------
<S> <C> <C> <C>
0$.10 - 0.50.. 713,000 8.7 $0.25
1$.00 - 2.50.. 1,627,174 9.6 $2.40
3$.00 - 5.00.. 803,350 9.8 $3.90
</TABLE>
FAS 123 requires disclosure of pro forma information which provides the
effects on net loss and loss per share as if the Company had accounted for its
employee stock awards under the fair value method. The fair value of the
Company's employee stock awards was estimated using a Black-
F-14
<PAGE> 85
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
6. STOCKHOLDERS' EQUITY (CONTINUED)
Scholes option pricing model with the following weighted-average assumptions for
1997, 1998 and 1999: risk-free interest rates of 4.68% - 5.89%; stock price
volatility factors of 69% - 100%, and expected option lives of 3 - 10 years. The
Company does not have a history of paying dividends, and none have been assumed
in estimating the fair value of the options. The weighted-average fair value per
share of options granted in 1997, 1998 and 1999 was $0.10, $0.20 and $1.65,
respectively. The pro forma effect on net loss is as follows:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 5, 1997
(INCEPTION)
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, ----------------------------
1997 1998 1999
------------- ------------ ------------
<S> <C> <C> <C>
Net Loss:
As reported................................ $(2,474,701) $(14,531,715) $(30,293,060)
Pro forma.................................. $(2,476,977) $(14,573,398) $(30,998,099)
Net loss per share:
As reported -- basic and diluted........... $ (0.50) $ (2.14) $ (3.17)
Pro forma -- basic and diluted............. $ (0.50) $ (2.15) $ (3.24)
</TABLE>
Because the fair value of accounting for options applies only to options
granted subsequent to March 5, 1997, the pro forma effect will not be fully
reflected until 2001.
In connection with services as placement agent for the Series A preferred
stock offering, in November 1997, the Company granted warrants to the agent to
purchase an aggregate of 500,000 shares of common stock, subject to adjustment
for anti-dilution, at a price of $0.50 per share. The warrants are exercisable
at any time before the earlier of a "Qualified Initial Public Offering" of the
Company or October 2004.
During 1998, the Company issued, in connection with the implementation of
its leasing facilities and credit agreements, 175,000 warrants at an exercise
per share of $0.50. See Note 4 for further information.
RESERVED STOCK
Common stock has been reserved for the following purposes:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Number of warrants outstanding....................... 500,000 675,000 675,000
Number of options outstanding........................ 515,000 1,776,750 3,143,524
Number of options available for grant under the stock
option plans....................................... 3,485,000 1,881,125 904,785
--------- --------- ---------
4,500,000 4,332,875 4,723,309
========= ========= =========
</TABLE>
F-15
<PAGE> 86
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
7. LOSS PER COMMON SHARE
The following table sets forth the computation of basic and diluted loss
per common share:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 5, 1997
(INCEPTION)
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, ----------------------------
1997 1998 1999
------------- ------------ ------------
<S> <C> <C> <C>
Numerator:
Net loss..................................... $(2,474,701) $(14,531,715) $(30,293,060)
Denominator for basic and diluted loss per
common share:
Weighted-average shares outstanding.......... 4,913,989 6,790,600 9,553,134
----------- ------------ ------------
Net loss per common share.................... $ (0.50) $ (2.14) $ (3.17)
=========== ============ ============
</TABLE>
The weighted-average shares outstanding include all common stock issued.
Restricted shares issued are not included in basic or diluted loss per share in
accordance with Statement of Financial Accounting Standards Board Statement No.
128, Earnings Per Share. In computing diluted loss per share, outstanding stock
options and common stock warrants were excluded from the diluted loss per share
computation because their effects would have been dilutive for the period March
5, 1997 through December 31, 1997 and for the years ended December 31, 1998 and
1999.
PRO FORMA NET LOSS PER SHARE (UNAUDITED)
Pro forma net loss per share for the year ended December 31, 1999 is
computed using the weighted-average number of common shares outstanding,
including the pro forma effects of the automatic conversion of the Company's
Series A, B and C preferred stock into shares of the Company's common stock
effective upon the closing of the Company's initial public offering as if such
conversion occurred on January 1, 1999, or at date of original issuance, if
later. The resulting pro forma adjustment includes an increase in the
weighted-average shares used to compute basic and diluted net loss per share of
29,247,274 for the year ended December 31, 1999.
8. RELATED PARTY TRANSACTIONS
The Company has entered into multiple contracts with a minority corporate
stockholder (Stockholder). In May 1997, the Company entered into a purchase
order with the Stockholder to provide engineering resources to execute the
design, fabrication, test and integration of a communications link for their
wireless network system. Under this purchase order, which serves as a
contractual agreement, the Company will pay the Stockholder on a cost
reimbursable basis, including their fee. Through December 31, 1997, 1998 and
1999, the Company has expensed approximately $1,490,000, $3,628,000 and
$1,675,000, respectively, under this agreement as research and development
expenses. During 1998 and 1999, the Company entered into production contracts
with the Stockholder for component parts. The Company incurred approximately
$185,000 and $1,500,000 in additional development expenses under this agreement
in 1998 and 1999, respectively. In addition, the Company purchased approximately
$2,311,000 in component parts under these production contracts during 1999.
Amounts payable to the Stockholder at December 31, 1998 and 1999 were
approximately $169,000 and $1,122,000, respectively. At December 31, 1999, the
Company had a
F-16
<PAGE> 87
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
8. RELATED PARTY TRANSACTIONS (CONTINUED)
firm purchase commitment with the Stockholder in the amount of approximately
$12,000,000 for component parts.
In 1997, the Company entered into a royalty agreement with the Stockholder,
which provided for payments of royalty for a five-year period starting at the
date of the first sale. In 1998, the Company issued 1,600,000 shares of common
stock to the Stockholder in satisfaction of the existing royalty agreement,
whereby the Stockholder relinquished all rights to future income streams. The
Company expensed $400,000 or $0.25 per share in 1998 based on the termination of
the royalty agreement.
During 1997, a stockholder of the Company paid approximately $1,080,000 in
expenses, purchased approximately $76,000 of equipment and furniture, and
advanced approximately $250,000 in cash on behalf of the Company. The Company
recorded expenses, equipment and furniture purchases, cash, and a payable due to
the stockholder as these payments and advances were made on its behalf. In
November 1997, the stockholder forgave the debt and the Company reclassified the
approximately $1,400,000 payable to the stockholder to additional paid-in
capital.
During 1997 and 1998, the Company had consulting agreements with two
stockholders and a member of the Board of Directors. Approximately $36,000 and
$181,000 and were expensed in 1997 and 1998, respectively, under these
agreements which are no longer in place.
During 1999, the Company had consulting agreements with a stockholder, a
member of the Board of Directors, and an immediate relative of a member of the
Board of Directors. Approximately $170,000 was expensed in 1999 under these
agreements.
During 1999, the Company loaned a member of management $300,000 in exchange
for a promissory note payable, which is secured by certain real estate. The note
is payable on September 30, 2004, or earlier if certain events occur.
9. COMMITMENTS
The Company leases certain facilities and equipment under operating leases,
which require future rental payments. These rental arrangements do not impose
any financing or dividend restrictions on the Company or contain contingent
rental provisions. Certain of these leases have renewal and purchase options
generally at the fair value at the renewal or purchase option date. Rent expense
under operating leases was $61,550, $406,348 and $1,005,359 during 1997, 1998
and 1999, respectively.
Future minimum lease payments under operating leases at December 31, 1999
were as follows:
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDING DECEMBER 31
2000........................................................ $1,522,753
2001........................................................ 1,784,603
2002........................................................ 1,799,644
2003........................................................ 1,396,934
2004........................................................ 999,737
Thereafter.................................................. 2,174,308
----------
$9,677,979
==========
</TABLE>
F-17
<PAGE> 88
TRITON NETWORK SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
10. SUBSEQUENT EVENTS
ACQUISITION
On February 29, 2000, the Company signed a definitive agreement to purchase
the broadband modem product line from International Business Machines for
approximately 5.5 million shares of series C preferred stock.
CREDIT AGREEMENT
On February 25, 2000, the Company entered into an agreement with a
financial institution to borrow up to $9.0 million in 2000 for capital equipment
purchases, furniture and software. Up to $5.0 million of the borrowings are
repayable over four years and will bear interest at an annual rate of 13.16% and
up to $4.0 million is repayable over three years with an annual rate of interest
of 10.4%. The current available borrowing base under this agreement is $7.0
million. An additional $2.0 million will be available upon completion of an
initial public offering. The agreement includes no financial covenants and the
specific equipment, furniture and software purchased with the borrowings will
serve as security for the loans. Under the agreement, the Company issued
warrants to purchase our common stock in the amount of 4% of the currently
available borrowing base, or $280,000. The exercise price of these warrants is
90% of the price of the Company's initial public offering price per share. If
the Company does not complete an initial public offering prior to the first
anniversary of the agreement the exercise price of these warrants will be $5.00
per share. The Company has also issued an additional $80,000 worth of warrants
which will become exercisable only upon completion of an initial public
offering. The exercise price of these warrants will be 90% of the price of our
initial public offering price per share.
INITIAL PUBLIC OFFERING
In February 2000, the Company's Board of Directors authorized the Company
to file a Registration Statement with the Securities and Exchange Commission to
permit the Company to proceed with an initial public offering of its common
stock. Upon consummation of this offering, all of the outstanding series A, B,
and C preferred stock will be converted into 37,612,938 shares of common stock.
F-18
<PAGE> 89
Description of Artwork:
[Front Inside Cover and Gatefold]
A depiction of a city with the Triton Network Systems Consecutive Point network
deployed.
[Inside Back Cover]
A picture of an Invisible Fiber unit attached to a building.
<PAGE> 90
TRITON NETWORK SYSTEMS(TM) LOGO
<PAGE> 91
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Triton Network Systems, Inc.
in connection with the sale of common stock being registered. All amounts are
estimates except the Securities and Exchange Commission registration fee and the
NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $
NASD filing fee.............................................
Nasdaq National Market listing fee..........................
Printing and engraving costs................................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Blue Sky fees and expenses..................................
Transfer Agent and Registrar fees...........................
Miscellaneous expenses......................................
----------
Total............................................. $
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article Eight of the Registrant's amended and restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware law.
Article Six of the Registrant's amended and restated Bylaws provides for
the indemnification of officers, directors and third parties acting on behalf of
the Registrant if such person acted in good faith and in a manner reasonably
believed to be in and not opposed to the best interest of the Registrant, and,
with respect to any criminal action or proceeding, the indemnified party had no
reason to believe his or her conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's amended and restated Bylaws, and intends to enter into
indemnification agreements with any new directors and executive officers in the
future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since inception, we have issued unregistered securities to a limited number
of persons as described below:
Common Stock:
(1) In March 1997, we sold 80,000 shares of our common stock at a price of
$0.001 per share to an investor for $80.
(2) In April 1997, we sold an aggregate of 3,580,873 shares of our common
stock at a price of $0.001 per share to investors for an aggregate
purchase price of $3,580.87.
II-1
<PAGE> 92
(3) In May 1997, we sold an aggregate of 1,475,057 shares of our common
stock at a price of $0.001 per share to investors for an aggregate
purchase price of $1,475.06.
(4) In June 1997, we sold an aggregate of 695,878 shares of our common
stock at a price of $0.001 per share to investors for an aggregate
purchase price of $695.88.
(5) In July 1997, we sold 8,335 shares of our common stock at a price of
$0.001 per share to investors for an aggregate purchase price of
$8.34.
(6) In August 1997, we sold an aggregate of 160,935 shares of our common
stock at a price of $0.001 per share to investors for an aggregate
purchase price of $160.94.
(7) In October 1997, we sold 100,000 shares of our common stock at a price
of $0.001 per share to investors for a purchase price of $100.
(8) In November 1997, we issued an aggregate of 999,058 shares of our
common stock to our existing stockholders pursuant to a stock split.
(10) In November 1997, we sold an aggregate of 1,379,736 shares of our
common stock at a price of $0.10 per share to investors for an
aggregate purchase price of $137,973.60.
(11) In November 1997, we sold an aggregate of 10,050 shares of our common
stock at a price of $0.10 per share to investors for an aggregate
purchase price of $1,005.
(12) In December 1997, we sold an aggregate of 10,050 shares of our common
stock at a price of $0.10 per share to investors for an aggregate
purchase price of $1,005.
Preferred Stock:
(1) In November 1997, we sold 14,400,000 shares of our series A preferred
stock at a price of $1.00 per share to a group of investors for an
aggregate purchase price of $14,400,000.
(2) In May 1998, July 1998 and January 1999, we sold an aggregate of
13,107,938 shares of our series B preferred stock at a price of $2.50
per share to a group of investors for an aggregate purchase price of
$32,769,845.
(3) In October 1999 and November 1999, we sold an aggregate of 10,105,000
shares of our series C preferred stock at a price of $5.00 per share to
a group of investors for an aggregate purchase price of $50,525,000.
Stock Options:
(1) From inception through February 2000, we granted stock options to
acquire an aggregate of 7,315,549 shares of our common stock at prices
ranging from $0.10 to $9.00 per share to employees, consultants and
directors pursuant to our 1997 Stock Plan.
(2) From inception through February 2000, we issued an aggregate of
3,795,225 shares of our common stock to employees, consultants and
directors pursuant to the exercise of stock options granted under our
1997 Stock Plan, for aggregate consideration of $1,167,244.
Common Stock Warrants:
(1) In November 1997, we issued warrants to acquire an aggregate of 500,000
shares of our common stock at an exercise price of $0.50 per share to
consultants.
(2) In January 1998, we issued a warrant to acquire 45,000 shares of our
common stock at an exercise price of $0.50 per share to an equipment
lessor.
II-2
<PAGE> 93
(3) In February 1998, we issued a warrant to acquire 100,000 shares of our
common stock at an exercise price of $0.50 per share to an equipment
lessor.
(4)In April 1998, we issued a warrant to acquire 30,000 shares of our
common stock at an exercise price of $0.50 per share to a lender.
(5)In February 2000, we issued a warrant to acquire our common stock in the
amount of $280,000 at an exercise price to be determined at the time of
our initial public offering.
(6)In February 2000, we issued a warrant to acquire our common stock in the
amount of $80,000 at an exercise price to be determined at the time of
our initial public offering.
For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Relationships and Related Transactions" in the form of prospectus included
herein. The sales of the above securities were deemed to be exempt from
registration in reliance on Rule 701 promulgated under Section 3(b) under the
Securities Act as transactions pursuant to a compensatory benefit plan or a
written contract relating to compensation, or in reliance on Section 4(2) of the
Securities Act or Regulation D promulgated thereunder as transactions by an
issuer not involving any public offering. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about us or had access, through employment
or other relationships, to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<S> <C>
1.1* Form of Underwriting Agreement
3.1 Form of Amended and Restated Certificate of Incorporation of
the Registrant
3.2 Form of Amended and Restated Bylaws of the Registrant
4.1* Form of stock certificates
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Amended and Restated 1997 Stock Plan
10.2* 2000 Employee Stock Purchase Plan
10.3* Restated Investor Rights Agreement, dated October 18, 1999,
between the Registrant and certain stockholders
10.4 Lease by and between Gran Central Corporation and Triton
Network Systems, dated March 26, 1998
10.5 Lease by and between Gran Central Corporation and Triton
Network Systems, dated May 5, 1998
10.5.1 Lease by and between Gran Central Corporation and Triton
Network Systems, dated September 16, 1999
10.6+ License Agreement with Lockheed Martin Corporation dated
June 12, 1997
10.6.1 Agreement to Purchase Additional Shares with Lockheed Martin
Corporation
10.7 Acquisition and License Agreement between International
Business Machines Corporation and Triton Network Systems,
Inc. dated as of February 29, 2000
10.8 Form of Indemnification Agreement between the Registrant and
each of its directors and officers
</TABLE>
II-3
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<S> <C>
10.9+ Supply Agreement with CenturyTel dated December 7, 1999
10.10+ Supply Agreement with Advanced Radio Telecom dated December
23, 1999
10.11 Employment offer letter for Skip Speaks dated August 16,
1999
10.12 Employment offer letter for Brian Andrew dated September 9,
1999
10.13 Employment offer letter for Ken Vines dated September 22,
1998
10.14 Employment offer letter for Doug Campbell dated December 18,
1998
10.14.1 Amended Employment offer letter for Doug Campbell dated July
20, 1999
10.15 Employment offer letter for Mike Clark dated February 27,
1997
10.15.1 Amended Employment offer letter for Mike Clark dated July
20, 1999
10.16 Employment offer letter for Philip Gulliford dated March 20,
1997
10.17 Common Stock Purchase Warrant Agreement with FINOVA Capital
Corporation dated February 25, 2000
10.18 Common Stock Purchase Warrant Agreement with FINOVA Capital
Corporation dated February 25, 2000
10.19* Loan and Lease Commitment Letter with FINOVA Capital
Corporation dated January 14, 2000
10.20* Master Lease Agreement with FINOVA Capital Corporation dated
January 27, 2000
10.21* Master Loan and Security Agreement with FINOVA Capital
Corporation dated January 27, 2000
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP, Independent Certified Public
Accountants
23.2* Consent of Counsel (see Exhibit 5.1)
24.1 Power of Attorney (see page II-6)
27.1 Financial Data Schedules (for SEC use only)
</TABLE>
- -------------------------
+ Confidential treatment requested for portions of these agreements. The omitted
portions have been separately filed with the Securities and Exchange
Commission.
* To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable or the information
is contained in the Consolidated Financial Statements and related Notes and
therefore have been omitted.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by a director,
officer or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel
II-4
<PAGE> 95
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 96
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Orlando,
State of Florida, on the 7th day of March, 2000.
Triton Network Systems, Inc.
By: /s/ KENNETH R. VINES
------------------------------------
Kenneth R. Vines
Senior Vice President, Finance
and Chief Financial Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ HOWARD "SKIP" SPEAKS* President, Chief Executive March 7, 2000
- ----------------------------------------------------- Officer and Director
Howard "Skip" Speaks (Principal Executive Officer)
/s/ KENNETH R. VINES* Senior Vice President, Finance March 7, 2000
- ----------------------------------------------------- and Chief Financial Officer
Kenneth R. Vines (Principal Financial and
Accounting Officer)
/s/ BRIAN J. ANDREW* Director March 7, 2000
- -----------------------------------------------------
Brian J. Andrew
/s/ JOSEPH ANTINUCCI* Director March 7, 2000
- -----------------------------------------------------
Joseph Antinucci
/s/ BANDEL L. CARANO* Director March 7, 2000
- -----------------------------------------------------
Bandel L. Carano
</TABLE>
II-6
<PAGE> 97
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES F. GIBBONS* Director March 7, 2000
- -----------------------------------------------------
James F. Gibbons
/s/ ROBERT P. GOODMAN* Director March 7, 2000
- -----------------------------------------------------
Robert P. Goodman
/s/ ARJUN GUPTA* Director March 7, 2000
- -----------------------------------------------------
Arjun Gupta
/s/ JAMES WEI* Director March 7, 2000
- -----------------------------------------------------
James Wei
*By: /s/ KENNETH R. VINES Attorney-In-Fact March 7, 2000
------------------------------------------------
Kenneth R. Vines
Attorney-In-Fact
</TABLE>
II-7
<PAGE> 98
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<S> <C>
1.1* Form of Underwriting Agreement
3.1 Form of Amended and Restated Certificate of Incorporation of
the Registrant
3.2 Form of Amended and Restated Bylaws of the Registrant
4.1* Form of stock certificates
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
10.1 Amended and Restated 1997 Stock Plan
10.2* 2000 Employee Stock Purchase Plan
10.3* Restated Investor Rights Agreement, dated October 18, 1999,
between the Registrant and certain stockholders
10.4 Lease by and between Gran Central Corporation and Triton
Network Systems, dated March 26, 1998
10.5 Lease by and between Gran Central Corporation and Triton
Network Systems, dated May 5, 1998
10.5.1 Lease by and between Gran Central Corporation and Triton
Network Systems, dated September 16, 1999
10.6+ License Agreement with Lockheed Martin Corporation dated
June 12, 1997
10.6.1 Agreement to Purchase Additional Shares with Lockheed Martin
Corporation
10.7 Acquisition and License Agreement between International
Business Machines Corporation and Triton Network Systems,
Inc. dated as of February 29, 2000
10.8 Form of Indemnification Agreement between the Registrant and
each of its directors and officers
10.9+ Supply Agreement with CenturyTel dated December 7, 1999
10.10+ Supply Agreement with Advanced Radio Telecom dated December
23, 1999
10.11 Employment offer letter for Skip Speaks dated August 16,
1999
10.12 Employment offer letter for Brian Andrew dated September 9,
1999
10.13 Employment offer letter for Ken Vines dated September 22,
1998
10.14 Employment offer letter for Doug Campbell dated December 18,
1998
10.14.1 Amended Employment offer letter for Doug Campbell dated July
20, 1999
10.15 Employment offer letter for Mike Clark dated February 27,
1997
10.15.1 Amended Employment offer letter for Mike Clark dated July
20, 1999
10.16 Employment offer letter for Philip Gulliford dated March 20,
1997
10.17 Common Stock Purchase Warrant Agreement with FINOVA Capital
Corporation dated February 25, 2000
10.18 Common Stock Purchase Warrant Agreement with FINOVA Capital
Corporation dated February 25, 2000
10.19* Loan and Lease Commitment Letter with FINOVA Capital
Corporation dated January 14, 2000
10.20* Master Lease Agreement with FINOVA Capital Corporation dated
January 27, 2000
10.21* Master Loan and Security Agreement with FINOVA Capital
Corporation dated January 27, 2000
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP, Independent Certified Public
Accountants
23.2* Consent of Counsel (see Exhibit 5.1)
24.1 Power of Attorney (see page II-6)
27.1 Financial Data Schedules (for SEC use only)
</TABLE>
- -------------------------
+ Confidential treatment requested for portions of these agreements. The omitted
portions have been separately filed with the Securities and Exchange
Commission.
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TRITON NETWORK SYSTEMS, INC.
Triton Network Systems, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that:
A. The name of this Corporation is Triton Network Systems, Inc.
B. The date of filing of this Corporation's original Certificate of
Incorporation with the Secretary of State of Delaware was March 5, 1997.
C. Pursuant to Sections 242 and 245 of the Delaware General Corporation
law, this Restated Certificate of Incorporation restates, integrates and amends
the provisions of the Corporation's Amended and Restated Certificate of
Incorporation as follows:
FIRST: The name of this Corporation is Triton Network Systems, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware
19801. The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The purpose of this Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: This Corporation is authorized to issue two classes of shares to
be designated, respectively, Common Stock and Preferred Stock. The total number
of shares of Common Stock which this corporation is authorized to issue is
120,000,000, with a par value of $0.001, and the total number of shares of
Preferred Stock which this corporation is authorized to issue is 10,000,000,
with a par value of $0.001.
The Preferred Stock may be issued from time to time in one or more
series pursuant to a resolution or resolutions providing for such issue duly
adopted by the Board of Directors (authority to do so being hereby expressly
vested in the Board). The Board of Directors is further authorized to determine
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, to fix the
number of shares of any such series of Preferred Stock and the designation of
any such series of Preferred Stock. The Board of Directors is authorized, within
the limits and restrictions stated in any resolution or resolutions of the Board
of Directors originally fixing the number of shares constituting any series, to
increase or decrease (but not below the number of shares thereof then
outstanding) the number of shares of any such series
<PAGE> 2
subsequent to the issue of shares of that series, to determine the designation
of any series, and to fix the number of shares of any series.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins or unless the Bylaws of the Corporation shall so provide.
SEVENTH: The management of the business and the conduct of the affairs
of the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
designated in the Bylaws of the Corporation.
The Board of Directors shall be divided into three classes designated as
Class I, Class II, and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the date
hereof, the term of office of the Class I directors shall expire, and Class I
directors shall be elected for a full term of three years. At the second annual
meeting of stockholders following the date hereof, the term of office of the
Class II directors shall expire, and Class II directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following
the date hereof, the term of office of the Class III directors shall expire, and
Class III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his or her successor is duly elected and qualified or until
his or her death, resignation, or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes shall be filled by
either (i) the affirmative vote of the holders of a majority of the voting power
of the then-outstanding shares of voting stock of the Corporation entitled to
vote generally in the election of directors (the "Voting Stock") voting together
as a single class; or (ii) by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Newly created directorships resulting from any increase in the
number of directors shall, unless the Board of Directors determines by
resolution that any such newly created directorship shall be filled by the
stockholders, be filled only by the affirmative vote of the directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified.
The affirmative vote of sixty-six and two-thirds percent (66-2/3%) of
the voting power of the then outstanding shares of Voting Stock, voting together
as a single class, shall be required for the
-2-
<PAGE> 3
adoption, amendment or repeal of the following sections of the Corporation's
Bylaws by the stockholders of the Corporation: 2.2 (Annual Meeting) and 2.3
(Special Meeting).
No action shall be taken by the stockholders of the Corporation except
at an annual or special meeting of the stockholders called in accordance with
the Bylaws.
Any director, or the entire Board of Directors, may be removed from
office at any time (i) with cause by the affirmative vote of the holders of at
least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.
EIGHTH: A. To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as may hereafter be amended, a director of
the Corporation or any subsidiary of the Corporation shall not be personally
liable to the Corporation or its stockholders and shall otherwise be indemnified
by the Corporation for monetary damages for breach of fiduciary duty as a
director of the Corporation, any predecessor of the Corporation or any
subsidiary of the Corporation.
B. The Corporation shall indemnify to the fullest extent permitted by
law any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director or officer of the
Corporation, any predecessor of the Corporation or any subsidiary of the
Corporation or serves or served at any other enterprise as a director or officer
at the request of the Corporation, any predecessor to the Corporation or any
subsidiary of the Corporation.
C. Neither any amendment nor repeal of this Article EIGHTH, nor the
adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article EIGHTH, shall eliminate or reduce the effect of
this Article EIGHTH, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article EIGHTH, would
accrue or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.
NINTH: Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any rights of designation of Preferred Stock conferred on
the Board of Directors pursuant to Article FOURTH, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Article SEVENTH
or this Article NINTH.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, except as provided in Article
NINTH of this Certificate, and all rights conferred upon the stockholders herein
are granted subject to this right.
-3-
<PAGE> 4
ELEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter, amend
or repeal the Bylaws of the Corporation.
TWELFTH: Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside of the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the Bylaws of the Corporation.
THIRTEENTH: Advance written notice of new business and stockholder
nominations for the election of directors shall be given in the manner and to
the extent provided in the Bylaws of the Corporation.
FOURTEENTH: Stockholders shall not be entitled to cumulative voting
rights for the election of directors.
This Amended and Restated Certificate of Incorporation has been duly
adopted by the stockholders of the Corporation in accordance with the provisions
of Sections 242 and 245 of the General Corporation Law of the State of Delaware,
as amended.
IN WITNESS WHEREOF, Triton Network Systems, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by Skip Speaks, its
President, and attested by ____________, its Secretary, this ____ day of
________, 2000.
TRITON NETWORK SYSTEMS, Inc.
------------------------------------
Skip Speaks, President
Attested:
- --------------------------------------
____________, Secretary
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<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
TRITON NETWORK SYSTEMS, INC.
A DELAWARE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - STOCKHOLDERS.........................................................................1
1. ANNUAL MEETINGS...................................................................1
2. SPECIAL MEETINGS..................................................................1
3. NOTICE OF MEETINGS................................................................1
4. ADJOURNMENTS......................................................................1
5. QUORUM............................................................................2
6. ORGANIZATION......................................................................2
7. VOTING; PROXIES...................................................................2
8. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD...........................3
9. LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................3
10. ACTION BY CONSENT OF STOCKHOLDERS.................................................4
ARTICLE II - BOARD OF DIRECTORS..................................................................4
1. NUMBER; QUALIFICATIONS............................................................4
2. ELECTION; RESIGNATION; REMOVAL; VACANCIES.........................................4
3. REGULAR MEETINGS..................................................................5
4. SPECIAL MEETINGS..................................................................5
5. TELEPHONIC MEETINGS PERMITTED.....................................................5
6. QUORUM; VOTE REQUIRED FOR ACTION..................................................5
7. ORGANIZATION......................................................................5
8. INFORMAL ACTION BY DIRECTORS......................................................5
ARTICLE III - COMMITTEES.........................................................................6
1. COMMITTEES........................................................................6
2. COMMITTEE RULES...................................................................6
ARTICLE IV - OFFICERS............................................................................7
1. EXECUTIVE OFFICERS; ELECTION; QUALIFICATIONS; TERM OF OFFICE; RESIGNATION;
REMOVAL; VACANCIES................................................................7
2. POWERS AND DUTIES OF EXECUTIVE OFFICERS...........................................7
ARTICLE V - STOCK................................................................................7
1. CERTIFICATES......................................................................7
2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW CERTIFICATES........8
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE VI - INDEMNIFICATION.....................................................................8
1. THIRD PARTY ACTIONS...............................................................8
2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.....................................8
3. SUCCESSFUL DEFENSE................................................................9
4. DETERMINATION OF CONDUCT..........................................................9
5. PAYMENT OF EXPENSES IN ADVANCE....................................................9
6. INDEMNITY NOT EXCLUSIVE...........................................................9
7. INSURANCE INDEMNIFICATION........................................................10
8. THE CORPORATION..................................................................10
9. EMPLOYEE BENEFIT PLANS...........................................................10
10. INDEMNITY FUND...................................................................10
11. INDEMNIFICATION OF OTHER PERSONS.................................................11
12. SAVINGS CLAUSE...................................................................11
13. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES......................11
ARTICLE VII - MISCELLANEOUS.....................................................................11
1. FISCAL YEAR......................................................................11
2. SEAL.............................................................................11
3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND COMMITTEES...........12
4. INTERESTED DIRECTORS; QUORUM.....................................................12
5. FORM OF RECORDS..................................................................12
6. AMENDMENT OF BY-LAWS.............................................................13
</TABLE>
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<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
TRITON NETWORK SYSTEMS, INC.
a Delaware corporation
ARTICLE I
STOCKHOLDERS
1. ANNUAL MEETINGS
An annual meeting of stockholders shall be held for the election of
directors at such date, time and place, either within or without the state of
Delaware, as may be designated by resolution of the Board of Directors from time
to time. Any other proper business may be transacted at the annual meeting.
2. SPECIAL MEETINGS
Special meetings of stockholders for any purpose or purposes may be
called at any time by the Board of Directors, or by a committee of the Board of
Directors which has been duly designated by the Board of Directors and whose
powers and authority, as expressly provided in a resolution of the Board of
Directors, include the power to call such meetings, or by one or more
shareholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes at that meeting, but such special meetings may not be
called by any other person or persons.
3. NOTICE OF MEETINGS
Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the certificate of incorporation or these by-laws, the written notice of
any meeting shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
4. ADJOURNMENTS
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the
<PAGE> 5
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
5. QUORUM
Except as otherwise provided by law, the certificate of incorporation or
these by-laws, at each meeting of stockholders the presence in person or by
proxy of the holders of shares of stock having a majority of the votes which
could be cast by the holders of all outstanding shares of stock entitled to vote
at the meeting shall be necessary and sufficient to constitute a quorum. In the
absence of a quorum, the stockholders so present may, by majority vote, adjourn
the meeting from time to time in the manner provided in Section 1.4 of these
by-laws until a quorum shall attend. Shares of its own stock belonging to the
corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the corporation, shall neither be entitled to vote nor be counted
for quorum purposes; provided, however, that the foregoing shall not limit the
right of the corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
6. ORGANIZATION
Meetings of stockholders shall be presided over by the Chairman of the
Board, if any, or in his absence by the Vice Chairman of the Board, if any, or
in his absence by the President, or in his absence by a Vice President, or in
the absence of the foregoing persons by a chairman designated by the Board of
Directors, or in the absence of such designation by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
7. VOTING; PROXIES
Except as otherwise provided by the certificate of incorporation, each
stockholder entitled to vote at any meeting of stockholders shall be entitled to
one vote for each share of stock held by him which has voting power upon the
matter in question. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy,
but no such proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the corporation. Voting at meetings of stockholders need not be by written
ballot and need not be conducted by inspectors of election unless so determined
by the holders of shares of stock having a majority of the votes which could be
cast by the holders of all
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<PAGE> 6
outstanding shares of stock entitled to vote thereon which are present in person
or by proxy at such meeting. At all meetings of stockholders for the election of
directors a plurality of the votes cast shall be sufficient to elect. All other
elections and questions shall, unless otherwise provided by law, the certificate
of incorporation or these by-laws, be decided by the vote of the holders of
shares of stock having a majority of the votes which could be cast by the
holders of all shares of stock entitled to vote thereon which are present in
person or represented by proxy at the meeting.
8. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and which record date: (1) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of any other action, shall not be more than sixty
days prior to such other action. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting when no prior action of the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
9. LIST OF STOCKHOLDERS ENTITLED TO VOTE
The Secretary shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting,
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<PAGE> 7
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present. Upon the willful
neglect or refusal of the directors to produce such a list at any meeting for
the election of directors, they shall be ineligible for election to any office
at such meeting. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
10. ACTION BY CONSENT OF STOCKHOLDERS
Unless otherwise restricted by the certificate of incorporation, any
action required or permitted to be taken at any annual or special meeting of the
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE II
BOARD OF DIRECTORS
1. NUMBER; QUALIFICATIONS
The Board of Directors shall consist of one or more members, the number
thereof to be determined from time to time by resolution of the Board of
Directors. Directors need not be stockholders.
2. ELECTION; RESIGNATION; REMOVAL; VACANCIES
The Board of Directors shall initially consist of the persons named as
directors in the certificate of incorporation, and each director so elected
shall hold office until the first annual meeting of stockholders or until his
successor is elected and qualified. At the first annual meeting of stockholders
and at each annual meeting thereafter, the stockholders shall elect directors
each of whom shall hold office for a term of one year or until his successor is
elected and qualified. Any director may resign at any time upon written notice
to the corporation. Any newly created directorship or any vacancy occurring in
the Board of Directors for any cause may be filled by a majority of the
remaining members of the Board of Directors, although such majority is less than
a quorum, or by a plurality of the votes cast at a meeting of stockholders, and
each director so elected
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<PAGE> 8
shall hold office until the expiration of the term of office of the director
whom he has replaced or until his successor is elected and qualified.
3. REGULAR MEETINGS
Regular meetings of the Board of Directors may be held at such places
within or without the State of Delaware and at such times as the Board of
Directors may from time to time determine, and if so determined notices thereof
need not be given.
4. SPECIAL MEETINGS
Special meetings of the Board of Directors may be held at any time or
place within or without the State of Delaware whenever called by the President,
any Vice President, the Secretary, or by any member of the Board of Directors.
Notice of a special meeting of the Board of Directors shall be given by the
person or persons calling the meeting at least twenty-four hours before the
special meeting.
5. TELEPHONIC MEETINGS PERMITTED
Members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting thereof by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this by-law shall constitute presence in person at such meeting.
6. QUORUM; VOTE REQUIRED FOR ACTION
At all meetings of the Board of Directors a majority of the whole Board
of Directors shall constitute a quorum for the transaction of business. Except
in cases in which the certificate of incorporation or these by-laws otherwise
provide, the vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
7. ORGANIZATION
Meetings of the Board of Directors shall be presided over by the
Chairman of the Board, if any, or in his absence by the Vice Chairman of the
Board, if any, or in his absence by the President, or in their absence by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
8. INFORMAL ACTION BY DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof, may be taken without a meeting
if all members of the Board of Directors or such committee,
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<PAGE> 9
as the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or such
committee.
ARTICLE III
COMMITTEES
1. COMMITTEES
The Board of Directors may, by resolution passed by a majority of the
whole Board of Directors, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of the committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member. Any such committee, to the extent permitted
by law and to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it.
2. COMMITTEE RULES
Unless the Board of Directors otherwise provides, each committee
designated by the Board of Directors may make, alter and repeal rules for the
conduct of its business. In the absence of such rules each committee shall
conduct its business in the same manner as the Board of Directors conducts its
business pursuant to Article III of these by-laws.
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<PAGE> 10
ARTICLE IV
OFFICERS
1. EXECUTIVE OFFICERS; ELECTION; QUALIFICATIONS; TERM OF OFFICE;
RESIGNATION; REMOVAL; VACANCIES
The Board of Directors shall elect a President and Secretary, and it
may, if it so determines, choose a Chairman of the Board and a Vice Chairman of
the Board from among its members. The Board of Directors may also choose one or
more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or
more Assistant Treasurers. Each such officer shall hold office until the first
meeting of the Board of Directors after the annual meeting of stockholders next
succeeding his election, and until his successor is elected and qualified or
until his earlier resignation or removal. Any officer may resign at any time
upon written notice to the corporation. The Board of Directors may remove any
officer with or without cause at any time, but such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
corporation. Any number of offices may be held by the same person. Any vacancy
occurring in any office of the corporation by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the Board of
Directors at any regular or special meeting.
2. POWERS AND DUTIES OF EXECUTIVE OFFICERS
The officers of the corporation shall have such powers and duties in the
management of the corporation as may be prescribed by the Board of Directors
and, to the extent not so provided, as generally pertain to their respective
offices, subject to the control of the Board of Directors. The Board of
Directors may require any officer, agent or employee to give security for the
faithful performance of his duties.
ARTICLE V
STOCK
1. CERTIFICATES
Every holder of stock shall be entitled to have a certificate signed by
or in the name of the corporation by the Chairman or Vice Chairman of the Board
of Directors, if any, or the President or Vice President, and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the
corporation, certifying the number of shares owned by him in the corporation.
Any of or all the signatures on the certificate may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued
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<PAGE> 11
by the corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of issue.
2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES
The corporation may issued a new certificate of stock in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VI
INDEMNIFICATION
1. THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director or officer of the corporation, or that such
director or officer is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise (collectively "Agent"), against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement (if
such settlement is approved in advance by the Company, which approval shall not
be unreasonably withheld) actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was an Agent (as defined in Section 6.1)
against expenses (including attorneys' fees) actually and reasonably incurred by
him in
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<PAGE> 12
connection with the defense or settlement of such action or suit if he acted in
good faith and in manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper.
3. SUCCESSFUL DEFENSE
To the extent that an Agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 6.1 and 6.2, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
4. DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the Agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 6.1 and 6.2. Such determination shall be made (1) by the Board of
Directors or an executive committee by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) or if
such quorum is not obtainable or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or (3)
by the stockholders.
5. PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VI.
6. INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided or granted
pursuant to the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
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<PAGE> 13
7. INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was an Agent of the corporation, or is or was
serving at the request of the corporation, as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article VI.
8. THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors and officers, so that any person who is or
was a director or Agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under and subject to the provisions
of this Article VI (including, without limitation the provisions of Section 6.4)
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
9. EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
10. INDEMNITY FUND
Upon resolution passed by the Board, the corporation may establish a
trust or other designated account, grant a security interest or use other means
(including, without limitation, a letter of credit), to ensure the payment of
certain of its obligations arising under this Article VI and/or agreements which
may be entered into between the corporation and its officers and directors from
time to time.
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<PAGE> 14
11. INDEMNIFICATION OF OTHER PERSONS
The provisions of this Article VI shall not be deemed to preclude the
indemnification of any person who is not an Agent (as defined in Section 6.1),
but whom the corporation has the power or obligation to indemnify under the
provisions of the General Corporation Law of the State of Delaware or otherwise.
The corporation may, in its sole discretion, indemnify an employee, trustee or
other agent as permitted by the General Corporation Law of the State of
Delaware. The corporation shall indemnify an employee, trustee or other agent
where required by law.
12. SAVINGS CLAUSE
If this Article or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each Agent against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement with respect to any action,
suit, proceeding or investigation, whether civil, criminal or administrative,
and whether internal or external, including a grand jury proceeding and an
action or suit brought by or in the right of the corporation, to the full extent
permitted by any applicable portion of this Article that shall not have been
invalidated, or by any other applicable law.
13. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise prided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
MISCELLANEOUS
1. FISCAL YEAR
The fiscal year of the corporation shall be determined by resolution of
the Board of Directors.
2. SEAL
The corporate seal shall have the name of the corporation inscribed
thereon and shall be in such form as may be approved from time to time by the
Board of Directors.
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3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND
COMMITTEES
Any written waiver of notice, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice.
4. INTERESTED DIRECTORS; QUORUM
No contract or transaction between the corporation and one or more of
its directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if: (1) the
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum: or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
5. FORM OF RECORDS
Any records maintained by the corporation in the regular course of its
business, including its stock ledger, books of account, and minute books, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs, or any other information storage device, provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
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6. AMENDMENT OF BY-LAWS
These by-laws may be altered or repealed, and new by-laws made, by the
Board of Directors, but the stockholders may make additional by-laws and may
alter and repeal any by-laws whether adopted by them or otherwise.
*****
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EXHIBIT 10.1
TRITON NETWORK SYSTEMS, INC.
AMENDED AND RESTATED 1997 STOCK PLAN
1. Purposes of the Plan. The purposes of this Amended and Restated 1997
Stock Plan are:
- to attract and retain the best available personnel for positions
of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are, or
will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Triton Network Systems, Inc., a Delaware
corporation.
(h) "Consultant" means any natural person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
<PAGE> 2
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three (3) months following the 91st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i)If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
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(s) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(t) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(u) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this Triton Network Systems, Inc. Amended and
Restated 1997 Stock Plan.
(x) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(y) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(aa) "Section 16(b) " means Section 16(b) of the Exchange Act.
(bb) "Service Provider" means an Employee, Director or Consultant.
(cc) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(dd) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ee) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 10,540,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares
which were subject thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated); provided, however, that Shares that
have actually been issued under the Plan, whether upon exercise of an Option or
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<PAGE> 4
Right, shall not be returned to the Plan and shall not become available for
future distribution under the Plan, except that if unvested Shares of Restricted
Stock are repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees with
respect to different groups of Service Providers may administer the Plan.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
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<PAGE> 5
(vii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws;
(viii) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(ix) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;
(x) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
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<PAGE> 6
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 500,000 Shares,
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.
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<PAGE> 7
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which, in the case of Shares acquired directly
from the Company, (A) have been owned by the Optionee for more than six (6)
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
Notwithstanding the foregoing, the Administrator may permit an Option to
be exercised by delivery of a full-recourse promissory note secured by the
purchased Shares. All other terms of such promissory note shall be determined by
the Administrator in its sole discretion.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
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<PAGE> 8
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement to the extent that the Option is vested on the date of death
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement) by the Optionee's designated beneficiary,
provided such beneficiary has been designated prior to Optionee's death in a
form acceptable by the Administrator. If no such beneficiary has been designated
by the Optionee, then such Option may be exercised by the personal
representative of the Optionee's estate or by the person(s) to whom the Option
is transferred pursuant to the Optionee's will or in accordance with the laws of
descent and distribution. If, at the time of death, the Optionee is not vested
as to his or her entire Option, the Shares covered by the unvested portion of
the Option shall immediately revert to the Plan. If the
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<PAGE> 9
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Limited Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or
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Stock Purchase Right, and the number of shares of Common Stock covered by each
outstanding Option and Stock Purchase Right, as well as the price per share of
Common Stock covered by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option or Stock Purchase Right shall
lapse as to all such Shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale.
(i) General. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company (a "Merger"), each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation (the
"Successor Corporation"). In the event that the Successor Corporation refuses to
assume or substitute for the Option or Stock Purchase Right, the Optionee shall
fully vest in and have the right to exercise the Option or Stock Purchase Right
as to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a Merger, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the Merger, the option or right
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the Merger,
the consideration (whether stock, cash, or other securities or property)
received in the Merger by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the Merger is not solely common stock of the Successor Corporation, the
Administrator may, with the consent of the Successor Corporation, provide for
the consideration to be received
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upon the exercise of the Option or Stock Purchase Right, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the Successor Corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
Merger.
(ii) Employee Options Following Assumption or Substitution.
Following an assumption or substitution in connection with a Merger as described
in Section 13 (c) (i) above, and in the event that upon the Merger the
stockholders of the Company immediately prior to the Merger hold less than fifty
percent (50%) of the outstanding voting equity securities of the Successor
Corporation following the Merger (a "Change of Control Merger"), if an
Optionee's status as an Employee of the Successor Corporation is terminated by
the Successor Corporation as a result of an Involuntary Termination (as defined
below) within twelve (12) months following the Change of Control Merger, the
Optionee shall fully vest in and have the right to exercise Optionee's Option or
Stock Purchase Right as to all of the Optioned Stock, including Shares as to
which Optionee would not otherwise be vested or exercisable. Thereafter, the
Option or Stock Purchase Right shall remain exercisable in accordance with
Section 10.
(iii) Definitions.
(A) For purposes of this section, an "Involuntary
Termination" shall mean any purported termination of the Optionee which is not
effected for Disability or for Cause (as defined below).
(B) For purposes of this section, "Cause" shall mean (i) any
act of personal dishonesty taken by the Optionee in connection with his or her
responsibilities as a Service Provider and intended to result in substantial
personal enrichment of the Optionee, (ii) Optionee's conviction of a felony,
(iii) a willful act by the Optionee which constitutes gross misconduct and which
is injurious to the Successor Corporation, and (iv) following delivery to the
Optionee of a written demand for performance from the Successor Corporation
which describes the basis for the Successor Corporation's belief that the
Optionee has not substantially performed his duties, continued violations by the
Optionee of the Optionee's obligations to the Successor Corporation which are
demonstrably willful and deliberate on the Optionee's part.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
-11-
<PAGE> 12
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
-12-
<PAGE> 1
Exhibit 10.4
GRAN PARK
AT
SOUTH PARK
OFFICE BUILDING LEASE
By and Between
GRAN CENTRAL CORPORATION
a Florida corporation
as Landlord,
and
TRITON NETWORK SYSTEMS, INC.,
a Delaware corporation
as Tenant
<PAGE> 2
Table or Contents
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Premises .......................................................... 1
2. Term .............................................................. 2
3. Delivery of Possession of Premises ................................ 3
4. Rental ............................................................ 3
5. Security Deposit .................................................. 8
6. Use of Premises ................................................... 8
7. Compliance With Laws .............................................. 9
8. Services to Tenant ................................................10
9. Liability of Landlord .............................................10
10. Improvements, Repairs by Landlord .................................11
11. Landlord's Right to Enter Promises ................................11
12. Repairs by Tenant .................................................12
13. Alterations .......................................................12
14. Liens .............................................................12
15. Assignment and Subletting .........................................13
16. Eminent Domain ....................................................14
17. Destruction or Damage to Premises .................................14
18. Indemnification ...................................................15
19. Insurance .........................................................15
20. Damage or Theft of Personal Property ..............................17
21. Hazardous Materials ...............................................17
22. Landlord's Lien ...................................................20
23. Relocation ........................................................21
24. Subordination and Attornment ......................................21
25. Estoppel Certificate ..............................................21
26. Default ...........................................................21
27. Remedies ..........................................................22
28. Effect of Termination of Lease ....................................24
29. Attorneys' Fees ...................................................24
30. Quiet Enjoyment ...................................................24
31. Surrender of Premises .............................................25
32. Holding Over ......................................................25
33. Removal of Fixtures ...............................................25
34. Notices ...........................................................25
35. Agency Disclosure .................................................26
36. Exculpation of Landlord ...........................................26
37. Parking ...........................................................26
38. Signage ...........................................................27
39. Force Majeure
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
40. Authority .........................................................27
41. Definitions .......................................................28
42. Rules and Regulations .............................................28
43. Personal Guaranty .................................................28
44. Entire Agreement ..................................................28
45. Radon Gas .........................................................28
46. Roof Equipment ....................................................29
Exhibit A - Floor Plan of Premises
Exhibit B - Description of Property on Which the Project is Situated
Exhibit C - Work Letter
Exhibit D - Rules and Regulations
Exhibit E - Option to Renew
</TABLE>
<PAGE> 4
OFFICE BUILDING LEASE
THIS LEASE, made this 26th day of March, 1998 (the "Effective Date"),
is entered into by and between GRAN CENTRAL CORPORATION, a Florida corporation
("Landlord"), and TRITON NETWORK SYSTEMS, INC., a Delaware corporation
("Tenant").
FOR AND IN CONSIDERATION of the mutual covenants and conditions
contained herein, the parties hereto do hereby agree as follows:
1. PREMISES
Tenant hereby leases from Landlord approximately 37,104 square feet of
"Rentable Area," as hereinafter defined, as outlined by the floor Plan attached
hereto as Exhibit "A" and incorporated herein by this reference, commonly known
as Suite 400 (the "Premises") in the Building to be constructed by Landlord
(the "Building"), situated on certain real property located at 8529 SouthPark
Circle, Ste. 400, Orlando, Florida 32819 (the "Property"), which is more fully
and particularly described on Exhibit "B" attached hereto and incorporated
herein by reference (the Building and the Property are collectively referred to
herein as the "Project"). This Lease shall create the relationship of landlord
and tenant between Landlord and Tenant; no estate shall pass out of Landlord;
Tenant's interest in the Premises is not subject to levy and sale and not
assignable by Tenant except by Landlord's consent. In addition to the interest
in the Premises demised to Tenant under this Lease, Landlord hereby grants
Tenant a nonexclusive license for so long as this Lease is in full force and
effect to use the "Common Areas," as hereinafter defined, of the project in
common with others entitled to use the Common Areas, including Landlord and
other tenants of the Project and their respective employees and invitees and
other persons authorized by Landlord, subject to the terms and conditions of
this Lease, including any and all rules and regulations promulgated by Landlord
in accordance with the terms of this Lease. As used herein, the term "Common
Areas" means all areas and facilities in the Project that are provided and
designated from time to time by Landlord for the general nonexclusive use and
convenience of Tenant, Landlord and all other tenants of the Project and their
respective employees, invitees, licensees, or other visitors, and may include
without limitation the hallways, entryways, stairs, elevators, driveways,
loading areas and restroom facilities of the Building, and the walkways,
parking and landscaped areas of the Project. Landlord may from time to time
change the size, use, shape, configuration or nature of any portion of the
Common Areas, so long as such change does not deprive Tenant of the substantial
benefit and enjoyment of the Premises. Neither Landlord nor Landlord's agents
have made any representations, warranties or promises with respect to the
Project, the physical condition of the Building, the land upon which it is
erected, or the Premises, or any matter or thing affecting or related to the
Premises except as expressly set forth in this Lease.
The "Rentable Area" of the Premises shall mean the gross area within
the inside surface of the outer glass of the exterior walls, to the mid-point
of any walls separating portions of the Premises from those of adjacent
tenants, and to the finished side of Common Area walls separating the Premises,
subject to the following: (a) Rentable Area shall not include any "Service
Areas", meaning those areas within the outside walls used for elevator
mechanical rooms, building stairs, fire towers, elevator shafts, flues, vents,
stacks, pipe shafts and vertical
1
<PAGE> 5
ducts (but Rentable Area shall include any such areas which are for the
exclusive use of a particular tenant); and (b) Rentable Area shall include
Tenant's pro rata share of the Common Areas within the Building, based upon the
ratio of the Rentable Area within the Premises to the total Rentable Area
within the Building, both determined without regard to the Common Areas. The
Rentable Area in the Building is 145,249 square feet. The estimates of Rentable
Area set forth above with respect to the Premises and the Building,
respectively, may be revised, at Landlord's election, if Landlord's architect
determines such estimate to be inaccurate after the examination of the final
drawings of the Premises and the Building. If it is determined that the
Rentable Area of the Building or the Premises is different from that set forth
above, then the Rentable Area of the Building or the Premises, as applicable,
shall be adjusted upward or downward accordingly. If such remeasurement shall
not be undertaken on or before the "Commencement Date", as herein defined,
then the Rentable Area calculations set forth above shall be conclusivly
binding upon Landlord and Tenant, and neither Landlord nor Tenant shall have
any further right to remeasure the Premises or the Building after such date.
2. TERM
The term of this Lease (the "Term") shall commence on the
"Commencement Date" as defined below, and shall expire on the "Expiration
Date," as defined below. The Term is scheduled to commence July 1, 1998 (the
"Scheduled Commencement Date"), and expire at 11:59 p.m. on June 30, 2003 (the
"Expiration Date"), unless adjusted as provided below. Tenant shall have an
option to renew this Lease as set forth in Exhibit "B" attached hereto.
Tenant acknowledges that the Building has not yet been constructed by
Landlord. The Commencement Date has been determined by Landlord and Tenant on
the assumption that the construction of the Building shall be completed by
Landlord on or before June 1, 1998 and that the certificate of occupancy for
the shell of the Building shall be issued on or before such date. In the event
completion of construction of the Building and the issuance of such a shell
certificate of occupancy has not been achieved on or before June 1, 1998, the
Commencement Date shall be that date on which Landlord completes construction
of the improvements to the Premises as described in Article 3 below and in
Exhibit "C" hereto, obtains the issuance of a shell certificate, of occupancy
and delivers possession of the Premises to Tenant. In the event the actual
Commencement Date is other than the date identified in this Article 2, rental
under this Lease shall not commence until said revised Commencement Date, and
the Term shall commence and the Expiration Date shall be extended so as to give
effect to the full stated Term. Should the Term commence on a date other than
that specified in this Article 2, Landlord will send Tenant a written statement
of such adjusted Commencement Date and Expiration Date, and, if Landlord
requests, Tenant will confirm such adjusted dates in writing.
"Lease Year" shall mean each successive twelve-month period throughout
the Term provided that the first Lease Year shall commence on the Commencement
Date and expire on the last day of the month preceding the month in which the
anniversary of the Commencement Date occurs, and each subsequent Lease Year
shall commence on the day following the expiration of the previous Lease Year.
2
<PAGE> 6
3. DELIVERY OF POSSESSION OF PREMISES
Following completion of the Building, Landlord agrees to cause the
Premises to be completed in accordance with the plans and specifications
approved by both parties and the Work Letter attached hereto as Exhibit "C" and
made a part of this Lease ("Landlord's Work"). Landlord's Work shall be
completed at the cost and expense of Landlord unless otherwise specified
herein. Landlord's Work may be done with such minor variations as Landlord may
deem advisable, so long as such variations will not materially interfere with
Tenant's intended use of the Premises. "Substantial Completion " of the
Premises shall occur when Landlord certifies in writing to Tenant that
Landlord's Work has been substantially completed and possession of the Premises
has been delivered from Landlord to Tenant, notwithstanding a requirement that
Landlord complete "punch list" or similar corrective work, and notwithstanding
that any work that is the responsibility of the Tenant may not be completed.
Other than Landlord's Work specifically set forth in this Lease, Landlord shall
have no obligation to make any improvements or modifications to the Premises.
The "Commencement Date" of this Lease shall be the later of the date
of Substantial Completion, as defined above, or the Scheduled Commencement
Date, as defined above. The Tenant, by taking possession of the Premises, shall
be deemed to have agreed that the Premises are then in a satisfactory order,
repair and condition, except as set forth on a list prepared by Landlord and
Tenant prior to occupancy, and Tenant shall provide Landlord, upon request, a
written acknowledgment of acceptance. If Tenant, for whatever reason, occupies
the Premises prior to the Commencement Date, then all terms and conditions of
this Lease shall apply to such occupancy, with the exception of Tenant's
obligation to pay rental, which unless otherwise agreed to in writing by
Landlord and Tenant, shall not commence until the Commencement Date. If
Landlord, for any reason whatsoever, fails to deliver possession of Premises to
Tenant on the Scheduled Commencement Date, this Lease shall not be void or
voidable nor shall Landlord be liable to Tenant for any loss or damage resulting
therefrom. Should the actual Commencement Date be later than the Scheduled
Commencement Date, Tenant's obligation to pay rental shall not commence until
the Commencement Date, and the Expiration Date shall be extended by the same
period as the Commencement Date extended past the Scheduled Commencement Date.
Provided, however, that if Landlord, for whatever reason, is unable to deliver
possession of the Premises to Tenant within one hundred eighty (180) days after
the Scheduled Commencement Date, Landlord or Tenant, in their sole discretion,
may terminate this Lease by forwarding written notice of such termination to
the other party, in accordance with the notices provision of this Lease, not
later than one hundred eighty (180) days following the Scheduled Commencement
Date. If this Lease is terminated pursuant to the terms of this paragraph,
Landlord shall refund to Tenant any Security Deposit Tenant may have previously
deposited with Landlord, but the parties shall not otherwise have any liability
or obligation to each other. If Landlord and Tenant elect not to terminate this
Lease pursuant to the terms of this paragraph, then the Commencement Date and
Expiration Date of this Lease shall be determined as otherwise set forth in
this paragraph.
4. RENTAL
(a) BASE RENTAL. Throughout the Term of this Lease, and until adjusted
as provided below, Tenant shall pay base rental to Landlord as follows (the
"Base Rental"):
3
<PAGE> 7
<TABLE>
<CAPTION>
RATE PER
SQUARE FOOT OF
RENTAL PERIOD RENTABLE AREA MONTHLY ANNUALLY
------------- ------------- ------- --------
<S> <C> <C> <C>
1st Lease Year $18.50 $57,202.00 $686,424.00
2nd lease Year $19.00 S58,748.00 $704,976.00
3rd Lease Year $19.52 $60,355.84 $724,270.08
4th Lease Year $20.06 $62,025.52 $744,306.24
5th Lease Year $20.62 $63,757.04 $765,084.48
</TABLE>
Each monthly installment shall be due and payable promptly on the first day of
each month, in advance and without offset, deduction or prior demand, during
the Term of this Lease. In the event that the Term of this Lease shall commence
on a date other than the first day of the month, rent for such month shall be
prorated and such prorated amount (which shall be equal to the monthly Base
Rental stated above multiplied by a fraction, the numerator of which shall be
the number of days from the Commencement Date through the end of such month,
inclusive of both days, and the denominator of which shall be the number of
days in such month) shall be due and payable on the Commencement Date. All
payments of rent or any other sum due under this Lease shall be made payable to
"Gran Central Corporation" and shall be forwarded by Tenant to Landlord as
follows: c/o CNL Corporate Properties, Inc., 455 South Orange Avenue, Suite 400,
Orlando, Florida 32801, Attention: Kim Ross.
In the event Tenant shall fail to pay a monthly installment within ten
(10) calendar days of the due date, a late charge of five percent (5%) of the
Monthly Base Rental, with a minimum of twenty dollars ($20.00) per month, shall
be added to the Base Rental and paid to Landlord for each such late payment and
the same shall be treated as additional rent. Should Tenant present a check to
Landlord that is returned from Tenant's bank for any reason, Landlord reserves
the right to demand that all future rental payments be made in the form of
cashiers' checks or certified funds. Tenant agrees to pay Landlord interest at
a rate of twelve percent (12%) per annum (or the maximum rate permitted by
applicable law, whichever is less) on all Base Rental, additional rental or
other sums due hereunder that are not paid when such amounts are due and
payable. Nothing contained herein shall require Landlord to accept any tender
of payment from Tenant for less than the full amount then due under this Lease,
including any and all late charges, interest and attorneys' fees that may then
be due from Tenant in accordance with the express terms of this Lease. Landlord
may elect to accept less than the full amount then due from Tenant hereunder;
however, no payment by Tenant or receipt by Landlord of such lesser amount
shall be deemed to be other than on payment on account, and no restrictive
endorsement or statement on any check or payment shall be deemed to alter the
express provisions of this Lease, nor constitute an accord and satisfaction.
Landlord may accept less than the full amount then due from Tenant without
prejudice to Landlord's right to recover the balance of the full amount then
due, or to pursue any other remedies then available to Landlord under this
Lease or applicable law. In all events, including but not limited to Landlord's
acceptance of a partial payment from Tenant, any payment accepted by Landlord
from Tenant shall be applied first to retire the oldest receivables due from
Tenant hereunder, then to any current rental or other payment then due
hereunder, and the balance, if any, will be applied to any rental or other
payment which will become due from Tenant hereunder.
4
<PAGE> 8
(b) SALES TAX. In addition to the Base Rental, Additional Rental and
any other sums or amounts required to be paid by Tenant to Landlord pursuant to
the provisions of this Lease, Tenant shall also pay to Landlord, simultaneously
with such payment of Base Rental, Additional Rental or other sums or amounts,
the amount of any applicable sales, use or excise tax on any such Base Rental,
Additional Rental or other sums or amounts so paid by Tenant to Landlord,
whether the same be levied, imposed or assessed by the State of Florida or any
other Federal, state, county or municipal governmental entity or agency. Any
such sales, use or excise taxes shall be paid by Tenant to Landlord at the same
time that each of the amounts with respect to which such taxes are payable are
paid by Tenant to Landlord.
(c) ADDITIONAL RENTAL - Operating Expenses and Real Estate Taxes.
(i) DEFINITIONS. The following definitions shall apply for
purposes of this Section:
All sums other than Base Rental due from Tenant to Landlord under this
Lease shall constitute "Additional Rental." The term "Operating Expenses" as
used herein shall include all direct costs of administration, operation, repair
and maintenance of the Property, the Building and its Common Areas and
appurtenances, as determined in accordance with generally accepted accounting
principles, and shall include Landlord's costs and expenses incurred in
connection with the following by way of illustration but not limitation: the
cost of labor, materials and services for the administration, operation, repair
and maintenance of the Property and the Building, its common areas and its
appurtenances, including but not limited to license, permit and inspection
fees; water and sewer charges; garbage and waste disposal; gas, electricity and
other utilities, heating, air conditioning and ventilation repairs; elevator
service; plumbing service and other normal repairs; janitorial and cleaning
service; landscaping; parking lot cleaning, repairs and maintenance;
association fees, including any charges imposed upon the Property by Orlando
Central Park, Inc. for any association created by it for maintenance of Common
Areas within the development of which the Property is a part; all assessments,
charges, fees and other expenses for which Landlord is obligated, in its
capacity as the owner of the Property, pursuant to any restrictive covenants or
other recorded matters of title now or hereafter affecting the Property; pest
control; maintenance contracts; security services or personnel (if provided to
the Building); insurance for fire, extended coverage, general liability, and
other insurance which Landlord is required to maintain on the Building and its
appurtenances either by the terms of this Lease or by the holder of any
mortgage or deed to secure debt encumbering the Building, or which Landlord
reasonably deems to be necessary in connection with the ownership and operation
of the Building; personnel engaged in on-site management, administration,
operation and maintenance of the Building, its common areas and its
appurtenances together with payroll taxes and employee benefits applicable
thereto; rental expenses for on-site management offices; management fees;
supplies, materials, tools, equipment and general costs associated therewith,
all accrued and based on a calendar year type operation; but excluding tenant
alterations, depreciation on the Building and equipment therein, costs of
capital nature not expressly permitted to be included hereunder, interest,
executive salaries, and all costs billed directly to tenants of the Building
either by Landlord or a third party, Landlord may also perform certain
maintenance and repairs of items which are considered Common Areas for the Gran
Park at SouthPark development (the "Development"), including without
limitation, landscaping along the public right of way and maintenance of
private driveways throughout the
5
<PAGE> 9
Development. The Property shall be billed its pro rata share of such costs
relating to the Common Areas of the Development based upon a fraction in which
the numerator is the square footage of the Property and the denominator is the
total square footage of all land within the Development. The amount of such
costs so allocated to the Property shall then become Operating Expenses for the
Property.
If for any reason, Landlord shall make an expenditure, directly or
indirectly, which is intended to reduce any of the Operating Expenses and
which, by generally accepted accounting principles would be treated as a
capital expenditure, the annual Operating Expenses of the Building shall also
include the amortization of such capital expenditure based upon a useful life
of not less than five (5) years.
In the event that any local, state or federal government shall, by any
legally enforceable legislative, administrative or judicial action, whether by
ordinance, act, statute, order, mandate, rule, regulation or otherwise, require
during the Term of this Lease any alteration of or improvement to any portion
of the Project or Building, excluding the Premises or any premises leased or
available to be leased by other tenants of the Building (a "Mandated
Alteration"), which, by generally accepted accounting principles would be
treated as a capital expenditure, then, provided that such Mandated Alteration
is the result of the adoption of a new or changed ordinance, act, statute,
order, mandate, rule or regulation or interpretation thereof not existing on
the Commencement Date of this Lease, the annual Operating Expenses of the
Building shall also include the annual amortization of such capital expenditure
based upon a useful life of not less than five (5) years.
"Tenant's Proportionate Share" shall be calculated by dividing the
Rentable Area of the Premises by the total Rentable Area of the Building.
The term "Taxes" shall include every type of real estate tax, charge
or other amount assessed against the Building and the Property, together with
any expenses for tax consulting services and legal services in appealing or
protesting such taxes, excepting only income taxes imposed upon Landlord.
The "Expense Stop" shall be $6.00 per square foot of Rentable Area in
the Building. The "Base Year" shall be calendar year 1998. The term "Comparison
Year" shall be each calendar year of the term after the Base Year.
(ii) Reimbursement of Operating Expenses and Taxes. If in any
Comparison Year, the Operating Expenses per square foot of Rentable Area in
the Building paid or incurred by Landlord shall exceed the Expense Stop, and/or
the Taxes paid or incurred for such year shall exceed the Taxes paid or
incurred in the Base Year, Tenant shall pay as Additional Rental for each
Comparison Year, Tenant's Proportionate Share of such excess as and when
specified below. An annual determination of Operating Expenses and Taxes shall
be made by Landlord pursuant to generally accepted accounting principles and
shall be binding upon Landlord and Tenant. Notwithstanding any language in this
Lease seemingly to the contrary, if the Building is not fully occupied during
any calendar year of the term of this Lease, actual operating Expenses and
Tenant's Proportionate Share thereof shall be determined as if the Building had
been fully occupied during such year.
6
<PAGE> 10
(iii) ESTIMATES OF OPERATING EXPENSES AND TAXES. Prior to the
actual determination of the Operating Expenses and Taxes for the Comparison
Year, Landlord may, if it so elects and at any time or from time to time during
such Comparison Year, estimate the amount of such Operating Expenses and Taxes
that will be paid or incurred in such year. If, in the estimation of Landlord,
the Operating Expenses for the Comparison Year will exceed the Expense Stop,
and/or the Taxes for the Comparison Year will exceed the Taxes for the Base
Year, Landlord may give Tenant written notice of the amount of such estimated
excess and the proportionate amount of such excess that will be due each month
from Tenant. In such event, Tenant shall, subsequent to receipt of such written
notice, pay monthly Tenant's Proportionate Share of such excess at the same time
and in the same manner as Base Rental is due from Tenant hereunder.
(iv) ANNUAL RECONCILIATION. If the total amount Tenant
actually paid for estimated increases in Operating Expenses and Taxes is less
than Tenant's Proportionate Share of the actual increase, Tenant shall pay to
Landlord as Additional Rental in one lump sum the difference between the total
amount actually paid by Tenant for such Comparison Year and the amount Tenant
should have paid pursuant to subparagraph (iii) above, and this lump sum payment
shall be made within thirty (30) days of receipt of Landlord's statement
therefor. If the total amount Tenant actually paid for estimated increases in
Operating Expenses and Taxes is more than Tenant's Proportionate Share of the
actual increase, then Landlord shall remit the excess to Tenant within thirty
(30) days of the making of such determination or, at Landlord's election, credit
such amount against the next monthly installment of Base Rental.
(v) PRORATIONS. If the Commencement Date is other than
January 1 or if the Expiration Date is other than December 31, Tenant's
Proportionate Share of any increase in Operating Expenses and Taxes for such
year shall be prorated based upon a 30-day month. Even if the Term has expired,
and Tenant has vacated the Premises when the final determination is made of
Tenant's Proportionate Share of Operating Expenses and Taxes for the year in
which this Lease expires, Tenant shall pay any increase due over the estimated
amount paid and conversely any overpayment made shall be rebated by Landlord to
Tenant, all as Specified above.
(vi) AUDIT. Tenant shall have the right to have Landlord's
books and records pertaining to Operating Expenses for the Base Year or any
Comparison Year, during the Term of this Lease reviewed, copied and audited
("Tenant's Audit") provided that (i) such right shall not be exercised more than
once during any calendar year; (ii) if Tenant elects to conduct Tenant's Audit,
Tenant shall provide Landlord with written notice thereof no later than thirty
(30) days following Tenant's receipt of Landlord's statement of Operating
Expenses for the year to which Tenant's Audit will apply; (iii) Tenant shall
have no right to conduct Tenant's Audit if Tenant is, either at the time Tenant
forwards Landlord written notice that Tenant's Audit will be conducted or at any
time during Tenant's Audit, then in default under this Lease; iv) conducting
Tenant's Audit shall not relieve Tenant from the obligation to pay Tenant's
Proportionate Share of Operating Expenses, as billed by Landlord, pending the
outcome of such audit; (v) Tenant's right to conduct such audit for any calendar
year shall expire thirty (30) days following Tenant's receipt of Landlord's
statement of Operating Expenses for such year, and if Landlord has not received
written notice of such audit within such thirty (30) day period, Tenant shall
have waived its right to conduct Tenant's Audit for such calendar year; (vi)
Tenant's Audit
7
<PAGE> 11
shall be conducted by a Certified Public Account not employed by or otherwise
affiliated with Tenant, except to the extent that such accountant has been
engaged by Tenant to conduct Tenant's Audit; (vii) Tenant's Audit shall be
conducted at Landlord's office where the records of the year in question are
maintained by Landlord, during Landlord's normal business hours; and (viii)
Tenant's Audit shall be conducted at Tenant's sole cost and expense, unless such
audit demonstrates to Landlord's reasonable satisfaction that Landlord has
overstated the Operating Expenses for the year audited by more than five percent
(5%), in which case Landlord shall reimburse Tenant for any overpayment of
Tenant's Proportionate Share of such Operating Expenses, as well as Tenant's
actual reasonable cost incurred in conducting Tenant's Audit, within thirty (30)
days of Landlord's receipt of documentation reasonably acceptable to Landlord
reflecting the amount of such overpayment and the cost of Tenant's Audit.
5. SECURITY DEPOSIT
Prior to occupancy, Tenant shall deliver to Landlord, as a security
deposit, (a) cash in the amount of One Hundred Ten Thousand and No/100 Dollars
($110,000.00), and (b) an unconditional, irrevocable letter of credit in the
amount of $375,000.00 in favor of Landlord, issued by a financial institution
reasonably acceptable to Landlord (collectively called the "Security Deposit").
The expiration date of such letter of credit shall correspond to the Expiration
Date of this Lease. Provided that no events of default hereunder then exist, on
each anniversary date of the Commencement Date hereunder, the face amount of
such letter of credit shall be reduced by $75,000.00. The Security Deposit is
refundable to Tenant within thirty (30) days following the Expiration Date, as
the same may be extended by the parties from time to time, provided that no
defective conditions are left unrepaired by Tenant, other than normal wear and
tear, loss by fire or other casualty not caused by Tenant, Tenant's employees,
agents or contractors or condemnation, and provided Tenant is not otherwise in
default under this Lease. Landlord may, but shall not be required to, apply all
or a portion of the Security Deposit toward sums due to Landlord by Tenant
hereunder and/or in order to make any repairs to the Premises required to be
made by Tenant hereunder, and any portion of this Security Deposit used by
Landlord for such purposes shall be restored by Tenant within fifteen (15) days
after written demand therefor from Landlord. Any portion of the Security Deposit
not required to reimburse Landlord for Landlord's expense in repairing defective
conditions caused by Tenant or for paying amounts owed by Tenant to Landlord,
shall be refunded to the Tenant as provided above. Tenant shall not be entitled
to any interest that may accrue on the Security Deposit during the Term of this
Lease.
6. USE OF PREMISES
Tenant shall use the Premises only for business or professional office
purposes and shall not use the Premises for any illegal purpose, or violate any
statute, regulation, rule, or order of any governmental body, or create or allow
to exist any nuisance, or trespass, or do any act in or about the Premises, or
bring anything onto or in the Premises or the Building containing same which
will in any way increase the rate of insurance on the Premises or said Building,
deface or injure the Premises or such Building, or overload the floor of the
Premises. In accordance with local governmental law, the Building is a "No
Smoking" building, and smoking cigarettes, cigars, pipes, or any other type of
smoking instrument by anyone in any portion of the Building, including the
Premises, is strictly prohibited. As an accommodation to tenants of the
Building,
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Landlord may designate certain portions of the Property as areas where smoking
is permitted in accordance with the Rules and Regulations attached as Exhibit
"D" to this Lease.
7. COMPLIANCE WITH LAWS
(a) LANDLORD'S COMPLIANCE. During the Term of this Lease, Landlord
shall be responsible for making any modifications to the Project and Building or
its appurtenances, excluding the Premises, but including the parking lot, common
areas, elevators and entrances serving the Project and Building, required
pursuant to any applicable federal, state and local laws, ordinances, building
codes, and rules and regulations of Governmental entities having jurisdiction
over the Project, including but not limited to the Americans with Disabilities
Act (the "ADA") and all regulations and orders promulgated pursuant to the ADA
(collectively, the "Applicable Laws"). Any modifications to the Project and/or
the Building made by Landlord pursuant to the provisions of this paragraph shall
initially be at Landlord's expense; however, such expense may be included in
Landlord's Operating Expenses of the Building as set forth above.
(b) TENANT'S COMPLIANCE. Tenant shall comply with all governmental
laws, ordinances, and regulations applicable to the use of the Premises, and
shall promptly comply with all governmental orders and directives for the
correction, prevention, and abatement of nuisances in, upon, or connected with
the Premises, all at Tenant's sole expense, Tenant warrants that all
improvements or alterations of the Premises made by Tenant or Tenant's
employees, agents or contractors, either prior to Tenant's occupancy of the
Premises or at any time during the term of this Lease, will comply with all
Applicable Laws. In addition, Tenant warrants that its use of the Premises will
be in strict compliance with all Applicable Laws. During the Term of this Lease,
Tenant shall, at Tenant's sole cost and expense, be responsible for making any
modifications to the Premises that may be required pursuant to any Applicable
Laws.
(c) MUTUAL INDEMNITY. Landlord agrees to indemnify, defend and hold
Tenant harmless from and against any claims, losses or causes of action arising
out of Landlord's failure to comply with the provision of subparagraph (a)
above. Tenant shall indemnify, defend and hold Landlord harmless from and
against any claims, losses or causes of action arising out of Tenant's failure
to comply with the provisions of subparagraph (b) above. The indemnities set
forth in this paragraph shall survive the expiration or earlier termination of
this Lease.
8. SERVICES TO TENANT
Landlord shall provide, as Landlord reasonably deems necessary, subject
to limitations contained in any governmental controls now or hereafter imposed,
or matters beyond Landlord's control and subject to cessation for reasonable
necessity, the following services:
(a) Heating and air-conditioning service daily on Monday through
Friday, inclusive, except for holidays observed by national banks as legal
holidays, from 8:00 a.m. to 6:00 p.m., and on Saturdays, if not a holiday, from
8:00 a.m. to 1:00 p.m. Heating and air conditioning shall be furnished to Tenant
during other hours only upon the written request of Tenant delivered
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to Landlord in accordance with the Building Rules and Regulations, and Tenant
shall reimburse Landlord for the actual cost of such after hours heating and air
conditioning service.
(b) Electric current for building standard tenant lighting and small
business machinery only from electric circuits designated by Landlord for
Tenant's use. Tenant will not use 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, personal computers, photocopy
equipment, standard test equipment, Triton product equipment, and data
networking equipment not requiring dedicated or special circuitry) or auxiliary
air conditioners to the electrical system of the Premises, or make any
alteration or addition to the electrical system in the Premises or Building. If
any additional circuitry or wiring is required by Tenant, and Landlord approves
the installation of the same in writing, such work shall be performed at
Tenant's expense by Landlord's electrician or under Landlord's control and
supervision, and Tenant shall pay Landlord for such additional work as billed.
In the event Tenant utilizes electric current or other utilities in excess of
the amount which would be typically utilized by normal business office use of
the Premises, then Landlord shall have the right to charge Tenant, as additional
rent, a reasonable sum as reimbursement for the direct cost of such additional
use or services. In the event of a disagreement as to the reasonableness of the
amount of such additional rent, the opinion of a qualified, local and
independent professional engineer selected by Landlord in good faith shall be
binding upon Landlord and Tenant. Payments for such additional electrical power
shall be deemed additional rent due from Tenant.
(c) General cleaning and janitorial service five times per week.
(d) Reasonable quantities of water to lavatories, toilets and water
fountains in or appurtenant to the Premises.
9. LIABILITY OF LANDLORD
Excepting for the willful misconduct or gross negligence of Landlord,
its agents, contractors and employees, Landlord shall not be liable to Tenant in
any manner whatsoever for failure or delay in furnishing any service provided
for in this Lease, and no such failure or delay to furnish any service or
services by Landlord shall be an actual or constructive eviction of Tenant nor
shall any such event operate to relieve Tenant from the prompt and punctual
performance of each and all of the covenants to be performed herein by Tenant;
nor shall Landlord be liable to Tenant for damage to person or property caused
by defects in the cooling, heating, electric, water, elevator or other apparatus
or systems or by water discharged from sprinkler systems, if any, in the
Building; nor shall Landlord be liable to Tenant for the theft, or loss of any
property of Tenant whether from the Premises or any part of the Building or
property adjoining the Building containing the Premises. Landlord agrees to make
reasonable efforts to protect Tenant from interference or disturbance of third
persons including other tenants. However, Landlord shall not be liable for any
such interference or disturbance whether caused by another tenant or tenants or
Landlord or other person, nor shall Tenant be relieved from any obligation under
this Lease because of such interference, disturbance or breach.
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10. IMPROVEMENTS, REPAIRS BY LANDLORD
Except as may be specifically set forth in this Lease, Landlord shall
have no obligation to alter, remodel, improve, repair, decorate or paint the
Premises. Landlord shall, however, repair and maintain all Common Areas of the
Project and the structural portions of the Building, including the basic
plumbing, air conditioning, heating and electrical systems installed in
accordance with similar buildings in Orlando, Florida, but taking into
consideration the age of the Building, unless the condition requiring such
maintenance is caused in part or in whole by the act, neglect, fault or omission
of any duty by Tenant, its agents, servants, employees or invitees, in which
case Tenant shall pay Landlord the reasonable cost of such maintenance or
repairs. By taking possession of the Premises, Tenant accepts them as being in
good order, condition and repair, and in the condition which Landlord is
obligated to deliver them to Tenant, except for such items as Tenant may set
forth on a punch list to be provided from Tenant to Landlord in accordance with
the Notices provision of this Lease within ten (10) days after Landlord's
delivery of possession of the Premises to Tenant. Landlord shall not be liable
for any failure to make any repairs or to perform any maintenance required of
Landlord hereunder, unless such failure shall persist for an unreasonable period
of time after written notice of the need for such repairs or maintenance is
given to Landlord by Tenant in accordance with the Notices provision of this
Lease.
11. LANDLORD'S RIGHT TO ENTER PREMISES
Landlord shall retain duplicate keys to all doors of the Premises.
Tenant shall not change the locks on any entrance to the Premises. Upon Tenant's
written request to Landlord, Landlord will make a reasonable change of locks on
behalf of Tenant at Tenant's sole cost and expense. Landlord and its agents,
employees and independent contractors shall have the right to enter the Premises
at all times in the event of an emergency, and at reasonable hours to make
repairs, additions, alterations, and improvements that are required by this
Lease or are otherwise performed with Tenant's prior written consent; to exhibit
the Premises to prospective purchasers, lenders or tenants, but Landlord may
enter to exhibit the Premises to prospective tenants only during the last twelve
(12) months of the Term or following any event of default for as long as such
event of default remains uncured; and to inspect the Premises to ascertain that
Tenant is complying with all of its covenants and obligations hereunder.
Landlord shall also have the right to enter the Premises at reasonable hours to
install, maintain, repair and replace pipes, wires, cables, duct work, conduit
and utility lines through hung ceiling space and column space within the
Premises. Landlord agrees to use reasonable efforts to minimize any interference
with Tenant's business caused by such entry. Landlord shall, except in case of
emergency, afford Tenant such prior notification of an entry into the Premises
as shall be reasonably practicable under the circumstances, for the purpose of
exhibiting the Premises to a prospective purchaser or tenant. During such time
as such work is being carried on in or about the premises, payments provided
herein shall not abate and Tenant waives any claim or cause of action against
Landlord for damages by reason of interruption of Tenant's business or loss of
profits therefrom because of the prosecution of any such work or any part
thereof.
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12. REPAIRS BY TENANT
With the exception of those items set forth in this Lease that are
required to be repaired by Landlord, Tenant, during the Term of this Lease or
any extension or renewal of this Lease, shall, at its sole cost and expense,
make all repairs as shall be reasonably necessary to keep the Premises, and any
portion of the Building under Tenant's exclusive control, in good condition and
repair, normal wear, loss by fire or other casualty not caused by Tenant,
Tenant's employees, agents or contractors and condemnation excepted. Tenant
further agrees that all damage or injury of whatever nature done to the Premises
by Tenant or by any person in or upon the Premises except Landlord, Landlord's
agents, servants and employees, shall be repaired by Tenant at its sole cost and
expense.
13. ALTERATIONS
Tenant shall make no alterations or other improvements to the Premises
without Landlord's prior written consent. Unless otherwise agreed, all such
approved alterations and other improvements shall be made by Landlord at
Tenant's sole expense and shall become the property of Landlord and be
surrendered with the Premises upon the expiration of this Lease.
Landlord may, at Landlord's option, require Tenant to remove any or all
such alterations, improvements, decorations and furnishings, and repair any
damage to the Premises resulting from such alterations, upon the expiration or
earlier termination of this Lease.
14. LIENS
Tenant shall pay or cause to be paid all costs for work done by or on
behalf of Tenant or caused to be done by or on behalf of Tenant on the Premises
of a character which will or may result in liens against Landlord's interest in
the Premises, the Building or the Project, or any part thereof and Tenant will
keep the same free and clear of all mechanics liens and other liens on account
of work done for or on behalf of Tenant or persons claiming under Tenant. Tenant
hereby agrees to indemnify Landlord for, and defend and hold Landlord harmless
from and against all liability, loss, damages, costs or expenses, including
reasonable attorneys' fees, incurred in connection with any claims of any nature
whatsoever for work performed for, or materials or supplies furnished to,
Tenant, including lien claims of contractors, laborers, or materialmen. Should
any such liens be filed or recorded against the Premises, the Building or the
Project with respect to work done for or materials supplied to or on behalf of
Tenant or should any action affecting the title thereto be commenced, Tenant
shall cause such liens to be released of record within twenty (20) days after
notice thereof. If Tenant desires to contest any such claim of lien, Tenant
shall nonetheless cause such lien to be released of record by the posting of
adequate security with a court of competent jurisdiction as may be provided by
Florida's mechanics' lien statutes. If Tenant shall be delinquent in paying any
charge for which such a mechanics' lien or suit to foreclose such a lien has
been recorded or filed and shall not have caused the lien to be released as
aforesaid, Landlord may (but without being required to do so) pay such lien or
claim and costs associated therewith, and the amount so paid, together with
interest thereon at the highest rate permitted by law and reasonable attorneys'
fees incurred in connection therewith, shall be immediately due from Tenant to
Landlord as Additional Rental.
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15. ASSIGNMENT AND SUBLETTING
Tenant may not assign this Lease or any interest hereunder, or sublet
the Premises or any part thereof, or permit the use of the Premises by any party
other than Tenant or an entity which owns, is owned by, or is under common
ownership with Tenant (collectively, an "Assignment"), without at least thirty
(30) days' prior written notice to Landlord in accordance with the Notices
provision of this Lease, and the prior written consent of Landlord in each
instance. In the event that Tenant provides Landlord with notice of such
proposed Assignment, such notice shall be accompanied by a copy of any and all
documents, instruments and agreements pertaining to such transaction reasonably
necessary for Landlord to evaluate such proposed Assignment. Whether or not such
proposed Assignment is approved by landlord, Tenant shall reimburse Landlord for
its reasonable attorneys' fees incurred in connection with reviewing any
proposed Assignment. Landlord shall have fifteen (15) days from its receipt of
Tenant's notice of the proposed Assignment and all other required and reasonably
requested information within which to make a decision as to whether or not such
proposed Assignment will be approved. At a minimum, without limitation, in each
event the following requirements must be satisfied: (a) Tenant shall not be
released from any obligations or any liabilities hereunder as a result of any
such Assignment; (b) Tenant shall not be in default hereunder at the time it
requests Landlord's consent or on the effective date of the proposed
Assignment; (c) any Assignment or attempted Assignment without Landlord's
consent shall be voidable at Landlord's option; (d) Landlord shall be provided
with such information regarding the name, identity, business reputation and
credit worthiness of the proposed assignee as Landlord shall reasonably request;
and (e) in the case of an assignment of the Lease, the assignee shall deliver to
Landlord a written agreement whereby it assumes jointly and severally with
Tenant all of the obligations and liabilities of Tenant under this Lease. In
lieu of approving or disapproving a proposed Assignment, Landlord shall have the
right, but not the obligation, to terminate the Lease effective as of the date
Tenant vacates the Premises. Should Landlord elect to terminate the Lease,
Tenant shall be relieved of any liability or obligation to pay rent beyond the
date of termination. Unless Landlord expressly agrees to terminate the Lease or
Tenant's obligations hereunder, in no event shall any Assignment, whether
approved by Landlord or not, relieve Tenant from its obligations under this
Lease. Consent to one Assignment shall not destroy or waive this provision, and
all later Assignments shall likewise be made only upon prior written content of
Landlord. Assignees shall become liable directly to Landlord for all obligations
of Tenant hereunder, without relieving Tenant's liability. In no event shall
Tenant be entitled to any rent, rentals, payment, profit or any other sum or
cost of the assignee or sublessee for such Assignment in excess of the then
applicable rent and other charges payable by Tenant to Landlord under this
Lease. Landlord shall have the sole and absolute right to any and all amounts
paid or payable in excess of the rent and other charges payable by Tenant
hereunder.
In making Landlord's determination to approve or disapprove a proposed
Assignment hereunder, Landlord and Tenant agree that Landlord may withhold its
consent to any proposed Assignment, and such withholding of consent by Landlord
will not be deemed to be unreasonable, (1) if the proposed assignee or subtenant
is not a reputable party or is a party who would (or whose use would) detract
from the character of the Building, such as, without limitation, a dental,
medical, chiropractic or a governmental office, or (2) if the proposed assignee
or subtenant shall be engaged in a business in the Premises which is not
consistent with the then standards of the Building or is not permitted by or
would contravene the provisions of
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this Lease, or (3) if the lease or use of the Premises or any portion thereof by
such subtenant or assignee will cause Landlord to be in violation of any
restrictive use covenants granted by Landlord to any other tenant in the
Building in such tenant's lease, or (4) if, in the case of a proposed Assignment
the proposed assignee is not of sufficient financial worth to perform its
obligations under this Lease as such obligations become due; provided, however,
it is understood and agreed that the reasons outlined above in this sentence are
not intended, and shall not be construed, to be an exclusive list of reasonable
bases upon which Landlord may withhold its consent, and Landlord reserves the
right to disapprove of a proposed Assignment by virtue of such other reasonable
bases.
Upon execution of any sublease or assignment approved by Landlord under
this Article, a fully-executed counterpart of the sublease or assignment shall
be promptly delivered to Landlord by Tenant.
A change, whether voluntary, involuntary or by operation of law, or a
merger, consolidation or other reorganization, of more than a 49% ownership in
Tenant shall be an assignment of this Lease and subject to the provisions of
this Article, except that a public stock offering on a national stock exchange
shall not constitute an assignment of this Lease.
16. EMINENT DOMAIN
If the whole or any part of the Premises shall be taken by Federal,
State, County or City authority for public use, or under any statute, or by
right of eminent domain (or is conveyed by Landlord in lieu of such taking),
then the Term hereby granted and all rights of the Tenant hereunder shall cease
and terminate as of the day before the effective date of such taking. It is
expressly agreed that the Tenant shall not have any right or claim to any award
made to or received by the Landlord for such taking.
17. DESTRUCTION OR DAMAGE TO PREMISES
If the Premises shall be damaged or destroyed in whole or in part by
fire, casualty or other causes covered by Landlord's insurance, Landlord shall
promptly and diligently restore the Premises, to the extent of Landlord's Work
therein, to their condition immediately prior to such destruction or damage,
provided that, in Landlord's reasonable estimation, such repairs can be made
within sixty (60) days of such destruction or damage. Tenant shall, upon
substantial completion by Landlord, promptly and diligently, and at its sole
cost and expense, repair and restore any improvements to the Premises made by
Tenant to the condition thereof prior to such destruction or damage. If, in
Landlord's reasonable estimation, the Premises cannot be restored, to the extent
of Landlord's Work therein, within sixty (60) days of such damage or
destruction, Landlord at its option shall, by written notice to Tenant given
within sixty (60) days after the date of such fire or other casualty, either (i)
elect to repair or restore such damage, this Lease continuing in full force and
effect, or (ii) terminate this Lease as of a date specified in such notice,
which date shall not be less than thirty (30) nor more than sixty (60) days
after the date such notice is given. Until the restoration of Landlord's Work is
complete, there shall be an abatement or reduction of Base Rental in the same
proportion that the square footage of the Premises so damaged or destroyed and
under restoration bears to the total square footage of the Premises.
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Notwithstanding the foregoing provisions of this paragraph, if damage
to or destruction of the Premises, in excess of fifty percent (50%) of the value
of Landlord's Work, shall occur within the last year of the Term of this Lease,
as the same may be extended as provided hereinafter, the obligation of Landlord
to restore Landlord's Work in the Premises shall not arise unless (i) Landlord,
at its sole option, elects to restore such work; (ii) Landlord, at its sole
option, elects to provide Tenant with the opportunity of extending the Term of
this Lease for an additional period so as to expire five (5) years from the date
of the completion by Landlord of the repairs and restoration to Landlord's Work;
and, (iii) Tenant gives written notice to Landlord within thirty (30) days after
Landlord's request that it agrees to such extension. Such extension shall be on
the terms and conditions provided herein, if an option to extend this Lease
remains to be exercise by Tenant hereunder, or under the terms prescribed in
Landlord's notice, if no such further extension period is provided for herein.
Upon receipt of such notice from Tenant, Landlord agrees to promptly repair and
restore Landlord's Work in the Premises. Failing such notice to extend, Landlord
at its option shall have the right to terminate this Lease as of the date of the
damaging event, or to restore Landlord's Work in the Premises and the Lease
shall continue for the remainder of the then unexpired Term, or until the Lease
is otherwise terminated as provided herein.
18. INDEMNIFICATION
Subject to the other provisions of this Lease, Tenant hereby
indemnifies Landlord from and agrees to hold Landlord harmless against, any and
all liability for any loss, injury, or damage (collectively, a "Loss"),
including, without limitation, all costs, expenses, court costs and reasonable
attorneys' fees, imposed on Landlord by any person whomsoever, caused by or
resulting from (i) any Loss occurring in the Premises (except where such Loss is
caused by or results from the gross negligence or willful misconduct of Landlord
or its employees, agents or contractors); and (ii) any Loss occurring in the
Premises, the Building or anywhere in the Project that is caused by or results
from the negligence or willful misconduct of Tenant, its employees, agents or
contractors. Subject to the provisions of this Lease, Landlord hereby
indemnifies Tenant from, and agrees to hold Tenant harmless against, any and all
liability for any Loss occurring in the Premises, the Building or anywhere in
the Project, including, without limitation, all costs, expenses, court costs and
reasonable attorneys' fees, imposed on Tenant by any person whomsoever, caused
by or resulting from the gross negligence or willful misconduct of Landlord or
its employees, agents or contractors. The provisions of this paragraph shall
survive the expiration or any termination of this Lease.
19. INSURANCE
(a) LANDLORD'S INSURANCE.
(i) Landlord shall obtain and keep in force during the Term of
this Lease an insurance policy or policies of all-risks fire, extended coverage,
theft, vandalism, malicious mischief and other casualty, covering loss or
damages to the Project and the Common Areas, as well as all improvements
thereto, and the structural improvements to the Premises.
(ii) Landlord shall also obtain and keep in force during the Term
of this Lease such other insurance in such amounts and with such policy
provisions as it shall deem necessary
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or appropriate, including without limitation the following: commercial general
liability insurance pertaining to the Project and the Common Areas, and bodily
injuries, death and property damage arising or occurring therein.
(iii) Tenant shall reimburse Landlord for any increase in
the cost of any of Landlord's insurance pertaining to the Project if said
increase is caused by or results from Tenant's use or occupancy of the Premises,
the breach of this Lease by Tenant, or the acts, omissions, or negligence of
Tenant, its employees, officers, agents, licensees, invitees, visitors,
customers, concessionaires, assignees, subtenants, contractors or
subcontractors.
(b) TENANT'S INSURANCE. During the Term of this Lease, and any
extension and renewal thereof, Tenant, at its sole cost and expense, shall carry
and maintain the following policies of insurance with insurance companies
licensed or authorized to do business in the State of Florida and rated as no
less than A-, Class VI in the current edition of Best's Guide, insuring
Landlord, Landlord's authorized agent, Tenant and any lender of record
encumbering the Premises if requested by Landlord, and shall deliver to Landlord
a certificate of insurance evidencing such coverage both prior to taking
possession of the Premises and annually thereafter:
(i) Property Insurance on the Special or All-Risk Form
(including theft, sprinkler leakage, boiler and machinery insurance), covering
Tenant's personal property, trade fixtures, inventory and equipment located in
the Premises in an amount equal to the full replacement cost of all items. Said
All-Risk policy is to have a maximum deductible of $10,000.
(ii) Commercial General Liability Insurance on an
occurrence form including premises operations, products/completed operations,
hazard and contractual coverage with limits of no less than $2,000,000 per
occurrence, $2,000,000 General Aggregate and $2,000,000 Completed Operations
Aggregate.
(iii) Workers' Compensation Insurance with liability limits
required by the laws of the state in which the Premises are located and
employers liability coverage.
Such insurance shall, to the extent permitted by law, name Landlord and
Landlord's authorized agent as additional insureds and provide for thirty (30)
days' prior written notice to Landlord and its asset and property manager before
any modification or termination of said insurance. The above-referenced
insurance shall be considered primary and non-contributory with or secondary to
coverage provided by Landlord. Landlord reserves the right to require additional
coverage and increase limits as industry standards change. Should Tenant engage
the services of a contractor, Tenant will make certain that such contractor will
carry General Liability Insurance and will name Landlord and its asset and
property manager as additional insureds.
(c) WAIVER OF SUBROGATION. Landlord and Tenant shall each have
included (so long as commercially reasonable and obtainable) in all policies of
all risks, fire, extended coverage, business interruption and other property
insurance respectively obtained by them covering the Premises, the Building and
contents therein, a waiver by the insurer of all right of subrogation against
the other in connection with any loss or damage thereby insured against. Any
additional premium for such waiver shall be paid by the primary insured. To the
full extent permitted by law, Landlord and Tenant each waives all right of
recovery against the other (and
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any officers, directors, partners, employees, agents, and representatives of the
other) for, and agrees to release the other from liability for, loss or damage
to the extent such loss or damage is covered by valid and collectible insurance
in effect covering the party seeking recovery at the time of such loss or damage
or would be covered by the insurance required to be maintained under this Lease
by the party seeking recovery. If the release of either party, as set forth in
the immediately preceding sentence, should contravene any law with respect to
exculpatory agreements, the liability of the party in question shall be deemed
not released but shall be secondary to the liability of the other's insurer.
20. DAMAGE OR THEFT OF PERSONAL PROPERTY
Tenant agrees that all personal property brought into the Premises
shall be at the risk of the Tenant only and that the Landlord shall not be
liable for the loss thereof or any damages thereto occasioned from any act of
any co-tenant, or other occupants of said Building or any other person.
21. HAZARDOUS MATERIALS
(a) Defined Terms.
(1) "Damages" shall mean all damages, and includes,
without limitation, punitive damages, liabilities, costs, losses, diminutions in
value, fines, penalties, demands, claims, cost recovery actions, lawsuits,
administrative proceedings, orders, response action costs, compliance costs,
investigation expenses, consultant fees, attorneys' and paralegals' fees and
litigation expenses.
(2) "Environmental Law" shall mean any current or future
statute, ordinance, regulation or rule pertaining to (1) the protection of
health, safety and the indoor or outdoor environment, (2) the conservation,
management or use of natural resources and wildlife, (3) the protection or use
of surface water and groundwater, (4) the management, manufacture, possession,
presence, use, generation, transportation, treatment, storage, disposal,
release, threatened release, abatement, removal, remediation, investigation or
handling of, or exposure to, any Hazardous Material or (5) pollution (including
any release to air, land, surface water and groundwater), and includes, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. ss.9601 et seq., the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C. ss.6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. ss.1251 et
seq., the Clean Air Act of 1966, as amended, 42 U.S.C. ss.7401 et seq., the
Toxic Substances Control Act of 1976, 15 U.S.C. ss.2601 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. App. ss.1801 et seq., the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. ss.651 et seq., any state
or local law requiring notifications or reports upon conveyance or other events,
any similar, implementing or successor law, any amendment, rule, regulation,
order or directive issued thereunder, and all other federal, state, regional,
county, municipal, and local laws, regulations, and ordinances insofar as they
regulate Hazardous Materials.
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(3) "Governmental Approval" shall mean any permit,
license, variance, certificate, consent, letter, clearance, closure, exemption,
decision, action or approval of any international, foreign, federal, state,
regional, county or local person or body having governmental or
quasi-governmental authority or a subdivision thereof.
(4) "Hazardous Material" shall mean any substance,
chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant,
contaminant or material which is hazardous or toxic, and includes, without
limitation, asbestos, polychlorinated biphenyls, petroleum (including crude oil
or any fraction thereof) and any such material classified or regulated as
"hazardous" or "toxic" pursuant to any Environmental Law.
(5) "Hazardous Material Activity" shall mean any
activity, event or occurrence involving a Hazardous Material, including, without
limitation, the manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened release,
abatement, removal, remediation, handling of or corrective or response action
to any Hazardous Material.
(b) Representations and Warranties of Tenant. Tenant represents
and warrants as of the date of this Lease, as to the Premises:
(1) Tenant is in compliance with any applicable
Environmental Law; and
(2) Tenant intends to conduct no Hazardous Material
Activity on the Premises, except in the ordinary course of its business.
