<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNIVERSAL ACCESS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 4813 36-4186543
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
100 NORTH RIVERSIDE PLAZA, SUITE 2200
CHICAGO, ILLINOIS 60606
(312) 660-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PATRICK C. SHUTT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
UNIVERSAL ACCESS, INC.
100 NORTH RIVERSIDE PLAZA, SUITE 2200
CHICAGO, ILLINOIS 60606
(312) 660-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
JUDITH MAYER O'BRIEN, ESQ. SCOTT FEHLAN, ESQ. JOHN L. SAVVA, ESQ.
DONNA PETKANICS, ESQ. GENERAL COUNSEL SULLIVAN & CROMWELL
ALISANDE ROZYNKO, ESQ. UNIVERSAL ACCESS, INC. 1888 CENTURY PARK EAST
WILSON SONSINI GOODRICH & ROSATI 100 NORTH RIVERSIDE PLAZA, SUITE SUITE 2100
PROFESSIONAL CORPORATION 2200 LOS ANGELES, CA 90067
650 PAGE MILL ROAD CHICAGO, ILLINOIS 60606 (310) 712-6600
PALO ALTO, CA 94304 (312) 660-5000
(650) 493-9300
FAX (650) 845-5000
</TABLE>
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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, please check the following box
and list the Securities Act registration 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,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C>
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- -------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF SECURITIES TO BE PROPOSED MAXIMUM AMOUNT OF
REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value.................... $115,000,000 $30,360
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES
IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED DECEMBER 17, 1999.
Shares
UNIVERSAL LOGO
Common Stock
----------------------
This is an initial public offering of shares of common stock of Universal
Access, Inc.
Universal Access is offering of the shares to be sold in the
offering. The selling stockholders identified in this prospectus are offering an
additional shares. Universal Access will not receive any of the
proceeds from the sale of the shares being sold by the selling stockholders.
Prior to this offering, there has been no public market for the common
stock. It is currently estimated that the initial public offering price per
share will be between $ .00 and $ .00. Universal Access will
apply to include the common stock for quotation on the Nasdaq National Market
under the symbol "UAXS".
See "Risk Factors" beginning on page 7 to read about certain factors you
should consider before buying shares of the common stock.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -------
<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Universal Access.............. $ $
Proceeds, before expenses, to the selling stockholders...... $ $
</TABLE>
To the extent that the underwriters sell more than shares, the
underwriters have the option to purchase up to an additional shares
from Universal Access and shares from selling stockholders,
respectively, at the initial public offering price less the underwriting
discount.
----------------------
The underwriters expect to deliver the shares against payment in New York,
New York on , 2000.
GOLDMAN, SACHS & CO.
HAMBRECHT & QUIST
ROBERTSON STEPHENS
----------------------
Prospectus dated , 2000.
<PAGE> 3
Description of cover artwork for edgar submission:
FRONT COVER:
CENTER: Universal Access logo. Picture of company employees interfacing with
clients and utilizing databases to provision circuit; lower center text:
"Universal Access is a global Internet infrastructure organization. We combine
information management and multiple vendor interconnection facilities to create
end-to-end network ubiquity."
Upper Right margin: text, Universal Access, Inc.: top to bottom pictures of
silver and purple abstract images, silver background computer configurations
"00110011", fiber image, Provisioning service identifier, Access service
identifier, UTX facilities identifier, Corporate identifier, UIX database
identifier, CAS service identifier.
INSIDE FRONT COVER - FOLDOUT
HEADLINE TEXT: "Universal Access", Corporate Identifier image and text:
"Creating End-to-End Network Ubiquity"
DIAGRAMS: BACKGROUND OF WORLD MAP IS RUNNING BEHIND ALL IMAGES ACROSS ENTIRE
INSIDE COVER LAYOUT
CENTER: Map of United States with cities highlighted in a network configuration.
UPPER LEFT: Picture of employees utilizing the databases and interfacing with
clients; text: "Universal Information Exchange (UIX) our integrated web-based
solution enables us to provide quoting, provisioning, network management and
other services for bandwidth access through our proprietary databases of
network availability and capacity from multiple vendors."
LOWER LEFT: Picture of a circuit made of segments from multiple vendors; text:
"End-to-End Multiple Vendor Network Access;" End Customer Los Angeles -
UTX--Vendor 1 DS-3 Local Loop - UTX--Vendor 2 DS-3 Long Haul - UTX--Vendor 3
DS-3 Long Haul - Vendor 4 - DS-3 Local Loop - End Customer Washington, D.C."
UPPER RIGHT: Diagram showing different kinds of circuits the Company can
provision; text: "Universal Access provides buyers of transport capacity
efficient and cost-effective circuit provisioning and installation across
multiple vendor networks."