(c) Covenants of Tenant. Tenant hereby covenants that, during the
term of this Lease as to the Premises:
(1) Tenant shall comply at its sole cost and expense with
all applicable Environmental Laws and shall be responsible for making any
notification or report required to be made by any applicable Environmental Law;
(2) Tenant shall not conduct any Hazardous Material
Activity on the Premises, except in the ordinary course of its business,
including, but not limited to, a. installing any underground storage tanks; b.
taking any action that would subject the Premises to the permit requirements
under Resource, Conservation and Recovery Act for storage, treatment or
disposal of Hazardous Materials, c. disposing of Hazardous Materials in
dumpsters provided by Landlord for tenant use, d. discharging Hazardous
Materials into drains or sewers, or e. causing or allowing the release of any
Hazardous Materials on, to or from the Premises, the Building or the Property;
(3) If Tenant's use, including any Hazardous Material
Activity, a. gives rise to liability or to a claim under any Environmental Law,
or any common law theory of tort or otherwise, b. causes a threat to, or
endangers human health or the environment, or c. creates a nuisance or trespass,
Tenant shall, to the reasonable satisfaction of Landlord and at Tenant's sole
cost and expense, promptly take all actions as are necessary to return the
Premises or any adjacent property to the condition existing prior to the
introduction of any such Hazardous
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Material and to comply with all applicable Environmental Laws and eliminate or
avoid any liability claim with respect thereto. Landlord's written approval of
such actions to be taken with respect to the Premises or any adjacent property
shall first be obtained;
(4) Tenant shall provide Landlord with a. copies of all
environmental reports and tests obtained by Tenant, and b. within ten (10) days
of Tenant's receipt of a written request by Landlord, any other applicable
documents and information with respect to environmental matters;
(5) Tenant shall provide Landlord promptly with copies of
all summonses, citations, directives, information inquiries or requests, notices
of potential responsibility, notices of violation or deficiency, orders or
decrees, claims, complaints, investigations, judgments, letters, notices of
environmental liens or response actions in progress, and other communications,
written or oral, actual or threatened, from any federal, state, or local agency
or authority, or any other entity or individual, concerning a. any actual or
alleged release of a Hazardous Material on, to or from the Premises, b. the
imposition of any lien on the Premises, c. any actual or alleged violation of,
or responsibility under, any Environmental Laws, or d. any actual or alleged
liability under any theory of common law tort or toxic tort, including,
without limitation, negligence, trespass, nuisance, strict liability, or
ultrahazardous activity;
(6) Tenant shall allow Landlord or its representatives
from time to time, at Landlord's expense and reasonable discretion, upon
reasonable prior written notice to Tenant to inspect the Premises and conduct an
environmental assessment (including invasive soil or groundwater sampling),
including, without limitation, to facilitate any sale or lease of the Premises,
the Building and/or the Property; and
(7) Tenant shall, upon the written request of Landlord,
timely provide a report of an environmental assessment of reasonable scope, form
and depth by a consultant reasonably approved by Landlord as to (1) any matter
to the extent such matter is attributable to events or conditions which arise
during the Lease Term and a. for which notice is provided pursuant to the above
requirements or b. which may reasonably be believed by Landlord to form the
basis for a claim under any Environmental Law or under any common law theory of
tort, and (2) the general environmental condition of the Premises within three
hundred sixty-five (365) days of the expiration of this Lease or the earlier
termination thereof or of Landlord's right to possession of the Premises. If
such a requested environmental report is not delivered within seventy-five (75)
days after receipt of Landlord's request, then Landlord may arrange for same.
The reasonable cost of any assessment pursuant to subpart (1) of this provision
or any assessment pursuant to subpart (2) of this provision which discloses a
breach of this Section 48 shall be payable by Tenant.
(d) Rights of Landlord. In the event that Tenant shall fail to
comply with any of its obligations under this Article 21 as and when required
hereunder and after giving Tenant prior written notice and a reasonable
opportunity to cure the same, Landlord shall have the right (but not the
obligation) to take such action as is required, in Landlord's sole discretion,
to be taken by Tenant hereunder and in such event, Tenant shall be liable and
responsible to Landlord for all costs, expenses, liabilities, claims and other
obligations paid, suffered, or incurred by
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Landlord in connection with such matters. Tenant shall reimburse Landlord
immediately upon demand for all such amounts for which Tenant is liable.
(e) Indemnification and Waiver. Notwithstanding anything
contained in this Lease to the contrary, Tenant shall indemnify, hold harmless,
and hereby waives any claim for contribution against, Landlord, and its
beneficiaries, officers, directors, shareholders, employees, and agents, from
and against any and all claims, response costs, losses, liabilities, damages,
costs, and expenses, including, but not limited to, the costs and expenses of
investigations, studies, health or risk assessments and consulting fees, and
including, without limitation, loss of rental income, loss due to business
interruption, and reasonable attorneys' fees and costs, arising out of or in
any way connected with any or all of the following:
(1) any Hazardous Materials which, at any time during
the term of this Lease are or were actually or allegedly generated, stored,
treated, released, disposed of, used or otherwise located on or at the
Premises, including, but not limited to, any and all (i) liabilities under any
common law theory of tort, nuisance, strict liability, ultrahazardous activity,
negligence or otherwise based upon, resulting from or in connection with any
Hazardous Material, and (ii) obligations to take response, cleanup or
corrective action pursuant to any investigation or remediation in connection
with the decontamination, removal, transportation, incineration, or disposal of
any of the foregoing; and
(2) any actual or alleged illness, disability, injury,
or death of any person in any manner arising out of or allegedly arising out of
exposure to Hazardous Materials present at the Premises and attributable to
events or conditions which arose during the term of this Lease, regardless of
when any such illness, disability, injury, or death shall have occurred or been
incurred or manifested itself; and
(3) any actual or alleged failure of Tenant or the
Premises at any time and from time to time to comply with all applicable
Environmental Laws to the extent noncompliance is attributable to events and
conditions which arose during the term of this Lease; and
(4) any failure by Tenant to comply with its obligations
under this Article 21.
In the event any claims or other assertion of liability shall be made
against Landlord for which Landlord is entitled to indemnity hereunder,
Landlord shall notify Tenant of such claim or assertion of liability and
thereupon Tenant shall, at its sole cost and expense, assume the defense of
such claim or assertion of liability, in a manner and with counsel reasonably
acceptable to Landlord, and continue such defense at all times thereafter until
completion. The obligations of Tenant under this Article 21 shall survive any
termination or expiration of this Lease.
22. LANDLORD'S LIEN
[INTENTIONALLY DELETED]
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23. RELOCATION
[INTENTIONALLY DELETED]
24. SUBORDINATION AND ATTORNMENT
Tenant agrees that this Lease shall be subject and subordinate to any
mortgage, security deed, loan deed or similar instrument now on said Premises
and to all advances already made, or which may be hereafter made, on account of
said instruments to the full extent of all debts and charges secured thereby
and to any renewals or extensions of all or any part thereof and to any such
instruments which any owner of said Promises may hereafter at any time elect to
place on said Premises, and Tenant agrees upon request to hereafter attorn to
the holder of such mortgage, security deed or other instrument as the Landlord
under this Lease and execute any paper or papers which the counsel for Landlord
may deem necessary to accomplish that end.
25. ESTOPPEL CERTIFICATE
Upon Landlord's request, Tenant shall execute and deliver to the
Landlord, within ten (10) days from Tenant's receipt of said request: (a) a
statement, in writing, certifying that this Lease is in full force and effect,
and setting forth the dates to which the rent and any other charges have been
paid, and (b) a statement in writing from any guarantor of this Lease
certifying that said guaranty is in full force and effect, and such statements
so delivered to the Landlord may be relied upon by any prospective purchaser
of, or by any holder or prospective holder of, a mortgage or other security
interest in the Building of which the Premises are a part. Tenant's failure to
deliver such statements, within such time shall be conclusive upon Tenant that
this Lease is in full force and effect, without modification, except as may be
represented by Landlord, that there are no defaults in Landlord's performance,
and that not more than one (1) month's rental has been paid in advance.
26. DEFAULT
The occurrence of any of the following shall constitute an event of
default hereunder by Tenant:
(a) The Base Rental payable under this Lease (including any
Additional Rental) or any sum of money due hereunder is not paid when due, and
such failure to pay continues for more than ten (10) days after Tenant's
receipt of notice thereof from Landlord; provided, however, that Landlord shall
not be required to provide Tenant with the notice and ten-day period set forth
in this subparagraph more than three (3) times during any Lease Year, and the
fourth and each subsequent failure to timely pay such sums during the same
Lease Year shall immediately constitute an event of default hereunder.
(b) [INTENTIONALLY DELETED]
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(c) Tenant or any guarantor of this Lease files any petition for
debt relief under any section or chapter of the national or federal bankruptcy
code or any other applicable federal or state bankruptcy, insolvency or other
similar act.
(d) Any petition is filed against Tenant under any section or
chapter of the national or federal bankruptcy code or any other applicable
federal or state bankruptcy, insolvency or other similar act, and such petition
is not dismissed within sixty (60) days after the date of such filing.
(e) Tenant or any guarantor of this Lease shall become insolvent
or transfer property to defraud creditors or there shall be a material adverse
change in the net worth or credit rating of Tenant or such guarantor.
(f) Tenant or any guarantor of this Lease makes material
misrepresentations to Landlord prior to or contemporaneously with the execution
of this Lease.
(g) Tenant or any guarantor of this Lease shall make an
assignment for the benefit of creditors.
(h) A receiver is appointed for any of the assets of Tenant or
any guarantor of the Lease, and such receiver is not removed within sixty (60)
days of Tenant's receipt of notice from Landlord to obtain such removal.
(i) A lien is filed against the Premises, Building or Project, or
Landlord's estate therein, by reason of any work, labor, services or materials
performed or furnished, or alleged to have been performed or furnished, to
Tenant or anyone holding the Premises by, through or under Tenant, and Tenant
fails to cause the same to be vacated and canceled of record, or bonded off in
accordance with the provisions of this Lease, within twenty (20) days after the
filing date thereof.
(j) Tenant fails to observe, perform and keep each and every one
of the covenants, agreements, provisions, stipulations and conditions contained
in this Lease to be observed, performed and kept by Tenant, including without
limitation the "Rules and Regulations" for the Project of which the Premises is
a part, and unless otherwise specified herein, Tenant persists in such failure
for twenty (20) days after receipt of notice by Landlord requiring that Tenant
correct such failure; provided, that in the event any such failure is not
reasonably susceptible of cure within such twenty (20) day period, Tenant shall
have a reasonable time to cure such failure, provided Tenant commences cure as
soon as is reasonably possible, and prosecutes such cure diligently to
completion.
27. REMEDIES
Upon the occurrence of an event of default by Tenant, Landlord shall
have the option to do and perform any one or more of the following:
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(a) Landlord may terminate this Lease, in which event Tenant
shall immediately surrender the Premises to Landlord. If Tenant shall fail to
do so, Landlord may, without notice and prejudice to any other remedy
available, enter and take possession of the Premises and remove Tenant, or
anyone occupying the Premises, and its effects without being liable to
prosecution or any claim for damages. In the event of termination of this
Lease, Tenant shall be responsible to Landlord for (i) all payments due under
this Lease prior to the date of termination, (ii) all costs incurred by
Landlord in connection with such termination, and (iii) the entire amount of
Base Rental, Additional Rental and other charges due hereunder for the
remainder of the Term, less the then fair market rental value of the Premises
for the remainder of the Term, with such difference discounted to its present
value by using a discount factor of 6%. Such amount shall be paid by Tenant to
Landlord immediately upon demand by Landlord and shall constitute liquidated
damages and not a penalty or forfeiture (Tenant and Landlord agree that the
actual damages are impossible to ascertain and that the amount described above
is a reasonable estimate thereof). If Landlord elects to terminate this Lease,
Tenant's liability to Landlord for damages shall survive such termination.
(b) Landlord may correct such default, and Tenant shall reimburse
Landlord, upon demand, for the cost incurred by Landlord in caring such
default.
(c) Landlord may terminate Tenant's right of possession of the
Premises without terminating this Lease. Landlord may enter upon and take
possession of the Premises as agent of Tenant without terminating this Lease
(termination of this Lease shall only occur by written notice of such
termination from Landlord to Tenant) and without being liable to prosecution or
any claim for damages. Landlord may elect to relet the Premises, but shall have
no obligation to do so. In the event that Landlord elects to relet the
Premises, Landlord may make any reasonable alterations or refurbish the
Premises, or both, or change the character or use of the Premises. Landlord may
relet all or any portion of the Premises, alone or in conjunction with other
portions of the Building, for a term longer or shorter than the Term of this
Lease, at a rental rate provided in this Lease, and upon such other terms
(including the granting of concessions) as Landlord solely determines to be
acceptable. If Landlord elects to reenter and relet all or any portion of the
Premises, Landlord shall apply the rent so collected as follows:
(i) first, to any amount due hereunder other than Base
Rental and Additional Rental;
(ii) second, to the payment of costs and expenses of such
reletting;
(iii) third, to the payment of Base Rental and Additional
Rental;
(iv) fourth, the residue shall be held and applied to
future Base Rental and Additional Rental due hereunder, and if any such excess
exists at the termination of this Lease it shall be paid over to Tenant.
No such reentry or taking possession of the Premises shall be construed as an
election on Landlord's part to terminate this Lease unless a written notice of
such intention is given to Tenant. Landlord, however, shall have no duty to
relet the Premises, and Landlord's failure to do so shall not release Tenant's
liability for rent or damages. Tenant shall remain fully liable
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to Landlord for the deficiency between any rent collected as a result of
reletting and the rent and other sums that are owed from Tenant to Landlord
under this Lease. Landlord shall have the right to rent any other available
Space in the building before reletting or attempting to relet the Premises.
(d) In addition to all other sums that are owed by
Tenant to Landlord under this Lease, upon such event of default, Tenant shall
become liable for any costs incurred by Landlord under this Lease for the
completion of any improvements to the Premises, and any real estate commissions
paid by Landlord under this Lease (collectively, the "Landlord's Costs"), to the
extent set forth in this paragraph. The entire amount of the Landlord's Costs
shall be amortized evenly over the Lease Term, and so long as Tenant does not
default in its obligations under this Lease, and fail to cure such default
within the applicable period of cure, if any, provided under this Lease, then
Tenant shall have no liability to Landlord for the repayment of any portion of
the Landlord's Costs. However, in the event that Tenant shall default in its
obligation under this Lease, and Tenant shall fail to cure such default
within the applicable period of cure, if any, provided under this Lease, then
in addition to all of Landlord's other remedies available under this Lease,
Tenant shall also be liable to Landlord for the portion of the Landlord's Costs
that remains amortized but unpaid between the date of such default and the
expiration of the Term of this Lease.
(e) The above-stated remedies of Landlord are to be in
addition to, and not in lieu of, any other nights and remedies provided
Landlord either at law or in equity. No delay in enforcing the provisions of
the Lease shall be deemed to constitute a waiver of such default by Landlord,
and the pursuit by Landlord of one or more remedies shall not be deemed to
constitute an election against other remedies.
28. EFFECT OF TERMINATION OF LEASE
No termination of this Lease prior to the normal ending thereof by
lapse of time or otherwise shall affect Landlord's right to collect sums due
hereunder for the period prior to termination thereof.
29. ATTORNEYS' FEES
If any rent or other sum due and owing under this Lease is collected
by or through an attorney at law, then, in addition to such sums, Tenant shall
also pay Landlord's reasonable attorneys' fees and other reasonable costs
incurred in such collection.
30. QUIET ENJOYMENT
Landlord represents and warrants that it has the full right and
authority to enter into this Lease and that Tenant, while paying the rental and
performing its other covenants and agreements contained in this Lease, shall
peaceably and quietly have, hold and enjoy the Premises for the Term without
hindrance or disturbance from Landlord, subject to the terms and provisions of
this Lease.
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31. SURRENDER OF PREMISES
At the termination of this Lease, Tenant shall surrender the Premises
and keys thereto to Landlord in same condition as at commencement of the Term,
normal wear and tear, loss by fire or other casualty not caused by Tenant,
Tenant's employees, agents or contractors, and condemnation excepted.
32. HOLDING OVER
If Tenant remains in possession of the Premises after expiration of
the Term hereof, without Landlord's written consent, Tenant shall be a holdover
tenant at sufferance, and there shall be no renewal of this Lease by operation
of law. During any such holdover period, Tenant shall pay holdover rent equal
to 200% of the last Base Rental and Additional Rental amount due from Tenant
prior to such holdover.
33. REMOVAL OF FUTURES
Tenant may (if not in default hereunder) prior to the expiration of
this Lease or any extension thereof, remove all unattached and movable personal
property and equipment which Tenant has placed in the Premises, provided Tenant
repairs all damages to the Premises caused by such removal. All personal
property of Tenant remaining on the Premises after the end of the Term shall be
deemed conclusively abandoned, notwithstanding that title to or a security
interest in such personal property may be held by an individual or entity other
than Tenant, and Landlord may dispose of such personal property in any manner
it deems proper, in its sole discretion, and Tenant shall reimburse Landlord
for the cost of removing such personal property. Tenant hereby waives and
releases any claim against Landlord arising out of the removal or disposition
of such personal property, and Tenant hereby agrees to indemnify and hold
Landlord harmless from and against the claims of all third parties resulting
from such removal. Tenant's obligations under this paragraph shall survive the
expiration or earlier termination of this Lease.
34. NOTICES
Any notice or other communication required or permitted to be given
under this Lease must be in writing and shall be effectively given or delivered
if hand delivered to the addresses for Landlord and Tenant stated below, or if
sent by certified United States Mail, return receipt requested, or if sent by
receipted overnight delivery service to said addresses. Notice effected by hand
delivery or receipted overnight delivery service shall be deemed to have been
received upon the earlier of actual receipt or refusal thereof. Any notice
mailed shall be deemed to have been received upon the earlier of (a) actual
receipt, (b) refusal thereof, or (c) three (3) days after mailing of same.
Either party shall have the right to change its address to which notices shall
thereafter be sent, and the party to whose attention such notice shall be
delivered, by giving the other party notice thereof in accordance with the
provisions of this paragraph; provided, however, that the party in actual or
constructive possession of the Premises under this Lease from time to time may
not change its address to which notices shall thereafter be sent to eliminate
the Premises as an acceptable address where notices to such party may be
forwarded or delivered. Until such time as either party shall change its
address for notices, notices shall be forwarded as follows:
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To Landlord: Gran Central Corporation
c/o CNL Corporate Properties, Inc.
455 South Orange Avenue
Suite 400
Orlando, Florida 32801
Attention: Stuart Beebe
To Tenant: Triton Network Systems, Inc.
7547 Commerce Center Drive
Orlando, Florida 32819
Attention ________________________
35. AGENCY DISCLOSURE
CNL Corporate Properties, Inc. ("Broker") has represented Landlord in
this transaction, and no broker has represented the Tenant in this transaction.
Broker will be compensated by Landlord by separate agreement. Landlord and
Tenant (each of which is an "Indemnifying Party" hereunder) represent to each
other that they have dealt with no broker, agent or finder in connection with
this transaction other than Broker. Each Indemnifying Party hereby indemnifies
the other party and agrees to hold such other party harmless from and against
any and all claims, causes, demands, losses, liabilities, fees, commissions,
settlements, judgments, damages, expenses and fees (including attorneys' fees
and court costs) in connection with any claim for commission, fees, compensation
or other charge relating in any way to this agreement, or to the consummation of
the transactions contemplated hereunder, which may be made by any person, firm
or entity, other than Broker, based upon any agreement made or alleged to have
been made by such Indemnifying Party or its agent or representative, or the
conduct or the alleged conduct of such Indemnifying Party or its agent or
representative. The provisions of this paragraph shall survive termination or
expiration of the Lease.
36. EXCULPATION OF LANDLORD
Landlord's obligations and liability to Tenant with respect to this
Lease shall be limited solely to Landlord's interest in the Building, and
neither Landlord nor any joint venturers (if any), partners, officers,
directors, employees or shareholders of or in Landlord shall have any personal
liability whatsoever with respect to this Lease.
37. PARKING
Tenant shall have the right to use in common with other tenants of the
Building the parking facilities of the Building, if any, as designated from time
to time by Landlord. Tenant shall not at any time park or permit the parking of
Tenant's vehicles, or the vehicles of others, adjacent to loading areas so as to
interfere in any way with the use of such areas. Tenant shall not park or permit
to be parked any inoperative or abandoned vehicles or equipment on any portion
of the parking or loading areas. If any abandoned vehicles are discovered by
Landlord
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to exist anywhere in the Project, Landlord shall have the right to remove same
from the Project in accordance with applicable law. The maximum number of
vehicles which may be parked in the Building's parking facility by Tenant,
Tenant's employees, agents or contractors is five and one-half (5.5) vehicles
per One Thousand (1,000) square feet of Rentable Area in the Premises. As of the
Effective Date hereof, the parking facility of the Building consists of
unassigned spaces located in an uncovered surface parking lot. Landlord may, in
Landlord's sole discretion, elect to construct a covered parking facility where
parking may be permitted on an assigned, reserved basis for a limited number of
spaces (the "Reserved Spaces"). If Landlord elects to create and/or designate
Reserved Spaces, (i) Landlord reserves the right to relocate or eliminate such
Reserved Spaces; (ii) access to the Reserved Spaces will be afforded by a permit
or access card; (iii) Landlord reserves the right to assess a fee to park in the
Reserved Spaces and for the issuance or replacement of the permits or access
cards; (iv) permits allowing vehicles to be parked in the Reserved Spaces are
subject to availability, and may be issued by Landlord on any basis that
Landlord determines to be appropriate; (v) Landlord reserves the right to remove
from the Reserved Spaces any vehicle that is parked there for which no permit
allowing such parking has been issued; (vi) although Landlord may designate the
spaces as being "Reserved" and Landlord has the right to remove from the
Reserved Spaces any vehicle that is parked there for which no permit allowing
such parking has been issued, Landlord shall have no obligation to police the
use of the Reserved Spaces, and Landlord shall not be responsible for ensuring
that unauthorized vehicles do not park in the parking spaces reserved for Tenant
38. SIGNAGE
Landlord agrees that Tenant shall be listed on the Building directory
at no cost or expense to Tenant. Tenant shall not place any signs, decals or
other materials upon the windows or suite doors of the Premises, nor on the
exterior walls of the Premises. Landlord agrees to provide Tenant, at Landlord's
expense, one building standard suite door tenant identification sign. Any
additional signage desired by Tenant must receive the prior written approval of
Landlord and the management company of the Building, which may be granted or
denied in their sole discretion.
39. FORCE MAJEURE
Each party shall be excused from performing an obligation or
undertaking provided for in this Lease (other than the obligation of Tenant to
pay any and all items of rent as the same become due under the applicable
provisions of this Lease) so long as such performance or undertaking is
prevented, delayed, or hindered by a strike, lockout, labor dispute, civil
commotion, act of God, or any other cause outside and beyond such party's
control.
40. AUTHORITY
If Tenant 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, in accordance with
the bylaws and resolutions of said corporation, and that this Lease is binding
upon said corporation. If Tenant is a partnership, each individual executing
this Lease on behalf of such partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the partnership, and
that this Lease is
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binding on the partnership. The submission or delivery of this document for
examination and review does not constitute an option, an offer to lease space in
the Building or an agreement to lease. This document shall have no binding
effect on the parties unless and until executed by both Landlord and Tenant.
41. DEFINITIONS
"Landlord" as used in this Lease shall include the first party named in
this Lease, and its representatives, assigns and successors in title to
Premises. "Tenant" shall include the second party named in this Lease, and his,
hers or its heirs and representatives, and if this Lease shall be validly
assigned or sublet, shall include also Tenant's assignees or subtenants, as to
Premises covered by such assignment or sublease.
42. RULES AND REGULATIONS
The current rules and regulations for the Building are attached hereto
as Exhibit "D," and are incorporated herein by this reference. Additionally,
Landlord may hereafter, from time to time, adopt and promulgate such additional,
reasonable and non-discriminatory rules and regulations for the government and
management of said Building as Landlord may reasonably determine to be
necessary (all such existing and future rules and regulations are collectively
referred to as the "Rules"). During the Term of this Lease, Tenant shall at all
times comply with the Rules and shall ensure compliance with the Rules by
Tenant's employees, agents and contractors.
43. GUARANTY
[Intentionally Deleted)
44. ENTIRE AGREEMENT
This Lease, including any attachments made a part hereof, contains the
entire agreement of the parties and no representations, inducements, promises or
agreements, oral or otherwise, between the parties not embodied herein shall be
of any force or effect. No failure of Landlord to exercise any power given
Landlord hereunder, or to insist upon strict compliance by Tenant of any
obligation hereunder, and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof.
45. RADON GAS
As directed by Section 404.056, Florida Statutes: "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."
28
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46. ROOF EQUIPMENT
Tenant shall have the right to install a transmitter box (or boxes) on
the roof of the Building for the purpose of facilitating Tenant's business in
the Premises. The size, weight and location of such transmitter boxes shall be
subject to Landlord's prior written approval, which shall not be unreasonably
withheld.
47. RIGHT OF FIRST OFFER
Landlord hereby grants Tenant a right of first offer to lease the
entire third floor of the Building (the "Expansion Space") during the Term of
this Lease on the terms set forth in this paragraph 47. At such time as Landlord
desires to lease all or any part of the Expansion Space, Landlord shall give
Tenant the prior opportunity to expand the Premises to include the entirety of
the Expansion Space. Landlord shall make a written offer to Tenant stating the
terms upon which Landlord would be willing to lease the Expansion Space to
Tenant. Tenant shall have five (5) business days from the date of receipt of
such notice from Landlord to exercise its right hereunder to expand the Premises
to include the Expansion Space. If Tenant does not give such written notice to
Landlord within such five (5) business day period, then Landlord may lease such
space to a third party. If Tenant fails to give such written notice to Landlord
within such five (5) business day period, Tenant shall be deemed to have waived
its right of first offer, and Tenant shall no longer have a right of first offer
to lease the Expansion Space. The right of first offer set forth herein shall be
contingent upon this Lease then being in full force and effect and there does
not then exist any event of default by Tenant under this Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals, in
quadruplicate, the day and year first above written.
TENANT:
TRITON NETWORK SYSTEMS, INC.
By: /s/ [ILLEGIBLE]
----------------------------
Title: President
---------------------
LANDLORD:
GRAN CENTRAL CORPORATION,
a Florida corporation
By: /s/ [ILLEGIBLE]
----------------------------
Title: As Agent
---------------------
29
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EXHIBIT A
[PRELIMINARY SPACE PLAN
TRITON NETWORK SYSTEMS]
<PAGE> 34
EXHIBIT B
DESCRIPTION OF PROPERTY ON WHICH THE PROJECT IS SITUATED
Block A, SOUTH PARK UNIT THREE, as recorded in Plat Book 17, Page 28, Public
Records of Orange County, Florida. LESS: BEGIN at the most Easterly corner of
Block A, SOUTH PARK UNIT THREE, as recorded in Plat Book 17, Page 28, Public
Records of Orange County, Florida, thence run North 30 degrees 59 minutes 15
seconds West 2065.24 feet along the Easterly boundary of said Block A to the
most Northerly corner of said Block A; thence run South 59 degrees 00 minutes 44
seconds West 405.13 feet along the Northerly boundary of said Block A to a point
on the Easterly right-of-way line of South Park Circle as shown on the plat of
SOUTH PARK UNIT ONE, as recorded in Plat Book 14, Page 84, Public Records of
Orange County, Florida, said Easterly right-of-way line being a nontangent curve
concave Westerly having a radius of 699.16 feet; thence from a tangent bearing
of South 30 degrees 22 minutes 19 seconds East, run Southerly 100.43 feet along
the arc of said curve and said Easterly right-of-way line through a central
angle of 08 degrees 13 minutes 46 seconds to a point on the Southerly boundary
of that certain 100.00 foot wide Drainage and Utilities Easement as show on the
aforesaid plat of SOUTH PARK UNIT THREE; thence run North 59 degrees 00 minutes
44 seconds East 313.41 feet along said Southerly boundary; thence run South 30
degrees 59 minutes 15 seconds East 1965.25 feet along the Westerly boundary of
said 100.00 foot wide Drainage and Utilities Easement to a point on the
Southerly boundary of the aforesaid Block A; thence run North 59 degrees 00
minutes 25 seconds East 100.00 feet to the Point of Beginning.
CONTAINING: 78.601 Acres, more or less.
SUBJECT TO: Easements.
<PAGE> 35
EXHIBIT C
WORK LETTER
This work letter is part of the Lease dated March 26, 1998 between
TRITON NETWORK SYSTEMS, INC., as Tenant, and GRAN CENTRAL CORPORATION, as
Landlord, and shall be subject to all of the same terms, definitions and
conditions of the Lease. Landlord and Tenant agree as follows:
1. Landlord's Work:
1.1 Shell Improvements. Landlord shall provide, at its own expense, as
part of the base building improvements, the following (the "Shell Improvements")
to the Premises:
(a) Sprinkler System. Building is fully sprinklered per code with
protruding sprinkler heads with chrome plated escutcheon trim
rings.
(b) Heating, Ventilation and Air Conditioning. System consists of
main distribution ducts, perimeter supply slot diffusers and
associated fixtures to provide cooling, dehumidification,
ventilation and heating during Building Standard hours of
operation. Floors are divided into zones, each served by a
variable air volume unit and controlled by individual
thermostats. Heating will be supplied by utilizing fan-powered
boxes with electric heating elements located in exterior zones
and below roof areas. The HVAC system will be controlled and
monitored by an energy management system.
(c) Electrical. Building Standard electrical distribution system
is provided to tenant areas for further sub-distribution
(lighting and power). Panel spaces in the electrical closet
will be allotted on the basis of square footage.
(d) Window Covering. All exterior windows provided with 1"
horizontal mini-blinds in a white anodized aluminum finish.
2. Tenant Improvements:
2.1 Definition: Except for the Shell Improvements, all tenant
improvements in the Premises, to prepare the Premises for occupancy by the
Tenant (herein called the "Tenant Improvements"), will be charged to the cost or
the Tenant Improvements, subject to the terms of the Lease. Except as set forth
herein, Tenant accepts the Premises in their "as is" condition,
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and Landlord shall have no obligation to make any improvements to the Premises
not specifically set forth herein.
2.2 Plans and Specifications. An architect and engineers licensed by
the State of Florida shall prepare the architectural, mechanical and electrical
plans and specifications for the layout and improvements of the Premises
("Plans"). The plans shall be in such form and detail as required by Landlord in
order to determine (a) if the materials requested by Tenant meet the quality
standards prescribed by Landlord for "Building Standard" materials (as defined
in Paragraph 7 below); and (b) the effect of the Tenant Improvements on the
structural components and service systems and facilities of the Building.
(a) Space Plan: The "Space Plan" shall be a schematic space plan
for the Premises, including a full and accurate description of
the size and location of all partitions and doors as well as
equipment that could affect structural components and service
systems and facilities of the Building.
(b) Final Plan: The "Final Plans" shall consist of all plans and
specifications necessary to construct the Tenant
Improvements, including mechanical and electrical working
drawings. Tenant's Final Plans will be certified by an
architect licensed to do business in Florida and will be in a
form in which building and occupancy permits can be obtained.
2.3 Permits: The Plans will be submitted to the City for plan check and
permit. Any changes required by the City will be incorporated into the Plans and
any costs will be charged to the cost of the Tenant Improvements. Landlord will
not be responsible for delays caused by the City beyond what was anticipated in
the schedule.
2.4 "As-Built" Plans. A set of "as-built" plans of the Premises, in
such form and detail as required by Landlord, shall be delivered to Landlord
within 60 days after Tenant's occupancy. The "as-built" plans required by this
paragraph may consist of the original reproducible drawings from the Final
Plans, accurately marked to show all material changes from the Final Plans made
in actual construction of the Tenant Improvements.
2.5 Schedule. Tenant will comply with the attached Schedule of
Submissions and Approvals (Annex A) which outlines a timetable of
responsibilities for actions and response on the part of Tenant. Failure on the
part of Tenant to meet the requirements outlined in the Schedule may result in a
delay to the Tenant Improvements and non-extension of the Commencement Date.
3. Construction:
3.1 Contractor. Landlord will enter into a construction contract with a
contractor or contractors (the "Contractor") to perform the work for the Tenant
Improvements. For
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Landlord's services of coordination of the Tenant Improvements with the Shell
Improvements and other administrative work, Landlord or its affiliate will
receive a fee of 5% of the cost of the Tenant Improvements. Landlord's cost for
the Tenant Improvements less credits (including the Allowance) shall constitute
rent due pursuant to the Lease. All requests for extras or changes to the work
in addition to instructions regarding the work to be performed by the Contractor
shall be made through Landlord.
3.2 Performance. All work shall be performed in accordance with the
Plans for the Tenant Improvements and in conjunction with Shell Improvements as
built conditions.
3.3 Landlord's Services. Landlord shall provide at Landlord's expense
to Contractor all necessary utilities, elevators or hoisting, general security
and access during normal working hours. At times other than normal working hours
Contractor will reimburse Landlord for Landlord's actual HVAC costs, elevator
services and security.
3.4 Deliveries. The scheduling of deliveries of materials will be
coordinated with Landlord. In the event that Landlord reasonably determines that
a delivery during normal working hours would disrupt the normal operation of the
Building, Landlord may require that such delivery be made at a time other than
during normal working hours.
3.5 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 Tenant's 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 Tenant's Plans in all other aspects.
3.6 Special Materials. Should any material (such as wall covering,
carpet, special equipment, special fixtures, or the like) that Tenant specifies
have an unusually long delivery date or cannot be located within a reasonable
time in order for Landlord to complete the Premises, or Landlord finds that any
of the specified materials would delay completion of the Premises, 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 in writing 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 them not having been installed.
3.7 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 by May 1, 1998, or the Premises will be deemed substantially
complete without those items or other items delayed as a result of late delivery
by Tenant having been installed.
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3.8 Substantial Completion. Substantial Completion of the Premises is
defined as the availability of the Premises for its intended use,
notwithstanding the provisions of Paragraphs 3.6 and 3.7 above and punch list
items not affecting the functions of the Premises.
3.8.1 If Tenant requests any changes in the specifications for the
Building Standard improvements or in the approved Plans for the 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. However, Landlord may require prior to
proceeding with any changes, additional cash advances against Tenant's Costs (if
Landlord determines that Tenant's proposed changes will increase the amount of
such costs).
3.8.2 If Tenant requests changes in the Building Standard improvements
or in the approved Plans for the work to be performed hereunder, or if Tenant
shall otherwise delay the completion of the work, Tenant's obligations to pay
rent hereunder shall nevertheless commence on the date set forth in Section 1 of
the Lease and the "Commencement Date" under the Lease shall not be delayed
pursuant to Section 3 of the Lease.
4. Payment for Tenant Improvements.
4.1 All costs and expenses incurred for the construction of the Tenant
Improvements ("Tenant's Costs") shall be paid by Tenant, less any credit to
Tenant from Landlord pursuant to Paragraph 4.5 below.
4.2 Any modifications or additions required to the Premises' life
safety systems brought about by final schematic drawings and specifications
(such as the addition and/or relocation of demising walls, sprinkler heads,
exit lights, emergency lighting, firehorns, or the like) shall be a cost of the
Tenant Improvements.
4.3 Tenant's 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) Prior to occupancy of the Premises, 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.
4.4 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.
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4.5 Allowance. Tenant shall receive an allowance ("Allowance") of
$15.00 per square foot of Rentable Area in the Premises to offset the cost of
the Tenant Improvements.
4.6 Payment of Allowance. Landlord shall charge the cost of the Tenant
Improvements to the amount provided as an Allowance. Certain items of
Improvement work such as ceiling grid and tile, blinds, light fixtures and
mechanical work may have been supplied and/or installed by Landlord during the
construction of the Building for the benefit of Tenant. These items will be
charged to the Allowance on a unit cost basis. Tenant shall not be entitled to
receive any portion of the Allowance which is not used for the payment of the
Tenant Improvements, if the cost of the Tenant Improvements is less than the
Allowance.
4.7 Substitution and Credits. Tenant may request Landlord to substitute
alternate materials for the specified Building Standard materials provided such
substitutes are new and are of a quality at least comparable to those replaced
as approved by Landlord. In the event that Tenant chooses not to use or to
substitute for the Building Standard materials, the cost of the work will be
charged with the value of the materials purchased by Landlord for the Premises.
All Building Standard materials, whether installed by Landlord or not, shall be
purchased from Landlord.
5. Delay.
5.1 Force Majeure. "Force Majeure" as used in this Work Letter
means a strike or other labor trouble, governmental preemption of priorities or
other controls in connection with a national or other public emergency, or
shortage of fuel, supplies or labor resulting from a national or other public
emergency, or any other cause, whether similar or dissimilar to the above,
beyond Landlord's or Tenant's reasonable control that delays the construction of
the Tenant Improvements, except that if Tenant employs an outside contractor no
strike against such contractor or other labor trouble will be reason for any
postponement of Commencement Date.
Upon occurrence of an event of Force Majeure, Tenant shall within three
business days give notice to Landlord, specifying the event of Force Majeure and
the anticipated delay in completion of the Tenant Improvements resulting
therefrom. 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, provided, that in no event shall the Commencement Date be postponed
until later than the date of completion of the Tenant Improvements. "Completion
of the Tenant Improvements" as used in this Paragraph 5.1 means Substantial
Completion of the Tenant Improvements. When Tenant gives Landlord notice of an
event of Force Majeure, Landlord shall have the right, but shall not be
required, to take action to mitigate the effect of the event of Force Majeure
and to shorten the delay resulting therefrom.
5.2 Delays Caused by Landlord. In the event the completion of the
Tenant Improvements has been materially delayed by acts or omissions of
Landlord, then the
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Commencement Date shall be postponed by the number of days of delay caused by
such acts or omissions of Landlord; provided that upon occurrence of a delay
caused by Landlord, Tenant shall give notice of the delay to Landlord within
three business days, specifying the act or omission of Landlord that caused the
delay and the anticipated length of the delay. In the event that a delay caused
by an event of Force Majeure runs concurrently with a delay caused by Landlord,
the concurrent period of delay shall not be counted twice in determining the
period of postponement of the Commencement Date.
5.3 Other Delays. Except for delays caused by the acts or omissions of
Landlord or by events or 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 nonstandard
materials required for the Tenant Improvements; or on account of any other delay
caused by Tenant or the Contractor unless Landlord is the Contractor.
6. Conflicts. In the event of a conflict between the terms and conditions
of this Work Letter and the Lease, the provisions of the Lease shall control.
7. Building Standard Specifications. The following are the minimum
specifications for Building Standard improvements:
7.1 Demising Partitions. One-hour fire rated partitions to deck,
consisting of 5/8" type "X" gypsum board on both sides of 2-1/2" metal studs
with 2" sound insulation batt. Partitions are taped, floated and ready to
receive paint or wall covering as required for Tenant's design.
7.2 Interior Partitions. Seventy-five (75) linear feet per 1,000 usable
square feet.
(a) Framing Materials:
(i) Studs and Tracks: ASTM C645; GA-216; 25 gauge (except
where noted otherwise in the drawings) galvanized sheet steel, "C"
shape, 3-5/8" and 6" width as indicated in drawings.
(ii) Standard Furring, Framing, and Accessories: ASTM C645;
GA-216; 25 gauge galvanized sheet steel, hat shape, 7/8" depth.
(iii) Furring at fire rated floor assembly; 7/8" depth, hat
shape spacing and gauge as required to support weight of suspended
ceilings, light fixtures, fire sprinkler piping and air
conditioning duct work. Submit design data signed and Sealed by a
Structural Engineer registered in the State of Florida.
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(b) Gypsum Board Materials:
(i) Standard Gypsum Board: ASTM C36; 5/8 inch
thick, maximum available length in place; ends square cut, tapered edges.
(ii) Moisture Resistant Gypsum Board: ASTM C630;
5/8 inch thick, maximum available length in place; ends square cut, tapered
edges.
(iii) Fire Rated Gypsum Board: ASTM C36; fire
resistive type, UL or WH rated; 5/8 inch thick, maximum available length in
place; ends square cut, tapered edges.
(c) Acoustic Insulation at Demising Partitions
(i) Unfaced Fiber Glass Batts:
(i) Material: Flame spread 25 or
less ASTM E84; smoke development 50 or less ASTM E84; 2 inches thick;
width to match stud spacing and/or 24" wide above suspended ceilings.
(ii) Acoustic Sealant: ASTM C834; Non-hardening:
non-sagging, non-staining, non-skinning, paintable latex sealant for use in
conjunction with gypsum board.
(d) Maintain clearance under structural building members
to avoid deflection transfer to studs. Provide extended leg ceiling runners.
(e) Acoustic Accessories Installation
(i) Place acoustic insulation in partitions
tight within spaces, around cut openings, behind and around electrical and
mechanical items within or behind partitions, and tight to items passing
through partitions.
(ii) Install acoustic sealant at gypsum board
perimeter at:
(1) Metal Framing: One bead.
(iii) Caulk all penetrations of partitions by
conduit, pipe, duct work, and rough-in boxes.
(f) Wall Joint Treatment
(i) Tape, fill, and sand exposed joints, edges,
and corners to produce smooth surface ready to receive finishes. Fill and sand
fastener heads and surface defects to produce smooth surface ready to receive
finishes.
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(ii) Feather coats onto adjoining surfaces so
that camber is maximum 1/32 inch.
(iii) Taping, filling, and sanding are not
required at surfaces behind adhesive applied ceramic tile.
(g) Tolerances
(i) Maximum Variation of Finished Gypsum Board
Surface from True Flatness: 1/8 inch in 10 feet in any direction.
7.3 Suite Entry Door and Hardware. Full height, including solid
core oak door with metal frame closer. Hardware is a heavy duty level type
lockset provided in Building Standard finish. One (1) unit each per tenant
suite. MANUFACTURERS: Locksets/Cylinders/Closers - Yale (or approved equal);
Butt Hinges - Hager (or approved equal); Stops/Silencers/Kick Plates - Rockwood
(or approved equal).
7.4 Interior Doors and Hardware. Hardware is a heavy duty lever
style latchset provided in Building standard finish. One (1) unit per 500
usable square feet. MANUFACTURERS: Locksets/Cylinders/Closers - Yale (or
approved equal); Butt Hinges - Hager (or approved equal); Stops/Silencers/Kick
Plates - Rockwood (or approved equal).
(a) Flush Interior Doors:
(i) 7'-0" high, 1-3/4 inches thick; solid core,
wood face, 5-ply PC-5 construction.
(ii) Core: Solid, hot glued to stiles and rails,
with wood lock blocks.
(iii) Veneer Facing: AWI Premium quality Red Oak
species wood, rift cut with book matched grain in each leaf and match each
leaf in pair of doors.
(iv) ADA compliant door closers and coordinators
for tenant doors.
(v) Tenant entry doors must have master
cylinder to match building system keying door lock master keyed to shell
building keying system.
(b) Comply with ADA door opening force and sweep period
requirements. Provide adjustable units complying with ANSI A117.1 provisions
for door openings force and delayed action closing. Comply with the following:
(i) Fire Doors: Minimum opening force allowable
by the appropriate administrative authority.
(ii) Interior Hinged Doors: Maximum 5 lbs.
opening force.
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(iii) Exterior Hinged Doors: Maximum 8.5 lbs.
opening force.
(c) Door Locks. Landlord has established a factory grand
master keying system. Key door locks to building master. Review with Landlord
and obtain Landlord's written approval.
(d) Hardware (Exterior)
(i) Weather Stripping: Manufacturer's standard.
(ii) Sill Sweep Strips: Manufacturer's standard.
(iii) Threshold: Extruded aluminum, one piece
per door opening, ribbed surface.
(iv) Coordinator and Carry Bars: Provide
coordinator and carry bars as required in the hardware sets. Coordinator and
carry bars are required to meet ANSI A156.2 type 21.
(v) Exterior doors in store front systems will
be aluminum.
(vi) Exterior doors in masonry openings shall be
galvanized to ASTM A525.
(vii) Frames should be welded with 2" wide face,
double rabbited and mitered corners welded and ground smooth. They should be
made of cold rolled 14 ga. galvanized steel for exterior openings and 16 ga.
for interior openings. These doors should also have silencers and be primed
ready for paint.
7.5 Painting. Two coats of flat latex paint selected from
Building Standard colors. Maximum of two colors per tenant suite as required
for Building Standard Partitions.
7.6 Electrical Equipment. One (1) outlet per 150 usable square
feet.
(a) Record Drawings
(i) The National Electrical Code (NEC), Florida
Electrical Code, National Electrical Safety Code, NFPA, ADA, and OSHA shall
establish the minimum requirements for installation; but in addition, all work
shall also comply with Local, State, County, or Municipal code requirements.
(ii) Be familiar with local code requirements
and local utility company standards for electrical service requirements, and
make installation in accordance with such requirements.
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(iii) The Architect/ Engineer will maintain
this set of drawings in an accessible location for review at any time. The
intent of this set of drawings is to create an "As-Built" drawing package as
the project proceeds.
(b) Conduit
(i) Electrical metallic tubing (EMT) shall be
restricted for use in building interior only. Do not install underground or
where exposed to moisture. EMT fittings may be set-screw type.
(ii) Flexible conduit shall be used for final
connections to motors appliances, and vibrating equipment, Length not to exceed
18" for motor or vibrating equipment or 6' maximum for lighting fixtures.
Liquid-tight flexible conduit shall be used in areas exposed to moisture.
(iii) Electrical non-metallic tubing (ENT) shall
not be used.
(c) Outlet Boxes
(i) All outlet boxes, extensions, and cover
frames shall be galvanized sheet steel. Boxes shall be 1-1/2" deep, minimum,
and shall be sized to accommodate the installed conduit, conductors, and
device. Boxes to which fixtures are installed shall have studs and straps to
support fixture weight.
(d) Pull and Junction Boxes
(i) Pull and junction boxes shall be
constructed of code-gauge galvanized sheet steel and fitted with screw covers
held in place with corrosion-resistant machine screws.
(ii) Furnish boxes where noted on drawings or
where necessary to facilitate conductor pulling and splicing. Splicing of
conductors is to be avoided as much as possible with continuous lengths being
preferred. Box sizes shall conform to sizes required by NEC or as indicated on
drawings.
(e) Wiring Devices
(i) All devices shall be commercial
specification grade and product of one manufacturer throughout project except
as otherwise noted. Device color shall be white, black or stainless in all
finished areas.
(ii) Wall switches shall be 20 ampere, 120-277
volt, AC, toggle handle, quiet type, with side or back wiring terminals.
Switches shall be single or multi-pole, as indicated on drawings.
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(iii) Duplex receptacles shall be straight blade,
20 ampere, 125 volt, AC, of grounding type, with side or back wiring terminals.
(iv) Device plates shall be smooth plastic, 0.10"
thick, ivory color in all finished areas. Surface-mounted device outlets
shall be fitted with appropriate sheet steel or cast metal cover plates to
match device and box.
(v) Where indicated, gang devices together in
common boxes with device straps bounded to metallic systems or separate
grounding conductor.
(vi) Wiring device mounting height shall be as
follows, unless otherwise noted or required:
Light switches and controls - 48" above
floor to top
Receptacles - 18" above floor to bottom
Telephone, TV, and computer outlets -
18" above floor to bottom
Fire alarm horn/strobe devices -
8'-0" above floor to center
(f) Lighting Fixtures (1 per 85 sq.ft.)
(i) Furnish and install all lighting fixtures
as shown on drawings and specified in fixture schedule. The fixture schedule is
intended as a guide for selection. Unless otherwise noted, fixtures of other
manufacturers will be acceptable if of similar design and characteristics,
subject to approval.
(ii) Ballasts for fluorescent fixtures shall be
low-energy type, high-power factor, ETL certified, and CBM approved, Class P,
automatic thermal resetting variety with south rating "A". Complete ballast
information must be provided with the lighting submittal package.
(iii) All light fixtures shall be installed in
accordance with the manufacturer's installation instructions and
recommendations.
(iv) Connect single-connected fixtures, surface
or stem hung, with heat-resistant fixture wire. Connect multiple-connected
fluorescent fixtures, surface or stem hung, with type THHN heat-resistant
thermoplastic wire of a size indicated for branch circuit.
(v) Support fixtures to be recessed in readily
removable tile ceilings (lay-in type) from the T-bar tile support and connect
to remote-mounted 4" square junction boxes with approved 6' long, 3/4" flexible
conduit "fixture whip" with grounding conductor bonded between conduit system
and fixture.
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(g) Lamps
(i) Furnish and install one complete set of
lamps for all installed fixtures as designated in fixture schedule, on
drawings, or specified herein. All lamps shall be of proper design to fit
specific fixture indicated. Lamps used during the construction period shall be
replaced after "final inspection", as part of the final "punch list" work.
(h) Raceways
(i) Provide approved fire-proof sealant around
all conduit penetrations of floor slabs and fire walls.
(ii) Install in all empty conduit systems with
suitable nylon pullstring and blank off to prevent entrance of foreign matter
until conductors are installed.
(iii) At motor connections, flexible connections,
or connections subject to vibration, use flexible galvanized conduit with PVC
outer jacket with grounding conductor, not to exceed 18" total length.
(iv) Conduit shall not be smaller than 1/2"
trade size and must be sized to accept conductors indicated.
(i) Telephone, TV, and Computer Conduit System
(i) Install conduits and backboards as shown on
drawings. Conduit shall be as previously specified with 3/4" as minimum size.
Provide all conduits with pullwire. Backboards shall be 3/4" plywood painted
light gray with fire-resistant paint.
(j) Fiber Optic Cable System
(i) All cabling shall be installed in a neat
and workmanlike manner. Minimum cable and unjacketed fiber bend radii as
specified by cable manufacturer shall be maintained.
(ii) Maximum pulling tensions as specified by
the cable manufacturer shall not be exceeded during installation. Post
installation residual cable tensions shall be within cable manufacturer's
specifications.
(iii) Fiber optic cabinets, hardware, and cable
entering the cabinet shall be installed in accordance with manufacturers'
instructions. Minimum cable and unjacketed fiber bend radii as specified by
cable manufacturer shall be maintained.
C-12
<PAGE> 47
(k) All equipment, installation, and wiring shall comply
with acceptable industry specifications and standards for performance,
reliability, and compatibility and be executed in strict adherence to local
codes and standard practices.
(l) TV and Fiber Optic cable systems will be placed in
the main telephone room on the ground floor. It will be up to the tenant to
provide the hardware and cabling from that point into their space.
7.7 Floor Covering. Building Standard carpeting or tile in one
style and one color throughout the Premises.
(a) Warranty - Carpet
(i) Provide a standard, printed, non-prorated
warranty from the manufacturer. All warranty items to be full term, not
prorated for the indicated period. If the product fails to perform as warranted
when properly installed and maintained, the affected area will be repaired or
replaced at the discretion of the manufacturer.
(b) Installation
(i) Apply carpet and adhesive in accordance
with manufacturers' instructions.
(ii) Verify carpet match before cutting to
ensure minimal variation between dye lots.
(iii) Join seams by sewing, hot adhesive tape
and/or hot welding method as recommended by the carpet manufacturer. Form
seams straight, not overlapped or peaked, and free of gaps.
(iv) Lay carpet tight and flat on subfloor, well
fastened at edges, with a uniform appearance. Provide monolithic color,
pattern, and texture match within any one area.
(v) Do not change run of pile in any room where
carpet is continuous through a wall opening into another room. Locate change of
color or pattern between rooms under door centerline. Maintain direction of
carpet pattern and texture.
(c) Vinyl Tile Flooring
(i) Lay flooring with joints and seams parallel
to building lines to produce symmetrical tile pattern. Begin pattern at room
center.
(ii) Install tile to basket weave pattern. Allow
minimum 1/2 full size tile width at room or area perimeter.
C-13
<PAGE> 48
(iii) Extend flooring into toe spaces, door
reveals, and into closets and similar openings. Extend flooring into ADA
accessible cabinet(s) below sink(s). Terminate flooring at centerline of door
openings where adjacent floor finish is dissimilar.
(iv) Install edge strips at unprotected or
exposed edges, and where flooring terminates. Secure metal strips before
installation of flooring with stainless steel screws.
(v) Scribe flooring to walls, columns,
cabinets, floor outlets, and other appurtenances to produce tight joints.
(vi) Install flooring in pan type floor access
covers. Maintain floor pattern.
(vii) At accessible sink cabinets and at movable
partitions, install flooring without interrupting floor pattern.
(viii) Install feature strips, edge strips, and
floor markings where indicated. Fit joints tightly.
7.8 Vinyl Floor Base. 4" cove vinyl base on all walls in Building
Standard color as required for Building Standard partitions.
7.9 Ceiling Tile. Install ceiling tile from base building
specification as required for Building Standard ceiling grid system.
(a) Installation - Lay-in Grid Suspension System
(i) Install suspension system in accordance
with ASTM C636 and manufacturer's instructions and as supplemented in this
section.
(ii) Install system capable of supporting
imposed loads to a deflection of 1/360 maximum. Attach all hangers to second
floor fireproofing metal furring through fire rated drywall careful not to
damage or penetrate fire rated drywall barrier.
(iii) Locate system on room axis according to
reflected ceiling plan drawings.
(iv) Install after major above ceiling
mechanical, electrical and plumbing work is complete. Coordinate the location
of hangers with other work.
(v) Hang suspension system independent of
walls, columns, ducts, pipes and conduit. Where carrying members are spliced,
avoid visible displacement of face plane of adjacent members.
C-14
<PAGE> 49
(vi) Where ducts or other equipment prevent the
regular spacing of hangers, reinforce the nearest affected hangers and related
carrying channels to span the extra distance.
(vii) Do not support components on main runners
or cross runners if weight causes total dead load to exceed deflection
capability. Support light fixture loads by supplementary hangers located at
each corner; or support components independently.
(viii) Do not eccentrically load system, or
produce rotation of runners.
(b) Tolerances
(i) Non-fire Rated Grid: ASTM C635,
intermediate duty; exposed T; double web; components die cut and interlocking.
(ii) Grid Materials: Commercial quality cold
rolled steel with galvanized coating.
(iii) Regular Grid Surface Width: 15/16 inch or
concealed DX suspension system (Bi-Parting Access). See List of Finishes.
(iv) Grid Finish: White
(v) Accessories: Stabilizer bars, clips,
splices, perimeter moldings and hold down clips required for suspended grid
system.
(vi) Support Channels and Hangers: Galvanized
steel; size and type to suit application and ceiling system flatness
requirement specified.
(vii) Hanger Wire: Galvanized carbon steel; soft
temper; prestretched; yield stress at least three time design load but not less
than 12 gauge.
(c) Installation - Acoustic Units
(i) Install acoustic units in accordance with
manufacturer's instructions.
(ii) Fit acoustic units in place, free from
damaged edges or other defects detrimental to appearance and function.
(iii) Lay directional patterned units one way
with pattern parallel to longest room axis. Fit border trim neatly against
abutting surfaces.
7.10 Sprinkler System.
(a) Design of Sprinkler System
C-15
<PAGE> 50
(i) Design of fire extinguishing sprinkler
systems shall be by hydraulic calculations for uniform distribution of water
over the design area and shall conform to NFPA 13 and meet all required codes.
(ii) Sprinkler Heads shall have nominal
0.50-inch orifice. Release element of each head shall be of the intermediate
temperature rating or higher as suitable for the individual location which it
is installed. Provide concealed head sprinklers for all sprinklers installed in
finished walls and ceilings. Brass finish sprinklers may be used in unfinished
areas.
(iii) Location of Sprinkler Heads: Heads in
relation to the roof soffits and the spacing of sprinkler heads shall not
exceed that permitted by NFPA 13 for light hazard occupancy.
(iv) All piping must be held as high as
possible, sprinkler heads shall remain clear of column line locations.
(v) Inspector's Test Connection: Provide test
connections for each sprinkler system or portion of each sprinkler system
equipped with an alarm device and locate at the hydraulically most remote part
of each system. Provide test connection piping to a location where the
discharge will be readily visible and where water may be discharged without
damage. A test connection shall be installed on the end of the most remote
sprinkler pipe conforming to NFPA 13.
(vi) Escutcheon Plates: Provide approved
one-piece or split-hinge type plates for piping passing through floors, walls,
and ceilings in both exposed and concealed areas. Provide chromium-plated brass
plates where pipe passes through finished walls and finished ceilings. Provide
other plates of steel or cast iron with aluminum paint finish. Securely anchor
plates in place with set screws or other approved positive means.
(vii) As-Built (Record) Working Drawings: After
completion, but before final acceptance of the work, furnish a complete set of
drawings of each sprinkler system for record purposes.
(viii) Acceptance Test Report: After completion of
all testing and inspections, furnish a complete copy of all Inspection,
Material, and Test Certificates for record purposes.
(b) Products
(i) General
(A) All equipment, devices, and
accessories shall be approved for fire protection use and shall be either UL
listed or FM approved.
C-16
<PAGE> 51
(ii) Sprinklers
(A) General
1. UL approved.
2. 165 Temperature Rating.
3. By one manufacturer, unless indicated or
specified otherwise, and/or as approved
by Architect.
(iii) Pendant Heads:
(A) Chrome plated finish concealed head.
(B) Adjustable semi-recessed fusible link.
(C) Escutcheon Plates:
1. One piece with 1/2" (maximum) depth.
2. Chrome plated finish.
(iv) Upright Heads: Standard bronze finish, fusible link.
(v) Sidewall Heads: Chrome plated finish.
(vi) Schedule:
(A) Pendant Heads: Areas with finished ceilings.
7.11 Mechanical System.
(a) HVAC Duct Work and Accessories
(i) Requirements of Regulatory Agencies: All work shall
conform to the applicable requirements of the State, County and City
codes and NFPA Standards. If in any part the plans and specifications
conflict with the above codes, it shall be the responsibility of the
Contractor to notify the Architect before the contract has been
negotiated. In the event any conflict develops after the contract has
been negotiated, it shall be the responsibility of the Contractor to
conform with the above codes at no additional expense to Landlord and
shall advise the Architect before making any changes.
(ii) Supply, return, and exhaust duct work shall be
galvanized sheet steel. Fabricate sheet metal duct work in accordance
with the duct manual and designed for the following minimum static
pressures.
C-17
<PAGE> 52
(iii) Noise produced at each diffuser, register, grille, or
other air distribution device shall not exceed the noise criteria
levels indicated below by occupancy, based on sound pressure levels in
db referenced to 0.0002 microbars. Coordinate air distribution devices,
sound attenuation measures, and equipment actually provided to insure
that these design goals are not exceeded by the system installed.
(A) Office Areas: NC35 noise criteria level.
(iv) Pressure drop across any air distribution device shall
not exceed 0.15 in w.g. static pressure unless otherwise indicated.
(v) All changes made to the mechanical system must be
reviewed by building management and building mechanical engineer.
(b) Submittals
(i) Shop Drawings and Product Data: Prior to placing any
work submit a copy of manufacturer's product data including
certification of compliance with the requirements specified herein to
Landlord. Submittals shall include:
(A) Grilles, Registers and Louvers
(B) Dampers and Accessories
(C) Duct Insulation
(D) Flexible Duct and Connection Fittings
(E) Variable Air Volume Boxes
(F) Fan Terminal Units
(G) Ventilation or Exhaust Air Fans
(H) Fire Dampers
(ii) Submit operation and maintenance data.
(iii) Include manufacturer's descriptive literature,
operating instructions, and maintenance and repair data.
(c) Warranty
(i) Provide one-year manufacturer's parts warranty from
date of system acceptance by the Architect.
(d) HVAC Duct Work
(i) Install all duct work in accordance with SMACNA
standards. Install extractors and air balance dampers in all branch
takeoffs to supply diffusers and elsewhere, as indicated or noted on
the drawings. Paint inside of diffusers and duct visible through
diffusers flat black.
C-18
<PAGE> 53
(ii) Install flexible ducts with a minimum run and
with a minimum of bends. No run shall exceed 8' and bends shall have a
minimum radii of 1-1/2 times the diameter of the duct measured from
the center line. Seal all joints and connections. Support flexible
duct from building structure. Do not lay on light fixtures or ceiling.
(iii) Install all exposed duct work tight to slab unless
otherwise noted.
(e) Duct Insulation
(i) Provide 2" thick flexible fiberglass duct insulation
for all exposed galvanized steel supply air ductwork. Insulation shall
have a flame-spread rating of not more than 25 and a smoke-developed
rating of not more than 50 in accordance with NFPA 90A.
(ii) Insulation shall be aluminum foil-backed type.
(iii) Insulation properties to ensure minimum "R" of 7.2 for
all exposed steel supply air duct work.
(iv) Installation of rigid fiberglass duct work insulation:
(A) Install insulation products in accordance
with manufacturer's written instructions, and in accordance
with recognized industry practices to ensure that insulation
serves its intended purpose.
(B) Install insulation materials with smooth and
even surfaces.
(C) Clean and dry duct work prior to insulating.
Butt insulation joints firmly together to ensure complete and
tight fit over surfaces to be covered.
(v) Maintain integrity of vapor-barrier on duct work
insulation, and protect it to prevent puncture and other damage.
(f) Ductwork Accessories (shall match Building Standard in type
and manufacturer)
(i) Manual Volume Dampers: Shall be constructed of
galvanized steel with zinc-plated hardware. Provide locking quadrant
damper operators.
(ii) Turning Vanes: Shall be double thickness with 24-gauge
rails and hollow vanes,
(iii) Access Doors: Shall be 12" x 10" except access doors in
ducts less than 22" wide shall be 12" x 4" less than the duct width.
All access doors shall be hinged, latched with a Ventlock No. 90 sash
type latch and be fitted with a rubber gasket
C-19
<PAGE> 54
to insure a leak-tight fit. Access doors on insulated ducts shall be
double-faced with insulation between the sheet metal door faces.
(iv) Fire Dampers: Fire dampers shall be UL labeled,
multiple blade curtain type in accordance with NFAP 90A requirements.
Damper blades shall be held in place by 165 F fusible link and shall
stack out of air stream on all sides. Dampers shall be Ruskin Model
DIBD 20 and DIBD 2CO, or equal; and installation shall comply with the
UL Installation Data Sheets furnished with the dampers.
(v) Equipment, Piping and Duct Hangers: Provide all
required angles, brackets, clamps, anchors, braces, frames, rods and
other miscellaneous steel items as necessary for support of equipment,
piping and duct work specified herein. Support attachment shall not
damage the integrity of the structural member to which it is attached.
Support shall be in accordance with SMACNA duct manual.
(vi) Flexible Ductwork: Shall be UL listed when tested in
accordance with UL-181, Class I-Standard for Safety of Air Ducts. Duct
insulation resistance shall be a minimum of R-6. Flexible duct shall
not be less than 4' in length or exceed 8' in length for any individual
runout, and shall be supported to prevent collapse or movement.
Sections of flexible duct shall not be connected end-to-end.
(vii) Acoustical Duct Liner: Line all sheet metal return air
plenum connections to the air handling units.
(A) Duct Liner: Shall be 2" thick, three lb.
density fiberglass duct liner with the surface in contact
with moving air stream stabilized with black pigmented
neoprene. Duct liner shall comply with requirements of NFPA
90A with regard to flame spread and smoke developed ratings.
(viii) VAV Units and Pan Terminal Units - Intermittent Fan
(A) Additional VAV units and FTU's shall match
building standard in type and manufacturer.
(B) Penetration of Building Elements:
1. Where fire dampers or smoke dampers are
required, provide angles in accordance with the Duct Manual
and NFPA Standard No. 90A. Maintain the fire rating of the
penetrated building element at all fire dampers.
2. Where no fire dampers are required
provide a snug-fitting 1-1/2" by 1-1/2" 20-gauge galvanized
sheet metal angle around each duct. Apply a bead of UL
approved fire-rated sealant caulking between angle and
building surface, and secure angle to surface. Where the
C-20
<PAGE> 55
opening size or shape is such that these 1-1/2" angles will
not completely close the opening, first install a flat
closure plate of 20-gauge galvanized sheet metal over a bead
of caulking, and install the angles to this plate. Where one
side of the penetration is concealed from view, only the
exposed side need be closed. Where both sides are concealed
from view, only one side need be closed. On the top side of
floor or roof penetrations, use support angles plus
supplemental matching angles to close the opening instead of
the 20-gauge sheet metal angles specified above.
(ix) Screened Openings: Where screened openings are called
for on the drawings, fabricate them of 1" mesh aluminum wire 0.063" in
diameter with 1-1/4" x 1-1/4" x -" angle iron frames.
(x) Furnish and install all duct supports including
anchors, hangers, and all miscellaneous structural steel not
specifically shown on the contract drawings, but required to properly
support the ductwork. Support components shall be attached to the
structural steel or masonry without damaging the integrity of the
existing structure. Duct work hangers shall comply with "Duct Manual".
(xi) Install all duct work up tight to structure above. All
duct transitions shall be made upward to maintain duct work tight to
structure above.
(xii) Flexible duct work shall be secured with stainless
steel clamps.
(xiii) Provide access doors at all fire dampers.
(xiv) Provide flexible connections immediately adjacent to
equipment in ducts associated with fans and motorized equipment.
(xv) Variable Air Volume Terminals:
(A) Install air terminals as indicated, and in
accordance with manufacturer's installation instructions.
(B) Install each unit level and accurately in
position indicated in relation to other work, and maintain
sufficient clearance for normal service and maintenance, but
in no case less than that recommended by manufacturer.
(C) Upon completion of installation and prior to
initial operation, test and demonstrate that air terminals,
and duct connections to air terminals, are leak-tight.
C-21
<PAGE> 56
Building Standard items shall be determined by Landlord's architect, subject to
the applicable terms and provisions of this Lease. Building Standard exit
lighting, emergency lighting, and fire and safety equipment required by
applicable codes placed in the Building's Common Areas shall be furnished by
Landlord.
Deliveries must be arranged with Landlord. Contractor is responsible for
protecting Common Areas including elevators and stairwells. Shut down of
building systems must be coordinated with Landlord (water, fire sprinkler, HVAC,
etc.).
Any core drillings, jack hammering, demolition, masonry cutting, etc., must be
coordinated with Landlord.
Deliveries made before 8:30 a.m., after 5:00 p.m., Saturdays, Sundays or
holidays must obtain special permission from Landlord.
"TENANT" "LANDLORD"
TRITON NETWORK SYSTEMS, INC. GRAN CENTRAL CORPORATION
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- --------------------------------- -----------------------------------
Title: President Title: As Agent
- --------------------------------- -----------------------------------
Address: Address: c/o CNL Corporate Properties, Inc.
455 South Orange Avenue, Suite 400
Orlando, Florida 32801
Attention: Toby Arnheim
Attention:
- ---------------------------------
C-22
<PAGE> 57
ANNEX A TO EXHIBIT C
SCHEDULE OF SUBMISSIONS AND APPROVALS
<TABLE>
<CAPTION>
ITEM DEADLINE
---- --------
<S> <C> <C>
(1) Preparation of Space Plan by Tenant and Five (5) business days after the
submission to Landlord complete execution and delivery of
the Lease
(2) Preparation of Final Plans by Tenant and Ten (10) business days after the
submission to Landlord complete execution and delivery of
the Lease
</TABLE>
<PAGE> 58
EXHIBIT D
RULES AND REGULATIONS
1. Tenant shall not obstruct the sidewalks, entry passages, corridors,
halls, elevators or stairways, or use them for any purpose other than ingress
and egress. Tenant shall not cover or obstruct the floors, or skylights and
windows which reflect or admit light into any place in the Building in which
the Premises are located. Nothing shall be thrown by Tenant, its agents,
employees or contractors out of the windows or doors, or down the passages of
the Building. The water closets and other water apparatus shall not be used for
any purpose other than those for which they were constructed, and no sweepings,
rubbish, or other obstructing substances, shall be thrown therein. The cost of
repairing any damage resulting to any water apparatus, or to associated systems
from the misuse of same by Tenant, its agents, employees or contractors, shall
be paid by Tenant.
2. Tenant shall not inscribe, paint, or affix any advertisement or
other notice to any part of the outside or inside of the Building, except upon
the doors of the Premises. Any advertisement or other notice placed upon the
doors of the Premises shall be of such order, size and style, and at such places
as shall be designated by Landlord. Signage, at the entrance of the Premises,
identifying Tenant as a tenant of the Building, will be provided by Landlord in
accordance with the signage provisions of this Lease.
3. Tenant shall not do or permit to be done in the Premises, or bring
or keep anything therein, which shall in any way increase the rate of fire
insurance on the Building or the Property, (only artificial and fire resistant
Christmas trees and/or decorations are permitted), or obstruct or interfere
with the rights of other Tenants, or in any way injure or annoy them, or
conflict with any of the rules and ordinances of the Board of Health. Tenant,
its agents, employees and contractors shall maintain order in the Building,
shall not make or permit any improper or offensive noise within the Premises or
the Building, shall not permit any noxious or offensive odors to permeate any
of the common areas of the Building or Project, and shall not interfere in any
way with other tenants rights of quiet enjoyment or the rights of quiet
enjoyment of those having business with other tenants of the Building. No rooms
shall be occupied or used as sleeping lodging apartments at any time. No part
of the Building shall be used or in any way appropriated for gambling, immoral
or other unlawful practices, and no intoxicating liquors shall be sold in said
Building.
4. Tenant shall not employ any persons, other than Landlord's janitors
(who will be provided with passkeys to the offices), for the purposes of
cleaning or taking charge of the Premises.
5. Tenant shall strictly comply with any and all regulations set forth
by Landlord for the operation, maintenance and management of the parking areas
adjacent to the Building or buildings in which the Premises are contained.
6. No animals, birds, bicycles or other vehicles, or other
obstructions, shall be allowed in the offices, halls, corridors, elevators or
elsewhere in the Building.
<PAGE> 59
7. No painting shall be done, nor shall any alterations be made to any
part of the Building by erecting or changing any partitions, doors or windows,
nor shall there be any nailing, boring or screwing into the woodwork or
plastering, nor shall any connection be made to the electric wires or gas or
electric fixtures, without the consent in writing on each occasion of Landlord
or its agent. Landlord requires Tenant to monitor all installation of
communications and other non-electrical wiring to ensure that all installed
wiring is of a plenum-rated type and that all relevant building and fire
codes concerning plenum-rated wiring are maintained by the installer. All glass,
locks and trimmings in or upon the doors and windows of the Building shall be
kept whole and, when any part thereof shall be broken, the same shall be
immediately replaced or repaired and put in order, under the direction and to
the satisfaction of Landlord or its agents, and shall be left whole and in good
repair. Tenant shall not injure, overload or deface the Building, the woodwork
or the walls of the Premises.
8. Only two keys for each office within the Premises will be furnished
to Tenant without charge. No additional locks or latches shall be put upon any
door without the consent of Landlord. Tenant, at the termination of this Lease,
shall return to Landlord all keys to doors in the Building and Premises.
9. Landlord, in all cases, reserves the right to prescribe the maximum
weight, and the location of iron safes or other heavy articles placed in the
Premises.
10. The use of burning fluid, camphor, alcohol, benzene, kerosene or
anything except or electricity for lighting the Premises, is prohibited. No
offensive gases or liquids are permitted in the Premises or in the Building.
11. Tenant, at its own expense, and only with Landlord's consent, shall
install window blinds or window covering, the shape, color and material of which
must be prescribed by Landlord. No awning shall be placed on the Building.
12. In accordance with local governmental law, the Building is a "No
Smoking" building, and smoking cigarettes, cigars, pipes, or any other type of
smoking instrument by anyone in any portion of the Building is strictly
prohibited. As an accommodation to tenants of the Building, Landlord may from
time to time designate certain portions of the Property as areas where smoking
is permitted ("Smoking Areas"). Smoking is not permitted on any portion of the
Property other than Smoking Areas designated by Landlord. The designated Smoking
Areas may be relocated or eliminated entirely by Landlord at any time, in
Landlord's sole discretion. Littering is strictly prohibited on all portions of
the Property, including but not limited to the Smoking Areas.
2
<PAGE> 60
EXHIBIT "E"
OPTION TO RENEW
A. Landlord hereby grants Tenant the option to renew the term of this
Lease for one (1) additional term of five (5) years (the "Renewal Term"),
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 twelve (12)
months prior to the expiration of the Lease Term; 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 fails to cure any default
under this Lease prior to the commencement of the Renewal Term, subject to
applicable notice and grace periods, the Renewal Term shall be immediately
cancelled, unless Landlord elects to waive such default, and Tenant shall
forthwith deliver possession of the Premises to Landlord as of the expiration
or earlier termination of the Lease Term.
D. Tenant shall be deemed to have accepted the Premises in "as-is"
condition as of the commencement of the 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 the Renewal Term, except as follows:
(1) The "Commencement Date" for the purposes of this Lease shall be
the first day of the Renewal Term.
(2) The "Base Rental" for the Renewal Term shall be at market rate
in the renewal year, but in no event shall such rate be less than the
Base Rental for the year immediately preceding the first year of such
Renewal Term.
(3) Following expiration of the Renewal Term as provided herein,
Tenant shall have no further right to renew or extend this Lease.
1
<PAGE> 61
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.
2
<PAGE> 62
[LOGO]
CNL CORPORATE PROPERTIES, INC.
Mr. Brian Andrew
April 21, 1998
Page 2
New Rental Schedule:
Year (1) $19.04 p.r.s.f.
Year (2) $19.54 p.r.s.f.
Year (3) $20.06 p.r.s.f.
Year (4) $20.60 p.r.s.f.
Year (5) $21.16 p.r.s.f.
Additionally, the costs associated with the completion of the Lab areas in the
Triton premises have not been fully determined. Once these costs are determined,
we will get together to agree how those costs shall be paid for by Triton.
Thank you in advance for your prompt attention to this matter.
Sincerely
/s/ Damien Madsen
- ------------------------
Damien Madsen
Senior Marketing Manager
DM/mjv
Cc: Toby Arnheim
Accepted and agreed to this 21 day of April 1998.
/s/ Brian Andrew
- ------------------------
Brian Andrew
President and CEO
Triton Network Systems, Inc.
<PAGE> 63
[LOGO]
CNL CORPORATE PROPERTIES, INC.
April 21, 1998
Mr. Brian Andrew VIA FACSIMILE
President and CEO (407) 903-0999
Triton Network Systems, Inc.
7547 Commerce Center Drive
Orlando, Florida 32819
RE: 8529 SouthPark Circle 1 Office Building one
Gran Park at SouthPark
Orlando, Florida
Dear Brian:
Pursuant to the lease agreement between Gran Central Corporation as Landlord and
Triton Network Systems, Inc. as Tenant at the above referenced project, I have
attached a summary of the costs associated with the Tenant Improvements for the
premises. Please review the attached Exhibit "Am".
Below I have summarized, for your review, the costs associated with the Tenant
Improvements relative to the allowance that was provided to Triton in the Lease.
Total Below Ceiling Cost: $12.22 per rentable square foot (p.r.s.f.)
Total Tenant Allowance: $15.00 p.r.s.f.
---------------
$ 2.78 p.r.s.f. (credit)
Total Costs Outside of
Tenant Allowance: $ 5.46 p.r.s.f.
Less Credit: $(2.78) p.r.s.f.
---------------
$ 2.68 Due from Triton
The total due from Triton is $2.68 p.r.s.f. or $99,438,72. The Landlord has
agreed to amortize this into the rental obligation outlined in the Lease. This
would add $0.54 p.r.s.f. to the rental obligation which is reflected in the
schedule outlined below. If this is acceptable to you, please acknowledge your
approval and acceptance by signing in the space provided below. Once this letter
is executed by you, construction for the Triton Premises shall commence
immediately. An amendment to the lease shall be forthcoming.
<PAGE> 64
EXHIBIT "A"
Triton Network Systems 4/21/98
Cost Per Square foot Analysis
Based on 37,104 S.F.
<TABLE>
<CAPTION>
Construction
Description of Work Estimate S/SQF
--------------------------------- ------------ -----
<S> <C> <C> <C>
Above Ceiling
1. HVAC 61,035 1.64
2. Fire sprinkler system 14,100 0.38
3. Lighting 69,000 1.86
4. Acoustical ceiling 41,250 1.11
------------ -----
Total 185,385 5.00
Below Ceiling
5. Doors, frames, hardware 23,770 0.64
6. Glass and glazing 7,845 0.21
7. Drywall partitions 74,528 2.01
8. Flooring 66,224 1.78
9. Painting and wall covering 19,180 0.52
10. Fire alarm 4,850 0.13
11. Electrical 100,537 2.71
12. Miscellaneous items 12,195 0.33
13. Permitting 7,678 0.21
14. General Conditions 40,175.36 1.08
15. Contractor's profit 21,694.69 0.58
------------ -----
Total 378,677 10.21
Construction Cost 564,062 15.20
============ =====
Soft costs:
---------------------------------
16. Management fee 27,500 0.75
17. Construction documents 44,400 1.20
18. Contingency 2,500.00 0.08
Soft Cost total 75,000 2.02
============ =====
Standard Tenant Improvement Total 639,062 17.22
============ =====
Items outside of tenant allowance
---------------------------------
19. Millwork 21,433 0.58
20. Plumbing 4,230 0.11
21. Glazing (4 glass doors) 10,670 0.29
22. Flooring 25,310 0.68
23. Painting and wall covering 9,465 0.26
24. Lighting 38,979 1.05
25. HVAC 14,030 0.38
26. Pre-action sprinkler system 4,000 0.11
27. Fire alarm system for pre-action system 5,125 0.14
28. Cable tray 7,000 0.19
29. Dimming package 18,000 0.49
30. Audio/Visual package 300 0.01
31. Conduit system for data 11,079 0.30
32. Addl. elec. panel and switch gear 4,000 0.11
33. Power for split system 375 0.01
34. Power for addl. VAV boxes 1,200 0.03
35. Floor boxes in lieu of power poles 5,000 0.13
36. General conditions 14,417 0.39
37. Contractor's profit 7,785 0.21
Items outside total 202,419 5.46
============ =====
Total Tenant Cost $ 641,481 22.68
============ =====
</TABLE>
<PAGE> 1
Exhibit 10.5
GRAN PARK
AT
SOUTH PARK
ASSEMBLY/LIGHT MANUFACTURING/OFFICE LEASE
By and Between
GRAN CENTRAL CORPORATION
a Florida corporation
as Landlord,
and
TRITON NETWORK SYSTEMS, INC.,
a Delaware corporation,
as Tenant
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Definitions ........................................................ 1
2. Lease Grant ........................................................ 3
3. Lease Term ......................................................... 3
4. Use and Possession ................................................. 4
5. Rent ............................................................... 5
6. Services to be Furnished by Landlord ............................... 7
7. Condition of Premises .............................................. 8
8. Maintenance and Repair of Premises by Landlord ..................... 8
9. Maintenance of Premises by Tenant .................................. 8
10. Graphics ........................................................... 9
11. Surrender of Premises ..............................................10
12. Repairs and Alterations by Tenant ..................................10
13, Net Lease ..........................................................11
14. Laws and Regulations ...............................................11
15. Building Rules and Regulations .....................................11
16. Entry by Landlord ..................................................11
17. Assignment and Subletting ..........................................12
18. Mechanic's Lien ....................................................13
19. Property Insurance .................................................14
20. Liability Insurance ................................................15
21. Indemnity ..........................................................16
22. Waiver of Subrogation Rights .......................................16
23. Casualty Damage ....................................................16
24. Condemnation .......................................................17
25. Damages From Certain Causes ........................................17
26. Events of Default/Remedies .........................................18
27. Peaceful Enjoyment .................................................20
28. Holding Over .......................................................21
29. Subordination to Mortgage ..........................................21
30. Landlord's Lien ....................................................21
31. Parking ............................................................22
32. Attorneys' Fees ....................................................22
33. No Implied Waiver ..................................................22
34. Personal Liability .................................................22
35 Security Deposit ...................................................23
36. Notice .............................................................23
37. Severability .......................................................23
38. Recordation ........................................................23
39. Governing Law ......................................................23
40. Force Majeure.......................................................23
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
41. Time of Performance ................................................24
42. Transfers by Landlord ..............................................24
43. Broker .............................................................24
44. Effect of Delivery of This Lease ...................................24
45. Certain Rights Reserved to Landlord ................................24
46. Waiver of Trial by Jury ............................................25
47. Estoppel Certificate ...............................................25
48. Environmental Matters...............................................25
49. Radon Gas ..........................................................29
50. Relocation .........................................................29
51. Exhibits ...........................................................29
52. Termination Option .................................................29
53. Roof Equipment .....................................................30
Exhibit A - Description of Property on Which the Project is Situated
Exhibit B - Floor Plan of Premises
Exhibit C - Work Letter
Exhibit D - Rules and Regulations
Exhibit E - Property Restrictions
</TABLE>
<PAGE> 4
ASSEMBLY/LIGHT MANUFACTURING/OFFICE
LEASE AGREEMENT
THIS ASSEMBLY/LIGHT MANUFACTURING/OFFICE LEASE AGREEMENT (this
"Lease"), made and entered into on this the ___ day of _________________, 1999,
between GRAN CENTRAL CORPORATION, a Florida corporation ("Landlord"), and
TRITON NETWORK SYSTEMS, INC., a Delaware corporation ("Tenant").
W I T N E S S E T H :
1. Definitions.
(a) "Building" shall mean the building situated at 8403
South Park Circle, Orlando, Florida 32819 and located upon the real property
described in Exhibit "A" attached hereto and incorporated herein (the
Property").
(b) "Premises" shall mean the space located within the
Building in Suite 670 and outlined on the floor plan attached to this Lease as
Exhibit "B" and incorporated herein. The Premises are stipulated for all
purposes to contain 22,720 square feet of "Rentable Area" (as below defined).
(c) "Base Rental" shall be as follows:
<TABLE>
<CAPTION>
RATE PER
SQUARE FOOT OF
RENTAL PERIOD RENTABLE AREA MONTHLY ANNUALLY
<S> <C> <C> <C>
Lease Year 1 $11.00 $20,826.67 $249,920.00
Lease Year 2 $11.33 $21,451.47 $257,417.60
Lease Year 3 $11.67 $22,095.20 $265,142.40
Lease Year 4 $12.02 $22,757.87 $273,094.40
Lease Year 5 $12.38 $23,439.47 $281,273.60
</TABLE>
Such amounts do not include sales taxes, which are payable as provided in
Section 5(d) below. For purposes hereof, the first "Lease Year" shall begin on
the Commencement Date and expire one year later. If the Commencement Date
does not fall on the first day of a calendar month, the first Lease Year shall
also include the remainder of the calendar month in which the first anniversary
of the Commencement Date falls. Each subsequent Lease Year shall commence on
the day following the expiration of the previous Lease Year. All such rent
shall be payable in the manner provided in Section 5 below.
(d) "Commencement Date" shall mean the earlier of the
date that Tenant actually occupies the Premises or July 1, 1999, subject to
Section 3 below. NOTWITHSTANDING THE FOREGOING, THE COMMENCEMENT DATE SHALL NOT
OCCUR PRIOR TO THE DATE ON WHICH ALL
<PAGE> 5
REQUIRED CERTIFICATES OF OCCUPANCY HAVE BEEN OBTAINED FOR THE PREMISES AND THE
ARCHITECT HAS CERTIFIED THAT THE PREMISES HAVE BEEN COMPLETED; PROVIDED,
HOWEVER, THAT IF THE ISSUANCE OF THE CERTIFICATES OF OCCUPANCY OCCURS AFTER
JULY 1, 1999 DUE TO DELAYS CAUSED BY TENANT, THEN THE COMMENCEMENT DATE SHALL
BE JULY 1, 1999.
(e) "Lease Term" shall mean a term commencing on the
Commencement Date and continuing for 60 full calendar months (plus any partial
calendar month in which the Commencement Date falls).
(f) "Security Deposit" shall mean the sum of
$20,826.67, WHICH SHALL BE PAID ON THE DATE HEREOF. IN ADDITION, AS PART OF THE
SECURITY DEPOSIT, TENANT SHALL DELIVER TO LANDLORD ON OR BEFORE THE
COMMENCEMENT DATE A LETTER OF CREDIT IN THE FACE AMOUNT OF $350,000.00. SUCH
LETTER OF CREDIT SHALL BE UNCONDITIONAL AND IRREVOCABLE AND SHALL OTHERWISE BE
IN A FORM AND FROM A FINANCIAL INSTITUTION ACCEPTABLE TO LANDLORD. PROVIDED
TENANT HAS NOT BEEN IN DEFAULT UNDER THIS LEASE, SUCH LETTER OF CREDIT SHALL
DECLINE ON EACH ANNIVERSARY OF THE COMMENCEMENT DATE BY AN AMOUNT EQUAL TO
TWENTY-FIVE PERCENT (25%) OF THE INITIAL AMOUNT OF SUCH LETTER OF CREDIT. SUCH
LETTER OF CREDIT SHALL HAVE AN EXPIRATION DATE OF FOUR (4) YEARS FOLLOWING THE
COMMENCEMENT DATE.
(g) "Common Areas" shall mean those areas devoted to
driveways, parking areas, landscaped areas, truck courts and other similar
facilities provided for the common use or benefit of tenants generally and/or
the public.
(h) "Rentable Area" of the Premises shall mean the area
within the Premises comprising the gross area enclosed by the surface of the
exterior walls of the Building and/or the mid-point of any walls separating
portions of the Premises from areas leased to other tenants and from other
areas of the Building not subject to any tenant leases. Rentable Area shall not
include any service areas, meaning those areas within the outside walls used
for elevator mechanical rooms, building stairs, fire towers, elevator shafts,
flues, vents, stacks, pipe shafts and vertical ducts (but Rentable Area shall
include any such areas which are for the exclusive use of a particular tenant),
and Rentable Area shall include Tenant's pro rata share of the Common Areas
within the Building, based upon the ratio of the Rentable Area within the
Premises to the total Rentable Area within the Building, both determined
without regard to the Common Areas. The Rentable Area in the Building is
131,607 square feet. The estimates of Rentable Area set forth in the
immediately preceding sentence with respect to the Building, and in Section
l(b) above with respect to the Premises, may be revised, at Landlord's
election, if Landlord's architect determines such estimate to be inaccurate
after examination of the final drawings of the Premises and the Building. If it
is determined that the Rentable Area of the Building or the Premises is
different from that set forth above, then the Rentable Area of the Building or
the Premises, as applicable, shall be adjusted upward or downward accordingly.
If such remeasurement shall not be undertaken on or before the Commencement
Date, then the Rentable Area calculations set forth above shall be conclusively
binding upon Landlord and Tenant, and neither Landlord nor Tenant shall have
any further right to remeasure the Premises or the Building after such date.
The Premises constitutes 17.26% of the total Rentable Area within the Building,
and therefore the Tenant's pro rata share for purposes of this Lease shall be
17.26%.
(i) "Taxes" shall mean all taxes, assessments and fees
levied upon the Building, the Property, the property of Landlord located
therein or the rents collected therefrom,
2
<PAGE> 6
by any governmental entity based upon the ownership, leasing, renting or
operation of the Building and the Property, including all costs and expenses of
protesting any such taxes, assessments or fees. Taxes shall not include any net
income, capital, stock, succession, transfer, franchise, gift, estate or
inheritance taxes; provided, however, if at any time during the Lease Term, a
tax or excise on income is levied or assessed by any governmental entity, in
lieu of or as a substitute for, in whole or in part, real estate taxes or other
ad valorem taxes, such tax shall constitute and be included in Taxes. For the
purpose of determining Taxes for any given year, the amount to be included for
such year shall be Taxes which are assessed or become a lien during such year
rather than Taxes which are due for payment or paid during such year. TAXES
SHALL NOT INCLUDE ANY LATE CHARGES OR PENALTIES IMPOSED UPON LANDLORD DUE TO
THE LATE PAYMENT OF TAXES.
(j) "Building Standard" shall mean 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 the exclusive type, grade or
quality of material to be used in the Building.
(k) "Assessments" shall mean all assessments, charges,
fees and other expenses for which Landlord is obligated, in its capacity as the
owner of the Property, pursuant to any restrictive covenants or other recorded
matters of title now or hereafter affecting the Property (collectively, the
"Title Matters"), BEING THE ASSOCIATION FEES AND CHARGES IN UPON LANDLORD BY
ORLANDO CENTRAL PARK, INC.
2. LEASE GRANT. Subject to and upon the terms herein
set forth, Landlord leases to Tenant and Tenant leases from Landlord the
Premises. LANDLORD HEREBY REPRESENTS AND WARRANTS THAT IT HOLDS FEE SIMPLE TITLE
TO THE PROPERTY. THE PROPERTY IS SUBJECT TO THE EASEMENTS AND OTHER
ENCUMBRANCES WHICH EXISTED ON THE DATE LANDLORD PURCHASED THE PROPERTY, AS
SHOWN ON EXHIBIT E ATTACHED HERETO AND MADE A PART HEREOF.
3. LEASE TERM. This Lease shall continue in force
during a period beginning on the Commencement Date and continuing until the
expiration of the Lease Term, unless this Lease is sooner terminated or
extended to a later date under any other term or provision hereof. In the event
the actual Commencement Date is other than the date identified in Section 1(d),
rental under this Lease shall not commence until said revised Commencement
Date, and the Lease Term shall commence and the expiration date shall be
extended so as to give effect to the full stated Lease Term. Should the Lease
Term commence on a date other than that specified in Section 1(d), Landlord
will send Tenant a written statement of such adjusted Commencement Date and
expiration date, and, if Landlord requests, Tenant will confirm such adjusted
dates in writing. IN THE EVENT THE PREMISES IS NOT READY FOR TENANT'S OCCUPANCY
BY JULY 31, 1999, UNLESS DUE TO (i) FORCE MAJEURE DELAYS DESCRIBED IN SECTION
40 BELOW, (ii) DELAYS IN OBTAINING PERMITS FROM ANY APPLICABLE GOVERNMENTAL
AUTHORITIES, (iii) DELAYS CAUSED BY TENANT, OR (iv) DELAYS IN DELIVERY OF
SPECIFIC MATERIALS REQUIRED BY TENANT'S PLANS AND SPECIFICATIONS FOR THE
PREMISES, THEN TENANT SHALL BE ENTITLED TO ONE DAY OF FREE RENT HEREUNDER FOR
EACH DAY OF DELAY BEYOND JULY 31, 1999 UNTIL SUCH TIME AS THE PREMISES ARE
READY FOR TENANT'S OCCUPANCY.
4. USE AND POSSESSION. The premises shall be used for
LIGHT MANUFACTURING, ASSEMBLY AND OFFICE PURPOSES, and for no other purpose.
Tenant agrees not to use or permit the use of the Premises for any purpose which
is illegal, dangerous to life, limb or property, or
3
<PAGE> 7
which, in Landlord's opinion, creates a nuisance or which would increase the
cost of insurance coverage with respect to the Building. In addition, Tenant
shall, at its own cost and expense, comply with all federal, state and
municipal laws, ordinances, rules and regulations issued by any governmental
authority and all Title Matters. Without limiting the foregoing, Tenant shall
not cause, nor permit, any hazardous or toxic substances to be brought upon,
produced, stored, used, discharged or disposed of in, on or about the Premises
without the prior written consent of Landlord and then only in compliance with
all applicable environmental laws, except as permitted in Section 48 below.
No routine repair or servicing of any automobile or truck shall be
allowed in the Premises, or in any parking or loading areas, roadways or other
areas serving the Building. No vehicle abandoned or disabled or in a state of
non-operation or disrepair shall be left upon the Property, and Tenant shall
enforce this restriction against Tenant's, employees, agents, visitors,
licensees, invitees, contractors and customers. Should Landlord determine that
a violation of this restriction has occurred, Landlord shall have the right to
cause the offending vehicle, equipment, trailer or machinery to be removed from
Landlord's Property, and all costs of such removal shall be the obligation of
the Tenant, and such costs shall be paid to Landlord by Tenant as additional
rent within ten (10) days of written notice to Tenant.
Landlord agrees to have the Premises completed and ready for
possession on or before the Commencement Date, barring strikes, insurrection,
acts of God and other casualties or unforeseen events beyond the control of the
Landlord. Such work shall be performed in accordance with the terms of the Work
Letter attached hereto as Exhibit "C" and incorporated herein. If Landlord is
unable to give possession of the Premises on the Commencement Date by reason of
the holding over of any prior tenant or tenants, incomplete construction, or
for any other reason, unless the same shall result from causes attributable to
Tenant, there shall be an abatement or adjustment of the Rent to be paid
hereunder for that period of time, and the Lease Term shall be extended beyond
the agreed expiration date by the number of days possession was delayed and
said abatement of Rent shall be the full extent of Landlord's liability to
Tenant for any loss or damage to Tenant on account of said delay in obtaining
possession of the Premises, If the Premises have not been tendered one hundred
FOUR (104) days after the scheduled Commencement Date, Tenant shall have the
right to terminate this Lease after fifteen (15) days' written notice to
Landlord, provided such notice is given prior to the date on which the Premises
are tendered to Tenant.
The Premises shall be deemed substantially completed and available to
Tenant upon issuance to Landlord of a certificate of occupancy by the
appropriate governmental authority AND A CERTIFICATE OF THE ARCHITECT THAT THE
PREMISES HAVE BEEN COMPLETED (notwithstanding the necessity of minor repairs
and adjustments still to be made by the Landlord), or when Tenant actually
occupies the Premises, whichever occurs first. If the substantial completion of
the Premises by Landlord is delayed due to any act or omission of Tenant or
Tenant's representatives, including any delays by Tenant in the submission of
the plans, drawings, specifications or other information, or in obtaining
permits for its installations, or in approving any working drawings or
estimates or in giving any authorization or approval, the Premises shall be
deemed substantially completed on the date when they would have been ready but
for such delay.
5. Rent.
4
<PAGE> 8
(a) Base Rental. Tenant agrees to pay the Base Rental to Landlord
during the Lease Term, without any setoff, deduction or counterclaim
whatsoever, together with all such other sums of money as shall become due
hereunder as additional rent (all of which are sometimes herein collectively
called "Rent"). Except as otherwise provided herein, the annual Base Rental for
each calendar 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 Tenant hereby agrees to pay such Base
Rental and any adjustments thereto to Landlord at P.0. Box 861946, Orlando,
Florida 32886-1946 (or such other address as may be designated by Landlord in
writing from time to time) monthly, in advance, and without demand. Any sum due
from Tenant to Landlord which is not paid when due shall bear interest from the
date due until the date paid at the annual rate of four percent (4%) above the
prime rate as announced from time to time by The Wall Street Journal but in no
event in excess of the maximum rate permitted by law (the "Default Rate"). If
the Lease Term commences on a day other than the first day of a month or
terminates on a day other than the last day of a month, then the installments
of Base Rental and adjustments thereto and any additional rent for such month
or months shall be prorated, based on the number of days in such month. Tenant
shall pay Landlord a late charge for any Rent payment which is paid more than
TEN (10) days after its due date, equal to five percent (5%) of such payment;
PROVIDED THAT SUCH LATE CHARGE SHALL NOT BE IMPOSED UNTIL THE FOURTH (4TH) SUCH
LATE PAYMENT EACH LEASE YEAR, AND FOR EACH SUBSEQUENT LATE PAYMENT DURING THE
SAME LEASE YEAR. The Base Rental due for the first month of the Lease Term
SHALL BE PAID TO LANDLORD ON THE COMMENCEMENT DATE.
(b) Operating Expenses. Tenant shall pay as additional rent its
pro rata share of any Operating Expenses (as hereinafter defined), Landlord
shall deliver to Tenant each year, on or before March 31 (or within a
reasonable time thereafter), a statement setting forth the amount of Operating
Expenses paid or incurred by Landlord, directly or indirectly, during the
immediately preceding year. This statement shall delineate Tenant's pro rata
share of the Operating Expenses for the preceding year and the estimated amount
of Tenant's pro rata share of Operating Expenses for the following year. Within
thirty (30) days after delivery of the statement, Tenant shall pay to Landlord,
as additional rent, Tenant's pro rata share of the previous year's Operating
Expenses not previously paid. Commencing with the rental payment immediately
following the receipt of the statement of Operating Expenses, Tenant shall
remit as additional rent one-twelfth (1/12) of Tenant's pro rata share of the
anticipated Operating Expenses for the following year in addition to the
scheduled Base Rental.
If the Lease Term begins after January 1 or ends prior to December 31,
Tenant's pro rata share of the Operating Expenses shown on the statement
delivered at the end of such year shall be reduced proportionately. In the
event Tenant's share of the Operating Expenses is less than the amount
previously estimated and collected by Landlord, Tenant's excess shall be
applied to amounts owed to Landlord, and if no amounts are owed, then the
excess shall be remitted to Tenant.
The term "Operating Expenses" as used herein shall include all direct
costs of administration, operation, repair and maintenance of the Property, the
Building and its Common Areas and appurtenances, as determined in accordance
with generally accepted accounting principles, and shall include Landlord's
costs and expenses incurred in connection with the
5
<PAGE> 9
following by way of illustration but not limitation: the cost of labor,
materials and services for the administration, operation, repair and
maintenance of the Property and the Building, its common areas and its
appurtenances, including but not Limited to license, permit and inspection
fees; water and sewer charges; garbage and waste disposal; gas, electricity and
other utilities consumed in the Common Areas of the Property or Building;
heating, air conditioning and ventilation repairs; elevator service; plumbing
service and other normal repairs; janitorial and cleaning service in the Common
Areas of the Building; landscaping; parking lot cleaning, repairs and
maintenance; association fees, including any charges imposed upon the Property
by Orlando Central Park, Inc. or any association created by it for maintenance
of Common Areas within the development of which the Property is a part; pest
control; maintenance contracts; security services or personnel (if provided to
the Building); insurance for fire, extended coverage, general liability and
other insurance which Landlord is required to maintain on the Building and its
appurtenances either by the terms of this Lease or by the holder of any
mortgage or deed to secure debt encumbering the Building, or which Landlord
reasonably deems to be necessary in connection with the ownership and
operation of the Building management fees; supplies, materials, tools,
equipment and general costs associated therewith, all accrued and based on a
calendar year operation; Taxes; Assessments and Common Area costs described in
Section 8 below.
The Operating Expenses shall not include the cost of any repairs or
replacements which by sound accounting practices should be capitalized, except
as follows: (i) if, for any reason, Landlord shall make an expenditure,
directly or indirectly, which is intended to reduce any of the Operating
Expenses and which, by generally accepted accounting principles would be
created as a capital expenditure, the annual Operating Expenses shall also
include the amortization of such capital expenditure based upon a useful life
of not less than five (5) years; and (ii) in the event that any local, state or
federal government shall, by any legally enforceable legislative,
administrative or judicial action, whether by ordinance, act, statute, order,
mandate, rule, regulation or otherwise, require during the Lease Term any
alteration of or improvement to any portion of the Building, excluding the
Premises or any other premises leased or available to be leased by other
tenants of the Building (a "Mandated Alteration"), which, by generally accepted
accounting principles, would be treated as a capital expenditure, then,
provided that such Mandated Alteration is the result of the adoption of a new
or changed ordinance, act, statute, order, mandate, rule or regulation or
interpretation thereof not existing on the Commencement Date of this Lease, the
annual Operating Expenses shall also include the annual amortization of such
capital expenditure based upon a useful life of not less than five (5) years.