LOWER RIGHT: Diagram of UTX facility integrated into the UIX database; text:
"Universal Transport Exchange (UTX): Washington, DC - The UTX facilities
interconnect the networks of local, long haul and international communications
providers allowing data to seamlessly pass between multiple carrier networks."
UPPER CENTER: Diagram of UIX databases overlaying United States map; text:
"UIX - Quoting - Order Processing - Provisioning - Carrier Development -
Network Management - Network Planning"
TENTATIVE>BOTTOM OF PAGE: logos of Universal Access clients and suppliers
including Teleglobe, AboveNet, BCE Nexxia, GTE, and IDT as clients and
Williams, BroadWing, MCIWorldcom and AT & T as suppliers.
REAR COVER
ENTIRE PAGE: Multiple pictures of globe overlaying page
UPPER LEFT TEXT TOP TO BOTTOM: "Sales Locations - Chicago Portland San
Francisco San Jose Los Angeles Denver Dallas Boston New York Washington DC
Miami"
<PAGE> 4
[INSIDE COVER ART]
2
<PAGE> 5
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information about us, the common stock being sold in this offering and our
consolidated financial statements, including the notes to those statements,
included elsewhere in this prospectus.
OUR BUSINESS
We are a web-enabled, business-to-business intermediary that facilitates
the provisioning, installation and servicing of dedicated, point-to-point
communications links, commonly known as circuits, for service providers who buy
network capacity, and transport suppliers who sell network capacity. We
aggregate network information, operate facilities where communications networks
can be physically interconnected, provide ongoing dedicated circuit access and
offer client support services. Through these services, we provide our clients
with an outsourced, integrated solution to the challenges they face within a
fragmented network services market.
As an independent intermediary, we have been able to collect and aggregate
network information from multiple transport suppliers. Our web-enabled Universal
Information Exchange, or UIX, consists of several proprietary, interconnected
databases containing capacity, availability, physical location and pricing
information from over 35 transport suppliers and more than 75,000 physical
sites. Through our UIX we provide our clients with point-to-point network
connections efficiently and cost-effectively. In addition, we operate network
interconnection facilities called Universal Transport Exchanges, or UTXs, where
various transport suppliers can easily access the network connections of any
other transport supplier in that facility. We also provide a single point of
contact for network management services, including network monitoring,
maintenance and restoration.
As of September 30, 1999, we provided services to over 75 clients,
including AboveNet Communications (MFN), BCE Nexxia, Fiber Network Solutions,
GTE Internetworking, IDT, and Teleglobe Communications, each of which
represented at least 1% of our monthly recurring revenues as of September 30,
1999.
THE OPPORTUNITY
The communications network services market is competitive, complex and
fragmented. Domestic and international deregulation, combined with growth in
Internet usage, has spawned a rapid increase in the number of transport
suppliers and service providers as well as the strategies they employ to build
networks and reach customers. This diversity of industry participants and
business strategies has resulted in the development of multiple networks serving
various geographic regions. In this multiple vendor landscape, network
connectivity continues to be hindered by the fact that transport suppliers and
service providers do not have access to pricing, capacity, availability and
location information for the networks of other suppliers. Because transport
suppliers compete with each other, they have little incentive to share this
information or to locate their equipment within competitors' facilities. To
date, we believe that major transport suppliers have not been able to
effectively support end-to-end circuit connections on their own networks, or
through efficient interconnection with other suppliers, to fully meet their
customers' requirements.
This multiple vendor market environment causes a number of challenges, as
outlined below.
<TABLE>
<CAPTION>
CHALLENGES FOR SERVICE PROVIDERS CHALLENGES FOR TRANSPORT SUPPLIERS
-------------------------------- ----------------------------------
<S> <C>
- - significant time and expense related to - inability to efficiently fulfill customer
quoting, provisioning and installing demand for point-to-point dedicated circuits
circuits; due to the limited reach of their
networks;
- - difficulty determining the availability of
capacity in a timely manner, which may - costs associated with selling excess
result in significant backlog of customer network capacity; and
orders and possibly lost revenues; and
- inability to provide a consistent level of
- - inability to maintain, monitor and restore service over multiple network segments.
connections.
</TABLE>
3
<PAGE> 6
OUR SOLUTION
Our integrated solution addresses these challenges and provides the
following key benefits to our clients:
- Outsourced Solution. We provide a single point of contact for
provisioning, installation and network management services. Our
outsourced solution provides significant time, effort and cost savings to
our clients who would otherwise be forced to independently analyze the
capacity, availability and pricing of circuits from multiple vendors to
construct and maintain circuits.
- Efficient, Cost Effective Circuit Provisioning and Installation Across
Multiple Vendor Networks. We leverage the information contained in our
UIX databases to provide efficient and cost-effective circuit
provisioning and installation across geographically dispersed, multiple
vendor networks.
- Easily Extended Network Reach. Our clients are able to easily extend the
reach of their networks by purchasing dedicated, point-to-point circuits
from us by accessing the networks of over 35 network transport suppliers.
- Significant Source of Demand for Transport Capacity Suppliers. We
represent a significant source of demand for transport suppliers because
we purchase a large volume of circuits. We believe our transport
suppliers consider us to be a valuable partner because we provide them
efficient access to the capacity requirements of our clients.
- Ongoing Client Support. We provide ongoing technical and administrative
support during the planning, ordering, provisioning and installation
processes.
- Single Point of Contact for Network Management Services. Through our
network management service organization, we provide a single point of
contact for 24-hour-a-day, seven-day-a-week network monitoring,
maintenance and restoration across multiple vendor networks.
OUR STRATEGY
Our objective is to facilitate the creation of a ubiquitous, global
communications network by improving the overall efficiency of the market for
transport capacity and infrastructure services. To achieve this objective, we
intend to:
- continue to enhance the Internet functionality of our UIX;
- continue to expand and populate our UIX databases with network
information;
- continue to develop UTX facilities;
- aggregate network demand;
- expand UIX, UTX and client support services internationally; and
- enhance capabilities through acquisitions and partnerships.
CORPORATE INFORMATION
Our principal executive offices are located at 100 North Riverside Plaza,
Suite 2200, Chicago, Illinois 60606, and our telephone number is (312) 660-5000.
Information contained on our website, www.universalaccess.net, does not
constitute part of this prospectus. We were incorporated in Illinois in October
1997. We reincorporated in Delaware in June 1999.
TRADEMARKS
Universal Access, the Universal Access logo, Universal Transport Exchange,
Universal Information Exchange, UTX and UIX are service marks and ProVision and
Stuff Software are trademarks of Universal Access. Each trademark, trade name or
service mark of any other company appearing in this prospectus belongs to its
holder.
4
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Shares offered by us.................................. shares
Shares offered by the selling stockholders............ shares
Shares to be outstanding after the offering(1)........ shares
Use of proceeds....................................... For general corporate purposes, including
working capital, capital expenditures and
potential acquisitions of complementary
products, technologies and businesses.
Proposed Nasdaq National Market symbol................ "UAXS"
</TABLE>
- ---------------
(1) Based on the number of shares outstanding as of November 30, 1999. This
number excludes:
- 13,000,000 shares of common stock reserved for issuance under our Amended
1998 Employee Stock Option Plan, of which 10,405,500 shares were subject
to outstanding options with a weighted average exercise price of $0.95
per share, and 994,500 shares were available for future grants;
- 1,943,400 shares of common stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $0.59 per share; and
- 11,000,000 shares available for issuance under our 1999 Stock Plan, 1999
Employee Stock Purchase Plan and 1999 Director Plan.
Except where we state otherwise, the information in this prospectus:
- gives effect to the conversion of all of our outstanding shares of
preferred stock into shares of common stock upon the
closing of this offering, and assumes that each share of Series E
preferred stock converts into shares of common stock. For a
description of the conversion terms of the Series E preferred stock,
please read "Description of Capital Stock";
- assumes no exercise of the underwriters' option to purchase additional
shares in this offering; and
- reflects a 500 for 1 forward stock split that our board approved on July
10, 1998, a 2 for 1 forward stock split that our board approved on
February 17, 1999, a 3 for 2 forward stock split that our board approved
on June 23, 1999 and a 2 for 1 forward stock split that our board
approved and effected as a stock dividend on September 15, 1999.
5
<PAGE> 8
SUMMARY FINANCIAL INFORMATION
The pro forma statement of operations data give effect to the Pacific Crest
Networks, Inc. and Stuff Software, Inc. acquisitions as if they had occurred on
January 1, 1998. The pro forma financial data set forth below may not be
indicative of our financial condition or results of operations had these
acquisitions actually occurred on the dates assumed, nor do they purport to be
indicative of our future financial position or results of operations.
Pro forma basic and diluted net loss per share have been calculated
assuming the conversion of all outstanding preferred stock into common stock, as
if the shares had converted immediately upon their issuance.