In connection therewith, the decision of Landlord's accountants shall be final.
(c) Increase in Insurance Premiums, Tenant shall pay to Landlord,
as additional rent hereunder, all increases in any insurance premiums under
those policies of insurance maintained by the Landlord hereunder, attributable
to or resulting from the Tenant's use and occupancy of the Premises or any
other action or omission of Tenant.
(d) Sales Tax. In addition to the Rent and any other sums or
amounts required to be paid by Tenant to Landlord pursuant to the provisions
of this Lease, Tenant shall also pay to Landlord, simultaneously with such
payment of such Rent or other sums or amounts, the amount of any applicable
sales, use or excise tax on any such Rent or other sums or amounts so paid by
Tenant to Landlord, whether the same be levied, imposed or assessed by the
State of Florida or any other federal, state, county or municipal governmental
entity or agency. Any such sales, use
6
<PAGE> 10
or excise taxes shall be paid by Tenant to Landlord at the same time that each
of the amounts with respect to which such taxes are payable are paid by Tenant
to Landlord.
(E) AUDIT. TENANT SHALL HAVE THE RIGHT TO HAVE LANDLORD'S BOOKS
AND RECORDS PERTAINING TO OPERATING EXPENSES FOR ANY YEAR DURING THE LEASE TERM
REVIEWED, COPIED AND AUDITED ("TENANT'S AUDIT") PROVIDED THAT (i) SUCH RIGHT
SHALL NOT BE EXERCISED MORE THAN ONCE DURING ANY CALENDAR YEAR; (ii) IF TENANT
ELECTS TO CONDUCT TENANT'S AUDIT, TENANT SHALL PROVIDE LANDLORD WITH WRITTEN
NOTICE THEREOF NO LATER THAN THIRTY (30) DAYS FOLLOWING TENANT'S RECEIPT OF
LANDLORD'S STATEMENT OF OPERATING EXPENSES FOR THE YEAR TO WHICH TENANT'S AUDIT
WILL APPLY; (iii) TENANT SHALL HAVE NO RIGHT TO CONDUCT TENANT'S AUDIT IF
TENANT IS, EITHER AT THE TIME TENANT FORWARDS LANDLORD WRITTEN NOTICE THAT
TENANT'S AUDIT WILL BE CONDUCTED OR AT ANY TIME DURING TENANT'S AUDIT, THEN IN
DEFAULT UNDER THIS LEASE; (iv) CONDUCTING TENANT'S AUDIT SHALL NOT RELIEVE
TENANT FROM THE OBLIGATION TO PAY TENANT'S PRO RATA SHARE OF OPERATING
EXPENSES, AS BILLED BY LANDLORD, PENDING THE OUTCOME OF SUCH AUDIT; (v)
TENANT'S RIGHT TO CONDUCT SUCH AUDIT FOR ANY CALENDAR YEAR SHALL EXPIRE THIRTY
(30) DAYS FOLLOWING TENANT'S RECEIPT OF LANDLORD'S STATEMENT OF OPERATING
EXPENSES FOR SUCH YEAR, AND IF LANDLORD HAS NOT RECEIVED WRITTEN NOTICE OF SUCH
AUDIT WITHIN SUCH THIRTY (30) DAY PERIOD, TENANT SHALL HAVE WAIVED ITS RIGHT TO
CONDUCT TENANT'S AUDIT FOR SUCH CALENDAR YEAR; (vi) TENANT'S AUDIT SHALL BE
CONDUCTED BY A CERTIFIED PUBLIC ACCOUNTANT NOT EMPLOYED BY OR OTHERWISE
AFFILIATED WITH TENANT, EXCEPT TO THE EXTENT THAT SUCH ACCOUNTANT HAS BEEN
ENGAGED BY TENANT TO CONDUCT TENANT'S AUDIT; (vii) TENANT'S AUDIT SHALL BE
CONDUCTED AT LANDLORD'S OFFICE WHERE THE RECORDS OF THE YEAR IN QUESTION ARE
MAINTAINED BY LANDLORD, DURING LANDLORD'S NORMAL BUSINESS HOURS; AND (viii)
TENANT'S AUDIT SHALL BE CONDUCTED AT TENANT'S SOLE COST AND EXPENSE, UNLESS
SUCH AUDIT DEMONSTRATES TO LANDLORD'S REASONABLE SATISFACTION THAT LANDLORD HAS
OVERSTATED THE OPERATING EXPENSES FOR THE YEAR AUDITED BY MORE THAN FIVE
PERCENT (5%), IN WHICH CASE LANDLORD SHALL REIMBURSE TENANT FOR ANY OVERPAYMENT
OF TENANT'S PRO RATA SHARE OF SUCH OPERATING EXPENSES, AS WELL AS TENANT'S
ACTUAL REASONABLE COST INCURRED IN CONDUCTING TENANT'S AUDIT, WITHIN THIRTY
(30) DAYS OF LANDLORD'S RECEIPT OF DOCUMENTATION REASONABLY ACCEPTABLE TO
LANDLORD REFLECTING AMOUNT OR SUCH OVERPAYMENT AND THE COST OF TENANT'S AUDIT.
6. SERVICES TO BE FURNISHED BY LANDLORD.
(a) Provided Tenant is not in default under this Lease,
Landlord agrees to make available to the Premises; (i) water; (ii) electric
service, and (iii) electrical lighting service for all Common Areas in the
manner and to the extent deemed by Landlord to be standard. Tenant, at its sole
cost and expense, shall pay for its own utility consumption in the Premises.
(b) THE FAILURE BY LANDLORD TO ANY EXTENT TO FURNISH, OR
THE INTERRUPTION OR TERMINATION OF THESE DEFINED SERVICES, IN WHOLE OR ANY
PART, RESULTING FROM CAUSES OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD, SHALL NOT RENDER LANDLORD LIABLE IN ANY RESPECT NOR BE
CONSTRUED AS AN EVICTION OF TENANT, NOR WORK AS AN ABATEMENT OF RENT, NOR
RELIEVE TENANT FROM THE OBLIGATION TO FULFILL ANY COVENANT OR AGREEMENT HEREOF.
Should any of the equipment or machinery used in the provision of such services
for any cause cease to function properly, Tenant shall have no claim for offset
or abatement of rent or damages on account of an interruption in service
occasioned thereby or resulting therefrom.
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7. CONDITION OF THE PREMISES. All installations and improvements now or
hereafter placed on the Premises shall be for Tenant's account and at Tenant's
cost, except as otherwise expressly provided for herein (and Tenant shall pay ad
valorem taxes and increased insurance thereon or attributable thereto), which
cost shall be payable by Tenant to Landlord upon demand as additional rent.
Tenant's taking possession of the Premises shall be conclusive evidence that
Tenant has inspected the Premises and accepts the Premises "AS IS" and that the
Premises were in good order and satisfactory condition when Tenant took
possession, SUBJECT TO ANY WORK WHICH LANDLORD IS REQUIRED TO PERFORM PURSUANT
TO EXHIBIT "C" hereof.
8. MAINTENANCE AND REPAIR OF PREMISES BY LANDLORD. Except as otherwise
expressly provided herein and so long as such repairs are not required as a
result of the actions or inactions of Tenant, its agents, contractors, employees
or invitees, in which event Tenant shall be responsible to make such repairs at
its expense, Landlord shall not be required to make any repairs to the Premises
other than repairs to exterior and load-bearing walls, floors (excluding the
replacement of floor coverings) and the roof of the Building, which may be
required from time to time but only after such required repairs have been
requested by Tenant in writing. In the interior of the Building, Landlord shall
only be responsible for maintaining and repairing the Common Areas, if any.
Landlord shall also cause the exterior Common Areas to be maintained and
repaired. The cost of any such maintenance and repairs by Landlord as set forth
in this Section 8 shall be included in Operating Expenses as described in
Section 5(b) above. Landlord may also perform certain maintenance and repairs of
items which are considered Common Areas for the Gran Park at South Park
development (the "Development"), including without limitation, landscaping along
the public right of way and maintenance of private driveways throughout the
Development. The Property shall be billed its pro rata share of such costs
relating to the Common Areas of the Development based upon a fraction in which
the numerator is the square footage of the Property and the denominator is the
total square footage of all land within the Development. The amount of such
costs so allocated to the Property shall then become Operating Expenses for the
Property for which Tenant shall pay its pro rata share.
9. MAINTENANCE OF PREMISES BY TENANT.
(a) Tenant shall maintain all parts of the Premises, including the
HVAC equipment (except for maintenance and repair work for which Landlord is
expressly responsible under Section 8 above) in good condition and promptly make
all necessary repairs and replacements to the Premises, Tenant shall also be
responsible for the cleaning and sweeping of the Premises. Tenant shall be
responsible for disposal of its trash and refuse from the Premises and will
maintain adequate receptacles for such disposal, the design, placement and
capacity of such receptacles to be subject to the prior approval of Landlord.
TENANT SHALL BE PERMITTED TO MAINTAIN TWO TRASH DUMPSTERS, IN THE LOCATIONS
SHOWN ON EXHIBIT B ATTACHED HERETO. Outdoor storage of trash, refuse or any
other material and receptacles or containers not approved by Landlord is
strictly prohibited. At its sole cost and expense, Tenant shall provide interior
pest and insect extermination at the Premises as often as is reasonably
necessary to eliminate any pests or insects, whether endemic to the Building or
specific to the Premises or Tenant's use thereof.
(b) Subject to Landlord's obligations set forth in Section 6 above,
Tenant shall maintain the hot water equipment and the HVAC system in good repair
and condition and in accordance with all applicable laws and such equipment
manufacturers' suggested
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operation/maintenance service program. THE HVAC SYSTEM SERVING THE PREMISES
SHALL NOT SERVE ANY OTHER SPACE WITHIN THE BUILDING. Tenant shall enter into a
regularly scheduled preventive maintenance/service contract for the hot water
equipment and the HVAC system, in form and substance and with a contractor
reasonably acceptable to Landlord, and shall promptly deliver copies thereof to
Landlord. At least fourteen (14) days prior to the end of the Lease Term (UNLESS
TENANT HAS ELECTED EARLY TERMINATION PURSUANT TO SECTION 52 BELOW), Tenant, at
its sole cost and expense, shall cause to be delivered to Landlord a certificate
from an engineer reasonably acceptable to Landlord certifying that the hot water
equipment and the HVAC system are then in good repair and working order.
(c) If Tenant fails to perform any of Tenant's maintenance or repair
obligations, and if such failure continues for thirty (30) days after written
notice thereof is delivered to Tenant, Landlord may perform such obligation, in
which event Tenant shall pay to Landlord the reasonable cost incurred by
Landlord in performing such obligation, as additional rent, within thirty (30)
days after Landlord's written request therefor.
(d) Tenant acknowledges that Landlord is not providing security
services of any kind to the Premises or for Tenant's property and that the keys
given to Tenant for the Premises may not be secure. At its sole expense, Tenant
shall provide whatever security and/or alarm systems Tenant deems necessary or
appropriate for the protection of the Premises and of Tenant's personal property
and personnel located therein, including, if Tenant desires to do so, installing
new locks for the Premises with new keys. Tenant shall provide to Landlord
copies of all keys and access codes to allow Landlord entry to the Premises. In
no event shall Landlord be responsible for, and Tenant waives any and all claims
arising from; the loss or damage to any of Tenant's personal property situated
in and on the Premises. Landlord may elect, but shall have no obligation, to
provide general area security or guard services and it may discontinue such
security or guard services without notice. At its expense, Tenant is also
responsible for the maintenance, repair or replacement of any mechanical,
security, and fire protection systems which Tenant has installed within the
Premises. Tenant is expressly advised that if Tenant should place any fixtures,
inventory or equipment with, in or on the Premises prior to the time the
Premises are completed and delivered to the Tenant, the risk of loss or damage
to such inventory, fixtures, or equipment will be greatly increased in view of
the fact that, out of necessity, numerous people will be permitted access to the
Premises for the purpose of completion of any work. All such risk of loss or
damage shall be borne exclusively by Tenant and not by Landlord, and Tenant
hereby waives any claim for any such loss or damage against Landlord relating
thereto.
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 Building and no others shall be used
or permitted on the Premises without Landlord's prior written consent.
11. SURRENDER OF PREMISES. Tenant agrees to and shall, upon expiration
or sooner termination of the Lease Term, promptly surrender and deliver the
Leased Premises to Landlord without demand therefor in good condition, ordinary
wear and tear and damage by the elements, fire, or other cause beyond the
reasonable control of Tenant excepted.
12. REPAIRS AND ALTERATIONS BY TENANT. Landlord shall have the right,
at Tenant's
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cost and expense, to repair or replace any damage done to the Premises and the
Building, or any part thereof, caused by Tenant or Tenant's agents, employees,
invitees, or visitors, and, to the extent such costs are not covered by Tenant's
insurance proceeds, Tenant shall pay the cost thereof to Landlord on demand as
additional rent. Tenant agrees with Landlord not to make or allow to be made any
alterations to the Premises, or place signs on the Premises which are visible
from outside the Premises, without first obtaining the written consent of
Landlord in each such instance, which consent may be withheld for any reason
whatsoever or given on such conditions as Landlord may elect. TENANT MAY PLACE
VENDING MACHINES WITHIN THE PREMISES. In the event Tenant proposes to make any
alteration, Tenant shall, prior to commencing such alteration, submit to
Landlord for prior written approval: (i) detailed plans and specifications; (ii)
the names, addresses and copies of contracts for all contractors; (ii) all
necessary permits evidencing compliance with all applicable governmental rules,
regulations and requirements; (iv) certificates of insurance in form and amounts
required by Landlord, naming Landlord, its managing agent and any other parties
designated by Landlord as additional insureds; and (v) all other documents and
information as Landlord may reasonably request in connection with such
alteration. IN THE EVENT TENANT REQUESTS LANDLORD TO PERFORM SUCH ALTERATIONS,
Tenant agrees to promptly pay all of Landlord's charges for and costs related to
any alteration, repair or service requested by Tenant that is not specifically
the responsibility of the Landlord, which charges and costs shall be at Tenant's
sole expense and shall include a fifteen percent (15%) supervision fee in
addition to the taxes, permits and other charges required by applicable
governmental authorities, insurers, laws, regulations and/or requirements for
review and/or approval, if applicable, of all such items and supervision of the
alterations, repairs and services. TENANT SHALL NOT BE REQUIRED TO USE LANDLORD
TO PERFORM SUCH ALTERATIONS. Neither approval of the plans and specifications
nor supervision of the alteration by Landlord shall constitute a representation
or warranty by Landlord as to the accuracy, adequacy, sufficiency or propriety
of such plans and specifications or the quality of workmanship or the compliance
of such alteration with applicable law. Tenant shall pay the entire cost of the
alteration and, if requested by Landlord, shall deposit with Landlord, prior to
the commencement of the alteration, security for the payment and completion of
the alteration in form and amount required by Landlord. Each alteration shall be
performed in a good and workmanlike manner, in accordance with the plans and
specifications approved by Landlord, and shall meet or exceed the standards for
construction and quality of materials established by Landlord for the Building.
In addition, each alteration shall be performed in compliance with all
applicable governmental and insurance company laws, regulations and
requirements. Each alteration shall be performed by Landlord or under Landlord's
supervision, and in harmony with Landlord's employees, contractors and other
tenants. Any and all alterations to the Premises shall become the property of
Landlord upon termination of this Lease (except for movable equipment or
furniture owned by Tenant). Landlord may, nonetheless, require Tenant to remove
any and all fixtures, equipment and other improvements installed on the Premises
(the "Additional Improvements"). In the event Landlord so elects, and Tenant
fails to remove the Additional Improvements, Landlord may remove the Additional
Improvements at Tenant's cost, and Tenant shall pay Landlord on demand all
costs incurred in removing Additional Improvements.
13. NET LEASE. Landlord and Tenant acknowledge and agree that both
parties intend that this Lease shall be and constitute what is generally
referred to as a "triple net" or "absolute net" lease, such that Tenant shall be
obligated hereunder to pay all costs and expenses incurred with respect to, and
associated with, the Premises and the business operated thereon and therein,
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and Tenant's pro rata share of Operating Expenses, including, without
limitation, all taxes and assessments, utility charges, insurance costs,
maintenance costs and repair, replacement and restoration expenses (all as more
particularly herein provided), together with any and all other assessments,
charges, costs and expenses of any kind or nature whatsoever related to, or
associated with, the Premises and the business operated thereon and therein, and
the Building and the Property; provided, however, that Landlord shall
nonetheless be obligated to pay any debt service on any mortgage encumbering
Landlord's fee simple interest in the Property, and Landlord's personal income
taxes with respect to the Rents received by Landlord under this Lease. Except as
expressly hereinabove provided, Landlord shall bear no cost or expense of any
type or nature with respect to, or associated with, the Premises, the Building,
or the Property. NOTWITHSTANDING ANYTHING, SET FORTH ABOVE TO THE CONTRARY,
LANDLORD SHALL PAY ALL SUMS AND PERFORM ALL OBLIGATIONS OTHERWISE SPECIFICALLY
TO BE REQUIRED TO BE PAID AND/OR PERFORMED BY LANDLORD PURSUANT TO THE TERMS OF
THIS LEASE.
14. LAWS AND REGULATIONS. Tenant agrees to comply with all applicable
laws, ordinances, rules, and regulations of any governmental entity or agency
having jurisdiction over the Premises, including without limitation, the
Americans with Disabilities Act. LANDLORD AGREES TO COMPLY WITH ALL APPLICABLE
LAWS, ORDINANCES, RULES, AND REGULATIONS OF A GOVERNMENTAL ENTITY OR AGENCY
(INCLUDING THE AMERICANS WITH DISABILITIES ACT) WITH RESPECT TO THE STRUCTURE OF
THE BUILDING AND THE EXTERIOR COMMON AREAS AROUND THE BUILDING.
15. BUILDING RULES AND REGULATIONS. Tenant will comply with the
Building Rules and Regulations adopted and altered by Landlord from time to time
and will cause all of its agents, employees, invitees and visitors to do so. All
changes to such Building Rules and Regulations shall be sent by Landlord to
Tenant in writing. A copy of the proposed initial Building Rules and Regulations
applicable to the Building and the Premises is attached hereto as Exhibit "D"
and incorporated herein.
16. ENTRY BY LANDLORD. Tenant agrees to permit Landlord or its agents
or representatives to enter into and upon any part of the Premises at all
reasonable hours UPON 24 HOURS' NOTICE (and in emergencies at all times )
WITHOUT NOTICE) to inspect the same, or to show the Premises to prospective
purchasers, mortgagees, tenants or insurers, or 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. DURING THE LAST NINE MONTHS OF
THE LEASE TERM, LANDLORD MAY SHOW THE PREMISES TO PROSPECTIVE TENANTS WITHOUT
HAVING TO GIVE SUCH 24 HOURS' NOTICE TO TENANT. EXCEPT WITH RESPECT TO
EMERGENCIES, LANDLORD AGREES TO BE ESCORTED AT ALL TIMES BY A REPRESENTATIVE OF
TENANT WHILE LANDLORD IS IN THE PREMISES.
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17. ASSIGNMENT AND SUBLETTING.
(a) Tenant may not assign, sublease or transfer any interest in
this Lease or encumber this Lease without first obtaining Landlord's prior
written consent, which consent SHALL NOT BE UNREASONABLY WITHHELD. TENANT SHALL
PROVIDE LANDLORD WITH ANY AND ALL DOCUMENTS, INSTRUMENTS AND AGREEMENTS
PERTAINING TO SUCH PROPOSED ASSIGNMENT REASONABLY NECESSARY FOR LANDLORD TO
EVALUATE SUCH PROPOSED ASSIGNMENT. AT A MINIMUM, WITHOUT LIMITATION, FOR EACH
PROPOSED ASSIGNMENT THE FOLLOWING REQUIREMENTS MUST BE SATISFIED: (i) TENANT
SHALL NOT BE RELEASED FROM ANY OBLIGATIONS OR ANY LIABILITIES HEREUNDER AS A
RESULT OF ANY SUCH ASSIGNMENT; (ii) TENANT SHALL NOT BE IN DEFAULT HEREUNDER AT
THE TIME IT REQUESTS LANDLORD'S CONSENT OR ON THE EFFECTIVE DATE OF THE PROPOSED
ASSIGNMENT; (iii) LANDLORD SHALL BE PROVIDED WITH SUCH INFORMATION REGARDING THE
NAME, IDENTITY, BUSINESS REPUTATION AND CREDITWORTHINESS OF THE PROPOSED
ASSIGNEE AS LANDLORD SHALL REASONABLY REQUEST; AND (iv) THE ASSIGNEE SHALL
DELIVER TO LANDLORD A WRITTEN AGREEMENT WHEREBY IT ASSUMES JOINTLY AND SEVERALLY
WITH TENANT ALL OF THE OBLIGATIONS AND LIABILITIES OF TENANT UNDER THIS LEASE.
Any attempted assignment or sublease by Tenant in violation of the terms and
covenants of this paragraph shall be void. TENANT SHALL HAVE THE RIGHT TO ASSIGN
THIS LEASE TO ANY EQUITY WHICH PURCHASES AT LEAST 50% OF TENANT OR ANY ENTITY
INTO WHICH TENANT MERGES. TENANT SHALL ALSO HAVE THE RIGHT TO ASSIGN THIS LEASE
OR SUBLET ALL OR ANY PART OF THE PREMISES TO ITS AFFILIATES. CHANGES IN THE
ownership of Tenant WHICH DO NOT RESULT IN A CHANGE OF CONTROL SHALL NOT BE
deemed an assignment UNDER THIS LEASE AND SHALL NOT REQUIRE LANDLORD'S CONSENT.
IN ADDITION, A PUBLIC OFFERING OF TENANT'S STOCK SHALL NOT BE DEEMED AN
ASSIGNMENT UNDER THIS LEASE AND SHALL NOT REQUIRE LANDLORD'S CONSENT.
(b) If Tenant requests Landlord's consent to an assignment of this
Lease or subletting of all or part of the Premises, Landlord shall either: (i)
approve such sublease or assignment (but no approval of an assignment or
sublease shall relieve Tenant of any liability hereunder); (ii) negotiate
directly with the proposed subtenant or assignee and (in the event Landlord is
able to reach agreement with such proposed tenant) upon execution of a lease
with such tenant, terminate this Lease (in part or in whole, as appropriate)
upon thirty (30) days' notice; or (iii) deny such sublease or assignment. If
Landlord should fail to notify Tenant in writing of its decision within a thirty
(30) day period after Landlord is notified in writing of the proposed
assignment, or sublet, then Landlord shall be deemed to have refused to consent
to an assignment or sublet and to have elected to keep this Lease in full force
and effect.
(c) All cash or other 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 notwithstanding, the fact that such
proceeds exceed the rent called for hereunder, unless Landlord agrees to the
contrary in writing, mid 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
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assuming Tenant's obligations hereunder, shall be deemed to have assumed
liability to Landlord for all amounts paid to persons other than Landlord by
such Successor in consideration of any such sale, assignment or subletting, in
violation of the provisions hereof.
(d) No assignment or subletting shall ever relieve Tenant of any
liability hereunder.
18. MECHANIC'S LIENS. Tenant shall not create or cause to be imposed,
claimed or filed upon the Premises, or any portion thereof, or upon the interest
of Landlord therein, any lien, charge or encumbrance whatsoever. If, because of
any act or omission of Tenant, any such lien, charge or encumbrance shall be
imposed, claimed or filed, Tenant shall, at its sole cost and expense, cause the
same to be fully paid and satisfied or otherwise discharged of record (by
bonding or otherwise) and Tenant shall indemnify and save and hold Landlord
harmless from and against any and all costs, liabilities, suits, penalties,
claims and demands whatsoever, and from and against any and all attorneys' fees,
at both trial and all appellate levels, resulting or on account thereof and
therefrom. In the event that Tenant shall fail to comply with the provisions of
this Section 18, Landlord shall have the option of paying, satisfying or
otherwise discharging (by bonding or otherwise) such lien, charge or encumbrance
and Tenant agrees to reimburse Landlord, upon demand and as additional rent, for
all sums so paid and for all costs and expenses incurred by Landlord in
connection therewith, together with interest thereon, until paid.
Landlord's interest in the Premises shall not be subjected to liens of
any nature by reason of Tenant's construction, alteration, renovation, repair,
restoration, replacement or reconstruction of any improvements on or in the
Premises, or by reason of any other act or omission of Tenant (or of any person
claiming by, through or under Tenant) including, but not limited to, mechanics'
and materialmen's liens. All persons dealing with Tenant are hereby placed on
notice that such persons shall not look to Landlord or to Landlord's credit or
assets (including Landlord's interest in the Premises) for payment or
satisfaction of any obligations incurred in connection with the construction,
alteration, renovation, repair, restoration, replacement or reconstruction
thereof by or on behalf of Tenant. Tenant has no power, right or authority to
subject Landlord's interest in the Premises to any mechanic's or materialmen's
lien or claim of lien. If a lien, a claim of lien or an order for the payment of
money shall be imposed against the Premises on account of work performed, or
alleged to have been performed, for or on behalf of Tenant, Tenant shall, within
thirty (30) days after written notice of the imposition of such lien, claim or
order, cause the Premises to be released therefrom by the payment of the
obligation secured thereby or by furnishing a bond or by any other method
prescribed or permitted by law. If a lien is released, Tenant shall thereupon
furnish Landlord with a written instrument of release in form for recording or
filing in the appropriate office of land records of Orange County, Florida, and
otherwise sufficient to establish the release as a matter of record.
Tenant may, at its option, contest the validity of any lien or claim of
lien if Tenant shall have first posted an appropriate and sufficient bond in
favor of the claimant or paid the appropriate sum into court, if permitted by
law, and thereby obtained the release of the Premises from such lien. If
judgment is obtained by the claimant under any lien, Tenant shall pay the same
immediately after such judgment shall have become final and the time for appeal
therefrom has expired without appeal having been taken. Tenant shall, at its own
expense, defend the interests of Tenant and Landlord in any and all such suits;
provided, however, that Landlord may, at its election, engage in its own counsel
and assert its own defenses, in which event Tenant
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shall cooperate with Landlord and make available to Landlord all information and
data which Landlord deems necessary or desirable for such defense.
Prior to commencement by Tenant of any work on the Premises which shall
have been previously permitted by Landlord as provided in this Lease, Tenant
shall record or file a notice of the commencement of such work in the land
records of Orange County, Florida, identifying Tenant as the party for whom such
work is being performed, stating such other matters as may be required by law
and requiring the service of copies of all notices, liens or claim of lien upon
Landlord. Any such notice of commencement shall clearly reflect that the
interest of Tenant in the Premises is that of a leasehold estate and shall also
clearly reflect that the interest of Landlord as the fee simple owner of the
Premises shall not he subject to mechanics or materialmen's liens on account of
the work which is the subject of such notice of commencement. A copy of any such
notice of commencement shall be furnished to and approved by Landlord and its
attorneys prior to the recording or filing thereof, as aforesaid.
19. PROPERTY AND LIABILITY INSURANCE. Landlord shall maintain fire and
extended coverage insurance on the Building and the Premises in such amounts as
Landlord shall require. The costs of such insurance shall be included in
Operating Expenses, and payments for losses thereunder shall be made solely to
Landlord or the mortgagees of Landlord as their interests shall appear.
Landlord, as a part of the Operating Expenses, shall maintain a policy or
policies of commercial general liability insurance with respect to its
activities in the Building and on the Property, such insurance to afford minimum
protection of not less than $1,000,000 combined single limit coverage of bodily
injury, property damage or combination thereof. Tenant shall purchase and
maintain such insurance as will protect it from claims set forth below which may
arise out of or result from its operations under this Lease, whether such
operations be by itself, by any subtenant or by anyone directly or indirectly
employed by any of them, or by anyone for whose acts any of them may be liable:
(1) claims under workers compensation, disability benefit, and other
similar employee acts;
(2) claims for damages because of bodily injury, occupational
sickness or disease, or death of its employees;
(3) claims for damages because of bodily injury, sickness or
disease, or death of any person other than employees;
(4) claims, for damages insured by usual personal injury liability
coverage which are sustained (a) by any person as a result of any
offense directly or indirectly related to the employment of such person
by Tenant, or (b) by any other person;
(5) claims for damages because of injury to or destruction of
tangible property, including loss of use thereof; and
(6) claims for damages because of bodily injury or property damage
arising out of the ownership, maintenance, use, loading or unloading
of any motor vehicle.
The insurance required by this Section 19, except for statutory Workers
Compensation, shall
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include Landlord and its property manager as an additional insured with respect
to operations performed under this Lease. The property insurance shall provide
that it is specific and noncontributory and shall contain a replacement cost
endorsement. Tenant shall, prior to commencement of the Lease Term and at
Landlord's request from time to time thereafter, provide Landlord with current
certificates of insurance evidencing Tenant's compliance with this Section 19
and with Section 20. Tenant shall obtain the agreement of Tenant's insurers to
notify Landlord that a policy is due to expire at least thirty (30) days prior
to such expiration, and the certificates of insurance shall provide that
Tenant's insurance coverage may not be reduced or cancelled without at least
thirty (30) days prior written notice to Landlord. The insurance companies
providing coverage required of Tenant under this Section 19 and in Section 20
shall be acceptable to the Landlord, shall be licensed to do business in the
State of Florida, and shall have a "Best's Rating" of "A" or "A+ ". In the event
Tenant shall fail to procure such insurance, Landlord may at its option after
giving Tenant no less than ten (10) days prior written notice of its election to
do so, procure the same for the account of Tenant, and the cost thereof shall
be paid to Landlord as additional rent upon receipt by Tenant of bills therefor.
20. INSURANCE LIMITS. THE REQUIRED limits of liability for the
policies required of Tenant under Section 19 shall be:
(a) Workers Compensation and Employers Liability
Coverage A - Statutory
Coverage B - $1,000,000
(b) Comprehensive General Liability (occurrence form)
Per Occurrence -$500,000
General Aggregate -$2,000,000
Products Aggregate -$2,000,000
Coverage must be endorsed to include a "Per Project" or "Per
Location" Aggregate.
(c) Automobile Liability
Bodily Injury -$500,000 per person
-$1,000,000 per accident
Property Damage -$100,000 per accident
OR
Combined Single Limit of $500,000
(d) Umbrella Liability
$5,000,000.
21. INDEMNITY. LANDLORD SHALL NOT BE LIABLE TO TENANT, OR TO
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TENANT'S AGENTS, SERVANTS, EMPLOYEES, CUSTOMERS OR INVITEES, FOR ANY INJURY TO
PERSON OR DAMAGE TO PROPERTY CAUSED BY ANY ACT, OMISSION, OR NEGLECT OF TENANT,
ITS AGENTS, SERVANTS, EMPLOYEES, INVITEES, LICENSEES OR ANY OTHER PERSON
ENTERING THE PROPERTY UNDER THE INVITATION OF TENANT, OR ARISING OUT OF THE USE
OF THE PREMISES BY TENANT AND THE CONDUCT OF ITS BUSINESS OR OUT OF A DEFAULT BY
TENANT IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER. TENANT HEREBY AGREES TO
INDEMNIFY, HOLD HARMLESS AND DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO
LANDLORD) LANDLORD, ITS AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES FROM ANY AND
ALL LIABILITY AND CLAIMS FOR ANY SUCH DAMAGE OR INJURY. LANDLORD HEREBY AGREES
TO INDEMNIFY, HOLD HARMLESS AND DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO
LANDLORD) LANDLORD, ITS AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES FROM ANY AND
ALL LIABILITY AND CLAIMS FOR DAMAGE OR INJURY CAUSED BY THE NEGLIGENCE OR
WILLFUL MISCONDUCT OF LANDLORD, ITS AGENTS, SERVANTS OR EMPLOYEES.
22. WAIVER OF SUBROGATION RIGHTS. ANYTHING IN THIS LEASE TO THE
CONTRARY NOTWITHSTANDING, LANDLORD AND TENANT HEREBY WAIVES ANY AND ALL RIGHTS
OF RECOVERY, CLAIM, ACTION OR CAUSE OF ACTION, AGAINST THE OTHER, THEIR AGENTS
(INCLUDING PARTNERS, BOTH GENERAL AND LIMITED), OFFICERS, DIRECTORS,
SHAREHOLDERS, CUSTOMERS, INVITEES 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 THEREON, OR ANY PERSONAL PROPERTY OF
SUCH PARTY THEREIN, BY REASON OF FIRE, THE ELEMENTS OR ANY OTHER CAUSE WHICH IS
OR IS REQUIRED TO BE INSURED AGAINST UNDER THE INSURANCE POLICIES REFERRED TO IN
SECTIONS 19 AND 20 HEREOF, REGARDLESS OF CAUSE OR ORIGIN, INCLUDING NEGLIGENCE
OF THE OTHER PARTY HERETO, ITS AGENTS, PARTNERS, SHAREHOLDERS, OFFICERS,
DIRECTORS, CUSTOMERS, INVITEES OR EMPLOYEES, AND COVENANTS THAT NO INSURER SHALL
HOLD ANY RIGHT OF SUBROGATION AGAINST SUCH OTHER PARTY. TENANT SHALL ADVISE
INSURERS OF THE FOREGOING WAIVER AND SUCH WAIVER SHALL BE A PART OF EACH POLICY
MAINTAINED BY TENANT.
23. CASUALTY DAMAGE. In the event (a) that the Premises should be
totally destroyed by fire, tornado or other casualty, or (b) that the Premises
or the Building should be so damaged that rebuilding or repairs cannot be
completed within one hundred eighty (180) days after the date of such casualty,
or (c) of a material uninsured loss to the Premises, Building or Property
(WHICH LACK OF INSURANCE COVERAGE IS NOT CAUSED BY ANY DEFAULT OF LANDLORD
UNDER THIS LEASE), Landlord may at its option terminate this Lease, in which
event the rent shall be abated during the unexpired portions of this Lease
effective with the date of such casualty. In the event Landlord elects or is
required to restore or rebuild the Premises or Building as provided above,
Landlord shall, within sixty (60) days after the date of such casualty, commence
to rebuild or repair the Premises and shall proceed with reasonable diligence to
restore the Premises to substantially the same condition which existed
immediately prior to the occurrence of the casualty except that Landlord shall
not be required to rebuild, repair or replace any part of the
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furniture, equipment, fixtures and other improvements which may have been placed
by Tenant or other tenants within the Building, the Property or the Premises.
Unless the casualty is a result of Tenant's fault or neglect, TENANT'S RENT
SHALL ABATE during the time the Premises are unfit for occupancy. In the event
any mortgagee under a deed of trust, security agreement or mortgage encumbering
the Premises should require that the insurance proceeds received as a result of
a casualty be used to retire the mortgage debt, Landlord shall have no
obligation to rebuild and this Lease shall terminate upon notice to Tenant. Any
insurance which may be carried by Landlord or Tenant against loss or damage to
the Building, the Property or to the Premises shall be for the sole benefit of
the party carrying such insurance and under its sole control. LANDLORD SHALL,
WITHIN SIXTY (60) DAYS FOLLOWING ANY SUCH CASUALTY, GIVE TENANT AN ESTIMATE
OF THE TIME TO REPAIR SUCH DAMAGE. IF, IN LANDLORD'S REASONABLE ESTIMATION, THE
PREMISES CANNOT BE RESTORED, TO THE EXTENT OF LANDLORD'S WORK THEREIN, WITHIN
SIX (6) MONTHS FOLLOWING SUCH DAMAGE OR DESTRUCTION, TENANT SHALL HAVE THE
OPTION TO TERMINATE THIS LEASE BY DELIVERING WRITTEN NOTICE TO LANDLORD WITHIN
FIFTEEN (15) DAYS AFTER LANDLORD HAS GIVEN TENANT ITS ESTIMATE OF THE TIME TO
REPAIR SUCH DAMAGE.
24. CONDEMNATION. If the whole or substantially the whole of the
Building, or ANY PORTION OF 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 is
taken or sold, Landlord (whether or not the Premises are affected thereby) may
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 is taken by the condemning authority. If this Lease is
not so terminated upon any such taking or sale, 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
installing shell 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. Except for any amounts specifically
awarded to Tenant for its separate property and fixtures, all amounts awarded
upon a taking of any part or all of the Property, Building or the Premises
belong to Landlord, and Tenant shall not be entitled to and expressly waives all
claims to any such compensation. NOTWITHSTANDING THE FOREGOING, TENANT SHALL BE
ENTITLED TO PURSUE REIMBURSEMENT CLAIMS OR COMPENSATION CLAIMS TO WHICH TENANT
IS ENTITLED UNDER APPLICABLE LAW, SO LONG AS SUCH CLAIMS DO NOT DECREASE THE
AMOUNT OF LANDLORD'S AWARD.
25. DAMAGES FROM CERTAIN CAUSES. Landlord shall not be liable to Tenant
for any loss or damage to any property or person occasioned by theft, fire, act
of God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, or order of governmental body or authority or by any other cause
except for Landlord's negligence or willful misconduct. Landlord shall not be
liable for any damage or inconvenience which may arise through repair or
alteration of any part of the Building or the Premises.
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26. 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 TEN (10) DAYS AFTER TENANT'S RECEIPT OF NOTICE THEREOF FROM LANDLORD;
PROVIDED, HOWEVER, THAT LANDLORD SHALL NOT BE REQUIRED TO PROVIDE TENANT WITH
THE NOTICE AND TEN-DAY PERIOD SET FORTH IN THIS SUBPARAGRAPH MORE THAN THREE
(3) TIMES DURING ANY LEASE YEAR, AND THE FOURTH AND EACH SUBSEQUENT FAILURE TO
TIMELY PAY SUCH SUMS DURING ANY LEASE YEAR SHALL IMMEDIATELY CONSTITUTE AN
EVENT OF DEFAULT HEREUNDER; (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 thirty (30)
days (or immediately if the failure involves a hazardous condition) after
written notice of such default is delivered to Tenant; PROVIDED, THAT IN THE
EVENT ANY SUCH FAILURE IS NOT REASONABLY SUSCEPTIBLE OF CURE WITHIN SUCH THIRTY
(30)-DAY PERIOD, TENANT SHALL HAVE A REASONABLE TIME TO CURE SUCH FAILURE (NOT
TO EXCEED NINETY (90) DAYS TOTAL), PROVIDED TENANT COMMENCES CURE AS SOON AS IS
REASONABLY POSSIBLE, AND PROSECUTES SUCH CURE DILIGENTLY TO COMPLETION; (iii)
the leasehold hereunder demised shall be taken on execution, levied upon or
attached or other process of law in any action against Tenant; (iv) Tenant
notifies Landlord, at any time prior to the Commencement Date, that Tenant does
not intend to take occupancy of the Premises upon the Commencement Date or
Tenant shall fail to promptly move into and take possession of the Premises when
the Premises are ready for occupancy or shall cease to do business in, vacate or
abandon any portion of the Premises; (v) Tenant shall become insolvent or unable
to pay its debts as they become due, or Tenant notifies Landlord that it
anticipates either condition, (vi) Tenant takes any action to, or notifies
Landlord that Tenant intends to, file a petition under any section or chapter of
the United States Bankruptcy Code, as amended from time to time, or under any
similar law or statute of the United States or any State thereof; or a petition
shall be filed against Tenant under any such statute or Tenant or any creditor
of Tenant notifies Landlord that it knows such a petition will be filed or has
been filed or Tenant notifies Landlord that it expects such a petition to be
filed; or (vii) 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) Remedies on Default. If any of the events of default
hereinabove specified shall occur, Landlord, at any time thereafter, shall have
and may exercise any of the following rights and remedies:
(i) Landlord may, pursuant to written notice
thereof to Tenant, terminate this Lease and, peaceably or pursuant to
appropriate legal proceedings, re-enter, retake and resume possession of the
Premises for Landlord's own account and, for Tenant's breach of and default
under this Lease, recover immediately from Tenant any and all Rent and other
sums and damages due or in existence at the time of such termination,
including, without limitation: (a) all Rent and other sums, charges, payments,
costs and expenses agreed and/or required to be paid by Tenant to Landlord
hereunder, (b) all costs and expenses of Landlord in connection with the
recovery of possession of the Premises, including reasonable attorneys' fees
and court costs, and (c) all costs and expenses of Landlord in connection with
any reletting or attempted reletting of the Premises or any part or parts
thereof, including, without limitation, brokerage fees, attorneys' fees and the
cost of any alterations or repairs which may be reasonably required to so relet
the
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Premises, or any part or parts thereof.
(ii) Landlord may, pursuant to any prior notice
required by law, and without terminating this Lease, peaceably or pursuant to
appropriate legal proceedings, re-enter, retake and resume possession of the
Premises for the account of Tenant, make such alterations of and repairs to the
Premises as may be reasonably necessary in order to relet the same or any part
or parts thereof and relet or attempt to relet the Premises or any part or parts
thereof for such term or terms (which may be for a term or terms extending
beyond the term of this Lease), at such rents and upon such other terms and
provisions as Landlord, in its sole, but reasonable, discretion, may deem
advisable. If Landlord relets or attempts to relet the Premises, Landlord shall
be the sole judge as to the terms and provisions of any new lease or sublease
and of whether or not a particular proposed new tenant or sublease is
acceptable to Landlord. Upon any such reletting, all rents received by the
Landlord from such reletting shall be applied: (a) first, to the payment of all
costs and expenses of recovering possession of the Premises, (b) second, to the
payment of any costs and expenses of such reletting, including brokerage fees,
attorneys' fees and the cost of any alterations and repairs reasonably required
for such reletting; (c) third, to the payment of any indebtedness, other than
Rent, due hereunder from Tenant to the Landlord, (d) fourth, to the payment of
all Rent and other sums due and unpaid hereunder, and (e) fifth, the residue,
if any, shall be held by the Landlord and applied in payment of future Rents
as the same may become due and payable hereunder. If the rents received from
such reletting during any period shall be less than that required to be paid
during that period by the Tenant hereunder, Tenant shall promptly pay any such
deficiency to the Landlord and failing the prompt payment thereof by Tenant to
Landlord, Landlord shall immediately be entitled to institute legal proceedings
for the recovery and collection of the same. Such deficiency shall be
calculated and paid at the time each payment of rent shall otherwise become due
under this Lease, or, at the option of Landlord, at the end of the term of this
Lease. Landlord shall, in addition, be immediately entitled to sue for and
otherwise recover from Tenant any other damages occasioned by or resulting from
any abandonment of the Premises or other breach of or default under this Lease
other than a default in the payment of rent. No such re-entry, retaking or
resumption of possession of the Premises by the Landlord for the account of
Tenant shall be construed as an election on the part of Landlord to terminate
this Lease unless a written notice of such intention shall be given to the
Tenant or unless the termination of this Lease be decreed by a court of
competent jurisdiction. Notwithstanding any such re-entry and reletting or
attempted reletting of the Premises or any part or parts thereof for the
account of Tenant without termination, Landlord may at any time thereafter,
upon written notice to Tenant, elect to terminate this Lease or pursue any
other remedy available to Landlord for Tenant's previous breach of or default
under this Lease.
(iii) Landlord may, without re-entering, retaking
or resuming possession of the Premises, sue for all Rent and all other sums,
charges, payments, costs and expenses due from Tenant to Landlord hereunder
either: (i) as they become due under this Lease, taking into account that
Tenant's right and option to pay the Rent hereunder on a monthly basis in any
particular Lease year is conditioned upon the absence of a default on Tenant's
part in the performance of its obligations under this Lease, or (ii) at
Landlord's option, accelerate the maturity and due date of the whole or any
part of the Rent for the entire then-remaining unexpired balance of the term of
this Lease, as well as all other sums, charges, payments, costs and expenses
required to be paid by Tenant to Landlord hereunder, including, without
limitation, damages for breach or default of Tenant's obligations hereunder in
existence at the time of such
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acceleration, such that all sums due and payable under this Lease shall,
following such acceleration, be treated as being and, in fact, be due and
payable in advance as of the date of such acceleration. Landlord may then
proceed to recover and collect all, such unpaid Rent and other sums so sued for
from Tenant by distress, levy, execution or otherwise. Regardless of which of
the foregoing alternative remedies is chosen by Landlord under this
subparagraph (iii), Landlord shall not be required to relet the Premises nor
exercise any other right granted to Landlord pursuant to this Lease, nor shall
Landlord be under any obligation to minimize or mitigate Landlord's damages or
Tenant's loss as a result of Tenant's breach of or default under this Lease.
In addition to the remedies hereinabove specified and enumerated,
Landlord shall have and may exercise the right to invoke any other remedies
allowed at law or in equity as if the remedies of re-entry, unlawful detainer
proceedings and other remedies were not herein provided. Accordingly, the
mention in this Lease of any particular remedy shall not preclude Landlord from
having or exercising any other remedy at law or in equity. Nothing herein
contained shall be construed as precluding the Landlord from having or
exercising such lawful remedies as may be and become necessary in order to
preserve the Landlord's right or the interest of the Landlord in the Premises
and in this Lease, even before the expiration of any notice periods provided
for in this Lease, if under the particular circumstances then existing the
allowance of such notice periods will prejudice or will endanger the rights and
estate of the Landlord in this Lease and in the Premises.
(c) This Section 26 shall be enforceable to the maximum
extent not prohibited by applicable law, and the unenforceability of any portion
hereof shall not thereby render unenforceable any other portion,
(d) Landlord shall be in default hereunder in the event
Landlord has not commenced and pursued with reasonable diligence the cure of
any failure of Landlord to meet its obligations hereunder within thirty (30)
days of the receipt by Landlord of written notice from Tenant of the alleged
failure to perform. In SUCH EVENT, TENANT SHALL BE ENTITLED TO SEEK WHATEVER
REMEDIES ARE PERMITTED AT LAW OR IN EQUITY. In addition, Tenant hereby
covenants that, prior to the exercise of any such remedies, it will give the
mortgagee(s) holding mortgages on the Building notice and a reasonable time to
cure any default by Landlord.
27. PEACEFUL ENJOYMENT. Tenant shall and my peacefully have, hold,
and enjoy the Premises, subject to the other terms hereof including, without
limitation, Section 28 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 any 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
the Landlord's interest hereunder.
28. HOLDING OVER. In the event of holding over by Tenant after
expiration or other termination of this Lease or in the event Tenant continues
to occupy the Premises after the
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termination of Tenant's right of possession pursuant Section 26(b) hereof,
unless otherwise agreed to in writing, such hold over shall constitute and be
construed as a tenancy at sufferance, and Tenant shall, throughout the entire
holdover period, pay rent equal to 150% OF the Rent which would have been
applicable had the Lease Term continued through the period of such holding over
by Tenant. No holding over by Tenant after the expiration of the term of this
Lease shall be construed to extend the term of this Lease. Additionally, Tenant
shall be liable to Landlord for all of Landlord's consequential damages
resulting directly or indirectly from Tenant's failure to surrender the
Premises to Landlord in accordance with this Lease.
29. SUBORDINATION TO MORTGAGE. Tenant accepts this Lease subject
and subordinate to any mortgage, deed of trust or other lien presently existing
or hereafter arising encumbering the Premises, the Building and/or the
Property, and to any renewals, modifications, consolidations, refinancing and
extensions thereof, but Tenant agrees that any such mortgagee shall have the
right at any time to subordinate such mortgage, deed of trust or other lien to
this Lease on such terms and subject to such conditions as such mortgagee may
deem appropriate in its discretion. Landlord is hereby irrevocably vested with
full power and authority to subordinate this Lease to any mortgage, deed of
trust or other lien now existing or hereafter placed upon the Premises, or the
Building and/or the Property and Tenant agrees upon demand to execute such
further instruments subordinating this Lease or attorning to the holder of any
such liens as Landlord in any request. The terms of this Lease are subject to
approval by Landlord's mortgagee(s) and such approval is a condition precedent
to Landlord's obligations hereunder. In the event that Tenant should fail to
execute any subordination or other agreement required by this paragraph,
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. Tenant agrees
that it will from time to time upon request by Landlord execute and deliver to
such persons as Landlord shall request a statement certifying that this Lease
is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as so modified),
stating the dates to which rent and other charges payable under this Lease have
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.
NOTWITHSTANDING THE FOREGOING, TENANT'S AGREEMENT TO SUBORDINATE THIS LEASE TO
ANY MORTGAGEE SHALL BE CONTINGENT UPON TENANT RECEIVING FROM SUCH MORTGAGEE A
NON-DISTURBANCE AGREEMENT IN A FORM REASONABLY ACCEPTABLE TO TENANT AND SUCH
MORTGAGEE.
30. LANDLORD'S LIEN.
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31. PARKING. Tenant shall have a non-exclusive license to use
five and one-half (5.5) parking spaces associated with the Building per One
Thousand (1,000) square feet of Rentable Area in the Premises. Tenant's right
to such parking spaces is subject to Landlord's rights to grant other tenants
of the Building the rights to parking spaces associated with the Building.
Landlord reserves the right from time to time to assign, or re-assign, the
location of such parking spaces in any manner that Landlord in Landlord's sole
discretion deems beneficial to the operation of the Building. Tenant agrees
that it will employ its best efforts to prevent the use by Tenant's employees
and visitors of parking spaces allocated exclusively to other tenants. Landlord
reserves the right to promulgate rules and regulations for the use of all
parking areas at any time during the term of this Lease. All motor vehicles
(including all contents thereof) shall be parked in such spaces at the sole
risk of Tenant, its employees, agents, invitees and licensees, it being
expressly agreed and understood that Landlord has no duty to insure any of said
motor vehicles (including the contents thereof), and that Landlord is not
responsible for the protection and security of such vehicles, or the contents
thereof. Landlord shall have no liability whatsoever for any property damage
and/or personal injury which might occur as a result of or in connection with
the parking of said motor vehicles in any of the parking spaces. Nothing herein
shall be deemed to create a bailment between the parties hereto, it being
expressly agreed and understood that the only relationship created between
Landlord and Tenant hereby is that of licensor and licensee, respectively.
32. ATTORNEYS' FEES. If either party shall bring an action to
recover any sum due hereunder, or for any breach hereunder, and shall obtain a
judgment or decree in its favor, the court shall award to such prevailing party
its reasonable costs and reasonable attorneys' fees, specifically including
reasonable attorneys' fees incurred in connection with any appeals (whether or
not taxable as such by law). Landlord shall also be entitled to recover its
reasonable attorneys' fees and costs incurred in any bankruptcy action filed by
or against Tenant, including, without limitation, those incurred in seeking
relief from the automatic stay, in dealing with the assumption or rejection of
this Lease, in any adversary proceeding, and in the preparation and filing of
any proof of claim.
33. NO IMPLIED WAIVER. The failure of Landlord to insist at any
time upon the strict performance of any covenant or agreement 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 monthly
installment of 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 or pursue any other remedy provided in this Lease.
34. PERSONAL LIABILITY. The liability of Landlord to Tenant for
any default by Landlord under the terms of this Lease shall be limited to the
interest of Landlord in the Building and Property, and Tenant agrees to look
solely to Landlord's interest in the Building and the Property for the recovery
of any judgment from the Landlord, it being intended that Landlord shall not be
personally liable for any judgment or deficiency.
35. SECURITY DEPOSIT. The Security Deposit shall be held by
Landlord without
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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 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 termination of
this Lease, the balance of the Security Deposit remaining after any such
application shall be returned by Landlord to Tenant. 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.
36. 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, postage prepaid 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, or by any other nationally recognized
overnight courier, addressed to the 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. Notice personally delivered shall be effective when delivered or when
the recipient refuses delivery; notice deposited in the mail in the manner
hereinabove described shall be effective from and after the expiration of three
(3) days after it is so deposited; and notice deposited with an overnight
carrier shall be effective one (1) day after it is so deposited.
37. SEVERABILITY. If any term or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, 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 valid and enforceable to the fullest
extent permitted by law.
38. RECORDATION. Tenant agrees not to record this Lease or any
memorandum hereof. The parties hereto will execute and record a memorandum of
this Lease, if requested by Landlord.
39. 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.
40. FORCE MAJEURE. Whenever a period of time is herein prescribed
for the taking of any action by EITHER PARTY, SUCH PARTY 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 or materials, war, governmental laws, regulations or restrictions, or any
other cause whatsoever beyond the reasonable control of SUCH PARTY.
NOTWITHSTANDING THE FOREGOING, THIS SECTION 40 SHALL NOT APPLY TO THE PAYMENT
OF RENT OR OTHER CHARGES BY TENANT.
41. TIME OF PERFORMANCE. Except as expressly otherwise herein
provided, with
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respect to all required acts of Tenant, time is of the essence of this Lease.
42. TRANSFERS BY LANDLORD. Landlord shall have the right to
transfer and assign, in whole or in part, all of its rights and obligations
hereunder and in the Building and Property referred to herein, and in such
event and upon such 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.
43. BROKER. Each of the parties represents and warrants to the
other that except as expressly set forth in this Section 43, such party has not
dealt with any broker, agent or other person in connection with this Lease and
that no other broker, agent or other person brought about this Lease through
the acts of or employment of either party, and each party hereby agrees to
indemnify, defend and hold the other party harmless from all liability arising
from any claim for brokerage commissions of any kind (including, without
limitation, attorneys' fees incurred in connection therewith) in connection
with this Lease, which claim arises (directly or indirectly) out of an
agreement, contract, course of dealings or relationship between Tenant and the
claiming party. The terms and provisions of this Section 43 shall survive the
expiration or sooner termination of this Lease.
44. 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. This Lease shall not be
effective until a copy executed by both Landlord and Tenant is delivered to and
accepted by Landlord, and this Lease has been approved by Landlord's mortgagee.
45. CERTAIN RIGHTS RESERVED TO LANDLORD. Landlord reserves the
following rights, each of which Landlord may exercise without liability to
Tenant, and the exercise of any such rights shall not be deemed to constitute
an eviction or disturbance of Tenant's use or possession of the Premises and
shall not give rise to any claim for set-off or abatement of rent or any other
claim: (a) to change the name or street address of the Building or the suite
number of the Premises, PROVIDED THAT LANDLORD SHALL PAY THE REASONABLE COSTS
FOR TENANT TO CHANGE ITS STATIONERY AND BUSINESS CARDS; (b) to install, affix
and maintain any and all signs on the exterior OF THE BUILDING OR IN THE COMMON
AREAS OF THE interior of the Building; (c) SUBJECT TO ANY RESTRICTIONS SET
FORTH IN THIS LEASE, to make repairs, decorations, alterations, additions or
improvements, whether structural or otherwise, in and about the Building, and
for such purposes to enter upon the Premises, temporarily close doors,
corridors and other areas in the Building and interrupt or temporarily suspend
services or use of Common Areas, and Tenant agrees to pay Landlord for overtime
and similar expenses incurred if such work is done other than during ordinary
business hours at Tenant's request; (d) to retain at all times, and to use in
appropriate instances, keys to all doors within and into the Premises, SUBJECT
TO ANY LIMITATIONS ON LANDLORD'S ENTRY CONTAINED IN THIS LEASE; (e) to grant to
any person or to reserve unto itself the exclusive right to conduct any
business or render any service in the Building (OTHER THAN IN THE PREMISES);
(f) to show or inspect the Premises at reasonable times and, if vacated or
abandoned, to prepare the Premises for reoccupancy, SUBJECT TO ANY LIMITATIONS
ON LANDLORD'S ENTRY CONTAINED IN THIS LEASE; (g) to install, use and maintain
in and through the Premises pipes, conduits, wires and ducts serving the
Building, provided that such installation, use and maintenance does not
unreasonably interfere with Tenant's use of the Premises, PROVIDED THAT SUCH
PIPES, CONDUITS, WIRES AND DUCTS ARE SHOWN ON THE APPROVED PLANS AND
SPECIFICATIONS
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FOR THE PREMISES; (h) to take any other action which Landlord deems reasonable
in connection with the operation, maintenance, marketing or preservation of the
Building WHICH IS OTHERWISE CONSISTENT WITH THE OTHER TERMS OF THE LEASE; and
(i) to approve the weight, size and location of safes or other heavy equipment
or articles IF THEY ARE HEAVIER THAN 100 POUNDS PER SQUARE FOOT, which articles
may be moved in, about or out of the Building or Premises, at Tenant's sole
risk and responsibility.
46. WAIVER OF TRIAL BY JURY. LANDLORD AND TENANT WAIVE TRIAL BY
JURY IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
LANDLORD OR TENANT AGAINST THE OTHER IN CONNECTION WITH THIS LEASE.
47. ESTOPPEL CERTIFICATE. Upon ten (10) days notice from Landlord
to Tenant, Tenant shall deliver a certificate dated as of the first day of the
calendar month in which such notice is received, executed by an appropriate
officer, partner or individual, in the form as Landlord may require, stating
(but not limited to) the following: (i) the Commencement Date of this Lease;
(ii) the space occupied by Tenant hereunder; (iii) the expiration date hereof;
(iv) a description of any renewal or expansion options, if any; (v) the amount
of Rent currently and actually paid by Tenant under this Lease; (vi) the nature
of any default or claimed default hereunder by Landlord; and (vii) that Tenant
is not in default hereunder nor has any event occurred which with the passage
time or the giving of notice would become a default by Tenant hereunder.
Landlord agrees that, within twenty (20) days after written request from
Tenant, Landlord shall execute, acknowledge and deliver to Tenant a similar
estoppel certificate.
48. ENVIRONMENTAL MATTERS.
(a) Defined Terms.
(1) "Damages" shall mean all damages, and
includes, without limitation, punitive damages, liabilities, costs, losses,
diminutions in value, fines, penalties, demands, claims, cost recovery actions,
lawsuits, administrative proceedings, orders, response action costs, compliance
costs, investigation expenses, consultant fees, attorneys' and paralegals' fees
and litigation expenses.
(2) "Environmental Law" shall mean any current
or future statute, ordinance, regulation or rule pertaining to (1) the
protection of health, safety and the indoor or outdoor environment, (2) the
conservation, management or use of natural resources and wildlife, (3) the
protection or use of surface water and groundwater, (4) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal,
remediation, investigation or handling of, or exposure to, any Hazardous
Material or (5) pollution (including any release to air, land, surface water
and groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.9601) et
seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. ss.6901 et seq., the Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 U.S.C. ss.1251 et seq., the Clean Air Act of
1966, as amended. 42 U.S.C. ss.7401 et seq., the Toxic Substances Control Act
of 1976, 15
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U.S.C. ss.2601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
App. ss.1801 et seq,, the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. ss.651 et seq., any state or local law requiring
notifications or reports upon conveyance or other events, any similar,
implementing or successor law, any amendment, rule, regulation, order or
directive issued thereunder, and all other federal, state, regional, county,
municipal, and local laws, regulations, and ordinances insofar as they regulate
Hazardous Materials.
(3) "Governmental Approval" shall mean any
permit, license, variance, certificate, consent, letter, clearance, closure,
exemption, decision, action or approval of any international, foreign, federal,
state, regional, county or local person or body having governmental or
quasi-governmental authority or a subdivision thereof.
(4) "Hazardous Material" shall mean any
substance, chemical, compound, product, solid, gas, liquid, waste, byproduct,
pollutant, contaminant or material which is hazardous or toxic, and includes,
without limitation, asbestos, polychlorinated biphenyls, petroleum (including
crude oil or any fraction thereof) and any such material classified or
regulated as "hazardous" or "toxic" pursuant to any Environmental Law.
(5) "Hazardous Material Activity" shall mean
any activity, event or occurrence involving a Hazardous Material, including,
without limitation, the manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened release,
abatement, removal, remediation, handling of or corrective or response action
to any Hazardous Material.
(b) REPRESENTATIONS AND WARRANTIES OF TENANT AND
LANDLORD. Tenant represents and warrants as of the date of this Lease, as to
the Premises:
(1) Tenant is in compliance with any applicable
Environmental Law; and
(2) Tenant intends to conduct no Hazardous
Material Activity on the Premises, except in the ordinary course of its
business. NOTWITHSTANDING ANYTHING SET FORTH HEREIN TO THE CONTRARY, TENANT MAY
STORE, USE AND DISPOSE OF HAZARDOUS MATERIAL INCIDENTAL TO ITS MANUFACTURING
ACTIVITIES, PROVIDED, HOWEVER, THAT ANY SUCH STORAGE, USE OR DISPOSAL IS
STRICTLY IN ACCORDANCE WITH ALL APPLICABLE ENVIRONMENTAL LAWS. THE NATURE OF
SUCH HAZARDOUS MATERIAL USED IN TENANT'S BUSINESS IS AS FOLLOWS: MATERIAL FOUND
IN SMALL ELECTRONIC COMPONENTS, TOGETHER WITH SMALL AMOUNTS OF CLEANING FLUIDS
USED IN THE ASSEMBLY, TESTING AND CLEANING OF ELECTRONIC COMPONENTS.
LANDLORD REPRESENTS AND WARRANTS AS OF THE DATE OF THIS LEASE THAT IT
HAS NO ACTUAL KNOWLEDGE, WITHOUT INDEPENDENT INVESTIGATION, OF ANY VIOLATIONS
OF ANY APPLICABLE ENVIRONMENTAL LAW WITH RESPECT TO THE PROPERTY OR THE
BUILDING.
(c) Covenants of Tenant. Tenant hereby covenants that,
during the term of this Lease as to the Premises:
(1) Tenant shall comply at its sole cost and
expense with all applicable Environmental Laws and shall be responsible for
making any notification or report required to be
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made by any applicable Environmental Law;
(2) Tenant shall not conduct any Hazardous
Material Activity on the Premises, except in the ordinary course of its
business, including, but not limited to, (i) installing any underground storage
tanks; (ii) taking any action that would subject the Premises to the permit
requirements under Resource, Conservation and Recovery Act for storage,
treatment or disposal of Hazardous Materials, (iii) disposing of Hazardous
Materials in dumpsters provided by Landlord for tenant use, (iv) discharging
Hazardous Materials into drains or sewers, or (v) causing or allowing the
release of any Hazardous Materials on, to or from the Premises, the Building or
the Property;
(3) If Tenant's use, including any Hazardous
Material Activity, (i) gives rise to liability or to a claim under any
Environmental Law, or any common law theory of tort or otherwise, (ii) causes a
threat to, or endangers human health or the environment, or (iii) creates a
nuisance or trespass, Tenant shall, to the reasonable satisfaction of Landlord
and at Tenant's sole cost and expense, promptly take all actions as are
necessary to return the Premises or any adjacent property to the condition
existing prior to the introduction of any such Hazardous Material and to comply
with all applicable Environmental Laws and eliminate or avoid any liability
claim with respect thereto. Landlord's written approval of such actions to be
taken with respect to the Premises or any adjacent property shall first be
obtained;
(4) Tenant shall provide Landlord with (i)
copies of all environmental reports and tests obtained by Tenant, and (ii)
within ten (10) days of Tenant's receipt of a written request by Landlord, any
other applicable documents and information with respect to environmental
matters;
(5) Tenant shall provide Landlord promptly with
copies of all summonses, citations, directives, information inquiries or
requests, notices of potential responsibility, notices of violation or
deficiency, orders or decrees, claims, complaints, investigations, judgments,
letters, notices of environmental liens or response actions in progress, and
other communications, written or oral, actual or threatened, from any federal,
state, or local agency or authority, or any other entity or individual,
concerning (i) any actual or alleged release of a Hazardous Material on, to or
from the Premises, (ii) the imposition of any lien on the Premises, (iii) any
actual or alleged violation of, or responsibility under, any Environmental
Laws, or (iv) any actual or alleged liability under any theory of common law
tort or toxic tort, including, without limitation, negligence, trespass,
nuisance, strict liability, or ultrahazardous activity;
(6) Tenant shall allow Landlord or its
representatives from time to time, at Landlord's expense and reasonable
discretion, upon reasonable prior written notice to Tenant to inspect the
Premises and conduct an environmental assessment (including invasive soil or
groundwater sampling), including, without limitation, to facilitate any sale or
lease of the Premises, the Building and/or the Property; and
(7) Tenant shall, upon the written request of
Landlord, timely provide a report of an environmental assessment of reasonable
scope, form and depth by a consultant reasonably approved by Landlord as to (1)
any matter to the extent such matter is attributable to events or conditions
which arise during the Lease Term and (i) for which notice is provided
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pursuant to the above requirements or (ii) which may reasonably be believed by
Landlord to form the basis for a claim under any Environmental Law or under any
common law theory of tort, and (2) the general environmental condition of the
Premises within three hundred sixty-five (365) days of the expiration of this
Lease or the earlier termination thereof or of Landlord's right to possession of
the Premises. If such a requested environmental report is not delivered within
seventy-five (75) days after receipt of Landlord's request, then Landlord may
arrange for same. The reasonable cost of any assessment pursuant to subpart (1)
of this provision or any assessment pursuant to subpart (2) of this provision
which discloses a breach of this Section 48 shall be payable by Tenant.
(d) RIGHTS OF LANDLORD. In the event that Tenant shall fail to
comply with any of its obligations under this Section 48 as and when required
hereunder and after giving Tenant prior written notice and a reasonable
opportunity to cure the same, Landlord shall have the right (but not the
obligation) to take such action as is required, in Landlord's sole discretion,
to be taken by Tenant hereunder and in such event, Tenant shall be liable and
responsible to Landlord for all costs, expenses, liabilities, claims and other
obligations paid, suffered, or incurred by Landlord in connection with such
matters, Tenant shall reimburse Landlord immediately upon demand for all such
amounts for which Tenant is liable.
(e) INDEMNIFICATION AND WAIVER. Notwithstanding anything contained
in this Lease to the contrary, Tenant shall indemnify, hold harmless, and hereby
waives any claim for contribution against, Landlord, and its beneficiaries,
officers, directors, shareholders, employees, and agents, from and against any
and all claims, response costs, losses, liabilities, damages, costs, and
expenses, including, but not limited to, the costs and expenses of
investigations, studies, health or risk assessments and consulting fees, and
including, without limitation, loss of rental income, loss due to business
interruption, and reasonable attorneys' fees and costs, arising out of or in any
way connected with any or all of the following:
(1) any Hazardous Materials which, at any time during the term
of this Lease are or were actually or allegedly generated, stored, treated,
released, disposed of, used or otherwise located on or at the Premises,
including, but not limited to, any and all (i) liabilities under any common law
theory of tort, nuisance, strict liability, ultrahazardous activity, negligence
or otherwise based upon, resulting from or in connection with any Hazardous
Material, and (ii) obligations to take response, cleanup or corrective action
pursuant to any investigation or remediation in connection with the
decontamination, removal, transportation, incineration, or disposal of any of
the foregoing; and
(2) any actual or alleged illness, disability, injury, or death
of any person in any manner arising out of or allegedly arising out of exposure
to Hazardous Materials present at the Premises and attributable to events or
conditions which arose during the term of this Lease, regardless of when any
such illness, disability, injury, or death shall have occurred or been incurred
or manifested itself; and
(3) any actual or alleged failure of Tenant or the Premises at
any time and from time to time to comply with all applicable Environmental Laws
to the extent noncompliance is attributable to events and conditions which arose
during the term of this Lease; and
(4) any failure by Tenant to comply with its obligations under
this
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Section 48.
NOTWITHSTANDING THE FOREGOING, TENANT SHALL NOT BE REQUIRED TO
INDEMNIFY LANDLORD AGAINST ANY HAZARDOUS MATERIALS WHICH EXISTED WITHIN THE
PREMISES OR ON THE PROPERTY PRIOR TO THE DATE OF THIS LEASE OR WHICH WERE PLACED
WITHIN THE PREMISES OR ON THE PROPERTY BY ANY PARTY OTHER THAN TENANT OR ITS
AGENTS, EMPLOYEES, SERVANTS, OR CONTRACTORS. In the event any claims or other
assertion of liability shall be made against Landlord for which Landlord is
entitled to indemnity hereunder, Landlord shall notify Tenant of such claim or
assertion of liability and thereupon Tenant shall, at its sole cost and expense,
assume the defense of such claim or assertion of liability, in a manner and with
counsel reasonably acceptable to Landlord, and continue such defense at all
times thereafter until completion. The obligations of Tenant under this Section
48 shall survive any termination or expiration of this Lease.
49. RADON GAS. As directed by Section 404.056, Florida Statutes: "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."
50. RELOCATION.
51. EXHIBITS. The following exhibits are attached hereto and
incorporated herein and made a part of this Lease for all purposes:
Exhibit "A" - Legal Description of Property
Exhibit "B" - Description of Premises
Exhibit "C" - Work Letter
Exhibit "D" - Rules and Regulations
Exhibit "E" - Property Restrictions
52. TERMINATION OPTION. IN THE EVENT THAT TENANT EXECUTES A LEASE WITH
LANDLORD IN WHICH TENANT COMMITS TO LEASE A MINIMUM OF 60,000 SQUARE FEET OF
RENTABLE AREA IN THE BUILDING KNOWN AS 500 GRAN PARK TO BE CONSTRUCTED AT 8337
SOUTH PARK CIRCLE, ORLANDO, FLORIDA, THEN TENANT SHALL HAVE THE RIGHT TO
TERMINATE THIS LEASE. LANDLORD AND TENANT HEREBY AGREE THAT IF A LEASE IS
EXECUTED AT 500 GRAN PARK AS PROVIDED ABOVE, SUCH LEASE SHALL HAVE THE FOLLOWING
TERMS: RENT FOR THE FIRST LEASE YEAR SHALL BE $11.00 PER SQUARE FOOT OF RENTABLE
AREA PER YEAR, INCREASED AT THE RATE OF THREE PERCENT (3%) PER ANNUM THEREAFTER;
THE LEASE TERM SHALL BE SEVEN (7) YEARS; THE SPACE SHALL BE A MINIMUM OF 60,000
SQUARE FEET OF RENTABLE AREA AND A MAXIMUM OF THE ENTIRE BUILDING; THE
COMMENCEMENT DATE SHALL BE BETWEEN APRIL 1, 2000 AND OCTOBER 1, 2000; THE TENANT
IMPROVEMENT ALLOWANCE SHALL BE $30.00 PER SQUARE FOOT OF RENTABLE AREA IN SUCH
SPACE;
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<PAGE> 33
TWO-THIRDS OF THE TENANT IMPROVEMENT ALLOWANCE SHALL BE SECURED BY A LETTER OF
CREDIT OR OTHER SECURITY SATISFACTORY TO LANDLORD, WITH SUCH SECURITY TO BE
REDUCED 25% PER YEAR OVER A FOUR YEAR PERIOD; AND TENANT SHALL HAVE A RIGHT OF
FIRST OFFER TO LEASE THE REMAINDER OF THE SPACE AT 500 GRAN PARK ON THE SAME
TERMS AND CONDITIONS AS THE INITIAL SPACE IS LEASED TO TENANT, PROVIDED THAT THE
TERM OF SUCH LEASE SHALL BE EXTENDED SO THAT IT SHALL EXPIRE AT LEAST SEVEN (7)
YEARS FOLLOWING THE DATE ON WHICH THE FINAL SPACE IN SUCH BUILDING IS LEASED BY
TENANT; AND UPON SUCH OTHER TERMS AND CONDITIONS AS LANDLORD AND TENANT MAY
AGREE. WITH RESPECT TO THE RIGHT OF FIRST OFFER OF SPACE AT 500 GRAN PARK, ANY
SPACE ADDED PURSUANT TO SUCH RIGHT FROM TIME TO TIME SHALL BE AT THE RENTAL RATE
THEN BEING PAID FOR THE REMAINDER OF THE SPACE PURSUANT TO SUCH LEASE. WHEN THE
TERM OF SUCH LEASE IS EXTENDED TO EXPIRE SEVEN (7) YEARS FOLLOWING THE DATE ON
WHICH THE FINAL SPACE IN SUCH BUILDING IS LEASED BY TENANT, THE RENTAL FOR ALL
SPACE AT 500 GRAN PARK SHALL CONTINUE TO INCREASE EACH YEAR DURING EACH EXTENDED
TERM AT THE SAME RATE THAT RENTAL HAS INCREASED FROM YEAR TO YEAR PRIOR TO SUCH
EXTENSION. IF SUCH LEASE IS ENTERED INTO FOR 500 GRAN PARK, THEN THE TERM OF
TENANT'S EXISTING LEASE WITH LANDLORD AT 100 GRAN PARK (8529 SOUTH PARK CIRCLE)
SHALL BE EXTENDED SO THAT SUCH LEASE EXPIRES ON THE SAME DATE AS THE LEASE AT
500 GRAN PARK. RENTAL FOR THE LEASE AT 100 GRAN PARK SHALL CONTINUE TO INCREASE
EACH YEAR DURING SUCH EXTENDED TERM AT THE SAME RATE THAT RENTAL HAS INCREASED
PRIOR TO SUCH EXTENSION PURSUANT TO THE TERMS OF THE LEASE AT 100 GRAN PARK.
THIS TERMINATION OPTION SHALL BE EFFECTIVE ONLY IF TENANT MOVES INTO THE 500
GRAN PARK BUILDING AND BEGINS PAYING RENT NO LATER THAN FIFTEEN (15) MONTHS
AFTER THE COMMENCEMENT DATE OF THIS LEASE. SUCH TERMINATION OPTION MUST BE
EXERCISED BY DELIVERY OF WRITTEN NOTICE OF TERMINATION FROM TENANT TO LANDLORD
ON OR BEFORE APRIL 1, 2000, AND TENANT AND LANDLORD MUST EXECUTE THE LEASE AT
500 GRAN PARK WITHIN THIRTY (30) DAYS THEREAFTER. OTHERWISE THIS TERMINATION
OPTION SHALL BE NULL AND VOID. IF TENANT AND LANDLORD EXECUTE SUCH LEASE FOR A
MINIMUM OF 60,000 SQUARE FEET OF RENTABLE AREA IN THE 500 GRAN PARK BUILDING AS
PROVIDED ABOVE, THEN TENANT SHALL RECEIVE A RENT CREDIT AGAINST THE FIRST RENT
OTHERWISE PAYABLE BY TENANT AT 500 GRAN PARK IN AN AMOUNT EQUAL TO THE BASE
RENTAL ACTUALLY PAID BY TENANT DURING THE FIRST NINE (9) MONTHS OF THE LEASE
TERM PURSUANT TO THIS LEASE.
53. ROOF EQUIPMENT. TENANT SHALL HAVE THE RIGHT TO INSTALL A
TRANSMITTER BOX (OR BOXES) ON THE ROOF OF THE BUILDING FOR THE PURPOSE OF
FACILITATING TENANT'S BUSINESS IN THE PREMISES. THE SIZE, WEIGHT, LOCATION AND
METHOD OF INSTALLATION AND REMOVAL OF SUCH TRANSMITTER BOXES SHALL BE SUBJECT TO
LANDLORD'S PRIOR WRITTEN APPROVAL, WHICH SHALL NOT BE UNREASONABLY WITHHELD.
TENANT SHALL REPAIR ANY DAMAGE TO THE BUILDING WHEN REMOVING SUCH TRANSMITTER
BOXES, AND TENANT SHALL NOT DRILL ANY HOLES IN THE ROOF OF THE BUILDING UNLESS
SUCH WORK IS PERFORMED BY OR SUPERVISED BY LANDLORD'S ROOF CONTRACTOR IN ORDER
TO AVOID THE INVALIDATION OF LANDLORD'S ROOF WARRANTY.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
multiple original counterparts as of the day and year first above written.
LANDLORD:
_______________________________ GRAN CENTRAL CORPORATION,
Witness a Florida corporation
By: The St. Joe Company,
a Florida corporation, its agent
_______________________________
Witness By:____________________________________
Title:_________________________________
Date:__________________________________
Address:
c/o The St. Joe Company
1650 Prudential Drive
Suite 400
Jacksonville, Florida 32207
Attention: William L. Mason
With a copy to:
Gran Central Corporation
8529 South Park Circle, Suite 120
Orlando, Florida 32819
Attention: Property Manager
TENANT:
/s/ [ILLEGIBLE] TRITON NETWORK SYSTEMS, INC.
- ------------------------------- a Delaware corporation
Witness
/s/ [ILLEGIBLE] By: /s/ Ken Vines
- ------------------------------- ---------------------------------------
Witness
Title: CFO
---------------------------------------
Date: 5/5/99
---------------------------------------
Address:
8529 South Park Circle
Suite 400
Orlando, Florida 32819
31
<PAGE> 35
EXHIBIT "A"
DESCRIPTION OF PROPERTY ON WHICH THE PROJECT IS SITUATED
Block A, SOUTH PARK UNIT THREE, as recorded in Plat Book 17, Page 28, Public
Records of Orange County, Florida. LESS: BEGIN at the most Easterly corner of
Block A, SOUTH PARK UNIT THREE, as recorded in Plat Book 17, Page 28, Public
Records of Orange County, Florida; thence run North 30 degrees 59 minutes 15
seconds West 2065.24 feet along the Easterly boundary of said Block A to the
most Northerly corner of said Block A; thence run South 59 degrees 00 minutes 44
seconds West 405.13 feet along the Northerly boundary of said Block A to a point
on the Easterly right-of-way line of South Park Circle as shown on the plat of
SOUTH PARK UNIT ONE, as recorded in Plat Book 14, Page 84, Public Records of
Orange County, Florida, said Easterly right-of-way line being a nontangent curve
concave Westerly and having a radius of 699.16 feet; thence from a tangent
bearing of South 30 degrees 22 minutes 19 seconds East, run Southerly 100.43
feet along the arc of said curve and said Easterly right-of-way line through a
central angle of 08 degrees 13 minutes 48 seconds to a point on the Southerly
boundary of that certain 100.00 foot wide Drainage and Utilities Easement as
shown on the aforesaid plat of SOUTH PARK UNIT THREE; thence run North 59
degrees 00 minutes 44 seconds East 313.41 feet along said Southerly boundary;
thence run South 30 degrees 59 minutes 15 seconds East 1965.25 feet along the
Westerly boundary of said 100.00 foot wide Drainage and Utilities Easement to a
point on the Southerly boundary of the aforesaid Block A; thence run North 59
degrees 00 minutes 25 seconds East 100.00 feet to the Point of Beginning.
CONTAINING: 78.601 Acres, more or less.
SUBJECT TO: Easements.
<PAGE> 36
EXHIBIT "B"
FLOOR PLAN
DUMPSTER LOCATION
600 Gran Park
First Floor Plan
<PAGE> 37
EXHIBIT "C"
WORK LETTER
GENERAL
1. (a) Tenant shall select the Space Plan and Building Standard
Allowances for Completion of the Premises for occupancy by
Tenant, subject to Landlord's approval.
(b) Working Drawings and Specifications for Completion of the
Premises as determined by Tenant and approved by Landlord shall
be prepared by Landlord and approved by Tenant in accordance
with Clause 4 hereof before work is commenced.
(c) All work involved in the Completion of the Premises shall be
carried out by Landlord's contractor in accordance with the
Working Drawings and Specifications and under the supervision of
Landlord.
(d) Tenant hereby appoints MIKE SINGLETON AND CARRYL SMITH to act
for Tenant in all matters covered by this Exhibit "C".
(e) In this Exhibit "C":
(i) "Completion of the Premises" means the supplying,
installation and finishing of partitions, doors and
hardware, ceilings, HVAC, plumbing, lights and switches,
electrical outlets, data outlets, telephone outlets,
carpets, window coverings, all finishes, counters, shelves
or other built-ins, fixtures and any other furniture,
fixtures or facilities attached to and forming part of the
Premises.
(ii) "Building Standard" means with respect to any item, the
specifications and current allowances as established from
time to time by Landlord as standard for the Building.
(iii) "Landlord's Architect" means that Architect or designer
appointed (in-house and/or outside hire) from time to time
by Landlord to provide design services, including Space
Planning, Working Drawings and Specifications.
(iv) "Landlord's Contractor" means the Contractor appointed
from time to time by Landlord to carry out work in
Completion of the Premises and any alterations, repairs
and maintenance in the Building.
(v) "Space Plan" means the graphic presentation of the
Premises indicating
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partitions, doors, electrical and telephone/data outlets,
and furniture arrangements.
(vi) "Working Drawings and Specifications" means the Plans and
Specifications for Building Standard and nonstandard
finishes for Completion of the Premises including
architectural, mechanical and electrical working drawings.
(f) Tenant must comply with Building Standard specifications for the
base building to maintain uniform quality level of materials throughout the
Building.
SHELL IMPROVEMENTS
2. Except for base building improvements that include only the Sprinkler
System with turned-up heads, Tenant shall, at its expense, make the
following improvements to the Premises:
(a) SPRINKLER SYSTEM. Tenant shall finish the Sprinkler System per
code with semi recessed sprinkler heads with metal covers - color
to match ceiling system.
(b) HEATING, VENTILATION AND AIR CONDITIONING. Tenant shall install
the entire system, including all mechanical equipment, main
distribution ducts, perimeter supply slot diffusers and
associated fixtures to provide cooling, dehumidification,
ventilation and heating to the Premises in accordance with the
approved Working Drawings and Specifications.
(c) ELECTRICAL. Electricity is available to the exterior walls of the
Building. Tenant shall provide the electrical distribution system
and electrical panels to the Premises in accordance with the
approved Working Drawings and Specifications.
OTHER IMPROVEMENTS
3. In addition to the Shell Improvements set forth in Clause 2 above,
Tenant shall, at its expense, make all other improvements to the
Premises which are set forth in the approved Working Drawings and
Specifications. Any architectural, space planning or interior design
services supplied by Landlord shall be paid for by Tenant, and Tenant
shall, also pay Landlord's supervisory fee as set forth in Clause 4
below.
PREMISES PLANS AND SPECIFICATIONS
4. (a) As soon as practicable Tenant shall meet with Landlord to
set forth Tenant's requirements for the completion of a Space
Plan.
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<PAGE> 39
(b) As soon as practicable (however, not longer than five (5) working
days after receipt of Tenant requirements) after the meeting
referred to in Clause 4.(a), Landlord shall submit to Tenant the
Space Plan for Tenant's approval.
(c) Within ten (10) working days after receipt of the Space Plan
referred to in Clause 4.(b), Tenant shall meet with Landlord to
approve the Space Plan, with or without revision, and include:
(i) a furniture layout to insure the Space Plan is functional,
(ii) finish schedules for walls and carpet, and
(iii) locations for telephone/data and electrical outlets and
switches.
(d) As soon as practicable (within ten (10) working days) after the
approval referred to in Clause 4.(c), Landlord shall submit the
approved Space Plan together with a written preliminary estimate
of the cost to Tenant therefor, if any, including Landlord's
supervisory fee of five percent (5%) of the cost of all work to
be performed.
(e) Within five (5) working days after receipt of the approved Space
Plan and written estimate of Tenant's cost referred to in Clause
4.(d), Tenant shall approve same in writing. Tenant's failure to
provide written approval shall be deemed a disapproval thereof
and Landlord shall not proceed with final Working Drawings and
Specifications.
(f) As soon as practicable thereafter (within ten (10) working days)
Landlord will submit to Tenant Working Drawings and
Specifications for construction of the Premises in accordance
with the approved Space Plan and written estimate of Tenant cost.
Tenant shall approve in writing said Working Drawings and
Specifications within five (5) working days after receipt
thereof.
(g) Any changes in the final Working Drawings and Specifications may
be made only by written request by Tenant to Landlord and all
costs incurred as a result of such changes (including costs of
revisions to Working Drawings and/or Specifications), shall be
paid for in full by Tenant upon billing by Landlord.
COMPLETION AND RENTAL COMMENCEMENT DATE
5. When Landlord's Architect has furnished Landlord with a certificate
that the work to be done by Landlord pursuant hereto has been
substantially complete, Completion of the Premises shall be deemed to
have occurred and possession thereof deemed delivered to Tenant for
all purposes of the Lease including, without limitation, Paragraph 3
thereof. Landlord and Tenant understand that pursuant to Paragraph 3
of the Lease, Tenant's obligation to pay Rent thereunder shall not
commence until Landlord's Architect has furnished such certificate;
provided, however, that if Landlord shall be delayed in
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<PAGE> 40
substantially completing said work as a result of:
(a) Tenant's failure to furnish information so that Plans and
Specifications cannot be completed within the time frame as set
forth in Clause 4(c) above; or
(b) Tenant's request for materials, finishes or installations other
than Landlord's "Building Standard Work"; or
(c) Tenant's changes in the Plans, Working Drawings and/or
Specifications approved by Tenant after their submission to
Landlord; or
(d) Tenant's failure to pay in full all outstanding amounts due with
respect to Completion of the Premises;
then the commencement of Rent under said Lease shall be accelerated by the
number of days of such delay.
AMOUNTS PAYABLE TO LANDLORD
6. Amounts payable by Tenant to Landlord as required by this Work Letter
shall be paid as follows:
(a) A retainer of 90% of Tenant's estimated costs in excess of any
improvement allowance as set forth in Clause 7 shall be paid
prior to start of construction;
(b) At Landlord's sole discretion, progress bills may be rendered
during the Work;
(c) At Completion of the Premises, Landlord will submit the final
bill which is due and payable upon Tenant acceptance of the
Premises, which acceptance will not be unreasonably delayed or
denied; and
(d) Tenant agrees to pay Landlord promptly upon being billed.
C-4
<PAGE> 41
IMPROVEMENT ALLOWANCE
7. Landlord will construct improvements in accordance with this Exhibit
"C" of the Lease and Tenant's approved Working Drawings and
Specifications, provided however, that the cost of such improvements
and all architectural fees and Landlord's supervisory fee shall not
exceed an allowance totaling $681,600.00 ($30.00 per Rentable Square
Foot). Any unused dollars from this allowance not used for
improvements to the Premises within 60 days from issuance of
Certificate of Occupancy will not be disbursed, EXCEPT THAT TENANT
SHALL HAVE UP TO 180 DAYS FROM ISSUANCE OF THE CERTIFICATE OF
OCCUPANCY TO USE ANY REMAINING ALLOWANCE FOR LOW VOLTAGE WIRING FOR
VOICE AND DATA TELECOMMUNICATIONS, AND FURNITURE INSTALLATION. To the
extent that the cost of such improvements and fees exceeds this
allowance, Tenant shall be responsible to reimburse Landlord for such
excess in addition to a five percent (5%) construction management fee
on the excess amount. There shall be no refund or rebate to Tenant for
any unused portion of this improvement allowance.
C-5
<PAGE> 42
EXHIBIT "D"
RULES AND REGULATIONS
These Rules and Regulations have been adopted by Landlord for the
mutual benefit and protection of all the tenants of the Building in order to
insure the safety, care and cleanliness of the Building and the preservation of
order therein.
1. The sidewalks shall not be obstructed or used for any purpose other
than ingress and egress. No tenant and no employees of any tenant shall go upon
the roof of the Building without the consent of Landlord.
2. No awnings or other projections shall be attached to the outside
walls of the Building.
3. The plumbing fixtures shall not be used for any purpose other than
those for which they were constructed, and no sweepings, rubbish, rags or other
substances, including Hazardous Substances, shall be thrown therein.
4. No tenant shall cause or permit any objectionable or offensive
noise or odors to be emitted from the Premises.
5. The Premises shall not be used for lodging or sleeping or for any
immoral or illegal purposes.
6. No tenant shall make, or permit to be made, any unseemly or
disturbing noises, sounds or vibrations or disturb or interfere with tenants of
this or neighboring buildings or premises or those having business with them.
7. Each tenant must, upon the termination of this tenancy, restore to
the Landlord all keys of stores, offices, and rooms, either furnished to, or
otherwise procured by, such tenant, and in the event of the loss of any keys so
furnished, such tenant shall pay to the Landlord the cost of replacing the same
or of changing the lock or locks opened by such lost key if Landlord shall deem
it necessary to make such change.
8. Canvassing, soliciting and peddling in the Building and the Project
are prohibited and each tenant shall cooperate to prevent such activity.
9. Landlord will direct electricians as to where and how telephone or
telegraph wires are to be introduced. No boring or cutting for wires or
stringing of wires will be allowed without written consent of Landlord. The
location of telephones, call boxes and other office equipment affixed to the
Premises shall be subject to the approval of Landlord.
10. Parking spaces associated with the Building are intended for the
exclusive use of passenger automobiles. Except for intermittent deliveries, no
vehicles other than passenger
D-1
<PAGE> 43
automobiles may be parked in a parking space without the express written
permission of Landlord. Trucks may only be parked at the rear of the Building
behind the Premises.
11. Tenant shall not use any area within the Property for storage
purposes other than the interior of the Premises.
D-2
<PAGE> 44
EXHIBIT "E"
PROPERTY RESTRICTIONS
1. Resolution Establishing the Orlando Central park Municipal Service
Taxing Unit for Maintenance of Drainage Improvements, recorded in
Official Records Book 3947, Page 62, Public Records of Orange County,
Florida.
2. Resolution of the Board of Orange County Commissioners establishing a
special Purpose Lighting District for Orlando Central Park, recorded
in Official Records Book 2887, Page 238, Public Records of Orange
County, Florida.
3. Matters appearing on the plat of SouthPark Unit Three, according to the
Plat thereof, as recorded in Plat Book 17, Page 28, of the Public
Records of Orange County, Florida.
4. Declaration of Covenants and Restrictions for Southpark, recorded in
Official Records Book 3865, Page 413, Public Records of Orange County,
Florida, but omitting any covenant or restriction based on race, color,
religion, sex, handicap, familial status, or national origin unless and
only to the extent that said covenant (s) is exempt under Chapter 42,
Section 3607 of the United States Code or (b) relates to handicap but
does not discriminate against handicapped persons.
5. Special Covenants and Restrictions for SouthPark Unit Three, recorded
in Official Records Book 3971, Page 2740, Public Records of Orange
County, Florida, but omitting any covenant or restriction based on
race, color, religion, sex, handicap, familial status, or national
origin unless and only to the extent that said covenant (a) is exempt
under Chapter 42, Section 3607 of the United States Code or (b) relates
to handicap but does not discriminate against handicapped persons.
6. Access Easement in favor of Orange County recorded in Official Records
book 3948, Page 1512, Public Records of Orange County, Florida.
7. Easement from Orlando Central Park, Inc. to the Orlando Utilities
Commission, recorded in Official Records Book 3428, Page 2664, Public
Records of Orange County, Florida.
<PAGE> 45
8. Limitation against ingress, egress, light, air and view between the
Exhibit A property and the property conveyed pursuant to Deed dated
May 19, 1982, executed by Orlando Central Park, Inc. in favor of State
of Florida Department of Transportation, recorded in Official Records
Book 5266, Page 827, Public Records of Orange County, Florida, as set
forth in such Deed.
9. There exists no right of access to or from John Young Parkway (S.R.
423), a limited access highway, in favor of the Exhibit A property.
10. Use Agreement by and among Orlando Central Park, Inc., SouthPark
Property Owners Association, Inc., and Orange County, Florida, recorded
in Official Records Book 3863, Page 2956, Public Records of Orange
County, Florida.
11. Special Warranty Deed dated November 17, 1995 from Orlando Central
Park, Inc. to Gran Central Corporation.
12. Concurrent Agreement dated November 16, 1995 executed by Gran Central
Corporation in favor of Orlando Central Park, Inc.
<PAGE> 1
Exhibit 10.5.1
GRAN PARK
AT
SOUTH PARK
ASSEMBLY/LIGHT MANUFACTURING/OFFICE LEASE
BY AND BETWEEN
GRAN CENTRAL CORPORATION
A FLORIDA CORPORATION
AS LANDLORD,
AND
TRITON NETWORK SYSTEMS, INC.,
A DELAWARE CORPORATION,
AS TENANT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions .......................................................1
2. Lease Grant .......................................................3
3. Lease Term ........................................................3
4. Use and Possession ................................................3
5. Rent ..............................................................4
6. Services to be Furnished by Landlord ..............................6
7. Condition of Premises .............................................7
8. Maintenance and Repair of Premises by Landlord ....................7
9. Maintenance of Premises by Tenant .................................7
10. Graphics ..........................................................8
11. Surrender of Premises .............................................8
12. Repairs and Alterations by Tenant .................................8
13. Net Lease .........................................................9
14. Laws and Regulations .............................................10
15. Building Rules and Regulations ...................................10
16. Entry by Landlord ................................................10
17. Assignment and Subletting ........................................10
18. Mechanic's Lien ..................................................11
19. Property and Liability Insurance .................................12
20. Insurance Limits .................................................12
21. Indemnity ........................................................13
22. Waiver of Subrogation Rights .....................................13
23. Casualty Damage ..................................................13
24. Condemnation .....................................................14
25. Damages From Certain Causes ......................................14
26. Events of Default/Remedies .......................................14
27. Peaceful Enjoyment ...............................................17
28. Holding Over .....................................................17
29. Subordination to Mortgage ........................................17
30. Landlord's Lien ..................................................18
31. Parking ..........................................................18
32. Attorneys' Fees ..................................................19
33. No Implied Waiver ................................................19
34. Personal Liability ...............................................19
35. Security Deposit .................................................19
36. Notice ...........................................................19
37. Severability .....................................................20
38. Recordation ......................................................20
39. Governing Law ....................................................20
40. Force Majeure.....................................................20
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
41. Time of Performance...............................................20
42. Transfers by Landlord ............................................20
43. Broker............................................................20
44. Effect of Delivery of This Lease .................................21
45. Certain Rights Reserved to Landlord ..............................21
46. Waiver of Trial by Jury ..........................................21
47. Estoppel Certificate .............................................21
48. Environmental Matters ............................................22
49. Radon Gas ........................................................25
50. Relocation .......................................................25
51. Exhibits..........................................................25
52. Expansion Options...................................................
53. Right of First Offer................................................
54. Roof Equipment .....................................................
</TABLE>
Exhibit A-Description of Property on Which the Project is Situated
Exhibit B-Floor Plan of Premises
Exhibit C-Work Letter
Exhibit D-Rules and Regulations
<PAGE> 4
ASSEMBLY/LIGHT MANUFACTURING/OFFICE
LEASE AGREEMENT
THIS ASSEMBLY/LIGHT MANUFACTURING/OFFICE LEASE AGREEMENT (this
"Lease"), made and entered into on this the 16th day of September, 1999, between
GRAN CENTRAL CORPORATION, a Florida corporation ("Landlord"), and TRITON NETWORK
SYSTEMS, INC., a Delaware corporation ("Tenant").
WITNESSETH:
1. DEFINITIONS.
(a) "Building" shall mean the building to be constructed at
8337 SOUTH PARK CIRCLE, ORLANDO, FLORIDA 32819 and located upon the real
property described in Exhibit "A" attached hereto and incorporated herein, (the
"Property").
(b) "Premises" shall mean the space located within the
Building in Suite 500 and outlined on the floor plan attached to this Lease as
Exhibit "B" and incorporated herein. The Premises are stipulated for all
purposes to contain 19,621 square feet of "Rentable Area" (as below defined).
(c) "Base Rental" shall be as follows:
<TABLE>
<CAPTION>
RATE PER
SQUARE FOOT OF
RENTAL PERIOD RENTABLE AREA MONTHLY ANNUALLY
<S> <C> <C> <C>
Lease Year 1 $11.00 $17,985.92 $215,831.00
Lease Year 2 $11.33 $18,525.49 $222,305.93
Lease Year 3 $11.67 $19,081.42 $228,977.07
Lease Year 4 $12.02 $19,653.70 $235,844.42
Lease Year 5 $12.38 $20,242.33 $242,907.98
Lease Year 6 $12.75 $20,847.31 $250,167.75
Lease Year 7 $13.13 $21,468.64 $257,623.73
</TABLE>
Such amounts do not include sales taxes, which are payable as provided in
Section 5(d) below. For purposes hereof, the first "Lease Year" shall begin on
the Commencement Date and expire one year later. If the Commencement Date does
not fall on the first day of a calendar month, the first Lease Year shall also
include the remainder of the calendar month in which the first anniversary of
the Commencement Date falls. Each subsequent Lease Year shall commence on the
day following the expiration of the previous Lease Year. All such rent shall be
payable in the manner provided in Section 5 below. The Base Rental, including
all applicable sales taxes, due for the first month of the "Lease Term"
(hereafter defined) shall be deposited with Landlord by Tenant upon Tenant
occupancy.
(d) "Commencement Date" shall mean the earlier of the date
that Tenant actually occupies the Premises or FEBRUARY 1, 2000, subject to
Section 3 below. NOTWITHSTANDING THE FOREGOING, THE COMMENCEMENT DATE SHALL NOT
OCCUR PRIOR TO THE DATE
<PAGE> 5
ON WHICH ALL REQUIRED CERTIFICATES OF OCCUPANCY HAVE BEEN OBTAINED FOR THE
PREMISES AND THE ARCHITECT HAS CERTIFIED THAT THE PREMISES HAVE BEEN COMPLETED;
PROVIDED, HOWEVER, THAT IF THE ISSUANCE OF THE CERTIFICATES OF OCCUPANCY OCCURS
AFTER FEBRUARY 1, 2000 DUE TO DELAYS CAUSED BY TENANT, THEN THE COMMENCEMENT
DATE SHALL BE FEBRUARY 1, 2000.
(e) "Lease Term" shall mean a term commencing on the
Commencement Date and continuing for 84 full calendar months (plus any partial
calendar month in which the Commencement Date falls).
(f) "Security Deposit" shall mean the sum of $17,985.92, WHICH
SHALL BE PAID ON THE COMMENCEMENT DATE. IN ADDITION, AS PART OF THE SECURITY
DEPOSIT, TENANT SHALL DELIVER TO LANDLORD ON OR BEFORE THE COMMENCEMENT DATE A
LETTER OF CREDIT IN THE FACE AMOUNT OF $294,315.00. SUCH LETTER OF CREDIT SHALL
BE UNCONDITIONAL AND IRREVOCABLE AND SHALL OTHERWISE BE IN A FORM AND FROM A
FINANCIAL INSTITUTION ACCEPTABLE TO LANDLORD. PROVIDED TENANT HAS NOT BEEN IN
DEFAULT UNDER THIS LEASE, SUCH LETTER OF CREDIT SHALL DECLINE ON EACH
ANNIVERSARY OF THE COMMENCEMENT DATE BY AN AMOUNT EQUAL TO TWENTY-FIVE PERCENT
(25%) OF THE INITIAL AMOUNT OF SUCH LETTER OF CREDIT. SUCH LETTER OF CREDIT
SHALL HAVE AN EXPIRATION DATE OF FOUR (4) YEARS FOLLOWING THE COMMENCEMENT DATE.
(g) "Common Areas" shall mean those areas devoted to
driveways, parking areas, landscaped areas, truck courts and other similar
facilities provided for the common use or benefit of tenants generally and/or
the public.