<TABLE>
<CAPTION>
NINE MONTHS PRO FORMA
INCEPTION PRO FORMA ENDED NINE MONTHS
THROUGH YEAR ENDED YEAR ENDED SEPTEMBER 30, ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------- SEPTEMBER 30,
1997 1998 1998 1998 1999 1999
------------ ------------ ------------ ------ ------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues............... $ 77 $ 1,629 $ 2,294 $ 730 $ 8,583 $ 9,220
------ ------- ------- ------ ------- --------
Total operating
expenses............... 246 2,884 4,466 1,529 17,996 19,447
------ ------- ------- ------ ------- --------
Operating loss........... (169) (1,255) (2,172) (799) (9,413) (10,227)
------ ------- ------- ------ ------- --------
Net loss..................... (170) (1,374) (2,336) (807) (9,059) (9,873)
Pro forma basic and diluted
net loss per share......... $ (0.05) $ (0.18)
Shares used in computing pro
forma basic and diluted net
loss per share............. 30,069 51,513
</TABLE>
The pro forma balance sheet data as of September 30, 1999 gives effect to
the acquisition of Stuff Software, Inc., the sale of 1,560,118 shares of
preferred stock and warrants to purchase 40,000 shares of preferred stock on
various dates subsequent to September 30, 1999 for aggregate proceeds of $28.3
million and the conversion of all outstanding shares of preferred stock into
common stock and all preferred stock warrants to common stock warrants upon the
closing of the offering. The pro forma as adjusted balance sheet data as of
September 30, 1999 also give effect to the sale of shares of
common stock by us in this offering at an assumed initial public offering price
of $ per share, after deducting an assumed underwriting discounts and
estimated offering expenses.
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA AS ADJUSTED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash........................................................ $49,064
Total assets................................................ 68,692
Total long-term debt, net of current portion................ 385
Total stockholders' equity.................................. 56,811
</TABLE>
6
<PAGE> 9
RISK FACTORS
An investment in our common stock involves a high degree of risk. Before
you invest in our common stock, you should consider carefully the risks
described below, together with all of the other information included in this
prospectus. If any of the risks described below were to occur, our business,
financial condition and results of operations could be materially adversely
affected. In that case, the trading price of our common stock could decline and
you could lose part or all of your investment.
IF WE FAIL TO INCREASE OUR REVENUES, WE WILL BE UNABLE TO ACHIEVE AND MAINTAIN
PROFITABILITY.
We have incurred significant losses since inception and expect to continue
to incur losses in the future. As of September 30, 1999, we had an accumulated
deficit of $11.3 million. Although our revenues have grown from $335,000 in the
quarter ended September 30, 1998 to $4.3 million in the quarter ended September
30, 1999, we cannot be certain that our revenues will continue to grow, or that
we will achieve sufficient revenues to achieve profitability. We expect to
continue to incur significant and increasing expenses in order to:
- expand sales and marketing activities to increase market acceptance;
- expand our operational activities to further develop our business model;
- expand our administrative organization to support the anticipated growth
of our business;
- expand and enhance our UIX databases; and
- build out our UTX facilities.
As a result, we will need to generate significantly higher revenues to
achieve and maintain profitability. If we fail to generate higher revenues, our
business will suffer.
OUR LIMITED OPERATING HISTORY MAKES FORECASTING DIFFICULT.
We have a limited operating history and, therefore, limited meaningful
historical financial data upon which to base our planned operating expenses.
Specifically, our UTX business model is relatively new, and we have not operated
our UIX databases in conjunction with our UTX facilities long enough to
accurately predict trends in our business. Moreover, we have not built out
enough UTX facilities to be able to test whether our strategy to utilize these
facilities will work. Accordingly, we are subject to all of the risks that are
associated with companies in an emerging industry and in an early stage of
development, including:
- undercapitalization;
- cash shortages;
- the unproven nature of our business model;
- the new and unproven nature of the market for our services;
- the need to make significant expenditures and incur significant expenses
as we develop our business, infrastructure and operations;
- the lack of sufficient clients and revenues to sustain our operations and
growth without additional financing;
- difficulties in managing growth; and
- limited experience in providing some of the services that we offer or
plan to offer.
If we are unsuccessful in addressing these risks, our business may be
seriously harmed.
7
<PAGE> 10
WE HAVE AN UNPROVEN BUSINESS MODEL, AND WE CANNOT BE SURE THAT OUR SERVICES WILL
BE WIDELY ACCEPTED.
Our business strategy is unproven. To be successful, we must convince
prospective clients to entrust their network capacity data and transport
requirements to a company without a long and proven track record. We are not
aware of any companies that have a directly comparable business, and we cannot
be sure that our services will be widely accepted.
Our ability to expand our client base may be limited by the following
factors:
- the speed, reliability and cost effectiveness of our services;
- the willingness of clients to outsource their circuit provisioning;
- our ability to market our services effectively; and
- the growth of the Internet.
If the markets for our services fail to develop or grow more slowly than
anticipated, if competitors enter the market or if we are unable to expand our
client base, our business could be adversely affected.
OUR ABILITY TO IMPLEMENT AND MAINTAIN OUR UIX DATABASES IS UNPROVEN, AND IF WE
CANNOT INCREASE THE SCOPE AND ACCURACY OF THESE DATABASES AS PLANNED, OUR
BUSINESS WILL SUFFER.
To be successful, we must increase and update information about pricing,
capacity, availability and location of circuits contained in our databases. Our
ability to provision circuits and to provide ongoing dedicated line circuit
access depends upon the information we collect from our transport suppliers
regarding their networks, which we include in our UIX databases. Our suppliers
are not obligated to provide us with this information and could decide to stop
providing this information to us at any time. Moreover, we cannot be certain
that the information that our suppliers share with us is completely accurate or
current. If we cannot continue to maintain and expand our UIX databases as
planned, our business will suffer.
THE MARKET FOR OUR UTX SERVICES IS NEW AND UNPROVEN, AND WE HAVE LIMITED
EXPERIENCE PROVIDING OUR UTX SERVICES.
The market for our UTX services is new and unproven. If the market for
these services fails to develop, or develops more slowly than we expect, our
business will be harmed. The growth of this market depends on several uncertain
events or occurrences including:
- our ability to remain a neutral intermediary between transport suppliers
and the willingness of these suppliers to install their equipment in our
UTX facilities;
- our ability to successfully and cost-effectively market our services to a
sufficiently large number of clients; and
- the increased need for high speed communications network services.
To date, we have derived substantially all of our revenues from providing
on-going circuit access, and we have only limited experience providing our UTX
services. At November 30, 1999, we had two operational UTX sites and seven UTX
clients. However, these clients may terminate their UTX contracts at any time,
and if we fail to maintain our existing clients and to attract new clients for
our UTX services, our business will be adversely affected.
RAPID EXPANSION OF OUR UTX FACILITIES WILL CAUSE A SIGNIFICANT STRAIN ON OUR
BUSINESS.
One of our key strategies is to expand our business by opening additional
UTX facilities in geographically diverse locations. As of November 30, 1999 we
had operational UTX facilities in
8
<PAGE> 11
Chicago and Santa Clara and UTX facilities under construction in San Francisco,
Los Angeles, Miami, Dallas and Washington, D.C. We expect to open six additional
facilities in the United States in 2000.
If we are unable to generate sufficient cash flows or raise sufficient
funds, we may have to delay or abandon some or all of our development and
expansion plans. A delay in the expansion of our UTX facilities may make it more
difficult for us to respond to competitive pressures and establish our presence
in the market.
It usually takes us at least six months to select an appropriate location
for a new UTX facility, construct the facility, install equipment and
communications network infrastructure and hire operations and sales personnel.
We must incur these costs before we have clients who purchase our services to be
delivered from the UTX facilities. If the demand does not develop as we
anticipate, we will have fixed costs without corresponding revenue and our
business will be harmed. Once a UTX facility becomes operational, we expect it
to experience losses for at least one year.
Our ability to open UTX facilities is subject to a number of risks,
including the following:
- the availability of appropriate space for these facilities on reasonable
terms;
- competition for limited space in desirable locations from large,
well-capitalized companies that may be more attractive tenants for
potential landlords;
- construction delays;
- cost overruns;
- equipment and material delays; and
- inability to obtain necessary permits on a timely basis.
In addition, our costs will increase as we open additional UTX facilities.
These increased costs include:
- leasing additional real estate;
- expenses associated with hiring, training and managing new employees;
- purchasing new equipment;
- implementing power and redundancy systems;
- implementing multiple communications connections; and
- depreciation expense.
An inability to establish additional UTX facilities as planned, to
effectively manage our expansion or to attract sufficient clients to our UTX
facilities would harm our business.
IF WE CANNOT SUCCESSFULLY IMPLEMENT OUR NETWORK OPERATIONS CENTER, WE WILL BE
UNABLE TO PROVIDE MONITORING, MAINTENANCE AND RESTORATION SERVICES TO OUR
CLIENTS, AND OUR BUSINESS WILL SUFFER.
One of our primary business objectives is to provide our clients with
network monitoring, maintenance and restoration services 24 hours a day, seven
days a week through a network operations center. However, we have not fully
developed this capacity and currently provide network management services
through an outsourcing arrangement with a third party, until our own facility
becomes operational. We recently acquired a network operations facility, but
have not yet upgraded this facility or begun hiring employees, and we have only
limited experience implementing services of this type. As a consequence, we
cannot be sure that our efforts to provide these services will be successful.
Our ability to implement this strategy will depend on many factors, including
our ability to upgrade the facility, install new equipment and hire, train and
manage employees.
9
<PAGE> 12
If we fail to successfully implement a network operations center, we may
not be able to monitor network operations effectively or troubleshoot circuits
in a cost-effective manner, which would cause our business to suffer.
WE FACE RISKS ASSOCIATED WITH OUR PLAN TO EXPAND INTERNATIONAL OPERATIONS.