(h) "Rentable Area" of the Premises shall mean the area within
the Premises comprising the gross area enclosed by the surface of the exterior
walls of the Building and/or the mid-point of any walls separating portions of
the Premises from areas leased to other tenants and from other areas of the
Building not subject to any tenant leases. Rentable Area shall not include any
service areas, meaning those areas within the outside walls used for elevator
mechanical rooms, building stairs, fire towers, elevator shafts, flues, vents,
stacks, pipe shafts and vertical ducts (but Rentable Area shall include any such
arm which are for the exclusive use of a particular tenant), and Rentable Area
shall include Tenant's pro rata share of the Common Areas within the Building,
based upon the ratio of the Rentable Area within the Premises to the total
Rentable Area within the Building, both determined without regard to the Common
Areas. The Rentable Area in the Building is 133,231 square feet. The estimates
of Rentable Area set forth in the immediately preceding sentence with respect to
the Building, and in Section 1(b) above with respect to the Premises, may be
revised, at Landlord's election, if Landlord's architect determines such
estimate to be inaccurate after examination of the final drawings of the
Premises and the Building. If it is determined that the Rentable Area of the
Building or the Premises is different from that set forth above, then the
Rentable Area of the Building or the Premises, as applicable, shall be adjusted
upward or downward accordingly. If such remeasurement shall not be undertaken on
or before the Commencement Date, then the Rentable Area calculations set forth
above shall be conclusively binding upon Landlord and Tenant, and neither
Landlord nor Tenant shall have any further right to remeasure the Premises or
the Building after such date. The Premises constitutes 14.98% of the total
Rentable Area within the Building, and therefore the Tenant's pro rata share for
purposes of this Lease shall be 14.98%. NOTWITHSTANDING THE FOREGOING, IT IS
UNDERSTOOD AND AGREED THAT THE BUILDING CONTAINS A MEZZANINE AREA (THE
"MEZZANINE SECTION") WHICH WILL CONTAIN CERTAIN COMMON AREAS. IF ANY PART OF THE
PREMISES SHALL NOW OR HEREAFTER BE LOCATED
2
<PAGE> 6
WITHIN A PORTION OF THE MEZZANINE SECTION, TENANT'S PRO RATA SHARE OF OPERATING
EXPENSES SHALL BE SPLIT. A CALCULATION SHALL BE MADE TO DETERMINE THE PERCENTAGE
OF THE MEZZANINE SECTION OCCUPIED BY THE PREMISES, AND TENANT SHALL PAY THAT
PERCENTAGE OF THE TOTAL OPERATING EXPENSES OR THE MEZZANINE SECTION ONLY. IN
ADDITION, TENANT SHALL PAY ITS PRO RATA SHARE CALCULATED IN THIS SECTION 1(h)
ABOVE WITH RESPECT TO THE OPERATING EXPENSES OF THE PROPERTY OUTSIDE OF THE
MEZZANINE SECTION. FOR PURPOSES HEREOF, THE OPERATING EXPENSES OF THE MEZZANINE
SECTION OF THE BUILDING SHALL INCLUDE THE REPAIR AND MAINTENANCE OF THE INTERIOR
COMMON AREAS OF THE MEZZANINE SECTION, AS WELL AS THE COSTS OF SECURITY, HVAC,
ELECTRICAL, JANITORIAL AND SIMILAR COSTS WITHIN THE MEZZANINE SECTION. LANDLORD
SHALL SEPARATELY ACCOUNT FOR OPERATING EXPENSES WITHIN THE MEZZANINE SECTION AND
OPERATING EXPENSES WITHIN THE REMAINDER OF THE PROPERTY. TENANT SHALL PAY ITS
APPLICABLE PRO RATA SHARE OF THE OPERATING EXPENSES WITHIN THE MEZZANINE
SECTION AND WITHIN THE REMAINDER OF THE PROPERTY, RESPECTIVELY, IN THE
APPROPRIATE PERCENTAGES AS SET FORTH ABOVE.
(i) "Taxes" shall mean all taxes, assessments and fees levied
upon the Building, the Property, the property of Landlord located therein or the
rents collected therefrom, by any governmental entity based upon the ownership,
leasing, renting or operation of the Building and the Property, including all
costs and expenses of protesting any such taxes, assessments or fees. Taxes
shall not include any net income, capital stock, succession, transfer,
franchise, gift, estate or inheritance taxes; provided, however, if at any time
during the Lease Term, a tax or excise on income is levied or assessed by any
governmental entity, in lieu of or as a substitute for, in whole or in part,
real estate taxes or other ad valorem taxes, such tax shall constitute and be
included in Taxes. For the purpose of determining Taxes for any given year, the
amount to be included for such year shall be Taxes which are assessed or become
a lien during such year rather than Taxes which are due for payment or paid
during such year. TAXES SHALL NOT INCLUDE ANY LATE CHARGES OR PENALTIES IMPOSED
UPON LANDLORD DUE TO THE LATE PAYMENT OF TAXES.
(j) "Building Standard" shall mean 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 the exclusive type, grade or quality of
material to be used in the Building.
(k) "Assessments" shall mean all assessments, charges, fees
and other expenses for which Landlord is obligated, in its capacity as the owner
of the Property, pursuant to any restrictive covenants or other recorded matters
of title now or hereafter affecting the Property (collectively, the "Title
Matters"), BEING THE ASSOCIATION FEES AND CHARGES IMPOSED UPON LANDLORD BY
ORLANDO CENTRAL PARK, INC.
2. LEASE GRANT. Subject to and upon the terms herein set forth,
Landlord leases to Tenant and Tenant leases from Landlord the Premises. LANDLORD
HEREBY REPRESENTS AND WARRANTS THAT IT HOLDS FEE SIMPLE TITLE TO THE PROPERTY.
THE PROPERTY IS SUBJECT TO THE EASEMENTS AND OTHER ENCUMBRANCES WHICH EXISTED ON
THE DATE LANDLORD PURCHASED THE PROPERTY.
3. LEASE TERM. This Lease shall continue in force during a period
beginning on the Commencement Date and continuing until the expiration of the
Lease Term, unless this Lease is sooner terminated or extended to a later date
under any other term or provision
3
<PAGE> 7
hereof. Tenant acknowledges that the Building has not yet been constructed by
Landlord. The Commencement Date has been determined by Landlord and Tenant on
the assumption that the construction of the Building shall be completed by
Landlord on or before JANUARY 15, 2000 and that a certificate of occupancy for
the shell of the Building shall be issued on or before such date. In the event
completion of construction of the Building and the issuance of such a shell
certificate of occupancy has not been achieved on or before JANUARY 15, 2000,
the Commencement Date shall be that date on which Landlord completes
construction of the improvements to the Premises as described in Section 4 below
and in Exhibit "C" hereto, obtains the issuance of a shell certificate of
occupancy and delivers possession of the Premises to Tenant. In the event the
actual Commencement Date is other than the date identified in Section 1(d),
rental under this Lease shall not commence until said revised Commencement Date,
and the Lease Term shall commence and the expiration date shall be extended so
as to give effect to the full stated Lease Term. Should the Lease Term commence
on a date other than that specified in Section 1(d), Landlord will send Tenant a
written statement of such adjusted Commencement Date and expiration date, and,
if Landlord requests, Tenant will confirm such adjusted dates in writing.
4. USE AND POSSESSION. The Premises shall be used for LIGHT
MANUFACTURING, ASSEMBLY AND OFFICE PURPOSES, and for no other purpose. Tenant
agrees not to use or permit the use of the Premises for any purpose which is
illegal, dangerous to life, limb or property, or which, in Landlord's opinion,
creates a nuisance or which would increase the cost of insurance coverage with
respect to the Building. In addition, Tenant shall, at its own cost and expense,
comply with all federal, state and municipal laws, ordinances, rules and
regulations issued by any governmental authority and all Title Matters. Without
limiting the foregoing, Tenant shall not cause, nor permit, any hazardous or
toxic substances to be brought upon, produced, stored, used, discharged or
disposed of in, on or about the Premises without the prior written consent of
Landlord and then only in compliance with all applicable environmental laws,
EXCEPT AS PERMITTED IN SECTION 48 BELOW.
No routine repair or servicing of any automobile or truck shall be
allowed in the Premises, or in any parking or loading areas, roadways or other
areas serving the Building. No vehicle abandoned or disabled or in a state of
non-operation or disrepair shall be left upon the Property, and Tenant shall
enforce this restriction against Tenant's, employees, agents, visitors,
licensees, invitees, contractors and customers. Should Landlord determine that a
violation of this restriction has occurred, Landlord shall have the right to
cause the offending vehicle, equipment, trailer or machinery to be removed from
Landlord's Property, and all costs of such removal shall be the obligation of
the Tenant, and such costs shall be paid to Landlord by Tenant as additional
rent within ten (10) days of written notice to Tenant.
Following completion of the Building, Landlord agrees to have the
Premises completed and ready for possession on or before the Commencement Date,
barring strikes, insurrection, acts of God and other casualties or unforeseen
events beyond the control of the Landlord. Such work shall be performed in
accordance with the terms of the Work Letter attached hereto as Exhibit "C" and
incorporated herein. If Landlord is unable to give possession of the Premises on
the Commencement Date by reason of the holding over of any prior tenant or
tenants, incomplete construction, or for any other reason, unless the same shall
result from causes attributable to Tenant, there shall be an abatement or
adjustment of the Rent to be paid hereunder for that period of time, and the
Lease Term shall be extended beyond the agreed
4
<PAGE> 8
expiration date by the number of days possession was delayed and said abatement
of Rent shall be the full extent of Landlord's liability to Tenant for any loss
or damage to Tenant on account of said delay in obtaining possession of the
Premises. If the Premises have not been tendered one hundred FOUR (104) days
after the scheduled Commencement Date, Tenant shall have the right to terminate
this Lease after fifteen (15) days' written notice to Landlord, provided such
notice is given prior to the date on which the Premises are tendered to Tenant.
The Premises shall be deemed substantially completed and available
to Tenant upon issuance to Landlord of a certificate of occupancy by the
appropriate governmental authority and A CERTIFICATE OF THE ARCHITECT THAT THE
PREMISES HAVE BEEN COMPLETED (notwithstanding the necessity of minor repairs and
adjustments still to be made by the Landlord), or when Tenant actually occupies
the Premises, whichever occurs first. If the substantial completion of the
Premises by Landlord is delayed due to any act or omission of Tenant or Tenant's
representatives, including any delays by Tenant in the submission of the plans,
drawings, specifications or other information, or in obtaining permits for its
installations, or in approving any working drawings or estimates or in giving
any authorization or approval, the Premises shall be deemed substantial1y
completed on the date when they would have been ready but for such delay.
5. RENT.
(a) Base Rental. Tenant agrees to pay the Base Rental to
Landlord during the Lease Term, without any setoff, deduction or counterclaim
whatsoever, together with all such other sums of money as shall become due
hereunder as additional rent (all of which are sometimes herein collectively
called "Rent"). Except as otherwise provided herein, the annual Base Rental for
each calendar 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 Tenant hereby agrees to pay such Base
Rental and any adjustments thereto to Landlord at P.O. Box 861946, Orlando,
Florida 32886-1946 (or such other address as may be designated by Landlord in
writing from time to time) monthly, in advance, and without demand. Any sum due
from Tenant to Landlord which is not paid when due shall bear interest from the
date due until the date paid at the annual rate of four percent (4%) above the
prime rate as announced from tune to time by The Wall Street Journal but in no
event in excess of the maximum rate permitted by law (the "Default Rate"). If
the Lease Term commences on a day other than the first day of a month or
terminates on a day other than the last day of a month, then the installments of
Base Rental and adjustments thereto and any additional rent for such month or
months shall be prorated, based on the number of days in such month. Tenant
shall pay Landlord a late charge for any Rent payment which is paid more than
TEN (10) days after its due date, equal to five percent (5%) of such payment;
PROVIDED THAT SUCH LATE CHARGE SHALL NOT BE IMPOSED UNTIL THE FOURTH (4TH) SUCH
LATE PAYMENT EACH LEASE YEAR, AND FOR EACH SUBSEQUENT LATE PAYMENT DURING THE
SAME LEASE YEAR. The Base Rental due for the first mouth of the Lease Term SHALL
BE PAID TO LANDLORD ON THE COMMENCEMENT DATE.
(b) Operating Expenses. Tenant shall pay as additional rent
its pro rata share of any Operating Expenses (as hereinafter defined). Landlord
shall deliver to Tenant each year, on or before March 31 (or within a reasonable
time thereafter), a statement setting forth the amount of Operating Expenses
paid or incurred by Landlord, directly or indirectly,
5
<PAGE> 9
during the immediately preceding year. This statement shall delineate Tenant's
pro rata share of the Operating Expenses for the preceding year and the
estimated amount of Tenant's pro rata share of Operating Expenses for the
following year. Within thirty (30) days after delivery of the statement, Tenant
shall pay to Landlord, as additional rent, Tenant's pro rata share of the
previous year's Operating Expenses not previously paid. Commencing with the
rental payment immediately following the receipt of the statement of Operating
Expenses, Tenant shall remit as additional rent one-twelfth (1/12) of Tenant's
pro rata share of the anticipated Operating Expenses for the following year in
addition to the scheduled Base Rental.
If the Lease Term begins after January 1 or ends prior to December 31,
Tenant's pro rata share of the Operating Expenses shown on the statement
delivered at the end of such year shall be reduced proportionately. In the
event Tenant's share of the Operating Expenses is less than the amount
previously estimated and collected by Landlord, Tenant's excess shall be
applied to amounts owed to Landlord, and if no amounts are owed, then the
excess shall be remitted to Tenant.
The term "Operating Expenses" as used herein shall include all direct
costs of administration, operation, repair and maintenance of the Property, the
Building and its Common Areas and appurtenances, as determined in accordance
with generally accepted accounting principles, and shall include Landlord's
costs and expenses incurred in connection with the following by way of
illustration but not limitation: the cost of labor, materials and services for
the administration, operation, repair and maintenance of the Property and the
Building, its Common Areas and its appurtenances, including but not limited to
license, permit and inspection fees; water and sewer charges; garbage and waste
disposal; gas, electricity and other utilities consumed in the Common Areas of
the Property or Building; heating, air conditioning and ventilation repairs;
elevator service; plumbing service and other normal repairs; janitorial and
cleaning service in the Common Areas of the Building; landscaping; parking lot
cleaning, repairs and maintenance; association fees, including any charges
imposed upon the Property by Orlando Central Park, Inc. or any association
created by it for maintenance of Common Areas within the development of which
the Property is a part; pest control; maintenance contracts; security services
or personnel (if provided to the Building); insurance for fire, extended
coverage, general liability and other insurance which Landlord is required to
maintain on the Building and its appurtenances either by the terms of this Lease
or by the holder of any mortgage or deed to secure debt encumbering the
Building, or which Landlord reasonably deems to be necessary in connection with
the ownership and operation of the Building; fees; supplies, materials, tools,
equipment and general costs associated therewith, all accrued and based on a
calendar year operation; Taxes; Assessments and Common Area costs described in
Section 8 below.
The Operating Expenses shall not include the cost of any repairs or
replacements which by sound accounting practices should be capitalized, except
as follows: (i) if, for any reason, Landlord shall make an expenditure,
directly or indirectly, which is intended to reduce any of the Operating
Expenses and which, by generally accepted accounting principles would be
treated as a capital expenditure, the annual Operating Expenses shall also
include the amortization of such capital expenditure based upon a useful life
of not less than five (5) years; and (ii) in the event that any local, state or
federal government shall, by any legally enforceable legislative,
administrative or judicial action, whether by ordinance, act, statute, order,
mandate, rule, regulation or otherwise, require during the Lease Term any
alteration of
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or improvement to any portion of the Building, excluding the Premises or any
other premises leased or available to be leased by other tenants of the
Building (a "Mandated Alteration"), which, by generally accepted accounting
principles, would be treated as a capital expenditure, then, provided that such
Mandated Alteration is the result of the adoption of a new or changed
ordinance, act, statute, order, mandate, rule or regulation or interpretation
thereof not existing on the Commencement Date of this Lease, the annual
Operating Expenses shall also include the annual amortization of such capital
expenditure based upon a useful life of not less than five (5) years. In
connection therewith, the decision of Landlord's accountants shall be final.
(c) Increase in Insurance Premiums. Tenant shall pay to Landlord, as
additional rent hereunder, all increases in any insurance premiums under those
policies of insurance maintained by the Landlord hereunder, attributable to or
resulting from the Tenant's use and occupancy of the Premises or any other
action or omission of Tenant.
(d) Sales Tax. In addition to the Rent and any other
sums or amounts required to be paid by Tenant to Landlord pursuant to the
provisions of this Lease, Tenant shall also pay to Landlord, simultaneously
with such payment of such Rent or other sums or amounts, the amount of any
applicable sales, use or excise tax on any such Rent or other sums or amounts
so paid by Tenant to Landlord, whether the same be levied, imposed or assessed
by the State of Florida or any other federal, state, county or municipal
governmental entity or agency. Any such sales, use or excise taxes shall be
paid by Tenant to Landlord at the same time that each of the amounts with
respect to which such taxes are payable are paid by Tenant to Landlord.
(e) AUDIT. TENANT SHALL HAVE THE RIGHT TO HAVE
LANDLORD'S BOOKS AND RECORDS PERTAINING TO OPERATING EXPENSES FOR ANY YEAR
DURING THE LEASE TERM REVIEWED, COPIED AND AUDITED ("TENANT'S AUDIT") PROVIDED
THAT (i) SUCH RIGHT SHALL NOT BE EXERCISED MORE THAN ONCE DURING ANY CALENDAR
YEAR; (ii) IF TENANT ELECTS TO CONDUCT TENANT'S AUDIT, TENANT SHALL PROVIDE
LANDLORD WITH WRITTEN NOTICE THEREOF NO LATER THAN THIRTY (30) DAYS FOLLOWING
TENANT'S RECEIPT OF LANDLORD'S STATEMENT OF OPERATING EXPENSES FOR THE YEAR TO
WHICH TENANT'S AUDIT WILL APPLY; (iii) TENANT SHALL HAVE NO RIGHT TO CONDUCT
TENANT'S AUDIT IF TENANT IS, EITHER AT THE TIME TENANT FORWARDS LANDLORD
WRITTEN NOTICE THAT TENANT'S AUDIT WILL BE CONDUCTED OR AT ANY TIME DURING
TENANT'S AUDIT, THEN IN DEFAULT UNDER THIS LEASE; (iv) CONDUCTING TENANT'S
AUDIT SHALL NOT RELIEVE TENANT FROM THE OBLIGATION TO PAY TENANT'S PRO RATA
SHARE OF OPERATING EXPENSES, AS BILLED BY LANDLORD, PENDING THE OUTCOME OF SUCH
AUDIT; (v) TENANT'S RIGHT TO CONDUCT SUCH AUDIT FOR ANY CALENDAR YEAR SHALL
EXPIRE THIRTY (30) DAYS FOLLOWING TENANT'S RECEIPT OF LANDLORD'S STATEMENT OF
OPERATING EXPENSES FOR SUCH YEAR, AND IF LANDLORD HAS NOT RECEIVED WRITTEN
NOTICE OF SUCH AUDIT WITHIN SUCH THIRTY (30) DAY PERIOD, TENANT SHALL HAVE
WAIVED ITS RIGHT TO CONDUCT TENANT'S AUDIT FOR SUCH CALENDAR YEAR; (vi)
TENANT'S AUDIT SHALL BE CONDUCTED BY A CERTIFIED PUBLIC ACCOUNTANT NOT EMPLOYED
BY OR OTHERWISE AFFILIATED WITH TENANT, EXCEPT TO THE EXTENT THAT SUCH
ACCOUNTANT HAS BEEN ENGAGED BY TENANT TO CONDUCT TENANT'S AUDIT; (vii) TENANT'S
AUDIT SHALL BE CONDUCTED AT LANDLORD'S OFFICE WHERE THE RECORDS OF THE YEAR IN
QUESTION ARE MAINTAINED BY LANDLORD, DURING LANDLORD'S NORMAL BUSINESS HOURS;
AND (viii) TENANT'S AUDIT SHALL BE CONDUCTED AT TENANT'S SOLE COST AND EXPENSE,
UNLESS SUCH AUDIT DEMONSTRATES TO LANDLORD'S REASONABLE SATISFACTION THAT
LANDLORD HAS OVERSTATED THE OPERATING EXPENSES FOR THE YEAR AUDITED BY MORE
THAN FIVE PERCENT (5%), IN WHICH CASE LANDLORD SHALL REIMBURSE TENANT FOR ANY
OVERPAYMENT OF TENANT'S PRO RATA
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SHARE OF SUCH OPERATING EXPENSES, AS WELL AS TENANT'S ACTUAL REASONABLE COST
INCURRED IN CONDUCTING TENANT'S AUDIT, WITHIN THIRTY (30) DAYS OF LANDLORD'S
RECEIPT OF DOCUMENTATION REASONABLY ACCEPTABLE TO LANDLORD REFLECTING THE
AMOUNT OF SUCH OVERPAYMENT AND THE COST OF TENANT'S AUDIT.
6. SERVICES TO BE FURNISHED BY LANDLORD.
(a) Provided Tenant is not in default under
this Lease, Landlord agrees to make available to the Premises: water; electric
service; and electrical lighting service for all Common Areas in the manner and
to the extent deemed by Landlord to be standard. Tenant, at its sole cost and
expense, shall pay for its own utility consumption in the Premises.
(b) THE FAILURE BY LANDLORD TO ANY EXTENT TO
FURNISH, OR THE INTERRUPTION OR TERMINATION OF THESE DEFINED SERVICES, IN WHOLE
OR ANY PART, RESULTING FROM CAUSES OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD, SHALL NOT RENDER LANDLORD LIABLE IN ANY RESPECT NOR BE
CONSTRUED AS AN EVICTION OF TENANT, NOR WORK AS AN ABATEMENT OF RENT, NOR
RELIEVE TENANT FROM THE OBLIGATION TO FULFILL ANY COVENANT OR AGREEMENT HEREOF.
Should any of the equipment or machinery used in the provision of such services
for any cause cease to function properly, Tenant shall have no claim for offset
or abatement of rent or damages on account of an interruption in service
occasioned thereby or resulting therefrom.
7. CONDITION OF THE PREMISES. All installations and
improvements now or hereafter placed on the Premises shall be for Tenant's
account and at Tenant's cost, except as otherwise expressly provided for herein
(and Tenant shall pay ad valorem taxes and increased insurance thereon or
attributable thereto), which cost shall be payable by Tenant to Landlord upon
demand as additional rent. Tenant's taking possession of the Premises shall be
conclusive evidence that Tenant has inspected the Premises and accepts the
Premises "AS IS" and that the Premises were in good order and satisfactory
condition when Tenant took possession, SUBJECT TO ANY WORK WHICH LANDLORD IS
REQUIRED TO PERFORM PURSUANT TO EXHIBIT "C" HEREOF.
8. MAINTENANCE AND REPAIR OF PREMISES BY LANDLORD.
Except as otherwise expressly provided herein and so long as such repairs are
not required as a result of the actions or inactions of Tenant, its agents,
contractors, employees or invitees, in which event Tenant shall be responsible
to make such repairs at its expense, Landlord shall not be required to make any
repairs to the Premises other than repairs to exterior and load-bearing walls,
floors (excluding the replacement of floor coverings) and the roof of the
Building, which may be required from time to time but only after such required
repairs have been requested by Tenant in writing. In the interior of the
Building, Landlord shall only be responsible for maintaining and repairing the
Common Areas, if any. Landlord shall also cause the exterior Common Areas to be
maintained and repaired. The cost of any such maintenance and repairs by
Landlord as set forth in this Section 8 shall be included in Operating Expenses
as described in Section 5(b) above. Landlord my also perform certain maintenance
and repairs of items which are considered Common Areas for the Gran Park at
South Park development (the "Development"), including without limitation,
landscaping along the public right of way and maintenance of private driveways
throughout the Development. The Property shall be billed
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its pro rata share of such costs relating to the Common Areas of the
Development based upon a fraction in which the numerator is the square footage
of the Property and the denominator is the total square footage of all land
within the Development. The amount of such costs so allocated to the Property
shall then become Operating Expenses for the Property for which Tenant shall
pay its pro rata share.
9. MAINTENANCE OF PREMISES BY TENANT.
(a) Tenant shall maintain all parts of the
Premises, including the HVAC equipment (except for maintenance and repair work
for which Landlord is expressly responsible under Section 8 above) in good
condition and promptly make all necessary repairs and replacements to the
Premises. Tenant shall also be responsible for the cleaning and sweeping of the
Premises. Tenant shall be responsible for disposal of its trash and refuse from
the Premises and will maintain adequate receptacles for such disposal, the
design, placement and capacity of such receptacles to be subject to the prior
approval of Landlord. TENANT SHALL BE PERMITTED TO MAINTAIN TRASH DUMPSTERS AT
THE BUILDING, WITH LANDLORD AND TENANT TO AGREE ON THE NUMBER NECESSARY TO
ACCOMMODATE TENANT'S ACTUAL NEEDS. LANDLORD AND TENANT SHALL ALSO AGREE ON THE
PLACEMENT AND SCREENING OF SUCH DUMPSTERS. Outdoor storage of trash, refuse or
any other material and receptacles or containers not approved by Landlord is
strictly prohibited. At its sole cost and expense, Tenant shall provide
interior pest and insect extermination at the Premises as often as is
reasonably necessary to eliminate any pests or insects, whether endemic to the
Building or specific to the Premises or Tenant's use thereof.
(b) Subject to Landlord's obligations set forth
in Section 6 above, Tenant shall maintain the hot water equipment and the HVAC
system in good repair and condition and in accordance with all applicable laws
and such equipment manufacturers' suggested operation/maintenance service
program. THE HVAC SYSTEM SERVING THE PREMISES SHALL NOT SERVE ANY OTHER SPACE
WITHIN THE BUILDING. Tenant shall enter into a regularly scheduled preventive
maintenance/service contract for the hot water equipment and the HVAC system,
in form and substance and with a contractor reasonably acceptable to Landlord,
and shall promptly deliver copies thereof to Landlord. At least fourteen (14)
days prior to the end of the Lease Term, Tenant at its sole cost and expense,
shall cause to be delivered to Landlord a certificate from an engineer
reasonably acceptable to Landlord certifying that the hot water equipment and
the HVAC system are then in good repair and working order. TENANT SHALL ALSO
HAVE THE RIGHT TO INSTALL, AT ITS SOLE COST AND EXPENSE, AN ADDITIONAL CHILLING
SYSTEM FOR ITS "CLEAN ROOM" WITHIN THE PREMISES. THE LOCATION OF SUCH CHILLING
EQUIPMENT SHALL BE ON THE ROOF OF THE BUILDING OR THE GROUND ADJACENT TO THE
BUILDING. LANDLORD AND TENANT SHALL AGREE ON THE EXACT LOCATION AND THE METHOD
OF SCREENING SUCH CHILLING EQUIPMENT, AND THE PARTIES UNDERSTAND AND AGREE THAT
SUCH EQUIPMENT AND THE SCREENING THEREOF MUST ALSO COMPLY WITH ALL RELEVANT
RESTRICTIVE COVENANTS WHICH AFFECT THE BUILDING AND THE PROPERTY.
(c) If Tenant fails to perform any of Tenant's
maintenance or repair obligations, and if such failure continues for thirty
(30) days after written notice thereof is delivered to Tenant, Landlord may
perform such obligation, in which event Tenant shall pay to Landlord the
reasonable cost incurred by Landlord in performing such obligation, as
additional rent, within thirty (30) days after Landlord's written request
therefor.
(d) Tenant acknowledges that Landlord is not
providing security services of
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any kind to the Premises or for Tenant's property and that the keys given to
Tenant for the Premises may not be secure. At its sole expense, Tenant shall
provide whatever security and/or alarm systems Tenant deems necessary or
appropriate for the protection of the Premises and of Tenant's personal
property and personnel located therein, including, if Tenant desires to do so,
installing new locks for the Premises with new keys. Tenant shall provide to
Landlord copies of all keys and access codes to allow Landlord entry to the
Premises. In no event shall Landlord be responsible for, and Tenant waives any
and all claims arising from, the loss or damage to any of Tenant's personal
property situated in and on the Premises. Landlord may elect, but shall have no
obligation, to provide general area security or guard services and it may
discontinue such security or guard services without notice. At its expense,
Tenant is also responsible for the maintenance, repair or replacement of any
mechanical, security, and fire protection systems which Tenant has installed
within the Premises. Tenant is expressly advised that if Tenant should place
any fixtures, inventory or equipment with, in or on the Premises prior to the
time the Premises are completed and delivered to the Tenant, the risk of loss
or damage to such inventory, fixtures, or equipment will be greatly increased
in view of the fact that, out of necessity, numerous people will be permitted
access to the Premises for the purpose of completion of any work. All such risk
of loss or damage shall be borne exclusively by Tenant and not by Landlord, and
Tenant hereby waives any claim for any such loss or damage against Landlord
relating thereto.
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 Building and no others
shall be used or permitted on the Premises without Landlord's prior written
consent. LANDLORD SHALL ALSO INSTALL, AT TENANT'S COST, (A) SIGNAGE ON THE
EXTERIOR OF THE BUILDING IDENTIFYING TENANT, AND (B) SHIPPING AND RECEIVING
TRUCK SIGNAGE IN THE DRIVEWAYS AROUND THE BUILDING. THE SIZE, LOCATION, STYLE
AND METHOD OF INSTALLATION AND REMOVAL OF SUCH SIGNAGE SHALL BE SUBJECT TO THE
PRIOR APPROVAL OF LANDLORD. UPON TERMINATION OF THIS LEASE, ALL SUCH SIGNAGE
SHALL BE REMOVED AT TENANT'S SOLE COST AND EXPENSE, AND TENANT SHALL REPAIR ANY
DAMAGE TO THE BUILDING CAUSED BY SUCH REMOVAL.
11. SURRENDER OF PREMISES. Tenant agrees to and shall, upon
expiration or sooner termination of the Lease Term, promptly surrender and
deliver the Leased Premises to Landlord without demand therefor in good
condition, ordinary wear and tear and damage by the elements, fire, or other
cause beyond the reasonable control of Tenant excepted.
12. REPAIRS AND ALTERATIONS BY TENANT. Landlord shall have the
right, at Tenant's cost and expense, to repair or replace any damage done to
the Premises and the Building, or any part thereof, caused by Tenant or
Tenant's agents, employees, invitees, or visitors, and, to the extent such
costs are not covered by Tenant's insurance proceeds, Tenant shall pay the cost
thereof to Landlord on demand as additional rent. Tenant agrees with Landlord
not to make or allow to be made any alterations to the Premises, or place signs
on the Premises which are visible from outside the Premises, without first
obtaining the written consent of Landlord in each such instance, which consent
may be withheld for any reason whatsoever or given on such conditions as
Landlord may elect. TENANT MAY PLACE VENDING MACHINES WITHIN THE PREMISES. In
the event Tenant proposes to make any alteration, Tenant shall, prior to
commencing such alteration, submit to Landlord for prior written approval:
detailed plans and specifications; the names, addresses
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and copies of contracts for all contractors; all necessary permits evidencing
compliance with all applicable governmental rules, regulations and
requirements; certificates of insurance in form and amounts required by
Landlord, naming Landlord, its managing agent and any other parties designated
by Landlord as additional insureds; and all other documents and information as
Landlord may reasonably request in connection with such alteration. IN THE
EVENT TENANT REQUESTS LANDLORD TO PERFORM SUCH ALTERATIONS, Tenant agrees to
promptly pay all of Landlord's charges for and costs related to any alteration,
repair or service requested by Tenant that is not specifically the
responsibility of the Landlord, which charges and costs shall be at Tenant's
sole expense and shall include a fifteen percent (15%) supervision fee in
addition to the taxes, permits and other charges required by applicable
governmental authorities, insurers, laws, regulations and/or requirements for
review and/or approval, if applicable, of all such items and supervision of the
alterations, repairs and services. TENANT SHALL NOT BE REQUIRED TO USE LANDLORD
TO PERFORM SUCH ALTERATIONS. Neither approval of the plans and specifications
nor supervision of the alteration by Landlord shall constitute a representation
or warranty by Landlord as to the accuracy, adequacy, sufficiency or propriety
of such plans and specifications or the quality of workmanship or the
compliance of such alteration with applicable law. Tenant shall pay the entire
cost of the alteration and, if requested by Landlord, shall deposit with
Landlord, prior to the commencement of the alteration, security for the payment
and completion of the alteration in form and amount required by Landlord. Each
alteration shall be performed in a good and workmanlike manner, in accordance
with the plans and specifications approved by Landlord, and shall meet or
exceed the standards for construction and quality of materials established by
Landlord for the Building. In addition, each alteration shall be performed in
compliance with all applicable governmental and insurance company laws,
regulations and requirements. Each alteration shall be performed by Landlord or
under Landlord's supervision, and in harmony with Landlord's employees,
contractors and other tenants. Any and all alterations to the Premises shall
become the property of Landlord upon termination of this Lease (except for
movable equipment or furniture owned by Tenant). Landlord may, nonetheless,
require Tenant to remove any and all fixtures, equipment and other improvements
installed on the Premises (the "Additional Improvements"). In the event
Landlord so elects, and Tenant fails to remove the Additional Improvements,
Landlord may remove the Additional Improvements at Tenant's cost, and Tenant
shall pay Landlord on demand all costs incurred in removing Additional
Improvements.
13. NET LEASE. Landlord and Tenant acknowledge and agree that
both parties intend that this Lease shall be and constitute what is generally
referred to as a "triple net" or "absolute net" lease, such that Tenant shall
be obligated hereunder to pay all costs and expenses incurred with respect to,
and associated with, the premises and the business operated thereon and
therein, and Tenant's pro rata share of Operating Expenses, including, without
limitation, all taxes and assessments, utility charges, insurance costs,
maintenance costs and repair, replacement and restoration expenses (all as more
particularly herein provided), together with any and all other assessments,
charges, costs and expenses of any kind or nature whatsoever related to, or
associated with, the Premises and the business operated thereon and therein,
and the Building and the Property; provided, however, that Landlord shall
nonetheless be obligated to pay any debt service on any mortgage encumbering
Landlord's fee simple interest in the Property, and Landlord's personal income
taxes with respect to the Rents received by Landlord under this Lease. Except
as expressly hereinabove provided, Landlord shall bear no cost or expense of
any type or nature with respect to, or associated with, the
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Premises, the Building, or the Property. NOTWITHSTANDING ANYTHING SET FORTH
ABOVE TO THE CONTRARY, LANDLORD SHALL PAY ALL SUMS AND PERFORM ALL OBLIGATIONS
OTHERWISE SPECIFICALLY TO BE REQUIRED TO BE PAID AND/OR PERFORMED BY LANDLORD
PURSUANT TO THE TERMS OF THIS LEASE.
14. LAWS AND REGULATIONS. Tenant agrees to comply with all
applicable laws, ordinances, rules, and regulations of any governmental entity
or agency having jurisdiction over the Premises, including without limitation,
the Americans with Disabilities Act. LANDLORD AGREES TO COMPLY WITH ALL
APPLICABLE LAWS, ORDINANCES, RULES, AND REGULATIONS OF ANY GOVERNMENTAL ENTITY
OR AGENCY (INCLUDING THE AMERICANS WITH DISABILITIES ACT) WITH RESPECT TO THE
STRUCTURE OF THE BUILDING AND THE EXTERIOR COMMON AREAS AROUND THE BUILDING.
15. BUILDING RULES AND REGULATIONS. Tenant will comply with the
Building Rules and Regulations adopted and altered by Landlord from time to
time and will cause all of its agents, employees, invitees and visitors to do
so. All changes to such Building Rules and Regulations shall be sent by
Landlord to Tenant in writing. A copy of the proposed initial Building Rules
and Regulations applicable to the Building and the Premises is attached hereto
as Exhibit "D" and incorporated herein.
16. ENTRY BY LANDLORD. Tenant agrees to permit Landlord or its
agents or representatives to enter into and upon any part of the Premises at
all reasonable hours UPON 24 HOURS' NOTICE (and in emergencies at all times)
WITHOUT NOTICE) to inspect the same, or to show the Premises to prospective
purchasers, mortgagees, tenants or insurers, or 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. DURING THE LAST NINE MONTHS
OF THE LEASE TERM, LANDLORD MAY SHOW THE PREMISES TO PROSPECTIVE TENANTS
WITHOUT HAVING TO GIVE SUCH 24 HOURS' NOTICE TO TENANT. EXCEPT WITH RESPECT TO
EMERGENCIES, LANDLORD AGREES TO BE ESCORTED AT ALL TIMES BY A REPRESENTATIVE OF
TENANT WHILE LANDLORD IS IN THE PREMISES.
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17. ASSIGNMENT AND SUBLETTING.
(a) Tenant may not assign, sublease or transfer any
interest in this Lease or encumber this Lease without first obtaining
Landlord's prior written consent, which consent SHALL NOT BE UNREASONABLY
WITHHELD. TENANT SHALL PROVIDE LANDLORD WITH ANY AND ALL DOCUMENTS, INSTRUMENTS
AND AGREEMENTS PERTAINING TO SUCH PROPOSED ASSIGNMENT REASONABLY NECESSARY FOR
LANDLORD TO EVALUATE SUCH PROPOSED ASSIGNMENT. AT A MINIMUM, WITHOUT
LIMITATION, FOR EACH PROPOSED ASSIGNMENT THE FOLLOWING REQUIREMENTS MUST BE
SATISFIED: (i) TENANT SHALL NOT BE RELEASED FROM ANY OBLIGATIONS OR ANY
LIABILITIES HEREUNDER AS A RESULT OF ANY SUCH ASSIGNMENT; (ii) TENANT SHALL NOT
BE IN DEFAULT HEREUNDER AT THE TIME IT REQUESTS LANDLORD'S CONSENT OR ON THE
EFFECTIVE DATE OF THE PROPOSED ASSIGNMENT; (iii) LANDLORD SHALL BE PROVIDED
WITH SUCH INFORMATION REGARDING THE NAME, IDENTITY, BUSINESS REPUTATION AND
CREDITWORTHINESS OF THE PROPOSED ASSIGNEE AS LANDLORD SHALL REASONABLY REQUEST;
AND (iv) THE ASSIGNEE SHALL DELIVER TO LANDLORD A WRITTEN AGREEMENT WHEREBY IT
ASSUMES JOINTLY AND SEVERALLY WITH TENANT ALL OF THE OBLIGATIONS AND
LIABILITIES OF TENANT UNDER THIS LEASE. Any attempted assignment or sublease by
Tenant in violation of the terms and covenants of this paragraph shall be void.
TENANT SHALL HAVE THE RIGHT TO ASSIGN THIS LEASE TO ANY ENTITY WHICH PURCHASES
AT LEAST 50% OF TENANT OR ANY ENTITY INTO WHICH TENANT MERGES. TENANT
SHALL ALSO HAVE THE RIGHT TO ASSIGN THIS LEASE OR SUBLET ALL OR ANY PART OF THE
PREMISES TO ITS AFFILIATES. CHANGES IN THE ownership of Tenant WHICH DO NOT
RESULT IN A CHANGE OF CONTROL SHALL NOT be deemed an assignment UNDER THIS
LEASE AND SHALL NOT REQUIRE LANDLORD'S CONSENT. IN ADDITION, A PUBLIC OFFERING
OF TENANT'S STOCK SHALL NOT BE DEEMED AN ASSIGNMENT UNDER THIS LEASE AND SHALL
NOT REQUIRE LANDLORD'S CONSENT.
(b) If Tenant requests Landlord's consent to an
assignment of this Lease or subletting of all or part of the Premises, Landlord
shall either: approve such sublease or assignment (but no approval of an
assignment or sublease shall relieve Tenant of any liability hereunder);
negotiate directly with the proposed subtenant or assignee and (in the event
Landlord is able to reach agreement with such proposed tenant) upon execution
of a lease with such tenant, terminate this Lease (in part or in whole, as
appropriate) upon thirty (30) days' notice; or deny such sublease or
assignment. If Landlord should fail to notify Tenant in writing of its decision
within a thirty (30) day period after Landlord is notified in writing of the
proposed assignment or sublet, then Landlord shall be deemed to have refused to
consent to an assignment or sublet and to have elected to keep this Lease in
full force and effect.
(c) All cash or other 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 notwithstanding the
fact that such proceeds exceed the rent 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
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occupying the Premises and/or assuming Tenant's obligations hereunder, shall
be deemed to have assumed liability to Landlord for all amounts paid to persons
other than Landlord by such Successor in consideration of any such sale,
assignment or subletting, in violation of the provisions hereof.
(d) No assignment or subletting shall ever relieve
Tenant of any liability hereunder.
18. MECHANIC'S LIENS. Tenant shall not create or cause to be
imposed, claimed or filed upon the Premises, or any portion thereof, or upon
the interest of Landlord therein, any lien, charge or encumbrance whatsoever.
If, because of any act or omission of Tenant, any such lien, charge or
encumbrance shall be imposed, claimed or filed, Tenant shall, at its sole cost
and expense, cause the same to be fully paid and satisfied or otherwise
discharged of record (by bonding or otherwise) and Tenant shall indemnify and
save and hold Landlord harmless from and against any and all costs,
liabilities, suits, penalties, claims and demands whatsoever, and from and
against any and all attorneys' fees, at both trial and all appellate levels,
resulting or on account thereof and therefrom. In the event that Tenant shall
fail to comply with the provisions of this Section 18, Landlord shall have the
option of paying, satisfying or otherwise discharging (by bonding or otherwise)
such lien, charge or encumbrance and Tenant agrees to reimburse Landlord, upon
demand and as additional rent, for all sums so paid and for all costs and
expenses incurred by Landlord in connection therewith, together with interest
thereon, until paid.
Landlord's interest in the Premises shall not be subjected to liens of
any nature by reason of Tenant's construction, alteration, renovation, repair,
restoration, replacement or reconstruction of any improvements on or in the
Premises, or by reason of any other act or omission of Tenant (or of any person
claiming by, through or under Tenant) including, but not limited to, mechanics'
and materialmen's liens. All persons dealing with Tenant are hereby placed on
notice that such persons shall not look to Landlord or to Landlord's credit or
assets (including Landlord's interest in the Premises) for payment or
satisfaction of any obligations incurred in connection with the construction,
alteration, renovation, repair, restoration, replacement or reconstruction
thereof by or on behalf of Tenant. Tenant has no power, right or authority to
subject Landlord's interest in the Premises to any mechanic's or materialmen's
lien or claim of lien. If a lien, a claim of lien or an order for the payment
of money shall be imposed against the Premises on account of work performed, or
alleged to have been performed, for or on behalf of Tenant, Tenant shall,
within thirty (30) days after written notice of the imposition of such lien,
claim or order, cause the Premises to be released therefrom by the payment of
the obligation secured thereby or by furnishing a bond or by any other method
prescribed or permitted by law. If a lien is released, Tenant shall thereupon
furnish Landlord with a written instrument of release in form for recording or
filing in the appropriate office of land records of Orange County, Florida, and
otherwise sufficient to establish the release as a matter of record.
Tenant may, at its option, contest the validity of any lien or claim
of lien if Tenant shall have first posted an appropriate and sufficient bond in
favor of the claimant or paid the appropriate sum into court, if permitted by
law, and thereby obtained the release of the Premises from such lien.
If judgment is obtained by the claimant under any lien, Tenant shall pay the
same immediately after such judgment shall have become final, and the time for
appeal
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therefrom has expired without appeal having been taken. Tenant shall, at its
own expense, defend the interests of Tenant and Landlord in any and all such
suits; provided, however, that Landlord may, at its election, engage its own
counsel and assert its own defenses, in which event Tenant shall cooperate with
Landlord and make available to Landlord all information and data which Landlord
deems necessary or desirable for such defense.
Prior to commencement by Tenant of any work on the Premises which
shall have been previously permitted by Landlord as provided in this Lease,
Tenant shall record or file a notice of the commencement of such work in the
land records of Orange County, Florida, identifying Tenant as the party for
whom such work is being performed, stating such other matters as may be
required by law and requiring the service of copies of all notices, liens or
claims of lien upon Landlord. Any such notice of commencement shall clearly
reflect that the interest of Tenant in the Premises is that of a leasehold
estate and shall also clearly reflect that the interest of Landlord as the fee
simple owner of the Premises shall not be subject to mechanics or materialmen's
liens on account of the work which is the subject of such notice of
commencement. A copy of any such notice of commencement shall be furnished to
and approved by Landlord and its attorneys prior to the recording or filing
thereof, as aforesaid.
19. PROPERTY AND LIABILITY INSURANCE. Landlord shall maintain
fire and extended coverage insurance on the Building and the Premises in such
amounts as Landlord shall require. The costs of such insurance shall be
included in Operating Expenses, and payments for losses thereunder shall be
made solely to Landlord or the mortgagees of Landlord as their interests shall
appear. Landlord, as a part of the Operating Expenses, shall maintain a policy
or policies of commercial general liability insurance with respect to its
activities in the Building and on the Property, such insurance to afford
minimum protection of not less than $1,000,000 combined single limit coverage
of bodily injury, property damage or combination thereof. Tenant shall purchase
and maintain such insurance as will protect it from claims set forth below
which may arise out of or result from its operations under this Lease, whether
such operations be by itself, by any subtenant or by anyone directly or
indirectly employed by any of them, or by anyone for whose acts any of them may
be liable:
(1) claims under workers compensation, disability
benefit, and other similar employee acts;
(2) claims for damages because of bodily injury,
occupational sickness or disease, or death of its employees;
(3) claims for damages because of bodily injury,
sickness or disease, or death of any person other than employees;
(4) claims for damages insured by usual personal injury
liability coverage which are sustained (a) by any person as a result of any
offense directly or indirectly related to the employment of such person by
Tenant, or (b) by any other person;
(5) claims for damages because of injury to or
destruction of tangible property, including loss of use thereof; and
(6) claim for damages because of bodily injury or
property damage arising
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out of the ownership, maintenance, use, loading or unloading of any motor
vehicle.
The insurance required by this Section 19, except for statutory Workers
Compensation, shall include Landlord and its property manager as an additional
insured with respect to operations performed under this Lease. The property
insurance shall provide that it is specific and noncontributory and shall
contain a replacement cost endorsement. Tenant shall, prior to commencement of
the Lease Term and at Landlord's request from time to time thereafter, provide
Landlord with current certificates of insurance evidencing Tenant's compliance
with this Section 19 and with Section 20. Tenant shall obtain the agreement of
Tenant's insurers to notify Landlord that a policy is due to expire at least
thirty (30) days prior to such expiration, and the certificates of insurance
shall provide that Tenant's insurance coverage may not be changed, reduced or
cancelled without at least thirty (30) days prior written notice to Landlord.
The insurance companies providing coverage required of Tenant under this Section
19 and in Section 20 shall be acceptable to the Landlord, shall be licensed to
do business in the State of Florida, and shall have a "Best's Rating" of "A" or
"A+". In the event Tenant shall fail to procure such insurance, Landlord may at
its option after giving Tenant no less than ten (10) days prior written notice
of its election to do so, procure the same for the account of Tenant, and the
cost thereof shall be paid to Landlord as additional rent upon receipt by Tenant
of bills therefor.
20. INSURANCE LIMITS. THE REQUIRED limits of liability for the
policies required of Tenant under Section 19 shall be:
(a) Workers Compensation and Employers Liability
Coverage A - Statutory
Coverage B - $1,000,000
(b) Comprehensive General Liability (occurrence form)
Per Occurrence -$500,000
General Aggregate -$2,000,000
Products Aggregate -$2,000,000
Coverage must be endorsed to include a "Per Project" or "Per
Location" Aggregate.
(c) Automobile Liability
Bodily Injury -$500,000 per person
-$1,000,000 per accident
Property Damage -$100,000 per accident
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OR
Combined Single Limit of $500,000
(d) Umbrella Liability
$5,000,000.
21. INDEMNITY. LANDLORD SHALL NOT BE LIABLE TO TENANT, OR TO
TENANT'S AGENTS, SERVANTS, EMPLOYEES, CUSTOMERS OR INVITEES, FOR ANY INJURY TO
PERSON OR DAMAGE TO PROPERTY CAUSED BY ANY ACT, OMISSION, OR NEGLECT OF TENANT,
ITS AGENTS, SERVANTS, EMPLOYEES, INVITEES, LICENSEES OR ANY OTHER PERSON
ENTERING THE PROPERTY UNDER THE INVITATION OF TENANT, OR ARISING OUT OF THE USE
OF THE PREMISES BY TENANT AND THE CONDUCT OF ITS BUSINESS OR OUT OF A DEFAULT BY
TENANT IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER. TENANT HEREBY AGREES TO
INDEMNIFY, HOLD HARMLESS AND DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO
LANDLORD) LANDLORD, ITS AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES FROM ANY AND
ALL LIABILITY AND CLAIMS FOR ANY SUCH DAMAGE OR INJURY. LANDLORD HEREBY AGREES
TO INDEMNIFY, HOLD HARMLESS AND DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO
TENANT) TENANT, ITS AGENTS OFFICERS, DIRECTORS AND EMPLOYEES FROM ANY AND ALL
LIABILITY AND CLAIMS FOR DAMAGE OR INJURY CAUSED BY THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD, ITS AGENTS, SERVANTS OR EMPLOYEES.
22. WAIVER OF SUBROGATION RIGHTS. ANYTHING IN THIS LEASE TO THE
CONTRARY NOTWITHSTANDING, TENANT HEREBY WAIVES ANY AND ALL RIGHTS OF RECOVERY,
CLAIM, ACTION OR CAUSE OF ACTION, AGAINST LANDLORD AND ITS PROPERTY MANAGER,
THEIR AGENTS (INCLUDING PARTNERS, BOTH GENERAL AND LIMITED), OFFICERS,
DIRECTORS, SHAREHOLDERS, CUSTOMERS, INVITEES 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 THEREON, OR ANY
PERSONAL PROPERTY OF TENANT THEREIN, BY REASON OF FIRE, THE ELEMENTS OR ANY
OTHER CAUSE WHICH IS OR IS REQUIRED TO BE INSURED AGAINST UNDER THE INSURANCE
POLICIES REFERRED TO IN SECTIONS 19 AND 20 HEREOF, REGARDLESS OF CAUSE OR
ORIGIN, INCLUDING NEGLIGENCE OF LANDLORD, ITS AGENTS, PARTNERS, SHAREHOLDERS,
OFFICERS, DIRECTORS, CUSTOMERS, INVITEES OR EMPLOYEES, AND COVENANTS THAT NO
INSURER SHALL HOLD ANY RIGHT OF SUBROGATION AGAINST LANDLORD. TENANT SHALL
ADVISE INSURERS OF THE FOREGOING WAIVER AND SUCH WAIVER SHALL BE A PART OF EACH
POLICY MAINTAINED BY TENANT.
23. CASUALTY DAMAGE. In the event (a) that the Premises should be
totally destroyed by fire, tornado or other casualty, or (b) that the Premises
or the Building should be
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so damaged that rebuilding or repairs cannot be completed within one hundred
eighty (180) days after the date of such casualty, or (c) of a material
uninsured loss to the Premises, Building or Property (WHICH LACK OF INSURANCE
COVERAGE IS NOT CAUSED BY ANY DEFAULT OF LANDLORD UNDER THIS LEASE), Landlord
may at its option terminate this Lease, in which event the rent shall be abated
during the unexpired portions of this Lease effective with the date of such
casualty. In the event Landlord elects or is required to restore or rebuild the
Premises or Building as provided above, Landlord shall, within sixty (60) days
after the date of such casualty, commence to rebuild or repair the Premises and
shall proceed with reasonable diligence to restore the Premises to substantially
the same condition which existed immediately prior to the occurrence of the
casualty, except that Landlord shall not be required to rebuild, repair or
replace any part of the furniture, equipment, fixtures and other improvements
which may have been placed by Tenant or other tenants within the Building, the
Property or the Premises. Unless the casualty is a result of Tenant's fault or
neglect, TENANT'S RENT SHALL ABATE during the time the Premises are unfit for
occupancy. In the event any mortgagee under a deed of trust, security agreement
or mortgage encumbering the Premises should require that the insurance proceeds
received as a result of a casualty be used to retire the mortgage debt, Landlord
shall have no obligation to rebuild and this Lease shall terminate upon notice
to Tenant. Any insurance which may be carried by Landlord or Tenant against loss
or damage to the Building, the Property or to the Premises shall be for the sole
benefit of the party carrying such insurance and under its sole control.
LANDLORD SHALL, WITHIN SIXTY (60) DAYS FOLLOWING ANY SUCH CASUALTY, GIVE TENANT
AN ESTIMATE OF THE TIME TO REPAIR SUCH DAMAGE. IF, IN LANDLORD'S REASONABLE
ESTIMATION, THE PREMISES CANNOT BE RESTORED, TO THE EXTENT OF LANDLORD'S WORK
THEREIN, WITHIN SIX (6) MONTHS FOLLOWING SUCH DAMAGE OR DESTRUCTION, TENANT
SHALL HAVE THE OPTION TO TERMINATE THIS LEASE BY DELIVERING WRITTEN NOTICE TO
LANDLORD WITHIN FIFTEEN (15) DAYS AFTER LANDLORD HAS GIVEN TENANT ITS ESTIMATE
OF THE TIME TO REPAIR SUCH DAMAGE.
24. CONDEMNATION. If the whole or substantially the whole of the
Building, or ANY PORTION OF 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 is
taken or sold, Landlord (whether or not the Premises are affected thereby) may
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 is taken by the condemning authority. If this Lease is
not so terminated upon any such taking or sale, 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
installing shell 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. Except for any amounts specifically
awarded to Tenant for its separate property and fixtures, all amounts awarded
upon a taking of any part or all of the Property, Building or the Premises
belong to Landlord, and Tenant shall not be entitled to and expressly waives all
claim to any such compensation. NOTWITHSTANDING THE FOREGOING, TENANT SHALL BE
ENTITLED TO PURSUE REIMBURSEMENT CLAIM OR COMPENSATION CLAIMS TO WHICH TENANT IS
ENTITLED UNDER APPLICABLE LAW, SO LONG AS SUCH CLAIMS DO NOT DECREASE THE
AMOUNT OF LANDLORD'S AWARD.
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25. DAMAGES FROM CERTAIN CAUSES. Landlord shall not be liable to
Tenant for any loss or damage to any property or person occasioned by theft,
fire, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, or order of governmental body or authority or by any
other cause except for Landlord's negligence or willful misconduct. Landlord
shall not be liable for any damage or inconvenience which may arise through
repair or alteration of any part of the Building or the Premises.
26. EVENTS OF DEFAULT/REMEDIES.
(a) The following events shall be deemed to be events of
default by Tenant under this Lease: Tenant shall fail to pay any Rent or other
sum of money due hereunder and such failure shall continue for a period of TEN
(10) DAYS AFTER TENANT'S RECEIPT OF NOTICE THEREOF FROM LANDLORD; PROVIDED,
HOWEVER, THAT LANDLORD SHALL NOT BE REQUIRED TO PROVIDE TENANT WITH THE NOTICE
AND TEN-DAY PERIOD SET FORTH IN THIS SUBPARAGRAPH MORE THAN THREE (3) TIMES
DURING ANY LEASE YEAR, AND THE FOURTH AND EACH SUBSEQUENT FAILURE TO TIMELY PAY
SUCH SUMS DURING ANY LEASE YEAR SHALL IMMEDIATELY CONSTITUTE AN EVENT OF DEFAULT
HEREUNDER; 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 covenant shall be deemed material, and such
failure shall continue for a period of thirty (30) days (or immediately if the
failure involves a hazardous condition) after written notice of such default is
delivered to Tenant; PROVIDED, THAT IN THE EVENT ANY SUCH FAILURE IS NOT
REASONABLY SUSCEPTIBLE OF CURE WITHIN SUCH THIRTY (30)-DAY PERIOD, TENANT SHALL
HAVE A REASONABLE TIME TO CURE SUCH FAILURE (NOT TO EXCEED NINETY (90) DAYS
TOTAL), PROVIDED TENANT COMMENCES CURE AS SOON AS IS REASONABLY POSSIBLE, AND
PROSECUTES SUCH CURE DILIGENTLY TO COMPLETION; the leasehold hereunder demised
shall be taken on execution, levied upon or attached or other process of law in
any action against Tenant; Tenant notifies Landlord, at any time prior to the
Commencement Date, that Tenant does not intend to take occupancy of the Premises
upon the Commencement Date or Tenant shall fail to promptly move into and take
possession of the Premises when the Premises are ready for occupancy or shall
cease to do business in, vacate or abandon any portion of the Premises; Tenant
shall become insolvent or unable to pay its debts as they become due, or Tenant
notifies Landlord that it anticipates either condition; Tenant takes any action
to, or notifies Landlord that Tenant intends to file a petition under any
section or chapter of the United States Bankruptcy Code, as amended from time to
time, or under any similar law or statute of the United States or any State
thereof; or a petition shall be filed against Tenant under any such statute or
Tenant or any creditor of Tenant notifies Landlord that it knows such a petition
will be filed or has been filed or Tenant notifies Landlord that it expects such
a petition to be filed; or 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) Remedies on Default. If any of the events of default
hereinabove specified shall occur, Landlord, at any time thereafter, shall have
and may exercise any of the following rights and remedies:
(i) Landlord may, pursuant to written notice thereof
to Tenant, terminate this Lease and, peaceably or pursuant to appropriate legal
proceedings, re-enter, retake and resume possession of the Premises for
Landlord's own account and, for Tenant's
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breach of and default under this Lease, recover immediately from Tenant any and
all Rent and other sum and damages due or in existence at the time of such
termination, including, without limitation: (a) all Rent and other sums,
charges, payments, costs and expenses agreed and/or required to be paid by
Tenant to Landlord hereunder, (b) all costs and expenses of Landlord in
connection with the recovery of possession of the Premises, including reasonable
attorneys' fees and court costs, and (c) all costs and expenses of Landlord in
connection with any reletting or attempted reletting of the Premises or any part
or parts thereof, including, without limitation, brokerage fees, attorneys' fees
and the cost of any alterations or repairs which may be reasonably required to
so relet the Premises, or any part or parts thereof.
(ii) Landlord may, pursuant to any prior notice required
by law, and without terminating this Lease, peaceably or pursuant to appropriate
legal proceedings, re-enter, retake and resume possession of the Premises for
the account of Tenant, make such alterations of and repairs to the Premises as
may be reasonably necessary in order to relet the same or any part or parts
thereof and relet or attempt to relet the Premises or any part or parts thereof
for such term or terms (which may be for a term or terms extending beyond the
term of this Lease), at such rents and upon such other terms and provisions as
Landlord, in its sole, but reasonable, discretion, may deem advisable. If
Landlord relets or attempts to relet the Premises, Landlord shall, be the sole
judge as to the terms and provisions of any new lease or sublease and of whether
or not a particular proposed new tenant or sublessee is acceptable to Landlord.
Upon any such reletting, all rents received by the Landlord from such reletting
shall be applied: (a) first, to the payment of all costs and expenses of
recovering possession of the Premises, (b) second, to the payment of any costs
and expenses of such reletting, including brokerage fees, attorneys' fees and
the cost of any alterations and repairs reasonably required for such reletting;
(c) third, to the payment of any indebtedness, other than Rent, due hereunder
from Tenant to the Landlord, (d) fourth, to the payment of all Rent and other
sums due and unpaid hereunder, and (e) fifth, the residue, if any, shall be held
by the Landlord and applied in payment of future Rents as the same may become
due and payable hereunder. If the rents received from such reletting during any
period shall be less than that required to be paid during that period by the
Tenant hereunder, Tenant shall promptly pay any such deficiency to the Landlord
and failing the prompt payment thereof by Tenant to Landlord, Landlord shall
immediately be entitled to institute legal proceedings for the recovery and
collection of the same. Such deficiency shall be calculated and paid at the time
each payment of rent shall otherwise become due under this Lease, or, at the
option of Landlord, at the end of the term of this Lease. Landlord shall, in
addition, be immediately entitled to sue for and otherwise recover from Tenant
any other damages occasioned by or resulting from any abandonment of the
Premises or other breach of or default under this Lease other than a default in
the payment of rent. No such re-entry, retaking or resumption of possession of
the Premises by the Landlord for the account of Tenant shall be construed as an
election on the part of Landlord to terminate this Lease unless a written notice
of such intention shall be given to the Tenant or unless the termination of this
Lease be decreed by a court of competent jurisdiction. Notwithstanding any such
re-entry and reletting or attempted reletting of the Premises or any part or
parts thereof for the account of Tenant without termination, Landlord may at any
time thereafter, upon written notice to Tenant, elect to terminate this Lease or
pursue any other remedy available to Landlord for Tenant's previous breach of or
default under this Lease.
(iii) Landlord may, without re-entering, retaking or
resuming possession of the Premises, sue for all Rent and all other sums,
charges, payments, costs and expenses
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due from Tenant to Landlord hereunder either: (i) as they become due under this
Lease, taking into account that Tenant's right and option to pay the Rent
hereunder on a monthly basis in any particular Lease year is conditioned upon
the absence of a default on Tenant's part in the performance of its obligations
under this Lease, or (ii) at Landlord's option, accelerate the maturity and due
date of the whole or any part of the Rent for the entire then-remaining
unexpired balance of the term of this Lease, as well as all other sums, charges,
payments, costs and expenses required to be paid by Tenant to Landlord
hereunder, including, without limitation, damages for breach or default of
Tenant's obligations hereunder in existence at the time of such acceleration,
such that all sums due and payable under this Lease shall, following such
acceleration, be treated as being and, in fact, be due and payable in advance as
of the date of such acceleration. Landlord may then proceed to recover and
collect all such unpaid Rent and other sums so sued for from Tenant by distress,
levy, execution or otherwise. Regardless of which of the foregoing alternative
remedies is chosen by Landlord under this subparagraph (iii), Landlord shall not
be required to relet the Premises nor exercise any other right granted to
Landlord pursuant to this Lease, nor shall Landlord be under any obligation to
minimize or mitigate Landlord's damages or Tenant's loss as a result of Tenant's
breach of or default under this Lease.
In addition to the remedies hereinabove specified and enumerated,
Landlord shall have and may exercise the right to invoke any other remedies
allowed at law or in equity as if the remedies of re-entry, unlawful detainer
proceedings and other remedies were not herein provided. Accordingly, the
mention in this Lease of any particular remedy shall not preclude Landlord from
having or exercising any other remedy at law or in equity. Nothing herein
contained shall be construed, as precluding the Landlord from having or
exercising such lawful remedies as may be and become necessary in order to
preserve the Landlord's right or the interest of the Landlord in the Premises
and in this Lease, even before the expiration of any notice periods provided for
in this Lease, if under the particular circumstances then existing the allowance
of such notice periods will prejudice or will endanger the rights and estate of
the Landlord in this Lease and in the Premises.
(c) This Section 26 shall be enforceable to the maximum extent
not prohibited by applicable law, and the unenforceability of any portion hereof
shall not thereby render unenforceable any other portion.
(d) Landlord shall be in default hereunder in the event
Landlord has not commenced and pursued with reasonable diligence the cure of any
failure of Landlord to meet its obligations hereunder within thirty (30) days of
the receipt by Landlord of written notice from Tenant of the alleged failure to
perform. In SUCH EVENT, TENANT SHALL BE ENTITLED TO SEEK WHATEVER REMEDIES ARE
PERMITTED AT LAW OR IN EQUITY. In addition, Tenant hereby covenants that, prior
to the exercise of any such remedies, it will give the mortgagee(s) holding
mortgages on the Building notice and a reasonable time to cure any default by
Landlord.
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27. PEACEFUL ENJOYMENT. Tenant shall and may peacefully have,
hold, and enjoy the Premises, subject to the other terms hereof including,
without limitation, Section 28 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 any 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 the Landlord's interest hereunder.
28. HOLDING OVER. In the event of holding over by Tenant after
expiration or other termination of this Lease or in the event Tenant continues
to occupy the Premises after the termination of Tenant's right of possession
pursuant Section 26(b) hereof, unless otherwise agreed to in writing, such hold
over shall constitute and be construed as a tenancy at sufferance, and Tenant
shall, throughout the entire holdover period, pay rent equal to 150% of the rent
which would have been applicable had the Lease Term continued through the period
of such holding over by Tenant. No holding over by Tenant after the expiration
of the term of this Lease shall be construed to extend the term of this Lease.
Additionally, Tenant shall be liable to Landlord for all of Landlord's
consequential damages resulting directly or indirectly from Tenant's failure to
surrender the Premises to Landlord in accordance with this Lease.
29. SUBORDINATION TO MORTGAGE. Tenant accepts this Lease subject
and subordinate to any mortgage, deed of trust or other lien presently existing
or hereafter arising encumbering the Premises, the Building and/or the Property,
and to any renewals, modifications, consolidations, refinancing and extensions
thereof, but Tenant agrees that any such mortgagee shall have the right at any
time to subordinate such mortgage, deed of trust or other lien to this Lease on
such terms and subject to such conditions as such mortgagee may deem appropriate
in its discretion. Landlord is hereby irrevocably vested with full power and
authority to subordinate this Lease to any mortgage, deed of trust or other lien
now existing or hereafter placed upon the Premises, or the Building and/or the
Property and Tenant agrees upon demand to execute such further instruments
subordinating this Lease or attorning to the holder of any such liens as
Landlord in any request. The terms of this Lease are subject to approval by
Landlord's mortgagee(s) and such approval is a condition precedent to Landlord's
obligations hereunder. In the event that Tenant should fail to execute any
subordination or other agreement required by this paragraph, 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. Tenant agrees
that it will from time to time upon request by Landlord execute and deliver to
such persons as Landlord shall request a statement certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as so modified), stating the dates to
which rent and other charges payable under this Lease have 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. Notwithstanding the foregoing,
Tenant's agreement to subordinate this Lease to any mortgagee shall be
contingent upon Tenant receiving from such mortgagee a nondisturbance agreement
in a form reasonably acceptable to Tenant and such mortgagee.
30. LANDLORD'S LIEN.
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31. PARKING. Tenant shall have a non-exclusive license to use FIVE
AND ONE-HALF(5.5) parking spaces associated with the Building per One Thousand
(1,000) square feet of Rentable Area in the Premises. Tenant's right to such
parking spaces is subject to Landlord's rights to grant other tenants of the
Building the rights to parking spaces associated with the Building. Landlord
reserves the right from time to time to assign, or re-assign, the location of
such parking spaces in any manner that Landlord in Landlord's sole discretion
deems beneficial to the operation of the Building. Tenant agrees that it will
employ its best efforts to prevent the use by Tenant's employees and visitors
of parking spaces allocated exclusively to other tenants. Landlord reserves the
right to promulgate rules and regulations for the use of all parking areas at
any time during the term of this Lease. All motor vehicles (including all
contents thereof) shall be parked in such spaces at the sole risk of Tenant, its
employees, agents, invitees and licensees, it being expressly agreed and
understood that Landlord has no duty to insure any of said motor vehicles
(including the contents thereof), and that Landlord is not responsible for the
protection and security of such vehicles, or the contents thereof. Landlord
shall have no liability whatsoever for any property damage and/or personal
injury which might occur as a result of or in connection with the parking of
said motor vehicles in any of the parking spaces. Nothing herein shall be
deemed to create a bailment between the parties hereto, it being expressly
agreed and understood that the only relationship created between Landlord and
Tenant hereby is that of licensor and licensee, respectively. NOTWITHSTANDING
THE FOREGOING, TENANT SHALL HAVE THE RIGHT TO PARK TWO CARS AND THREE GOLF CARTS
IN A DESIGNATED AREA TO BE AGREED UPON BY LANDLORD AND TENANT, 24 HOURS PER DAY,
SEVEN DAYS PER WEEK.
32. ATTORNEYS' FEES. If either party shall bring an action to
recover any sum due hereunder, or for any breach hereunder, and shall obtain a
judgment or decree in its favor, the court shall award to such prevailing party
its reasonable costs and reasonable attorneys' fees, specifically including
reasonable attorneys' fees incurred in connection with any appeals (whether or
not taxable as such by law). Landlord shall also be entitled to recover its
reasonable attorneys' fees and costs incurred in any bankruptcy action filed by
or against Tenant, including, without limitation, those incurred in seeking
relief from the automatic stay, in dealing with the assumption or rejection of
this Lease, in any adversary proceeding, and in the preparation and filing
of any proof of claim.
33. NO IMPLIED WAIVER. The failure of Landlord to insist at any
time upon the strict performance of any covenant or agreement herein or to
exercise any option, right, power or remedy contained in this Lease shall not be
construed as a waiver or a relinquishment
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thereof for the future. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly installment of 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 or pursue any other remedy provided in this Lease.
34. PERSONAL LIABILITY. The liability of Landlord to Tenant for
any default by Landlord under the terms of this Lease shall be limited to the
interest of Landlord in the Building and Property, and Tenant agrees to look
solely to Landlord's interest in the Building and the Property for the recovery
of any judgment from the Landlord, it being intended that Landlord shall not be
personally liable for any judgment or deficiency.
35. SECURITY DEPOSIT. The Security Deposit 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 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 termination of
this Lease, the balance of the Security Deposit remaining after any such
application shall be returned by Landlord to Tenant. 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.
36. 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, postage prepaid 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, or by any other nationally recognized
overnight courier, addressed to the 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. Notice personally delivered shall be effective when delivered or when the
recipient refuses delivery; notice deposited in the mail in the manner
hereinabove described shall be effective from and after the expiration of three
(3) days after it is so deposited; and notice deposited with an overnight
carrier shall be effective one (1) day after it is so deposited.
37. SEVERABILITY. If any term or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, 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 valid and enforceable to the fullest
extent permitted by law.
38. RECORDATION. Tenant agrees not to record this Lease or any
memorandum
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hereof. The parties hereto will execute and record a memorandum of this Lease,
if requested by Landlord.
39. 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.
40. FORCE MAJEURE. Whenever a period of time is herein prescribed
for the taking of any action by EITHER PARTY, SUCH PARTY 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 or
materials, war, governmental laws, regulations or restrictions, or any other
cause whatsoever beyond the reasonable control of SUCH PARTY. NOTWITHSTANDING
THE FOREGOING, THIS SECTION 40 SHALL NOT APPLY TO THE PAYMENT OF RENT OR OTHER
CHARGES BY TENANT.
41. 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.
42. TRANSFERS BY LANDLORD. Landlord shall have the right to
transfer and assign, in whole or in part, all of its rights and obligations
hereunder and in the Building and Property referred to herein, and in such event
and upon such 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.
43. BROKER. Each of the parties represents and warrants to the
other that except as expressly set forth in this Section 43, such party has not
dealt with any broker, agent or other person in connection with this Lease and
that no other broker, agent or other person brought about this Lease through the
acts of or employment of either party, and each party hereby agrees to
indemnify, defend and hold the other party harmless from all liability arising
from any claim for brokerage commissions of any kind (including, without
limitation, attorneys' fees incurred in connection therewith) in connection with
this Lease, which claim arises (directly or indirectly) out of an agreement,
contract, course of dealings or relationship between Tenant and the claiming
party. The terms and provisions of this Section 43 shall survive the expiration
or sooner termination of this Lease.
44. 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. This Lease shall not be
effective until a copy executed by both Landlord and Tenant is delivered to and
accepted by Landlord, and this Lease has been approved by Landlord's mortgagee.
45. CERTAIN RIGHTS RESERVED TO LANDLORD. Landlord reserves the
following rights, each of which Landlord may exercise without liability to
Tenant, and the exercise of any such rights shall not be deemed to constitute an
eviction or disturbance of Tenant's use or possession of the Premises and shall
not give rise to any claim for set-off or abatement of rent or any other claim,
to change the name or street address of the Building or the suite number of the
Premises, PROVIDED THAT LANDLORD SHALL PAY THE REASONABLE COSTS FOR TENANT TO
CHANGE ITS STATIONERY AND BUSINESS CARDS; to install, affix and maintain any and
all signs on
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the exterior OF THE BUILDING OR IN THE COMMON AREAS OF THE interior of the
Building, SUBJECT TO ANY RESTRICTIONS SET FORTH IN THIS LEASE, to make repairs,
decorations, alterations, additions or improvements, whether structural or
otherwise, in and about the Building, and for such purposes to enter upon the
Premises, temporarily close doors, corridors and other areas in the Building
and interrupt or temporarily suspend services or use of Common Areas, and
Tenant agrees to pay Landlord for overtime and similar expenses incurred if
such work is done other than during ordinary business hours at Tenant's
request; to retain at all times, and to use in appropriate instances, keys to
all doors within and into the Premises, SUBJECT TO ANY LIMITATIONS ON
LANDLORD'S ENTRY CONTAINED IN THIS LEASE; to grant to any person or to reserve
unto itself the exclusive right to conduct any business or render any service
in the Building (OTHER THAN IN THE PREMISES); to show or inspect the Premises
at reasonable times and, if vacated or abandoned, to prepare the Premises for
reoccupancy, SUBJECT TO ANY LIMITATIONS ON LANDLORD'S ENTRY CONTAINED IN THIS
LEASE; to install, use and maintain in and through the Premises pipes,
conduits, wires and ducts serving the Building, provided that such
installation, use and maintenance does not unreasonably interfere with Tenant's
use of the Premises, PROVIDED THAT SUCH PIPES, CONDUITS, WIRES AND DUCTS ARE
SHOWN ON THE APPROVED PLANS AND SPECIFICATIONS FOR THE PREMISES; to take any
other action which Landlord deems reasonable in connection with the operation,
maintenance, marketing or preservation of the Building WHICH IS OTHERWISE
CONSISTENT WITH THE OTHER TERMS OF THE LEASE; and to approve the weight, size
and location of safes or other heavy equipment or articles IF THEY ARE HEAVIER
THAN 250 POUNDS PER SQUARE FOOT, which articles may be moved in, about or out
of the Building or Premises at Tenant's sole risk and responsibility.
46. WAIVER OF TRIAL BY JURY. LANDLORD AND TENANT WAIVE TRIAL BY
JURY IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
LANDLORD OR TENANT AGAINST THE OTHER IN CONNECTION WITH THIS LEASE.
47. ESTOPPEL CERTIFICATE. Upon ten (10) days notice from Landlord
to Tenant, Tenant shall deliver a certificate dated as of the first day of the
calendar month in which such notice is received, executed by an appropriate
officer, partner or individual, in the form as Landlord may require, stating
(but not limited to) the following: the Commencement Date of this Lease; the
space occupied by Tenant hereunder; the expiration date hereof; a description
of any renewal or expansion options, if any; the amount of Rent currently and
actually paid by Tenant under this Lease; the nature of any default or claimed
default hereunder by Landlord; and that Tenant is not in default hereunder nor
has any event occurred which with the passage time or the giving of notice
would become a default by Tenant hereunder. Landlord agrees that, within twenty
(20) days after written request from Tenant, Landlord shall execute,
acknowledge and deliver to Tenant a similar estoppel certificate.
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48. ENVIRONMENTAL MATTERS.
(a) Defined Terms.
(1) "Damages" shall mean all damages, and
includes, without limitation, punitive damages, liabilities, costs, losses,
diminutions in value, fines, penalties, demands, claims, cost recovery actions,
lawsuits, administrative proceedings, orders, response action costs, compliance
costs, investigation expenses, consultant fees, attorneys' and paralegals' fees
and litigation expenses.
(2) "Environmental Law" shall mean any current
or future statute, ordinance, regulation or rule pertaining to (1) the
protection of health, safety and the indoor or outdoor environment, (2) the
conservation, management or use of natural resources and wildlife, (3) the
protection or use of surface water and groundwater, (4) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal,
remediation, investigation or handling of, or exposure to, any Hazardous
Material or (5) pollution (including any release to air, land, surface water
and groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.9601 et
seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. ss.6901 et seq., the, Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 U.S.C. ss.1251 et seq., the Clean Air Act of
1966, as amended, 42 U.S.C. ss.7401 et seq., the Toxic Substances Control Act
of 1976, 15 U.S.C. ss.2601 et seq., the Hazardous Materials Transportation Act,
49 U.S.C. App. ss.1801 et seq., the Occupational Safety and Health Act of 1970,
as amended, 29 U.S.C. ss.651 et seq., any state or local law requiring
notifications or reports upon conveyance or other events, any similar,
implementing or successor law, any amendment, rule, regulation, order or
directive issued thereunder, and all other federal, state, regional, county,
municipal, and local laws, regulations, and ordinances insofar as they regulate
Hazardous Materials.
(3) "Governmental Approval" shall mean any
permit, license, variance, certificate, consent, letter, clearance, closure,
exemption, decision, action or approval of any international, foreign, federal,
state, regional, county or local person or body having governmental or
quasi-governmental authority or a subdivision thereof.
(4) "Hazardous Material" shall mean any
substance, chemical, compound, product, solid, gas, liquid, waste, by product,
pollutant, contaminant or material which is hazardous or toxic, and includes,
without limitation, asbestos, polychlorinated biphenyls, petroleum (including
crude oil or any fraction thereof) and any such material classified or
regulated as "hazardous" or "toxic" pursuant to any Environmental Law.
(5) "Hazardous Material Activity" shall mean
any activity, event or occurrence involving a Hazardous Material, including,
without limitation, the manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened release,
abatement, removal, remediation, handling of or corrective or response action
to any Hazardous Material.
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\
(b) Representations and Warranties of Tenant and
Landlord. Tenant represents and warrants as of the date of this Lease, as to
the Premises:
(1) Tenant is in compliance with any applicable
Environmental Law; and
(2) Tenant intends to conduct no Hazardous
Material Activity on the Premises, except in the ordinary course of its
business, NOTWITHSTANDING ANYTHING SET FORTH HEREIN TO THE CONTRARY, TENANT MAY
STORE, USE AND DISPOSE OF HAZARDOUS MATERIAL INCIDENTAL TO ITS MANUFACTURING
ACTIVITIES, PROVIDED, HOWEVER, THAT ANY SUCH STORAGE, USE OR DISPOSAL IS
STRICTLY IN ACCORDANCE WITH ALL APPLICABLE ENVIRONMENTAL LAWS. THE NATURE OF
SUCH HAZARDOUS MATERIAL USED IN TENANT'S BUSINESS IS AS FOLLOWS: MATERIALS
FOUND IN SMALL ELECTRONIC COMPONENTS, TOGETHER WITH SMALL AMOUNTS OF CLEANING
FLUIDS AND ADHESIVES USED IN THE ASSEMBLY, TESTING AND CLEANING OF ELECTRONIC
COMPONENTS.
Landlord represents and warrants as of the date of this Lease that it
has no actual knowledge, without independent investigation, of any violations
of any applicable Environmental Law with respect to the Property or the
Building.
(c) Covenants of Tenant. Tenant hereby covenants that,
during the term of this Lease as to the Premises:
(1) Tenant shall comply at its sole cost and
expense with all applicable Environmental Laws and shall be responsible for
making any notification or report required to be made by any applicable
Environmental Law;
(2) Tenant shall not conduct any Hazardous
Material Activity on the Premises, except in the ordinary course of its
business, including, but not limited to, installing any underground storage
tanks; taking any action that would subject the Premises to the permit
requirements under Resource, Conservation and Recovery Act for storage,
treatment or disposal of Hazardous Materials, disposing of Hazardous Materials
in dumpsters provided by Landlord for tenant use, discharging Hazardous
Materials into drains or sewers, or causing or allowing the release of any
Hazardous Materials on, to or from the Premises, the Building or the Property;
(3) If Tenant's use, including any Hazardous
Material Activity, gives rise to liability or to a claim under any
Environmental Law, or any common law theory of tort or otherwise, causes a
threat to, or endangers human health or the environment, or creates a nuisance
or trespass, Tenant shall, to the reasonable satisfaction of Landlord and at
Tenant's sole cost and expense, promptly take all actions as are necessary to
return the Premises or any adjacent property to the condition existing prior to
the introduction of any such Hazardous Material and to comply with all
applicable Environmental Laws and eliminate or avoid any liability claim with
respect thereto. Landlord's written approval of such actions to be taken with
respect to the Premises or any adjacent property shall first be obtained;
(4) Tenant shall provide Landlord with copies
of all environmental reports and tests obtained by Tenant, and within ten (10)
days of Tenant's receipt of a written
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request by Landlord, any other applicable documents and information with
respect to environmental matters;
(5) Tenant shall provide Landlord promptly with
copies of all summonses, citations, directives, information inquiries or
requests, notices of potential responsibility, notices of violation or
deficiency, orders or decrees, claim, complaints, investigations, judgments,
letters, notices of environmental liens or response actions in progress, and
other communications, written or oral, actual or threatened, from any federal,
state, or local agency or authority, or any other entity or individual,
concerning any actual or alleged release of a Hazardous Material on, to or from
the Premises, the imposition of any lien on the Premises, any actual or alleged
violation of, or responsibility under, any Environmental Laws, or any actual or
alleged liability under any theory of common law tort or toxic tort, including,
without limitation, negligence, trespass, nuisance, strict liability, or
ultrahazardous activity;
(6) Tenant shall allow Landlord or its
representatives from time to time, at Landlord's expense and reasonable
discretion, upon reasonable prior written notice to Tenant to inspect the
Premises and conduct an environmental assessment (including invasive soil or
groundwater sampling), including, without limitation, to facilitate any sale or
lease of the Premises, the Building and/or the Property; and
(7) Tenant shall, upon the written request of
Landlord, timely provide a report of an environmental assessment of reasonable
scope, form and depth by a consultant reasonably approved by Landlord as to (1)
any matter to the extent such matter is attributable to events or conditions
which arise during the Lease Term and for which notice is provided pursuant to
the above, requirements or which may reasonably be believed by Landlord to form
the basis for a claim under any Environmental Law or under any common law
theory of tort, and (2) the general environmental condition of the Premises
within three hundred sixty-five (365) days of the expiration of this Lease or
the earlier termination thereof or of Landlord's right to possession of the
Premises. If such a requested environmental report is not delivered within
seventy-five (75) days after receipt of Landlord's request, then Landlord my
arrange for same. The reasonable cost of any assessment pursuant to subpart (1)
of this provision or any assessment pursuant to subpart (2) of this provision
which discloses a breach of this Section 48 shall be payable by Tenant.
(d) RIGHTS OF LANDLORD. In the event that Tenant shall
fail to comply with any of its obligations under this Section 48 as and when
required hereunder and after giving Tenant prior written notice and a
reasonable opportunity to cure the same, Landlord shall have the right (but not
the obligation) to take such action as is required, in Landlord's sole
discretion, to be taken by Tenant hereunder and in such event, Tenant shall be
liable and responsible to Landlord for all costs, expenses, liabilities, claims
and other obligations paid, suffered, or incurred by Landlord in connection
with such matters. Tenant shall reimburse Landlord immediately upon demand for
all such amounts for which Tenant is liable.
(e) IDENTIFICATION AND WAIVER. Notwithstanding anything
contained in this Lease to the contrary, Tenant shall indemnify, hold harmless,
and hereby waives any claim for contribution against, Landlord, and its
beneficiaries, officers, directors, shareholders, employees, and agents from
and against any and all claims, response costs, losses, liabilities,
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damages, costs, and expenses, including, but not limited to, the costs and
expenses of investigations, studies, health or risk assessments and consulting
fees, and including, without limitation, loss of rental income, loss due to
business interruption, and reasonable attorneys' fees and costs, arising out of
or in any way connected with any or all of the following:
(1) any Hazardous Materials which, at any time
during the term of this Lease are or were actually or allegedly generated,
stored, treated, released, disposed of, used or otherwise located on or at the
Premises, including, but not limited to, any and all (i) liabilities under any
common law theory of tort, nuisance, strict liability, ultrahazardous activity,
negligence or otherwise based upon, resulting from or in connection with any
Hazardous Material, and (ii) obligations to take response, cleanup or
corrective action pursuant to any investigation or remediation in connection
with the decontamination, removal, transportation, incineration, or disposal of
any of the foregoing; and
(2) any actual or alleged illness, disability,
injury, or death of any person in any manner arising out of or allegedly
arising out of exposure to Hazardous Materials present at the Premises and
attributable to events or conditions which arose during the term of this Lease,
regardless of when any such illness, disability, injury, or death shall have
occurred or been incurred or manifested itself; and
(3) any actual or alleged failure of Tenant or
the Premises at any time and from time to time to comply with all applicable
Environmental Laws to the extent non-compliance is attributable to events and
conditions which arose during the term of this Lease: and
(4) any failure by Tenant to comply with its
obligations under this Section 48.
NOTWITHSTANDING THE FOREGOING, TENANT SHALL NOT BE REQUIRED TO
INDEMNIFY LANDLORD AGAINST ANY HAZARDOUS MATERIALS WHICH EXISTED WITHIN THE
PREMISES OR ON THE PROPERTY PRIOR TO THE DATE OF THIS LEASE OR WHICH WERE
PLACED WITHIN THE PREMISES OR ON THE PROPERTY BY ANY PARTY OTHER THAN TENANT OR
ITS AGENTS, EMPLOYEES, SERVANTS, OR CONTRACTORS. In the event any claims or
other assertion of liability shall be made against Landlord for which Landlord
is entitled to indemnity hereunder, Landlord shall notify tenant of such claim
or assertion of liability and thereupon Tenant shall, at its sole cost and
expense, assume the defense of such claim or assertion of liability, in a
manner and with counsel reasonably acceptable to Landlord, and continue such
defense at all times thereafter until completion. The obligations of Tenant
under this Section 48 shall survive any termination or expiration of this
Lease.
49. RADON GAS. As directed by Section 404.056, Florida Statutes:
"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."
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50. RELOCATION.
51. EXHIBITS. The following exhibits are attached hereto and
incorporated herein and made a part of this Lease for all
purposes:
Exhibit "A" - Legal Description of Property
Exhibit "B" - Description of Premises
Exhibit "C" - Work Letter
Exhibit "D" - Rules and Regulations
52. EXPANSION OPTIONS. LANDLORD HEREBY GRANTS TENANT THREE
EXPANSION OPTIONS TO ADD SPACE TO THE PREMISES AS DESCRIBED BELOW:
(a) EXPANSION OPTION 1 - 56,600 SQUARE FEET OF RENTABLE
AREA ON OR BEFORE THE DATE THAT LANDLORD OBTAINS A CERTIFICATE OF OCCUPANCY FOR
THE SHELL BUILDING.
(b) EXPANSION OPTION 2 - 31,711 SQUARE FEET OF RENTABLE
AREA ON OR BEFORE SIX (6) MONTHS AFTER THE COMMENCEMENT DATE OF THIS LEASE.
(c) EXPANSION OPTION 3 - 25,299 SQUARE FEET OF RENTABLE
AREA ON OR BEFORE FOURTEEN (14) MONTHS AFTER THE COMMENCEMENT DATE OF THIS
LEASE.
SUCH AREAS ARE REFERRED TO HEREIN AS "EXPANSION SPACE 1", "EXPANSION SPACE 2",
AND "EXPANSION SPACE 3", RESPECTIVELY, AND SUCH AREAS ARE COLLECTIVELY REFERRED
TO AS THE "EXPANSION SPACES." SUCH EXPANSION SPACES ARE SHOWN ON EXHIBIT B
ATTACHED HERETO AND MADE A PART HEREOF. TENANT SHALL EXERCISE EACH OPTION TO
ADD AN EXPANSION SPACE TO THE PREMISES BY DELIVERING WRITTEN NOTICE TO
LANDLORD, ON OR BEFORE THE DATES SET FORTH WITH RESPECT TO EACH EXPANSION SPACE
ABOVE, STATING THAT TENANT HAS EXERCISED THE APPROPRIATE EXPANSION OPTION. IF
TENANT EXERCISES ITS RIGHT TO LEASE ANY EXPANSION SPACE BY DELIVERING SUCH
WRITTEN NOTICE TO LANDLORD AS PROVIDED ABOVE, SUCH EXPANSION SPACE SHALL BE
ADDED TO THE PREMISES ON THE SAME TERMS AND CONDITIONS AS ARE CONTAINED IN THIS
LEASE, INCLUDING THE RENTAL RATE PER SQUARE FOOT AND THE TENANT IMPROVEMENT
ALLOWANCE, PROVIDED THAT BASE RENTAL SHALL COMMENCE ON THE FOLLOWING DATES WITH
RESPECT TO EACH EXPANSION SPACE: EXPANSION SPACE 1 - THE EARLIER OF THE DATE ON
WHICH TENANT TAKES OCCUPANCY OF EXPANSION SPACE 1, OR NINETY (90) DAYS AFTER
TENANT BEGINS PAYING BASE RENTAL WITH RESPECT TO THE ORIGINAL PREMISES;
EXPANSION SPACE 2 - SIXTY (60) DAYS FOLLOWING THE DATE ON WHICH TENANT
EXERCISES ITS OPTION TO LEASE EXPANSION SPACE 2; AND EXPANSION SPACE 3 - SIXTY
(60) DAYS AFTER TENANT EXERCISES ITS OPTION TO LEASE EXPANSION SPACE 3.
HOWEVER, EACH TIME THAT TENANT EXERCISES ITS OPTION TO ADD AN EXPANSION SPACE
TO THE PREMISES, THE LEASE TERM OF THIS LEASE SHALL BE EXTENDED SO THAT SUCH
LEASE TERM (WITH RESPECT TO THE ENTIRE EXPANDED PREMISES) SHALL EXPIRE SEVEN
(7) YEARS FOLLOWING THE DATE ON WHICH BASE RENTAL COMMENCES FOR SUCH EXPANSION
SPACE. BASE RENTAL FOR ANY SUCH EXPANSION SPACE
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ADDED PURSUANT TO SECTION 52 SHALL BE AT THE RENTAL RATE PER SQUARE FOOT THEN
BEING PAID FOR THE REMAINDER OF THE PREMISES PURSUANT TO THIS LEASE. WHEN THE
LEASE TERM OF THIS LEASE IS EXTENDED TO EXPIRE SEVEN (7) YEARS FOLLOWING THE
DATE ON WHICH EACH EXPANSION SPACE IS LEASED TO TENANT, THE BASE RENTAL FOR ALL
SPACE IN THE PREMISES SHALL CONTINUE TO INCREASE EACH LEASE YEAR DURING SUCH
EXTENDED TERM AT THE RATE OF THREE PERCENT (3%) PER ANNUM. EACH TIME THAT AN
EXPANSION SPACE IS ADDED TO THE PREMISES, THE SECURITY DEPOSIT SHALL BE
PROPORTIONATELY INCREASED, AND A NEW LETTER OF CREDIT, IN AN AMOUNT EQUAL TO
FIFTY PERCENT (50%) OF THE IMPROVEMENT ALLOWANCE FOR EACH EXPANSION SPACE, SHALL
BE ADDED TO THE SECURITY DEPOSIT ON THE SAME TERMS AS ARE SET FORTH IN SECTION
1(F) ABOVE. THE EXPANSION OPTIONS SET FORTH HEREIN SHALL BE CONTINGENT UPON THIS
LEASE THEN BEING IN FULL FORCE AND EFFECT AND THERE DOES NOT THEN EXIST ANY
EVENT OF DEFAULT BY TENANT UNDER THIS LEASE. EACH EXPANSION OPTION MUST BE
EXERCISED IN THE ORDER SET FORTH ABOVE. IN THE EVENT THAT TENANT FAILS TO
DELIVER A NOTICE TO LANDLORD EXERCISING AN EXPANSION OPTION BY THE DEADLINE FOR
ANY SUCH EXPANSION OPTIONS AS SET FORTH ABOVE, THEN SUCH EXPANSION OPTION AND
ALL SUBSEQUENT EXPANSION OPTIONS SET FORTH ABOVE SHALL AUTOMATICALLY TERMINATE
AND BECOME NULL AND VOID. THEREAFTER, LANDLORD SHALL HAVE THE RIGHT TO LEASE ANY
SUCH EXPANSION SPACES TO THIRD PARTIES ON WHATEVER TERMS LANDLORD DEEMS
ACCEPTABLE. HOWEVER, TENANT SHALL THEREUPON HAVE A RIGHT OF FIRST OFFER WITH
RESPECT TO ADDITIONAL SPACE IN THE BUILDING AS SET FORTH IN SECTION 53 BELOW.
53. RIGHT OF FIRST OFFER. IN THE EVENT THAT TENANT FAILS
TO EXERCISE ANY OF THE THREE EXPANSION OPTIONS SET FORTH IN SECTION 52 ABOVE,
TENANT SHALL THEREAFTER HAVE A RIGHT OF FIRST OFFER TO LEASE ANY SPACE IN THE
BUILDING, AS IT BECOMES AVAILABLE FOR LEASE DURING THE REMAINDER OF THE LEASE
TERM, ON THE TERMS SET FORTH IN THIS SECTION 53. THIS RIGHT OF FIRST OFFER
SHALL BE SUBJECT TO THE RIGHTS OF ANY EXISTING TENANTS FROM TIME TO TIME TO
EXERCISE THEIR RENEWAL OPTIONS OR TO ENTER INTO NEW LEASES WITH LANDLORD
FOLLOWING THE EXPIRATION OF THEIR LEASES. AT SUCH TIME AS LANDLORD DESIRES TO
LEASE ANY SUCH AVAILABLE SPACE IN THE BUILDING (EACH SUCH SPACE BEING REFERRED
TO HEREIN AS AN "EXPANSION SPACE"), LANDLORD SHALL GIVE TENANT THE PRIOR
OPPORTUNITY TO EXPAND THE PREMISES TO INCLUDE THE ENTIRETY OF SUCH EXPANSION
SPACE. LANDLORD SHALL MAKE A WRITTEN OFFER TO TENANT STATING THE TERMS UPON
WHICH LANDLORD WOULD BE WILLING TO LEASE SUCH EXPANSION SPACE TO TENANT. TENANT
SHALL HAVE FIVE (5) DAYS FROM THE DATE OF RECEIPT OF SUCH NOTICE FROM LANDLORD
TO EXERCISE ITS RIGHT HEREUNDER TO EXPAND THE PREMISES TO INCLUDE SUCH
EXPANSION SPACE ON THE TERMS SET FORTH IN LANDLORD'S NOTICE. IF TENANT DOES NOT
GIVE WRITTEN NOTICE TO LANDLORD WITHIN SUCH FIVE (5) DAY PERIOD, OR IF TENANT
NOTIFIES LANDLORD THAT IT IS DECLINING ITS RIGHT OF FIRST OFFER, THEN LANDLORD
MAY LEASE SUCH SPACE TO A THIRD PARTY ON SUCH TERMS AS LANDLORD MAY DEEM
ACCEPTABLE. THE RIGHT OF FIRST OFFER SET FORTH HEREIN SHALL BE CONTINGENT UPON
THIS LEASE THEN BEING IN FULL FORCE AND EFFECT AND THERE DOES NOT THEN EXIST
ANY EVENT OF DEFAULT BY TENANT UNDER THIS LEASE.
54. ROOF EQUIPMENT. TENANT SHALL HAVE THE RIGHT TO
INSTALL A TRANSMITTER BOX (OR BOXES) ON THE ROOF OF THE BUILDING FOR THE
PURPOSE OF FACILITATING TENANT'S BUSINESS IN THE PREMISES. THE SIZE, WEIGHT,
LOCATION AND METHOD OF INSTALLATION AND REMOVAL OF SUCH TRANSMITTER BOXES SHALL
BE SUBJECT TO LANDLORD'S PRIOR WRITTEN APPROVAL, WHICH SHALL NOT BE
UNREASONABLY WITHHELD. TENANT SHALL REPAIR ANY DAMAGE TO THE BUILDING WHEN
REMOVING SUCH TRANSMITTER BOXES AND TENANT SHALL NOT DRILL ANY HOLES IN THE
ROOF OF THE BUILDING UNLESS SUCH WORK IS PERFORMED BY OR SUPERVISED BY
LANDLORD'S ROOF CONTRACTOR IN ORDER TO AVOID THE INVALIDATION OF LANDLORD'S
ROOF WARRANTY.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
multiple original counterparts as of the day and year first above written.
LANDLORD:
[ILLEGIBLE] GRAN CENTRAL CORPORATION,
- ------------------------------------ a Florida corporation
Witness
By: The St. Joe Company,
[ILLEGIBLE] a Florida corporation, its agent
- ------------------------------------
Witness
By: [ILLEGIBLE]
----------------------------------
Title: Senior Vice President
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Date: 9/16/99
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With a copy to: Address:
Gran Central Corporation c/o The St. Joe Company
8529 South Park Circle, Suite 120 1650 Prudential Drive
Orlando, Florida 32819 Suite 400
Attention: Property Manager Jacksonville, Florida 32207
Attention: William L. Mason
TENANT
[ILLEGIBLE]
- ------------------------------------ TRITON NETWORK SYSTEMS INC.,
Witness a Delaware corporation
By:
Title:
[ILLEGIBLE] By: /s/ Ken Vines
- ------------------------------------ ----------------------------------
Title: CFO
-------------------------------
Date: 8/21/99
--------------------------------
Address:
8529 South Park Circle
Suite 400
Orlando, Florida 32819
33
<PAGE> 37
EXHIBIT "A"
DESCRIPTION OF PROPERTY ON WHICH THE PROJECT IS SITUATED
Block A, SOUTH PARK UNIT THREE, as recorded in Plat Book 17, Page 28, Public
Records of Orange County, Florida. LESS: BEGIN at the most Easterly corner of
Block A, SOUTH PARK UNIT THREE, as recorded in Plat Book 17, Page 28, Public
Records of Orange County, Florida; thence run North 30 degrees 59 minutes 15
seconds West 2065.24 feet along the Easterly boundary of said Block A to the
most Northerly corner of said Block A; thence run South 59 degrees 00 minutes
44 seconds West 405.13 feet along the Northerly boundary of said Block A to a
point on the Easterly right-of-way line of South Park Circle as shown on the
plat of SOUTH PARK UNIT ONE, as recorded in Plat Book 14, Page 84, Public
Records of Orange County, Florida, said Easterly right-of-way line being a
nontangent curve concave Westerly and having a radius of 699.16 feet; thence
from a tangent bearing of South 30 degrees 22 minutes 19 seconds East, run
Southerly 100.43 feet along the arc of said curve and said Easterly
right-of-way line through a central angle of 08 degrees 13 minutes 48 seconds
to a point on the Southerly boundary of that certain 100.00 foot wide Drainage
and Utilities Easement as shown on the aforesaid plat of SOUTH PARK UNIT THREE;
thence run North 59 degrees 00 minutes 44 seconds East 313.41 feet along said
Southerly boundary; thence run South 30 degrees 59 minutes 15 seconds East
1965.25 feet along the Westerly boundary of said 100.00 foot wide Drainage and
Utilities Easement to a point on the Southerly boundary of the aforesaid Block
A; thence run North 59 degrees 00 minutes 25 seconds East 100.00 feet to the
Point of Beginning.
CONTAINING: 78.601 Acres, more or less.
SUBJECT TO: Easements.
A-1
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EXHIBIT "B"
EXPANSION OPTION 3
EXPANSION OPTION 2 SECOND FLOOR 500 GRAN PARK
31,711 RENTABLE SQUARE FEET 25,299 RENTABLE SQUARE FEET
EXPANSION OPTION 1 INITIAL PREMISES
56,600 RENTABLE SQUARE FEET 19,621 RENTABLE
SQUARE FEET
B-1
<PAGE> 39
EXHIBIT "C"
WORK LETTER
GENERAL
1. (a) Tenant shall select the Space Plan and Building Standard
Allowances for Completion of the Premises for occupancy by
Tenant, subject to Landlord's approval.
(b) Working Drawings and Specifications for Completion of the
Premises as determined by Tenant and approved by Landlord
shall be prepared by Landlord and approved by Tenant in
accordance with Clause 4 hereof before work is commenced.
(c) All work involved in the Completion of the Premises shall be
carried out by Landlord's contractor in accordance with the
Working Drawings and Specifications and under the supervision
of Landlord.
(d) Tenant hereby appoints MIKE SINGLETON AND CARRYL SMITH TO act
for Tenant in all matters covered by this Exhibit "C".
(e) In this Exhibit "C":
(i) "Completion of the Premises" means the supplying,
installation and finishing of partitions, doors and
hardware, ceilings, HVAC, plumbing, lights and
switches, electrical outlets, data outlets,
telephone outlets, carpets, window coverings, all
finishes, counters, shelves or other built-ins,
fixtures and any other furniture, fixtures or
facilities attached to and forming part of the
Premises.
(ii) "Building Standard" means with respect to any item,
the specifications and current allowances as
established from time to time by Landlord as
standard for the Building.
(iii) "Landlord's Architect" means that Architect or
designer appointed (in-house and/or outside hire)
from time to time by Landlord to provide design
services, including Space Planning, Working Drawings
and Specifications.
(iv) "Landlord's Contractor" means the Contractor
appointed from time to time by Landlord to carry out
work in Completion of the Premises and any
alterations, repairs and maintenance in the
Building.
(v) "Space Plan" means the graphic presentation of the
Premises indicating partitions, doors, electrical
and telephone/data outlets, and furniture
arrangements.
C-1
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(vi) "Working Drawings and Specifications" means the
Plans and Specifications for Building Standard and
nonstandard finishes for Completion of the Premises
including architectural, mechanical and electrical
working drawings.
(f) Tenant must comply with Building Standard specifications for
the base building to maintain uniform quality level of
materials throughout the Building.
SHELL IMPROVEMENTS
2. Except for base building improvements that include only the sprinkler
System with turned-up heads, Tenant shall, at its expense, make the
following improvements to the Premises:
(a) SPRINKLER SYSTEM. Tenant shall finish the Sprinkler System
per code with semi-recessed sprinkler heads with metal
covers - color to match ceiling system.
(b) HEATING, VENTILATION AND AIR CONDITIONING. Tenant shall
install the entire system, including all mechanical
equipment, main distribution ducts, perimeter supply slot;
diffusers and associated fixtures to provide cooling,
dehumidification, ventilation and heating to the Premises in
accordance with the approved Working Drawings and
Specifications.
(c) ELECTRICAL. Electricity is available to the exterior walls of
the Building. Tenant shall provide the electrical
distribution system and electrical panels to the Premises in
accordance with the approved Working Drawings and
Specifications.
OTHER IMPROVEMENTS
3. In addition to the Shell Improvements set forth in Clause 2 above,
Tenant shall, at its expense, make all other improvements to the
Premises which are set forth in the approved Working Drawings and
Specifications. Any architectural, space planning or interior design
services supplied by Landlord shall be paid for by Tenant, and Tenant
shall also pay Landlord's supervisory fee as set forth in Clause 4
below.
PREMISES PLANS AND SPECIFICATIONS
4. (a) As soon as practicable Tenant shall meet with Landlord to set
forth Tenant's requirements for the completion of a Space
Plan.
(b) As soon as practicable after the meeting referred to in
Clause 4.(a), Landlord shall submit to Tenant the Space Plan
for Tenant's approval.
C-2
<PAGE> 41
(c) AS SOON AS PRACTICABLE AFTER receipt of the Space Plan
referred to in Clause 4.(b), Tenant shall meet with Landlord
to approve the Space Plan, with or without revision, and
include:
(i) a furniture layout to insure the Space Plan is
functional,
(ii) finish schedules for walls and carpet, and
(iii) locations for telephone/data and electrical outlets
and switches.
(d) As soon as practicable after the approval referred to in
Clause 4.(c), Landlord shall submit the approved Space Plan
together with a written preliminary estimate of the cost to
Tenant therefor, if any, including Landlord's supervisory fee
of five percent (5%) of the cost of all work to be performed.
(e) AS SOON AS PRACTICABLE after receipt of the approved Space
Plan and written estimate of Tenant's cost referred to in
Clause 4.(d), Tenant shall approve same in writing. Tenant's
failure to provide written approval shall be deemed a
disapproval thereof and Landlord shall not proceed with final
Working Drawings and Specifications.
(f) As soon as practicable thereafter Landlord will submit to
Tenant Working Drawings and Specifications for construction
of the Premises in accordance with the approved Space Plan
and written estimate of Tenant cost. Tenant shall approve in
writing said Working Drawings and Specifications within five
(5) working days after receipt thereof.
(g) Any changes in the final Working Drawings and Specifications
my be made only by written request by Tenant to Landlord and
all costs incurred as a result of such changes (including
costs of revisions to Working Drawings and/or
Specifications), shall be paid for in full by Tenant upon
billing by Landlord.
COMPLETION AND RENTAL COMMENCEMENT DATE
5. When Landlord's Architect has furnished Landlord with a certificate
that the work to be done by Landlord pursuant hereto has been
substantially complete, Completion of the Premises shall be deemed to
have occurred and possession thereof deemed delivered to Tenant for
all purposes of the Lease including, without limitation, Paragraph 3
thereof. Landlord and Tenant understand that pursuant to Paragraph 3
of the Lease, Tenant's obligation to pay Rent thereunder shall not
commence until Landlord's Architect has furnished such certificate;
provided, however, that if Landlord shall be delayed in substantially
completing said work as a result of:
(a) Tenant's failure to furnish information so that Plans and
Specifications cannot be completed within the time frame as
set forth in Clause 4(c) above; or
C-3
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(b) Tenant's request for materials, finishes or installations
other than Landlord's "Building Standard Work"; or
(c) Tenant's changes in the Plans, Working Drawings and/or
Specifications approved by Tenant after their submission to
Landlord; or
(d) Tenant's failure to pay in full all outstanding amounts due
with respect to Completion of the Premises;
then the commencement of Rent under said Lease shall be accelerated by the
number of days of such delay.
AMOUNTS PAYABLE TO LANDLORD
6. Amounts payable by Tenant to Landlord as required by this Work Letter
shall be paid as follows:
(a) A retainer of 50% of Tenant's estimated costs in excess of
any improvement allowance as set forth in Clause 7 shall be
paid prior to start of construction;
(b) At Landlord's sole discretion, progress bills may be rendered
during the Work;
(c) At Completion of the Premises, Landlord will submit the final
bill which is due and payable upon Tenant acceptance of the
Premises, which acceptance will not be unreasonably delayed
or denied; and
(d) Tenant, agrees to pay Landlord promptly upon being billed.
IMPROVEMENT ALLOWANCE
7. Landlord will construct improvements in accordance with this Exhibit
"C" of the Lease and Tenant's approved Working Drawings and
Specifications, provided however, that the cost of such improvements
and all architectural fees and Landlord's supervisory fee shall not
exceed an allowance totaling $588,630.00 ($30.00 per Rentable Square
Foot). Any unused dollars from this allowance not used for
improvements to the Premises within 60 days from issuance of
Certificate of Occupancy will not be disbursed, EXCEPT THAT TENANT
SHALL HAVE UP TO 180 DAYS FROM ISSUANCE OF THE CERTIFICATE OF
OCCUPANCY TO USE ANY REMAINING ALLOWANCE FOR LOW VOLTAGE WIRING FOR
VOICE AND DATA COMMUNICATIONS, AND FURNITURE INSTALLATION. To the
extent that the cost of such improvements and fees exceeds this
allowance, Tenant shall be responsible to reimburse Landlord for such
excess in addition to a five percent (5%) construction management fee
on the excess amount. There shall be no refund or rebate to Tenant for
any unused portion of this improvement allowance.
C-4
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EXHIBIT "D"
RULES AND REGULATIONS
These Rules and Regulations have been adopted by Landlord for the
mutual benefit and protection of all the tenants of the Building in order to
insure the safety, care and cleanliness of the Building and the preservation of
order therein.
1. The sidewalks shall not be obstructed or used for any purpose
other than ingress and egress. No tenant and no employees of any tenant shall
go upon the roof of the Building without the consent of Landlord.
2. No awnings or other projections shall be attached to the
outside walls of the Building.
3. The plumbing fixtures shall not be used for any purpose other
than those for which they were constructed, and no sweepings, rubbish, rags or
other substances, including Hazardous Substances, shall be thrown therein.
4. No tenant shall cause or permit any objectionable or
offensive noise or odors to be emitted from the Premises.
5. The Premises shall not be used for lodging or sleeping or for
any immoral or illegal purposes.
6. No tenant shall make, or permit to be made, any unseemly or
disturbing noises, sounds or vibrations or disturb or, interfere with tenants
of this or neighboring buildings or premises or those having business with
them.
7. Each tenant must, upon the termination of this tenancy,
restore to the Landlord all keys of stores, offices, and rooms, either
furnished to, or otherwise procured by, such tenant, and in the event of the
loss of any keys so furnished, such tenant shall pay to the Landlord the cost
of replacing the same or of changing the lock or locks opened by such lost key
if Landlord shall deem it necessary to make such change.
8. Canvassing, soliciting and peddling in the Building and the
Project are prohibited and each tenant shall cooperate to prevent such
activity.
9. Landlord will direct electricians as to where and how
telephone or telegraph wires are to be introduced. No boring or cutting for
wires or stringing of wires will be allowed without written consent of
Landlord. The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Landlord.
10. Parking spaces associated with the Building are intended for
the exclusive use of passenger automobiles. Except for intermittent deliveries,
no vehicles other than passenger automobiles may be parked in a parking spare
without the express written permission of
D-1
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Landlord. Trucks may only be parked at the rear of the Building behind the
Premises.
11. Tenant shall not use any area within the Property for storage
purposes other than the interior of the Premises.
D-2
<PAGE> 1
Exhibit 10.6
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (as hereinafter defined, this "Agreement), made
and entered into as of the Effective Date (as hereinafter defined), by and
between LOCKHEED MARTIN CORPORATION, a Maryland corporation acting through its
Electronics and Missiles operating unit in Orlando, Florida (as hereinafter
defined, "LMC"), and TRITON NETWORK SYSTEMS, INC., a Delaware corporation with
an office in Orlando, Florida (as hereinafter defined "Triton").
WITNESSETH:
WHEREAS, capitalized terms used in these recitals and not otherwise
defined shall have the respective meanings specified in Section 1 of this
Agreement; and
WHEREAS, Triton has marketing and technical expertise in commercial
wireless communications and wishes to engage in the development and production
of Commercial Systems, with a particular view toward its eventual offering for
sale of a production Microwave External Device (MED); and
WHEREAS, Triton will need certain licensed technology, certain
development efforts, and certain technical assistance if it is to achieve the
goals set forth in the preceding recital; and
WHEREAS, LMC has developed and owns certain Millimeter Wave MMIC Design
Technology primarily intended for military-specification-designed products;
WHEREAS, LMC would like to assist Triton in Triton's efforts to make,
have made, use, sell, offer to sell, service, and improve a production MED, all
on the terms set forth in
<PAGE> 2
this Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, LMC and Triton agree as follows:
1. DEFINITIONS. In addition to the other terms defined elsewhere in this
Agreement, each of the following capitalized terms used in this Agreement shall
have the respective meaning as follows:
"Agreement" shall mean this License Agreement and all subsequent
amendments hereto executed and delivered by the parties in the manner
contemplated hereby.
"Commercial System" shall mean non-military-specification packaged
MEDs.
"Effective Date" shall mean the date when this Agreement shall become
effective, which shall be the date when the Party who later signs and dates this
Agreement does so at the signature pages of this Agreement.
"Field of Use" shall mean any Commercial System that is used for
wireless communications.
"Improvement" shall mean any modification or update to Millimeter Wave
MMIC Design Technology, which modifies or relates to a manufacturing, servicing,
performance, or other characteristic of Millimeter Wave MMIC Design Technology.
2
<PAGE> 3
"LMC" shall mean Lockheed Martin Corporation, a Maryland corporation
acting through its Electronics and Missiles operating unit in Orlando, Florida,
together with its successors and assigns.
"LMC Intellectual Property" shall mean the inventions, discoveries,
methods, techniques, data and other information set forth in Exhibit A that are
useful or necessary in the design, development, manufacture, servicing or
operation of Commercial Systems.
"LMC Intellectual Property Rights" shall include any legally
enforceable right owned by LMC in LMC Intellectual Property, including but not
limited to a right in a patent, a patent application, copyright, know-how, mask
work, trademark or trade secret.
"LME&M" shall mean the Lockheed Martin Electronics and Missiles
operating unit of LMC that is headquartered in Orlando, Florida.
"MED" shall mean a millimeter wave external device, and components
thereof, consisting of a transmitter, receiver, frequency synthesizer, antenna,
digital modem, CPU controller and power supply, and characterized by having an
operating frequency range of 18.0 to 41.0 GHz, a transmitter CW output power
between 0.5 to 5.0 watts, a receiver noise figure of less than 9 dB, a
modulation of m-PSK or other suitable equivalent and a full duplex interface. By
way of example, and not limitation, Exhibit B comprises a detailed specification
for an MED within the scope of this Agreement.
"Millimeter Wave MMIC Design Technology" shall mean LMC developed
patents, know-how and trade secrets related to the design, development and
production of
3
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monolithic millimeter wave integrated circuit (MMIC) components,
modules, and systems as further defined in Exhibit A hereto.
"Party" shall mean either LMC or Triton, and "Parties" shall mean both
of them.
"Territory" shall mean the United States of America and all
international markets for which export licenses have been obtained by Triton.
"Triton" shall mean Triton, Network Systems, Inc., a Delaware
corporation, together with its successors and assigns.
"Triton Intellectual Property" shall mean the inventions, discoveries,
methods, techniques, data and other information known to Triton and Improvements
by Triton that are useful or necessary in the design, development, manufacture,
servicing, or operation of wireless communications systems.
"Triton Intellectual Property Rights" shall mean a legally enforceable
right owned by Triton in Triton Intellectual Property, including but not limited
to a right in a patent, a patent application, copyright, know-how, mask work,
trademark or trade secret.
2. GRANT OF LICENSE; ROYALTY.
2.1 LMC hereby grants Triton for the term of this Agreement an
exclusive, nontransferable (except as otherwise provided in Section 2.5 hereof)
license under LMC Intellectual Property Rights to make, have made, improve, have
improved, use, sell, and offer to sell throughout the Territory, Commercial
Systems incorporating Millimeter Wave
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MMIC Design Technology and related LMC Intellectual Property, provided, however
that LMC expressly reserves whatever rights in the Millimeter Wave MMIC Design
Technology and related LMC Intellectual Property as may be necessary or useful
to enable LMC to continue in existing pursuits and to pursue future business in
natural areas of expansion. The reservation expressed herein shall not be deemed
or interpreted to limit Triton's right to make, have made, improve, have
improved, use, sell and offer to sell Commercial Systems as aforesaid. Moreover,
LME&M shall extend to Triton a right of first refusal to supply to LME&M MEDs
then being manufactured by or for Triton, or variations on an MED which could be
produced by Triton within a competitive timeframe, and supplied by Triton to
others. This extension to Triton of a right of first refusal is limited to those
instances where LME&M's activities pursuant to the reservation expressed herein
would otherwise be inconsistent with the aforesaid exclusive grant of rights to
Triton.
2.2 The scope of the license granted in Section 2-1 above is
limited to the design, manufacture, use, sale, offer for sale, and importation
of Commercial Systems. No other right or license under the Millimeter Wave MMIC
Design Technology and related LMC Intellectual Property is herein granted.
2.3 From the Effective Date hereof, Triton agrees to pay LMC a
royalty on each MED utilizing Millimeter Wave MMIC Design Technology that Triton
sells or otherwise disposes of, all in accordance with the following rules:
(a) The amount payable as a royalty to LMC shall be
determined in accordance with this Section 23 and the royalty schedule set forth
in Exhibit C hereto.
(b) For the purposes of this Section, an MED utilizing
Millimeter Wave
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MMIC Design Technology that has not been sold shall be deemed "otherwise
disposed of" whenever in return for valuable consideration such system is
delivered by Triton to a third party or put into use by Triton either on behalf
of a third party or for any purpose other than demonstration and/or routine
testing. The sales price deemed to apply to any system "otherwise disposed of"
for the purposes of computing the royalty shall be the sales price at which
Triton or any of its subsidiaries or affiliates at the time is offering products
of similar kind and quality, less any customary discount that Triton is offering
on such system.
(c) For Purposes of this Section and Exhibit C, the gross
sales price for the purposes of computing LMC's royalty shall be only the fair
gross sales price of the MED included in the system, it being specifically
acknowledged that Triton shall on its own develop or purchase from others
certain software for the MED and certain hardware and software for related items
that ultimately will constitute a majority of the selling price of each system.
LMC shall not be entitled to a royalty on any portions of any system sold by
Triton other than in respect of the gross sales price of the portion of the MED
which LMC developed.
(d) The parties should mutually agree on the value. If
the parties are unable to agree on what portion of the selling price of an
integrated system is fairly allocable to the hardware of the MED (and therefore
constitutes the gross sales price of the MED) and what portion of such selling
price is fairly allocable to the balance of the system (including both software
for the MED and hardware and software for the related items), they shall submit
that question to binding arbitration in Orlando, Florida through the American
Arbitration Association.
(e) If Triton pays LMC all sums required for five years
after the date
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Triton first sells or otherwise disposes of an MED, then the license granted in
Section 2.1 above shall be deemed to be fully paid up.
2.4 Triton agrees to furnish to LMC, within thirty days of the end
of each calendar quarter, a written royalty report setting forth the number of
MED's sold or otherwise disposed of, or, where the Millimeter Wave MMIC Design
Technology is incorporated into a higher assembly, the number of such higher
assemblies sold or otherwise disposed of, the sales price of such products, the
royalties due thereon, and the manner in which Triton calculated said royalties.
With each quarterly royalty report, Triton shall also submit financial
statements of Triton that break out in detail LMC designed Millimeter Wave MMIC
Design Technology sales and royalty payment checks, with such financial
statements to be certified as to accuracy and completeness by Triton's chief
financial officer. LMC shall have the right to cause an audit of Triton's books
and records to be performed at LMC's expense by an independent auditor
reasonably acceptable to Triton. The sole objective of that audit shall be to
verify reported LMC designed Millimeter Wave MMIC Design Technology sales.
Triton shall cooperate with the audit by affording the auditor access to the
names and addresses of Triton customers for systems involving Millimeter Wave
MMIC Design Technology.
2.5 The license granted to Triton in this Section shall be
assignable to new commercial ventures that are owned in whole or in part by
Triton providing that Triton notifies LMC of such assignment and that the new
commercial venture accepts in writing all terms of this Agreement. Nothing in
this Agreement shall be construed to preclude the license from going with Triton
in connection with any change in control of Triton or any sale of substantially
all of the assets or business of Triton to a third party.
3. DUTIES OF LMC
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3.1 LMC specifically agrees, in accordance with its exclusive
license to Triton, the following:
(a) LME&M will not while this Agreement is in force
directly or indirectly compete with Triton within the scope of the exclusive
license granted in Section 2.1 above.
(b) LME&M will not make its Millimeter Wave MMIC Design
Technology available to any other company or LMC Division that will make, have
made, use, sell, and offer to sell Commercial Systems in the Field of Use. LME&M
cannot transfer Triton proprietary or contract data to other LMC divisions
without prior written approval from Triton.
3.2 During the term of this Agreement, LMC will not initiate
contact with any Triton employee supporting Millimeter Wave MMIC Design
Technology development for the purpose of recruiting such employee to join LMC
in the Millimeter Wave MMIC Design Technology development area. LMC will,
however, have the right to use standard advertising methods and job postings
when searching for individuals to support its Millimeter Wave MMC Design
Technology development activities. It shall not be a violation of this Section
for LMC to hire any Triton employee who approaches LMC, either as a consequence
of such standard advertising methods and job postings or otherwise as long as
LMC shall not have initiated the contact for the purpose of recruitment.
4. DUTES OF TRITON.
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4.1 Except with the consent of LMC, in no event may Triton, its
affiliates or subsidiaries hire any current or former employee of LME&M who
performs or performed significant duties for LME&M relating to the design and
development of millimeter wave products, methods and components. As used in this
Section:
(a) the term "former employee" shall refer to a person
who has been employed by LME&M at any time within the four month period
immediately preceding the start of such person's employment with
Triton; and
(b) the term "significant duties" shall mean that such
current or former employee charged half or more of his or her time to
activities relating to the design and development of millimeter wave
products, methods and components.
4.2 Triton will submit to Lockheed Martin Electronics and Missiles
(Ocala) commercial manufacturing facility requests for quotes on the
manufacturing of MED products. Triton will be under no obligation to make awards
if Triton in good faith determines that Ocala is non-competitive.
4.3 For so long as the Agreement is in effect, LMC shall have the
right of first negotiation with respect to any product development work that
Triton intends to have performed by a third party with respect to millimeter
wavelength communications products. Whenever Triton has determined that it will
seek a third party to perform such work, Triton will issue a
request-for-proposal (RFP) to LMC with the RFP containing that level of detail
that Triton intends to present to third parties for such work. This RFP shall be
issued to LMC prior to any discussion or negotiations with third parties with
respect to
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<PAGE> 10
performing such work. LMC shall have 30 days within which to submit a proposal
to Triton per the RFP. LMC may elect not to make a proposal with respect to such
work, in which case it will notify Triton of this decision as soon as such
decision is reached.
4.4 Upon receipt of the LMC proposal by Triton within the 30-day
period, LMC and Triton agree to negotiate in good faith, on an exclusive basis,
towards a contract for such work. In the event that Triton and LMC cannot reach
agreement on the contract within 30 days after the delivery of the LMC proposal
to Triton, Triton shall have the right to discuss and negotiate with third
parties and enter into such contract with a third party provided that Triton
first certifies in writing to LMC that the terms of such contract are materially
better than the terms last offered by LMC in respect to such contract.
4.5 Triton, upon consummation and as a requirement of this Agreement,
and in accordance with its covenants, agrees to provide the Central Florida
Innovation Corporation with 1% equity in Triton.
4.6 LMC has the right at its sole discretion to participate in any
future sales of equities by Triton after its initial financing, at the agreed
valuation not exceeding 10% total ownership. Triton shall provide LMC with prior
written notification of any such sales of equities, such written notification to
be timely and in no event less than sixty (60) days prior to such sales of
equities.
4.7 At any time during the period beginning 28 months from the
Effective Date of this Agreement and ending 34 months from the Effective Date of
this Agreement LMC may, at its sole option, convert the right to receive
royalties set forth in this Agreement (the "Royalty Right") into a stock option
(the "Stock Option"), the terms of which are set forth below. Such conversion
shall take place on the date LMC
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notifies Triton in writing (the "Conversion Date") that it has exercised its
right to convert the Royalty Right into the Stock Option. All royalties due to
LMC arising out of royalty bearing sales or other dispositions which have
occurred prior to the Conversion Date shall be paid to LMC according to the
terms for such payment contained in this Agreement. The payment by Triton to LMC
of the lump sum payment specified in Exhibit C at any time prior to LMC
notifying Triton of LMC's election to convert the Royalty Right into the Stock
Option shall be deemed to terminate LMC's right to convert.
Upon conversion, LMC shall have a 5-year option to acquire, at no cost capital
stock in Triton having a fair market value Of $4,000,000 as of the Conversion
Date. If Preferred Stock has been issued by Triton, LMC will receive Preferred
Shares, convertible one-for-one into Common Shares, with rights equivalent to
the rights associated with existing Preferred Stock. If no shares of Preferred
Stock have been issued before the Conversion Date, or if all preferred shares
have been issued but have been converted to Common Stock, the option stock shall
be shares of Common Stock having the same rights as shares of Common Stock last
sold to investors prior to the conversion date. The fair market value of capital
stock shall be determined in good faith by the Triton Board of Directors,
subject to determination by appraisal in the event that LMC disagrees with this
valuation. In the event that determination by appraisal is necessary, LMC and
Triton shall mutually agree upon a qualified appraiser. The appraiser shall
determine the fair market value of the capital stock using traditional methods
of appraisal and will attribute relative value to the various classes of capital
stock. Such determination by the appraiser shall be final. The Stock Option and
the shares underlying the Stock Option shall be fully assignable by the holder
thereof and its assignees, subject only to compliance by the holder with
applicable securities laws.
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<PAGE> 12
5. WARRANTIES.
5.1 LMC warrants that it has the right to grant to Triton this license
and the rights set forth herein. LMC further warrants that it is not aware of
any third party claim that the Millimeter Wave MMIC Design Technology products
licensed hereunder infringes the intellectual property rights held by such third
party. LMC makes no further warranties either express or implied.
5.2 Triton warrants to LMC that it has developed a business plan and
commensurate resources that provide a reasonable basis for the commercial
exploitation of Millimeter Wave MMIC Design Technology in accordance with the
terms and intent of this Agreement. Triton makes no further warranties either
express or implied.
5.3 None of the information which may be transmitted or exchanged by
the Parties shall constitute any representation, warranty, assurance, guarantee,
or inducement by any Party to the other Party with respect to the validity of
any patents or other intellectual property rights or non-infringement of
patents or other intellectual property rights held by third parties.
6. COMPLIANCE WITH LAWS AND REGULATIONS.
6.1 Both parties shall comply with the applicable provisions of all
federal, state, and local laws and ordinances and all lawful orders, rules, and
regulations thereunder.
12
<PAGE> 13
6.2 Triton shall be responsible for obtaining all licenses and
approvals and complying with all applicable laws, rules and regulations,
including but not limited to, the regulations of the United States Department
of Commerce relating to the export of its commercial products containing
Millimeter Wave MMIC Design Technology. LMC will initially provide all
Millimeter Wave MMIC Design Technology technical and background information
needed to expedite the export licensing process.
7. TERM AND TERMINATI0N.
7.1 This Agreement may be terminated by either Party under the
following conditions:
(a) After notice to either party due to a material breach in
performance of any of the terms of this Agreement, which breach is not
cured as provided for in Section 12.
(b) Immediately following notice in the event of the filing of
petition in bankruptcy by or against either Party, its making an
assignment for the benefit of its creditors or seeking protection under
any law designed to protect debtors from creditor's claims.
If this Agreement is terminated then LMC shall permit Triton a wind down period
in which Triton may continue to make and sell MEDs to meet any contractual
obligations which Triton may have at the time of such termination, such wind
down period not to exceed twelve (12) months after termination, provided that
during such wind down period Triton continues to pay royalties according to the
schedule set forth in Exhibit C.
13
<PAGE> 14
8. LIMITS OF AGREEMENT.
8.1 Neither Party shall have the right to make commitments of any kind
for or on behalf of the other Party without the prior written consent of the
other Party.
8.2 Triton and LMC are allowed to disclose to the general public the
nature of the relationship that exists between LMC and Triton.
9. EXCUSABLE DELAYS. Neither Party hereto shall be in default by reason
of any failure to perform in accordance with any terms herein, if such failure
is due to conditions beyond the control of such Party, including but not limited
to, acts of God or the public enemy, acts of government in either its sovereign
or contractual capacity unless induced by such Party to do so, strikes, fires,
floods, epidemics, quarantine restrictions, freight embargoes, civil commotion's
and the like.
10. INTELLECTUAL PROPERTY.
10.1 All Intellectual Property Rights for Millimeter Wave MMIC Design
Technology at the time of execution of this Agreement are and shall continue to
be the property of LMC and may be used by Triton only as provided in this
Agreement and may not be assigned to any third party by Triton except as
provided in section 2.5 or as authorized in writing by LMC.
10.2 Subject to any third party restrictions on disclosure, the Parties
agree that they shall meet at least semiannually during the term of this
Agreement to disclose to one another and discuss any Improvements made related
to Millimeter Wave MMIC Design
14
<PAGE> 15
Technology that the developing party believes may be beneficially employed in
the Millimeter Wave MMIC Design Technology products of the other party. In the
event that a Party desires to obtain rights to an Improvement so disclosed, the
Parties agree to negotiate in good faith the terms and conditions of a license
pertaining to such Improvements.
11. LIMITATION OF LIABILITY. In no event shall LMC be liable for any
special, indirect, incidental or consequential damages, whether in contract, in
tort, or strict liability, caused by an act or omission of Triton, and Triton
shall defend, indemnify and hold harmless LMC from and against any and all
liability, injury, damage, claim or legal action resulting from any act or
omission of Triton in the manufacture, use, sale or import of Triton products or
systems incorporating Millimeter Wave MMIC Design Technology or trademarks.
12. EACH PARTY'S RIGHTS UPON BREACH BY THE OTHER PARTY. If one Party
determines that the other Party has breached the Agreement, it shall promptly so
notify the other in writing. The breaching Party shall then have thirty days to
cure the breach.
13. NOTICES. All notices relating hereto shall be sent by certified mail or
registered mail, return receipt requested with postage prepaid, in the USA mail,
to LMC or Triton at its respective address shown below or at any later address
of which written notice is given, and shall become effective when actually
received.
For LMC:
Lockheed Martin Electronics and Missiles
Attention: R&T Contracts, Mail Point 090
5600 Sand Lake Road
Orlando, Fl 32819-8907
15
<PAGE> 16
For Triton:
Triton Network Systems, Inc.
Attention: President
7547 Commerce Center Drive
Orlando, F1 32819
14. APPLICABLE LAW. The validity, performance and construction of this
Agreement shall be governed by the laws of the State of Florida, USA, excluding
its choice of law provisions. The parties agree that any disputes between them
shall be resolved before a court of competent jurisdiction located in Orange
County, Florida.
15. INCORPORATION OF EXHIBITS. All Exhibits to this Agreement shall be
deemed incorporated herein by reference and made a part hereof.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the Parties as to the subject matter hereof, and supersedes any and all prior
oral or written understandings and agreements.
17. MODIFICATION. This agreement may be modified only by a written
agreement signed by both Parties. In the event of conflict between the terms of
the Agreement and any other contracts, documents and/or agreements relating to
this effort, the terms of this Agreement shall control.
16
<PAGE> 17
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the day, month and year
of later signature hereto.
"LMC"
LOCKHEED MARTIN CORPORATION,
acting through its Electronics
and Missiles Operating Unit
By: /s/ James A. Borders
-------------------------------
James A. Borders
Director of Contracts
Electronics & Missiles
Date: June 12, 1997
"TRITON"
TRITON NETWORK SYSTEMS, INC.
By: /s/ Robert Francis
-------------------------------
Robert Francis
Chairman
Date: June 12, 1997
17
<PAGE> 18
EXHIBIT LIST FOR LICENSE
AGREEMENT
Exhibit A Millimeter Wave MMIC Design Technology
Exhibit B Product Specifications
Exhibit C Royalty Schedule
18
<PAGE> 19
EXHIBIT A - MILLIMETER WAVE MMIC DESIGN TECHNOLOGY
The following items constitute current or anticipated technology which
will be utilized in the design of the MED:
1) MMW TRANSCEIVER FOR DIGITAL COMMUNICATIONS.
The object of this proprietary design is to obtain a MMW transceiver which
provides at least 1 Watt CW of power over a frequency range of 38.6 to 40.0 GHz
while operating as a continuous-duty, full-duplex transceiver. The design
incorporates [*] LO/2 (1/2 Local Oscillator) [*] for [*] transmit and
receive functions. This is accomplished by matching the [*]. The exciter
section, of this design, uses [*], 50 MHz ultra-low-phase-noise oscillator [*]
for [*]-duplex channels. The [*] LO/2 frequencies are generated from a [*]
within this design. A [*] precise sampling frequency [*] is locked with the 50
MHz reference. The result of this design allows the two ends of the link to be
[*]-locked thus obtaining Zero Frequency Error between MMW link and Datum
carriers. A disclosure filing is planned for this design.
2) MMW MMIC CIRCUITS.
LME&M are currently evaluating MMIC circuits for both the prototype and
production designs. It is probable that the prototype will primarily use
non-proprietary circuitry. For improved performance, however, the final design
may use proprietary circuitry using trade secrets developed by LME&M.
Disclosures will be filed at the discretion of the parties.
[*] Confidential Treatment Requested
19
<PAGE> 20
3) RADOME TECHNOLOGY.
There are 3 LMC patents that cover the following technologies that will be
evaluated for use in the MED antenna/radome system:
The first patent covers an absorptive/transmissive structure which can be used
to fabricate [*] without disrupting the electromagnetic waves generated by the
antenna. [*] This technology maybe useful in minimizing EMI emissions from the
MED (which will help meet FCC regulations) and to minimize outside EMI
emissions from getting into the MED.
The second patent relates to a method for fabricating a substantially nonplanar
substrate having a predetermined pattern. More particularly, the present
invention relates to a method for fabricating a [*] surface on to a radome by
ablating the [*] into a resist layer and removing [*] metallized layer or by
ablating the [*] into a metallized layer. This patent also maybe used to
fabricate radomes with band pass characteristics.
The third patent is an anti-ice radome having a [*] plurality of resistive
heating elements. The [*] surface prevents the resistive heating elements from
disturbing the electromagnetic waves generated by the antenna within the radome.
Thus, ice formation on the radome can be prevented without sacrificing the
transmission characteristics of the radome.
These technologies will be evaluated in conjunction with the design of the MED
antenna/radome assemblies.
[*] Confidential Treatment Requested
20
<PAGE> 21
EXHIBIT B
PRODUCT SPECIFICATIONS
21
<PAGE> 22
CANDIDATE PRODUCT SPECIFICATION
Wireless Coaxial Link
April 17, 1997
Key Features:
High-Power, (2 to 3 Watt) MMW Transmitter(1)
Low Noise Receiver, (5dB Noise Figure)(2)
Digital Modulation for accommodation of repeaters
Compliance (Goals):
MMW Link Receivers and Signal
Processors: US CFR Title 47, Part 15
MMW Link Transmitters: US CFR Title 47, Parts 21 and 101
FCC MMW Link Frequency pairs in accordance with US CFR Title 47, Part
101.147 (u)
<TABLE>
<CAPTION>
Forward Path GHz Reverse Path, GHz
1st Segment Group A Group B
<S> <C> <C>
Chan 1 38.60 to 38.65 39.30 to 39.35
Chan 2 38.65 to 38.70 39.35 to 39.40
Chan 3 38.70 to 38.75 39.40 to 39.45
Chan 4 38.75 to 38.80 39.45 to 39.50
Chan 5 38.80 to 38.85 39.50 to 39.55
Chan 6 38.85 to 38.90 39.55 to 39.60
Chan 7 38.90 to 38.95 39.60 to 39.65
2nd Segment
Chan 8 38.95 to 39.00 39.65 to 39.70
Chan 9 39.00 to 39.05 39.70 to 39.75
Chan 10 39.05 to 39.10 39.75 to 39.80
Chan 11 39.10 to 39.15 39.80 to 39.85
Chan 12 39.15 to 39.20 39.85 to 39.90
Chan 13 39.20 to 39.25 39.90 to 39.95
Chan 14 39.25 to 39.30 39.95 to 40.00
</TABLE>
<TABLE>
<CAPTION>
Link Transmitter:
<S> <C>
Channel Spacing 50 MHz
Transmitter RF Output(1) 2-3 Watts
Maximum EIRP, 1-meter diameter antennas(3) 50 dBW
Maximum Occupied Bandwidth 40 MHz
Modulation(4) DPSK
Link Receiver:
Channel Spacing 50 MHz
Noise Figure(2) 5 dB
3 dB Bandwith 40 MHz
Input Dynamic Range -20 to -90 dBm
</TABLE>
21-1
<PAGE> 23
<TABLE>
<CAPTION>
Antenna Configuration:
<S> <C>
Number of Antennas/Site One 1-foot antenna std.,
Two 1-foot antennas or
other antennas as req'd
for special circumstances
Host/Controller-to-MMW RF Link Interfaces:
Signal Interface Type Dedicated Coaxial Cable
Signal Interface Definition Serial, Digital, Full-duplex
Signal Serial Bite Rate(4) 30.72 MHz + 1 PPM
-
Control Interface Type Dedicated Differential Pair
Control Interface Definition EIA RSS 485
Control Interface Bit Rate 14400 bit/second
Precise Reference Output:
Low Phase Noise RF Reference 50.00 MHz +0.1 PPM
-
System Clock Reference 30.72 MHz +1PPM
-
Diagnostic & Management Interface:
Controls Channel Select
Tx/Rx Enable
RF parameter settings
Modem settings
Built-in Test Power sources
Status of LRUs
</TABLE>
Packaging:
The MMW RF link group is packaged in an environmentally resistant
outdoor case and will operate over an ambient temperature range of -30
to +55 degrees Celsius.
Primary Power:
Standard operating voltage is 115 VAC or 230 VAC
Power input is applied to both Host and Link groups.
Notes:
1: Rated Transmitter Power is measured at the transmitter module output
WG interface with [*], and specifically not at the antenna flange when
a [*] to accommodate a single antenna.
2: Rated Receiver Noise Figure is measured at the receiver module
output WG interface with either an antenna [*], and specifically not at
the antenna flange when [*] to accommodate a single antenna.
3: Maximum EIRP under FCC rules; CFR Title 47, Part 101.113 to 55 dBW
4: As a goal, a data rate of more than > 45 Mbit/sec, and a
corresponding modulation type will be evaluated for implementation.
[*] Confidential Treatment Requested
21-2
<PAGE> 24
CANDIDATE PRODUCT DESCRIPTION
WIRELESS COAXIAL LINK
April 17, 1997
The Wireless Coaxial Link is a millimeter wave, full-duplex radio system that
provides the equivalent of a coaxial link, between two points without wires.
The Wireless Coaxial Link operates over [*] full-duplex pair of [*] MMW channels
which are defined in [*] segments [*].
The MMW RP Link side of the Wireless Coaxial Link provides Client Interfaces of
high-speed signals via a coaxial cable and controls via a differential pair.
The extended air side of the Wireless Coaxial Link is packaged in an
environmentally resistant outdoor case and will operate over an ambient
temperature range or -30 to +55 degrees Celsius.
Standard operating voltage is 115 VAC or 230 VAC.
Antennas supporting each end of the Wireless Coaxial Link can be as small as
1 foot in diameter for short distances in rain-free locations or can be as
large as 1 meter in diameter for more margin. The standard product features a
single 1-foot diameter antenna. Dual 1-foot antennas or larger antennas are
optional for special circumstances.
[*] Confidential Treatment Requested
21-3
<PAGE> 25
EXHIBIT C - ROYALTY SCHEDULE
Triton shall provide royalty payments to LMC for a five-year period
starting at the date of first sale or other disposition of an MED (the "first
sale" date) based on a percentage of the MED gross sales price. As used herein,
the "MED gross sales price" shall exclude discounts allowed, transportation
charges assessed by third party carriers, insurance in transit, and applicable
sales taxes, if any, incident to delivery of Triton products to the purchaser of
such products.
The amount of royalty payments will be computed according to the
following schedule:
<TABLE>
<CAPTION>
Cumulative MED Gross Sales Level Royalty as Percent
For Five Years (US Dollars) of Gross MED Sales Price
-------------------------------- ------------------------
<S> <C>
0.00 through 999,999.99 [*]
1,000,000.00 through 5,999,999.99 [*]
6,000,000.00 through 11,999,999.99 [*]
12,000,000.00 and above [*]
</TABLE>
Triton has the option at anytime prior to termination of the Agreement
of having the license being deemed paid-up and so relieving it of any obligation
to pay future royalties under the Agreement by paying LMC a lump sum payment of
[*], the lump sum being in addition to any royalties due under the Agreement at
the time Triton exercises the option.
If the royalties paid under the above schedule in a royalty year
between the first sale date and the first anniversary of the first sale date, or
between successive anniversaries of
[*] Confidential Treatment Requested
22
<PAGE> 26
the first sale date, are less than $25,000, then Triton shall make a payment to
LMC within (30) days of the anniversary ending the royalty year equal to the
difference between the royalties paid during the royalty year and $25,000.
23
<PAGE> 1
Exhibit 10.6.1
AGREEMENT TO PURCHASE ADDITIONAL SHARES
This share purchase agreement (the "Agreement"), dated July 13, 1998,
is entered into between Lockheed Martin Corporation, a Maryland corporation,
having offices at 5600 Sand Lake Road, Orlando, Florida 32819 ("Lockheed") and
Triton Network Systems, Inc., a Delaware corporation, having offices at 7547
Commerce Center Drive, Orlando, Florida 32819 ("Triton").
Whereas Lockheed has purchased 800,000 shares of the Series B
Preferred Stock of Triton at a purchase price of $2.50 per share and has
received 1,600,000 shares of Triton Common Stock in exchange for termination of
Lockheed's royalty rights under the license agreement between Lockheed and
Triton dated June 12, 1997.
Whereas Triton has indicated that the issuance of the 1,600,000 shares
of Common Stock to Lockheed is contingent on the purchase of an additional
1,600,000 shares of Triton Series B Preferred Stock by Lockheed at a purchase
price of $2.50 per share.
The parties agree as follows:
1. Purchase of Additional Shares. On or before January 31, 1999,
Lockheed will have purchased an additional 1,600,000 shares of Triton Series B
Preferred Stock at a purchase price of $2.50 per share. The purchase and sale
of such shares shall be accomplished by a Series B Preferred Stock purchase
agreement substantially similar to that entered into by Triton and Lockheed on
July 31, 1998.
2. Failure to Purchase Additional Shares. In the event Triton and
Lockheed do not consummate the sale of the Triton Series B Preferred Stock on
or before January 31, 1999, then the royalty payments due to Lockheed from
Triton under the License Agreement dated June 12, 1997 shall be treated as
having been fully paid up and Lockheed shall forfeit any right to receive any
royalty payments.
3. Miscellaneous. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument. This Agreement shall be governed by
and construed under the laws of the State of Delaware, made and to be performed
entirely within the State of Delaware.
LOCKHEED MARTIN CORPORATION TRITON NETWORK SYSTEMS, INC.
By: /s/ Janet L. McGregor By: /s/ Brian J. Andrew
- ------------------------------ -----------------------------
Janet L. McGregor Brian J. Andrew
Title: Vice President Title: President
----------------------- ----------------------
<PAGE> 1
EXHIBIT 10.7
ACQUISITION AND LICENSE AGREEMENT
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
TRITON NETWORK SYSTEMS, INC.
DATED AS OF
FEBRUARY 29, 2000
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION TITLE
<S> <C>
SECTION 1 DEFINITIONS
SECTION 2 PURCHASE AND SALE
SECTION 3 PERSONNEL
SECTION 4 PAYMENT
SECTION 5 TAX MATTERS
SECTION 6 RESPONSIBILITIES OF IBM
SECTION 7 RESPONSIBILITIES OF TRITON
SECTION 8 LICENSES
SECTION 9 REPRESENTATIONS AND WARRANTIES OF IBM
SECTION 10 Reserved
SECTION 11 REPRESENTATIONS AND WARRANTIES OF TRITON
SECTION 12 RESTRICTIONS ON TRANSFERABILITY OF SHARES
SECTION 13 CONSENTS AND SUBROGATED WORK
SECTION 14 CONDITIONS OF EFFECTIVENESS OF SALE AND LICENSES;
POST CLOSING COVENANTS
SECTION 15 LIMITATION OF LIABILITY
SECTION 16 COMMUNICATIONS
SECTION 17 GENERAL PROVISIONS
</TABLE>
2
<PAGE> 3
TABLE OF SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
SCHEDULE TITLE
<S> <C>
SCHEDULE 1A Furniture, Fixtures and Equipment
SCHEDULE 1B Acquired Contracts
SCHEDULE 1C IBM Knowledge employees
SCHEDULE 1D Identified Employees
SCHEDULE 1E Identified Products
SCHEDULE 1F Disclosures
SCHEDULE 1G Patents
SCHEDULE 1H Inventory
SCHEDULE 1I IBM Licensed Software
SCHEDULE 1J IBM Workstation Software
SCHEDULE 1K Documentation
SCHEDULE 1L reserved
SCHEDULE 1M Vendor Agreements
SCHEDULE 1N Other Acquired Software Assets
SCHEDULE 1O Affected Employees
SCHEDULE 1P Third Party Workstation Software
SCHEDULE 1Q Acquired Software Assets
SCHEDULE 1R reserved
SCHEDULE 1S Masks
SCHEDULE 1T Holder Agreements
SCHEDULE 3.1 Summary of TRITON's Terms of Employment
SCHEDULE 3.3 Support Employees
SCHEDULE 4.5 Accounts Payable
SCHEDULE 5.1 Allocation of Purchase Price
SCHEDULE 8.2 IBM Workstation Software Licenses
SCHEDULE 9.17 Contract Status
SCHEDULE 9.27 Tangible Assets
SCHEDULE 9.28 Software
SCHEDULE 9.6 Claims
SCHEDULE 9.18 Contractual Commitments
SCHEDULE 14.3(c) Consents
SCHEDULE 17.4 Press Release
EXHIBIT TITLE
EXHIBIT I Reserved
EXHIBIT II Sublease Agreement
EXHIBIT III Reserved
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
EXHIBIT IV Amended and Restated Certificate of Incorporation
EXHIBIT V Investor Rights Agreement
EXHIBIT VI Bill of Sale
EXHIBIT VII Assignment and Assumption Agreement
EXHIBIT VIII EDA Program Agreement
EXHIBIT IX Letter Agreement
</TABLE>
4
<PAGE> 5
Agreement Reference Number L003806
ACQUISITION AND LICENSE AGREEMENT
THIS ACQUISITION AND LICENSE AGREEMENT (this "Agreement") is dated as
of the 29th day of February, 2000, by and between International Business
Machines Corporation, a New York corporation, ("IBM"), and Triton Network
Systems, Inc., a corporation of Delaware ("TRITON") (each a "Party,"
collectively the "Parties").
WHEREAS, IBM possesses certain intellectual property rights and
tangible assets useful for the manufacture and sale of Broadband Products
(defined below); and
WHEREAS, TRITON now wishes to acquire and IBM wishes to sell, assign,
delegate or license, as the case may be, certain of such rights and assets, and
certain contracts and liabilities related thereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, IBM and TRITON agree as follows:
SECTION 1. DEFINITIONS
The following words shall have the following meanings when used in this
Agreement:
"Acquired Assets" shall mean the Acquired Contracts, the Acquired
Software Assets, the Other Acquired Software Assets, the Invention Disclosures,
the Vendor Contracts, Inventory, and the Furniture, Fixtures and Equipment, the
Masks, the Board Design, the Deliverable Documentation and the Holder
Agreements.
"Acquired Contracts" shall mean the contracts between IBM and its
customers to be transferred to TRITON as set forth on Schedule 1B hereto.
"Acquired Software Assets" shall mean the software in Source Code and
Object Code form that is identified in Schedule 1Q.
"Affected Employees" shall mean the individuals identified as such on
Schedule 10 hereto.
"Amended and Restated Certificate of Incorporation" shall mean the
instrument attached as Exhibit IV.
5
<PAGE> 6
"Assignment and Assumption Agreement" shall mean the agreement
attached as Exhibit VII.
"Assumed Liabilities" shall have the meaning set forth in Section
2.3(a).
"Bill of Sale" shall mean the agreement attached as Exhibit VI.
"Board Design" shall mean the schematics and other documentation for
the digital modem module card using CQT8010 as specifically set forth in
Schedule 1K, and IBM's non-patent intellectual property therein.
"Broadband Product" shall mean a product designed to provide
quadrature amplitude modulation and/or phase shift keying modulation for use in
point-to-point fixed wireless or point-to-multipoint fixed wireless
communications applications at a rate of 1.5 Mbps or greater.
"Closing" shall have the meaning set forth in Section 4.2.
"Closing Date" shall have the meaning set forth in Section 4.2.
"Code" shall mean computer programming code. If not otherwise
specified, Code shall include Object Code and Source Code as well as associated
procedural code (such as job control language and build scripts).
"Deliverable Documentation" shall mean the Documentation listed on
Schedule 1K hereto.
"Deliverables" shall mean the Acquired Assets, the Third Party
Workstation Software, the IBM Workstation Software, the IBM Licensed Software
and the Deliverable Documentation.
"Derivative Work" shall mean a work which is based on one or more
preexisting works, such as a revision, Enhancement, modification, translation,
abridgment, condensation, expansion or any other form in which such preexisting
work may be recast, transformed or adapted and which, if prepared without
authorization of the owner of the preexisting work, would constitute copyright
infringement or other infringement of proprietary rights of the owner thereof.
For purposes hereof, a Derivative Work shall also include any compilation that
incorporates such preexisting work.
"Documentation" shall mean manuals, specifications, module
descriptions, logic descriptions, flow charts, principles of operation and
other written materials or diagrams used in, or that relate to the design,
development, modification or use of software either in hard copy (paper form)
or stored or recorded on magnetic media as machine readable text or graphic
files subject to display or printout. "Documentation" includes "User
Documentation."
"EDA Program Agreement" shall mean the agreement attached as Exhibit
VIII.
6
<PAGE> 7
"Effective Date" shall mean the later of the third business day
following the date on which all of the conditions set forth in Section 14 have
been satisfied or waived, or such other date as may be agreed upon by IBM and
TRITON, when the Closing shall occur.
"Enhancement" shall mean any change of or addition to software,
including, but not limited to, translations, new releases and versions or
additional programs that improve functions, add new related functions or
improve performance by changes in system design or coding or by the addition of
new Code and Documentation.
"Furniture, Fixtures and Equipment" shall mean those tangible assets
listed on Schedule 1A hereto.
"Governmental Authority" shall mean any federal, state, or local court
of the United States or foreign court, or any governmental or administrative
agency or commission or other governmental authority, instrumentality or
regulatory body.
"Governmental Rule" shall mean any statute, law, treaty, rule, code,
ordinance, regulation or order of any Governmental Authority or any judgment,
decree, injunction, writ, order or like action of any federal, state, or local
court of the United States or foreign court, arbitrator or other judicial
tribunal of competent jurisdiction.
"Holder Agreements" shall mean those agreements listed in Schedule 1T
that restrain or restrict any person from directly or indirectly competing with
the manufacture and sale of the Identified Products or from disclosing
information relating to the intellectual property or other confidential
information relating primarily to the Acquired Contracts.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"IBM Licensed Software" shall mean the items listed on Schedule 1I
hereto.
"IBM Workstation Software" shall mean the software listed on Schedule
1J hereto.
"Identified Employees" shall mean those employees of IBM identified as
such in Schedule 1D.
"Identified Products" shall mean the IBM products specified in
Schedule 1E.
"Invention Disclosures" shall mean those documents listed in Schedule
1F hereto.
"Inventory" shall mean those tangible assets listed in Schedule 1H
hereto.
7
<PAGE> 8
"Investor Rights Agreement" shall mean the agreement attached as
Exhibit V.
"Knowledge of IBM" means actual knowledge of the IBM employees listed
on Schedule 1C.
"Letter Agreement" shall mean the agreement attached as Exhibit IX.
"Licensed Patents" shall mean (i) those patents listed in Schedule 1G
hereto, patents issuing from the applications listed in Schedule 1G hereto and
foreign counterparts to such patents, and (ii) any patent licensable by IBM
(where such license would not require payment by IBM to any third party) that
would be infringed by the manufacture, use, sale, offer for sale, import, lease
or other transfer of the Identified Products as they exist on the Effective
Date.
"Masks" shall mean those items listed in Attachment 1S hereto and all
of IBM's mask work rights therein.
"Object Code" shall mean machine readable forms of Code.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Other Acquired Software Assets" shall mean the software in Source
Code and Object Code form that is identified in Schedule 1N.
"Other Technology" shall mean that IBM technical information, data,
formulas, knowledge, processes and/or trade secrets developed or acquired by IBM
which is described in the Acquired Software Assets, Other Acquired Software
Assets, Deliverable Documentation or the Invention Disclosures.
"Permitted Liens" shall mean: (i) liens for Taxes, assessments and
governmental charges due and being contested in good faith by IBM; (ii) any
liens upon any of the Acquired Assets, provided that the same are not of such a
nature that would individually or in the aggregate materially adversely affect
the value of the Acquired Assets; (iii) liens for Taxes either not due and
payable or due but for which notice of assessment has not been given, or which
may thereafter be paid without penalty; (iv) undetermined or inchoate liens,
charges and privileges incidental to current operations or the ordinary course
of business; (v) any statutory liens, charges, adverse claims, security
interests or encumbrances of any nature whatsoever claimed or held by any
Governmental Authority that have not at the time been filed or registered
against title to the Acquired Assets or that relate to obligations that are not
due or delinquent; (vi) security given in the ordinary course of business to
any public utility, Governmental Authority or to any statutory or public
authority in connection with the Acquired Assets; and (vii) other imperfections
of title or encumbrances, if any, which imperfections of title or other
encumbrances do not materially impair the use of the assets to which they
relate.
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"Person" shall mean any individual firm, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, government or agency (or subdivision thereof), or any other legal
entity.
"Purchase Price" shall mean the fair market value on the Effective
Date of the consideration referred to in Section 4.1.
"Security Interest" shall mean any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanics, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Software" shall mean computer programs (instructions) that cause
computer hardware to do work.
"Source Code" shall mean human readable forms of Code and related
Documentation, including all comments and any procedural codes such as job
control language.
"Sublease Agreement" shall mean the agreement attached hereto as
Exhibit II.
"Subsidiary" of a party hereto or of a third party shall mean a
corporation, company or other entity:
(a) more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of directors or
other managing authority) are now, or hereafter, owned or controlled, directly
or indirectly, by a Party hereto or such third party, but such corporation,
company or other entity shall be deemed to be a Subsidiary only so long as such
ownership or control exists; or
(b) which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture or unincorporated association, but
more than fifty percent (50%) of the ownership interest representing the right
to make the decisions for such corporation, company or other entity is now or
hereafter, owned or controlled, directly or indirectly, by a party hereto or
such third party, but such corporation, company or other entity shall be deemed
to be a Subsidiary only so long as such ownership or control exists.
"Tax" or "Taxes" shall mean all taxes, imposts, duties, withholdings,
charges, fees, levies, or other assessments imposed by any governmental or
taxing authority, whether domestic or foreign, including but not limited to,
income, gross receipts, excise, property, sales, use, transfer, conveyance,
payroll or other employment related, license, ad valorem, value added,
withholding, social security, national insurance (or other similar
contributions or payments), franchise, estimated severance, stamp taxes, taxes
based upon capital stock or net worth and other taxes (including interest,
fines, penalties, or additions attributable to or imposed on or with
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respect to respect to such amounts and any obligations under any agreement or
arrangements with any Person with respect to such amounts).
"Tax Return" shall have the meaning set forth in Section 5.3.
"Third Party Workstation Software" shall mean that Software (and the
user documentation supplied by its vendor therefor) which is owned by entities
other than IBM, or its Subsidiaries, as listed on Schedule 1P hereto.
"Unassigned Third Party Software" shall mean that Software (and the
user documentation supplied by its vendor therefor) owned by entities other
than IBM, or its Subsidiaries.
"User Documentation" shall mean Documentation which consists of
manuals, brochures and machine readable instructional text or graphic files
subject to display or printout, provided to users of a computer program and
intended primarily to aid in productive use of such program rather than design,
development or modification thereof.
"Vendor Contracts" shall mean those contracts for vendors listed on
Schedule 1M.
SECTION 2. PURCHASE AND SALE
2.1 Upon the terms and subject to the conditions set forth in this Agreement,
IBM hereby sells, transfers, delegates and assigns to TRITON as of the
Effective Date and TRITON hereby purchases or otherwise acquires and accepts
full responsibility for, as of the Effective Date, all of IBM's rights, title
and interest in and to:
(a) the Acquired Contracts;
(b) the Vendor Contracts;
(c) the Inventory;
(d) to the extent they may be transferred, any express or implied
warranties from the suppliers of IBM, manufacturers or others with respect to
the Deliverables;
(e) the Acquired Software Assets and Other Acquired Software Assets;
(f) any rights and obligations of IBM accruing from and after the
Effective Date to any invoice, purchase or sales order, or service order issued
pursuant to the Acquired Contracts; provided, however, that IBM retains the
right to invoice, collect and retain for itself the proceeds from all sales
made and services performed by IBM prior to the Effective Date; and
(g) the Holder Agreements;
(h) the Masks;
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(i) [intentionally blank];
(j) to the extent it has the legal right to do so and subject to the
applicable license agreement with the licensors, its royalty-free usage rights
to the Third Party Workstation Software;
(k) the Furniture, Fixtures and Equipment;
(l) the Board Design; and
(m) the Invention Disclosures, subject to the provisions of Section 8.9.
2.2 TRITON shall be responsible for all accounts payable which accrue on or
after the Effective Date with respect to the Deliverables and that are either
(i) listed on Schedule 2.2 or (ii) that relate to goods and services purchased
prior to the Effective Date in the ordinary course of business and delivered or
performed after the Effective Date. IBM shall remain responsible for any other
accounts payable incurred by it prior to the Effective Date.
2.3 (a) TRITON shall not assume any liabilities or obligations of IBM except
for those liabilities which TRITON expressly assumes pursuant to this
Agreement. On the Effective Date, TRITON will assume the following rights,
obligations and liabilities of IBM (collectively, the "Assumed Liabilities")
and thereafter shall fully perform and discharge on a timely basis, and in
accordance with their respective terms: (i) all rights and obligations under
the Acquired Contracts, the Vendor Contracts, the Holder Agreements and the
Deliverables to the extent that such contracts are actually assigned to TRITON
and only with respect to obligations under those contracts to be performed
after the Effective Date, and (ii) accounts payable to the extent provided in
Section 2.2. Without limiting the generality of the foregoing, except for the
Assumed Liabilities, TRITON is not assuming any liability, obligation or
commitment of any nature of IBM related to IBM's operations prior to the
Effective Date. TRITON agrees to discharge its Assumed Liabilities in
accordance with their terms and conditions and TRITON agrees that IBM shall
have no liability for any failure of TRITON to discharge its Assumed
Liabilities in accordance with their terms and conditions.
(b) The Parties will each use reasonable efforts to obtain written
consents to the transfer and assignment of the Acquired Assets and Assumed
Liabilities to TRITON, and the novation of IBM, where the approval or other
consent of any other Person may be required for these actions. TRITON shall
cooperate with IBM (including, where necessary, entering into appropriate
instruments of assumption as shall be agreed upon) to have IBM released from
all liability to third parties with respect to the Assumed Liabilities, and the
Parties will each solicit such releases concurrently in a manner acceptable to
both Parties, with the solicitation of consents from third parties to the
transfer, assignment and novation of the Assumed Liabilities;
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provided, that, neither Party shall be required to grant any additional
consideration to any third party in order to obtain any such consent, novation,
assumption or release.
2.4 On the Effective Date, IBM shall deliver to TRITON one copy each of the
Deliverable Documentation.
2.5 On the Effective Date, IBM and TRITON shall enter into the Sublease
Agreement and the EDA Program Agreement.
2.6 Unless otherwise mutually agreed by the Parties, the Parties agree to enter
a foundry agreement no later than December 31, 2000, under which IBM will
manufacture products for TRITON under IBM's then-standard commercial terms and
conditions, including pricing.
2.7 For a period of 18 months following the Effective Date, IBM agrees to
provide to Triton, without charge and upon the receipt of appropriate orders,
SiGe services (prototype wafer runs and development services) having an
aggregate value of up to $1,850,000 (one million, eight hundred fifty thousand
dollars), based upon IBM's standard commercial terms and conditions, including
pricing and delivery. Any taxes on such services shall be the responsibility of
Triton. Any contracts entered into under this Section 2.7 may be completed
beyond the 18 month period.
SECTION 3. PERSONNEL
3.1 (a) TRITON agrees that it will make written offers of employment, subject
to the closing of this transaction, to all Affected Employees within four days
of the date of this agreement and employ, subject to the closing of this
transaction, those who accept employment within four days of receiving those
written offers. TRITON will employ such persons at the same salaries and
initially at the same or substantially similar positions as their current
positions, provided that TRITON's ability to reassign and redeploy employees
will not be limited. TRITON will provide all Affected Employees who accept
employment the benefits described in Schedule 3.1 and similar terms and
conditions, including a benefit plan as outlined in Schedule 3.1. Prior periods
of employment with IBM will be considered as employment with the TRITON for the
calculation of severance pay. During the first year after the Effective Date,
TRITON shall implement the following severance pay practice for the Affected
Employees: if an Affected Employee is involuntarily severed without cause from
full-time employment with TRITON, such Affected Employee shall receive one (1)
week of severance pay for each six (6) months of service fully or partially
completed with TRITON or with IBM, with a minimum of eight (8) weeks and a
maximum of twenty-six (26) weeks. Each week of severance pay will be an amount
equal to one week of such Affected Employee's total cash employment
compensation from TRITON for full-time employment. For one year from the
Effective Date, TRITON agrees that it will not change this severance pay
practice as applied to the Affected Employees.
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(b) TRITON shall offer the Affected Employees three weeks of paid
vacation per year. Upon separation from IBM, Affected Employees shall be paid
by IBM for vacation accrued, plus previously deferred vacation, less vacation
taken.
(c) As of the Effective Date, TRITON shall be responsible for all
employer obligations incurred by TRITON in accordance with Section 3.1(a) or
otherwise in accordance with law for the post-Effective Date period for all
Affected Employees who accept employment with TRITON. Such obligations include,
without limitation, COBRA obligations and damages or settlements arising out of
any claims of wrongful termination by TRITON. IBM will remain responsible for
all employer obligations for the Affected Employees incurred by IBM prior to
the Effective Date. IBM will remain responsible for the Affected Employees who
do not accept employment with TRITON.
3.2 In the event that IBM effects a reduction or cessation of the operations
or workforce that exists to service or support the Acquired Assets prior to the
Effective Date, IBM shall perform and undertake all acts as may be necessary to
comply with the applicable provisions of the WARN Act and any analogous state
laws. In the event that TRITON effects a reduction or cessation of the
operations or workforce that exist to service or support the Acquired Assets
subsequent to the Effective Date, TRITON shall perform and undertake all acts
as may be necessary to comply with the applicable provisions of the WARN Act
and analogous state laws.
3.3 IBM is a party to three (3) government-related contracts (the "Government
Contracts"), which are not being assigned or transferred to TRITON, but which
are being performed, in whole or in part, by the Affected Employees identified
in Schedule 3.3 (collectively, the "Support Employees"). In the event that any
Support Employee accepts employment with Triton on or after the Effective Date,
the Parties agree that IBM may, at any time thereafter, hire and use any such
Support Employee to work on the Government Contracts in accordance with the
terms and conditions set forth in the Letter Agreement, which will be signed by
the Parties at Closing.
SECTION 4. CLOSING
4.1 In consideration for the assets, licenses and other rights to be
transferred to TRITON, TRITON shall issue to IBM five million five hundred
thousand (5,500,000) shares of TRITON's Series C Preferred Stock (the
"Shares"), which will represent, after the issuance of these shares at Closing,
approximately 8.8% of the ownership of TRITON on a fully diluted basis, subject
to Section 11.23, and IBM shall become party to TRITON's existing Investor
Rights Agreement.
4.2 The closing of the transactions contemplated by this Agreement (the
Closing") shall be held at the offices of IBM, at 10:00 a.m. on the date which
is two business days following satisfaction or waiver of the last condition to
effectiveness of sale and license set forth in Section 14 hereof, or such other
time and place as the parties may agree (the "Closing Date").
4.3 At the Closing:
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(a) the Parties shall execute and deliver the Bill of Sale;
(b) TRITON shall deliver a certificate for the Shares;
(c) The parties shall execute and deliver the Investor Rights Agreement;
(d) The Parties shall execute and deliver the Assignment and Assumption
Agreement; and
(e) The Parties shall execute and deliver the Letter Agreement.
SECTION 5. TAX MATTERS
5.1 TRITON and IBM hereby agree to the tax-basis allocation of the Purchase
Price set forth in Schedule 5.1 (the "Allocation Statement"), allocating the
total of the Purchase Price (and other payments properly treated as additional
Purchase Price for Tax purposes) to the different transferred assets pursuant
to Section 1060 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
5.2 TRITON and IBM shall each file all income, franchise and other Tax
Returns (as defined below) in a manner consistent with the Allocation
Statement. TRITON shall prepare Form 8594 under Section 1060 of the Internal
Revenue Code based on Schedule 5.1 and deliver such Form and all documentation
used in the preparation and support of such Form to IBM within 90 days after
the Effective Date.
5.3 IBM shall prepare and file, or cause to be prepared and filed, with the
appropriate authorities all Tax returns, reports and forms (herein "Tax
Returns") and shall pay, or cause to be paid, when due all Taxes relating to
the Deliverables and the ownership of the Acquired Assets attributable to any
taxable period which ends on or prior to the Effective Date (herein
"Pre-Closing Tax Period"). TRITON shall prepare and file, or cause to be
prepared and filed, with the appropriate authorities all Tax Returns, and shall
pay, or cause to be paid, when due all Taxes relating to the Deliverables
attributable to any taxable period which is not part of the Pre-Closing Tax
Period. If, in order to properly prepare its Tax Returns or other documents
required to be filed with Governmental Authorities or in connection with any
audit by any taxing authority or other examination by any taxing authority or
any judicial or administrative proceeding relating to any liability for Taxes,
it is necessary that a party be furnished with additional information,
documents or records relating to the Deliverables, both IBM and TRITON agree to
use reasonable efforts to furnish or make available such nonprivileged
information at the other's request, cost and expense; provided, however, that
neither party shall be entitled to review or examine the Tax Returns of the
other party.
For purposes of this Section 5.3, in the case of any taxable period that
includes (but does not end on) the Effective Date (a "Straddle Period"), the
Taxes for the portion of the Straddle Period prior to and including the
Effective Date (the "Pre-Effective Date Tax Period") shall be computed as if
the Pre-Effective Date Tax Period ended as of the close of business on the
Effective Date and the amount of Taxes for the portion of the Straddle Period
following the Effective Date shall be the excess, if any, of (x) the Taxes for
the Straddle Period over (y) the Taxes for the Pre-Effective Date Tax Period.
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5.4 Any refunds and credits attributable to the Pre-Closing Tax Period shall
be for the account of IBM and any refunds and credits attributable to the
period which is not part of the Pre-Closing Tax Period shall be for the account
of TRITON.
5.5 All transfer, documentary, sales, use, registration, value-added and any
other similar Taxes (including real estate transfer taxes, conveyance, capital
gains or similar taxes) and related fees incurred in connection with this
Agreement, the Sublease Agreement and the transaction contemplated hereby shall
be borne equally by the Parties. To the extent legally able to do so, TRITON
and IBM shall cooperate with each other to obtain exemptions from such Taxes,
provided that neither party shall be obligated to seek any exemption that would
require any audit by a Governmental Authority of its books and records.
SECTION 6. RESPONSIBILITIES OF IBM
6.1 Within ten (10) days after the Effective Date, IBM shall deliver to
TRITON one copy of the Object Code for the IBM Licensed Software.
6.2 IBM shall establish a single point of contact to facilitate the
assignment process set forth herein.
6.3 IBM shall take such additional actions as TRITON may reasonably request
to effect the delivery of the Acquired Assets. IBM shall execute such documents
and, at TRITON's expense, take such other actions as TRITON may reasonably be
requested to assist TRITON in preserving or perfecting its rights in the
Deliverables or to perfect or evidence the assignment or sale to TRITON of the
Acquired Assets.
6.4 IBM shall file any Notification and Report Forms and related material
that may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the HSR
Act, will use all reasonable efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper, or advisable in connection therewith.
SECTION 7. RESPONSIBILITIES OF TRITON
7.1 TRITON shall establish a single point of contact to facilitate the
assignment process set forth herein.
7.2 TRITON shall make offers of employment to the Identified Employees and
the Affected Employees within four days after the date of this Agreement under
the condition that such offers must be accepted, contingent upon the
satisfaction of the other conditions to effectiveness of the
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sale and license hereunder as set forth in Section 14, within four days after
such offer or be deemed rejected.
7.3 TRITON shall cause all IBM trademarks, service marks, trade names and
logos, including design variations thereof, to be removed promptly (and no
later than 30 days after the Effective Date) from all facilities and materials
provided to TRITON hereunder which TRITON provides to the public.
7.4 Except with respect to the Third Party Workstation Software, TRITON shall
be responsible for deleting any and all existing third party software from the
Acquired Assets or notifying the owners of the software or obtaining necessary
licenses for such software.
7.5 TRITON shall be responsible for obtaining necessary licenses from the
owners of Unassigned Third Party Software and for any fees associated
therewith.
7.6 TRITON shall file any Notification and Report Forms and related material
that may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the HSR
Act, will use all reasonable efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper, or advisable in connection therewith.
SECTION 8. LICENSES
8.1 Subject to IBM's receipt of the consideration set forth in Section 4, and
as of the Effective Date, IBM agrees to grant and hereby grants to TRITON a
fully paid-up, worldwide, irrevocable and nonexclusive license to the IBM
Licensed Software to use, reproduce, execute, display, or perform the IBM
Licensed Software, to prepare Derivative Works of the IBM Licensed Software
(subject to IBM's patent rights) and to distribute internally the IBM Licensed
Software and Derivative Works thereof (subject to IBM's patent rights). The
foregoing license does not grant TRITON the right to sublicense the IBM
Licensed Software. Any such Derivative Works shall be owned by TRITON.
8.2 Subject to IBM's receipt of the consideration set forth in Section 4, IBM
agrees to grant and hereby grants to TRITON a fully paid-up and nonexclusive
end-user license to the IBM Workstation Software under IBM's standard terms and
conditions for such Software. Such standard terms and conditions are attached
here as Exhibit 8.2.
8.3 Subject to IBM's receipt of the consideration set forth in Section 4, and
as of the Effective Date, IBM agrees to grant and hereby grants to TRITON a
fully paid-up, worldwide, irrevocable and nonexclusive license, with right of
sublicense (but without any express or implied license under any IBM patent),
to the Other Technology for the purpose of making, using, selling, and
otherwise transferring Broadband Products.
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8.4 IBM hereby reserves, for itself and its Subsidiaries, the right to use the
Residuals of information included in the Deliverable Documentation for any
purpose. The "Residuals" of the information in the Deliverable Documentation
means information of general application or nature, in non-tangible form,
retained in the memories of persons who have had access to it, without further
reference to any material that is written, stored in magnetic, electronic or
physical form, or that is otherwise fixed.
8.5 Subject to IBM's receipt of the consideration set forth in Section 4, and
as of the Effective Date, IBM agrees to grant and hereby grants to TRITON a
fully paid-up, worldwide, irrevocable and non-exclusive license under the
Licensed Patents to make, have made (subject to Section 8.7) for sale by
TRITON, use, sell, offer for sale, import, lease, and otherwise transfer
Broadband Products, provided, however, that no license, express or implied, is
granted to TRITON under the Licensed Patents or any other patent licensable by
IBM, to practice any manufacturing process, including but not limited to
semiconductor manufacturing processes. The license granted under this Section
8.5 does not include the right to sublicense third parties.
8.6 Except as expressly set forth in this Agreement, nothing contained herein
shall be construed as conferring either directly or by implication, estoppel,
or otherwise upon either Party hereunder any license or other right with
respect to any patents or patent applications, trademarks, copyrights, trade
secrets, mask works or other similar intellectual property rights of the other
Party.
8.7 The license granted in Section 8.5 to TRITON to have Broadband Products
made by another manufacturer:
(a) shall only apply when the specifications for such products (other than
the Identified Products) were created by TRITON, either solely or jointly with
one or more third parties; and
(b) shall only be under claims of the Licensed Patents, the infringement of
which would be necessitated by compliance with such specifications.
8.8 In the event that TRITON engages in or suffers any of the following
events:
(a) becomes insolvent, is dissolved or liquidated, files or has filed
against it a petition in bankruptcy, reorganization, dissolution or liquidation
or similar action filed by or against it, is adjudicated as bankrupt, or a
receiver is appointed for its business; or
(b) has all or a substantial portion of its capital stock or assets
expropriated or attached by any government entity;
then TRITON shall offer, on a right of first offer basis, to sell to IBM all
TRITON's ownership interest in and to TRITON's statutory patent rights acquired
from IBM in the patent applications and any issued patents, resulting from the
Invention Disclosures.
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8.9 IBM reserves for itself and its Subsidiaries, a license under the
Invention Disclosures, and all patent applications filed thereon, and patents
issuing therefrom, in any country of the world, a nonexclusive, fully paid-up,
worldwide license to make, have made, use, sell, offer for sale, import, lease,
and otherwise transfer any information handling system product, and to
sublicense those licensees of IBM as of the Effective Date that would have been
required to be licensed under patent applications (and patents issuing
therefrom) filed on the Invention Disclosures if such applications had been
filed by IBM or its Subsidiaries on or before the Effective Date.
8.10 The licenses granted to TRITON hereunder shall be assignable to a
successor in interest to TRITON's Broadband modem business. In such event:
(a) TRITON shall promptly give notice of such acquisition to IBM; and
(b) the license granted to TRITON under Section 8.5 shall not apply to
any products manufactured or sold by such third party following its acquisition
of TRITON that are substantially similar to products it manufactured and sold
prior to acquiring TRITON.
8.11 (a) IBM hereby reserves, for itself and its Subsidiaries, a worldwide,
irrevocable, nonexclusive, and fully paid-up right and license to use,
reproduce, execute, display, perform, create Derivative Works of (subject to
TRITON's patent rights), and distribute the Acquired Software Assets for any
purpose other than the manufacture and sale of Broadband Products.
(b) IBM hereby reserves, for itself and its Subsidiaries, a worldwide,
irrevocable, nonexclusive, and fully paid-up right and license, including the
right to sublicense others, to use, reproduce, execute, display, perform,
create Derivative Works of (subject to TRITON's patent rights), and distribute
the Other Acquired Software Assets for any purpose other than the manufacture
and sale of Broadband Products.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF IBM
Except as otherwise set forth on the Schedule of Disclosures and Exceptions
attached hereto:
9.1 IBM represents and warrants that it has the full right, power, legal
capacity and authority to enter into this Agreement, to perform the
transactions contemplated hereunder and to grant the rights and licenses
granted hereunder and all such actions have been duly authorized by all
necessary corporate proceedings on its part. This Agreement has been duly and
validly executed and delivered by IBM and constitutes the legal, valid and
binding obligation of it and is enforceable against IBM in accordance with its
terms and conditions.
9.2 IBM is a duly incorporated and validly existing corporation in good
standing under the laws of the State of New York, with all requisite corporate
power and authority to own its properties and conduct its business.
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9.3 The execution and delivery by IBM of this Agreement does not, and the
performance by IBM of its obligations hereunder will not:
(a) conflict with, or result in a breach of, any of the provisions of
IBM's Articles of Incorporation or By-laws;
(b) on IBM's part, breach, violate or contravene any Governmental
Rule, or create any right of termination or acceleration or encumbrance against
IBM, that, singly or in the aggregate, would have a material adverse effect on
IBM's authority or ability to perform its obligations under this Agreement; and
(c) on IBM's part, conflict in any respect with, or result in a breach
of or default under, any contract, license, franchise, permit or any other
agreement or instrument to which IBM is a party or by which IBM or any of the
Deliverables may be bound that, singly or in the aggregate, would have a
material adverse effect on the Deliverables or IBM's authority or ability to
perform its obligations under this Agreement (except for agreements and
instruments that require the consent or approval of a third party for the
transactions contemplated by this Agreement).
9.4 Other than compliance with the HSR Act pre-notification requirements, no
material consent, approval or authorization of, or designation, declaration or
filing with, any Governmental Authority on the part of IBM is required in
connection with the execution or delivery by IBM of this Agreement or the
consummation by IBM of the transactions contemplated herein.
9.5 IBM has and will convey good and marketable title to all Acquired
Assets, free and clear of any liens and encumbrances other than Permitted Liens
and other than the Assumed Liabilities, provided however that IBM will remain
responsible for costs associated with Permitted Liens that are not otherwise
included within the Assumed Liabilities. Provided, however, that IBM is not
currently the owner of the Teradyne Tester that appears on the schedules to
this Agreement. This tester is currently owned by a third party and leased to
IBM. Immediately prior to closing, IBM will buy out the remaining period of
that lease and obtain title to that tester.
9.6 Except as set forth on Schedule 9.6, there are no actions, suits,
proceedings or investigations pending or, to the Knowledge of IBM, threatened
in a writing to IBM against or directly affecting the Acquired Assets, at law
or in equity, including any administrative proceedings or condemnation actions
with any Governmental Authority. IBM has not received any written claim made by
a third party prior to the date of this Agreement that IBM's marketing and sale
of the Identified Products infringed any patent, copyright, trade secret, or
trademark of such third party, except as identified in Section 9.6. The
manufacture, use and sale of the Identified Products by TRITON after the
closing, in substantially the same manner as conducted by IBM prior to the
closing, does not violate any third party non-patent intellectual property
right (but not including any third party non-patent intellectual property right
in the Unassigned Third
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Party Software) and, to the Knowledge of IBM, does not violate any third party
patent rights, except as identified in Schedule 9.6.
9.7 IBM has performed or is performing all material obligations required to
be performed by it under the Acquired Contracts and is not, (with or without
notice, lapse of time or both) in breach or default in any material respect
thereunder.
9.8 To the Knowledge of IBM, no representation petition has been filed with
the National Labor Relations Board and, to the Knowledge of IBM, no union card
signing campaign is in progress at any IBM facility concerning the Affected
Employees. There is not any, and during the past 12 months there has not been
any, labor strike, work stoppage or lockout with respect to the Affected
Employees.
9.9 IBM has provided Triton with an accurate statement of IBM's book value of
the Inventory, Furniture, Fixtures and Equipment that existed on IBM's books,
as of January 31, 2000, of the Inventory, Furniture, Fixtures and Equipment.
9.10 Except for the express representations and warranties made by IBM in
this Section 9, the Deliverables are sold, licensed or otherwise transferred
hereunder "as is" without warranty of any kind, express or implied, including,
but not limited to the implied warranties of merchantability and fitness for a
particular purpose, and IBM shall not have any liability in respect of any
infringement of any intellectual property rights of third parties due to
TRITON's use of the Acquired Contracts, Identified Products, Acquired Software
Assets, Other Acquired Software Assets, Invention Disclosures or the IBM
Technology or operation under the rights and licenses herein granted. Without
limiting the foregoing, IBM makes no representations or warranties concerning
the ability of the IBM Licensed Software, IBM Workstation Software, Acquired
Software Assets, Other Acquired Software Assets, or Third Party Workstation
Software to process, provide or represent date data in and between the
twentieth and twenty-first centuries.
9.15 IBM has good and marketable title to the Acquired Assets, free and clear
of all Security Interests or restriction on transfer.
9.16 To the Knowledge of IBM, IBM and its Subsidiaries have complied with all
applicable laws in connection with the Acquired Assets.
9.17 IBM has delivered to TRITON a correct and complete copy of each written
agreement, including any amendments, modifications or extensions, listed in
Schedule 1B and Schedule 1M. With respect to each such agreement, to the
Knowledge of IBM: (a) the agreement is legal, valid, binding, enforceable, and
in full force and effect; (b) no party is in breach or default, and no event
has occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (c) no party has repudiated any provision of the agreement.
9.18 To the Knowledge of IBM, each Identified Product has been in conformity
with all applicable contractual commitments and all express and implied
warranties, except as set forth in
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Schedule 9.18, there are no pending or, to the Knowledge of IBM, threatened
claims for the breach of any express or implied warranty made with respect to
the Identified Products.
9.19 IBM has provided to TRITON the names and location of employment of all
employees employed in connection with the Identified Products as of the date of
this Agreement (the "Affected Employees"), including all Affected Employees on
leave for any reason, and their current annual compensation, including variable
elements such as long term incentive plans, stock option (including vesting
schedules and exercise prices); date of birth; sex; date of employment;
positions and rate of vacation accrual as of the date of this Agreement; and
accrued vacation as of the payroll date immediately preceding the date of this
Agreement.
9.20 IBM does not have any Employee Benefit Plan as that term is defined in
the Employee Retirement Income Security Act of 1974, that will result in any
liability to TRITON for such Employee Benefit Plan.
9.21 To the Knowledge of IBM, IBM is not a party to or bound by any
collective bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes relating to the Affected Employees. To the Knowledge of IBM, there is
no organizational effort presently being made by or on behalf of any labor
union with respect to the Affected Employees.
9.22 The tangible assets included within the Acquired Assets have been
maintained in accordance with IBM's normal maintenance procedures and, as a
whole, are substantially in good working order and condition, subject to normal
wear and tear. The Teradyne Catalyst tester identified in Schedule 1A is in
good working order and condition, subject to normal wear and tear, and has been
maintained in accordance with the manufacturer's warranty requirements.
9.23 The intellectual property rights included within the Deliverables and
the licenses set forth in this Agreement and the EDA Program Agreement include
all intellectual property rights owned by IBM that would be infringed by the
design, manufacture, use or sale of the Identified Products as they exist on
the Effective Date other than integrated circuit manufacturing processes.
9.24 Binding Obligation. The Investors Rights Agreement, when executed and
delivered by IBM, will constitute a valid and legally binding obligation of
IBM, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws of general
application relating to or affecting enforcement of creditors' rights and to
the availability of the remedy of specific performance.
9.25 Investment Intent. IBM is acquiring the Shares and the Common Stock
issuable on conversion of the Shares (the "Conversion Shares") for investment
for its own account, not as a nominee or agent, and not with the view to, or
for resale in connection with, any distribution thereof. IBM understands that
the Shares and the Conversion Shares have not been, and will not be, registered
under the Act by reason of a specific exemption from the registration
provisions of
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the Securities Act of 1933, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
IBM's representations.
9.26 Discussion. IBM has had an opportunity to discuss TRITON's business,
management and financial affairs with TRITON's management and has also had an
opportunity to ask questions of TRITON's officers, which questions were
answered to IBM's satisfaction.
9.27 Assets. To the Knowledge of IBM, the Acquired Assets transferred under
this Agreement include all of the material tangible assets that IBM currently
uses to carry on the operations acquired from IBM under this Agreement, other
than foundry and other services covered in separate agreements.
9.28 To the Knowledge of IBM, the software being transferred or licensed to
Triton includes the material software that IBM currently uses directly in the
development and manufacturing of the Identified Products, other than the
Unassigned Third Party Software.
9.29 To the Knowledge of IBM, the Comquest Confidential Information and
Invention Assignment Agreement or the IBM Agreement Regarding Confidential
Information, Intellectual Property, and Other Matters has been signed by all
IBM employees who developed IBM's intellectual property in the Invention
Disclosures, Acquired Software Assets, Other Acquired Software Assets, Board
Design, Deliverable Documentation, and the Masks, and IBM has provided copies
of such agreements for Triton's review.
9.30 Schedule 1H includes an accurate list of the inventory owned by IBM and
used in the operations being acquired by TRITON, as of January 31, 2000. Since
January 31, 2000, items have been added to and withdrawn from Inventory only in
the ordinary course of business.
SECTION 10 Reserved
SECTION 11 REPRESENTATIONS AND WARRANTIES OF TRITON
11.1 Organization and Standing; Certificate and Bylaws. TRITON is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. TRITON has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted. TRITON is
qualified to do business and is in good standing as a foreign corporation in
every jurisdiction in which the failure to be so qualified would have a
material adverse effect on TRITON's business as now conducted or as proposed to
be conducted.
11.2 Corporate Power; Conflict. TRITON has all requisite legal and corporate
power to execute and deliver this Agreement and the Investors Rights Agreement,
to sell and issue the Shares hereunder, to issue the Common Stock and other
securities issuable upon conversion of the Shares, and to carry out and perform
its obligations under the terms of this Agreement and
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the Investors Rights Agreement. The execution and delivery by TRITON of this
Agreement does not, and the performance by TRITON of its obligations hereunder
will not: (i) conflict with, or result in a breach of, any of the provisions of
its Amended and Restated Certificate of Incorporation or By-laws; (ii) breach,
violate or contravene any Governmental Rule, or create any right of termination
or acceleration or encumbrance, that, singly or in the aggregate, would have a
material adverse effect on its authority or ability to perform its obligations
under this Agreement; or (iii) conflict in any respect with, or result in a
breach of or default under, any contract, license, franchise, permit or any
other agreement or instrument to which it is a party or by which it or any of
its properties may be affected or bound that, singly or in the aggregate, would
have a material adverse effect on its authority or ability to perform its
obligations under this Agreement
11.3 Capitalization. As of February 28, 2000, the authorized capital stock of
TRITON consists of 66,500,000 shares of Common Stock and 43,205,000 shares of
Preferred Stock, 14,400,000 which are designated as Series A Preferred Stock,
13,200,000 of which are designated Series B Preferred Stock and 15,605,000 of
which are designated Series C Preferred Stock. Triton is currently soliciting a
consent from its' shareholders approving the increase in Triton's authorized
shares of Common and Preferred Stock by 53,500,000 and 10,000,000 shares,
respectively. Triton's audited financial statements for the year ended December
31, 1999 accurately state Triton's capitalization, including shares, options
and warrants, as of December 31, 1999.
11.4 Subsidiaries. Other than a wholly-owned subsidiary incorporated in
Nevada, TRITON has no subsidiaries or affiliated companies and does not
otherwise own or control, directly or indirectly, any equity interest in any
corporation, association or business entity. TRITON is not a participant in any
joint venture, partnership or similar arrangement.
11.5 Authorization. All corporate action on the part of TRITON, its officers,
directors and stockholders necessary for the authorization, execution, delivery
and performance by TRITON of this Agreement and the Investors Rights Agreement,
the authorization, issuance, sale and delivery of the Shares and the Common
Stock issuable on conversion of the Shares , and the performance of all of
TRITON's obligations under this Agreement and the Investors Rights Agreement
has been taken or will be taken prior to the Closing. This Agreement and the
Investors Rights Agreement, when executed and delivered by TRITON, shall
constitute valid and legally binding obligations of TRITON enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws of general application
relating to or affecting enforcement of creditors' rights and to the
availability of the remedy of specific performance. The Shares, when issued in
compliance with the provisions of this Agreement, and the Common Stock issuable
on conversion of the Shares will be validly issued, fully paid and
nonassessable, and will have the rights, preferences and privileges described
in the Restated Certificate; and the Shares and the Conversion Stock will be
free of any restrictions on transfer, liens or encumbrances, other than any
liens or encumbrances created by or imposed upon the holders; provided,
however, that the Shares and the Conversion Stock may be subject to
restrictions on transfer under applicable securities laws as set forth
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herein. The Shares are not subject to any preemptive rights or rights of first
refusal that have not been duly waived.
11.7 Title to Properties and Assets. TRITON owns its properties and assets,
and has good title to all its leasehold interests, in each case subject to no
mortgage, pledge, lien, lease (or sublease), loan, encumbrance or charge,
except (i) the lien of current taxes not yet due and payable, and (ii) possible
minor liens and encumbrances which do not in any case or in the aggregate
materially detract from the value of the property subject thereto or materially
impair TRITON's operations, and which have not arisen otherwise than in the
ordinary course of business. Substantially all of TRITON's fixed assets are
subject to equipment lease arrangements. With respect to property it leases,
TRITON is in compliance with such leases, and, holds a valid leasehold
interest, free of any liens, claims or encumbrances, subject to (i) and (ii)
above.
11.8 Patents, Trademarks. To the knowledge of TRITON, TRITON owns or
possesses all legal right, title to, and ownership of all patents, patent
applications, licenses, trademarks, service marks, trade names, inventions,
franchises, copyrights, trade secrets, information and other proprietary rights
necessary for the operation of its business as now conducted and that, after
reasonable investigation, it believes are necessary for the operation of its
business as proposed to be conducted. Triton's business, as currently
conducted, does not infringe or conflict with the non-patent rights of others
and, to Triton's knowledge, there is no infringement or conflict with the
patent rights of others. TRITON has not violated, or by conducting its business
as proposed, would not violate any of the trademarks, service marks, trade
names, copyrights, trade secrets or other proprietary rights or processes of
any other person or entity. TRITON has disclosed, as an exception to the
representations in this paragraph and paragraph 11.10, the existing dispute
over trademark rights to the TRITON trademark.
11.9 Compliance with Other Instruments, None Burdensome. TRITON is not in
violation or default of any term of (i) its Certificate of Incorporation or
Bylaws, (ii) in any material respect of any material contract, agreement,
mortgage, indebtedness, indenture or instrument of TRITON or (iii) any
judgment, decree, order or, to the best of TRITON's knowledge, after reasonable
investigation, any statute, rule or regulation applicable to TRITON.
11.10 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against TRITON that questions the validity of
this Agreement or the Investors Rights Agreement or the right of TRITON to
enter into such agreements, or to consummate the transactions contemplated
hereby or thereby, or that might result, either individually or in the
aggregate, in any material adverse change in the assets, business, properties,
prospects, or financial condition of TRITON, or in any change in the current
equity ownership of TRITON. The foregoing includes, without limitation, any
action, suit, proceeding, or investigation pending or currently threatened
involving the prior employment any of TRITON's employees, their use in
connection with TRITON's business of any information or techniques allegedly
proprietary to any of their former employees, their obligations under any
agreements with prior employers, or negotiations by TRITON with potential
backers of, or investors in, TRITON or its proposed business. TRITON is not a
party to or named in or subject to any order, writ, injunction, judgment, or
decree of any court, government agency, or instrumentality. There is no action,
suit,
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proceeding or investigation by TRITON currently pending or that TRITON
currently intends to initiate.
11.11 Tax Returns. As of the date hereof, TRITON has accurately and timely
filed or obtained extensions for all federal, state and other tax returns and
reports (federal, state and local) which are required to be filed and has paid
all taxes and assessments which have become due and payable in connection
therewith. These returns and reports are true and correct in all material
respects. None of its returns, federal, state or other, have been or are being
audited as of the date thereof. TRITON has never had any tax deficiency
proposed or assessed against it and has not executed any waiver of any statute
of limitations on the assessment or collection of any tax or governmental
charge. Since the date of the Financial Statements (as defined below), TRITON
has made adequate provisions on its books of account for all taxes,
assessments, and governmental charges with respect to its business, properties,
and operations for such period. TRITON has withheld or collected from each
payment made to each of its employees, the amount of all taxes, including but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories.
11.12 Employees. TRITON has no collective bargaining agreements with any of
its employees and there is no labor union organizing activity pending or
threatened with respect to TRITON. None of TRITON's employees belongs to any
union or collective bargaining unit. Triton does have an incentive compensation
plan for officers and certain other key employees, and has a sales commission
plan for sales personnel. Triton has an employee 401(k) plan. TRITON has
complied with all applicable state and federal equal opportunity and, to the
best of TRITON's knowledge, other laws related to employment. To TRITON's
knowledge, no employee of TRITON is or will be in violation of any judgment,
decree, or order, or any term of any employment contract, patent disclosure
agreement or other contract or agreement relating to the relationship of any
such employee with TRITON or any other party because of the nature of the
business conducted or to be conducted by TRITON or to the use by the employee
of his best efforts with respect to such business. TRITON is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with TRITON. Triton's Vice President of Operations
has resigned and will be leaving Triton in the near future. Subject to general
principles related to wrongful termination of employees, the employment of each
officer and employee of TRITON is terminable at the will of TRITON. All
employees and consultants of TRITON have entered into a standard employee
proprietary information agreement with TRITON, and TRITON is not aware that any
of such employees is in violation thereof.
11.13 Employee Benefit Plans. TRITON does not have any Employee Benefit Plan
as defined in the Employee Retirement Income Security Act of 1974.
11.14 Securities Law Exemption. Subject to the accuracy of IBM's
representations in this Agreement, the offer, sale and issuance of the Shares
and the issuance of the Conversion Stock constitute transactions exempt from
registration under the Securities Act of 1933, as amended
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(the "Act"), and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws and neither TRITON nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
11.15 Brokers or Finders. TRITON has not incurred, and will not incur, directly
or indirectly, as a result of any action taken by or on behalf of TRITON, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or the Investors Rights Agreement or
the transactions contemplated herein or therein.
11.16 Disclosure. To TRITON's knowledge, there are no facts which (individually
or in the aggregate) materially adversely affect the business, assets,
liabilities, financial condition, prospects or operations of TRITON that have
not been set forth in this Agreement, the Exhibits hereto or the Investors
Rights Agreement or in the other documents delivered to IBM or its attorneys or
agents in connection herewith.
11.17 Financial Statements. TRITON has delivered to IBM its audited financial
statements as of December 31, 1999 and the twelve months then ended (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated and with each other The
Financial Statements fairly present the financial condition and operating
results of TRITON as of the dates, and for the periods, indicated therein.
11.18 Permits. TRITON has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, and TRITON believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
TRITON is not in default under any such franchises, permits, licenses or other
similar authority.
11.19 Environmental Compliance. TRITON's business as currently conducted and as
proposed to be conducted does not violate, and will not result in any violation
of, any applicable statute, law, or regulation relating to the environment or
occupational health and safety. To its knowledge, no material expenditures are
or will be required in order to comply with such existing statute, law or
regulation.
11.20 Insurance. TRITON has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed.
11.21 Changes. Since December 31, 1999, there has not been any event or
condition of any type that has had or is expected to have a material adverse
effect on the business, properties, prospects, or financial conditions of
TRITON.
11.22 Other than compliance with the HSR Act pre-notification requirements, no
material consent, approval or authorization of, or designation, declaration or
filing with, any
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Governmental Authority on the part of TRITON is required in connection with the
execution or delivery by TRITON of this Agreement or the consummation by TRITON
of the transactions contemplated herein.
11.23 Triton represents and warrants that it is not engaged in any discussions
regarding a possible private equity financing (including convertible debt) or
acquisition or other issuance of its equity, other than the issuance of stock
options to employees in the ordinary course of business and other than the
possibility of a potential initial public stock offering. Except for the
acquisition of assets from IBM and as stated above, Triton has no current plans
to issue more of its equity prior to the Closing of this transaction. If,
however, circumstances change and, prior to the Effective Date of this
Agreement, Triton does enter into an agreement providing for an equity
financing or an acquisition in which Triton issues shares of its common stock
or securities exercisable for or convertible into common stock, or otherwise
issues such securities, and if the purchase price of such securities is less
than $12 (twelve dollars) per common stock equivalent, then Triton will, at the
Closing, issue without additional consideration from IBM an additional number
of shares to IBM equal to approximately 8.8% of the "Dilutive Shares" issued or
issuable in such event (excluding stock options to employees in the ordinary
course of business). For this purpose, "Dilutive Shares" will equal the amount
by which the total number of common stock equivalents issued or issuable in
such events exceed a number equal to the total consideration paid or payable
for such shares by the receiving parties to such events, divided by $12 (twelve
dollars); if no consideration is paid or payable then all of such common stock
equivalents will be considered to be "Dilutive Shares". In the event of a stock
split or a reverse stock split of Triton's Series C preferred stock prior to
Closing, there will be a proportional adjustment in the number of shares issued
to IBM.
SECTION 12 RESTRICTIONS ON TRANSFERABILITY OF SHARES
12.1 Restrictions on Transferability. The Shares and the Conversion Shares
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 12, which conditions are intended to ensure
compliance with the provisions of the Securities Act of 1933.
12.2 Restrictive Legend. Each certificate representing (i) the Shares, (ii) the
Conversion Shares and (iii) any other securities issued in respect of the
Shares or the Conversion Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event (hereinafter
collectively referred to as the "Restricted Securities"), shall (unless
otherwise permitted by the provisions of Section 12.3 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED
UNDER THE LAWS OF ANY STATE. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR SUCH
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QUALIFICATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR
RULE OR UNLESS TRITON RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES
AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
IBM and each subsequent transferee (hereinafter collectively referred to as a
"Holder") consents to TRITON making a notation on its records and giving
instructions to any transfer agent of the Shares or the Conversion Shares in
order to implement the restrictions on transfer established in this Section 12.
12.3 Notice of Proposed Transfers. Each Holder of a certificate representing
Restricted Securities by acceptance thereof agrees to comply in all respects
with the provisions of this Section 12.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities by a
Holder to any of its partners, or retired partners, or to the estate of any of
its partners or retired partners, (iii) a transfer to an affiliated fund,
partnership or TRITON, subject to compliance with applicable securities laws or
(iv) transfers in compliance with Rule 144, so long as TRITON is furnished with
reasonably satisfactory evidence of compliance with such Rule), unless there is
in effect a registration statement under the Act covering the proposed
transfer, the Holder thereof shall give written notice to TRITON of such
Holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at the reasonable request of TRITON at such Holder's expense by
either (i) an opinion of counsel (who shall, and whose opinion shall be,
addressed to TRITON and reasonably satisfactory to TRITON) to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Act or (ii) a "no action" letter from the Securities and
Exchange Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the Holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by such Holder to TRITON.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear, except if such transfer is made pursuant to Rule 144, the
appropriate restrictive legend set forth in Section 12.2 above, except that
such certificate shall not bear such restrictive legend if in the opinion of
counsel for such Holder and in the opinion of counsel for TRITON such legend is
not required in order to establish compliance with any provision of the Act.
12.4 Removal of Restrictions on Transfer of Securities. Any legend referred to
in Section 12.2 hereof stamped on a certificate evidencing (i) the Shares, (ii)
the Conversion Shares or (iii) any other securities issued in respect of the
Shares or the Conversion Shares upon any stock split,
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stock dividend, recapitalization, merger, consolidation or similar event and
the stock transfer instructions and record notations with respect to such
security shall be removed and TRITON shall issue a certificate without such
legend to the Holder of such security if such security is registered under the
Act, or if such Holder provides TRITON with an opinion of counsel (which may be
counsel for TRITON) reasonably satisfactory to TRITON to the effect that a
public sale or transfer of such security may be made without registration under
the Act or such Holder provides TRITON with reasonable assurances, which may,
at the option of TRITON, include an opinion of counsel (which may be counsel
for TRITON) reasonably satisfactory to TRITON, that such security can be sold
pursuant to Rule 144(k) (or any successor provision) under the Act.