An important component of our strategy is to expand into international
markets, such as Europe, Asia and South America. However, we have no experience
operating internationally. The risks inherent in conducting our business
internationally include:
- unexpected changes in regulatory requirements and trade barriers;
- unexpected changes in national and international (including European
Union and World Trade Organization) regulatory requirements and trade
barriers;
- challenges in staffing and managing foreign operations;
- differences in technology standards;
- employment laws and practices in foreign countries;
- longer payment cycles and problems in collecting accounts receivable;
- inability to obtain access to transport capacity;
- political instability;
- fluctuations in currency exchange rates and imposition of currency
exchange controls; and
- potentially adverse tax consequences.
In addition, in order to expand internationally, we may enter into joint
ventures or outsourcing agreements with third parties, acquire complementary
businesses or operations, or establish and maintain new operations outside of
the United States. We may not control or manage some or all of these operations.
As a result, we may be required to depend on third parties for the management of
these international operations. If these foreign operations are not successful,
they could significantly damage our reputation, which would harm our business.
COMPETITION IN OUR INDUSTRY IS INTENSE AND GROWING, AND WE MAY BE UNABLE TO
COMPETE EFFECTIVELY.
The market for the services we provide is highly fragmented. In addition,
the market in which we operate is new, rapidly evolving and highly competitive.
We believe that at this time no single competitor competes directly with us with
respect to all of the services we offer; however, we currently or potentially
compete with a variety of companies, including some of our transport suppliers,
with respect to our products and services individually, including:
- national and local carriers, such as AT&T, Broadwing, MCI WorldCom and
Williams Communications;
- companies that provide collocation facilities, such as AboveNet
Communications (MFN), AT&T, Equinix, Exodus Communications, Frontier
Global Center, and Intel;
- competitive local exchange carriers, such as AT&T, ELI, ICG
Communications, MCI WorldCom, NextLink Communications, and Pathnet; and
- incumbent local exchange carriers, such as GTE and Sprint, and regional
Bell operating companies such as BellSouth and SBC Communications.
We expect to face additional competition from new market entrants in the
future as there are few substantial barriers to entry in our market. Significant
new competitors could arise from increased consolidation and strategic alliances
in the telecommunications industry. Other new entrants could
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enter the market with a business model similar to ours. Our target markets may
support only a limited number of competitors. Operations in such markets with
multiple competitive providers may be unprofitable for one or more of such
providers. Prices in both the long distance business and the data transmission
business have declined significantly in recent years and are expected to
continue to decline.
Moreover, while recent regulatory initiatives allow carriers such as us to
interconnect with incumbent local exchange carrier facilities and to obtain
unbundled network elements from incumbent local exchange carriers, certain
initiatives also provide increased pricing flexibility for, and relaxation of
regulatory oversight of, the incumbent local exchange carrier. This may present
incumbent local exchange carriers with an opportunity to subsidize services that
compete with our services with revenues generated from non-competitive services.
This would allow incumbent local exchange carriers to offer competitive services
at lower prices. Existing laws also restrict the regional Bell operating
companies from fully competing with us in the market for interstate and
international long distance telecommunications services, but also permit the
Federal Communications Commission, the FCC, to lessen or remove some
restrictions. If FCC decisions under existing law, or future amendments to
Federal telecommunications laws, permit the regional Bell operating companies to
compete fully with us in this market, our revenues from these services could be
reduced if these companies are able to attract a substantial portion of our
customers.
We must distinguish ourselves through the quality of our client service,
our service offerings and brand name recognition. We may be unsuccessful in
doing this.
Many of our potential competitors have certain advantages over us,
including:
- substantially greater financial, technical, marketing and other
resources, including brand or corporate name recognition;
- larger customer bases;
- longer operating histories; and
- more established relationships in the industry.
Our competitors may be able to use these advantages to:
- expand their offerings more quickly;
- adapt to new or emerging technologies and changes in customer
requirements more quickly;
- take advantage of acquisitions and other opportunities more readily;
- enter into strategic relationships to rapidly grow the reach of their
networks and capacity;
- devote greater resources to the marketing and sale of their services; and
- adopt more aggressive pricing and incentive policies, which could drive
down margins.
If we are unable to compete successfully against our current and future
competitors, our gross margins could decline and we could lose market share,
either of which could materially and adversely affect our business.
WE HAVE A LONG CIRCUIT PROVISIONING CYCLE, AND IF WE HAVE DIFFICULTIES OR DELAYS
IN DELIVERING CIRCUITS TO OUR CLIENTS, OUR OPERATING RESULTS WILL SUFFER.