SECTION 13 CONSENTS AND SUBROGATED WORK
TRITON and IBM shall use reasonable efforts to obtain, between the date of
signing of this Agreement and the Effective Date, all requisite consents to
assignments of all of the Assumed Liabilities. For any Assumed Liabilities for
which IBM has any secondary liability to third parties, TRITON shall provide
IBM reasonable access and information in order for IBM to ascertain continuing
compliance by TRITON with all such contract terms and conditions. If any such
required consents cannot be secured without the incurring of any significant
additional costs, where additional action is deemed necessary by either Party,
the Parties agree to enter into such other arrangements with respect to the
underlying rights and obligations as shall permit TRITON to perform the
obligations of IBM thereunder, as a subcontractor or otherwise, and TRITON to
obtain the benefit thereof (the "Subrogated Work"); and until the requisite
consents are obtained, such obligations will not be deemed to be included in
the Assumed Liabilities and nothing contained herein will be deemed to create
an obligation or relationship that would constitute a breach of the contract
underlying such rights and obligations. TRITON agrees to diligently perform and
discharge the obligations of IBM in connection with the Subrogated Work
directly, or indirectly through IBM, as applicable; and to the extent that
consents to assignment are obtained after the Effective Date, the Parties agree
that such obligations will no longer be considered to be Subrogated Work at
such time, but will instead be deemed to be Assumed Liabilities for all
purposes of this Agreement.
SECTION 14. CONDITIONS TO EFFECTIVENESS OF SALE AND LICENSES; POST CLOSING
COVENANTS
14.1 The respective obligation of each Party to consummate the transactions
contemplated hereby shall be subject to the fulfillment on or prior to the
Effective Date of the following conditions:
(a) all applicable HSR Act waiting periods shall have expired or been
terminated or appropriate approval granted;
(b) all other consents or approvals, orders, licenses, permits and
authorizations of, and registrations, declarations and filings with, any
Governmental Authority, if any, that are required
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by applicable law to be obtained by the parties prior to consummation of the
transactions contemplated hereby shall have been obtained and be in full force
and effect; and
(c) neither of the parties hereto shall be subject to any order or
injunction of a Governmental Authority which prohibits the consummation of the
transactions contemplated by this Agreement.
14.2 The obligations of IBM to consummate the transactions contemplated hereby
shall be subject to the fulfillment on or prior to the Effective Date of the
following additional conditions:
(a) the payment by TRITON of the consideration referred to in Section
4.1;
(b) TRITON shall have performed in all material respects its agreements
and covenants contained in this Agreement required to be performed on or prior
to the Effective Date; and
(c) the representations and warranties of TRITON contained in this
Agreement shall be true and correct in all material respects as of the date
made and (unless made as of specified date) as of the Effective Date.
(d) the consents set forth on Schedule 14.3(c) shall have been
obtained;
14.3 The obligations of TRITON to consummate the transactions contemplated
hereby shall be subject to the fulfillment on or prior to the Effective Date of
the following additional conditions:
(a) IBM shall have performed in all material respects its agreements
and covenants contained in this Agreement required to be performed on or prior
to the Effective Date;
(b) the representations and warranties of IBM contained in this
Agreement shall be true and correct in all material respects as of the date
made and (unless made as of specified date) as of the Effective Date; and
(c) the consents set forth on Schedule 14.3(c) shall have been
obtained;
14.4 The required number of the Identified Employees, as set forth on Schedule
1D, shall have continued to be IBM employees and shall have accepted Triton's
offer of employment made pursuant to Section 7, and eighty percent (80%) of the
Affected Employees shall have continued to be IBM employees and shall have
accepted Triton's offer of employment made pursuant to Section 7.
14.5 During the period between signing of the Agreement and the Effective
Date, (i) IBM will not, and will not cause or permit any director or officer
to, engage in any practice, take any action, or enter into any transaction with
respect to the Acquired Assets that is outside the Ordinary Course of Business,
(ii) IBM will make commercially reasonable efforts to preserve intact the base
of Affected Employees and the Acquired Assets, and (iii) IBM will continue
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performing the Acquired Contracts and, including the building of products and
the replenishing of inventory in the ordinary course of business for such
Acquired Contracts.
14.6 IBM agrees to execute documents, render such assistance, and take such
other actions as TRITON may reasonably request, to assist TRITON to apply for,
register, perfect, confirm and protect TRITON's rights in the intellectual
property rights acquired by TRITON under this Agreement.
14.7 During the period extending for two (2) years from the date of this
Agreement, neither party shall solicit for employment purposes those employees
of the other Party who have been associated with the discussions relating to
this Agreement or the Affected Employees. This Agreement does not in any manner
restrict general solicitations for employment or hiring as a result thereof,
nor the right of any employee of either Party on his or her own initiative or
in response to general solicitations to seek employment from the other Party.
SECTION 15. LIMITATION OF LIABILITY
15.1 IBM shall not be liable for any amounts with respect to the breach of a
representation or warranty hereunder unless and until such amounts shall exceed
in the aggregate one hundred thousand dollars ($100,000) (the "Limitation
Amount") (in which case IBM shall only be liable with respect to the excess
over the Limitation Amount). There shall be no IBM liability with respect to
any such matter for individual amounts of less than seven thousand five hundred
dollars ($7,500) and such amounts shall not be taken into account in
determining whether the Limitation Amount has been exceeded. In no event shall
IBM's liability with respect to the breach of representations, warranties and
covenants hereunder exceed ten million ($10,000,000) dollars in the aggregate.
Neither IBM nor TRITON shall be responsible for any indirect, incidental,
punitive, special or consequential damages whatsoever, including loss of
profits or goodwill, even if advised of the possibility of such damages.
Notwithstanding the foregoing, nothing shall limit IBM's liability for breaches
of Section 5 hereof.
15.2 Indemnification. (a) IBM shall indemnify and hold TRITON harmless from and
against all losses, liabilities, claims and damages (including reasonable
attorney's fees) (collectively "Damages") resulting from the ownership or
conduct prior to the Closing of the Acquired Assets or the operations being
acquired by Triton, including warranty obligations for products shipped prior
to the Closing, but excluding the Assumed Liabilities.
(b) Triton shall indemnify and hold IBM harmless from and against all
Damages resulting from (i) the ownership or conduct after the Closing of the
Acquired Assets or the operations being acquired by Triton or (ii) the Assumed
Liabilities.
(c) In the event of a third party claim, the party seeking
indemnification under this Section (the "Indemnitee") shall give prompt written
notice to the party from whom indemnification is sought (the "Indemnitor") but
no later than thirty days after service of process in the event of litigation
or sixty days after written assertion of a claim is received by the Indemnitee.
The Indemnitor shall (with, if necessary, reservation of rights) defend such
action or proceeding at its
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own expense with counsel of its choosing. The Indemnitor shall keep the
Indemnitee fully appraised at all times of the status of the defense, shall
consult with the Indemnitee prior to settlement of any indemnified matter, and
shall not, without the Indemnitee's consent, which shall not be unreasonably
withheld, enter any settlement of the indemnified matter that does not include
a full release of the Indemnitee.
SECTION 16. COMMUNICATIONS
16.1 Notices and other communications shall be sent by receipted facsimile or
by registered or certified mail to the following addresses and shall be
effective (i) on the third day after mailing, by United States mail, first
class, postage prepaid, by certified or registered mail, return receipt
requested, addressed in each case as follows (or to such other address as may
be specified by like notice) or (ii) if and when received by facsimile at the
phone number listed below (or to such other phone number as may be specified by
like notice):
<TABLE>
<S> <C>
For IBM: For TRITON:
Director of Licensing Senior VP and CFO
IBM Corporation Triton Network Systems, Inc.
North Castle Drive 8529 South Park Circle
Armonk, New York 10504-1785 Orlando, FL 32819
Facsimile: (914) 765-1785 Facsimile: (407) 903-0994
</TABLE>
16.2 All correspondence shall reference the Agreement Reference No. set forth
above.
SECTION 17. GENERAL PROVISIONS
17.1 All representations, warranties or covenants made by the Parties in this
Agreement or in any schedule, document, certificate or other instrument
delivered by or on behalf of the Parties pursuant to this Agreement shall
survive for a period of twelve (12) months following the Effective Date, other
than Section 9.6, which shall survive for a period of twenty four months (24),
and other than Section 9.23, which shall survive as long as the intellectual
property rights referred in Section 9.23 remain enforceable.
17.2 Neither Party will provide to the other Party any confidential
information of any third party unless authorized by the third party.
17.3 Nothing in this Agreement shall be construed as conferring any right to
use in advertising, publicity or promotional or other external activities any
name, trade name, trademark or other designation of either Party hereto
(including any contraction, abbreviation or simulation of any of the
foregoing).
17.4 TRITON and IBM agree to issue the press release attached as Schedule
17.4 as soon as practicable after execution of the this Agreement announcing
this transaction. No other public announcement, press releases or similar
publicity or advertising of any nature relating to this
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<PAGE> 33
Agreement or the transactions hereunder shall be issued by either Party without
the prior written consent of both Parties, except as required by law such as
any filings required by the Securities and Exchange Commission, provided that
the other Party is provided with prior notice of and a right to object to the
content of such public announcement, press release or similar publicity or
advertising.
17.5 Nothing in this Agreement shall be construed to limit the right of
either Party, alone or with others, to design, develop, make, procure, market,
maintain or otherwise deal in products or services, now or in the future, which
may constitute competitive alternatives to the technology and products
contemplated by this Agreement.
17.6 Each Party is an independent contractor. Neither Party is, nor shall
claim to be, a legal representative, partner, franchisee, joint venturer, agent
or employee of the other. Neither Party will assume or create obligations for
the other. Each Party is responsible for the direction and compensation of its
employees.
17.7 This Agreement shall in all respects be governed by and construed
exclusively in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State without regard
to any conflict of laws principles of such State. The United Nations'
Convention on International Sale of Goods shall not apply to this Agreement.
17.8 Each Party waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement.
17.9 Each Party hereby irrevocably and unconditionally, in any action, suit,
or proceeding:
(a) submits, for itself and its property, to the exclusive jurisdiction
of any Delaware State court sitting in the State of Delaware or any
federal court of the United States of America sitting in the State of
Delaware and any appellate court from any such court, in any suit,
action or proceeding arising out of or relating to this Agreement, or
for recognition or enforcement of any judgment, and each Party hereby
irrevocably and unconditionally agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in such
Delaware State court or, to the extent permitted by law, in such federal
court.
(b) waives, to the fullest extent it may legally and effectively do so,
any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this
Agreement in any Delaware court sitting in the State of Delaware or any
federal court sitting in the State of Delaware.
(c) waives, to the fullest extent permitted by law, the defense of any
inconvenient forum to the maintenance of such suit, action or proceeding
in any such court and further waives
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<PAGE> 34
the right to object, with respect to such suit, action or proceeding,
that such court does not have jurisdiction over such Party.
(d) consents to service of process in the manner provided for the giving
of notices pursuant to this Agreement. Nothing in this Agreement shall
affect the right of any Party to this Agreement to serve process in any
other manner permitted by law.
17.10 Neither Party will bring a legal action relating to the subject matter
of this Agreement more than two (2) years after the cause of action
arose.
17.11 Any failure or delay on the part of either Party in the exercise of any
right or privilege hereunder shall not operate as a waiver thereof, nor
shall any single or partial exercise of any such right or privilege
preclude other or further exercise thereof or of any other right or
privilege. All waivers and consents, if any, given hereunder shall be in
writing.
17.12 Except as expressly provided herein, neither Party shall assign this
Agreement nor any of its rights, interests, privileges, licenses or
obligations hereunder without the other Party's prior written
permission. TRITON may assign this Agreement to a successor in interest
to its Broadband Products modem business subject to the limitations set
forth in Section 8.10. Any act in derogation of the foregoing shall be
null and void.
17.13 The headings of Sections in this Agreement are inserted for convenience
of reference only and are not intended to be a part of, or to affect the
meaning or interpretation of, this Agreement.
17.14 In the event that any provision of this Agreement is found to be
invalid, voidable or unenforceable by any court of law with competent
jurisdiction, the Parties agree that unless it materially affects the
entire intent and purpose of this Agreement, such invalidity,
voidability or unenforceability shall not affect either the validity of
this Agreement or the remaining provisions herein, and the provision in
question shall be deemed to be replaced with a valid and enforceable
provision most closely reflecting the intent and purpose of the original
provision.
17.15 This Agreement shall not be binding upon the Parties until it has been
signed hereinbelow by an authorized representative of each Party, in
which event it shall be effective according to its terms. No amendment
or modification of this Agreement shall be valid or binding upon the
Parties unless made in writing and signed by an authorized
representative of each Party.
17.16 Each Party shall, at its own expense, comply with any Governmental Rule
relating to its duties, obligations and performance under this Agreement
and shall procure all licenses and pay all fees and other charges
required thereby. Each Party agrees to comply with all applicable
federal, state and local laws, regulations and ordinances, including the
Regulations of the U.S. Department of Commerce or the U.S. State
Department in respect of the export of technical data and commodities.
TRITON hereby gives written assurance that, unless authorized by
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<PAGE> 35
appropriate U.S. Government license or regulations, neither software nor
technical data provided by IBM under this Agreement, nor the direct
product thereof, shall be exported, directly or indirectly, to
prohibited countries or nationals thereof. TRITON agrees that it is
responsible for obtaining required government documents and approvals
prior to export of any commodity, machine, software or technical data.
17.17 TRITON and IBM hereby waive compliance with any applicable bulk sales or
similar laws in the United States or other jurisdictions.
17.18 As promptly as practicable after the execution of this Agreement, each
party shall, in cooperation with the other, file any reports or
notifications that may be required to be filed by it regarding this
transaction under applicable law. IBM and TRITON will cooperate to
obtain any consents or approvals or assist in any filings required in
connection with the transactions contemplated hereby and that have not
been previously obtained or made.
17.19 This Agreement may be signed in one or more counterparts, each of which
will be considered an original, but all of which together form one and
the same instrument. Once signed, both Parties agree any reproduction of
this Agreement made by reliable means (for example, photocopy or
facsimile) shall be considered an original unless prohibited by law.
17.20 Neither Party relies on any promises, inducements or representations
made by the other or expectations of more business dealings in addition
to this transaction. This Agreement accurately expresses the business
agreement of the Parties.
17.21 TRITON and IBM shall pay their own respective expenses, including the
fees and disbursements of their respective counsel in connection with
the negotiation, preparation and execution of this Agreement and the
consummation of the transactions contemplated herein.
This Agreement, including its Schedules and Exhibits, embodies the
entire understanding of the Parties with respect to the subject matter
hereof and merges all prior oral or written understandings, discussions
or communications between them.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective authorized representatives.
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<PAGE> 36
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS MACHINES TRITON NETWORK SYSTEMS, INC.
CORPORATION
BY: BY:
------------------------------- --------------------------
NAME: NAME:
------------------------------- --------------------------
TITLE: TITLE:
------------------------------- --------------------------
36
<PAGE> 1
EXHIBIT 10.8
TRITON NETWORK SYSTEMS, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of this ____ day
of ____________, 2000 by and between Triton Network Systems, Inc., a Delaware
corporation (the "Company"), and ____________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty
in obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals such as Indemnitee to serve as officers and
directors of the Company and to indemnify its officers and directors so as to
provide them with the maximum protection permitted by law.
NOW THEREFORE, in consideration for Indemnitee's services as an officer
or director of the Company, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or any alternative
dispute resolution mechanism, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of
the Company, or any subsidiary of the Company, by reason of any action or
inaction on the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld) actually and reasonably incurred by Indemnitee in connection with such
action, suit or proceeding if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any
<PAGE> 2
criminal action or proceeding, had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(b) Proceedings By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and, to the fullest extent permitted by law, amounts
paid in settlement actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1, or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.
2. Agreement to Serve. In consideration of the protection afforded by
this Agreement, if Indemnitee is a director of the Company, he or she agrees to
serve at least for the six months after the effective date of this Agreement as
a director and not to resign voluntarily during such period without the written
consent of a majority of the Board of Directors. If Indemnitee is an officer of
the Company not serving under an employment contract, he or she agrees to serve
in such capacity at least for the balance of the current fiscal year of the
Company and not to resign voluntarily during such period without the written
consent of a majority of the Board of Directors. Following the applicable period
set forth above, Indemnitee agrees to continue to serve in such capacity at the
will of the Company (or under separate agreement, if such agreement exists) so
long as he or she is duly appointed or elected and qualified in accordance with
the applicable provisions of the Bylaws of the Company or any subsidiary of the
Company or until such time as he or she tenders his or her resignation in
writing. Nothing contained in this Agreement is intended to create in Indemnitee
any right to continued employment.
3. Expenses; Indemnification Procedure.
2
<PAGE> 3
(a) Advancement of Expenses. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any
such action, suit or proceeding). Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee within thirty (30) days following delivery of a written
request therefor by Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in writing as soon as practicable of any claim made
against Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the President of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three business days after the date postmarked if sent
by domestic certified or registered mail, properly addressed; or five business
days if sent by airmail to a country outside of North America; otherwise notice
shall be deemed received when such notice shall actually be received by the
Company. In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.
(c) Procedure. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws, providing for indemnification, is not paid in full by
the Company within thirty (30) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter, bring an action against the Company to recover the unpaid
amount of the claim and, subject to Section 13 of this Agreement, Indemnitee
shall also be entitled to be paid for the expenses (including attorneys' fees)
of bringing such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
action, suit or proceeding in advance of its final disposition) that Indemnitee
has not met the standards of conduct which make it permissible under applicable
law for the Company to indemnify Indemnitee for the amount claimed. However,
Indemnitee shall be entitled to receive interim payments of expenses pursuant to
Subsection 3(a) unless and until such defense may be finally adjudicated by
court order or judgment from which no further right of appeal exists. It is the
parties' intention that if the Company contests Indemnitee's right to
indemnification, the question of Indemnitee's right to indemnification shall be
for the court to decide, and neither the failure of the Company (including its
Board of Directors, any committee or subgroup of the Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Company (including it Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such
3
<PAGE> 4
applicable standard of conduct, shall create a presumption that Indemnitee has
or has not met the applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice
of a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated under Section 3(a) hereof to advance the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election to request that the
Company advance expenses to Indemnitee. After delivery of such notice, approval
of such counsel by Indemnitee and the retention of such counsel by the Company,
the Company shall not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that (i) Indemnitee shall have the right to employ his or
her own counsel in any such proceeding at Indemnitee's expense; and (ii) if (A)
the employment of counsel by Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
material conflict of interest between the Company and Indemnitee in the conduct
of any such defense, or (C) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, ipso facto, within
the purview of Indemnitee's rights and Company's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested Directors, the General Corporation Law of
the State of Delaware, or otherwise, both as to action in
4
<PAGE> 5
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though he or she may have ceased to serve in such
capacity at the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him or her in the investigation, defense, appeal or settlement of
any civil or criminal action, suit or proceeding, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such expenses, judgments, fines or penalties to which Indemnitee
is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
7. Officer and Director Liability Insurance. The Company shall, from
time to time, make a good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or the most favorably insured of the Company's
officers, if Indemnitee is not a director of the Company but is an officer.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain such insurance if the Company determines in good faith that such
insurance is not reasonably available, if the premium costs for such insurance
are disproportionate to the amount of coverage provided, if the coverage
provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company.
8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated,
5
<PAGE> 6
and the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit; or
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company, its
parent or any of its subsidiaries; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger with the Company, which constituent corporation, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; and references to "serving at
the request of the Company" shall include any
6
<PAGE> 7
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. Notice. Except as provided in Section 3(b), all notices, requests,
demands and other communications under this Agreement shall be in writing and
shall be deemed duly given (i) if delivered by hand and receipted for by the
party addressee on the date of such receipt, or (ii) if mailed by domestic
certified or registered mail with postage prepaid, on the third business day
after the date postmarked. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.
16. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Delaware, as
applied to contracts between Delaware residents entered into and to be performed
entirely within Delaware without regard to the conflict of law principles
thereof.
7
<PAGE> 8
17. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
18. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver.
20. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Triton Network Systems, Inc.
a Delaware Corporation
By:
----------------------------
----------------------------
President
9
<PAGE> 10
AGREED TO AND ACCEPTED:
INDEMNITEE:
----------------------------------------
----------------------------------------
(signature)
Address:
----------------------------------------
----------------------------------------
10
<PAGE> 1
Exhibit 10.9
TRITON NETWORK SYSTEMS, INC.
SUPPLY AGREEMENT
This Supply Agreement (the "Agreement") is made as of
December 7, 1999 (the "Effective Date")
between Triton Network Systems, Inc. ("Seller", also referred to as "Triton"),
a Delaware corporation with principal place of business at:
8529 South Park Circle
Orlando, FL; USA 32819
and
CenturyTel Supply Group, Inc. ("Buyer")
a Louisiana corporation with principal place of business at:
100 Century Park Drive
Monroe, LA 71203
In consideration of the mutual covenants contained herein, the Parties agree as
follows:
Page 1 of 37
<PAGE> 2
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
1.01 "AFFILIATE" means any entity listed in Exhibit 1 or any entity which is
a parent or subsidiary of a Party or which is controlled by or under
common ownership or control of a Party.
1.02 "AGREEMENT" means this Supply Agreement, and the Exhibits attached
hereto, as they may be amended from time to time.
1.03 "ACCEPTANCE" means with respect to deliveries of the Equipment to
Buyer, that the shipment has been inspected by Buyer, the paperwork,
including packing list, accurately matches the shipment and the
shipment matches the Buyer's Purchase Order or other written delivery
instructions. Acceptance shall be deemed to have occurred within 10
days of Seller's delivery hereunder.
1.04 "ANNUAL SUPPORT FEE" shall mean the fees for annual software support
by Seller as reflect in Exhibit 2.
1.05 "APPLICATIONS" means any Software program, Product, or invention
developed by Buyer.
1.06 "BACKWARDS COMPATIBLE" means (i) with respect to Software, the ability
of newer or more advanced versions to function seamlessly with older or
less advanced version of Software and Products, including without
limitation, all existing Software and Products purchased by Buyer and
(ii) with respect to Equipment the interoperability and compatibility
of such Equipment with existing Products purchased by Buyer and Buyer's
Network infrastructure, in each case resulting in no reduction in the
existing level of functionality of the existing Products or Buyer's
Network infrastructure. Software and Equipment shall be compatible with
the current Software Release and at least two (2) immediately preceding
Major Software Releases.
1.07 "CHANGE ORDER" shall have the meaning set forth in Section 5.03(d).
1.08 "CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section 10.01.
1.09 "DELIVERY DATE" means the date on which Products ordered by Buyer are
to be delivered to the location(s) specified in Purchase Orders (such
date shall be subject to Seller's Standard Intervals).
1.10 "DOCUMENTATION" means the system standard documentation provided to
Buyer, in written or electronic form, as described in this Agreement.
All Documentation shall be subject to applicable copyright and
confidentiality restrictions.
1.11 "EFFECTIVE DATE" shall mean December 7, 1999.
1.12 "EQUIPMENT" means the hardware Products provided to Buyer as defined in
this Agreement. In addition to hardware developed by Seller, Equipment
generally includes Third Party Equipment, except as otherwise provided
in this Agreement.
1.13 "IFU" refers to Seller's Invisible Fiber(TM) unit.
1.14 "INITIAL PURCHASE CANCELLATION FEE" has the meaning set forth in
Section 4.05.
1.15 "LATE DELIVERY" has the meaning set forth in Section 5.04.
1.16 "LIST PRICE" means the Seller's standard price before any discount, as
maybe available in price lists from time to time.
1.17 "MAJOR SOFTWARE RELEASE" means a Software Release which contains
significantly new features
Page 2 of 37
<PAGE> 3
and functionality and does not include maintenance releases, updates or
bug fixes.
1.18 "MINIMUM PURCHASE CANCELLATION FEE" has the meaning set forth in
Section 4.04.
1.19 "NET PRICE" means the price the Buyer will pay after Seller's discount.
1.20 "PARTY" means either Buyer or Seller.
1.21 "PRODUCT" means, individually and collectively, the Equipment,
Software, and Documentation specified in Exhibit 2. In addition, any
item Seller adds to its generally available standard Product price list
or so identifies to Buyer in a Quotation shall be deemed incorporated
into this Agreement upon the mutual agreement of the Buyer and Seller,
subject to additional terms and conditions specified in the applicable
Product Exhibit, if any.
1.22 "PURCHASE ORDER" means a written, numerically controlled and dated
purchase authorization document issued by Buyer or Buyer Affiliate to
Seller or Seller Affiliate, specifying the types and quantities of
Products to be furnished by Seller.
1.23 "QUOTATION" means a written budgetary or firm price quotation, as
specified in this Agreement, issued by Seller to Buyer for the supply
of any Products pursuant to this Agreement.
1.24 "SHIP DATE" means the date on which a Product ordered by Buyer is to be
shipped as agreed to by the Parties, or in the case of Software, the
date upon which such Software is either available for download by Buyer
or physically shipped to Buyer.
1.25 "SOFTWARE" means the Seller's proprietary and/or Third Party Software
computer programs provided to Buyer (consisting of firmware and logic
instructions in machine readable code residing in, or intended to be
loaded in computer memories which provide basic logic, operating
instructions and Seller-related application instructions, but excluding
customer data) as well as the Documentation used to describe, maintain
and use the programs. Any reference herein to Software being "sold,"
"Purchased" or the like is understood to be a reference in fact to the
program being licensed.
1.26 "SOFTWARE LICENSE" shall mean the license to use Software granted to
Buyer by Seller pursuant to this Agreement.
1.27 "SOFTWARE LICENSE FEE" shall mean the fee to be paid by Buyer to
Seller for the right to use the Software pursuant to this Agreement.
1.28 "SOFTWARE RELEASE" means revisions to Software or new Software
containing new features, and/or enhancements, and/or certain problem
fixes that may be supplied by Seller to Buyer from time to time.
1.29 "STANDARD INTERVAL" means the standard time prior to the shipment of a
Product following acceptance of a Purchase Order by Seller. Seller's
Standard Interval is ninety (90) days for forecasted quantities.
1.30 "TAC" means Seller's Technical Assistance Center.
1.31 "TERM" means the duration of this Agreement.
1.32 "THIRD PARTY" means any individual or legal entity not including Buyer
and Seller and their respective Affiliates.
1.33 "THIRD PARTY EQUIPMENT" means any Equipment not of Seller's
manufacture. In addition, any Equipment Seller adds to its generally
available standard Third Party Equipment price list or so identifies to
Buyer in a
Page 3 of 37
<PAGE> 4
Quotation shall be subject to the terms and conditions of this
Agreement and any mutually acceptable additional terms and conditions
specified in writing. Seller may also recommend Third Party Equipment
that is not included in the Exhibits or provided by the Seller. Any
Third Party Equipment recommended by but not sold by the Seller is
not covered under the terms and conditions set forth in this
Agreement.
1.34 "THIRD PARTY SOFTWARE" means any Software not owned by Seller which is
included within Licensed Software.
ARTICLE 2. SCOPE OF AGREEMENT
2.01 This Agreement sets forth the terms and conditions under which Buyer
and its Affiliates may order Products from Seller and its Affiliates
and Seller and its Affiliates will supply Products to Buyer and its
Affiliates. Unless otherwise set forth herein, any reference in this
Agreement to Seller or Buyer shall be deemed to include their
respective Affiliates. Buyer may use the Products itself, or may use
the Products to provide services to others, or sell the Products
subject to the terms and conditions of this Agreement.
2.02 Unless specifically stated otherwise, all references to money or
currency shall be in U.S. dollars and all documentation,
correspondence, and communication shall be in the English language.
2.03 Seller shall meet all Buyer supply requirements set forth in Purchase
Orders in a timely manner irrespective of Purchase Orders for Equipment
from other parties; provided, however, such Buyer requirements are
reasonably consistent with Forecasts submitted by Buyer to Seller in
the manner set forth herein.
ARTICLE 3. TERM
3.01 The term of this Agreement is three (3) years from the Effective Date.
Buyer, if it fails to take delivery of a minimum of [*] or 1,000 units
during the term of this Agreement, may extend this Agreement for a
subsequent one (1) year term in order to take delivery of the minimum
Purchase commitment, by providing Seller with written notice of such
extension at least ninety (90) days prior to the end of the then
current Term.
ARTICLE 4. PURCHASE RIGHTS AND COMMITMENTS
4.01 Subject to the terms and conditions of this Agreement Seller agrees to
sell and Buyer agrees to buy Products in accordance with the pricing
and benefits set forth in Exhibit 2 of this Agreement.
4.02 Buyer agrees to place Purchase Orders for IFU's an amount totaling
[*] or 1,000 IFUs (the "Minimum Purchase Commitment") to be delivered
by December 31, 2002. In addition to the "Minimum Purchase
Commitment", Buyer also commits to an "Initial Purchase Commitment"
for an amount totaling [*] or 500 IFUs for delivery by December 31,
2000. In consideration for the Buyers Initial Purchase Commitment for
the amount of [*] or 500 IFUs for delivery by December 31, 2000,
Seller will provide an additional [*] discount ([*] per IFU) for the
first 500 IFUs. Buyer will issue confirming Purchase Orders with
specific delivery information such as Ship Date and location. The
remaining amounts of the Minimum Purchase Commitment are to be
delivered by December 31, 2002 pursuant to Purchase Orders issued by
Buyer.
[*] Confidential Treatment Requested
Page 4 of 37
<PAGE> 5
4.03 Purchases of IFUs by Affiliates of Buyer count towards Buyer's Minimum
and Initial Purchase Commitments. Buyer may, without any further
liability to Seller, cancel its Minimum and Initial Purchase Commitment
upon the occurrence of any of the following events, in which case Buyer
has no obligations to pay any Initial Purchase Cancellation Fee or
otherwise:
(a) Seller materially breaches this Agreement and such breach
recurs, continues or remains uncured after thirty (30) days
written notice.
(b) Seller files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is
not dismissed within forty-five (45) days of such involuntary
filing; Seller admits the material allegations of any petition
in bankruptcy filed against it; Seller is adjudged bankrupt;
Seller makes a general assignment for the benefit of its
creditors; if a receiver is appointed for all or a
substantial portion of its assets and is not discharged within
sixty (60) days after his appointment; or Seller commences any
proceeding for relief from its creditors in any court under
any state insolvency statutes;
(c) Seller fails to deliver to Buyer the quantity of Products
conforming with Product Specifications for which Buyer has
placed Purchase Orders;
(d) Buyer is enjoined from using any Products and Seller is unable
to cure the effects of such injunction pursuant to 9.02(a) or
(b) within thirty (30) days.
4.04 If during the term of this agreement or any extensions described in
Article 3.01, The Buyer does not take delivery totaling [*] or 1,000
IFUs, Buyer will pay to Seller a penalty (the "Minimum Purchase
Cancellation Fee") equal to [*] of the purchase price of the
undelivered IFUs (e.g., 1,000 IFUs minus the number of IFUs delivered,
multiplied by the applicable purchase price, multiplied by [*]).
4.05 If buyer does not take delivery totaling [*] or 500 IFU Initial
Purchase Commitment by December 31, 2000, Buyer will pay seller a
penalty (the Initial Purchase cancellation fee) equal to the [*]
discount offered in consideration for the Initial Purchase Commitment
for each IFU delivered through December 31, 2000.
ARTICLE 5. TERMS OF PURCHASE
5.01 PRICING
(a) The pricing of the Products shall be as specified in the
attached Exhibit 2 plus applicable taxes unless otherwise
agreed to between the Parties in writing or in the case of
regulatory change as specified in this section 5.01 (a). The
prices set forth in the attached Exhibit 2 for
Seller-manufactured Equipment are based on Seller's design,
manufacture, and delivery pursuant to its design criteria and
manufacturing processes and procedures in effect on the
Effective Date. If, solely as a result of the imposition of
requirements by any Federal, State or local government during
the Term, there is a change in such criteria, processes or
procedures or any material change in the Equipment caused by
such governmental requirements, the prices may be adjusted by
Seller. Any OEM Equipment or other Third Party Equipment which
have been so identified in the attached Exhibit 2 shall be
furnished subject to the applicable vendor's then-current
terms, conditions and specifications subject to Buyer's
written acceptance of such terms, conditions and
[*] Confidential Treatment Requested
Page 5 of 37
<PAGE> 6
specifications.
(b) All prices listed in the Exhibit 2 and in any and all
Quotations, unless otherwise noted, are FOB Seller and are
exclusive of all freight, insurance, duties, taxes (more
specifically including but not limited to excise, sales, value
added, goods & services, and usage taxes), and any and all
other levies as might be incurred after the FOB point.
5.02 PAYMENT
(a) Equipment, Documentation and Software License Fee Payment -
Payment for Equipment, Documentation and Software License Fee
shall be due within thirty (30) days following shipment by
Seller.
(b) Annual Support Fees - Payment for Annual Support Fees shall be
due within thirty (30) days of receipt of Seller's invoice.
(c) Timely Payment - Past due amounts shall bear interest from the
expiration of such period at the rate of one and one-half
percent (1-1/2%) per month (or such lesser rate as may be
the maximum permissible rate under applicable law).
(d) Security Interest - Until the total amount due for Products
under each Purchase Order is paid in full, Seller may retain a
security interest in the Products delivered to Buyer pursuant
to such Purchase Order. Buyer agrees to promptly execute
reasonable, mutually acceptable documents which are necessary
for Seller to perfect and protect such security interest. In
addition, prior to payment in full of the total amount due
under each Purchase Order, Buyer agrees that it shall not,
without the prior written consent of Seller,
(i) sell or lease the Products (or license the Software)
subject to such Purchase Order; or
(ii) allow any liens or encumbrances to attach to the
Products subject to such Purchaser Order.
(e) Release of Security Interest - Upon payment of the amounts due
for any Product, Seller shall immediately release its security
interest in such Products and promptly file all documents
required to relieve such security interest.
(f) Taxes - Buyers price for Products as reflected in this
Agreement does not include any taxes, duties or charges of any
kind imposed by any federal, state or local governmental
entity, excluding only those taxes based solely on Seller's
net income. When Seller has the legal obligation to collect
such taxes, the appropriate amount shall be added to Buyees
invoice and shall be paid by Buyer unless Buyer provides
Seller with a valid tax exemption certificate authorized by
the appropriate taxing authority.
5.03 PURCHASE ORDERS
(a) During a quarter, Buyer will submit firm Purchase Orders to
purchase Products and Seller will deliver Products in
accordance with such Purchase Orders
(b) Products to be procured hereunder, as well as the Delivery
Date, shall be listed in a Purchase Order issued by Buyer
pursuant to this Agreement. Each Purchase Order shall
specifically reference this Agreement, and time is of the
essence in connection with the performance of each Purchase
Order. Any Purchase Order issued by Buyer to Seller for
Products shall be governed in all respects by the terms and
conditions of this Agreement. A form of Purchase Order is
attached hereto as Exhibit 6. Buyer and Seller agree that,
except for non-conflicting administrative terms as provided
below, any additional or preprinted terms or conditions on a
Purchase Order shall be null, void and of no effect.
Page 6 of 37
<PAGE> 7
Each Purchase Order shall specify, in addition to other
appropriate information as may be mutually agreed upon:
i. name and address of Buyer, or Buyer Affiliate;
ii. Buyer Purchase Order number and Purchase Order date
of issuance;
iii. name and address of Seller, or as appropriate, Seller
Affiliate, which shall be an Affiliate set forth in
the Exhibit 1, that will be providing Product being
ordered;
iv. incorporation within, by reference, to this
Agreement;
v. types and quantities of Product to be furnished by
Seller as set forth in Exhibit 2 or as provided in a
Quotation;
vi. applicable prices, charges, and fees with respect to
such Product as set forth in Exhibit 2 or as provided
in a Quotation;
vii. location or facility to which Product is to be
delivered;
viii. Delivery Date of Product;
ix. billing address of the Party responsible for the
payment whether it is the Buyer, or Buyer Affiliate
to which Buyer intends to resell the Product, if any,
other information required under this Agreement to be
included in a Purchase Order;
x. proper authorization of Buyer or Buyer's Agent.
(c) Seller is obligated to accept all Purchase Orders issued by
Purchaser under this Agreement except those Purchase Orders
which are missing the material terms required by this Article
to be contained in a Purchase Order. A Purchase Order
submitted pursuant to the terms and conditions of this
Agreement, and which Seller has accepted, shall constitute an
Agreement between Buyer and the Seller. Any Purchase Order for
which Seller gives timely notice of non-acceptance if
non-acceptance is permitted under this section shall be deemed
void. The Product quantities listed on any Purchase Order
which conforms to the terms and conditions of this Agreement,
which are consistent with Forecasts including any permitted
variance to such Forecasts and which are not accepted by
Seller shall be deducted from the Initial Purchase
Commitments.
(d) Buyer may at any time request additions, alterations,
deductions, or deviations to a Purchase Order subject to the
condition that such changes and any adjustments resulting from
such changes, including but not limited to schedules and
prices, shall be mutually agreed upon, and if so agreed,
subsequently detailed in a written revision to the applicable
Purchase Order ("Change Order") signed by a designated Buyer
representative and Seller representative. Change Orders which
are processed outside of Seller's customary processing cycle
or which require additional work by Seller to comply with such
changes may be subject to a change fee provided Seller has
given Buyer a written quote for such change fee and Buyer and
Seller have mutually agreed to such change fee in writing
prior to or concurrent with execution of the Change Order. If
Buyer fails to accept the change fee, Seller has no obligation
to accept or comply with the Change Order.
(e) Purchase Orders may be issued either electronically, such as
through electronic data interchange, or via traditional manual
methods, as mutually agreed to by the Parties.
5.04 Delivery - Delivery of Products under this Agreement shall be F.O.B.
Seller's specified facilities.
All shipments are subject to the following conditions:
Page 7 of 37
<PAGE> 8
(a) Partial shipments or early shipments may only be sent by
Seller if Buyer has approved such partial or early shipments
in writing and in advance;
(b) Seller shall notify Buyer, via e-mail as directed by Buyer,
when orders are shipped;
(c) Packing slips shall accompany shipment and shall include
serial numbers, when applicable, in barcode and human readable
format and shall reference Buyer's Purchase Order number;
(d) Shipment sent via truck load or less than truck load shall be
stretch wrapped on pallets with markings facing outwards; and
(e) Buyer may, at its discretion, (i) reject shipments that do not
comply with the preceding shipping requirements or (ii) apply
as a credit against amounts due to Seller, Buyer's reasonable
labor costs arising from Seller's failure to comply with the
preceding shipping requirements.
(f) Seller shall not deliver Products more than 10 days prior to
the requested and accepted Delivery Date in the Purchase Order
without the consent of the Buyer.
(g) In the absence of specific shipping instructions from Buyer,
Seller may ship-by the method it deems most advantageous;
provided however that Buyer shall not reimburse Seller for the
costs of overnight courier or other expedited shipping unless
Buyer has agreed in advance to pay such costs for such
Purchase Order in writing.
(h) Title to the Product (excluding Software) shall pass to Buyer
upon delivery to carrier subject to the Seller's security
interest in the Product, and risk of loss shall pass to Buyer
upon shipment to Buyer.
(i) Buyer shall inspect the Product upon delivery and shall advise
Seller in writing of any obvious physical defects,
discrepancies, and/or shortages observed between the Product
physically inspected and the corresponding Product shipment
packing list provided by the Seller. Buyer shall issue to
Seller a defect/discrepancy written report within ten (10)
business days of receipt of Product. If no such report is
issued to Seller within ten (10) business days the Buyer shall
be deemed to have accepted the Products as delivered.
(j) Buyer shall store all Products at the proper temperature and
other environmental conditions, as specified in the Product
Specifications, to maintain Product quality. In the event of
damage to any Product, for reason of improper storage, thereby
rendering Product unfit for intended use, Buyer shall promptly
notify Seller in writing of the facts, and shall not use such
Product except as directed by Seller.
5.05 CANCELLATION
(a) Upon written notice to Seller, Buyer may cancel all or any
part of a Purchase Order without cost to Buyer if Seller
receives written and dated Purchase Order cancellation notices
more than sixty (60) days before the requested Delivery Date.
(b) If a cancellation of a Purchase Order by Buyer does not meet
the conditions specified in Section 5.05(a) above, Seller
shall be entitled to cancellation charges, and shall make such
a claim in writing to Buyer within thirty (30) days after
receipt of a Purchase Order cancellation notice from Buyer.
Buyer shall pay cancellation charges based on the date a
Page 8 of 37
<PAGE> 9
Purchase Order cancellation notice is received by the Seller,
and such cancellation charges shall not exceed the schedule
as shown below:
<TABLE>
<CAPTION>
DAYS PRIOR NOTICE OF PO CANCELLATION ORDER CANCELLATION CHARGE
------------------------------------ -------------------------
<S> <C>
Greater than 60 days before Delivery Date None
Greater than 30 and less than 60 days before Delivery Date 20% of the Purchase Price
Less than 30 days before Delivery Date 50% of Purchase Price
</TABLE>
5.06 Invoicing. Each invoice shall include (a) Buyer's Purchase Order
number, (b) Seller's invoice number, (c) quantity and price of each
item shipped or services rendered, (d) applicable sales or other tax,
(e) freight charges (if applicable) and (f) final total cost.
ARTICLE 6. EQUIPMENT CHANGES
With respect to any Purchase Order issued under this Agreement,
notwithstanding any other provisions contained herein, Seller reserves the right
to make changes in the Products in whole or in part, or to substitute Products
of later design at any time prior to delivery thereof, provided that such
changes do not adversely affect performance or function or increase the cost to
Buyer and further provided that the changed or substituted Products meet or
exceed Product Specifications. Such changes do not obligate Seller to make any
changes in items of the Products previously delivered unless such changes affect
the interoperability of Products including Software in Buyer's network in which
case such changes to previously delivered Products, including Software, as are
required to maintain the interoperability and functionality of such Products
will be made at Seller's expense.
ARTICLE 7. SOFTWARE LICENSING
7.01 Buyer is granted no title or ownership rights to the Software or
Documentation, which rights shall remain with Seller or Seller's
suppliers, as appropriate. This Agreement does not entitle Buyer to the
receipt or use of, or access to, Software source code or any right to
reproduce the Software or Documentation, and Buyer agrees that it shall
not decompile, reverse engineer or otherwise attempt to gain access to
the Software source code. The obligations of Buyer under this section
shall survive the expiration or termination of this Agreement.
Notwithstanding the foregoing, Buyer may reproduce or copy Software or
Documentation for installation, back-up or archival and test purposes
and may provide such copies to Third Parties who provide installation
or maintenance services for Buyer. Buyer will notify Seller in the
event it provides copies of Software to Third Parties.
7.02 Upon Buyees payment of the applicable Software License Fee as described
in Exhibit 2.03, Buyer shall be granted a perpetual, non-exclusive,
transferable (as limited by the provisions of this Agreement),
non-assessable, unlimited-user, paid-up license to:
(a) use such features contained in the release of the Software
furnished;
(b) use and make adaptations of the Software (or any part
thereof), subject to the provisions of this Agreement,
provided that any such adaptations are created as an integral
step in the use of the Software in conjunction with a Product
and that it is not used in any other manner;
(c) make as many copies of the Software and any related
Documentation as Buyer deems
Page 9 of 37
<PAGE> 10
necessary for its use, archival purposes, or test purposes
including use by Third Parties who are acting under the
control and direction of Buyer; and
(d) use the associated Software Documentation.
Buyer agrees that the license to use the Software is subject to its
continued use of and ownership of the Equipment upon which such
Software is installed and that Buyer shall have the right to sell,
pledge as security, or otherwise transfer the Equipment upon which the
Software resides and the related Software. Transferee shall be granted
a license to use the Software but no title or ownership rights to the
Software, which rights shall remain in Seller or its suppliers, as
appropriate and upon sale or transfer the terms of this Software
License shall apply to Transferee.
7.03 As a condition precedent to this Software License and to the supply of
Software by Seller pursuant to this Agreement, Seller requires Buyer to
give proper assurances to Seller for the protection of the Software.
Accordingly, all Software supplied by Seller under or in implementation
of the Agreement shall be treated by Buyer as the exclusive property,
and to the extent not publicly available, as proprietary and a trade
secret, of Seller and/or its suppliers, as appropriate.
7.04 Seller may, from time to time, issue new Software Releases, including
Major Software Releases, which shall be made available to Buyer as part
of the Annual Support Fee and without additional cost or expense to
Buyer.
7.05 The Software Releases shall be updated periodically throughout the Term
of the Agreement. Once an updated Software Release is available, it
shall be made available to Buyer subject to the terms of this
Agreement.
7.06 All standard Software must be Backwards Compatible with annual software
upgrade (which will be provided as part of the Annual Support Fee) and
with Seller Equipment in the Buyer's network.
7.07 Repair and return of Equipment is same for same based on serial number
with thirty (30) day turnaround from receipt at factory to return
shipment.
ARTICLE 8. WARRANTIES
8.01 Seller Supplied Equipment
(a) Seller warrants for a period ending fifteen (15) months from
the Ship Date, that under normal use and service the Equipment
subject to this Agreement will be free from material defects
or faulty workmanship, and shall operate in compliance with
the applicable Product Specifications. The foregoing warranty
shall not apply to items normally consumed during operation
such as, but not limited to, lamps and fuses. If Equipment is
not free from material defects or faulty workmanship or fails
to comply with the applicable Product Specification during the
warranty period, Seller will, at its option, repair, replace,
or modify the Equipment so that it is free from defects and
does comply with the applicable Product Specification. The
warranty service shall be performed at Seller's facility. If
Seller is unable to repair or modify the Equipment within a
reasonable period of time so that the Equipment conform to the
applicable Product Specification, Seller shall replace the
Equipment with Equipment that conforms to such Product
Specification. In such cases Seller does not guarantee that
equipment with like serial numbers will be returned to the
Buyer but such replacement Equipment shall meet all Product
Specifications and provide the same function as the Equipment
it replaces. Seller's sole obligation and Buyer's exclusive
remedy under the warranty provisions of this Article with
respect to Equipment shall be limited to repair, modification,
or replacement of the
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<PAGE> 11
defective or non functioning Equipment or refund if Equipment
cannot be provided which complies with Product Specifications.
(b) The warranties set forth in this Article shall not apply to
any Products where the defect or non-conformance is due to:
(i) accident, alteration, abuse, misuse, or repair not
performed by Seller or Seller qualified technician,
provided that Seller will approve agreed upon
employees of Buyer and its agents as qualified
technicians;
(ii) storage other than as set forth in the Product
Specification;
(iii) failure to comply with all applicable environmental
requirements for Product as set forth in the Product
Specification, including but not limited to
temperature or humidity ranges;
(iv) performance of Product installation, maintenance,
operation, repair, relocation, or other service not
in compliance with Product Specifications, unless
such noncomplying service was performed by Seller or
on Seller's behalf;
(v) breakage, damage, alteration, or removal of any
Seller affixed seal or label located on the IFU
without the Seller's written approval. The IFU
contain no Buyer serviceable parts;
(vi) use in conjunction with a product specified by Seller
as incompatible with such Products;
(vii) any error, act, omission, vandalism, mishandling or
misuse by anyone other than Seller or Seller's
agents, employees, and subcontractors; or
(viii) where written notice of the defect has not been given
to Seller within the applicable warranty period.
(c) Buyer shall be responsible for de-installation and
re-installation of any warranty repair or replacement
Equipment. Buyer shall use qualified technicians to perform
any maintenance and/or repair to the Product during the
warranty period, where such maintenance and/or repair shall be
confined to tasks performed in accordance with Seller provided
Documentation.
(d) A return material authorization (RMA) must be obtained by
Buyer from the Seller prior to the return of any Product.
(e) Warranty replacement Equipment may be new or reconditioned to
perform as new, at Seller's option. Notwithstanding the
foregoing, the warranty period of Equipment which has been
subject to repair or replacement by Seller shall commence upon
the Delivery Date of the repaired or replacement Equipment to
Buyer and shall expire on the later of one hundred twenty
(120) days from the Delivery Date or the last day of the
original warranty period with respect to the Equipment which
was repaired or replaced.
(f) All Equipment to be repaired or replaced, whether in or out of
warranty, shall be packed by Buyer in accordance with Seller's
reasonable instructions and shall follow Seller's reasonable
repair and return policy and procedures. Buyer shall bear risk
of loss and shall pay for all transportation charges for
Equipment returned to Seller and Seller shall bear such risk
and pay for transportation charges for repaired or
replacement Equipment shipped to Buyer. Seller shall use
reasonable efforts to ship repaired or replacement Equipment
within thirty (30) days of receipt of the defective Equipment
for routine warranty repair or replacement. Seller shall
return the repaired or replaced Equipment to
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<PAGE> 12
the Buyer by the same transport method in which the Buyer sent
the Equipment to the Seller.
(g) if the Equipment that is returned to Seller is determined by
Seller to be beyond repair and is outside the warranty period,
Seller shall notify Buyer and Seller shall upon request from
Buyer sell Buyer replacement Equipment at the then current
Agreement price between the Parties for such Equipment, or if
no such Agreement exists, at the last price paid for such
Product.
(h) Seller shall maintain an adequate inventory of spare parts to
repair and replace all Products for a period of 5 years or as
otherwise provided by law.
8.02 Third Party Equipment
(a) With respect to any Third Party Equipment furnished by Seller
to Buyer, Seller shall secure from the applicable
manufacturers such warranties and indemnities as maybe
available with respect to such Third Party Equipment, and
assign and pass through to Buyer all available warranties and
indemnities for such Third Party Equipment to the extent
legally assignable. In the event such warranties and
indemnities are not assignable to Buyer, Seller shall enforce,
if necessary, such warranties and indemnities on Buyer's
behalf. In addition to the above, Seller shall, at Buyer's
request, register Buyer with any and all Third Party Equipment
vendors (for Third Party Equipment that constitutes systems as
opposed to individual components) such that Buyer is
acknowledged as a support obligation of the Third Party
Equipment vendors and Buyer can receive and obtain product
notices directly from the Third Party Product vendors. Seller
shall produce evidence of such registration within sixty (60)
calendar days from the date Buyer requests that Seller obtain
such registration.
(b) All Third Party Equipment unless otherwise stated in this
Agreement, or in the Third Party warranties, will follow the
same repair and return procedures as noted in Article 7.01.
8.03 Software
(a) Seller warrants for a period ending fifteen (15) months from
the Ship Date, that under normal use and service the Software
shall (i) perform the necessary functionality to operate
radios in accordance with Product Specifications; (ii) shall
provide the full functionality described in the Documentation
and Product Specifications. Seller represents and warrants
that, to the best of its knowledge, any Software provided by
Seller hereunder does not contain and will not receive from
any Seller data transmission via modem or other Seller medium,
any virus, worm, trap door, back door, timer, clock, counter,
or other limiting routine, instruction, or design that would
erase data or programming or otherwise cause the Software or
Equipment to become inoperable or incapable of being used in
the full manner for which it was designed and created (but
specifically excluding locking mechanisms designed to prevent
Buyer from using those Software features or functions not
licensed to Buyer under the terms of this Agreement, referred
to as 'disabling code') including, without limitation, any
limitations that are triggered by:
(i) the Software being used or copied a certain number of
times, or after the lapse of a certain period of
time;
(ii) the Software being installed on or moved to a central
processing unit that has a serial number, model
number, or other identification different from the
central processing unit on which the Software was
originally installed; or
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<PAGE> 13
(iii) the occurrence or lapse of any similar triggering
factor or event.
(b) In the event Seller introduces a disabling code into the
Software, Seller shall:
(i) take all steps necessary at Seller's sole cost to
test a new copy of the Software for the presence of
disabling codes;
(ii) furnish to Buyer a new copy of the Software without
the presence of disabling codes;
(iii) install and implement such new copy of the Software
at no additional cost to Buyer; and
(iv) take all steps necessary, at Seller's sole cost, to
restore any and all data or programming lost by Buyer
as a result of such disabling code. In the event
disabling codes are identified by Buyer or Seller in
the Software, Seller shall furnish to Buyer a new
copy of the Software without the presence of
disabling codes.
(c) Seller warrants all Software is Y2K compliant as set forth in
Exhibit 3.
8.04 All Products. For all Products to be sold to Buyer under this
Agreement, Seller represents and warrants that the Products and Buyer's
ownership and use of such Products will not infringe upon or
misappropriate the intellectual property rights of any party and no
party shall have the right to seek damages from Buyer or enjoin Buyer's
right to use such Products.
8.05 THE WARRANTIES SET FORTH ABOVE CONSTITUTE THE ONLY WARRANTIES WITH
RESPECT TO THE PRODUCTS PROVIDED. THEY ARE IN LIEU OF ALL OTHER
WARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS. IMPLIED OR OTHERWISE,
INCLUDING WITHOUT LIMITATION THE WARRANTY OF MERCHANTABILITY AND THE
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
8.06 The terms of this Article shall survive any expiration or termination
of this Agreement.
ARTICLE 9. PATENT AND COPYRIGHT INFRINGEMENT INDEMNITY
9.01 Indemnification - Seller agrees to indemnify Buyer, as set forth
herein, with respect to any suit, claim, or proceeding brought against
Buyer alleging that Buyer's use of the Equipment or Software
constitutes an infringement of any United States or foreign patent or
copyright. Seller agrees to defend Buyer, at Seller's expense, against
any such claims and to pay all settlement payments, costs and legal
expenses, including reasonable attorneys' fees, and any damages awarded
in any final judgment arising from such suit, claim or proceeding;
provided, however, that Buyer shall promptly advise Seller of any such
suit, claim, or proceeding and shall reasonably cooperate with Seller
in the defense or settlement of such suit, claim or proceeding;
provided further that Seller shall have sole control thereof; and
provided further that in those circumstances where Seller's control of
the defense may materially affect Buyer's network and operations,
Seller agrees to consult with Buyer in good faith to obtain Buyer's
input into appropriate defense methods. The obligation of Seller
hereunder with respect to any infringement claim shall not apply to
infringement claims based on:
(a) use of Product by Buyer in a manner, including combinations
with other products not provided by Seller, not contemplated
nor suggested by the Agreement or by Seller's product
documentation existing as of the Effective Date of the
Agreement;
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<PAGE> 14
(b) use of Product by Buyer in any other combination with other
products not provided by Seller, unless Seller would otherwise
normally be liable for such a combination as a direct (or on
the basis of contribution or inducement) infringement, or
unless the products not provided by Seller are those products
normally used in connection with providing communication
services over Buyer's network, and provided that but for the
existence of such combination by Buyer, there would be no
infringement claim;
(c) use of Product in a Territory other than that for which it has
been specified in Exhibit 4 to this Agreement;
(d) modifications made by Buyer without Seller's consent;
(e) Buyer's use of Equipment supplied by Third Parties;
(f) Seller's use of specifications or designs (except
specifications or designs which are or become industry
standards or are used by Seller in a Product that is supplied
to other customers) which are supplied by Buyer to Seller for
use in Seller Products to be purchased under this Agreement
provided that but for such use by Seller there would be no
infringement claim and further provided that the Seller team
providing the custom development and the Seller employees
assigned to the Buyer account team shall use all commercially
reasonable best efforts, without violating any Third Party
confidentiality obligations, to determine whether the
requested specification or design would violate any Third
Party patent, copyright, trademark, or other intellectual
property right and provide notice to Buyer of such knowledge
as soon as reasonably possible; and
(g) The foregoing exclusions shall not apply to use of Products,
Equipment or Software in Buyer's data communications network
if Buyer and Seller have discussed the use and implementation
of Seller's Product with other products not provided by Seller
and Buyer has purchased Products for use in its network in a
manner consistent with such discussions.
9.02 Injunction - In the event that an injunction is obtained against
Buyer's use of Equipment or Software arising from such patent or
copyright suit, claim or proceeding, in whole or in part, Seller shall,
at its option, either:
(a) procure for Buyer the right to continue using the portion of
the system enjoined from use; or
(b) replace or modify the same so that Buyer's use is not subject
to any such injunction.
If, after using commercially reasonable best efforts, Seller is not able to
achieve any of the above remedies, Seller shall refund the purchase price of
Equipment upon return of the equipment from Buyer. Thereupon, neither Party
shall have any further liabilities or obligations under this Agreement.
9.03 Limitation of Liability - THE FOREGOING STATES THE ENTIRE LIABILITY OF
SELLER FOR PATENT OR COPYRIGHT INFRINGEMENT BY THE EQUIPMENT OR
SOFTWARE. THE REMEDIES CONTAINED HEREIN ARE BUYER'S SOLE REMEDY FOR ANY
CLAIM OF INFRINGEMENT OF THIRD PARTY PATENT, COPYRIGHT, TRADEMARK,
TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.
9.04 The terms of this Article 9 shall survive any expiration or
termination of this Agreement.
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<PAGE> 15
ARTICLE 10. CONFIDENTIALITY
10.01 Confidentiality - All terms and conditions of this Agreement between
Buyer and Seller are confidential and may not be disclosed to any third
party.
10.02 Release of Information - Neither Party shall, without the express
written consent of the other Party, publicly announce the existence or
terms of this Agreement or advertise or release any publicity or press
release regarding this Agreement except such disclosures that may be
required to comply with securities laws, court order or similar order
of an administrative or regulatory agency provided each Party shall use
reasonable best efforts to seek confidential treatment or other
protective orders which are available to limit such disclosures and
provide the other Party with advanced notice of such disclosures.
Notwithstanding the foregoing, either Party shall be entitled to
disclose this Agreement and its specific terms and conditions to its
financing sources, including prospective financing sources and to its
auditors, attorneys and other agents in the normal course of its
business; provided that such financing sources, auditors, attorneys and
other agents keep such information confidential.
ARTICLE 11. LIMITATION OF LIABILITY
11.01 General - THE TOTAL LIABILITY OF SELLER FOR ALL CLAIMS OF ANY KIND FOR
ANY LOSS OR DAMAGE, WHETHER IN AGREEMENT, WARRANTY, TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, OR CLAIMS FOR
INDEMNIFICATION ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM THE
PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT EXCEPT FOR SELLER'S
OBLIGATION TO INDEMNIFY BUYER FOR INFRINGEMENT CLAIMS SHALL IN NO CASE
EXCEED THE TOTAL PRICE OF ALL PURCHASE ORDERS ACCEPTED UNDER THIS
AGREEMENT. NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT, NEITHER
PARTY SHALL BE LIABLE FOR LOST PROFITS, LOSS OF DATA OR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS EXCEPT AS SET FORTH IN SECTION 9.03, OR
FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES OF ANY
NATURE WHATSOEVER FOR ANY ACTION ARISING UNDER THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THOSE RESULTING FROM THE USE OF
EQUIPMENT PURCHASED HEREUNDER, OR THE FAILURE OF THE EQUIPMENT TO
PERFORM, OR FOR ANY OTHER REASON. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
11.02 Specific Exclusions - Seller shall not be responsible for any failures
or inadequacies of performance resulting from products not supplied by
Seller. Seller shall not be responsible for interference or disruption
of service caused by operation of other radio systems, lightning, motor
ignition or other similar interference. In the event Buyer utilizes
facilities or services supplied by others such as common carrier
circuits, antennas or towers, Buyer shall have the total responsibility
for the availability or adequacy of such services or facilities. Seller
shall have no liability as a result of non-performance, failures or
poor performance of the Product caused by, resulting from or
attributable to Buyer provided designs, specifications or Product
configuration requirements that have not been discussed with and
approved by Seller or failures caused by improper installation by
Buyer.
11.03 The terms of this Article shall survive any expiration or termination
of this Agreement.
ARTICLE 12. MISCELLANEOUS
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<PAGE> 16
12.01 Applicable Law - The validity, construction, and performance of this
Agreement shall be governed by and interpreted in accordance with the
laws of the State of Florida, without giving effect to the principles
of conflict of laws thereof except to the extent that any mandatory
provisions of local laws in any country take precedence over the
provisions of this Agreement and Florida State law. Jurisdiction will
reside in the federal courts in Orange County, FL. Notwithstanding the
above, neither Party shall institute a proceeding in any court or
administrative agency to resolve a dispute between the Parties before
that Party has sought to resolve the dispute through direct negotiation
with the other Party. If the dispute is not resolved after three (3)
weeks of direct negotiation, the Parties shall attempt to resolve the
dispute through mediation. If the Parties do not promptly agree upon a
mediator, either Party may request the then chief judge of the circuit
court in Orange County, Florida appoint a Circuit Mediator. If the
mediator is unable to facilitate a settlement of the dispute within a
reasonable period of time, as determined by the mediator, the mediator
shall issue a written statement to the Parties to that effect and the
aggrieved Party may then seek resolution by arbitration under
conditions and procedures provided below in section 12.02. The fees and
expenses of the mediator shall be paid one-half each by Sellers and
Buyer.
12.02 Arbitration - The parties desire to resolve disputes arising out of
this agreement without litigation. If the parties are unable to resolve
any disputes arising out of this Agreement pursuant to the provisions
of section 12.01 above, then the dispute shall be submitted to binding
arbitration in Orlando, Florida by a panel of three arbitrators
pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. A Party may demand such arbitration in
accordance with the procedures set out in those rules.
12.03 Assignment - Other than as explicitly stated in this Agreement, neither
Party may assign or transfer this Agreement, or any of its rights
hereunder, without the prior written consent of the other which consent
shall not be unreasonably withheld. Buyer's consent shall not be
required for any assignment or transfer by Seller to any Third Party
for all or a part of Seller's right to receive any monies
("Receivables") which may become due to Seller pursuant to this
Agreement. Consent shall also not be required for the following
transactions if the transactions do not involve a direct competitor of
the non-assigning Party: (a) a reorganization, merger, consolidation
or other form of corporate transaction or series of transactions, (b)
the sale of all or substantially all of the assets of the Buyer or the
Seller, or (c) the acquisition of all or substantially all the
outstanding equity of the Buyer or the Seller.
Any assignment or transfer in violation of this Agreement shall be
void. Seller reserves the right to refuse to honor any assignment or
sublicense which, in the opinion of its legal counsel, would require it
to violate any United States export restriction, other law, or
regulation.
12.04 Consents - Each Party hereto represents and warrants that:
(a) it has obtained all necessary approvals, consents, and
authorizations of Third Parties and governmental authorities
to enter into this Agreement and to perform and carry out its
obligations hereunder,
(b) the persons executing this Agreement on its behalf have
express authority to do so, and, in so doing, to bind the
Party thereto;
(c) the execution, delivery, and performance of this Agreement has
been duly authorized by all necessary partnership or corporate
action and this Agreement is a valid and binding obligation of
such Party, enforceable in accordance with its terms;
(d) in the case of Buyer, that Buyer has obtained the required
licenses to use the relevant radio spectrum; and
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<PAGE> 17
(e) In the case of Seller, that Seller has obtained all necessary
government approvals for manufacture and sale of Equipment.
12.05 Counterparts and Facsimile Signatures - This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original and
all of which taken together shall constitute one and the same
instrument. Facsimile signatures shall have the same effect as original
signatures, but any Party transmitting a signature by facsimile shall
promptly follow up with a copy of the same document bearing the
original signature of that Party.
12.06 Entire Agreement - This Agreement, including the Exhibits which are
attached hereto and incorporated herein, comprises all the terms,
conditions, and agreements of the Parties hereto with respect to the
subject matter hereof and supersedes all previous negotiations,
proposals, commitments, writings, publications, and understandings of
any nature whatsoever. No agent, employee, or representative of Seller
has any authority to bind Seller to any affirmation, representation, or
warranty, except as stated in this Agreement and unless such
affirmation, representation, or warranty is specifically included
within this Agreement it shall not be enforceable by Buyer or any
assignee or sub-licensee of Buyer. Buyer hereby acknowledges and agrees
that it has not relied on any representations or warranties other than
those expressly set forth in this Agreement.
12.07 Export - Buyer shall not export any Product or technical data received
from Seller pursuant to this Agreement, or release any such Product or
technical data with the knowledge or intent that such Product or
technical data will be exported or transmitted to any country or to
foreign nationals of any country, except in accordance with applicable
laws or regulations concerning the exporting of such items arising in
the U.S. or other such jurisdiction affecting the Product. Buyer shall
obtain all authorizations from the appropriate government in accordance
with applicable law prior to exporting or transmitting any such
Products or technical data as specified above. Seller will provide such
assistance as Buyer reasonably requests to obtain such authorizations.
Buyer acknowledges that the transfer of Equipment or components
thereof, and Documentation outside of Canada or the United States, may
be subject to the specific approval of the applicable Software
suppliers and other suppliers. All such approvals, if applicable, shall
be conditions precedent to any of the obligations of Seller hereunder
respecting such Equipment or component thereof and Documentation.
12.08 Factoring - Seller may, upon notice to Buyer and subject to Buyer's
consent which may not be unreasonably withheld, sell receivables to a
Third Party or Affiliate.
12.09 Force Majeure - If the performance by a Party of any of its obligations
under this Agreement shall be prevented, restricted, or interfered with
by reason of any circumstances beyond the reasonable control of that
Party, including without limitation, fire, explosion, embargoes,
government ordinances or requirements, civil or military authorities,
acts of God or of the public enemy, war, revolution, civil commotion,
acts or omissions of carriers, loss of sources of energy, power
failure, breakdown of machinery, or labor difficulties of third
parties, including without limitation, strikes, slowdowns, picketing,
or boycotts, or other causes beyond the reasonable control of the party
whose performance is affected, then the Party affected, upon giving
prompt notice to the other Party, shall be excused from such
performance on a day-for-day basis to the extent of such prevention,
restriction, or interference (and the other Party shall likewise be
excused from performance of its obligations on a day-for-day basis to
the extent such Party's obligations relate to the performance so
prevented, restricted or interfered with), provided that the Party so
affected shall use reasonable efforts to avoid or remove such causes of
non-performance and both parties shall proceed to perform their
obligations with dispatch whenever such causes are removed or cease.
With respect to labor difficulties as specified above, a Party shall
not be obligated to accede
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<PAGE> 18
to any demands being made by employees or other personnel.
12.10 Headings - All headings used herein are for index and reference
purposes only, and shall not be given any substantive effect. This
Agreement has been created jointly by the Parties and no rule of
construction requiring interpretation against the drafter of this
Agreement shall apply in its interpretation.
12.11 Litigation Expense - The Party prevailing in arbitration, at trial, or
on appeal shall be entitled, in addition to such other relief as may be
granted, to a sum the court or arbitration may fix as reasonable
attorneys' fees, plus any associated costs.
12.12 Modification of Agreement - No addition to or modification of this
Agreement shall be effective or binding on either of the Parties hereto
unless reduced to writing and executed by the respective duly
authorized representatives of each of the Parties hereto.
12.13 [*]
12.14 Non-Waiver - The failure by either Party hereto at any time to require
performance by the other Party or to claim a breach of any provision of
this Agreement shall not be construed as affecting any subsequent
breach or the right to require the performance with respect thereto or
to claim a breach with respect thereto.
12.15 Notice - All notices required or permitted to be given hereunder shall
be in writing and shall be delivered to the address listed on the
signature page of this Agreement by (i) certified mail, return receipt
requested, (ii) nationally recognized overnight courier, or (iii) by
hand. Any notice given pursuant to this Section shall be effective five
(5) days after the day it is mailed or upon receipt as evidenced by the
Postal Service return receipt card, or courier or hand delivery written
confirmation, whichever is earlier. Either Party hereto may change its
address by a notice given to the other Party hereto in the manner set
forth above. All Purchase Orders and invoices to be delivered pursuant
to this Agreement shall be delivered via a delivery provider that
provides proof of delivery, such as certified mail, overnight mail, or
private courier company.
12.16 Registration - Product furnished under this Agreement for installation
within the United States shall, at the time of installation, comply to
the extent applicable, with the requirements of the Federal
Communications Commission's Rules and Regulations including, without
limitation, all labeling and customer instruction requirements. Product
furnished under this Agreement for installation outside the United
States shall comply with local governmental regulations, as applicable.
12.17 Relationship of the Parties - The provisions of this Agreement shall
not be construed to establish any form of partnership, agency, or other
joint venture of any kind between Seller and Buyer, nor to constitute
either Party as the agent, employee, or legal representative of the
other. All persons provided by either Party to accomplish the intent of
this Agreement shall be considered solely as the providing Party's
employees or agents and the furnishing Party shall be solely
responsible for compliance with all laws, rules, and regulations
involving, but not limited to, employment of labor, hours of labor,
working conditions, workers' compensation, payment of wages, and
withholding and payment of applicable taxes, including, but not limited
to income taxes, unemployment taxes, and social security taxes.
12.18 Severability - If any of the provisions of this Agreement shall be
declared or determined to be
[*] Confidential Treatment Requested
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<PAGE> 19
invalid or unenforceable under applicable law and a Party deems such
provisions to be material, that Party may terminate this Agreement
upon written notice to the other Party. Otherwise such invalidity in
whole or in part, of any term, covenant, condition, or provision of
this Agreement shall not affect the validity of the remainder of such
term, covenant, condition or provision or the Agreement or render this
Agreement unenforceable, but this Agreement shall be construed as if
not containing the particular invalid or unenforceable provision and
the rights and obligations of the Parties shall be construed and
enforced accordingly.
12.19 Third Patty Beneficiaries Disallowed - All covenants and agreements of
the Parties hereto are solely and exclusively for the benefit of the
Parties to this Agreement and no other person or entity shall have
standing to require performance of any such covenants and agreements,
and no person or entity shall, under any circumstances, be deemed to be
a beneficiary of such obligations.
12.20 Waiver of Breach - Failure by either Party at any time to require
performance by the other Party or to claim a breach of any provision of
this Agreement shall not be construed as affecting any subsequent
breach or the right to require performance with respect thereto or to
claim a breach with respect thereto.
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SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have executed this "Agreement" as of the
"Effective Date" shown above, by their representative(s) being duly authorized
and having signed accordingly.
TRITON NETWORK SYSTEMS INC. CENTURYTEL SUPPLY GROUP, INC.
- ------------------------------------- --------------------------------------
Signed: /s/ Ken Vines Signed: /s/ Robert J. Mirabito
------------------------------ -------------------------------
Name: Ken Vines Name: Robert J. Mirabito
------------------------------ -------------------------------
Title: CFO Title: Vice President
------------------------------ -------------------------------
Date: 12/7/99 Date: 12/7/99
------------------------------ -------------------------------
Addresses for Notice:
Triton Network Systems, Inc.: CenturyTel Supply Group, Inc.:
8529 South Park Circle 100 Century Park Drive
Orlando, Florida 32819 Monroe, LA 71203
Attention: Ken Vines Attention: Bob Mirabito
---------------------------
With a copy to:
Holland & Knight LLP Boles, Boles & Ryan
200 South Orange, Suite 2600 1805 Tower Drive
Orlando, Florida 32801 Monroe, LA 71201
Attention: Louis T. M. Conti, Esquire Attention: L. Scott Patton, Esquire
Page 20 of 37
<PAGE> 21
EXHIBITS
EXHIBIT 1. AFFILIATES
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
Actel Corporation Louisiana
Bloomingdale Telephone Company, Inc. (20%) Michigan
Century Cellunet of Mississippi RSA #6, Inc. Mississippi
Century Interactive Fax, Inc. Louisiana
Pivotal Communications, LLC (19.5%) Georgia
Century Telephone of West Virginia, Inc. West Virginia
CenturyTel of Adamsville, Inc. Tennessee
CenturyTel of Arkansas, Inc. Arkansas
CenturyTel of Central Indiana, Inc. Indiana
CenturyTel of Central Louisiana, Inc. Louisiana
CenturyTel of Chatham, Inc. Louisiana
CenturyTel of Chester, Inc. Iowa
CenturyTel of Claiborne, Inc. Tennessee
CenturyTel of East Louisiana, Inc. Louisiana
CenturyTel of Evangeline, Inc. Louisiana
Page 21 of 37
<PAGE> 22
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel Holdings, Inc. Louisiana
Century Business Communications, LLC Louisiana
Century Color Graphics, LLC (65%) Louisiana
CenturyTel of Greater Wisconsin, Inc. Wisconsin
Brown Equipment Corp. Nevada
Carter Company, Inc. Hawaii
CenturyTel of Colorado, Inc. Colorado
CenturyTel of Forestville, Inc. Wisconsin
CenturyTel of Larsen-Readfield, Inc. Wisconsin
CenturyTel of Monroe County, Inc. Wisconsin
CenturyTel of Northern Wisconsin, Inc. Wisconsin
CenturyTel of Northwest Wisconsin, Inc. Wisconsin
CenturyTel of the Southwest, Inc. New Mexico
CenturyTel/UTI, Inc. Wisconsin
Honomach PR, Inc. Puerto Rico
Universal Contracting Corp. Wisconsin
Universal Manufacturing Corp. Wisconsin
Universal Telephone Long Distance, Inc. Wisconsin
Page 22 of 37
<PAGE> 23
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel of the Northwest, Inc. Washington
Cascade Autovon Company Washington
CenturyTel of Eagle, Inc. Colorado
CenturyTel of Eastern Oregon, Inc. Oregon
CenturyTel Entertainment, Inc. Washington
CenturyTel of the Gem State, Inc. (96%) Idaho
CenturyTel of Inter Island, Inc. Washington
CenturyTel of the Midwest-Kendall, Inc. Wisconsin
CenturyTel of the Midwest-Wisconsin, Inc. Wisconsin
CenturyTel of Minnesota, Inc. Minnesota
CenturyTel of Montana, Inc. (991/6) Oregon
CenturyTel of Oregon, Inc. Oregon
CenturyTel of Paradise, Inc. Washington
CenturyTel of Cowiche, Inc. Washington
CenturyTel of Postville, Inc. Iowa
CenturyTel Telecom Service, Inc. Washington
CenturyTel Telephone Utilities, Inc. Washington
CenturyTel TeleVideo, Inc. Wisconsin
CenturyTel of Upper Michigan, Inc. Michigan
CenturyTel of Washington, Inc. Washington
CenturyTel/WORLDVOX, Inc. Oregon
CenturyTel of Wyoming, Inc. Wyoming
Eagle Valley Communications Corporation Colorado
International Communications Holdings, Inc. Delaware
MVI Corp. Oregon
Page 23 of 37
<PAGE> 24
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel of the Northwest, Inc. (Cont.) Washington
Pacific Telecom, Inc. (Shell) Oregon
PTI Broadcasting, Inc. Oregon
PTI Communications of Ketchikan, Inc. Alaska
PTI Communications of Minnesota, Inc, Minnesota
PTI Transponders, Inc. Oregon
Western Services, Inc. Wyoming
CenturyTel of Pecoco, Inc. Wisconsin
CenturyTel/Cable Layers, Inc. Wisconsin
CenturyTel of Fairwater-Brandon-Alto, Inc. Wisconsin
CenturyTel of Southern Wisconsin, Inc. Wisconsin
CenturyTel/Teleview of Wisconsin, Inc, Wisconsin
CenturyTel of Idaho, Inc. Delaware
CenturyTel Interactive Company Louisiana
CenturyTel International, Inc. Louisiana
CenturyTel Investments, LLC Louisiana
CenturyTel Long Distance, Inc. Louisiana
CenturyTel MFN, Inc. Delaware
CenturyTel of Michigan, Inc. Michigan
CenturyTel Michigan Network, LLC Louisiana
CenturyTel Midwest - Michigan, Inc. Michigan
CenturyTel Mobile Communications, Inc. Louisiana
CenturyTel of Mountain Home, INC. Arkansas
CenturyTel of North Louisiana, Inc. Louisiana
CenturyTel of North Mississippi, Inc. Mississippi
Page 24 of 37
<PAGE> 25
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel of Northern Michigan, Inc. Michigan
CenturyTel of Northwest Louisiana, Inc. Louisiana
CenturyTel of Odon, Inc. Indiana
CenturyTel of Ohio, Inc. Ohio
CenturyTel of Ooltewah-Collegedale, Inc. Tennessee
CenturyTel Personal Access Network, Inc. Louisiana
Wireless 2000, Inc. (20%) Louisiana
CenturyTel of Port Aransas, Inc. Texas
CenturyTel of Redfield, Inc. Arkansas
CenturyTel of Ringgold, Inc. Louisiana
CenturyTel/Ringgold IC & C, Inc. Louisiana
CenturyTel SM Telecorp, Inc. Texas
CenturyTel Telecommunications, Inc. Texas
CenturyTel/Area Long Lines, Inc. Wisconsin
SM Telecom, Inc. Texas
CenturyTel/SM, Inc. Texas
CenturyTel of San Marcos, Inc. Texas
Telecor Cellular, Inc. Louisiana
CenturyTel Security Systems, Inc. Louisiana
Page 25 of 37
<PAGE> 26
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel Security Systems Holding Company, LLC Louisiana
CenturyTel Security Systems of Arkansas, LLC Louisiana
CenturyTel Security Systems of Colorado, L.L.C. Louisiana
CenturyTel Security Systems of Louisiana, L.L.C. Louisiana
CenturyTel Security Systems of Mississippi, L.L.C. Louisiana
CenturyTel Security Systems of Montana, L.L.C. Louisiana
CenturyTel Security Systems of Ohio, L.L.C. Louisiana
CenturyTel Security Systems of Oregon, L.L.C. Louisiana
CenturyTel Security Systems of Washington, L.L.C. Louisiana
CenturyTel Security Systems of Wisconsin, L.L.C. Louisiana
Lone Star Security Systems, LLC Louisiana
Texas-CenturyTel Security Systems, LLC Louisiana
CenturyTel Service Group, LLC Louisiana
CenturyTel Solutions, LLC
CenturyTel of South Arkansas, Inc. Arkansas
CenturyTel of Southeast Louisiana, Inc. Louisiana
CenturyTel of Southwest Louisiana, Inc. Louisiana
CenturyTel Supply Group, Inc. Louisiana
CenturyTel/Tele-Max, Inc. Texas
CenturyTel/Remote Access, Inc. Louisiana
CenturyTel of Lake Dallas, Inc. Texas
Page 26 of 37
<PAGE> 27
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel Wireless, Inc. Louisiana
Century Cellunet of Alexandria, Inc. Louisiana
Century Cellunet B-Side Development Corp. Louisiana
Century Cellunet International, Inc. Louisiana
Cellunet of India Limited Mauritius
Century Cellunet of Louisiana, Inc. Louisiana
Century Cellunet of Michigan, Inc. Louisiana
Century Cellunet of Michigan RSAs, Inc. Louisiana
Century Cellunet of Michigan RSA #4, Inc. Louisiana
Century Cellunet of Mississippi RSA #2, Inc. Mississippi
Century Cellunet of Mississippi RSA #7, Inc. Mississippi
Century Cellunet of North Arkansas, Inc. Louisiana
Century Cellunet of Saginaw, Inc. Louisiana
Century Cellunet of South Arkansas, Inc. Louisiana
Century Cellunet of Southern Michigan, Inc. Delaware
Saginaw Bay Cellular Company Michigan
Century Cellunet of Texarkana, Inc. Louisiana
CenturyTel Wireless of Texarkana, LLC Louisiana
CenturyTel Paging, Inc. Louisiana
CenturyTel Telelink, Inc. Louisiana
Page 27 of 37
<PAGE> 28
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel Wireless of Louisiana, Inc. Louisiana
Celutel, Inc. Delaware
Brownsville Cellular Telephone Co., Inc. Delaware
Celutel of Biloxi, Inc. (96.45%) Delaware
Jackson Cellular Telephone Co., Inc. (90.22%) Delaware
The McAllen Cellular Telephone Co., Inc. Nevada
Pascagoula Cellular Services, Inc. Mississippi
Pacific Telecom Cellular, Inc. Wisconsin
CenturyTel Wireless of Wisconsin RSA #8, LLC Delaware
Eau Claire Cellular, Inc. Colorado
North-West Cellular of Eau Claire, Inc. Wisconsin
Pacific Telecom Cellular of Idaho, Inc. Idaho
Pacific Telecom Cellular of 1-5 Mobilnet, Inc. Washington
Pacific Telecom Cellular of Illinois, Inc. Illinois
Pacific Telecom Cellular of Michigan, Inc. Michigan
Pacific Telecom Cellular of Michigan RSA #1, Inc. Michigan
Pacific Telecom Cellular of Michigan RSA #2, Inc. Michigan
Pacific Telecom Cellular of Minnesota, Inc. Minnesota
Pacific Telecom Cellular of Montana, Inc. Montana
Pacific Telecom Cellular of Oregon, Inc. Oregon
Pacific Telecom Cellular of South Dakota, Inc. South Dakota
Pacific Telecom Cellular of Washington, Inc. Washington
Page 28 of 37
<PAGE> 29
EXHIBIT 1. AFFILIATES (Cont.)
CENTURYTEL, INC.
LIST OF SUBSIDIARIES
(EACH 100% OWNED UNLESS NOTED OTHERWISE)
STATE OR
JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- --------------
CenturyTel Wireless Louisiana, Inc. (Cont.) Louisiana
Pacific Telecom Cellular, Inc. (Cont.) Wisconsin
UC/PTC of Wisconsin, LLC (85%) Wisconsin
CenturyTel Wireless of Wisconsin RSA #1, LLC Delaware
CenturyTel Wireless of Wisconsin RSA #2, LLC Delaware
CenturyTel Wireless of Wisconsin RSA #3, LLC Delaware
CenturyTel Wireless of Wisconsin RSA #6, LLC Delaware
CenturyTel Wireless of Appleton-Oshkosh-Neenah MSA, LLC Delaware
Universal Cellular, Inc. Wisconsin
Century Cellunet of Pine Bluff, LLC Arkansas
CenturyTel Wireless of La Crosse, LLC Delaware
CenturyTel Wireless of Wisconsin RSA #10, LLC Delaware
Universal Cellular for New Mexico RSA #4, Inc. New Mexico
Universal Cellular for Wisconsin RSA #8.1, Inc. Wisconsin
CenturyTel Wireless of North Louisiana, LLC Louisiana
CenturyTel Wireless of Shreveport, LLC Louisiana
Pacific Telecom Cellular of Alaska RSA #1, Inc. Alaska
CenturyTel of Wisconsin, Inc. Wisconsin
Hillsboro Telephone Company, Inc. (20%) Wisconsin
La Crosse Telephone Corporation Wisconsin
Spectra Communications Group, LLC (56.9%) Delaware
Telephone USA of Wisconsin, LLC (89%) Delaware
Page 29 of 37
<PAGE> 30
Exhibit 2. PRODUCT and PRICING
2.01 EQUIPMENT
Products: All current and future LMDS (28,29 & 31GHz) OC-3 and Fast Ethernet
products offered by Triton
Price:
o Pricing is per IFU.
o In addition to the initial license fee, an Annual Support fee for
each IFU installed in the Buyer's networks will be invoiced as
discussed below at Exhibit 2, Section 2.03.
o [*] per IFU for first 500 IFUs (less [*] per IFU as described in
section 4.02)
o [*] per IFU or units 501-800
o [*] per IFU for IFUs 801-1600.
o [*] per IFU for IFUs 1601-2000.
o Mounting/Alignment brackets are [*].
o Software licensing fee [*] of Purchase Order value per year per
IFU.
[*] Confidential Treatment Requested
Page 30 of 37
<PAGE> 31
2.02 DOCUMENTATION
All Documentation shall be available electronically or hardcopy at prices set
forth in Triton's published price book.
Page 31 of 37
<PAGE> 32
2.03 SOFTWARE LICENSE FEE AND ANNUAL SUPPORT FEE FOR SOFTWARE AND TECHNICAL
ASSISTANCE CENTER
The IFU Link Manager, IFU Software and all other Seller provided
Software necessary to operate the Products in Buyer's network shall be provided
under this Software License. Triton will be responsible to make available
up-to-date copies of all Software as well as TAC software support (as described
in the TAC section) for all clients who are in full payment of their"Software
License Fee."
Software License Fee
o All Purchase Orders will include a Software License Fee of [*] of
the Purchase Order's Net Price for IFUs. The Software License Fee
of [*] will be prorated for the balance of the calendar year in
which the PO is issued beginning the month following the scheduled
delivery date in the PO. Example: IFU unit price of [*] with
scheduled delivery date of May 15, 2000. Calculation: [*] X [*] /
12 months X 7 Months remaining in calendar year = [*] per IFU unit
ordered for May 15, 2000 delivery.
Annual Support Fee
o The Annual Support Fee will be [*] per year of the purchase value
of all IFUs installed in the network. The annual support fee
includes "Bronze" level TAC support and all standard software
upgrades. The Annual Software Support Fee ([*] of the PO value all
IFU's) will be billed in the first quarter of each calendar year
based on the total number of IFU's in the Buyers network as of the
last day of the previous calendar year.
[*] Confidential Treatment Requested
Page 32 of 37
<PAGE> 33
2.04 EQUIPMENT WARRANTY - TRITON SUPPLIED EQUIPMENT
(a) Standard Warranty
o The Warranties relating to Triton Supplied Equipment can be found
in Article 8.
(b) Extended IFU Warranty
o The Seller offers the following optional Extended IFU Warranty
terms:
o Additional 12 month warranty [*] of the Purchase Order
IFU net sales price.
o Extended IFU Warranty must be purchased with this Equipment
purchased in this Agreement and is incremental to the twelve months
in the Standard IFU Warranty.
o The return and replacement terms and conditions of the Standard IFU
Warranty apply to the Extended IFU Warranty.
o Extended IFU warranty relates to Equipment only. Technical support
for Software is covered separately.
[*] Confidential Treatment Requested
Page 33 of 37
<PAGE> 34
2.05 TECHNICAL ASSISTANCE CENTER (TAC) SERVICE LEVEL AGREEMENT
TAC Services is available for all Products.
(a) Bronze Level TAC Services
o Part of net Equipment price as per this Agreement.
o Regular business hour support (08:00 to 17:00 Eastern Time;
Mondays through Fridays excluding Seller's observed holiday
schedule).
o Non-business hour paging services with maximum three (3) hour
response time.
o E-mail communication available for information inquiries with
maximum three (3) business day response.
o Per hour service charge of telephone and administrative time
to manage Triton and Third Party out of warranty Equipment:
[*].
[*] Confidential Treatment Requested
Page 34 of 37
<PAGE> 35
2.06 CUSTOMER TRAINING
(a) AVAILABLE TRAINING COURSES
o Local IFU Installation
o Physical installation
o Alignment
o Configuration
o Integration
o Remote IFU OAM&P - Administration, Management, and Protocol
o Integrate IFUs into new and existing networks
o Configure all components and aspects of the IFU
o Perform all typical diagnostics and problem isolation to
properly identify failed or degraded operation
o Retrieve all remote administration data
o Apply security measures to ensure network integrity
o IFU Network Engineering
(b) CERTIFICATION
o Installation and Maintenance
o Training is provided at a level to certify the customer in
the Installation and Maintenance of the Triton product.
o Certification verification for each Student is supplied by
Seller.
o Customer will be able to perform all the necessary
functions to install, locally align and configure, and
integrate the IFU in an effective manner.
o Customer will be able to remotely integrate, diagnose
typical failures and degradations, and manage and
administer the IFUs in an effective, consistent manner.
(c) PRICE.
o Additional class prices are based on a course basis at
individual student or group rates, excluding travel and
facilities costs.
o Prices are to be negotiated based on course program
supplied by Seller.
o Price includes all course material and Equipment.
o Minimum number of two (2) students per class.
o Maximum number of ten (10) students per class.
o Customer Premise Training
Page 35 of 37
<PAGE> 36
o Travel Expense for two (2) Seller Trainers including
lodging, meals, rental care, and airfare.
o Shipment of any training material and Equipment.
o Two (2) fully installed and operational IFUs to be used for
training purposes.
o The payment terms in net 30 days upon issuance of the
invoice.
(d) TRAINING ALLOWANCE
o During the Term of this Agreement, Buyer has the right to require
Seller to train up to five (5) Buyer employees at no charge to
Buyer. The training will be for one week per employee, and will
take place in Orlando, Florida unless another site is specified by
Seller. Buyer will be responsible for all expenses incurred by
Buyers employees related to the training.
Page 36 of 37
<PAGE> 37
Exhibit 3. YEAR 2000 (Y2K) COMPLIANCE
Section 1.02 Seller warrants, with respect to Products that Seller has
undertaken commercially practicable efforts to ensure, to the extent within its
reasonable control, that when such Products are properly used in accordance with
the applicable Product Specifications, then both before and after 01 January
2000 such Products will accurately receive, provide, and process date and date
dependent data (including calculating, comparing, and sequencing) from, into,
and between the twentieth (20th) and the twenty-first (21st) centuries through
to the year 2036, including the years 1999 and 2000, and leap year calculations.
Seller further warrants during Product warranty period, as specified in this
Agreement, Product shall function without any material, service affecting,
non-conformance to the applicable Product Specifications as a consequence of
date and date dependent data, to the extent that other software used in
combination with Seller's Products sold or licensed hereunder is also Year 2000
Compliant and properly exchanges date and date dependent data with Seller's
Products. If Product fails to so function as set forth herein, the Parties agree
to negotiate a commercially reasonable solution. Any modification to Products
not performed by Seller, other than with respect to Modifiable Software, shall
void this warranty.
Page 37 of 37
<PAGE> 1
EXHIBIT 10.10
TRITON NETWORK SYSTEMS, INC.
SUPPLY AGREEMENT
This Supply Agreement (the "Agreement") is made as of
December 23, 1999 (the "Effective Date")
between Triton Network Systems, Inc. ("Seller", also referred to as "Triton"),
a Delaware corporation with principal place of business at:
8529 South Park Circle,
Orlando, FL; USA 32819
and
Advanced Radio Telecom Corp. ("Buyer", also referred to as "ART") a Delaware
corporation with principal place of business at:
500 - 108th Avenue NE, Suite 2600,
Bellevue, WA, USA 98004
In consideration of the mutual covenants contained herein,
the Parties agree as follows:
TRITON NETWORK SYSTEMS, Inc. SUPPLY AGREEMENT NUMBER:
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<PAGE> 2
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
1.01 "ADDITIONAL TERM" has the meaning set forth in Section 3.01.
1.02 "AFFILIATE" means any entity listed in Exhibit I or any entity which
is a parent or subsidiary of a Party or which is controlled by or
under common ownership or control of a Party.
1.03 "AGREEMENT" means this Supply Agreement, and the Exhibits attached
hereto, as they may be amended from time to time.
1.04 "ACCEPTANCE" means with respect to deliveries of the Equipment to
Buyer, that the shipment has been inspected by Buyer, the paperwork,
including packing list, accurately matches the shipment and the
shipment matches the Buyer's Purchase Order or other written
delivery instructions.
1.05 "ANNUAL SUPPORT FEE" shall mean the fees for annual software support
by Seller as reflect in Exhibit 2.
1.06 "BACKWARDS COMPATIBLE" means (i) with respect to Software, the ability
of newer or more advanced versions to function seamlessly with older
or less advanced version of Software and, Products, including without
limitation, all existing Software and Products purchased by Buyer
and (ii) with respect to Equipment the interoperability and
compatibility of such Equipment with existing Products purchased by
Buyer and Buyer's network infrastructure, in each case resulting in no
reduction in the existing level of functionality of the existing
Products or Buyer's network infrastructure.
1.07 "CHANGE ORDER" shall have the meaning set forth in Section 5.03(d).
1.08 "CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
10.01.
1.09 "DELIVERY DATE" means the date on which Products ordered by Buyer are
to be delivered to the location(s) as specified by Buyer in Purchase
Orders accepted by Seller pursuant to Section 5.03.
1.10 "DOCUMENTATION" means the system standard documentation provided to
Buyer, in written or electronic form, as described in this Agreement.
All Documentation shall be subject to applicable copyright and
confidentiality restrictions.
1.11 "EFFECTIVE DATE" shall mean December 23, 1999.
1.12 "EQUIPMENT" means the hardware Products provided to Buyer as defined
in this Agreement. In addition to hardware developed by Seller,
Equipment generally includes OEM Equipment and other Third Party
Equipment, except as otherwise provided in this Agreement.
1.13 "FORECAST" means non-binding forecasts of Buyer's anticipated Product
orders as most recently revised pursuant to Section 5.03 of this
Agreement.
1.14 "IFU" refers to Seller's Invisible Fiber(TM) unit.
1.15 "INITIAL TERM" has the meaning set forth in Section 3.01.
1.16 "INITIAL PURCHASE CANCELLATION FEE" has the meaning set forth in
Section 4.05.
1.17 "INITIAL PURCHASE COMMITMENT" has the meaning set forth in
Section 4.02.
1.18 "LATE SHIPMENT" has the meaning set forth in Section 5.04.
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Triton Network Systems, Inc. Confidential 2
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<PAGE> 3
1.19 "LIST PRICE" means the Seller's standard price before any discount,
as may be available in price lists from time to time.
1.20 "MAJOR SOFTWARE RELEASE" means a Software Release which contains
significantly new features and functionality (only) and does not
include maintenance releases, updates or bug fixes.
1.21 "NET PRICE" means the price the Buyer will pay after Seller's
discount.
1.22 "PARTY" means either Buyer or Seller.
1.23 "PRODUCT" means, individually and collectively, the Equipment,
Software, and Documentation specified in Exhibit 2. In addition, any
item Seller adds to its generally available standard Product price
list or so identifies to Buyer in a Quotation shall be deemed
incorporated into this Agreement upon the mutual agreement of the
Buyer and Seller, subject to additional terms and conditions specified
in the applicable Product Exhibit, if any.
1.24 "PRODUCT SPECIFICATION" means those specifications set forth in
Exhibit 6 to this Agreement. Exhibit 6 may be revised from time to
time by the mutual agreement of the Parties to address performance
issues revealed by testing during the Term hereof.
1.25 "PURCHASE ORDER" means a written, numerically controlled and dated
purchase authorization document issued by Buyer or Buyer Affiliate to
Seller or Seller Affiliate, specifying the types and quantities of
Products to be furnished by Seller pursuant to this Agreement.
1.26 "RPS" means a Radio Pair System which includes two (2) IFUs, mounting
brackets and initial Software.
1.27 "QUOTATION" means a written budgetary or firm price quotation, as
specified in this Agreement, issued by Seller to Buyer for the supply
of any Products pursuant to this Agreement.
1.28 "SHIP DATE" means the date on which a Product ordered by Buyer is to
be shipped as set forth in the relevant Purchase Order, or in the case
of Software, the date upon which such Software is either available for
download by Buyer or physically shipped to Buyer.
1.29 "SOFTWARE" means the Seller's proprietary and/or Third Party Software
computer programs provided to Buyer (consisting of firmware and logic
instructions in machine readable code residing in, or intended to be
loaded in computer memories which provide basic logic, operating
instructions and Seller-related application instructions, but
excluding customer data) as well as the Documentation used to
describe, maintain and use the programs. Any reference herein to
Software being "sold," "purchased" or the like is understood to be a
reference in fact to the program being licensed.
1.30 "SOFTWARE LICENSE" shall mean the license to use Software granted to
Buyer by Seller pursuant to this Agreement.
1.31 "SOFTWARE RELEASE" means revisions to Software or new Software
containing new features, and/or enhancements, and/or certain problem
fixes that may be supplied by Seller to Buyer from time to time.
1.32 "SOURCE CODE" shall have the meaning set forth in Section 7.07.
1.33 "STANDARD INTERVAL" means the standard time prior to the shipment of
a Product following acceptance of a Purchase Order by Seller. Seller's
Standard Interval is ninety (90) days for forecasted quantities and
one hundred twenty (120) days for unforecasted quantities.
1.34 "TAC" means Seller's Technical Assistance Center.
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1.35 "TERM" means the duration of this Agreement.
1.36 "TERRITORIES" means the countries, country, or portion of country
that are covered by this Agreement as noted in Exhibit 4. The
Parties may, by mutual written agreement, amend this Agreement from
time to time to add additional countries to the Territories.
1.37 "THIRD PARTY" means any individual or legal entity not including
Buyer and Seller and their respective Affiliates.
1.38 "THIRD PARTY EQUIPMENT" means any Equipment not of Seller's
manufacture which are identified in Exhibits to this Agreement. In
addition, any Equipment Seller adds to its generally available
standard Third Party Equipment price list or so identifies to Buyer
in a Quotation shall be subject to the terms and conditions of this
Agreement and any mutually acceptable additional terms and
conditions specified in writing. Seller may also recommend Third
Party Equipment that is not included in the Exhibits or provided by
the Seller. Any Third Party Equipment recommended by but not sold by
the Seller is not covered under the terms and conditions set forth
in this Agreement.
1.39 "THIRD PARTY PRODUCTS" means, collectively, Third Party Equipment and
Third Party Software.
1.40 "THIRD PARTY SOFTWARE" means any Software not owned by Seller which
is included within Licensed Software.
ARTICLE 2. SCOPE OF AGREEMENT
2.01 This Agreement sets forth the terms and conditions under which Buyer
and its Affiliates may order Products from Seller and its Affiliates
and Seller and its Affiliates will supply Products to Buyer and its
Affiliates. Unless otherwise set forth herein, any reference in this
Agreement to Seller or Buyer shall be deemed to include their
respective Affiliates. Buyer may use the Products itself, or may use
the Products to provide services to others, or sell the Products to
Third Parties subject to the terms and conditions of this Agreement.
2.02 Unless specifically stated otherwise, all references to money or
currency shall be in U.S. dollars and all documentation,
correspondence, and communication shall be in the English language.
2.03 Seller shall meet all Buyer supply requirements as set forth in
accepted Purchase Orders irrespective of Purchase Orders for
Equipment from other parties; provided, however, such Buyer
requirements are reasonably consistent with Forecasts submitted by
Buyer to Seller in the manner set forth herein.
2.04 Subject to Section 4.03 below, this Agreement shall also apply to the
products provided by Seller and installed as of the Effective Date in
Buyer's network in San Jose, California pursuant to the Evaluation
Trial Agreement dated as of April 29, 1999, subject to section 4.03
below, which products shall be deemed to be "Products" under this
Agreement.
ARTICLE 3. TERM
3.01 The initial term of this Agreement is three (3) years from the
Effective Date (the "Initial Term"). Following the Initial Term, this
Agreement shall be automatically renewed for successive one (1) year
terms (each, an "Additional Term"); provided, that (i) at any time
after this Initial Term Buyer may terminate this Agreement by
providing thirty (30) days prior written notice to Seller,
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<PAGE> 5
and (ii) at any time beginning one year after the expiration of the
initial Term, Seller may terminate this Agreement by providing
thirty (30) days prior written notice to Buyer.
ARTICLE 4. PURCHASE RIGHTS AND COMMITMENTS
4.01 Subject to the terms and conditions of this Agreement, Seller
agrees to sell and Buyer agrees to buy Products in accordance with
the pricing and benefits set forth in Exhibit 2 of this Agreement.
4.02 Buyer agrees to place Purchase Orders for 1,000 RPSs to be delivered
by December 31, 2000. This "Initial Purchase Commitment" is Buyer's
sole commitment with respect to purchasing Products from Seller
during the Term. Concurrent with execution of this Agreement, Buyer
will issue a Purchase Order for 170 RPSs to be delivered before
June 30, 2000, which RPSs shall be counted towards the Initial
Purchase Commitment. Buyer will issue confirming Purchase Orders with
specific delivery information such as Ship Date and location. An
additional 750 RPSs of the Initial Purchase Commitment are to be
delivered by December 31, 2000 pursuant to Purchase Orders issued by
Buyer. Buyer may apply purchases of any of Seller's 38Ghz products
to the Initial Purchase Commitment. If prices for Seller's future
38Ghz products are greater than the prices set forth in this
Agreement, the Initial Purchase Commitment shall be measured by total
purchase price not by the number of units.
4.03 Seller shall replace the IFUs which are installed in Buyer's network
in San Jose, California. ("San Jose IFUs") as of the Effective Date
with new IFU's which Seller delivered to) Buyer pursuant to Purchase
Orders number 3886, 3888 or 3891. Seller will replace the IFUs, at
Seller's sole cost and expense, at a mutually acceptable time during
January, 2000. Buyer shall return the San Jose IFUs to Seller, at
Seller's sole cost and expense, and Seller will not bill Buyer for
the San Jose IFUs. Seller shall submit an invoice for equipment
(which invoice shall not include the San Jose IFU's or any replaced
cable or other equipment which has been or will be returned to Seller
in connection with the IFU replacement) provided by Seller and
installed as of the Effective Date in Buyer's network in San Jose,
California. Buyer shall promptly pay such invoice subject to
reconciling such invoice with the Triton supplied equipment in use in
the ART network as of the Effective Date.
4.04 Purchases of RPSs (i) by Affiliates of Buyer, (ii) pursuant to orders
outstanding on the date hereof as set forth in the Letter Agreement,
dated November 11, 1999, between Buyer and Seller, and (iii)
delivered by Seller to Buyer prior to the date of this Agreement,
shall count towards Buyer's Initial Purchase Commitment. Buyer may,
without any further liability to Seller, cancel its Initial Purchase
Commitment upon the occurrence of any of the following events, in
which case Buyer has no obligations to pay any Initial Purchase
Cancellation Fee or otherwise:
(a) Seller materially breaches this Agreement and such breach
recurs, continues or remains uncured after thirty (30) days
written notice;
(b) During the period commencing on the Effective Date and
ending on June 1, 2000, there occur [*], or during the period
commencing on June 1, 2000 through the remainder of the Term,
there occurs [*];
(c) Products fail to meet the performance requirements set
forth in the Product Specifications;
[*] Confidential Treatment Requested
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(d) Seller files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is
not dismissed within forty-five (45) days of such involuntary
filing; Seller admits the material allegations of any
petition in bankruptcy filed against it; Seller is adjudged
bankrupt; Seller makes a general assignment for the benefit
of its creditors, if a receiver is appointed for all or a
substantial portion of its assets and is not discharged
within sixty (60) days after his appointment; or Seller
commences any proceeding for relief from its creditors in any
court under any state insolvency statutes;
(e) Seller fails to ship to Buyer the quantity of Products
set forth in an accepted Purchase Order (which Products
conform with Product Specifications) within fifteen (15) days
after the Ship Date set forth in such accepted Purchase
Order;
(f) Seller materially disregards or materially violates any
applicable laws;
(g) The Product Specifications or the price is materially
changed due to the effect of changes in government
regulations which require such change;
(h) A force majeure event which impedes Sellers performance
hereunder continues for a period of thirty (30) days
(regardless of whether, as a result of such event, Buyer
cancels any Purchase Order in accordance with Section 5.05
hereof);
(i) Buyer is enjoined from using any Products and Seller is
unable to cure the effects of such injunction pursuant to
Section 9.02(a) or (b) within thirty (30) days; or
4.05 Subject to Section 4.04, if Buyer fails to place Purchase Orders (or
later cancels such Purchase Orders (other than pursuant to Section
5.05(c))) for 1,000 RPSs to be delivered by December 31, 2000, Buyer
will pay to Seller a penalty (the "Initial Purchase Cancellation Fee")
equal to ten percent (10%) of the aggregate purchase price of the
number of RPSs equal to the remainder of (i) 1000 RPSs minus (ii) the
total number of RPSs included in Purchase Orders placed by Buyer to be
delivered on or before December 31, 2000. Any RPS included in any
Purchase Order placed by Buyer to be delivered prior to December 31,
2000 which is cancelled by Buyer in accordance with Section 5.05(c)
hereof shall be counted as delivered (and accordingly included in
clause (ii) of the immediately preceding sentence) for purposes of
calculating the Initial Purchase Cancellation Fee pursuant to this
Section 4.05. Payment by Buyer of the Initial Purchase Cancellation
Fee shall be Seller's sole and exclusive remedy for Buyer's failure to
satisfy the Initial Purchase Commitment, and Seller agrees not to seek
any other remedy for such failure.
Article 5. TERMS OF PURCHASE
5.01 Pricing
(a) The pricing of the Products shall be as specified in the
attached Exhibit 2 plus applicable taxes unless otherwise
agreed to between the Parties in writing or in the case of
regulatory change as specified in this Section 5.01 (a). The
prices set forth in the attached Exhibit 2 for
Seller-manufactured Products are based on Seller's design,
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manufacture, and delivery pursuant to its design criteria
and manufacturing processes and procedures in effect on the
Effective Date. If, solely as a result of the imposition of
requirements by any Federal, State or local government
during the Term, there is a change in such criteria,
processes or procedures or any material change in the
Products caused by such governmental requirements, the
prices may be adjusted by Seller, subject to reasonable
approval of Buyer and mutual written agreement of Seller and
Buyer. Any OEM Equipment and Third Party Products which have
been so identified in the attached Exhibit 2 shall be
furnished subject to the applicable vendor's then-current
terms, conditions and specifications subject to Buyer's
written acceptance of such terms, conditions and
specifications.
(b) All prices listed in Exhibit 2 and in any and all
Quotations, unless otherwise noted, are FOB Seller and are
exclusive of all freight, insurance, duties, taxes (more
specifically including but not limited to excise, sales,
value added, goods & services, and usage taxes), and any and
all other levies as might be incurred after the FOB point.
5.02 Payment
(a) Product Payment - Payment for Products shall be due upon the
later of thirty (30) days following shipment of such
Products to Buyer and thirty (30) days following the receipt
by Buyer of Seller's invoice with respect to such Products.
Notwithstanding any other provision hereof, in the event
that (i) Buyer fails to make timely payment for Products
pursuant to this Section 5.02(a), and (ii) Buyer does not
make payment to Seller for such Products within fifteen
(15) days after the receipt by Buyer of written notice from
Seller of such failure, Seller shall have no obligation to
ship any Products to Buyer hereunder until such time as
Buyer remits such payment to Seller.
(b) Annual Support Fees - Payment for Annual Support Fees
ordered by Buyer shall be due within thirty (30) days of
receipt of Seller's invoice given in accordance with
Exhibit 2.
(c) Timely Payment - Past due amounts shall bear interest from
the expiration of such period at the rate of one and
one-half percent (1 1/2%) per month (or such lesser rate as
may be the maximum permissible rate under applicable law).
(d) Taxes - Buyer's price for Products as reflected in this
Agreement does not include any taxes, duties or charges of
any kind imposed by any federal, state or local governmental
entity on the sale or shipment to Buyer of Products,
excluding only those taxes based solely on Seller's net
income. When Seller has the legal obligation to collect
such taxes, the appropriate amount shall be added to Buyer's
invoice and shall be paid by Buyer unless Buyer provides
Seller with a valid tax exemption certificate authorized by
the appropriate taxing authority.
5.03 Forecasts and Purchase Orders
(a) Within thirty (30) days after the Effective Date, Buyer will
provide Seller with a written, non-binding Forecast
estimating the Products Buyer will purchase during the
period of twelve (12) consecutive calendar months commencing
on the Effective Date. Buyer will update such Forecast
monthly in order to provide Seller with a twelve month
rolling view of prospective purchases by Buyer. The
Forecasts shall not be binding and only are intended to give
the Parties an estimate of future purchases for planning
purposes.
(b) Products to be procured hereunder, as well as the Ship Date,
shall be listed in a Purchase Order issued by Buyer pursuant
to this Agreement and subject to the Forecast process listed
above. Each Purchase Order shall specifically reference this
Agreement, and time
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is of the essence in connection with the performance of
each Purchase Order. Any Purchase Order issued by Buyer
to Seller for Products shall be governed in all respects
by the terms and conditions of this Agreement. A form of
Purchase Order is attached hereto as Exhibit 7. Buyer and
Seller agree that, except for non-conflicting
administrative terms as provided below, any additional or
preprinted terms or conditions on a Purchase Order shall
be null, void and of no effect. Each Purchase Order shall
specify, in addition to other appropriate information as
may be mutually agreed upon:
(i) name and address of Buyer, or Buyer Affiliate;
(ii) Buyer Purchase Order number and Purchase Order date
of issuance;
(iii) name and address of Seller, or as appropriate,
Seller Affiliate, which shall be an Affiliate set
forth in the Exhibit 1, that will be providing
Product being ordered;
(iv) incorporation within, by reference, this Agreement;
(v) types and quantities of Product to be furnished by
Seller as set forth in Exhibit 2 or as provided in
a Quotation;
(vi) applicable prices, charges, and fees with respect
to such Product as set forth in Exhibit 2 or as
provided in a Quotation;
(vii) location or facility to which Product is to be
delivered;
(viii) Ship Date of Product;
(ix) billing address of the Party responsible for the
payment whether it is the Buyer, or Buyer Affiliate
to which Buyer intends to resell the Product, if
any, and other information required under this
Agreement to be included in a Purchase Order;
(x) proper authorization of Buyer or Buyer's agent
(c) Seller is obligated to accept all Purchase Orders issued by
Purchaser under this Agreement except those Purchase Orders
which (i) are missing the material terms required by this
Article to be contained in a Purchase Order or call for
delivery of Products in an amount which is in excess of [*]
more than the amounts contained in the Forecast for the month
for which such a Purchase Order is issued or (ii) have Ship
Dates that materially vary from Standard Intervals. All
Purchase Orders shall be deemed to have been accepted by
Seller unless (i) Seller notifies Buyer in writing within
fifteen (15) business days of receipt of a Purchase Order
that it will not accept such Purchase Order and (ii) Seller
may rightfully decline to accept such Purchase Order pursuant
to the immediately preceding sentence. Any Purchase Order not
rightfully rejected shall be deemed to be accepted by Seller.
A Purchase Order submitted pursuant to the terms and
conditions of this Agreement, and which Seller has accepted,
shall constitute an Agreement between Buyer and Seller. Any
Purchase Order for which Seller gives timely notice of
non-acceptance if non-acceptance is permitted under this
Section shall be deemed void. The Product quantities listed
on any Purchase Order which conforms to the terms and
conditions of this Agreement, which are consistent with
Forecasts including any permitted variance to such Forecasts
and (i) which are not accepted by Seller pursuant to the
first sentence of this clause (c) or (ii) which are cancelled
by Buyer in accordance with Section 5.05(c) hereof, shall be
counted toward the Initial Purchase Commitment.
(d) In addition to changes allowed in the Forecast process set
forth in Section 5.03 and
[*] Confidential Treatment Requested
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changes pursuant to Sections 5.05 and 5.06, Buyer may at any
time request additions, alterations, deductions, or
deviations to a Purchase Order subject to the condition
that such changes and any adjustments resulting from such
changes, including but not limited to schedules and prices,
shall be mutually agreed upon, and if so agreed,
subsequently detailed in a written revision to the
applicable Purchase Order ("Change Order") signed by a
designated Buyer representative and Seller representative.
Change Orders which are processed outside of Seller's
customary processing cycle or which require additional work
by Seller to comply with such changes may be subject to a
reasonable change fee provided Seller has given Buyer a
written quote for such change fee and Buyer and Seller have
mutually agreed to such change fee in writing prior to or
concurrent with execution of the Change Order. If Buyer
fails to accept the change fee. Seller has no obligation to
accept or comply with the Change Order.
(e) Purchase Orders may be issued either electronically, such as
through electronic data interchange, or via traditional
manual methods, as mutually agreed to by the Parties.
5.04 Delivery - Delivery of Products under this Agreement shall be F.O.B.
Seller's specified facilities. The Seller shall: (a) be responsible
for and arrange for shipment of the Products to Buyer's site as
specified in the Purchase Order applicable thereto; (b) prepay all
shipping and handling charges for the Products; and (c) invoice Buyer
for such charges upon shipment of all the Products specified in a
Purchase Order. Buyer shall reimburse Seller for such charges at
Seller's actual cost. Seller shall be responsible for repair or
replacement of any Products damaged in shipment without cost to
Buyer, and Seller shall file all claims for transportation damage. If
any Product is lost, or damaged in transit, Seller shall use all
commercially reasonable best efforts to supply a replacement within
the shortest possible time at the same price and terms as applicable
to the original Purchase Order.
All shipments are subject to the following conditions:
(a) Partial shipments or early shipments may only be sent by
Seller if Buyer has approved such partial or early shipments
in writing and in advance;
(b) Seller shall notify Buyer, via e-mail as directed by Buyer,
when orders are shipped;
(c) The outside of all packing cartons shall be clearly marked
with (i) model name or number, (ii) part number, (iii) serial
number, when applicable, in barcode and human readable format
(iv) Buyer Purchase Order number and (v) Buyer part number;
(d) Packing slips shall accompany shipment and shall include
serial numbers, when applicable, in barcode and human
readable format and shall reference Buyer's Purchase Order
number;
(e) Shipment sent via truck load or less than truck load shall
be stretch wrapped on pallets with markings facing outwards;
and
(f) Buyer may, at its discretion, (i) reject shipments that do
not comply with the preceding shipping requirements or (ii)
apply as a credit against amounts due to Seller, Buyer's
reasonable labor costs arising from Seller's failure to
comply with the preceding shipping requirements.
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(g) Seller shall not ship Products more than five (5) business
days prior to the requested and accepted Ship Date in the
Purchase Order without the consent of the Buyer. Subject to
the immediately preceding sentence, in the event Seller
ships Products to the Buyer prior to the Ship Date in the
Purchase Order, Seller shall provide Buyer with reasonable
advance notice of the date on which Seller intends to
deliver such Products.
(h) In the absence of specific shipping instructions from Buyer,
Seller may ship by the method it deems most advantageous;
provided however that Buyer shall not reimburse Seller for
the costs of overnight courier or other expedited shipping
unless Buyer has agreed in advance to pay such costs for
such Purchase Order in writing.
(i) Title to the Product (excluding Software) and risk of loss
shall pass to Buyer upon shipment to Buyer.
(j) Buyer shall inspect the Product upon delivery and shall
advise Seller in writing of any obvious physical defects,
discrepancies, and/or shortages observed between the Product
physically inspected and the corresponding Product shipment
packing list provided by Seller. Buyer shall issue to Seller
a defect/discrepancy written report within fifteen (15)
business days of receipt of Product. If no such report is
issued to Seller within fifteen (15) business days the Buyer
shall be deemed to have accepted the Products as delivered.
(k) Buyer shall store all Products at the proper temperature and
other environmental conditions, as specified in the Product
Specifications, to maintain Product quality. In the event of
damage to any Product, for reason of improper storage,
thereby rendering Product unfit for intended use, Buyer
shall promptly notify Seller in writing of the facts, and
shall not use such Product except as directed by Seller.
(l) For all deliveries after January 1, 2000, if any shipment
of Products to Buyer by Seller occurs more than ten (10)
business days following the Ship Date in the accepted
Purchase Order and such delay is not caused by a force
majeure event, such delivery shall be a "Late Shipment."
(m) Not later than thirty (30) days prior to the Ship Date
relating to Product covered by a Purchase Order, Buyer may
notify Seller in writing that (i) Buyer does not wish to
receive shipment of any Products on the date set forth in
such Purchase Order, or (ii) Buyer's facilities are not
prepared in sufficient time for Seller to make delivery on
such date. In either case, Seller shall delay delivery as
requested by Buyer. Seller may, subject to Buyer's consent,
store such Products in a commercially reasonable manner
consistent with the storage requirements set forth in the
Product Specifications at Buyer's risk of loss. Buyer shall
reimburse Seller for reasonable out-of-pocket storage and
shipping fees associated with such delay.
5.05 Cancellation
(a) Subject to Section 5.05(b), upon written notice to Seller,
Buyer may cancel all or any part of a Purchase Order if
Seller receives a written and dated Purchase Order
cancellation notice before the Ship Date.
(b) Buyer shall pay cancellation charges based on the date a
Purchase Order cancellation notice is received by the Seller,
and such cancellation charges shall not exceed the
schedule as shown below (such charges shall be the sole and
exclusive remedy of the Seller with respect to cancellation
of Purchase Orders pursuant to this section 5.05):
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<TABLE>
<CAPTION>
Days Prior Notice of PO Cancellation Order Cancellation Charge
------------------------------------ -------------------------
<S> <C>
Greater than 60 days before Ship Date or within None
30 Days of Purchase Order
Greater than 30 and less than 60 days before Ship Date 20% of the Purchase Price
Less than 30 days before Ship Date 50% of the Purchase Price
</TABLE>
(c) In the event that ten (10) days after the requested Ship
Date for any Purchase Order Seller has not shipped the
Products subject to such Purchase Order, Buyer shall
have the right to cancel such Purchase Order without
cost or charge upon written notice to Seller by
facsimile, e-mail or otherwise. Seller shall notify
Buyer via e-mail if Seller is unable to ship Products on
the Ship Date. Seller shall pay any additional costs
required to expedite late shipments.
5.06 Change of Purchase Orders. Buyer may delay shipment of Product
without penalty as follows:
(a) Buyer may delay shipment of the first 250 RPSs until
June 30, 2000.
(b) Buyer may delay shipment of the next 750 RPSs until
December 31, 2000.
(c) After the first 1000 RPSs are delivered, Buyer may delay
shipment of Product for up to six (6) months for each
Purchase Order issued thereafter as set forth below;
provided, however, Buyer may not delay shipment of
Products less than thirty (30) days before the Ship Date
unless mutually agreed upon:
(i) During the first six (6) months after the first
1,000 RPSs are delivered, up to fifty percent
(50%) of any Purchase Order.
(ii) During the following six (6) months, up to forty
percent (40%) of any Purchase Order.
(iii) During the following six (6) months, up to thirty
percent (30%) of any Purchase Order.
(iv) Remainder of term, up to twenty percent (20%) of
any Purchase Order.
(d) Seller will not invoice Buyer for Products subject to
the above delays until such Products are actually
shipped to Buyer.
5.07 Invoicing. Each invoice shall include (a) Buyer's Purchase Order
number, (b) Seller's invoice number, (c) quantity and price of
each item shipped or services rendered, (d) applicable sales or
other tax, (e) freight charges (if applicable) and (f) final total
cost.
5.08 Resale Rights. Buyer shall have an unlimited right to resell the
Products to its Affiliates or as part of a service arrangement or
business arrangement with Third Parties if the Equipment is to be
used in such service or business arrangement; provided, however,
that Buyer is not permitted to sell to a direct competitor of
Seller. Seller has right of first refusal for sales which are not
to an Affiliate of Buyer or part of a service or business
arrangement (other than for sales pursuant to a foreclosure by any
Third Party on such Third Party's security interest) provided
Seller purchases on identical terms and conditions. Any Software
License, warranty and prepaid Annual Support Fees are transferable
with the sale of Equipment to the extent the foregoing provisions
are applicable to Buyer.
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ARTICLE 6. EQUIPMENT CHANGES
Notwithstanding any other provisions contained herein, Seller reserves the
right, upon prior approval from Buyer, to make changes in the Products in whole
or in part, or to substitute Products of later design at any time prior to
delivery thereof, provided that such changes do not adversely affect performance
or function or increase the cost to Buyer and further provided that the changed
or substituted Products meet or exceed Product Specifications. Such changes do
not obligate Seller to make any changes in items of the Products previously
delivered unless such changes affect the interoperability of Products including
Software in Buyer's network in which case such changes to previously delivered
Products, including Software, as are required to maintain the interoperability
and functionality of such Products will be made at Seller's expense.
ARTICLE 7. SOFTWARE LICENSING
7.01 Buyer is granted no title or ownership rights to the Software or
Documentation, which rights shall remain with Seller or Seller's
suppliers, as appropriate. This Agreement does not entitle Buyer to
the receipt or use of, or access to, Software Source Code (except as
set forth in Sections 7.07 and 7.08) or any right to reproduce the
Software or Documentation, and Buyer agrees that it shall not
decompile, reverse engineer or otherwise attempt to gain access to
the Software Source Code. The obligations of Buyer under this section
shall survive the expiration or termination of this Agreement.
Notwithstanding the foregoing, Buyer may reproduce or copy Software
or Documentation for installation, back-up or archival and test
purposes and may provide such copies to Third Parties who provide
installation or maintenance services for Buyer. Buyer will notify
Seller in the event it provides copies of Software to Third Parties.
7.02 Buyer shall be granted a perpetual, non-exclusive, transferable (as
limited by the provisions of this Agreement), non-assessable,
unlimited-user, paid-up license to:
(a) use the Software furnished;
(b) use and make adaptations of the Software (or any part
thereof), subject to the provisions of this Agreement,
provided that any such adaptations are created as an
integral step in the use of the Software in conjunction with
a Product and that it is not used in any other manner;
(c) make as many copies of the Software and any related
Documentation as Buyer deems necessary for its use, archival
purposes, or test purposes, including use by Third Parties
who are acting under the control and direction of Buyer; and
(d) use the associated Software Documentation.
Buyer agrees that the license to use the Software is subject to its
continued use of and ownership of the Equipment upon which such
Software is installed and that Buyer shall have the right to sell,
pledge as security, or otherwise transfer the Equipment upon which the
Software resides and the related Software. Transferee shall be granted
a license to use the Software but no title or ownership rights to the
Software, which rights shall remain in Seller or its suppliers, as
appropriate and upon sale or transfer the terms of this Software
License shall apply to transferee.
7.03 All Software supplied by Seller under or in implementation of this
Agreement shall be treated by Buyer as the exclusive property, and to
the extent not publicly available, as proprietary and a trade secret,
of Seller and/or its suppliers, as appropriate
7.04 Seller may, from time to time, issue new Software Releases, including
Major Software Releases,
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which shall be made available to Buyer as part of the Annual Support
Fee and without additional cost or expense to Buyer.
7.05 The Software Releases shall be updated periodically throughout the
Term of this Agreement. Once an updated Software Release is
available, it shall be made available to Buyer subject to the terms
of this Agreement.
7.06 From the date of this Agreement through December 31, 2000, Seller
shall provide a special "Founding Customer Service Package" which
provides Buyer with the "Gold Level" support as defined in Exhibit 2
hereto [*] to the Buyer. Subsequent to December 31, 2000, during the
term of this Agreement, Seller shall provide its "Bronze Level"
support as defined in Exhibit 2 hereto at no charge to the Buyer.
After the "Gold Level" support has concluded, for the two (2) week
period following the issuance of a new Software Release, Seller shall
provide Buyer with access to dedicated technical assistance center
personnel twenty-four (24) hours per day, seven (7) days per week
with immediate response time.
7.07 No later than thirty (30) business days after Seller delivers
Software to Buyer, Seller shall, [*] place a copy of all Software
source code, including copies of the source code for any upgrades or
new releases developed by Seller in the future when they are
available (collectively "Source Code"), with an independent escrow
agent reasonably acceptable to Buyer along with written escrow
instructions to deliver all Source Code to Buyer upon request from
Buyer without further instructions in the event Seller declares
bankruptcy, or is involuntarily bankrupt. The Source Code shall be
designated in writing as being held in escrow for Buyer. The escrow
agent shall hold the Source Code for the Term of the Agreement. If,
at any time, Seller declares bankruptcy, or is involuntarily
bankrupt, upon notice from Buyer, the escrow agent shall immediately
transfer the Source Code to Buyer. Possession of the Source Code does
not give Buyer any rights to sell, rent or lease the Source Code or
Software to Third Parties.
7.08 In the event Seller no longer supports past releases of Software and
Buyer requires such unsupported Software to operate Equipment in
Buyer's network, Seller shall, within [*] days of Buyer's request,
provide Buyer with the Source Code for the unsupported Software to
enable Buyer to support the Equipment in its network. Possession of
the Source Code does not give Buyer any rights to sell, rent or lease
the Source Code or Software to Third Parties.
7.09 [*] Software Releases must be Backwards Compatible.
7.10 Repair and return of Equipment is [*] based on serial number with
[*] day turnaround from receipt at factory to return shipment.
ARTICLE 8. WARRANTIES
8.01 Seller Supplied Equipment
(a) Seller warrants for a period ending on (i) the later of
fifteen (15) months from the Ship Date or twelve (12) months
after installation for the first 1,000 RPSs; or (ii) fifteen
(15) months from the Ship Date for all RPSs delivered after
the first 1,000 RPSs, that under normal use and service the
Equipment subject to this Agreement will be free from
material defects or faulty workmanship, and shall operate in
compliance with the applicable Product Specifications. In the
event the Buyer changes its network configuration in a manner
that causes the Equipment not to operate in compliance with
the applicable Product Specifications, the Seller shall use
commercially reasonable
[*] Confidential Treatment Requested
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efforts to modify the Equipment so that it will so operate and
the parties shall negotiate in good faith applicable
amendments to the Product Specifications and the cost of
Product if necessary. The foregoing warranty shall not apply
to items normally consumed during operation such as, but not
limited to, lamps and fuses. [*] Equipment will be Backwards
Compatible with [*] other Equipment and Software. If Equipment
is not free from material defects or faulty workmanship or
fails to comply with the applicable Product Specification
during the warranty period, or is not Backwards Compatible as
required by the immediately preceding sentence, Seller will,
at its option, repair, replace, or modify the Equipment so
that it is free from defects and does comply with the
applicable Product Specifications and is so Backwards
Compatible. The warranty service shall be performed at
Seller's facility. If Seller is unable to repair or modify the
Equipment within a reasonable period of time so that the
Equipment conforms to the applicable Product Specification and
is so compatible, Seller shall replace the Equipment with
Equipment that conforms to such Product Specification and is
so compatible. In such cases Seller does not guarantee that
equipment with like serial numbers will be returned to the
Buyer but such replacement Equipment shall meet all Product
Specifications and provide the same function as the Equipment
it replaces. Seller's sole obligation and Buyer's exclusive
remedy under the warranty provisions of this Article with
respect to Equipment shall be limited to repair, modification,
or replacement of the defective or non functioning Equipment
or refund if Equipment cannot be provided which complies with
Product Specifications.
(b) The warranties set forth in this Article shall not apply to
any Products where the defect or non-conformance is due to:
(i) accident, alteration, abuse, misuse, or
repair not performed by Seller or Seller qualified
technician, provided that Seller will approve agreed
upon employees of Buyer and its agents as qualified
technicians;
(ii) storage other than as set forth in the
Product Specification;
(iii) failure to comply with all applicable
environmental requirements for Product as set forth
in the Product Specification, including but not
limited to temperature or humidity ranges;
(iv) performance of Product installation,
maintenance, operation, repair, relocation, or other
service not in compliance with Product
Specifications, unless such non-complying service was
performed by Seller or on Seller's behalf;
(v) breakage, damage, alteration, or removal of
any Seller affixed seal or label located on the RPS
without the Seller's written approval. The RPSs
contain no Buyer serviceable parts;
(vi) use in conjunction with a product specified
by Seller as incompatible with such Products;
(vii) any error, act, omission, vandalism,
mishandling or misuse by anyone other than Seller or
Seller's agents, employees, vendors, and
subcontractors; or
(viii) where written notice of the defect has not
been given to Seller within the applicable warranty
period.
(c) Buyer shall be responsible for de-installation and
re-installation of any warranty repair or replacement
Equipment. Buyer shall use qualified technicians to perform
any
[*] Confidential Treatment Requested
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<PAGE> 15
maintenance and/or repair to the Product during the warranty
period, where such maintenance and/or repair shall be confined
to tasks performed in accordance with Seller provided
Documentation.
(d) A return material authorization (RMA) must be obtained by
Buyer from the Seller prior to the return of any Product.
Seller shall not unreasonably delay or withhold issuing any
RMA to Buyer. Information regarding the RMA process is
provided in Exhibit 3.
(e) Warranty replacement Equipment may be new or reconditioned to
perform as new, at Seller's option. Notwithstanding the
foregoing, the warranty period of Equipment which has been
subject to repair or replacement by Seller shall commence upon
the Delivery Date of the repaired or replacement Equipment to
Buyer and shall expire on the later of one hundred twenty
(120) days from the Delivery Date or the last day of the
original warranty period with respect to the Equipment which
was repaired or replaced.
(f) All Equipment to be repaired or replaced, whether in or out of
warranty, shall be packed by Buyer in accordance with Seller's
reasonable instructions and shall follow Seller's reasonable
repair and return policy and procedures. Buyer shall bear risk
of loss and shall pay for all transportation charges for
Equipment returned to Seller and Seller shall bear such risk
and pay for transportation charges for repaired or replacement
Equipment shipped to Buyer. Seller shall use reasonable
efforts to ship repaired or replacement Equipment within
thirty (30) days of receipt of the defective Equipment. Seller
shall return the repaired or replaced Equipment to the Buyer
by the same transport method in which the Buyer sent the
Equipment to the Seller.
(g) If the Equipment that is returned to Seller is determined by
Seller to be beyond repair and is outside the warranty period,
Seller shall notify Buyer and Seller shall upon request from
Buyer sell Buyer replacement Equipment at the then current
Agreement price between the Parties for such Equipment, or if
no such Agreement exists, at the last price paid for such
Product.
(h) Seller shall maintain an adequate inventory of spare parts to
repair and replace all Products for a period beginning on the
date of this Agreement and ending on the fifth (5th)
anniversary of the termination of this Agreement or, if
longer, as otherwise provided by law.
8.02 Third Party Products
(a) With respect to any Third Party Products furnished by Seller
to Buyer, Seller shall secure from the applicable
manufacturers such warranties and indemnities as may be
available with respect to such Third Party Products, and
assign and pass through to Buyer all available warranties and
indemnities for such Third Party Products to the extent
legally assignable. In the event such warranties and
indemnities are not assignable to Buyer, Seller shall enforce,
if necessary, such warranties and indemnities on Buyer's
behalf. In addition to the above, Seller shall, at Buyer's
request, register Buyer with any and all Third Party Products
vendors (for Third Party Products that constitute systems as
opposed to individual components) such that Buyer is
acknowledged as a support obligation of the Third Party
Products vendors and Buyer can receive and obtain product
notices directly from the Third Party Products vendors. Seller
shall produce evidence of such registration within sixty (60)
calendar days from the date Buyer requests that Seller obtain
such registration.
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<PAGE> 16
(b) All Third Party Products unless otherwise stated in this
Agreement, or in the Third Party warranties, will follow the
same repair and return procedures as noted in Article 8.01.
8.03 Software
(a) Seller warrants for a period ending on (i) the later of
fifteen (15) months from the Ship Date or twelve (12) months
after installation for the first 1,000 RPSs; or (ii) fifteen
(15) months from the Ship Date for all RPSs delivered after
the first 1,000 RPSs, that under normal use and service the
Software shall (i) perform the necessary provide the full
functionality described in the Documentation and Product
Specifications and (ii) be Backwards Compatible with all other
Products. In the event the Buyer changes its network
configuration in a manner that causes the Software not to
operate in compliance with the applicable Product
Specifications, the Seller shall use commercially reasonable
efforts to modify the Software so that it will so operate and
the parties shall negotiate in good faith applicable
amendments to the Product Specifications. Seller represents
and warrants that, to the best of its knowledge, any Software
provided by Seller hereunder does not contain and will not
receive from any Seller data transmission via modem or other
Seller medium, any virus, worm, trap door, back door, timer,
clock, counter, or other limiting routine, instruction, or
design that would erase data or programming or otherwise cause
the Software or Equipment to become inoperable or incapable of
being used in the full manner for which it was designed and
created (but specifically excluding locking mechanisms
designed to prevent Buyer from using those Software features
or functions not licensed to Buyer under the terms of this
Agreement, referred to as "disabling code") including, without
limitation, any limitations that are triggered by:
(i) the Software being used or copied a certain number
of times, or after the lapse of a certain period of
time;
(ii) the Software being installed on or moved to a central
processing unit that has a serial number, model
number, or other identification different from the
central processing unit on which the Software was
originally installed; or
(iii) the occurrence or lapse of any similar triggering
factor or event.
(b) In the event Seller introduces a disabling code into the
Software, Seller shall:
(i) take all steps necessary at Seller's sole cost to
test a new copy of the Software for the presence of
disabling codes;
(ii) furnish to Buyer a new copy of the Software without
the presence of disabling codes;
(iii) install and implement such new copy of the Software
at no additional cost to Buyer; and
(iv) take all steps necessary, at Seller's sole cost, to
restore any and all data or programming lost by
Buyer as a result of such disabling code. In the
event disabling codes are identified by Buyer or
Seller in the Software, Seller shall furnish to Buyer
a new copy of the Software without the presence of
disabling codes.
(c) Seller warrants all Software is Y2K compliant as set forth in
Exhibit 5.
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8.04 All Products. For all Products to be sold to Buyer under this
Agreement, Seller represents and warrants that the Products and
Buyer's ownership and use of such Products will not infringe upon
or misappropriate the intellectual property rights of any party and
no party shall have the right to seek damages from Buyer or enjoin
Buyer's right to use such Products.
8.05 THE WARRANTIES SET FORTH ABOVE CONSTITUTE THE ONLY WARRANTIES WITH
RESPECT TO THE PRODUCTS PROVIDED. THEY ARE IN LIEU OF ALL OTHER
WARRANTIES WRITTEN OR ORAL, STATUTORY, EXPRESS. IMPLIED OR
OTHERWISE, INCLUDING WITHOUT LIMITATION THE WARRANTY OF
MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
8.06 The terms of this Article shall survive any expiration or
termination of this Agreement.
ARTICLE 9. PATENT AND COPYRIGHT INFRINGEMENT INDEMNITY
9.01 Indemnification - Seller agrees to indemnify Buyer, as set forth
herein, with respect to any suit, claim, or proceeding brought
against Buyer alleging that Buyer's use of the Equipment or Software
constitutes an infringement of any United States or foreign patent,
copyright, trademark, trade secret or other intellectual property
rights. Seller agrees to defend Buyer, at Seller's expense,
against any such claims and to pay all settlement payments, costs
and legal expenses, including reasonable attorneys' fees, and any
damages awarded in any final judgment arising from such suit, claim
or proceeding; provided, however, that Buyer shall promptly advise
Seller of any such suit, claim, or proceeding and shall reasonably
cooperate with Seller in the defense or settlement of such suit,
claim or proceeding; provided further that Seller shall have sole
control thereof; and provided further that in those circumstances
where Seller's control of the defense may materially affect Buyer's
network and operations, Seller agrees to consult with Buyer in good
faith to obtain Buyer's input into appropriate defense methods. The
obligation of Seller hereunder with respect to any infringement
claim shall not apply to infringement claims based on:
(a) use of Product by Buyer in a manner, including combinations
with other products not provided by Seller, not contemplated
nor suggested by this Agreement or by Seller's product
documentation existing as of the Effective Date of this
Agreement;
(b) use of Product by Buyer in any other combination with other
products not provided by Seller, unless Seller would
otherwise normally be liable for such a combination as a
direct (or on the basis of contribution or inducement)
infringement, or unless the products not provided by Seller
are those products normally used in connection with
providing communication services over Buyer's network, and
provided that but for the existence of such combination by
Buyer, there would be no infringement claim;
(c) use of Product in a Territory other than that for which it
has been specified in Exhibit 4 to this Agreement;
(d) modifications made by Buyer without Seller's consent;
(e) Buyer's use of Equipment supplied by Third Parties;
(f) Seller's use of specifications or designs (except
specifications or designs which are or become industry
standards or are used by Seller in a Product that is
supplied to other customers) which are supplied by Buyer to
Seller for use in Seller Products to he purchased under this
Agreement provided that but for such use by Seller there
would be no infringement claim and further provided that the
Seller team providing the custom
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development and the Seller employees assigned to the Buyer
account team shall use all commercially reasonable best
efforts, without violating any Third Party confidentiality
obligations, to determine whether the requested
specification or design would violate any Third Party
patent, copyright, trademark, or other intellectual
property right and provide notice to Buyer of such knowledge
as soon as reasonably possible; and
(g) The foregoing exclusions shall not apply to use of Products,
Equipment or Software in Buyer's data communications network
if Buyer and Seller have discussed the use and
implementation of Seller's Product with other products not
provided by Seller and Buyer has purchased Products for use
in its network in a manner consistent with such discussions.
9.02 Injunction - In the event that an injunction is obtained against
Buyer's use of Equipment or Software arising from such patent or
copyright suit, claim or proceeding, in whole or in part, Seller
shall, at its option, either:
(a) procure for Buyer, at Seller's sole cost and expense, the
right to continue using the portion of the system enjoined
from use; or
(b) replace or modify, at Seller's sole cost and expense, the
same so that Buyer's use is not subject to any such
injunction.
If, after using commercially reasonable best efforts, Seller is not able to
achieve any of the above remedies, Seller shall refund the purchase price of
Product and pay for the de-installation of Seller's Product. Thereupon,
neither Party shall have any further liabilities or obligations under this
Agreement.
9.03 Limitation of Liability- THE FOREGOING STATES THE ENTIRE LIABILITY OF
SELLER FOR PATENT OR COPYRIGHT INFRINGEMENT BY THE EQUIPMENT OR
SOFTWARE. THE REMEDIES CONTAINED HEREIN ARE BUYER'S SOLE REMEDY FOR
ANY CLAIM OF INFRINGEMENT OF THIRD PARTY PATENT, COPYRIGHT,
TRADEMARK, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.
9.04 The terms of this Article shall survive any expiration or termination
of this Agreement.
ARTICLE 10. CONFIDENTIALITY
10.01 Confidentiality - All terms and conditions of that certain Mutual
Confidentiality and Non-Disclosure Agreement dated as of January 20,
1998 (the "Confidentiality Agreement") executed between Buyer and
Seller are hereby incorporated herein by this reference and shall
survive any expiration or termination of the Confidentiality
Agreement.
10.02 Release of Information - Neither Party shall, without the express
written consent of the other Party, publicly announce the existence
or terms of this Agreement or advertise or release any publicity or
press release regarding this Agreement except such disclosures that
may be required to comply with securities laws, court order or
similar order of an administrative or regulatory agency provided each
Party shall use reasonable BEST efforts to seek confidential
treatment or other protective orders which are available to limit
such disclosures and provide the other Party with advanced notice of
such disclosures. Notwithstanding the foregoing, either Party shall
be entitled to disclose this Agreement and its specific terms and
conditions to its financing sources, including prospective financing
sources and to its auditors, attorneys and other agents in the normal
course of its business; provided that such financing sources,
auditors, attorneys and other agents keep such information
confidential.
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ARTICLE 11. LIMITATION OF LIABILITY
11.01 General - THE TOTAL LIABILITY OF SELLER FOR ALL CLAIMS OF ANY KIND
FOR ANY LOSS OR DAMAGE, WHETHER IN AGREEMENT, WARRANTY, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, OR CLAIMS FOR
INDEMNIFICATION ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM THE
PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT EXCEPT FOR ARTICLE
9, ARTICLE 10, [*] SELLER'S OBLIGATION TO INDEMNIFY BUYER FOR
INFRINGEMENT CLAIMS SHALL IN NO CASE EXCEED THE TOTAL PRICE OF ALL
PURCHASE ORDERS ACCEPTED UNDER THIS AGREEMENT. NOTWITHSTANDING ANY
PROVISION OF THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE FOR LOST
PROFITS OR LOSS OF DATA OR FOR ANY INCIDENTAL, INDIRECT,
CONSEQUENTIAL, OR SPEC DAMAGES OF ANY NATURE WHATSOEVER FOR ANY
ACTION ARISING UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
THOSE RESULTING FROM THE USE OF EQUIPMENT PURCHASED HEREUNDER, OR THE
FAILURE OF THE EQUIPMENT TO PERFORM, OR FOR ANY OTHER REASON. THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
11.02 Specific Exclusions - Subject to the terms of this Agreement, Seller
shall not be responsible for any failures or inadequacies of
performance resulting from products not supplied by Seller. Seller
shall not be responsible for interference or disruption of service
caused by operation of other radio systems, lightning, motor ignition
or other similar interference. In the event Buyer utilizes facilities
or services supplied by others such as common carrier circuits,
antennas or towers, Buyer shall have the total responsibility for the
availability or adequacy of such services or facilities. Seller shall
have no liability as a result of non-performance, failures or poor
performance of the Product caused by, resulting from or attributable
to Buyer provided designs, specifications or Product configuration
requirements that have not been discussed with and approved by Seller
or failures caused by improper installation by Buyer.
11.03 The terms of this Article shall survive any expiration or termination
of this Agreement.
ARTICLE 12. MISCELLANEOUS
12.01 Applicable Law - The validity, construction, and performance of this
Agreement shall be governed by and interpreted in accordance with the
laws of the State of New York without giving effect to the principles
of conflict of laws thereof except to the extent that any mandatory
provisions of local laws in any country take precedence over the
provisions of this Agreement and New York State law. Jurisdiction
will reside in the federal courts located in Orange County, FL, USA,
King County, WA, USA. In the event of a dispute between the Parties
relating to this Agreement, the Parties shall make good faith efforts
to resolve such dispute through direct negotiations; provided, that
this provision shall in no way limit the rights of the Parties at any
time to pursue resolution through arbitration, judicial proceedings
or any other means of dispute resolution. Nothing in this
subparagraph precludes the Parties from agreeing to submit the
dispute for resolution by arbitration under conditions and procedures
to which they agree in advance.
[*] Confidential Treatment Requested
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12-02 Assignment - Other than as explicitly stated in this Agreement,
neither Party may assign or transfer this Agreement, or any of its
rights hereunder, without the prior written consent of the other
Party, which consent shall not be unreasonably withheld. Buyers
consent shall not be required for any assignment or transfer by
Seller to any Third Party for all or a part of Seller's right to
receive any monies ("Receivables") which may become due to Seller
pursuant to this Agreement. Consent shall also not be required for
the following transactions if the transactions do not involve a
direct competitor of the non-assigning Party: (a) a reorganization,
merger, consolidation or other form of corporate transaction or
series of transactions, (b) the sale of all or substantially all of
the assets of the Buyer or the Seller, or (c) the acquisition of all
or substantially all the outstanding equity of the Buyer or the
Seller.
Any assignment or transfer in violation of this Agreement shall be
void. Seller reserves the right to refuse to honor any assignment or
sublicense which, in the opinion of its legal counsel, would require
it to violate any United States export restriction, other law, or
regulation.
12.03 Consents - Each Party hereto represents and warrants that:
(a) it has obtained all necessary approvals, consents, and
authorizations of Third Parties and governmental authorities
to enter into this Agreement and to perform and carry out
its obligations hereunder;
(b) the persons executing this Agreement on its behalf have
express authority to do so, and, in so doing, to bind the
Party thereto;
(c) the execution, delivery, and performance of this Agreement
has been duly authorized by all necessary partnership or
corporate action and this Agreement is a valid and binding
obligation of such Party, enforceable in accordance with its
terms;
(d) On the Effective Date, Buyer has the necessary FCC
authorizations to use the relevant radio spectrum; and
(e) In the case of Seller, that Seller has obtained all
necessary government approvals for manufacture and sale of
Equipment.
12.04 Counterparts and Facsimile Signatures - This Agreement may be
executed in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one and the
same instrument. Facsimile signatures shall have the same effect as
original signatures, but any Party transmitting a signature by
facsimile shall promptly follow up with a copy of the same document
bearing the original signature of that Party.
12.05 Entire Agreement - This Agreement, including the Exhibits which are
attached hereto and incorporated herein, comprises all the terms,
conditions, and agreements of the Parties hereto with respect to the
subject matter hereof and supersedes all previous negotiations,
proposals, commitments, writings, publications, and understandings of
any nature whatsoever. No agent, employee, or representative of
Seller or Buyer has any authority to bind Seller or Buyer,
respectively, to any affirmation, representation, or warranty, except
as stated in this Agreement and unless such affirmation,
representation, or warranty is specifically included within this
Agreement it shall not be enforceable by Buyer or Seller, as
applicable, or any assignee or sub-licensee of Buyer or Seller, as
applicable. Buyer and Seller each hereby acknowledge and agree that
Buyer and Seller, respectively, has not relied on any representations
or warranties other than those expressly set forth in this Agreement.
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12.06 Export - Buyer shall not export any Product or technical data
received from Seller pursuant to this Agreement, or release any such
Product or technical data with the knowledge or intent that such
Product or technical data will be exported or transmitted to any
country or to foreign nationals of any country, except in accordance
with applicable laws or regulations concerning the exporting of such
items arising in the U.S. or other such jurisdiction affecting the
Product. Buyer shall obtain all authorizations from the appropriate
government in accordance with applicable law prior to exporting or
transmitting any such Products or technical data as specified above.
Seller will provide such assistance as Buyer reasonably requests to
obtain such authorizations. Buyer acknowledges that the transfer of
Products or components thereof outside of Canada or the United States
may be subject to the specific approval of the applicable Product
suppliers and other suppliers. All such approvals, if applicable,
shall be conditions precedent to any of the obligations of Seller
hereunder respecting such Product or components thereof.
12.07 Factoring - Seller may, upon notice to Buyer and subject to Buyer's
consent which may not be unreasonably withheld, sell receivables to a
Third Party or Affiliate.
12.08 Force Majeure - If the performance by a Party of any of its
obligations under this Agreement shall be prevented, restricted, or
interfered with by reason of any circumstances beyond the reasonable
control of that Party, including without limitation, fire, explosion,
embargoes, government ordinances or requirements, civil or military
authorities, acts of God or of the public enemy, war, revolution,
civil commotion, acts or omissions of carriers, loss of sources of
energy, power failure, breakdown of machinery, or labor difficulties
of third parties, including without limitation, strikes, slowdowns,
picketing, or boycotts, or other causes beyond the reasonable control
of the Party whose performance is affected, then the Parry affected,
upon giving prompt notice to the other Party, shall be excused from
such performance on a day-for-day basis to the extent of such
prevention, restriction, or interference (and the other Party shall
likewise be excused from performance of its obligations on a
day-for-day basis to the extent such Party's obligations relate to
the performance so prevented, restricted or interfered with),
provided that the Party so affected shall use reasonable efforts to
avoid or remove such causes of non-performance and both parties shall
proceed to perform their obligations with dispatch whenever such
causes are removed or cease. With respect to labor difficulties as
specified above, a Party shall not be obligated to accede to any
demands being made by employees or other personnel.
12.09 Headings - All headings used herein are for index and reference
purposes only, and shall not be given any substantive effect. This
Agreement has been created jointly by the Parties and no rule of
construction requiring interpretation against the drafter of this
Agreement shall apply in its interpretation.
12.10 Litigation Expense - The Party prevailing in arbitration, at trial,
or on appeal shall be entitled, in addition to such other relief as
may be granted, to a sum the court or arbitration may fix as
reasonable attorneys' fees, plus any associated costs.
12.11 Modification of Agreement - No addition to or modification of this
Agreement shall be effective or binding on either of the Parties
hereto unless reduced to writing and executed by the respective duly
authorized representatives of each of the Parties hereto.
12.12 Non-Waiver - The failure by either Party hereto at any time to
require performance by the other Party or to claim a breach of any
provision of this Agreement shall not be construed as affecting any
subsequent breach or the right to require the performance with
respect thereto or to claim a breach with respect thereto.
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12.13 NOTICE - All notices required or permitted to be given hereunder shall
be in writing and shall be delivered to the address listed on the
signature page of this Agreement by (i) certified mail, return receipt
requested, (ii) nationally recognized overnight courier, (iii) telecopy
or (iv) by hand. Any notice given pursuant to this Section shall be
effective five (5) days after the day it is mailed or upon receipt as
evidenced by the Postal Service return receipt card, or courier or hand
delivery written confirmation, or in the case of a telecopy, the
appropriate answerback, whichever is earlier. Either Party hereto may
change its address by a notice given to the other Party hereto in the
manner set forth above. All Purchase Orders and invoices to be delivered
pursuant to this Agreement shall be delivered via a delivery provider
that provides proof of delivery, such as certified mail, overnight mail,
or private courier company.
12.14 REGISTRATION - Product furnished under this Agreement for installation
within the United States shall, at the time of installation, comply to
the extent applicable, with the requirements of the Federal
Communications Commission's Rules and Regulations including, without
limitation, all labeling and customer instruction requirements. Product
furnished under this Agreement for installation outside the United States
shall comply with local governmental regulations, as applicable.
12.15 RELATIONSHIP OF THE PARTIES - The provisions of this Agreement shall not
be construed to establish any form of partnership, agency, or other joint
venture of any kind between Seller and Buyer, nor to constitute either
Party as the agent, employee, or legal representative of the other. All
persons provided by either Party to accomplish the intent of this
Agreement shall be considered solely as the providing Party's employees
or agents and the furnishing Party shall be solely responsible for
compliance with all laws, rules, and regulations involving, but not
limited to, employment of labor, hours of labor, working conditions,
workers' compensation, payment of wages, and withholding and payment of
applicable taxes, including, but not limited to income taxes,
unemployment taxes, and social security taxes.
12.16 SEVERABILITY - If any of the provisions of this Agreement shall be
declared or determined to be invalid or unenforceable under applicable
law and a Party deems such provisions to be material, that Party may
terminate this Agreement upon written notice to the other Party.
Otherwise such invalidity in whole or in part, of any term, covenant,
condition or provision of this Agreement shall not affect the validity of
the remainder of such term, covenant, condition or provision or the
Agreement or render this Agreement unenforceable, but this Agreement
shall be construed as if not containing the particular invalid or
unenforceable provision and the rights and obligations of the Parties
shall be construed and enforced accordingly.
12.17 THIRD PARTY BENEFICIARIES DISALLOWED - All covenants and agreements of
the Parties hereto are solely and exclusively for the benefit of the
Parties to this Agreement and no other person or entity shall have
standing to require performance of any such covenants and agreements, and
no person or entity shall, under any circumstances, be deemed to be a
beneficiary of such obligations.
12.18 INSPECTION - During the Term of this Agreement, Buyer has the right to
inspect the Seller's factory as often as Buyer deems necessary to ensure
quality assurance; provided that Buyer gives Seller reasonable written
notice of such inspection; and provided further that such inspections do
not unreasonably adversely affect the Seller's day-to-day activities at
the factory.
22
<PAGE> 23
12.19 CUSTOMER FEATURE REQUESTS - Seller shall use its commercially reasonable
efforts to complete and deliver to Buyer the agreed upon Customer Feature
Requests set forth in the "IFU Software & IFU Management Software Plan"
and the "IFU Hardware Plan" attached as Exhibit 8 hereto in accordance
with such plans.
SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have executed this "Agreement" as of the
"Effective Date" shown above, by their representative(s) being duly authorized
and having signed accordingly.
<TABLE>
<S> <C>
TRITON NETWORK SYSTEMS INC. ADVANCED RADIO TELECOM CORP.
Signed: /s/ H.W. Speaks, Jr. Signed: /s/ Robert S. McCambridge
------------------------------- -------------------------------
Name: H.W. Speaks, Jr. Name: Robert S. McCambridge
------------------------------- -------------------------------
Title: President Title: President
------------------------------- -------------------------------
Date: 12-22-99 Date: 12-22-99
------------------------------- -------------------------------
</TABLE>
Address for Notice:
<TABLE>
<S> <C>
Triton: ART:
Triton Network Systems Inc. Advanced Radio Telecom Corp.
8529 SouthPark Circle 500 - 108th Avenue NE, Suite 2600
Orlando, FL 32819 Bellevue, Washington 98004
Attention: CFO Attention: President
Telecopier No.: 407.903.2233 Telecopier No.: 425.990.1642
</TABLE>
With a copy to:
<TABLE>
<S> <C>
Holland & Knight LLP Advanced Radio Telecom Corp.
220 So. Orange Ave., Suite 2600 500 - 108th Avenue NE, Suite 2600
Orlando, FL 32801 Bellevue, Washington 98004
Attention: Louis Conti Attention: General Counsel
Telecopier No.: 407.244.5288 Telecopier No.: 425.990.1642
</TABLE>
23
<PAGE> 24
Exhibit 1
<PAGE> 25
Exhibit 1. AFFILIATES
Seller Affiliate A
Seller Affiliate B
Seller Affiliate C
Seller Affiliate D
Buyer Affiliate A
Buyer Affiliate B
Buyer Affiliate C
Buyer Affiliate D
24
<PAGE> 26
Exhibit 2
<PAGE> 27
Exhibit 2. PRODUCT AND PRICING
2.01 EQUIPMENT
PRODUCTS: All current and future 38GHz products offered by Triton
PRICE:
o Pricing is per RPS.
o An Annual Support Fee for each IFU installed in the Buyer's
networks will be invoiced as discussed below at Exhibit 2,
Section 2.03.
o [*] per RPS for first 1,000. After the first 1,000, ART price
per RPS will be no higher than the following:
<TABLE>
<CAPTION>
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ARTICLE I. PURCHASE PRICE TABLE FOR RPS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RPS Units 1 1,020 2,041 3,061 4,081
Ordered to to to to to
1,020 2,040 3,060 4,080 5,200
====================================================================================
Hardware
Discount % [*] [*] [*] [*] [*]
From List
- ------------------------------------------------------------------------------------
Unit Price [*] [*] [*] [*] [*]
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
ARTICLE II. PURCHASE PRICE TABLE FOR RPS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RPS Units 5,201 6,321 7,440 Greater
Ordered to to to than
6,320 7,440 8,560 8,560
====================================================================================
Hardware
Discount % [*] [*] [*] [*]
From List
- ------------------------------------------------------------------------------------
Unit Price [*] [*] [*] [*]
- ------------------------------------------------------------------------------------
</TABLE>
[*] Confidential Treatment Requested
25
<PAGE> 28
o [*]
[*] Confidential Treatment Requested
26
<PAGE> 29
2.02 DOCUMENTATION
All Documentation shall be available electronically at no charge to Buyer.
27
<PAGE> 30
2.03 ANNUAL SUPPORT FEE FOR SOFTWARE AND TECHNICAL ASSISTANCE CENTER
Annual Support Fee
o On or before January 31, 2000, Buyer shall notify Seller of the total
number of IFUs Buyer has installed in its network as of December 31,
1999. Seller shall invoice Buyer an Annual Support Fee equal to [*]
for each IFU installed by Buyer as of December 31, 1999 to cover the
Annual Support Fee for calendar year 2000.
o On or before January 31, 2001, Buyer shall notify Seller of the total
number of IFUs Buyer has installed in its network as of December 31,
2000. Seller shall invoice Buyer an Annual Support Fee equal to [*]
for each IFU installed by Buyer as of December 31, 2000, including
those installed in prior years, to cover the Annual Support Fee for
calendar year 2001.
o On or before January 31, 2002, Buyer shall notify Seller of the total
number of IFUs Buyer has installed in its network as of December 31,
2001. Seller shall invoice Buyer an Annual Support Fee equal to [*]
for each IFU installed by Buyer as of December 31, 2001, including
those installed in prior years, to cover the Annual Support Fee for
calendar year 2002.
o On or before January 31 of each year following 2002, Buyer shall
notify Seller of the total number of IFUs Buyer has installed in its
network as of December 31 of the immediately preceding year. Seller
shall invoice Buyer an Annual Support Fee equal to [*] for each IFU
installed by Buyer as of December 31 of such immediately preceding
year, including those installed in all prior years, to cover the
Annual Support Fee for such year.
o If the Annual Support Fee is not paid, Seller will not be required to
provide any new Software Releases to Buyer until such time as Buyer
pays the overdue Annual Support Fee.
[*] Confidential Treatment Requested
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2.04 EQUIPMENT WARRANTY -- TRITON SUPPLIED EQUIPMENT
(a) STANDARD WARRANTY
o The Warranties relating to Products can be found in Article 8.
(b) EXTENDED IFU WARRANTY
o The Seller offers the following optional Extended IFU Warranty
terms:
o Additional 12 month warranty [*] of the Purchase Order IFU
net sales price.
o Extended IFU Warranty must be purchased with this Equipment
purchased in this Agreement and is incremental to the twelve
months in the Standard IFU Warranty.
o The return and replacement terms and conditions of the Standard
IFU Warranty apply to the Extended IFU Warranty.
o Extended IFU warranty relates to Equipment only. Technical
support for Software is covered separately.
[*] Confidential Treatment Requested
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<PAGE> 32
2.05 TECHNICAL ASSISTANCE CENTER (TAC) SERVICE LEVEL AGREEMENT
TAC Services are available for all Products. Without limiting Seller's
obligations as otherwise set forth herein, Seller shall provide TAC Services
during the Term in support of the then-current Software Release and at least the
two (2) immediately preceding Major Software Releases.
(c) BRONZE LEVEL TAC SERVICES
o Part of net Equipment price as per this Agreement.
o Regular business hour support (08:00 to 17:00 Eastern Time;
Mondays through Fridays excluding Seller's observed holiday
schedule).
o Non-business hour paging services with maximum three (3) hour
response time.
o E-mail communication available for information inquiries with
maximum three (3) business day response.
o Per hour service charge of telephone and administrative time to
manage Triton and Third Party out of warranty Equipment: [*].
(d) SILVER LEVEL TAC SERVICES
o Additional charge based on quantity of RPSs purchased.
o Dedicated TAC telephone line.
o Dedicated TAC personnel during regular Business Hour support
(08:00 to 17:00 Eastern Time; Mondays through Fridays excluding
Seller's observed Holiday schedule).
o Non-business hour paging services with maximum one (1) hour
response time.
o E-mail communication available for information inquiries with
maximum one (1) business day response.
o Per hour service charge of telephone and administrative time to
manage RPS and Third Party out of warranty Equipment: [*].
(e) GOLD LEVEL TAC SERVICES
o Additional charge based on quality of RPSs purchased.
o Dedicated TAC telephone line.
o Dedicated TAC personnel available twenty-four (24) hours per
day, seven (7) days per week with immediate response time.
o Single point of contact for all network related issues including
Third-Party Equipment and Software.
o E-mail communication available for information inquiries with
maximum half (0.5) business day response.
o Per hour service charge of telephone and administrative time to
manage RPS
[*] Confidential Treatment Requested
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<PAGE> 33
and Third Party out of warranty Equipment: [*].
[*] Confidential Treatment Requested
31
<PAGE> 34
2.06 CUSTOMER TRAINING
(a) AVAILABLE TRAINING COURSES
o Local IFU Installation
o Physical installation
o Alignment
o Configuration
o Integration
o Remote IFU OAM&P - Administration, Management and Protocol
o Integrate IFUs into new and existing networks
o Configure all components and aspects of the IFU
o Perform all typical diagnostics and problem isolation to
properly identify failed or degraded operation
o Retrieve all remote administration data
o Apply security measures to ensure network integrity
o IFU Network Engineering
(b) CERTIFICATION
o Installation and Maintenance
o Training is provided at a level to certify the customer in the
Installation and Maintenance of the Triton product.
o Certification verification for each Student is supplied by
Seller.
o Customer will be able to perform all the necessary functions to
install, locally align and configure, and integrate the IFU in an
effective manner.
o Customer will be able to remotely integrate, diagnose typical
failures and degradations, and manage and administer the IFUs in
an effective, consistent manner.
(c) PRICE
o Two Network Management, two Installations and one Engineering
classes are to be provided at no charge with commitment to an
initial order.
o Additional class prices are based on a course basis at
individual student or group rates, excluding travel and
facilities costs.
o Prices are to be negotiated based on course program supplied by
Seller.
o Price includes all course material and Equipment.
32
<PAGE> 35
o Minimum number of two (2) students per class.
o Maximum number of ten (10) students per class.
o Customer Premise Training
o Travel Expense for two (2) Seller Trainers including
lodging, meals, rental care, and airfare.
o Shipment of any training material and Equipment.
o Two (2) fully installed and operational IFUs to be used for
training purposes.
o The payment terms in net 30 days upon issuance of the invoice.
33
<PAGE> 36
Exhibit 3
<PAGE> 37
EXHIBIT 3. RETURN MATERIALS AUTHORIZATION
[LOGO]
TRITON(TM)
Network Systems, Inc.
Customer Return Material Authorization Procedures
The following document should be referenced when returning Triton Network
Systems product.
BEFORE OBTAINING AN RMA (CUSTOMER RESPONSIBILITY)
The customer should attempt troubleshooting procedures as provided within
existing Triton Network Systems documentation and work with the Triton Network
Systems Technical Assistance Center (TAC) to resolve any problems. If
reasonable attempts at troubleshooting do not bring resolution, then the item
should be replaced and a Return Material Authorization (RMA) should be
generated.
OBTAINING AN RMA
The customer should call the TAC at 877-687-4866 or +1-407-903-0997 or contact
the TAC via fax or e-mail to obtain an RMA number. The minimum information
required (or confirmed from previous troubleshooting) for generation of an RMA
by the TAC is:
o Customer Company
o Contact Name
o Contact Phone, FAX
o Site Address of Product
o Shipping Address for Repaired Product
o Part Number of Product if printed on unit
o Model Number of Product if printed on unit
o Serial Number of Product
o Description of Problem
PACKAGING AND RETURN PROCEDURES
The TAC will provide an RMA number to the customer who will indicate the RMA
and serial number on the return label. The IFU must be returned in packaging
that provides a level of protection equal to the original type packaging. If
original type packaging is not available, Triton Network Systems will upon
request from Customer provide packaging.
All Equipment to be repaired or replaced, whether in or out of warranty, shall
be packed by Customer in accordance with Triton Network Systems's reasonable
instructions and shall follow Triton Network Systems's Repair and Return policy
and procedures. Customer shall bear risk of loss and shall pay for all
transportation charges for Equipment returned to Triton Network Systems and
Triton Network Systems shall bear such risk and pay for transportation charges
for repaired or replacement Equipment shipped to Customer. Triton Network
Systems shall use reasonable efforts to ship repaired or replacement Equipment
within thirty (30) days of receipt of the defective Equipment for routine
warranty repair or replacement. Triton Network Systems shall return the
repaired or replaced Equipment to the Customer the same transport method in
which the Customer sent the Equipment to the Triton Network Systems.
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<PAGE> 38
WHERE TO SEND RMA PRODUCT
RMA product should be sent to the following address:
Triton Network Systems
8337 SouthPark Circle
Attn.: Kevin Haney, Depot Manager
Orlando, FL 32819
407.903.2254
REPAIR TIME
IFUs will be repaired in 30 days or less on a "same for same" basis, identical
serial number IFUs will be returned. If the Equipment that is returned to
Triton Network Systems is determined by Triton Network Systems to be beyond
repair or is outside the warranty period, Triton Network Systems shall notify
Customer and if Customer decides to purchase Equipment to replace the defective
IFU, Customer shall issue a Purchase Order and Triton Network Systems shall
sell Customer replacement Equipment at the lesser of the most recent Agreement
price between the Parties for such Equipment, or the then current price for
such Equipment.
IMPROPERLY RETURNED PRODUCT
If product is sent to Triton Network Systems without a valid RMA number, it
will be returned to the customer at their expense without repairs being
performed.
35
<PAGE> 39
Exhibit 4
<PAGE> 40
Exhibit 4. TERRITORIES
United States.
Canada.
36
<PAGE> 41
Exhibit 5
<PAGE> 42
Exhibit 5. YEAR 2000 (Y2K) COMPLIANCE
Seller warrants, with respect to Products, that Seller has undertaken all
commercially practicable efforts to ensure, to the extent within its reasonable
control, that when such Products are properly used in accordance with the
applicable Product Specifications, then both before and after 01 January 2000
such Products will accurately receive, provide, and process date and date
dependent data (including calculating, comparing, and sequencing) from, into,
and between the twentieth (20th) and the twenty-first (21st) centuries through
to the year 2036, including the years 1999 and 2000, and leap year calculations.
Seller further warrants that during the Product warranty period, as specified
in this Agreement, Product shall function without any material, service
affecting, non-conformance to the applicable Product Specifications as a
consequence of date and date dependent data, to the extent that other software
used in combination with Seller's Products sold or licensed hereunder is also
Year 2000 Compliant and properly exchanges date and date dependent data with
Seller's Products. If Product fails to so function as set forth herein, (i)
Buyer may cancel its Initial Purchase Commitment and shall have no obligations
to pay any Initial Purchase Cancellation Fee or otherwise, and (ii) such
failure shall be deemed to be a breach by Seller of the warranties set forth in
Article 8 of this Agreement and Buyer shall be entitled to the remedies set
forth in Article 8 of this Agreement. Any modification to Products not performed
by Seller, other than with respect to Modifiable Software, shall void this
warranty only to the extent such modification causes the Product to fail to
function as set forth in this Exhibit 5.
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Exhibit 6
<PAGE> 44
Exhibit 6. PRODUCT SPECIFICATIONS
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<PAGE> 45
[TRITON LOGO]
TNS-38 100 Mbps Invisible
Fiber(TM) Internet: Product
Specification
Document Number: SY-SPE-23-fe
Version & Revision: 1.0.27.3
Release Status: DRAFT
Security Level: TNS and Customer Under Non-Disclosure
Audience: TNS and Customer Under Non-Disclosure
Authors: Engineering, Product Management
Date: 21-December-1999
Distribution: TNS and Customer Under Non-Disclosure
<TABLE>
<S> <C>
- --------------------------------------- ---------------------------------------
PRODUCT MANAGEMENT: Dave Harlow MARKETING: Doug Campbell
- --------------------------------------- ---------------------------------------
ENGINEERING: Mike Clark SALES: Doug Campbell
- --------------------------------------- ---------------------------------------
SYSTEMS: Peter Chow OPERATIONS: Al Samball
- --------------------------------------- ---------------------------------------
HARDWARE: Roger Babb FINANCE: Ken Vine
- --------------------------------------- ---------------------------------------
SOFTWARE: Chris Matthies MANUFACTURING: Bob Daly
- --------------------------------------- ---------------------------------------
TEST AND INTEGRATION: Al Morone QUALITY: Dave Verrelli
- --------------------------------------- ---------------------------------------
- --------------------------------------- ---------------------------------------
</TABLE>
<PAGE> 46
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
Change History
<TABLE>
<CAPTION>
Date Updated by Change Description Revision
<S> <C> <C> <C>
31-AUG-99 Engineering, Initial document draft 1.0.22
Product
Management
10-NOV-99 Engineering, Updated based on Release 1. 1.0.27
Product
Management
07-DEC-99 Engineering, Updated. 1.0.27.1
Product
Management
16-DEC-99 Product Updated 2.2.17.1, 2.2.27, and 6.1.4.1 1.0.27.2
Management
21-DEC-99 Product Updated 2.3.1.2, 2.3.1.5.2, and 4.3.1.2.1 1.0.27.3
Management
</TABLE>
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<PAGE> 47
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Introduction .............................................................. 4
1.1 Purpose .............................................................. 4
1.2 Scope ................................................................ 4
1.3 References ........................................................... 4
2. System Requirements ....................................................... 5
</TABLE>
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<PAGE> 48
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
1 INTRODUCTION
1.1 PURPOSE
This document contains Triton Network Systems, Inc. TNS-38 100 Mbps Internet
IFU Product Specification.
1.2 SCOPE
This document is a complete customer Product Specification for the TNS-38 100
Mbps Internet IFU product.
1.3 REFERENCES
None
Page 4 of 4
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
2 SYSTEM REQUIREMENTS
<TABLE>
<CAPTION>
Req. No. Specification Description
<S> <C> <C>
2. IFU System Performance, Environmental, and Regulatory
2.1 Network Topology IFUs can be deployed in Linear (backhaul) networks and
Consecutive Point Ring networks
2.2 Performance
2.2.1 Data Rate
2.2.1.1 FE 100 Mbps full duplex
2.2.2 OAM&P communication channel A separate 3 Mbps radio overhead channel
2.2.3 Frequency
2.2.3.1 Frequency (Band A) 38.6 to 39.3 GHz (700 MHz)
2.2.3.2 Frequency (Band B) 39.3 to 40.0 GHz (700 MHz)
2.2.4 Tx Polarization The IFU that transmits in the A Band (38.6 to 39.3 GHz) will
be transmitting on the HORIZONTAL plane. The IFU that
transmits in the B Band (39.3 to 40.0 GHz) will be
transmitting on the VERTICAL plane.
2.2.5 Short-Term Tx Frequency Accuracy +/-1 ppm first year
2.2.6 Long-term Tx Frequency Stability +/-5 ppm over 15 years (in compliance with FCC Part
101.107)
2.2.7 Full Duplex Channels 14 (programmable)
2.2.8 Tx/Rx Offset 700 MHz
2.2.9 Tuning Range Channels 1-7, 8-14
2.2.10 Channel Bandwidth 50 MHz (in compliance with FCC Part 101, 109)
2.2.11 Modulation
2.2.11.1 FE 8 PSK
2.2.12 BER (faded) 10(-12) or better
2.2.13 Maximum BER Radio Link remains in operation up to a BER of 10(-12)
2.2.14 System Availability System Availability of 99.9999% for a ring configuration
2.2.15 Antenna gain [*] dBi nominal, [*] dBi minimum
2.2.16 Receiver sensitivity @ BER of 10(-12)
2.2.16.1 FE [*] dBm typical, [*] dBm minimum
2.2.17 Transmit Power
2.2.17.1 FE [*] dBm to [*] dBm typical, [*] dBm to [*] dBm minimum
2.2.18 System Gain
2.2.18.1 FE [*] dB typical
</TABLE>
[*] Confidential Treatment Requested
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<PAGE> 50
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
REQ. NO. SPECIFICATION DESCRIPTION
<S> <C> <C>
2. IFU SYSTEM PERFORMANCE, ENVIRONMENTAL, AND REGULATORY (CONTINUED)
2.2.19 RF Link System Gain (including Tx/Rx
Antennas)
2.2.19.1 FE >= 177 dB typical
2.2.20 Tx Dynamic Range Up to 50 dB
2.2.21 Receiver Overload [*] dBm
2.2.22 Noise Figure [*] dB typical, [*] dB maximum
2.2.23 Forward Error Correction Reed Solomon and Trellis Code Modulation (concatenated)
2.2.24 Adaptive Tx Power Control (AdTPC) Closed loop AdTPC up to 50 dB in typically 0.5 dB steps, and always
less than [*] step increments. With rate of change of up to
[*].
2.2.25 Radio link recovery time after propagation Less than [*] ms
interruption
2.2.26 Co-channel single entry C/I (causing 1 dB (C/I = Carrier to Interference Ratio) 20 dB below carrier typical
degradation) and [*] dB maximum for 10e-12 BER performance.
2.2.27 Adjacent single entry C/I (causing 1 dB (C/I = Carrier to Interference Ratio) -15 dB typical and [*] dB
degradation) maximum for 10e-12 BER performance.
2.2.28 MTBF (Mean Time Between Failure) Meets or exceeds [*] hours as defined by Telcordia TR-332, Issue 5.
The MTBF would apply to any component that could interfere with the
radio link and/or SNMP processing or communication.
2.2.29 MTTR (Mean Time To Replace) MTTR is the time interval to replace a failed IFU assuming the IFU
has been configured. MTTR <= 15 minutes.
2.2.30 Link Latency
2.2.30.1 FE < [*], across an IFU link. The delay does not contemplate the latency
due to additional network elements.
2.3 Environmental
2.3.1 Operating Conditions
2.3.1.1 Temperature (ambient) -27 (degrees)F to +131 (degrees)F (-33 (degrees)C to +55 (degrees)C)
2.3.1.2 Humidity Up to 100% condensing (not submerged)
2.3.1.3 Altitude -450 ft to 16,000 ft (-135 m to 4,650 m)
2.3.1.4 Wind Loading
2.3.1.4.1 Operational Designed to operate up to 90 mph (145 kph)
2.3.1.4.2 Survival Designed to survive up to 125 mph (200 kph)
2.3.1.5 Maximum deflection angle 0.1 degree in 70 mph (110 kph) wind.
2.3.5 Storage
2.3.5.1 Temp -40 (degrees)F to -158 (degrees)F (-40 (degrees)C to +70 (degrees)C)
2.3.5.2 Humidity Up to 95% non-condensing
2.4 Regulatory
2.4.1 FCC/IC Parts 15B, 101/RSS-191
2.4.2 UL/CSA 50, 1950 / C22,2 # 94-M91, C22-24
</TABLE>
[*] Confidential Treatment Requested
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<PAGE> 51
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Reg. No. Specification Description
<S> <C> <C>
3. IFU Physical Characteristics
3.1 MECHANICAL
3.1.1 IFU Packaging Integrated Out Door Unit only
3.1.2 Weight (without bracket) < [*] lbs.
3.1.3 Dimensions 16' H X 16" W X 14.5" D (40cm M x 40cm W x 36cm D)
3.1.4 Mounting Pole (4.5" O.D.) or wall mountable using mounting bracket.
3.1.4.1 Bracket Weight < 18 lbs.
3.1.4.2 Radio rotation +/- 60" in azimuth
(+/- 90" in azimuth with extension option)
+/- 30" in elevation
3.1.4.3 Horizontal Alignment Resolution +/- 0.45" (nominal)
+/- 0.8" (90 mph / 145 kph wind)
3.1.4.4 Includes a secured locking mechanism Yes.
3.1.5 Shock/Vibration Designed to comply with ETS 300 019-1-4, Class 4, 1E.
3.1.6 Appearance Default color is off-white. Customer paintable.
3.1.7 Enclosure NEMA 4X
3.1.8 Flammability Comply with UL 94V0 flammability requirements.
3.1.9 Safety Includes electrical, optical, and RF hazard labels.
3.2 CONNECTORS
3.2.1 Fiber Optic Connector 8-fiber, sealed screw-on connector.
3.2.1.1 FE The Fiber Optic Connector supports the following signals:
two 100BaseFX and two 10BaseFL.
3.2.2 Power Connector 4-pin, sealed screw-on connector. Conforms to MIL-C-38999.
Two pairs of -48 V DC signals for power and ground to the
electronic components of the IFU.
3.2.3 General Purpose Input (GPI) / Test 19-pin, sealed screw-on connector. Conforms to MIL-C-38999.
Connector
This connector supports the following signals: two GP
inputs, and with a test cable the connector supports one
10BaseT, one RS-232, and one RSSI.
3.3 CABLING
3.3.1 Fiber Optic Connector Connector
3.3.1.1 FE Cable bundle consists of 4 multi-mode (for OAM&P and
Inter-IFU connection) and 4 multi-mode (for payload and
add/drop cables) fibers. All fibers use SC connectors.
3.3.2 Power Connector Cable Two pairs of -48 VDC signals.
3.3.3 General Purpose Input (GPI) Cable Cable bundle consists of 2 pair of external alarm input
conductors.
</TABLE>
[*] Confidential Treatment Requested
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<PAGE> 52
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
REG. NO. SPECIFICATION DESCRIPTION
<S> <C> <C>
3. IFU PHYSICAL CHARACTERISTICS (CONTINUED)
3.3.4 Test Cable Cable bundle that consists of the following cables and
connectors:
Local Ethernet. Using RJ45 male connector.
RSSI. Using BNC male connector.
RS-232: Using female DB-9 connector.
4. IFU EXTERNAL INTERFACES
4.1 Power Interface
4.1.1 Signals Two pairs of -48 V DC signals for power and ground to the
electronic components of the IFU.
4.1.2 Voltage -28 to -56 VDC
4.1.3 Power Consumption [*] Watts at 68 F (20 C) degrees: [*] Watts Maximum
4.1.4 Current Rating [*] Amps
4.2 Air Interface
4.2.1 RF Characteristics (Refer to Section 2 above)
4.2.2 Antenna
4.2.2.1 Minimum Gain Compliant with CFR 47, Part 101.115 +38 dBi minimum.
4.2.2.2 Polarization Dual Feed, Dual Linear.
4.2.2.2 Polarization (Continued) A unit - Tx horizontal, Rx vertical
B unit - Tx vertical, Rx horizontal
4.2.2.3 Radiation Suppression Compliant with CFR 47, Part 101.115
4.2.3 Modulation
4.2.3.1 Fast Ethernet
4.2.3.1.1 Modulation 8 PSK
4.3 Customer Data Interface
4.3.1 Fast Ethernet Interface
4.3.1.1 Application Designed for interconnecting Ethernet data networks such
as Ethernet-based TCP/IP networks or SPX/IPX networks.
These signals are used for connecting to the customer's
100BaseFX Ethernet equipment at network termination
points. They also can be used for interconnecting IFUs in a
back-to-back configuration.
4.3.1.2 Physical Interface
4.3.1.2.1 100BaseFX Payload Port 100BaseFX fiber, 1310 nm multimode
100BaseFX Ethernet interface used to receive and transmit
user payload data. (ON/OFF build configurable)
4.3.1.2.2 100BaseFX Add/Drop Port 100BaseFX fiber, 1310 nm multimode
100BaseFX Ethernet interface used as an add/drop point to
receive and transmit user payload data.
</TABLE>
[*] Confidential Treatment Requested
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<PAGE> 53
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
REQ. NO SPECIFICATION DESCRIPTION
<S> <C> <C> <C>
4. IFU EXTERNAL INTERFACES (CONTINUED)
4.3.2 Data Rate 100 Mbps, full duplex
4.3.3 Protocol Complies with IEEE 802.3u (Fast Ethernet) and Ethernet v2
standards.
4.4 OAM&P Interface
4.4.1 OAM&P Port 10BaseFL fiber, 850 nm multimode
10BaseFL optical Ethernet management port is intended to
connect to a remote network management system.
4.4.2 Inter-IFU Port 10BaseFL fiber, 850 nm multimode
10BaseFL optical Ethernet management port intended to
transport IFU OAM&P traffic between two IFUs connected in
a back-to-back configuration.
4.4.3 Local Management Port 10BaseT Ethernet port provides an interface to a locally
connected IFU Link Manager workstation.
4.4.4 RSSI Port Provides a direct feed of the received RSSI signal from the
IFU's internal modem. The signal consists of a voltage
output which can be measured with a voltmeter to determine
the relative strength of the received radio signal (+/- 50mV
/dB)
4.4.5 Transmitter on Indicator Light visible from outside the enclosure is illuminated when
transmitter power is on. Compliant with CFR 47,
Part 101.131
4.4.6 Local RS-232 The IFU's IP Address and the subnet mask are output on
the RS-232 serial port once per minute.
4.5 GENERAL PURPOSE INPUT INTERFACE
4.5.1 Input signals There are two GP input ports. Each port consists of a cable
pair supporting two signals, one for power and one for
ground.
4.5.2 Threshold If the difference between power and ground decreases to
less than 1 volt, then an alarm condition is raised. If the
difference between power and ground increases to greater
than 7 volts, then the alarm condition is cleared.
4.5.3 Application Each of the two GP inputs can be connected to customer-
provided external equipment that causes the IFU to report
an alarm when voltage drops below the threshold. For
example, a power failure could trigger this alarm.
5. IFU HARDWARE FEATURES
5.1 CPU MBX 860 card from Motorola
5.1.1 Clock Speed [*] MHz
5.1.2 Memory [*] M DRAM, [*] M Flash
5.2 Power Supply
5.2.1 Voltage -28 to -56 VDC
</TABLE>
[*] Confidential Treatment Requested
Page 9 of 9
<PAGE> 54
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req. No. Specification Description
5. IFU Hardware Features (Continued)
<S> <C> <C>
5.3 NIC
5.3.1 FE Two 100BaseFX ports
[*] switch
5.3.2 OAM&P ports [*] 10BaseFL ports and [*] 10BaseT port linked by a HUB
5.4 Antenna
5.4.1 Size 13.5" (33 cm) diameter
5.4.2 Gain [*] dBi nominal, [*] dBi minimum
5.4.3 Main-lobe beamwidth [*]
5.4.4 Sidelobes FCC Part 101.115 Category A compliant.
5.5 RF Filter
5.5.1 Low A band channel 1-7 in band A
5.5.2 High A band channel 8-14 in band A
5.5.3 Low B band channel 1-7 in band B
5.5.4 High B band channel 8-14 in band B
5.6 Modem
5.6.1 Modulation
5.6.1.1 FE 8 PSK
5.7 Transmitter
5.7.1 Output frequency range 38.6 GHz to 40.0 GHz
5.7.2 Output power (Refer to the Section 2.3.17.1 for Tx power)
5.8 Receiver
5.8.1 Input frequency range 38.6 GHz to 40.0 GHz
5.8.2 Input Receiver Overload [*] dBm
5.9 Reference Oscillator
5.9.1 Frequency 50 MHz
6. Network Management
6.1 IFU Link Manager The IFU Link Manager (IFU-LM) is an IFU link management
tool developed by TNS. IFU-LM is written in Java(TM) and can
be run on a wide variety of platforms. The IFU-LM
communicates with the IFU locally or remotely over TCP/IP.
The following section highlights the many features that IFU-
LM offers.
These features are available to customer who logs in using password for Access Level 1.
Not all features listed are available for user of Access Level 2 and 3 (see section 6.1.3).
</TABLE>
[*] Confidential Treatment Requested
Page 10 of 10
<PAGE> 55
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req. No. Specification Description
<S> <C> <C>
6. Network Management (Continued)
6.1.1 Network Tree View Displays network containment hierarchy in tree structure where branches are clusters
of IFU and leaves are IFUs.
IFU Clusters and IFUs are represented by corresponding hard-coded icon graphics.
Allows user to add and delete IFUs (leaves) and clusters (branches) as needed to
reflect the network topology.
6.1.2 Network Monitoring Feature Provides continuous monitoring of the IFUs in a network without logging-in to each IFU.
User can launch multiple Network Monitor windows. Each window monitors multiple IFU links
(partitioned by IP Address filtering).
Each Network Monitor window consists of multiple rows where each row displays the status
of the 2 IFUs that form an RF link.
The Information display per IFU consists of: IP Address, alarm status, RSSI, SQM, and
reporting statistics (total number of IFUs being monitored, number of IFUs with active
alarm, number of IFUs that are Not Reporting).
The operator can program the system to automatically send email to a programmable valid
destination to report the status of an IFU when its status changes to Not Reporting or
Alarmed.
6.1.3 Security Management Features Access to each IFU is restricted to authorized users only. Each authorized user is given
an IFU login ID and password enabling him/her to perform the management tasks according to
the security access level.
Users log in to an IFU using their assigned User Login ID and Password.
There are 3 Security Access levels:
Level 1: Full READ-WRITE access plus User/Password Administration and Network
Administration.
Level 2: Full READ-WRITE access. No User/Password Administration and Network
Administration privileges.
Level 3: READ-only. No user/password administration.
Each IFU includes [*] editable User Login IDs and passwords for the [*] Security Access
levels.
Level 1 user can perform Login ID/Password administration for the corresponding IFU.
Displays warning message if SW version mismatched between IFU-LM and the IFU which the
user tries to login to.
Controls access to certain management functions based on user's login security level.
User can display all users currently logged on to the IFU.
User can view a log of the [*] user login sessions.
</TABLE>
[*] Confidential Treatment Requested
Page 11 of 11
<PAGE> 56
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req. No. Specification Description
<S> <C> <C>
6. Network Management (Continued)
6.1.4 Configuration Management Features Allows users to read or change the IFU configuration
attributes based on their access privilege.
Some of the attributes are strictly READ-ONLY while others
can be changed by users with WRITE privilege.
Examples of the read-only attributes are IFU Serial Number,
IFU Product Type, SW Version, etc.
Examples of the attributes that can be read and changed
are Channel Number, IFU's and EMS' IP addresses, Rain
Region, SNMP Community String, etc.
6.1.4.1 The following configuration Site Name/ID
management parameters can be read
and changed:
Near-end (this) IFU's IP Address
Far-end IFU's IP Address
Network Mask
NTP Server IP Address
Gateway IP Address
EMS 1 IP Address
EMS 2 IP Address
Grade of Service
Tx/Rx Carrier Frequency
Rain Model (User selectable Rain Statistics - Rain
Attenuation Algorithm pair from the following choices:
Crane-Crane, Crane-ITU, ITU-ITU)
Rain Region (User selectable Rain based on whether Crane
or ITU Rain Model is chosen. Available Rain Region
choices for the Crane Model are: A, B1, B2, C, D1, D2, D3,
E, F, G, H: available Rain Region choices for the ITU Rain
Model are: A, B, C, D, E, F, H, K, M, N, P)
Near-end IFU's Latitude and Longitude
Far-end IFU's Latitude and Longitude
Link Distance (If both Link Distance and Near-end/Far-end
Lat/Long were entered, the value of Link Distance
supersedes the values of Near-end/Far-end Lat/Long.)
Installation Date
In-Service Date
SNMP Trap Community Name
6.1.4.2 The following configuration IFU Serial Number
management parameters are read-only:
IFU Part Number
NIC Type (IFU Product Type: OC-3 or FE)
Link Type (A/B unit)
</TABLE>
Page 12 of 12
<PAGE> 57
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req. No. Specification Description
<S> <C> <S>
6. Network Management (Continued)
6.1.4.2 The following configuration management Antenna Orientation (Horizontal/Vertical)
parameters are read-only (Continued):
OS Software Version
Application Software Version
Link Budget (for OC-3 or FE depending on
the IFU Product Type)
Modem Hardware Version
Modem Software Version
Last Configuration Change Date/Time
6.1.4.3 IP Address & Subnet Mask Broadcast The IFU's IP Address and the subnet mask
(Configuration Management) are output on the RS-232 serial port [*].
This capability enables the craftsperson with
serial connectivity to an IFU to safely
obtain its IP address to be used to connect
to it via IFU-LM.
6.1.5 Fault Management Features Viewing of the IFU's active alarms (time-
stamped) stored on the individual IFU.
Allows user to lag a note with each alarm
type.
Viewing of the Alarm History Log [*] events
(time-stamped) stored on the individual IFU
(an event is either an alarm set or alarm clear).
Mask/Unmask of all alarms.
Displays the Modem Lock status.
Configuration of the SET/CLEAR threshold
values for certain Threshold Crossing Alarm
(TCA) parameters.
6.1.5.1 The following TCA parameters RSSI
can be configured:
SQM
IFU Internal Temperature
6.1.5.2 The following alarms can be generated Payload Offline
when corresponding fault of threshold-
crossing conditions occur. When
conditions no longer exist, the
corresponding alarm-clear is generated.
Exciter Unlock
Modem Unlock
Power Supply Failure for Tx
Power Supply Failure On Unswitched Rail
Tx Failure
SONET Clock LOL from RF
RSSI Too Low
</TABLE>
[*] Confidential Treatment Requested
Page 13 of 13
<PAGE> 58
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req. No. Specification Description
<S> <C> <C>
6. Network Management (Continued)
6.1.5.2 (Continued) SQM Too Low
SONET LOS from Fiber
Internal Communication Failure
Power Supply Failure On +12v Rail
Power Supply Failure On -48v Rail
IF Tuning Failure
Tx ID Mismatched
External Alarm Input #1 Active
External Alarm Input #2 Active
Power Management Timeout
Internal Temperature Too High
Internal Temperature Too Low
Carrier Frequency Offset Error
Tx Power At Max
6.1.6 Performance Management Features
6.1.6.1 PM parameters that can be displayed
via IFU-LM:
RF Parameters RSSI (or RSL)
SQM
BER
Transmit Power Out
Environmental: IFU Internal Temperature
Ethernet Parameters: [*]
</TABLE>
[*] Confidential Treatment Requested
Page 14 of 14
<PAGE> 59
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req. No. Specification Description
<S> <C> <C>
6. Network Management (Continued)
6.1.6.1 (Continued) [*]
6.1.6.2 PM graphs that can be viewed: Several types of PM data can be viewed graphically over a
given time period:
SQM plot
Modem power plot
Reed Solomon modem block error plot
Modem lock status in discrete values. 0=unlocked
1=locked.
IFU internal temperature plot
Tx Power Plot
6.1.7 Tx Power ON/OFF Allows user to turn ON or OFF the power supply to the
Transmitter and displays status.
6.1.9 Adaptive Tx Power Control (AdTPC) Allows user to [*].
Automatic hop distance calculation.
Adaptive Tx Power Control to maintain RSSI at pre-set level
under varying channel conditions.
6.1.10 Manual System Reboot Allows manual system reboot
6.1.11 Manual Modem Reboot Allows manual reboot at the Modem.
6.2 IFU Link Manager Command-Line Allows IFU-LM to be launched via command-line with an
Arguments optional argument for either an IP address or host name
(DNS). This allows HP OpenView(TM) Network Node Manager
to launch IFU-LM within its environment (either from a menu or by
clicking on an IFU icon).
6.3 SNMP Agent
6.3.1 SNMP Version Embedded SNMP Agent [*].
6.3.2 SNMP NMS Compatibility The SNMP Agent is compatible with HP Openview(TM)
[*].
6.3.3 SNMP 'Lite' Agent Solution Supports only the Fault Management function. All other
management functions are performed through IFU-LM. The
SNMP agent maps alarms generated by the IFU Alarm
Manager into SNMP Traps and sends them to the EMS/NMS.
6.3.3.1 Generic Traps Supported coldStart, warmStart
6.3.3.2 TNS Enterprise-Specific Traps Please refer to the MIB Specification for Traps that can be
reported.
6.3.3.3 Number of Trap Destinations 2 (EMS1 and EMS2 attribute a configurable via IFU-LM)
</TABLE>
[*] Confidential Treatment Requested
Page 15 of 15
<PAGE> 60
<TABLE>
<S> <C> <C> <C>
TNS-38 100 Mbps Invisible Fiber(TM) Internet: Product Specification 21-Dec-1999
Security Level: TNS and ART Under Non-Disclosure Document Number: SY-SPE-23-fe
Audience: TNS and ART Under Non-Disclosure Revision: 1.0.27.3
Authors: Engineering, Product Management Release Status: Approved
</TABLE>
<TABLE>
<CAPTION>
Req No. Specification Description
<S> <C> <C>
6. Network Management (Continued)
6.3.3.4 Traps Enable/Disable Via IFU-LM Alarm Mask/Unmask feature.
6.4 TNS Enterprise MIB for TNS-38 OC-3/FE
IFU
6.4.1 TNS Private Enterprise Number 4216
6.4.2 Compatibility RFC 1155, RFC 1157, RFC 1212, RFC 1215, X. 208/X.680
6.4.3 HPOV NNM Compatibility Compilable and loadable onto HPOV NNM 6.0.
</TABLE>
Page 16 of 16
<PAGE> 61
EXHIBIT 7
<PAGE> 62
EXHIBIT 7. FORM OF PURCHASE ORDER
<PAGE> 63
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
This Purchase Order is subject to Supply Agreement
ART (LOGO) dated 31 Dec 1999 between Advanced Radio Telecom
Advanced Radio Telecom(TM) Corp. and Triton Network Systems Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
PHASE ORDER 500 - 108th Avenue NE, Suite 2600
Number: POXXXX Bellevue, Washington 98004
Office: (425) 688-8700
Please Quote Phase Order Number on all correspondence. Facsimile: (425) 688-0703
Toll-Free: (800) 580-0278
Date 12/17/1999 Page: 1 Website: http://www.art-net.net
- ------------------------------------------------------------------------------------------------------------------------------------
Order From: Triton Network Systems, Inc. Deliver to: Advanced Radio Telecom
8529 South Park Circle Distribution Center
4th Floor 23215 66th Ave. S.
Orlando FL 32819 Kent, WA 98032
Contact: Kelly Summers Contact:
Phone: (407) 903-0900 Ext. 0000 Ship Via: USF FOB:
FAX: (407) 903-0997 Ext. 0000 Terms: Net 30
- ------------------------------------------------------------------------------------------------------------------------------------
1 Your Item Number ART Reference Qty UOM Unit Cost Extension
Item Description Date Req'd
- ------------------------------------------------------------------------------------------------------------------------------------
1 TNS-38-ETP-FE-200 IFU 4.00 Each [*] [*]
IFU Including Mounting Brackets & Software 3/1/2000
- ------------------------------------------------------------------------------------------------------------------------------------
Authorized Signature Date
--------------------------------------- ------------------
Subtotal: [*]
Freight: $0.00
Tax amount: $0.00
Total Value: [*]
</TABLE>
[*] Confidential Treatment Requested
<PAGE> 64
EXHIBIT 8
<PAGE> 65
Exhibit 8. CUSTOMER FEATURE REQUESTS
<PAGE> 66
EXHIBIT 8a
[TRITON LOGO]
IFU HARDWARE PLAN
SHORT HAUL RADIO for TNS-38-ETP-FE PRODUCTS:
REQUIREMENT:
ART believes that at least [*] of their [*] will be at distances
that are shorter than the distance needed for the IFU to maintain a receive
signal level of [*]. The impact of not being able to transmit at a level
below our current typical minimum level of [*] means that the IFU is
operating at a level beyond what is required to maintain the link at a BER
>10(-12) on short links [*].
PLAN:
Using a phased approach, Triton Network Systems, Inc. will provide enhancements
to the 100 Mbps Internet IFU by Q2, 2000, which will enable the IFU to operate
at a minimum transmit level of [*] that will allow the receive signal level
to be maintained at [*] at a minimum link distance of [*]. Phase II
will provide the ability to reduce the transmit power even further by [*],
to a minimum transmit level of [*] that will allow the receive signal level
to be maintained at [*] at a minimum link distance of [*].
ANTENNA PATTERNS IN A DIGITIZED FORMAT for TNS-38-ETP-FE PRODUCTS:
REQUIREMENT:
ART has requested digitized antenna patterns with a minimum granularity shown
in the table below for at least one antenna for each of the antenna positions
in both the elevation and azimuth directions (VV, HH, VH, and HV):
<TABLE>
<CAPTION>
ANGLE FROM BEAM CENTER IN DEGREES MEASUREMENT GRANULARITY
--------------------------------- -----------------------
<S> <C>
< 5 0.1 degree
5 to 10 0.5 degree
10 to 25 1.0 degree
25 to 90 3.0 degree
90 to 180 10.0 degree
</TABLE>
PLAN:
Triton Network Systems, Inc. commits to provide the requested antenna patterns
in the granularity proposed. Expected completion date is April 3, 1999.
[*] Confidential Treatment Requested
Page 1 of 1
<PAGE> 67
EXHIBIT 8a
The table below lists all RF ART Customer Feature Requests and a plan for
resolution. Items identified as resolved on the chart below are changes or
features that will appear in release [*]. Delivery of Release [*]
is expected by [*]. Delivery of [*] is expected by the end of the
[*]. Items that are identified on the chart below as closed
are changes or features that will appear in release 1.0 or 1.1. Delivery of
Release 1.0 is expected by January 3, 2000. Delivery of 1.1 is expected by
January 31, 2000.
<TABLE>
<CAPTION>
ART
CFR# DESCRIPTION STATUS RELEASE COMMENTS
- ---- ----------- ------ ------- --------
<S> <C> <C> <C> <C>
5 Support for modem loopback test [*] [*]
mode functionality
11 Display transmit power monitor in Resolved 1.0 Introduced in Release
dBm 1.0.
12 Display received signal level in Resolved 1.0 Introduced in Release
dBm 1.0.
13 Setting initial transmit power [*] [*]
14 IFU weight less than 40 lbs. [*] Expected weight goal
of [*]
22 Flexible rain data entry [*] [*]
23 Provide link BER test mode based [*] [*]
on [*] data [*]
24 Improve receiver sensitivity @ [*] [*] typical.
10e-12-to [*] [*] minimum.
25 User control of RSSI thresholds [*] [*]
(see CFR #13)
</TABLE>
[*] Confidential Treatment Requested
Page 2 of 2
<PAGE> 68
EXHIBIT 8b
[LOGO] TRITON
NETWORK SYSTEMS, INC.
IFU Software & IFU Management Software Plan
The table below lists all non-RF ART Customer Feature Requests and a plan for
resolution. As discussed during the Triton/ART conference call on 12/17/99,
Triton will further develop the requirements and review an Alpha design of the
Mass Deployment capabilities with ART to ensure support of ART processes, to
occur no later than January 15/00. The Alpha design will serve as a basis for
developing a mutually agreeable feature rollout schedule. Items identified as
resolved on the chart below are changes or features that will appear in release
2.0, 2.1 or sooner. Delivery of Release 2.0 is expected by March 31, 2000.
Delivery of 2.1 is expected by the end of the second quarter of 2000. Items
that are identified on the chart below as closed are changes or features that
will appear in release 1.0 or 1.1. Delivery of Release 1.0 is expected by
January 3, 2000. Delivery of 1.1 is expected by January 31, 2000.
<TABLE>
<CAPTION>
ART
CFR# DESCRIPTION STATUS RELEASE COMMENTS
- ---- ----------- ------ ------- --------
<S> <C> <C> <C> <C>
1 Support for Multiple Simultaneous Resolved 2.0 Resolved when IFU LM
Users of IFU LM Launched from a moves to web-based
Single Host operation.
2 Support for IFU ASCII Resolved 2.0 Introduced in Release
Configuration File 2.0 and enhanced in
Release 2.1.
3 Support for Ethernet Performance Closed 1.0 Already available.
Management Minor enhancements
requested to capture
"snapshot" of register
values rather than 15
minute intervals
(available in Release
1.1).
4 Support for Echoing Critical IP Closed 1.0 Already available.
Address Data on RS232 port
6 Support for Software Loading Resolved 2.0 Introduced in Release
2.0 and enhanced for
mass deployment in
Release 2.1.
7 [*] [*] [*]
8 Support for Multiple SNMP trap [*] 2.0 [*]
destinations
9 Support for IP address-based Resolved 2.1 [*]
Access Lists
</TABLE>
[*] Confidential Treatment Requested
Page 1 of 1
<PAGE> 69
EXHIBIT 8b
<TABLE>
<CAPTION>
ART
CFR# Description Status Release Comments
- ---- ----------- ------ ------- --------
<S> <C> <C> <C> <C>
15 Context Sensitive Help Resolved 2.0 Will maintain ability for
IFU LM Help to run
Independently of IFU
LM.