It typically takes 30 to 90 days to provision a circuit for a client, and
we do not begin to recognize revenue until a circuit has been installed and
accepted by the client. Once we agree to provision a circuit for a client, we
negotiate with one or more transport suppliers and manage the provisioning
personnel and field technicians of multiple vendors. A client can withdraw its
order with minimal liability at any time before accepting the circuit. We may
experience difficulties in provisioning circuits if our transport suppliers run
out of capacity, forcing us to look for alternative sources of
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capacity at the last minute. If we are unable to provision a circuit in a timely
manner or fail to obtain client acceptance of the circuit, we will be unable to
recognize access revenues for that circuit, and our operating results would be
adversely affected. Furthermore, the ability of our clients to cancel orders at
any time before accepting the circuit may make it difficult for us to forecast
revenue and plan our expenses accordingly.
THE UNPREDICTABILITY OF OUR QUARTERLY RESULTS MAY ADVERSELY AFFECT THE TRADING
PRICE OF OUR COMMON STOCK.
Our revenues and operating results will vary significantly from quarter to
quarter due to a number of factors, many of which we cannot control and any of
which may cause our stock price to fluctuate. These factors include the
following:
- uncertainty regarding timing for provisioning of circuits or failure to
obtain client acceptance of circuits;
- timing of the completion of new UTX facilities;
- decisions by end-users to reallocate their information resources to other
purposes, including year 2000 preparedness;
- costs related to acquisitions of technology or businesses;
- decisions by existing clients not to renew services on a timely basis
when existing client contracts terminate;
- the amount of unused circuit capacity that we hold;
- general economic conditions as well as those specific to the Internet and
related industries; and
- Internet growth and demand for Internet infrastructure.
In addition, we depend on decisions by our clients to expand their Internet
infrastructure, which decisions in turn depend upon the success and expected
demand for the services these clients offer.
We expect our operating expenses to increase significantly in future
periods. Our operating expenses are largely based on anticipated revenue trends,
and a high percentage of our expenses are, and will continue to be, fixed in the
short term due in large part to our build out of our UTX facilities. As a
result, fluctuations in our revenue for the reasons set forth above, or for any
other reason, could cause significant variations in our operating results from
quarter to quarter and could result in substantial operating losses.
Because of these factors, we believe that quarter-to-quarter comparisons of
our operating results are not, and will not be, a good indication of our future
performance. It is likely that, in some future quarters, our operating results
may not meet the expectations of public market analysts and investors. In that
event, the price of our common stock may fall.
OUR FACILITIES AND THE NETWORKS ON WHICH WE DEPEND MAY FAIL, WHICH WOULD
SERIOUSLY HARM OUR BUSINESS.
Our clients depend on our ability to provide ongoing dedicated circuit
access. The operation of these circuits depends on the networks of third party
transport suppliers, such as MCI WorldCom or Williams Communications. The
networks of transport suppliers and clients who may use our UTX facilities, may
be interrupted by failures in or damage to these facilities. Our facilities and
the ongoing circuit access we provide may be interrupted as a result of various
events, many of which we cannot control, including:
- fire;
- human error;
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- earthquakes, floods and other natural disasters;
- train derailments or similar disasters along communications
rights-of-way;
- power loss;
- telecommunications failures; or
- sabotage or vandalism.
We may be subject to legal claims and be liable for losses suffered by our
clients for disruptions to circuits or damage to client equipment resulting from
failures at our facilities or on the networks of third party providers. In
addition, we may be subject to legal claims and be liable for losses suffered by
clients and carriers who use our UTX facilities. Our contracts with our clients
and with carriers who use our UTX facilities attempt to eliminate our liability
for consequential or punitive damages and for damage to client equipment not
caused by our gross negligence or willful acts. However, those provisions may
not protect us from being held liable for those damages.
We generally provide outage credits to our clients if circuit disruptions
occur. If our circuit failure rate is high, we may incur significant expenses
related to circuit outage credits, which would reduce our revenues. We would
also have to incur significant expenses in investigating and addressing the
causes of such circuit failures, which would divert resources from the expansion
of our services and cause our business to suffer. Clients may seek to terminate
their contracts with us if there is a circuit failure. In addition, if our
circuit failure rate is high, our reputation could be harmed, which would
materially harm our business.
WE DEPEND ON SEVERAL LARGE CLIENTS, AND THE LOSS OF ONE OR MORE OF THESE
CLIENTS, OR A SIGNIFICANT DECREASE IN TOTAL REVENUES FROM ANY OF THESE CLIENTS,
COULD SIGNIFICANTLY REDUCE OUR REVENUE AND INCOME.
Historically, a substantial portion of our revenues has come from a limited
number of clients. For example, for the year ended December 31, 1998 two clients
accounted for approximately 29% of our total revenues, and for the nine months
ended September 30, 1999, one client accounted for approximately 35% of our
total revenues.
If we lose one or more large clients, or if one or more of our large
clients reduces the services they purchase from us and we fail to add new
clients, our results of operations could be seriously harmed.