16 Timestamps displayed in Local Resolved 2.0
Time
17 Link Manager Budget Calculation Closed 1.1 Clarification provided
Display to ART that a Transmit
Power reset will occur
and the link will be
"restarted". Graphic
change will occur in
Release 1.1 and will
include Yes/No option.
18 Remove references to SONET from Resolved 2.0
IFU LM when radio is Fast Ethernet
19 Alarm's Masked notification on Resolved 1.1 Add visual indication
front Link Manager screen which is set when one
or more alarms on the
IFU are masked. Also
add SNMP trap for
same event.
20 Correct GPI alarm text so spacing Closed 1.0 Text currently runs
is preserved together - spaces are
lost between words.
21 Prevent Serial Number field from Closed 1.1
being "selectable".
</TABLE>
<TABLE>
SOFTWARE RELEASE SCHEDULE
- -------------------------
<S> <C>
Release 1.0 January 3/00
Release 1.1 January 31/00
Release [*] [*]
Release [*] [*]
</TABLE>
[*] Confidential Treatment Requested
Page 2 of 2
<PAGE> 1
EXHIBIT 10.11
AUGUST 16, 1999
Mr. Skip Speaks
4234 Gilbert Avenue
Dallas, TX 75219
Dear Skip:
On behalf of myself and our Board of Directors, I am extremely pleased to offer
you the position of President and Chief Executive Officer of Triton Network
Systems, Inc. (Triton) reporting to the Board of Directors. The following is
designed to serve as a record of the essential terms of your employment,
which supersedes all prior discussions:
POSITION
PRESIDENT & CHIEF EXECUTIVE OFFICER (CEO), TRITON NETWORK SYSTEMS, INC.
This position is the most senior executive level position within Triton Network
Systems. Responsibilities include, but are not limited to management of all
aspects of Triton's business and management of all management personnel. The
objectives of the position will be based upon Triton Network System's business
plan and associated operating budgets established by you and your team and
approved by the Board of Directors.
SALARY
Your base salary will be $290,000 per annum based semi-monthly in arrears.
BONUSES
25% of your base salary paid upon completion of the unaudited financials for
the previous year, based upon completion of personal and corporate objectives
assigned by the board. For calendar year 1999 your bonus will be no less than
$60,000.
STOCK OPTIONS
You will receive 1,000,000 Triton share options with an exercise price of $2.50
per Share. Your options will be granted in accordance with and governed by the
Triton Network Systems, Inc. 1997 Stock Option Plan (the "Plan") and will vest
based on the following formula:
o One fourth (250,000 share options) after completion of one full year
of employment with Triton.
o 1/48th (of the 1,000,000 share options) each month thereafter so long
as you are employed by Triton.
<PAGE> 2
Mr. Skip Speaks
August 16, 1999
Page 2
In addition to the one million share option grant above, you will receive an
additional grant of 250,000 Triton share options to be granted in accordance
with and also governed by the Plan and which will vest after you have been
employed for six (6) years but with accelerated vesting in full upon the
company (on a consolidated basis) generating Two Hundred Million Dollars
($200,000,000.00) in gross sales during any fiscal year. The exercise price for
these options shall also be Two Dollars and Fifty Cents ($2.50) per share.
It is Triton's intention that all of the above options will be "incentive stock
options" as such term is defined in Section 422 of the Internal Revenue Code,
to the extent allowed by the Plan and applicable law.
You shall vest in all of the above options and stock as provided above until
you are no longer employed by or providing services to Triton or any of its
affiliates. You shall remain vested in all of the above options to the extent
you were vested as of the date of your termination and you shall vest no
further thereafter, except that if your employment is terminated at any time by
us without "Cause" (as that term is defined below) or at any time by you "for
cause" (as that term is defined below) or if you die or become disabled, your
stock option vesting for all the above options will accelerate by six (6)
months. In addition to the foregoing, if such termination without "Cause" by us
or "for cause" by you or your death or disability occurs within six months of
the commencement of your employment, a total of One Hundred Thousand (100,000)
shares will vest.
In addition, with regard to your grant of 1,250,000 shares as provided above,
should a "change of control" occur; that is, a sale, transfer or other
transaction that results in the Triton shareholders immediately prior to such
transaction not owning after such transaction a majority of the voting equity,
or if all or substantially all of the assets of the company are sold to a party
not controlled by a majority of the Triton shareholders immediately prior to
such transaction, then all of your share options shall vest in full upon the
closing of such transaction. As a condition of your options or stock vesting
upon a change of control transaction, you will agree that, for one year after
the closing of such transaction, you will not directly or indirectly engage in
(whether as an employee, consultant, proprietor, partner, director or
otherwise), or have any ownership interest in, or participate in the financing,
operation, management or control of, any business that competes with Triton,
whether in the U.S. or abroad. Ownership of no more than 1% of $250,000 of
stock (whichever is less) of a publicly traded corporation, and ownership of
Ericcson stock, will not constitute a violation of this provision. If requested
by the acquirer, your commitment not to compete with Triton during such one
year period will be set forth in a separate non-compete agreement in a form
reasonably acceptable to the acquirer and you.
All of the above options shall be granted pursuant to a written agreement,
incorporating the above terms and otherwise subject to the terms of the Plan,
to be provided to you no later than August 20, 1999.
<PAGE> 3
Mr. Skip Speaks
August 16, 1999
Page 3
At such time as Triton becomes subject to the reporting requirements under the
Securities Exchange Act of 1934, Triton shall use its best efforts to: (a) file
all periodic reports required to be filed under such Act at the times provided
therein or in the rules and regulations of the Securities and Exchange
Commission; and (b) to file and cause to remain effective a Registration
Statement on Form S-8 (or any successor form) with respect to any outstanding
options granted to you hereunder.
SEVERANCE
The company will provide you with a severance package in the event that Triton
terminates your employment without "Cause". Cause shall mean:
A. Illegal acts (other than minor traffic violations, misdemeanors, or other
acts that do not result in criminal conviction) including theft or
embezzlement.
B. A material violation of published written policies of the company or
material violation of any confidentiality or proprietary information
agreement with the company.
C. Irresponsible or unauthorized acts of a willful nature in the performance
of duties or continuing failure to follow the reasonable written directions
of the Board of Directors.
Notwithstanding the foregoing, you will not be deemed to have been terminated
for Cause without (i) reasonable written notice to you setting forth the
reasons for Triton's intention to terminate for Cause, and (ii) an opportunity
for you, together with your counsel, if any, to be heard before the Triton
Board of Directors.
The severance package will provide you with up to twelve (12) months base
salary and benefits continuance from the time of your involuntary termination.
If you are employed within twelve months of your termination from the company,
your severance payments will stop at the time of your new employment.
You will also receive the severance package and accelerated stock option
vesting as set forth above if you at any time terminate your employment "for
cause" after the occurrence of one or more of the following events:
(i) The failure of Triton to maintain you in the position of President and
Chief Executive Officer;
(ii) The removal or non-election of you to Triton's Board of Directors;
(iii) A reduction in your base salary; or
(iv) A breach by Triton of any material provision of this letter agreement
which remains uncorrected for thirty (30) days following written notice
to Triton of such breach.
<PAGE> 4
Mr. Skip Speaks
August 16, 1999
Page 4
During the period in which severance benefits are continuing, you will not
directly or indirectly engage in (whether as an employee, consultant,
proprietor, partner, director or otherwise), or have any ownership interest in,
or participate in the financing, operation, management or control of, any
business that competes with Triton, whether in the U.S. or abroad. Ownership of
no more than 1% or $250,000 of stock (whichever is less) of a publicly traded
corporation, and ownership of Ericsson stock, will not constitute a violation
of this provision.
If the benefits accruing to you upon a change of control transaction trigger a
"golden parachute" excise tax under Section 4999 of the Internal Revenue Code,
then Triton will pay you one-half the amount of the excise tax.
LOAN
The company will provide you with a $300,000 loan at zero interest to replace
your current housing loan. This loan will have a term of five years and shall
be paid back sooner out of the first proceeds of the sale any Triton stock and
must be paid back within 12 months of termination of employment with Triton for
any reason. This loan will be secured by your stock options and 2nd mortgage on
your home in California. Should the IRS rules deem it necessary, the company
will be required to impute the IRS mandated minimum interest and report that as
compensation to you.
SIGN ON INCENTIVE
The company will pay to you together with your first pay check, a
non-refundable sign on bonus of $125,000. The company will also pay you on or
before January 15, 2000 an additional $125,000 bonus (the "Additional Bonus").
The Additional Bonus will be pro-rated over (9) months. You will be required to
repay the pro-rata portion of the Additional Bonus should you terminate your
employment with Triton prior to September 30, 2000 other than "for cause" (as
that term is defined above) in which event you will have no obligation to repay
any of the Additional Bonus. No repayment of the Additional Bonus will be
required in the event Triton is acquired in a change of control transaction.
VACATION
You will be eligible for three weeks of vacation annually.
BENEFITS
Triton will provide you and your dependents with the benefits provided to other
Senior Executives and their dependents. Those benefits currently offered are
listed below but may be changed by the company in its sole discretion:
o Medical Insurance o Disability Insurance
<PAGE> 5
Mr. Skip Speaks
August 16, 1999
Page 5
o Life Insurance o Dental Insurance
o 401(K) Plan Eligibility o Tuition Reimbursement
RELOCATION
You will be reimbursed for relocation expenses to Orlando, Florida from Dallas,
Texas for your townhouse furniture and one car. Triton will also reimburse you
for repayment of expenses to your previous employer for your move to Dallas,
should this be necessary.
OTHER
The company will bear the cost of air travel when you commute from your
home/office in California to the company offices in Orlando, Florida. The
company will pay for temporary living expenses in Orlando, Florida for an
initial two month period.
Triton will reimburse your legal expenses to review this letter up to $1000.
MEDIATION AND ARBITRATION
In the event of any dispute between us, you agree to first attempt to resolve
the dispute amicably by direct discussions with the Board of Directors and in
the event such discussions do not resolve the dispute, you agree to enter into
a non-binding mediation of the dispute. If the mediation is unsuccessful in
resolving the dispute, you agree to join us in a binding arbitration in
accordance with the provisions set forth in Section 9 of the attached Employee
Proprietary Information Agreement.
PROPRIETARY INFORMATION AGREEMENT
You will be required to sign the attached Employee Proprietary Information
Agreement. You will also be asked to sign a limited non-compete Agreement in
a form acceptable to you, which prevents you from competing with Triton during
the period you are receiving severance benefits from Triton and, in the event
of a change of control and full vesting of your stock options, for 1 year after
that point.
COMMENCEMENT OF EMPLOYMENT
Your employment with Triton is scheduled to commence September 6, 1999, subject
to final discussions between you and your current employer.
TERM
Subject to all of the provisions herein, specifically including, but not
limited to, the severance and accelerated stock option vesting provisions, your
employment is at will and may be terminated by the employee or the company
without cause on 60 days' written notice.
The undersigned has fully authority to act on behalf of Triton and bind Triton
to the terms herein. The preceding sets forth all of the terms of Triton's
offer to employ you. If this offer is in accordance with your understanding and
acceptable to you, please sign, date and return to me a copy of this
<PAGE> 6
Mr. Skip Speaks
August 16, 1999
Page 6
letter. This letter agreement may be signed in counterpart, and signed copies
exchanged by facsimile. Upon your signature, this letter agreement will be
binding upon Triton and its respective successors and assigns.
Sincerely,
/s/ Robert Goodman
- --------------------------
Robert Goodman
Chairman of the Board
I am in agreement with the terms as stated and hereby accept this offer of
employment by Triton Network Systems, Inc.
/s/ Skip Speaks August 17, 1999
- --------------------------- -----------------------------
Skip Speaks Date
<PAGE> 1
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as
of the 9th day of September, 1999, (the "Effective Date") by and between TRITON
NETWORK SYSTEMS, INC. (the "Company"), a Florida corporation, and Brian Andrew
(the "Employee").
BACKGROUND
The Company desires to continue to retain the services of the Employee,
and the Employee desires to continue to be retained by the Company, on the terms
and conditions set forth in this Agreement. During the term of his employment as
an Employee (but not as a consultant) pursuant to this Agreement, the Employee
will serve as Chairman of the Board of Directors and, in his capacity as an
employee, will report to the Chief Executive Officer.
The Employee recognizes and agrees that during the course of his
employment with the Company he will have substantial contacts with various
Customers and Potential Customers of the Company and will have access to the
Company's confidential business information and trade secrets. The Employee
acknowledges that the restrictive covenants contained in this Agreement are
reasonable and reasonably necessary to protect the Company's relationships with
its Customers and Potential Customers as well as its confidential business
information and trade secrets.
Accordingly, in consideration of the mutual promises, terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
TERMS
1. EMPLOYMENT: EMPLOYMENT TERM. The Company hereby continues to employ
the Employee, and the Employee hereby accepts continued employment by the
Company upon the terms and conditions set forth in this Agreement. The Employee
agrees to devote his full business time, energy, skills and best efforts to such
employment. The Employee shall not, directly or indirectly, alone or as a member
of a partnership, or as an officer, director, employee or agent of any other
person, firm or business organization engage in any other business activities or
pursuits requiring his personal service that materially conflict with his duties
hereunder or the diligent performance of such duties. The Employment Term shall
expire on May 1, 2000 or the date of an Initial Public Offering "IPO"),
whichever occurs first. Notwithstanding the above, the Parties agree that the
Company may terminate Employee's employment prior to expiration of the
Employment Term, for any reason, or no reason, with or without cause, upon
written notice to the Employee.
2. CONSULTING SERVICES. Upon the termination of the Employee's
employment with the Company, either at the expiration of the Employment Term, or
earlier, the Company will retain the services of Employee as a consultant for a
period beginning on the date of the
<PAGE> 2
termination of the Employee's employment hereunder and continuing through August
1, 2001, unless there is a "Change in Control" of the Company "Change of
Control"). In the event of a Change of Control which occurs at any time during
the first six (6) months of the Employee's status as a Consultant, the Company
will continue to pay consulting fees to Employee for the balance of said six (6)
month period. In the event of a Change of Control which occurs after the
Employee's first six (6) months as a consultant, the Employee's status as a
Consultant shall terminate on the effective date of the Change of Control, and
the Company shall have no further obligations to Employee. Upon becoming a
consultant, the employee will make himself available to consult with the
Company's Board of Directors but he will not be expected to consult exclusively
for, or on a full time basis with, the Company. The Employee will also not be
prohibited from pursuing other employment opportunities while serving as a
consultant, provided that it does not violate any terms of this Agreement.
3. COMPENSATION.
3.1 SALARY. During his employment hereunder, the Employee shall be
paid a base salary prorated at a rate equivalent to an annual salary of one
hundred and seventy-five thousand dollars ($175,000), payable in such
installments as the Company pays its other employees ("Base Salary"). Employee
shall also be paid a bonus in the amount of twenty percent (20%) of the
Employee's Base Salary, prorated on an annualized basis, if the Company's
financial performance for the fiscal year meets or exceeds the goals which have
been set by the Board of Directors. The goals for the current fiscal year which
have been set by the Board of Directors shall be attached hereto as Exhibit A.
While serving as a consultant following the expiration of the Employment Term,
the Employee shall be compensated as set forth in Section 3.5.
3.2 STOCK OPTIONS: RESTRICTED STOCK. As an incentive for the
Employee's services under this Agreement, the Employee has been granted options
to purchase one hundred thousand (100,000) shares of TRITON common stock,
exercisable at $2.50 per share, all of which will vest on August 1, 2001. The
stock options referenced in this Section 3.2 are in addition to the shares of
TRITON common stock which have previously been sold to Employee, and which are
in escrow and subject to a lapsing repurchase right held by the Company (the
"Restricted Stock"). The Company hereby agrees that so long as the Employee has
not been terminated for "Cause," the Restricted Stock will continue to vest
(i.e., the repurchase right will continue to lapse) as long as Employee remains
an employee or consultant or remains willing to serve as a consultant.
3.3 BENEFITS. During his period of employment hereunder, the
Employee shall be entitled to participate in the Company's health benefits and
vacation policy as are available and consistent with the Company's policies
related to such benefits.
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<PAGE> 3
3.4 EXPENSE REIMBURSEMENT. The Employee shall, upon submission of
adequate documentary evidence satisfactory to the Company, be entitled to
reimbursement of reasonable out-of-pocket expenses incurred in the performance
of his duties hereunder in accordance with policies established by the Company,
provided that each such expenditure is of a nature deductible under Section 162
of the Internal Revenue Code of 1986, as amended, on the federal income tax
return of the Company as a business expense and not as deductible compensation
to the Employee.
3.5 CONSULTING FEES. During the first six (6) months of his service
as a consultant, Employee shall be paid consulting fees in the amount of
$14,583.33 per month, payable in monthly installments. During the remaining
period of his service as a consultant, ending August 1, 2001, Employee shall be
paid consulting fees in the amount of two thousand five hundred dollars ($2,500)
per month, payable in such installments as the Company pays its employees. There
shall be no bonus during the period of service as a consultant. The benefits
identified in Section 3.3 shall continue only during the first six (6) months of
Employee's service as a consultant.
4. TERMINATION.
4.1 WITHOUT CAUSE. Employee's services as an employee may be
terminated by either party prior to the end of the Employment Term, at any
time, for any reason or no reason, with written notice. If the Company should
terminate the Employee's employment, without Cause, at any time during the Term,
the Company (i) will pay the Employee all accrued but unpaid Base Salary, all
accrued but unpaid bonus, and all incurred but unpaid expense reimbursements
which are payable to Employee pursuant to this Agreement ("Severance Payment")
up to and including the effective date of termination and (ii) will engage the
Employee as a consultant on the terms set forth in Sections 2 and 3.5.
Additionally, if the Employee is terminated without Cause, and the Company fails
for any reason to engage the Employee as a consultant as set forth above, or the
Company for any reason, with or without Cause, terminates the Employee's
services as a consultant, then any unvested restricted stock and stock options
held by Employee will be subject to immediate vesting, and Employee may exercise
any unexercised stock options held by him.
4.2 FOR CAUSE. Termination for "Cause" shall only apply during
Employee's status as an Employee, but not as a Consultant. As used here,
termination for "Cause" shall mean only the following:
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<PAGE> 4
A. Illegal acts (other than minor traffic violations,
misdemeanors, or other acts that do not result in criminal conviction) including
theft or embezzlement.
B. An intentional violation of published written policies of the
Company or an intentional violation of any Confidentiality or Proprietary
Information Agreement with the Company which causes demonstrable and substantial
harm to the Company.
C. Irresponsible or unauthorized acts of a willful nature in the
performance of duties which cause demonstrable and substantial harm to the
Company or continuing failure, after written warning, to follow the reasonable
written directions of the Board of Directors.
Notwithstanding the foregoing, Employee will not be deemed to have
been terminated for Cause without (i) reasonable written notice to him setting
forth the reasons for the Company's intention to terminate for Cause, and (ii)
an opportunity for him, together with his counsel, if any, to be heard before
the Company's Board of Directors.
5. PAYMENT AND OTHER PROVISIONS UPON TERMINATION FOR CAUSE. If the
Employee's employment with the Company is terminated by the Company for Cause,
then the Employee shall not be entitled to Severance Payments and, in lieu
thereof, on or before the Employee's last day of employment with the Company,
the Company shall pay to the Employee his Base Salary, if any, earned but
unpaid up to the date of termination plus benefits, if any, earned but unpaid up
to the date of termination, and shall reimburse the Employee for any expenses to
which the Employee is due reimbursement under Section 3 hereof. In addition, the
Employee shall retain the right to exercise any vested by unexercised stock
options in accordance with the Option Plan.
6. RESTRICTIVE COVENANTS. In order to induce the Company to enter into
this Employment Agreement, and as a material condition of his employment by the
Company, the Employee acknowledges that the Company has a legitimate business
interest in protecting the goodwill, confidential information, advantageous
business relationships, trade secrets, business methods and other valuable and
confidential aspects of the Company and its subsidiaries and affiliated
companies. In order to protect the Company's legitimate business interests, the
Employee agrees as follows:
6.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Employee
acknowledges and agrees that the Confidential Information (as defined below) is
a valuable, special and unique asset of the Company's business. Employee
acknowledges receipt and delivery of the Confidential Information and
specialized training, received during the course of his employment with the
Company. Accordingly, except in connection with the performance of his duties
hereunder, the Employee shall not at any time during or subsequent to the term
of his employment (i) disclose, directly or indirectly, to any person, firm,
corporation, partnership, association or other entity, any proprietary or
confidential information relating to the Company;
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<PAGE> 5
or (ii) utilize such information for any reason or purpose whatsoever.
"Confidential Information" includes but is not limited to, any information
concerning the Company's financial condition or prospects, the Company's
customers or potential customers' business or financial information of the
customers or potential customers obtained during the course of Employee's
employment with the Company, the design, development, manufacture, marketing or
sale of the Company's products or the Company's methods of operating its
business. Confidential Information shall not include information which, at the
time of disclosure, is known or available to the general public by publication
or otherwise through no act or failure to act on the part of the Employee.
The Employee acknowledges that the above-defined Confidential
Information constitutes "trade secrets" as defined in the Florida Uniform Trade
Secrets Act (Chapter 688, Florida Statutes), and all remedies provided
thereunder shall, in addition but not by way of limitation, be available to the
Company in the event of breach or threatened breach by the Employee.
6.2 COMPETITION. During the Restricted Period (as defined below) and
within the Restricted Area (as defined below), the Employee will not,
individually or in conjunction with others, directly or indirectly, enter into
or engage in any business which competes directly or indirectly with the
business of the Company as conducted at any time during the Restricted Period,
on the Employee's own behalf or in the service of or on behalf of others as
principal, partner, officer, director, manager, employee or shareholder (other
than as holder of less than 1% of the outstanding capital stock of a publicly
traded corporation), by soliciting, intentionally inducing or influencing any
person, partnership, corporation or other entity which has a business
relationship with the Company to discontinue or reduce the extent of such
relationship with the Company. The "business of the Company" shall be construed
to mean production and/or sale or licensing of Broadband Wireless Equipment.
6.3 NON-SOLICITATION AND NON-DISPARAGEMENT. During the Restricted
Period the Employee, on his own behalf or on behalf of any other person,
partnership, corporation or other entity, will not directly or indirectly,
recruit or hire any other employee, agent or consultant of the Company or
encourage any other employee, agent or consultant to terminate his or her
relationship with the Company. Further, the Employee agrees that he will not, at
any time, make disparaging comments about the Company, its Officers, or
Directors.
6.4 RETURN OF CONFIDENTIAL INFORMATION. Upon termination of the
Employee's employment, for whatever reason and whether voluntary or involuntary,
or at any time at the request of the Company, the Employee shall promptly return
all Confidential Information in the possession or under the control of the
Employee to the Company and shall not retain any copies or other reproductions
or extracts thereof. The Employee shall at any time at the request of the
Company destroy or have destroyed all memoranda, notes, reports, and documents,
whether in "hard copy" form or as stored on magnetic or other media, and all
copies and other reproductions
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<PAGE> 6
and extracts thereof, prepared by the Employee and shall provide the Company
with a certificate that the foregoing materials have in fact been returned or
destroyed.
6.5 BOOKS AND RECORDS. All books, records and accounts of the
Company, whether prepared by the Employee or otherwise coming into the
Employee's possession, shall be the exclusive property of the Company and shall
be returned immediately to the Company upon termination of the Employee's
employment or upon the Company's request at any time.
6.6 CONSTRUCTION. It is agreed by the parties hereto that if any
portion of the above restrictive covenants are held to be unreasonable,
arbitrary, against public policy, or for any other reason unenforceable, the
covenants herein shall be considered diminishable both as to time and geographic
area; and each month for the specified period shall be deemed a separate period
of time, and the restrictive covenants shall remain effective so long as the
same is not unreasonable, arbitrary or against public policy. The parties hereto
agree that in the event any court determines the specified time period or the
specified geographic area to be unreasonable, arbitrary or against public
policy, a lesser period or geographic area which is determined to be reasonable,
nonarbitrary and not against public policy shall be enforced against the
Employee.
6.7 CALCULATION OF TIME. The time period covered by the restrictive
covenants contained in this Section 6 shall not include any period(s) of
violation of any restrictive covenant or any period(s) of time required for
litigation brought by the Company to enforce any covenant.
6.8 DISGORGEMENT. The Employee covenants and agrees that if it is
proven by virtue of a judgment from a Court of competent jurisdiction that the
Employee has violated any of the covenants or agreements set forth in this
Section 6, the Company shall be entitled to an accounting and repayment of all
profits, compensation, commission, remuneration or other benefits that the
Employee has realized, directly or indirectly, or may realize as a result of or
in connection with such violation. These remedies shall be in addition to, and
not in limitation of, any injunctive relief or other rights or remedies to which
the Company may be entitled at law, in equity or under this Agreement.
6.9 DEFINITIONS. As used in this Section 6,
6.9.1 The "Company" includes any parent, subsidiary or affiliated
company of the Company.
6.9.2 The "Restricted Period" commences on the Effective Date of
this Agreement and terminates on August 1, 2001.
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<PAGE> 7
6.9.3 The "Restricted Area" is the United States and any other
location where the Company conducts business during the Restricted Period,
including by telephone, telecopy, e-mail or other forms of communication.
6.10 INDEPENDENT COVENANTS. The covenants set forth in this Section
6 shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any potential or alleged claim or cause of
action of the Employee against the Company, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Company
of the covenants contained herein. An alleged or actual breach of the Agreement
by the Company shall not be a defense to enforcement of the provisions of this
Section 6. It is acknowledged and agreed that the provisions of this Section 6
shall survive the termination of this Agreement.
6.11 INJUNCTION/SPECIFIC PERFORMANCE: SETOFF. The Employee
acknowledges that if it were to breach any of the provisions of this Section 6,
it would result in an immediate and irreparable injury to the legitimate
business interests of the Company which cannot be adequately or reasonably
compensated at law. Therefore, the Employee agrees that the Company shall be
entitled, if any such breach shall occur or be threatened or attempted, if it so
elects, to a decree of specific performance and to a temporary and permanent
injunction enjoining and restraining such breach, either directly or indirectly,
and that such right to injunction shall be cumulative to whatever other remedies
for actual damages the Company may possess. The Employee further agrees that the
Company may set off against or recoup from any amounts due under the Purchase
Agreement to the extent of any losses incurred by the Company as a result of any
breach by the Employee of the provisions of this Section 6. If any action is
brought by the Company pursuant to this Section 6, the prevailing party shall be
entitled to recover costs and reasonable attorneys' fees incurred in such
action, the amount of such reasonable attorneys' fees to be determined by the
court and not a jury.
7. INTELLECTUAL PROPERTY. As between the Employee and the Company, all
products, designs, styles, processes, discoveries, materials, ideas, creations,
inventions and properties, whether or not furnished by the Employee, created,
developed, invented or used in connection with the Employee's employment with
the Company or the business of the Company under this Agreement will be the sole
and absolute property of the Company for any and all purposes whatsoever in
perpetuity, whether or not conceived, discovered and/or developed during regular
working hours. The Employee will not have, and will not claim to have, under
this Agreement or otherwise, any right, title or interest of any kind or nature
whatsoever in or to any such products, processes, discoveries, material ideas,
creations, inventions and properties which are related to the Company's
business.
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<PAGE> 8
8. MISCELLANEOUS
8.1 REPRESENTATION OF THE EMPLOYEE. The Employee represents and
warrants to the Company that the Employee is not party to or bound by any
employment agreement, noncompetition agreement or confidentiality agreement with
any person or entity other than the Company and its affiliates.
8.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
8.3 ENTIRE AGREEMENT. This Agreement (including the documents
attached hereto) constitutes the entire agreement between the parties hereto and
supersedes any prior understandings, agreements, or representations by or
between the parties hereto, written or oral, to the extent they related in any
way to the subject matter hereof.
8.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. The Employee may not assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the Company.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is sent
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Employee:
Mr. Brian Andrew
573 Fox Hunt Circle
Longwood, FL 32750.
(407) 328-0614
-8-
<PAGE> 9
If to the Company:
Triton Network Systems, Inc.
Attn: Robert P. Goodman
8529 SouthPark Circle
Orlando, FL 32819
(407) 903-0900
Facsimile: (407) 903-0997
Any party hereto may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, facsimile transmission, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall
be deemed to have been duly given unless and until it actually is received by
the intended recipient; provided, however, that if notice is sent by U.S. mail
it shall be deemed received on the fifth (5th) business day after it is sent.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
8.8. GOVERNING CHOICE OF LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Florida
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida.
8.9. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
parties hereto. No waiver by any party of any default misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
8.10. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
8.11. CONSTRUCTION. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no
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<PAGE> 10
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
8.12. SUBMISSION TO JURISDICTION. Each of the parties hereto submits
to the jurisdiction of any state or federal court sitting in Orange County,
Florida, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court, Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other parties with respect
thereto.
8.13. ATTORNEYS' FEES. If litigation shall be brought to enforce or
interpret any provision contained herein, the prevailing party shall be entitled
to its reasonable attorney's fees (including those for negotiations, trial and
appeals) and disbursements incurred by the prevailing party in such litigation.
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<PAGE> 11
This Agreement has been executed by the parties as of the date first above
written.
Company:
TRITON NETWORK SYSTEMS, INC.
By: /s/ Robert F. Goodman
---------------------------------
Name: Robert F. Goodman
Title: Chairman
Employee:
/s/ Brian J. Andrew
------------------------------------
Brian J. Andrew
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<PAGE> 1
EXHIBIT 10.13
[LETTERHEAD]
September 22, 1998
Mr, Kenneth R. Vines
4556 Daffodil Trail
Plano, Texas 75093
Dear Ken:
On behalf of myself and our Board of Directors. I am pleased to offer you the
position of Chief Financial Officer (CFO), Triton Network Systems, Inc.
(Triton). The following is designed to serve as a record of the essential terms
of your employment, which supersedes all prior discussions:
POSITION
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER (CFO);
TRITON NETWORK SYSTEMS, INC.
This position is an executive level position within Triton Network Systems.
Responsibilities include, but are not limited to management of Finance,
Accounting, Human Resources, MIS, and Facilities. The objectives of the position
will be based upon Triton Network Systems business plan and associated operating
budgets established by the executive management team and approved by the Board
of Directors.
SALARY
Your base salary will be $150,000 per annum payable semi-monthly in arrears.
BONUSES
20% end of year bonus based upon completion of personal and corporate
objectives.
STOCK OPTIONS
You will receive, subject to board approval, 300,000 Triton share options with
an exercise price of $.26 per Share. Your options will vest based on the
following formula:
o One fourth (1/4) after completion of one full year of employment with
Triton.
o 1/48th each month thereafter.
8529 SouthPark Circle o Orlando, FL 32819
Phone (407) 903-0900 o Fax (407) 903-0999
<PAGE> 2
Mr. Kenneth R. Vines
September 22, 1998
Page Two
This vesting is provided in each case that your employment by or services to the
company have not been terminated prior to the date of any such vesting except as
specified in this offer letter. You will also have the option of purchasing the
options upon your employment and placing these in an escrow account with the
above vesting schedule. Options are granted in accordance with and governed by
the Triton Network Systems, Inc. 1997 Stock Option Plan. Should the company be
sold or be acquired by another company (excluding transactions in which the
Triton shareholders hold a majority of the voting equity of the surviving
entity), all stock or stock options will vest immediately.
Notwithstanding anything herein or in the Plan to the contrary, if the
undersigned's employment with the Company is terminated Without Cause within one
year of the Vesting Commencement Date, then, upon such termination, the Shares
subject to the Option shall be vested in an amount equal to 1/48th of the Shares
per month from the Vesting Commencement Date until the termination date, plus an
additional 6/48ths of the Shares subject to the Option shall also vest at the
time of termination.
SEVERANCE
The company will provide you with a severance package in the event that Triton
Network Systems, Inc. terminates your employment without cause. Without
cause shall mean for any reason other than:
A. Illegal acts (other than minor traffic violations, misdemeanors, or
other Acts that do not result in criminal conviction) including theft
or embezzlement.
B. Material violation of published written policies of the company or
material violation of any confidentiality or proprietary information
agreement with the company.
C. Irresponsible, unauthorized acts of a willful nature in the performance
of duties or repeated failure to follow the reasonable directions of
the Board of Directors or CEO.
That package will provide you with up to six (6) months base salary,
twenty-flve percent (25%) of your annual bonus and benefit continuance from the
time of your involuntary termination. If you are employed within six months of
your termination from the company, your severance payments will stop at the time
of your new employment. You will continue to vest your stock options during your
severance period. If your employment is terminated without cause because of or
within one year after a sale of the company, you will receive six months
compensation (base salary and bonus at plan), plus six months benefit
continuance.
<PAGE> 3
Mr. Kenneth R. Vines
September 22, 1998
Page Three
VACATION
You will be eligible for three weeks of vacation.
BENEFITS
Triton will provide the following paid benefits, at its sole discretion:
- Medical Insurance - Disability Insurance
- Life Insurance - Dental Insurance
- 401 (K) Plan Eligibility - Tuition Reimbursement
RELOCATION
You will be reimbursed for relocation expenses as outlined in Exhibit A.
PROPIETARY INFORMATION AGREEMENT
You will be asked to sign the attached Employee Proprietary Information
Agreement.
COMMENCEMENT OF EMPLOYMENT
No later than October 19, 1998.
The preceding sets forth all of the terms of Triton Network Systems, Inc.'s
offer to employ you. If this offer is in accordance with your understanding and
acceptable to you, please sign, date and return to me a copy of this letter by
September 30, 1998.
Sincerely
/s/ Brian J. Andrew
- ---------------------------------
Brian J. Andrew
President & Chief Executive Officer
I am in agreement with the terms as stated and will accept this offer of
employment by Triton Network Systems, Inc.
9/30/98
- ----------------------------- -----------------------------
Name Date
<PAGE> 4
[LETTERHEAD]
July 20, 1999
Mr. Kenneth R. Vines
11431 Willow Gardens Drive
Windermere, FL 34786
Dear Ken:
In consideration of your further employment with the Company, we are
proposing the following Amendment to your Employment Offer letter dated
September 22. 1998.
NON-DISPARAGEMENT:
You agree that should your employment with the Company terminate for
any reason, you will not disparage the Company, which includes, but is not
limited to, making negative comments about the Company, its products, its
employees, Officers, or Board of Directors, or your employment with the Company.
In addition, should your employment With the Company terminate for any reason,
the Company agrees to not disparage you.
NON-SOLICITATION:
You agree that for six (6) months following your employment with the
Company, whether the termination shall be voluntary or involuntary, with or
without cause, or for any other reason whatsoever, you shall not, directly or
indirectly or on behalf of yourself or any other person or entity: (a) attempt
to hire any other employee of the Company or otherwise encourage or attempt to
encourage any other employee of the Company to leave employment With the
Company; or (b) in any manner or at any time, solicit or encourage or discuss
with any person, firm, corporation, or any business entity who are Customers of
the Company and/or other employees of the Company to cease doing business with
the Company and/or other employees of the Company. In the event you breach any
term contained in this Section, you immediately waive any right or entitlement
to the Severance Benefits described in the Employment Severance Agreement and
will pay to the Company an amount equal to any portion of the Severance Benefits
paid to you prior to your breach, in addition to any damages the Company may be
able to recover.
CONFIDENTIAL
<PAGE> 5
If you are in agreement with the terms of this Amendment, please sign
and date below.
Sincerely,
---------------------------
I accept the terms of this amendment to my offer of employment.
- -----------------------------
Name
- -----------------------------
Date
CONFIDENTIAL
<PAGE> 1
Exhibit 10.14
[TRITON NETWORK SYSTEMS, INC. LOGO]
December 18, 1998
Mr. Doug Campbell
161 Lonong Chuan #02-01
New Tech Park, Singapore 556741
Dear Doug:
it is with pleasure that Triton Network Systems, Inc. extends to you an offer of
employment for the position of Vice President, Marketing and International
Sales. You will be reporting to Brian J. Andrew, and your work location will be
in Orlando, Florida. The following is designed to serve as a record of the
essential terms of your employment, which supersedes all prior discussions:
COMMENCEMENT OF EMPLOYMENT: No later than 17 Feb 99 or sooner.
REMUNERATION: Your base salary will be $126,000 per annum payable
semi-monthly in arrears with a 20% end of year bonus based
upon completion of personal and corporate objectives
STOCK OWNERSHIP: You will receive, subject to board approval, 250,000 Triton
share options. Your options will vest based on the following
formula:
- One fourth (1/4) after completion of one full year of
service with Triton.
- 1/48th each month thereafter
This vesting is provided in each case that your employment by
or services to the Company have not been terminated prior to
the date of any such vesting.
Your official stock option contract will be sent to you for
your review and signature.
RELOCATION: Triton will re-imburse for [illegible] all valid relocation
expenses, when supported with original receipts, for up to
six months after your start date.
In the event that you voluntarily resign from Triton within
twelve months of your start date, you will be liable for all
your relocation expenses previously re-imbursed by Triton.
<PAGE> 2
VACATION: Vacation is on a calendar year basis, and accrues on a
monthly basis. For the first three years of employment, the
fate of accrual shell be 10 hours per month (three weeks per
year). After three years of continuous employment with
Triton, your vacation entitlement will increase to 13.3 hours
per month (four weeks per year).
BENEFITS: Triton will provide the following paid benefits, at its sole
discretion:
Medical Insurance Disability Insurance
Life Insurance Dental Insurance
401(K) Plan Eligibility Tuition Reimbursement
Please sign and return the offer letter to me on or before 5:00 PM EST date
1998.
1 am delighted that you are joining the Triton team and look forward to
assisting you in achieving your professional objectives. I believe that you will
enjoy working here and find it to be a professionally satisfying experience.
Please let me know if you have any questions about your employment at Triton or
if there is any other information or material I can provide for you.
Sincerely
/s/ Brian J. Andrew
- --------------------------------------------
Brian J. Andrew
President & CEO Triton Network Systems, Inc.
Acceptance of Offer
/s/ Doug Campbell
- --------------------------------------------
Doug Campbell
<PAGE> 1
Exhibit 10.14.1
[TRITON NETWORK SYSTEMS, INC. LOGO]
July 20, 1999
Mr. Douglas R.B. Campbell
5961 Masters Blvd., Bay Hill
Orlando, FL 32819
Dear Doug:
In consideration of your further employment with the Company, we are
proposing the following Amendment to your Employment Offer letter dated December
18, 1999.
POSITION & TITLE:
Your new position in the Company will be Vice President, Sales &
Marketing reporting to the Chief Executive Officer.
SEVERANCE PACKAGE:
The Company will provide you with a severance package in the event you
are terminated without cause. Without cause shall mean for any reason other
than:
1. Illegal acts (other than minor traffic violations or misdemeanors),
including but not limited to theft or embezzlement.
2. Violation of published written policies of the Company or violation
of any confidentiality or proprietary information agreement with
the Company.
3. Irresponsible unauthorized acts of a willful nature in the
performance of duties or repeated failure to follow the reasonable
directions of the Board of Directors or Officers of the Company.
The severance package will provide you with up to six (6) months base
salary, twenty-five percent (25%) of your annual bonus, and benefit continuance
from the time of your involuntary termination for a six (6) month period. If you
are employed within six (6) months of your termination from the Company, your
severance payments will stop at the time of your new employment. You will
continue to vest your stock options during your severance period which may be up
to six (6) months. If your employment is terminated without cause because of, or
within one (1) year after, a sale of the Company, you will receive six (6)
months compensation (bass salary and bonus), plus six (6) months benefit
continuance.
Page 1
<PAGE> 2
Should you be terminated, without cause, within your first year of
employment, the minimum continued vesting period will be the number of months
required to obtain one year of vesting.
NON-DISPARAGEMENT:
You agree that should your employment with the Company terminate for
any reason, you will not disparage the Company, which includes, but is not
limited to, making negative comments about the Company, its products, its
employees, Officers, or Board of Directors, or your employment with the Company.
In addition, should your employment with the Company terminate for any reason,
the Company agrees to not disparage you.
NON-SOLICITATION:
You agree that for six (6) months following the your employment with
the Company, whether the termination shall be voluntary or involuntary, with or
without cause, or for any other reason whatsoever, you shall not, directly or
indirectly or on behalf of yourself or any other person or entity: (a) attempt
to hire any other employee of the Company or otherwise encourage or attempt to
encourage any other employee of the Company to leave employment with the
Company; or (b) in any manner or at any time, solicit or encourage or discuss
with any person, firm, corporation, or any business entity who are Customer of
the Company and/or other employees of the Company to cease doing business with
the Company and/or other employees of the Company. In the event you breach any
term contained in this Section, you immediately waive any right or entitlement
to the Severance Benefits described in the Employment Severance Agreement and
will pay to the Company an amount equal to any portion of the Severance Benefits
paid to you prior to your breach, in addition to any damages the Company may be
able to recover.
If you are in agreement with the terms of this Amendment, please sign
and date below.
Sincerely
/s/ Brian J. Andrew
-----------------------
Brian J. Andrew
I accept the terms of this amendment to my offer of employment
/s/ DRB Campbell
- -----------------------
Name DRB Campbell
18 Oct 99
- -----------------------
Date
Confidential Page 2
<PAGE> 1
February 27, 1997 Exhibit 10.15
Michael Clark
1315 Black Oak
Carrollton, TX 75007
Dear Mike
It is with pleasure that Milcom, Inc. for Triton Network Systems, Inc. extends
to you an offer of employment as the Vice President of Engineering. You will be
reporting to Brian Andrew and your work location will be in Orlando, Florida.
The following is designed to serve as a record of the essential terms of your
employment, which supersedes all prior discussions:
Commencement of employment: April 1, 1997
Remuneration: Your base salary will be $125,000 per annum payable semi-monthly
in arrears. With a 20% end of year bonus based on completion of
personal and corporate objectives.
Stock options: As a member of the Triton startup team, you will receive earned
equity in the form of stock options totaling 2% of total company
stock. Your options will vest based on the following formula:
- One third at start of employment
- One third after three years of continuous employment
- One third based on successful completion of agreed individual
objectives over three years.
Relocation: Triton will cover up to $30,000 worth of documented relocation
costs associated with your move to Orlando, Florida.
Vacation: Vacation is on a calendar year basis, and accrues on a monthly
basis. For the first three years of employment, the rate of
accrual shall be 10 hours per month (three weeks per year). After
three years of continuous employment with Triton, your vacation
entitlement will increase to 13.3 hours per month (four weeks per
year).
Benefits: Triton will provide the following paid benefits, at its sole
discretion:
Medical Insurance Disability Insurance
Life Insurance Dental Insurance
401(K) Plan Eligibility Tuition Reimbursement
<PAGE> 2
-2-
March 1, 1997
In the interim, Milcom, Inc. will cover the cost of your current
coverage within the COBRA program as offered by your current employer
upon termination with them.
Please sign and return the offer letter to me on or before 5:00 PM EST Friday,
March 7, 1997.
I am delighted that you are joining the Triton team and look forward to
assisting you in achieving your professional objectives. I believe that you
will enjoy working here and find it to be a professionally satisfying
experience. Please let me know if you have any questions about your employment
at Triton or if there is any other information or material I can provide for
you.
Sincerely,
/s/ BRIAN J. ANDREW
- -------------------
Brian J. Andrew
President & CEO Triton Network Systems, Inc.
/s/ ANDY BADOLATO
- ------------------
Andy Badolato
President, Milcom, Inc.
Accepted:
Signature: Michael A. Clark
-----------------
Name: Michael A. Clark
----------------------
Date: 3/1/97
----------------------
<PAGE> 1
Exhibit 10.15.1
July 20, 1999
Mr. Michael A. Clark
8514 Fulton Court
Oriando,FL 32835
Dear Mike:
In consideration of your further employment with the Company, we are
proposing the following Amendment to your Employment Offer letter dated
February 27, 1997.
SEVERANCE PACKAGE:
The Company will provide you With a severance package in the event you
are terminated without cause. Without cause shall mean for any reason other
than:
1. Illegal acts (other than minor traffic violations or
misdemeanors), including but not limited to theft or
embezzlement.
2. Violation of published written policies of the Company or
violation of any confidentiality or proprietary information
agreement with the Company.
3. Irresponsible unauthorized acts of a willful nature in the
performance of duties or repeated failure to follow the
reasonable directions of the Board of Directors or Officers,
of the Company.
The severance package will provide you with up to six (6) months bass
salary, twenty-five percent (25%) of your annual bonus, and benefit continuance
from the time of your involuntary termination for a six (6) month period. If
you are employed within six (6) months of your termination from the Company,
your severance payments Will stop at the time of your new employment. You will
continue to vest your stock options during your severance period which may be
up to six (6) months. If your employment is terminated without cause because
of, or within one (1) year after, a sale of the Company, you Will receive six
(6) months compensation (base salary and bonus), plus six (6) months benefit
continuance.
Confidential Page 1
<PAGE> 2
NON-DISPARAGEMENT
You agree that should your employment with the Company terminate for
any reason, you WILL not disparage the Company, which includes, but is not
limited to, making negative comments about the Company, its products, its
employees, Officers, or Board of Directors, or your employment with the
Company. In addition, should your employment with the Company terminate for any
reason, the Company agrees to not disparage you.
NON-SOLICITATION:
You agree that for six (6) months following the your employment with
the Company, whether the termination shall be voluntary or involuntary, with or
without cause, or for any other reason whatsoever, you shall not, directly or
indirectly or on behalf of yourself or any other person or entity: (a) attempt
to hire any other employee of the Company or otherwise encourage or attempt to
encourage any other employee of the Company to leave employment with the
Company; or (b) in any manner or at any time, solicit or encourage or discuss
with any person, firm, corporation, or any business entity who are Customer of
the Company and/or other employees of the Company to cease doing business with
the Company and/or other employees of the Company. In the event you breach any
term contained in this Section, you immediately waive any right or entitlement
to the Severance Benefits described in the Employment Severance Agreement and
will pay to the Company an amount equal to any portion of the Severance
Benefits paid to you prior to your breach, in addition to any damages the
Company may be able to recover.
If you are in agreement With the terms of this Amendment, please sign
and date below.
Sincerely,
/s/ Brian J. Andrew
----------------------------------------
Brian J. Andrew
I accept the terms of this amendment to my offer of employment.
/s/ Michael A. Clark
- -----------------------------------
Name: Michael A. Clark
8/2/99
- -----------------------------------
Date
Confidential Page 2
<PAGE> 1
EXHIBIT 10.16
TRITON NETWORK SYSTEMS, INC.
101 PHILIPPE PARKWAY, SUITE 308
SAFETY HARBOR, FL 34695
MARCH 20, 1997
Mr. Dan Guiliford
634 Tall Oaks Terrace
Longwood, Florida 32750
Dear Dan:
I am pleased to offer you the position of Vice President of Product Development
for Triton Network Systems, Inc., a Delaware corporation to be located in
Orlando, Florida. Triton Network Systems, Inc. is a new company which has been
formed to exploit certain commercial markets for wireless technology developed
for the United States military by the Electronics and Missiles division of
Lockheed Martin Corporation. Triton is currently in negotiation with Lockheed
for the purpose of licensing the necessary technology. The effective date of
your employment will be April 1, 1997.
In this position, you will report to the President of Triton Network Systems,
Inc.
Your compensation in this position will include the following:
o Base Salary of $10,416.67 per month, paid twice monthly in accordance
with Triton's standard payroll policies. The first and last payment by
the company will be adjusted, if necessary, to reflect a commencement
or termination date other than the first or last working day of a pay
period.
o An Incentive Bonus of $25,000 per annum, based on achievement of
performance objectives mutually agreed between yourself and the
President, on an annual basis.
In addition, you will be reimbursed for normal and reasonable expenses incurred
when you travel outside Orlando on company business, in accordance with the
Company's approved Travel Reimbursement Policy.
Subject to action by the Company's Board of Directors and compliance with
applicable state and federal securities laws, the Company will sell to you
shares of Common Stock (the "Shares"), subject to a Repurchase Option by the
Company to be defined in a restricted stock purchase agreement.
<PAGE> 2
Page 2, Dan Guiliford
March 20, 1997
In addition, the company will establish an Employee Benefits Program, including
Health Insurance, with coverage comparable to other companies in our industry
in Orlando. You will be entitled to participate in this program. Until this
plan is established, Triton will pay the cost of your current coverage within
the COBRA program as offered by your previous employer.
The company will provide you with three weeks of paid vacation leave per year
after completion of one year's service. In addition, you will be entitled to
company paid sick leave and personal leave up to a maximum of 10 days per year.
It is expected that you will devote your full business time, attentions and
energies to Triton Network Systems, Inc. and not engage in other employment.
You will be required to enter into an Non-Compete and Intellectual Property
Agreement with the Company covering Patents, Trade Secrets and other
intellectual property of the company.
Your employment with Triton is for no specific period and constitutes "at-will"
employment. As a result, you are free to terminate your employment at any time,
for any reason or for no reason. Similarly, the Company is free to terminate
your employment at any time, for any reason or for no reason. However, in the
event that Triton terminates your employment without "cause," or you become
permanently disabled as determined by the Board of Directors, you will be
entitled to severance pay in the form of continuation of your base salary for a
period of six months. Your stock options will not continue to vast after your
termination date. If you resign or are terminated with "cause," you will not be
entitled to any severance. "Cause" means gross negligence, habitual neglect of
duties, dishonesty, criminal acts, violation of any state or federal securities
laws or failure to abide by the lawful policies or instructions of the Board of
Directors.
This offer letter, the Non-Compete and Intellectual Property Agreement and the
restricted stock purchase agreement set forth in the terms of your employment
with the Company and supersede any and all prior understandings and agreements,
whether written or oral. This agreement can only be amended in writing signed
by you and an officer and director of the Company. Any waiver of a right under
this agreement must be in writing. This agreement will be governed by Florida
law.
<PAGE> 3
Page 3, Dan Guiliford
March 20, 1997
We look forward to you joining the Company. If the foregoing terms are
agreeable, please indicate your acceptance by signing the enclosed copy of this
letter in the space provided below and returning it to me, along with your
completed Non-Compete and Intellectual Property Agreement.
Sincerely yours,
TRITON NETWORK SYSTEMS, INC.
/s/ Robert D. Francis
- --------------------------------
Robert D. Francis
Chairman of the Board
ACCEPTED
/s/ Dan Guiliford
- --------------------------------
Dan Guiliford
Dated: 05/28/97
--------------------------
<PAGE> 1
Exhibit 10.17
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNLESS
REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
UNLESS THE HOLDER OF SUCH WARRANT OR SHARES DELIVERS TO THE COMPANY AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH
PROPOSED TRANSFER WILL BE MADE PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
COMMON STOCK PURCHASE WARRANT
Company: TRITON NETWORK SYSTEMS, INC., a Delaware corporation
("Company")
Number of Shares: Such number of shares of Common Stock as shall be equal to 4%
of $7,000,000 divided by 90% of the price per share of Common
Stock used in a firm underwritten initial public offering of
the Company's common stock. In the event the Company has not
completed a firm underwritten initial public offering on or
before the first anniversary hereof, the number of shares
shall be 56,000 shares.
Class of Stock: Common Stock
Exercise Price: 90% of the price per share of Common Stock used in a firm
underwritten initial public offering of the Company's common
stock. In the event the Company has not completed a firm
underwritten initial public offering on or before the first
anniversary hereof, the exercise price shall be equal to the
price per share of the securities sold in the Company's most
recent equity offering prior to the date of this Warrant,
which is $5.00 per share.
Issued as of: February 25, 2000
Expiration Date: As described in Section 1
FOR VALUE RECEIVED in the form of a Commitment Letter dated January 14,
2000 and revised January 20, 2000 from FINOVA Capital Corporation in favor of
the Company, the adequacy and receipt of which are hereby acknowledged, TRITON
NETWORK SYSTEMS, INC., a Delaware corporation, hereby certifies that FINOVA
Capital Corporation, a Delaware corporation, and its successors and assigns, are
entitled to purchase from the Company at any time and from, time to time on and
after the date hereof until 6:00 p.m. California local time on the Expiration
Date at an Exercise Price (as described in Section 1), fully paid and
nonassessable shares of Common Stock of the Company, on the terms and conditions
hereinafter set forth (the
1
<PAGE> 2
"Shares"). The number of such shares of Common, Stock and the Exercise Price are
subject to adjustment as provided in the Warrant.
1. Certain Definitions. As used in this Warrant, the following terms
have the following definitions:
"Common Stock" means the Company's Common Stock, $0.001 par value,
and includes any common stock of the Company of any class or classes resulting
from any reclassification or reclassifications thereof.
"Company" means TRITON NETWORK SYSTEMS, INC., a Delaware
corporation.
"Convertible Securities" means evidence of indebtedness, shares of
stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
"Current Market Price" of a share of Common Stock or of any other
security as of a relevant date means: (i) the Fair Value thereof as determined
in accordance with clause (ii) of the definition of Fair Value with respect to
Common Stock or any other security that is not listed on a national securities
exchange or traded on the over-the-counter market or quoted on NASDAQ, and (ii)
the closing price on such date (excluding any trades which are not bona fide
arm's length transactions) with respect to Common Stock or any other security
that is listed on a national securities exchange or traded on the
over-the-counter market or quoted on NASDAQ. The closing price for each day
shall be (i) the last sale price of shares of Common Stock or such other
security on such date or, if no such sale takes place on such date, the average
of the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which the
same are then listed or admitted to trading, or (ii) if no shares of Common
Stock or if no securities of the same class as such other security are then
listed or admitted to trading on any national securities exchange, the average
of the reported closing bid and asked prices thereof on such date in the
over-the-counter market as shown by NASDAQ or, if no shares of Common Stock or
if no securities of the same class as such other security are then quoted in
such system, as published by the National Quotation Bureau, Incorporated or any
similar successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Warrantholders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Period" means the period commencing on the date hereof and
ending at 6:00 p.m. California local time on the Expiration Date.
"Exercise Price" shall have the meaning set forth above.
"Expiration Date" means the date that is seven (7) years after the
date hereof.
"Fair Value" means: (i) with respect to a share of Common Stock or
any other security, the Current Market Price thereof, and (ii) with respect to
any other property, assets, business or entity, or if the Shares have not been
registered under the Securities Act, an amount
2
<PAGE> 3
determined in good faith by the Board of Directors of the Company.
"Indemnified Party" and "Indemnifying Party" have the meanings set
forth in Section 11(f)(iii).
"Registrable Stock" means: (i) all Warrant Shares which are issuable
to the Warrantholders pursuant to the Warrants, whether or not the Warrants have
in fact been exercised and whether or not such Warrant Shares have in fact been
issued, (ii) all Warrant shares acquired by the Warrantholders pursuant to the
Warrants, and (iii) any shares of Common Stock, whether or not such shares of
Common Stock have in fact been issued, and stocks or other securities of the
Company issued upon conversion of, in a stock split or reclassification of, or a
stock dividend or other distribution on, or in substitution or exchange for, or
otherwise in connection with, such Warrant Shares or in a merger or
consolidation involving the Company or its assets; provided, however, that the
foregoing securities shall not be considered Registrable Stock if they were
previously registered pursuant to Section 11 hereunder or if they are
transferable without registration pursuant to Rule 144(k) under the Securities
Act. For purposes of Section 11, a Warrantholder of record shall be treated as
the record holder of the related Warrant Shares and other securities issuable
pursuant to the Warrants.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant(s)" means this Warrant and any warrants issued in exchange
or replacement of this Warrant or upon transfer hereof.
"Warrantholder(s) and "Holder" means FINOVA Capital Corporation, a
Delaware corporation, and its successors and assigns.
"Warrant Shares" means shares of Common Stock issuable to
Warrantholders pursuant to the Warrants.
1. Exercise of Warrant. This Warrant may be exercised, in whole or in
part, at any time and from time to time during the Exercise Period by written
notice to the Company (accompanied by physical surrender of this Warrant) and
upon payment to the Company of the Exercise Price (subject to adjustment as
provided herein) for the shares of Common Stock in respect of which the Warrant
is exercised.
2. Form of Payout of Exercise Price. Anything contained herein to the
contrary notwithstanding, at the option of the Warrantholders, the Exercise
Price may be paid in any one or a combination of the following forms: (a) by
wire transfer to the Company, (b) by a certified or cashier's check to the
Company, (c) by the cancellation of any indebtedness owed by the Company and/or
any subsidiaries of the Company to the Warrantholder, and/or (d) by the
surrender to the Company of that number of Warrant Shares having a Fair Value
equal to the Exercise Price in accordance with Section 4 below.
3. Cashless Exercise. In lieu of exercising this Warrant as specified
in Sections 2 and 3 above, the Warrantholders may from time to time at the
Warrantholders' option convert
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this Warrant, in whole or in part, into a number of shares of Common Stock of
the Company determined by dividing (A) the aggregate Fair Value of such shares
or other securities otherwise issuable upon exercise of this Warrant, minus the
aggregate Exercise Price of such shares by (B) the Fair Value of one such
share.
4. Certificates for Warrant Shares; New Warrant. The Company agrees
that the Warrant Shares shall be deemed to have been issued to the
Warrantholders as the record owners of such Warrant Shares as of the close of
business on the date on which payment for such Warrant Shares has been made (or
deemed to be made by cashless exercise) in accordance with the terms of this
Warrant. Certificates for the Warrant Shares shall be delivered to
Warrantholders within a reasonable time, not exceeding thirty (30) days, after
this Warrant his been exercised. A new Warrant representing the number of
shares, if any, with respect to which this Warrant remains exercisable also
shall be issued to the Warrantholders within such time so long as this Warrant
has been surrendered to the Company at the time of exercise.
5. Adjustment of Exercise Price. Number of Shares and Nature of
Securities Issuable Upon Exercise of Warrants.
(a) Exercise Price; Adjustment of Number of Shares. The Exercise
Price shall be subject to adjustment from time to time as, hereinafter provided.
Upon each adjustment of the Exercise Price, the Warrantholders shall thereafter
be entitled to purchase, at the Exercise Price resulting from such adjustment, a
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization or reclassification of the capital stock of the
Company, or any or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive cash, stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the Warrantholders shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant upon exercise of this Warrant and in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such cash, shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of Common Stock equal to the number of shares
of such Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, and in any such case appropriate
provision shall be made with respect to the rights and interests of the
Warrantholders to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock securities or assets thereafter deliverable upon the exercise hereof.
(c) Stock Splits and Reverse Splits. In case at any time the Company
shall subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise
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<PAGE> 5
Price in effect immediately prior to such subdivision shall be proportionately
reduced and the number of shares of Common Stock purchasable pursuant to this
Warrant immediately prior to such subdivision shall be proportionately
increased, and conversely, in case at any time the Company shall combine its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased and the number of shares of Common Stock purchasable upon the exercise
of this Warrant immediately prior to such combination shall be proportionately
reduced.
(d) Dissolution, Liquidation and Wind-Up. In case the Company shall,
at any time prior to the expiration of this Warrant, dissolve, liquidate or wind
up its affairs, the Warrantholders shall be entitled, upon the exercise of this
Warrant, to receive, in lieu of the shares of Common Stock of the Company which
such Warrantholders would have been entitled to receive, the same kind and
amount of assets as would have been issued, distributed or paid to such
Warrantholders upon any such dissolution, liquidation or winding up with respect
to such shares of Common Stock of the Company, had such Warrantholders been the
holders of record of the Warrant Shares receivable upon the exercise of this
Warrant on the record date for the determination of those persons entitled to
receive any such liquidating distribution. After any such dissolution,
liquidation or winding up which shall result in any cash distribution in excess
of the Exercise Price provided for by this Warrant, the Warrantholders may, at
each such Warrantholder's option, exercise the same without making payment of
the Exercise Price, and in such case the Company shall, upon the distribution to
said Warrantholders, consider that said Exercise Price has been paid in full to
it and in making settlement to said Warrantholders, shall deduct from the amount
payable to such Warrantholders an amount equal to such Exercise Price.
(e) Adjustment Certificate. In each case of an adjustment in the
number of shares of Common Stock or other stock, securities or property
receivable on the exercise of the Warrants, the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare and duly
execute and deliver to the Warrantholders a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
6. Special Agreements of the Company.
(a) Reservation of Shares. The Company covenants and agrees that all
Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder, and from
all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
(b) Avoidance of Certain Actions. The Company will not, by amendment
of its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, issue or sale of securities or otherwise, avoid
or take any action which would have the effect of avoiding the observance or
performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in carrying out all of the
provisions of this Warrant and in taking all of such actions as may be necessary
or appropriate in order to protect the rights of the Warrantholders against
impairment of their rights hereunder.
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(c) Listing on Securities Exchanges; Registration. If, and so long
as, any class of the Company's Common Stock shall be listed on any national
securities exchange (as defined in the Exchange Act), the Company will, at its
expense, obtain and maintain the approval for listing upon official notice of
issuance of all Warrant Shares and maintain the listing of Warrant Shares after
their issuance; and the Company will so list on such national securities
exchange, and will maintain such listing of, any other securities that at any
time are issuable upon exercise of this Warrant if and at the time any
securities of the same class shall be listed on such national securities
exchange by the Company.
7. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, such
fraction shall be rounded to the nearest whole share. A fraction of one-half
shall be rounded up to the next highest integer.
8. Notices of Stock Dividends, Subscriptions, Reclassifications,
Consolidations, Mergers, etc. If at any time: (i) the Company shall declare a
cash or stock dividend (or an increase in the then existing dividend rate), or
declare a dividend on Common Stock payable otherwise than in cash out of its net
earnings after taxes for the prior fiscal year, or (ii) the company shall
authorize the granting to the holders, of Common Stock of rights to subscribe
for or purchase any shares of capital stock of any class or of any other rights;
or (iii) there shall be any capital reorganization, or reclassification, or
redemption of the capital stock of the Company, or consolidation or merger of
the Company with, or sale of all or substantially all of its assets to, another
corporation or firm; or (iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company; or (v) the Company
proposes to effect a Public Offering, then the Company shall give to the
Warrantholders at the addresses of such Warrantholders as shown on the books of
the Company, at least forty-five (45) days prior to the applicable record date
hereinafter specified, a written notice summarizing such action or event and
stating the record date for any such dividend or rights (or, if a record date is
not to be selected, the date as of which the holders of Common Stock of record
entitled to such dividend or rights are to be determined), the date on which any
such reorganization, reclassification, consolidation, merger, sale of assets,
dissolution, liquidation or winding up or Public Offering is expected to become
effective, and the date as of which it is expected the holders of Common Stock
of record shall be entitled to effect any exchange of their shares of Common
Stock for cash (or cash equivalent), securities or other property deliverable
upon any such reorganization, reclassification, consolidation, merger, sale of
assets, dissolution, liquidation or winding up or Public Offering.
9. Registered Holder, Transfer of Warrants or Warrant Shares.
(a) Maintenance of Registration Books, Ownership of this Warrant.
The Company shall keep at its principal office a register in which the Company
shall provide for the registration, transfer and exchange of this Warrant. The
Company shall not at any time, except upon the dissolution, liquidation or
winding-up of the Company, close such register so as to result in preventing or
delaying the exercise or transfer of this Warrant.
(b) Exchange and Replacement. To the extent permissible under any
applicable securities laws, this Warrant is exchangeable upon surrender hereof
by the registered
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holder to the Company at its principal office for new Warrants of like tenor
and date representing in the aggregate the right to purchase the number of
shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of shares as shall be designated by said registered
holder at the time of surrender. This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the registered
holder hereof in person or by duly authorized attorney, and new Warrants shall
be made and delivered by the Company, of the same tenor and date as this Warrant
but registered in the name of the transferee(s), upon surrender of this Warrant,
duly endorsed, to said office of the Company. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and upon surrender and cancellation of this Warrant,
if mutilated, the Company will make, and deliver a new Warrant of like tenor, in
lieu of this Warrant, without requiring the posting of any bond or the giving of
any other security. This Warrant shall be promptly canceled by the Company upon
the surrender hereof in connection with any exchange, transfer or replacement.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, execution and delivery of Warrants pursuant to
this Section 10.
10. Registration. The holders of the Warrant Shares shall have
registration rights equivalent to those enjoyed by the holders of the Company's
Series C Preferred Stock in accordance with Section 2 of that certain Amended
and Restated Investors' Rights Agreement ("Investors' Rights Agreement"), dated
October ___, 1999, by and between the Company and the holders of its Preferred
Stock, except that Holder shall be required to approve any waiver or amendment
under Section 5 thereof affecting Holder's rights. The Company shall use
commercially reasonable efforts to amend the Investors' Rights Agreement to
provide therefor.
11. Representation and Warranties of the Company. The Company hereby
represents and warrants to and covenants with Warrantholder, and each holder of
Warrant Shares that:
(a) Organization and Capitalization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. As of the date hereof, the authorized capital of the
Company consists of 98,705,000 shares of Common and Preferred Stock of which
51,247,676 shares of Common and Preferred Stock, all are issued and outstanding.
The Company has, and at all times during the Exercise Period will have, reserved
for issuance pursuant to the Warrants that number of shares of Common Stock that
are issuable pursuant to the Warrants. All the outstanding shares of Common
Stock have been validly issued without violation of any preemptive or similar
rights, are fully paid and nonassessable and have been issued in compliance with
all federal and applicable state securities laws.
(b) Authority. The Company has full corporate power and authority to
execute and deliver this Warrant, to issue the shares of Common Stock issuable
upon exercise of this Warrant, and to perform all of its obligations hereunder,
and the execution, delivery and performance hereof has been duly authorized by
all necessary corporate action on its part. This Warrant has been duly executed
on behalf of the Company and constitutes the legal, valid and binding obligation
of the Company enforceable in accordance with its terms.
(c) No Legal Bar. Neither the execution, delivery or performance of
this Warrant nor the issuance of the shares of Common Stock issuable upon
exercise of this Warrant
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will (a) conflict with or result in a violation of the Certificate of
Incorporation or By-Laws of the Company, (b) conflict with or result in a
violation of any law, statute, regulation, order or decree applicable to the
Company or any affiliate, (c) require any consent or authorization or filing
with, or other act by or in respect of any governmental authority, or (d) result
in a material breach of, constitute a default under or constitute an event
creating rights of acceleration, termination or cancellation under any mortgage,
lease, contract, franchise, instrument or other agreement to which the Company
is a party or by which it is bound.
(d) Validity of Shares. When issued upon the exercise of this
Warrant as contemplated herein, the shares of Common Stock so issued will have
been validly issued and will be fully paid and nonassessable. On the date
hereof, the par value of the Common Stock is less than the Exercise Price per
share of Common Stock.
12. Representations and Warranties of the Warrantholder. This Warrant
has been issued by the Company in reliance upon the following representations
and covenants of Warrantholder.
(i) Investment Purpose. This Warrant and the Warrant Shares will
be acquired for investment for the Warrantholder's own account, and not as a
nominee or agent and not with a view to the sale or distribution of any part
thereof, and the Warrantholder has no present intention of selling, granting any
participation in or otherwise distributing the same. The Warrantholder further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person, or to any third person, with respect to this Warrant.
(ii) Private Issue. The Warrantholder understands (i) that the
Warrant and the Warrant Shares issuable upon exercise of this Warrant are not
registered under the Securities Act, or qualified under applicable state
securities laws on the ground that the issuance of this Warrant will be exempt
from the registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(iii) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of the Warrant Shares issuable upon exercise of
this Warrant unless and until (i) it shall have notified the Company of the
proposed disposition, and (ii) if requested by the Company, it shall have
furnished the Company with an opinion of counsel satisfactory to the Company and
its counsel to the effect that (A) appropriate action necessary for compliance
with the Securities Act has been taken, or (B) an exemption from the
registration requirements of the Securities Act is available. Notwithstanding
the foregoing, the restrictions imposed upon the transferability of the Warrant
Shares shall terminate as to this Warrant and any particular share of Common
Stock when (1) such security shall have been effectively registered under the
Securities Act and sold by the Holder thereof in accordance with such
registration or (2) such security shall have been sold without registration in
compliance with Rule 144 under the Securities Act, or (3) a letter shall have
been issued to the Warrantholder at its request by the staff of the Securities
and Exchange Commission or a ruling shall have been issued to the Warrantholder
at its request by such Commission stating that no action shall be recommended by
the staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the Securities Act in accordance with the
conditions set forth in such letter or
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ruling and such letter or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed hereunder shall
terminate, as hereinabove provided, the Warrantholder or the Holder of a share
of Common Stock issued upon exercise of this Warrant as to which such
restrictions have terminated shall be entitled to receive from the Company,
without expense to such Holder, one or more new certificates for the Warrant or
for such shares of Common Stock not bearing any restrictive legend.
(iv) Rule 144. The Warrantholder acknowledges that it has
received and reviewed a copy of Rule 144 promulgated under the Securities Act,
which permits limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions.
(v) Sale of Warrant. The Warrantholder acknowledges that in the
event the applicable requirements of Rule 144 are not met, registration under
the Securities Act or compliance with another exemption from registration will
be required for any disposition of this Warrant or the Warrant Shares. The
Warrantholder understands that although Rule 144 is not exclusive, the
Securities and Exchange Commission has expressed its opinion that persons
proposing to sell restricted securities received in a private offering other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales and that such persons and the brokers who participate
in the transactions do so at their own risk. The Warrantholder also acknowledges
that it is not receiving any rights with respect to registration of this Warrant
or the Warrant Shares under the Securities Act.
(vi) Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.
(vii) Accredited Investor. The Warrantholder is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under
the Act.
(viii) No Public Market. The Warrantholder understands that no
public market now exists for any of the securities issued by the Company,
(ix) Receipt of Information. The Warrantholder has received and
reviewed this Warrant; it, its attorney and its accountant have had access to,
and an opportunity to review all documents and other materials requested of, the
Company; it and they have been given an opportunity to ask any and all questions
or, and receive answers from, the Company concerning the terms and conditions of
this Warrant and to evaluate the suitability of an investment in this Warrant;
and, in evaluating the suitability of an investment in this Warrant; it and they
have not relief upon any representations or other information (whether oral or
written) other than as set forth herein.
14. Lock-Up Period. Warrantholder hereby agrees that, if so requested
by the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act or a public offering that is
exempt from the Securities Act (e.g. Regulation A offering), Warrantholder shall
not sell or otherwise transfer any Warrant Shares or other securities of the
Company during the
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180-day period (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act or the commencement date of such an
exempt public offering. Such restriction shall apply only to the first
registration statement or exempt public offering of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.
15. Miscellaneous Provisions.
(a) Governing Law. This Warrant shall be deemed to have been made
in the State of California and the validity of this Warrant, the construction,
interpretation, and enforcement thereof, and the rights of the parties thereto
shall be determined under, governed by, and construed in accordance with the
internal laws of the State of California, without regard to principles of
conflicts of law.
(b) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when personally delivered
to the addressee or five (5) days after being mailed by certified mail addressed
to the address below stated of the party to which notice is given, or to such
changed address as such party may have fixed by notice:
To the Company:
TRITON NETWORK SYSTEMS, INC.
8529 Southpark Circle
Orlando, FL 32819
Attn: ___________________________
To the Warrantholders Or holder of Warrant Shares:
FINOVA Capital Corporation
10 Waterside Drive
Farmington, Connecticut 06032
Attn: Contracts Administration Dept.
provided, however, that any notice of change of address shall be effective upon
receipt.
(c) Successors and Assigns. This Warrant shall be binding upon and
inure to the benefit of the Company, the Warrantholders and the holders of
Warrant Shares and the successors, assigns and transferees of the Company, the
Warrantholders and the holders of Warrant Shares.
(d) Attorneys' Fees. The Company agrees to pay, on demand, all
attorneys' fees (include attorneys' fees incurred pursuant to proceedings
arising under the Bankruptcy Code) and all other costs and expenses which may be
incurred by the Warrantholders and the holders of
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Warrant Shares in connection with any amendment to this Warrant which may be
requested by the Company and/or in any action or proceeding in which the Company
is not the prevailing party, if such action or proceeding is in connection with,
arising out of, or consequential to the protection, assertion, or enforcement of
rights under this Warrant.
(e) Entire Agreement, Amendments and Waivers. This Warrant sets
forth the entire understanding of the parties with respect to the transactions
contemplated hereby. The failure of any party to seek redress for the violation
or to insist upon the strict performance of any term of this Warrant shall not
constitute a waiver of such term and such party shall be entitled to enforce
such term without regard to such forbearance. This Warrant may be amended, the
Company may take any action herein prohibited or omit to take action herein
required to be performed by it, and any breach of or compliance with any
covenant, agreement, warranty or representation may be waived, only if the
Company has obtained the written consent or written waiver of the majority in
interest of the Warrantholders, and then such consent or waiver shall be
effective only in the specific instance and for the specific purpose for which
given.
(f) Severability. If any term of this Warrant as applied to any
person or to any circumstance is prohibited, void, invalid or unenforceable in
any jurisdiction, such term shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or invalidity without in any way affecting any
other term of this Warrant or affecting the validity or enforceability of this
Warrant or of such provision in any other jurisdiction.
(g) Headings. The headings in this Warrant are inserted only for
convenience of reference and shall not be used in the construction of any of its
terms.
(h) Transferability. This Warrant may be assigned, transferred or
sold by Warrantholder only in compliance with the provisions of applicable
securities laws and with the consent of Company which shall not be unreasonably
withheld; provided, however, that no consent of the Company shall be required
for any assignment or transfer of this Warrant to any direct or indirect
subsidiary or parent of the Warrantholders or to any entity in which
Warrantholder has a 50% or greater ownership interest.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officers effective as of the date first set forth above.
TRITON NETWORK SYSTEMS, INC.
a Delaware corporation
By: /s/ Ken Vines
------------------------
Printed Name: Ken Vines
--------------
Title: CFO
---------------------
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Exhibit 10.18
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE TRANSFERRED UNLESS REGISTERED UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS UNLESS THE HOLDER OF
SUCH WARRANT OR SHARES DELIVERS TO THE COMPANY AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH
PROPOSED TRANSFER WILL BE MADE PURSUANT TO AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
COMMON STOCK PURCHASE WARRANT
-----------------------------
Company: TRITON NETWORK SYSTEMS, INC., a Delaware corporation
("Company")
Number of Shares: Such number of shares of Common Stock as shall be
equal to 4% of $2,000,000 divided by 90% of the
price per share of Common Stock used in a firm
underwritten initial public offering of the
Company's common stock. In the event the Company has
not completed a firm underwritten initial public
offering on or before the first anniversary hereof,
the number of shares shall be 16,000 shares.
Class of Stock: Common Stock
Exercise Price: 90% of the price per share of Common Stock used in a
firm underwritten initial public offering of the
Company's common stock. In the event the Company has
not completed a firm underwritten initial public
offering on or before the first anniversary hereof,
the exercise price shall be equal to the price per
share of the securities sold in the Company's most
recent equity offering prior to the date of This
Warrant, which is $5.00 per share.
Issued as of: February 25, 2000
Expiration Date: As described in Section 1
FOR VALUE RECEIVED in the form of a Commitment Letter dated January
14, 2000 and revised January 20, 2000 from FINOVA Capital Corporation in favor
of the Company, the adequacy and receipt of which are hereby acknowledged,
TRITON NETWORK SYSTEMS, INC., a Delaware corporation, hereby certifies that
FINOVA Capital Corporation, a Delaware corporation, and its successors and
assigns, are entitled to purchase from the Company at any time and from time to
time on and after the date the $2,000,000 Credit Facility becomes available for
use until 6:00 p.m. California local time on the Expiration Date at an Exercise
Price (as described in Section 1), fully paid and nonassessable shares of Common
Stock of the Company, on the terms and conditions hereinafter set forth (the
"Shares"). The number of such shares of Common Stock and the Exercise Price are
subject to adjustment as provided in the Warrant.
<PAGE> 2
1. Certain Definitions. As used in this Warrant, the following
terms have the following definitions:
"Common Stock" means the Company's Common Stock, $0.001 par
value, and includes any common stock of the Company of any class or classes
resulting from any reclassification or reclassifications thereof.
"Company" means TRITON NETWORK SYSTEMS, INC., a Delaware
corporation.
"Convertible Securities" means evidence of indebtedness,
shares of stock or other securities which are at any time directly or
indirectly convertible into or exchangeable for Additional Shares of Common
Stock.
"Current Market Price" of a share of Common Stock or of any
other security as of a relevant date means: (i) the Fair Value thereof as
determined in accordance with clause (ii) of the definition of Fair Value with
respect to Common Stock or any other security that is not listed on a national
securities exchange or traded on the over-the-counter market or quoted on
NASDAQ, and (ii) the closing price on such date (excluding any trades which are
not bona fide arm's length transactions) with respect to Common Stock or any
other security that is listed on a national securities exchange or traded on
the over-the-counter market or quoted on NASDAQ. The closing price for each day
shall be (i) the last sale price of shares of Common Stock or such other
security on such date or, if no such sale takes place on such date, the average
of the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which the
same are then listed or admitted to trading, or (ii) if no shares of Common
Stock or if no securities of the same class as such other security are then
listed or admitted to trading on any national securities exchange, the average
of the reported closing bid and asked prices thereof on such date in the
over-the-counter market as shown by NASDAQ or, if no shares of Common Stock or
if no securities of the same class as such other security are then quoted in
such system, as published by the National Quotation Bureau, Incorporated or any
similar successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Warrantholders.
"Exchange" means the Securities Exchange Act of 1934, as
amended.
"Exercise Period" means the period commencing on the date
hereof and ending at 6:00 p.m. California local time on the Expiration Date.
"Exercise Price" shall have the meaning set forth above.
"Expiration Date" means the date that is seven (7) years
after the date hereof.
"Fair Value" means: (i) with respect to a share of Common
Stock or any other security, the Current Market Price thereof, and (it) with
respect to any other property, assets, business or entity, or if the Shares
have not been registered under the Securities Act, an amount determined in good
faith by the Board of Directors of the Company.
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"Indemnified Party" and "Indemnifying Party" have the
meanings set forth in Section 11(f)(iii).
"Registrable Stock" means: (i) all Warrant Shares which are
issuable to the warrantholders pursuant to the Warrants, whether or not the
Warrants have in fact been exercised and whether or not such Warrant Shares
have in fact been issued, (ii) an Warrant Shares acquired by the Warrantholders
pursuant to the Warrants, and (iii) any shares of Common Stock, whether or not
such shares of Common Stock have in fact been issued, and stocks or other
securities of the Company issued upon conversion of, in a stock split or
reclassification of, or a stock dividend or other distribution on, or in
substitution or exchange for, or otherwise in connection with, such Warrant
Shares or in a merger or consolidation involving the Company or its assets;
provided, however, that the foregoing securities shall not be considered
Registrable Stock if they were previously registered pursuant to Section 11
hereunder or if they are transferable without registration pursuant to Rule
144(k) under the Securities Act. For purposes of Section 11, a Warrantholder of
record shall be treated as the record holder of the related Warrant Shares and
other securities issuable pursuant to the Warrants.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant(s)" means this Warrant and any warrants issued in
Exchange or replacement of this Warrant or upon transfer hereof.
"Warrantholder(s) and "Holder" means FINOVA Capital
Corporation, a Delaware corporation, and its successors and assigns.
"Warrant Shares" means shares of Common Stock issuable to
Warrantholders pursuant to the Warrants.
1. Exercise of Warrant. This Warrant may be exercised, in whole
or in part, at any time and from time to time during the Exercise Period by
written notice to the Company (accompanied by physical surrender of this
Warrant) and upon payment to the Company of the Exercise Price (subject to
adjustment as provided herein) for the shares of Common Stock in respect of
which the Warrant is exercised.
2. Form of Payout of Exercise Price. Anything contained herein
to the contrary notwithstanding, at the option of the Warrantholders, the
Exercise Price may be paid in any one or a combination of the following forms:
(a) by wire transfer to the Company, (b) by a certified or cashier's check to
the Company, (c) by the cancellation of any indebtedness owed by the Company
and/or any subsidiaries of the Company to the Warrantholder, and/or (d) by the
surrender to the Company of that number of Warrant Shares having a Fair Value
equal to the Exercise Price in accordance with Section 4 below.
3. Cashless Exercise. In lieu of exercising this Warrant as
specified in Sections 2 and 3 above, the Warrantholders may from time to time
at the Warrantholders' option convert this Warrant, in whole or in part, into a
number of shares of Common Stock of the Company determined by dividing (A) the
aggregate Fair Value of such shares or other securities otherwise
3
<PAGE> 4
issuable upon exercise of this Warrant minus the aggregate Exercise Price of
such shares by (B) the Fair Value of one such share.
4. Certificates for Warrant Shares; New Warrant. The Company
agrees that the Warrant Shares shall be deemed to have been issued to the
Warrantholders as the record owners of such Warrant Shares as of the close of
business on the date on which payment for such Warrant Shams has been made (or
deemed to be made by cashless exercise) in accordance with the terms of this
Warrant. Certificates for the Warrant Shares shall be delivered to
Warrantholders within a reasonable time, not exceeding thirty (30) days, after
this Warrant has been exercised. A new Warrant representing the number of
shares, if any, with respect to which this Warrant remains exercisable also
shall be issued to the Warrantholders within such time so long as this Warrant
has been surrendered to the Company at the time of exercise.
5. Adjustment of Exercise Price; Number of Shares and Nature of
Securities Issuable Upon Exercise of Warrants.
(a) Exercise Price: Adjustment of Number of Shares. The
Exercise Price shall be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Exercise Price, the Warrantholders shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, a number of shares determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Reorganization, Reclassification, Consolidation, Merger
or Sale. If any capital reorganization or reclassification of the capital stock
of the Company, or any or any consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive cash, stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the Warrantholders shall thereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant upon exercise of this Warrant and in lieu
of the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such cash, shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of such Common Stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, and in any such case appropriate provision shall be made
with respect to the rights and interests of the Warrantholders to the end that
the provisions hereof (including, without limitation, provisions for
adjustments of the Exercise Price and of the number of shares purchasable and
receivable upon the exercise of this Warrant) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock securities or assets
thereafter deliverable upon the exercise hereof.
(c) Stock Splits and Reverse Splits. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock purchasable pursuant to this Warrant immediately prior to
4
<PAGE> 5
such subdivision shall be proportionately increased, and conversely, in case at
any time the Company shall combine its outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased and the number of shares of
Common Stock purchasable upon the exercise of this Warrant immediately prior
to such combination shall be proportionately reduced.
(d) Dissolution, Liquidation and Wind-Up. In case the Company
shall, at any time prior to the expiration of this Warrant, dissolve, liquidate
or wind up its affairs, the Warrantholders shall be entitled, upon the exercise
of this Warrant, to receive, in lieu of the shares of Common Stock of the
Company which such Warrantholders would have been entitled to receive, the same
kind and amount of assets as would have been issued, distributed or paid to
such Warrantholders upon any such dissolution, liquidation or winding up with
respect to such shares of Common Stock of the Company, had such Warrantholders
been the holders of record of the Warrant Shares receivable upon the exercise
of this Warrant on the record date for the determination of those persons
entitled to receive any such liquidating distribution. After any such
dissolution, liquidation or winding up which shall result in any cash
distribution in excess of the Exercise Price provided for by this Warrant, the
Warrantholders may, at each such Warrantholder's option, exercise the same
without making payment of the Exercise Price, and in such case the Company
shall, upon the distribution to said Warrantholders, consider that said
Exercise Price has been paid in full to it and in making settlement to said
Warrantholders, shall deduct from the amount payable to such Warrantholders an
amount equal to such Exercise Price.
(e) Adjustment Certificate. In each case of an adjustment in
the number of shares of Common Stock or other stock, securities or property
receivable on the exercise of the Warrants, the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare and duly
execute and deliver to the Warrantholders a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
6. Social Agreements of the Company.
(a) Reservation of Shares. The Company covenants and agrees
that all Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder, and from
all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and reserved, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
(b) Avoidance of Certain Actions. The Company will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, issue or sale of securities or
otherwise, avoid or take any action which would have the effect of avoiding the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in
carrying out all of the provisions of this Warrant and in taking all of such
actions as my be necessary or appropriate in order to protect the rights of the
Warrantholders against impairment of their rights hereunder.
5
<PAGE> 6
(c) Listing on Securities Exchanges; Registration. If, and so
long as, any class of the Company's Common Stock shall be listed on any
national securities exchange (as defined in the Exchange Act), the Company
will, at its expense, obtain and maintain the approval for listing upon
official notice of issuance of all Warrant Shares and maintain the listing of
Warrant Shares after their issuance; and the Company will so list on such
national securities exchange, and will maintain such listing of, any other
securities that at any time are issuable upon exercise of this Warrant if and
at the time any securities of the same class shall be listed on such national
securities exchange by the Company.
7. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, such
fraction shall be rounded to the nearest whole share. A fraction of one-half
shall be rounded up to the next highest integer.
8. Notices of Stock Dividends. Subscriptions, Reclassifications.
Consolidations, Mergers, etc., If at any time: (i) the Company shall declare a
cash or stock dividend (or an increase in the then existing dividend rate), or
declare a dividend on Common Stock payable otherwise than in cash out of its
net earnings after taxes for the prior fiscal year, or (ii) the Company shall
authorize the granting to the holders of Common Stock of rights to subscribe
for or purchase any shares of capital stock of class or of any other rights; or
(iii) there shall be any capital reorganization, or reclassification, or
redemption of the capital stock of the Company, or consolidation or merger of
the Company with, or sale of all or substantially all of its assets to, another
corporation or firm; or (iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company; or (v) the Company
proposes to effect a Public Offering, then the Company shall give to the
Warrantholders at the addresses of such Warrantholders as shown on the books of
the Company, at least forty-five (45) days prior to the applicable record date
hereinafter specified, a written notice summarizing such action or event and
stating the record date for any such dividend or rights (or, if a record date
is not to be selected, the date as of which the holders of Common Stock of
record entitled to such dividend or rights are to be determined), the date on
which any such reorganization, reclassification, consolidation, merger, sale of
assets, dissolution, liquidation or winding up or Public Offering is expected
to become effective, and the date as of which it is expected the holders of
Common Stock of record shall be entitled to effect any exchange of their shares
of Common Stock for cash (or cash equivalent), securities or other property
deliverable upon any such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding up or Public
Offering.
9. Registered Holder, Transfer of Warrants or Warrant Shares.
(a) Maintenance of Registration Books; Ownership of this
Warrant. The Company shall keep at its principal office a register in which the
Company shall provide for the registration, transfer and exchange of this
Warrant. The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result
in preventing or delaying the exercise or transfer of this Warrant.
(b) Exchange and Replacement. To the extent permissible under
any applicable securities laws, this warrant is exchangeable upon surrender
hereof by the registered
6
<PAGE> 7
holder to the Company at its principal office for new Warrants of like tenor
and date representing in the aggregate the right to purchase the number of
shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of shares as shall be designated by said registered
holder at the time of surrender. This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the
registered holder hereof in person or by duly authorized attorney, and new
Warrants shall be made and delivered by the Company, of the same tenor and date
as this Warrant but registered in the name of the transferee(s), upon surrender
of this Warrant, duly endorsed, to said office of the Company. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and upon surrender and cancellation
of this Warrant, if mutilated, the Company will make and deliver a new Warrant
of like tenor, in lieu of this Warrant, without requiring the posting of any
bond or the giving of any other security. This Warrant shall be promptly
canceled by the Company upon the surrender hereof in connection with any
exchange, transfer or replacement. The Company shall pay all expenses, taxes
and other charges payable in connection with the preparation, execution and
delivery of Warrants pursuant to this Section 10.
10. Registration. The holders of the Warrant Shares shall have
registration rights equivalent to those enjoyed by the holders of the Company's
Series C Preferred Stock in accordance with Section 2 of that certain Amended
and Restated Investors' Rights Agreement ("Investors' Rights Agreement"), dated
October ___, 1999, by and between the Company and the holders of its Preferred
Stock, except that Holder shall be required to approve any waiver or amendment
under Section 5 thereof affecting Holder's rights. The Company shall use
commercially reasonable efforts to amend the Investors' Rights Agreement to
provide therefor.
11. Representation and Warranties of the Company. The Company
hereby represents and warrants to and covenants with Warrantholder, and each
holder of Warrant Shares that:
(a) Organization and Capitalization of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. As of the date hereof, the authorized
capital of the Company consists of 98,705,000 shares of Common and Preferred
Stock of which 51,247,676 shares of Common and Preferred Stock, all are issued
and outstanding. The Company has, and at all times during the Exercise Period
will have, reserved for issuance pursuant to the Warrants that number of shares
of Common Stock that are issuable pursuant to the Warrants. All the
outstanding shares of Common Stock have been validly issued without violation
of any preemptive or similar rights, are fully paid and nonassessable and have
been issued in compliance with all federal and applicable state securities
laws.
(b) Authority. The Company has full corporate power and
authority to execute and deliver this Warrant, to issue the shares of Common
Stock issuable upon exercise of this Warrant, and to perform all of its
obligations hereunder, and the execution, delivery and performance hereof has
been duly authorized by all necessary corporate action on its part. This
Warrant has been duly executed on behalf of the Company and constitutes the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms.
(c) No Legal Bar. Neither the execution, delivery or
performance of this Warrant nor the issuance of the shares of Common Stock
issuable upon exercise of this Warrant
7
<PAGE> 8
will (a) conflict with or result in a violation of the Certificate of
Incorporation or By-Laws of the Company, (b) conflict with or result in a
violation of any law, statute, regulation, order or decree applicable to the
Company or any affiliate, (c) require any consent or authorization or filing
with, or other act by or in respect of any governmental authority, or (d)
result in a material breach of, constitute a default under or constitute an
event creating rights of acceleration, termination or cancellation under any
mortgage, lease, contract, franchise, instrument or other agreement to which
the Company is a party or by which it is bound.
(d) Validity of Shares. When issued upon the exercise of this
Warrant as contemplated herein, the shares of Common Stock so issued will have
been validly issued and will be fully paid and nonassessable. On the date
hereof, the par value of the Common Stock is less than the Exercise Price per
share of Common Stock.
12. Representations and Warranties of the Warrantholder. This
Warrant has been issued by the Company in reliance upon the following
representations and covenants of Warrantholder.
(i) Investment Purpose. This Warrant and the Warrant
Shares will be acquired for investment for the Warrantholder's own account, and
not as a nominee or agent and not with a view to the sale or distribution of
any part thereof, and the Warrantholder has no present intention of selling,
granting any participation in or otherwise distributing the same. The
Warrantholder further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person, or to any third person, with respect to
this Warrant.
(ii) Private Issue. The Warrantholder understands (i)
that the Warrant and the Warrant Shares issuable upon exercise of this Warrant
are not registered under the Securities Act, or qualified under applicable
state securities laws on the ground that the issuance of this Warrant will be
exempt from the registration and qualifications requirements thereof, and (ii)
that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 10.
(iii) Disposition of Warrantholder's Rights. In no event
will the Warrantholder make a disposition of the Warrant Shares issuable upon
exercise of this Warrant unless and until (i) it shall have notified the
Company of the proposed disposition, and (ii) if requested by the Company, it
shall have furnished the Company with an opinion of counsel satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the Securities Act has been taken, or (B) an exemption from the
registration requirements of the Securities Act is available. Notwithstanding
the foregoing, the restrictions imposed upon the transferability of the Warrant
Shares shall terminate as to this Warrant and any particular share of Common
Stock when (1) such security shall have been effectively registered under the
Securities Act and sold by the Holder thereof in accordance with such
registration or (2) such security shall have been sold without registration in
compliance with Rule 144 under the Securities Act, or (3) a letter shall have
been issued to the Warrantholder at its request by the staff of the Securities
and Exchange Commission or a ruling shall have been issued to the Warrantholder
at its request by such Commission stating that no action shall be recommended
by the staff or taken by such Commission, as the case may be, if such security
is transferred without registration under the Securities Act in accordance with
the conditions set forth in such letter or
8
<PAGE> 9
ruling and such letter or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed hereunder shall
terminate, as hereinabove provided, the Warrantholder or the Holder of a share
of Common Stock issued upon exercise of this Warrant as to which such
restrictions have terminated shall be entitled to receive from the Company,
without expense to such Holder, one or more new certificates for the Warrant or
for such shares of Common Stock not bearing any restrictive legend.
(iv) Rule 144. The Warrantholder acknowledges that it has
received and reviewed a copy of Rule 144 promulgated under the Securities Act,
which permits limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions.
(v) Sale of Warrant. The Warrantholder acknowledges that
in the event the applicable requirements of Rule 144 are not met, registration
under the Securities Act or compliance with another exemption from registration
will be required for any disposition of this Warrant or the Warrant Shares. The
Warrantholder understands that although Rule 144 is not exclusive, the
Securities and Exchange Commission has expressed its opinion that persons
proposing to sell restricted securities received in a private offering other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is
available for such offers or sales and for such persons and the brokers who
participate in the transaction do so at their own risk. The Warrantholder also
acknowledges that it is not receiving any rights with respect to registration of
this Warrant or the Warrant Shares under the Securities Act.
(vi) Financial Risk. The Warrantholder has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the
economic risks of its investment.
(vii) Accredited Investor. The Warrantholder is an
"accredited investor" within the meaning of Rule 501 of Regulation D
promulgated under the Act.
(viii) No Public Market. The Warrantholder understands that
no public market now exists for any of the securities issued by the Company.
(ix) Receipt of Information. The Warrantholder has
received and reviewed this Warrant; it, its attorney and its accountant have
had access to, and an opportunity to review all documents and other materials
requested of, the Company; it and they have been given an opportunity to ask
any and all questions or, and receive answers from, the Company concerning the
terms and conditions of this Warrant and to evaluate the suitability of an
investment in this Warrant; and, in evaluating the suitability of an investment
in this Warrant; it and they have not relief upon any representations or other
information (whether oral or written) other than as set forth herein.
14. Lock-Up-Period. Warrantholder hereby agrees that, if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter") in connection with any registration of the offering of
any securities of the Company under the Securities Act or a public offering
that is exempt from the Securities Act (e.g. Regulation A offering),
Warrantholder shall not sell or otherwise transfer any Warrant Shares or other
securities of the Company during the
9
<PAGE> 10
180-day period (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act or the commencement date of such an
exempt public offering. Such restriction shall apply only to the first
registration statement or exempt public offering of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering. The
Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such Market Standoff
Period.
15. Miscellaneous Provisions.
(a) Governing Law. This Warrant shall be deemed to have been
made in the State of California and the validity of this Warrant, the
construction, interpretation, and enforcement thereof, and the rights of
the parties thereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of California, without regard to
principles of conflicts of law.
(b) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given when personally
delivered to the addressee or five (5) days after being mailed by certified
mail addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Company:
TRITON NETWORK SYSTEMS, INC.
8529 Southpark Circle
Orlando, FL 32819
Attn:
--------------------------
To the Warrantholders
Or holder of Warrant Shares:
FINOVA Capital Corporation
10 Waterside Drive
Farmington, Connecticut 06032
Attn: Contracts Administration Dept.
provided, however, that any notice of change of address shall be effective upon
receipt.
(c) Successors and Assigns. This Warrant shall be binding
upon and inure to the benefit of the Company, the Warrantholders and the
holders of Warrant Shares and the successors, assigns and transferees of the
Company, the Warrantholders and the holders of Warrant Shares.
(d) Attorneys' Fees. The Company agrees to pay, on demand,
all attorneys' fees (include attorneys' fees incurred pursuant to proceedings
arising under the Bankruptcy Code) and all other costs and expenses which may
be incurred by the Warrantholders and the holders of
10
<PAGE> 11
Warrant Shares in connection with any amendment to this Warrant which may be
requested by the Company and/or in any action or proceeding in which the
Company is not the prevailing party, if such action or proceeding is in
connection with, arising out of, or consequential to the protection, assertion,
or enforcement of rights under this Warrant.
(e) Entire Agreement; Amendments and Waivers. This Warrant
sets forth the entire understanding of the parties with respect to the
transactions contemplated hereby. The failure of any party to seek redress for
the violation or to insist upon the strict performance of any term of this
Warrant shall not constitute a waiver of such term and such party shall be
entitled to enforce such term without regard to such forbearance. This Warrant
may be amended, the Company may take any action herein prohibited or omit to
take action herein required to be performed by it, and any breach of or
compliance with any covenant, agreement, warranty or representation may be
waived, only if the, Company has obtained the written consent or written waiver
of the majority in interest of the Warrantholders, and then such consent or
waiver shall be effective only in the specific instance and for the specific
purpose for which given.
(f) Severability. If any term of this Warrant as applied to
any person or to any circumstance is prohibited, void, invalid or unenforceable
in any jurisdiction, such term shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or invalidity without in any way affecting
any other term of this Warrant, or affecting the validity or enforceability of
this Warrant or of such provision in any other jurisdiction.
(g) Headings. The headings in this Warrant are inserted only
for convenience of reference and shall not be used in the construction of any
of its terms.
(h) Transferability. This Warrant may be assigned,
transferred or sold by Warrantholder only in compliance with the provisions of
applicable securities laws and with the consent of Company which shall not be
unreasonably withheld; provided, however, that no consent of the Company shall
be required for any assignment or transfer of this Warrant to any direct or
indirect subsidiary or parent of the Warrantholders or to any entity in which
Warrantholder has a 50% or greater ownership interest.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officers effective as of the date first set forth above.
TRITON NETWORK SYSTEMS, INC.
a Delaware corporation
By: /s/ Ken Vines
-------------------------------------
Printed Name: Ken Vines
---------------------------
Title: CFO
----------------------------------
<PAGE> 1
Exhibit 21.1
List of Subsidiaries of the Registrant
TNS Finance Company, Inc.
<PAGE> 1
Exhibit 23.1
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
February 11, 2000 (except Note 10, as to which the date is February 29, 2000),
in the Registration Statement (Form S-1 No. 333-00000) and related Prospectus of
Triton Network Systems, Inc. for the registration of 000,000 shares of its
common stock.
/s/ Ernst & Young LLP
Orlando, Florida
February 29, 2000
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<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 46,130,279
<SECURITIES> 0
<RECEIVABLES> 0
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<INVENTORY> 7,244,874
<CURRENT-ASSETS> 54,392,718
<PP&E> 9,839,285
<DEPRECIATION> 1,868,911
<TOTAL-ASSETS> 63,700,445
<CURRENT-LIABILITIES> 10,212,484
<BONDS> 2,155,130
0
37,613
<COMMON> 13,592
<OTHER-SE> 51,281,626
<TOTAL-LIABILITY-AND-EQUITY> 63,700,445
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
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<OTHER-EXPENSES> 31,204,974
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 425,905
<INCOME-PRETAX> (30,293,060)
<INCOME-TAX> 0
<INCOME-CONTINUING> (30,293,060)
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<NET-INCOME> (30,293,060)
<EPS-BASIC> (3.17)
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