OUR CLIENTS MAY FAIL TO PAY OR BE UNABLE TO PAY THEIR OBLIGATIONS TO US IN A
TIMELY MANNER OR AT ALL, WHICH COULD ADVERSELY AFFECT OUR BUSINESS.
Some of our clients may have limited operating histories and may have
inadequate financial resources to meet all of their obligations. We recorded a
substantial bad debt expense during the nine months ended September 30, 1999
primarily in connection with the failure by one of our clients to pay its bills.
If other of our clients are unable to meet their obligations to us, we may incur
additional bad debt expenses and our cash flows and results of operations may be
harmed.
THE REGULATORY FRAMEWORK UNDER WHICH WE OPERATE AND NEW REGULATORY REQUIREMENTS
OR NEW INTERPRETATIONS OF EXISTING REGULATORY REQUIREMENTS COULD HARM OUR
BUSINESS.
Our communications services are subject to both federal and state
regulation. In providing our interstate and international communications
services, we must comply with federal telecommunications laws and regulations
prescribed by the FCC. At the state level, we are subject to state laws and to
regulation by state public utility commissions. As we expand internationally, we
will also become subject to regulation by foreign authorities and, in some
markets, supra-national authorities, such as the European Union.
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These laws and regulations are subject to frequent changes and different
interpretations, and therefore, it is difficult for us to assess the impact of
these factors on our operations. The current domestic and international trend is
toward deregulation of telecommunications and Internet services. However, we
cannot assure you that this trend will continue, and it is possible that changes
in regulatory policies could limit our ability to compete in some markets. The
implementation, modification, interpretation and enforcement of laws and
regulations vary and can limit our ability to provide many of our services.
We will need to obtain authorization from the FCC and many state public
utilities commissions to offer particular types of telecommunications services.
Once we receive this authorization, we will have to comply with a variety of
regulatory obligations on an ongoing basis. We cannot assure you that the FCC or
state commissions will grant the required authority (or do so in a timely
manner), or refrain from taking action against us if we are found to have
violated any requirements of their rules. If authority is not obtained or if our
schedules of prices, terms, and conditions are not filed, or are not updated, or
otherwise do not fully comply with the rules of the FCC or state regulatory
agencies, third parties or regulators could challenge our ability to offer our
services. Such challenges could cause us to incur substantial legal and
administrative expenses.
For additional information on governmental regulations affecting us, see
"Business -- Governmental Regulation."
REQUIRED REGULATORY APPROVALS MAY INTERFERE WITH OR DELAY CORPORATE
TRANSACTIONS.
As a regulated company, we are required to obtain the approval of the FCC
and certain state regulators before engaging in certain types of transactions,
including mergers, acquisitions of other regulated companies, sales of all or
substantial parts of our business, issuance of stock, and incurrence of debt
obligations. The particular types of transactions that require approval differ
in each jurisdiction. In several states, any transaction that results in a
transfer of 10% or more of our voting stock may require prior approval. If we
cannot obtain the required approvals, or if we encounter substantial delays in
obtaining them, our ability to enter into transactions on favorable terms may be
impaired.
TELECOMMUNICATIONS REGULATIONS OF OTHER COUNTRIES MAY RESTRICT OUR OPERATIONS.
We will be subject to the regulatory regimes in each of the countries in
which we conduct business. Local regulations range from permissive to
restrictive, depending upon the country. Changes to existing regulations of
foreign countries may decrease the opportunities that are available for us to
enter into those markets, or may increase our legal, administrative or
operational costs, or may constrain our activities in other ways that we cannot
necessarily anticipate. Any of these developments could impair our efforts to
develop foreign operations.
WE EXPECT TO FACE RISKS ASSOCIATED WITH ACQUIRED BUSINESSES.
Part of our expansion strategy includes acquiring businesses and
technologies that we believe will complement our existing business. For example,
in 1999 we acquired two companies, and we may acquire additional companies in
the future. These acquisitions will likely involve some or all of the following
risks:
- difficulty of assimilating acquired operations and personnel and
information systems;
- potential disruption of our ongoing business;
- diversion of resources;
- possible inability of management to maintain uniform standards, controls,
procedures and policies;
- possible difficulty of managing our growth;
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- risks of entering markets in which we have little experience; and
- potential impairment of relationships with employees or clients.
We may need to complete these transactions in order to remain competitive.
We cannot be sure that we will be able to obtain required financing for these
transactions or that these transactions will occur.
WE EXPECT TO REQUIRE ADDITIONAL THIRD-PARTY FINANCING, AND IF WE CANNOT OBTAIN
THIS FINANCING ON COMMERCIALLY REASONABLE TERMS, OUR BUSINESS WILL SUFFER.
Our ability to meet our planned growth will require substantial cash
resources. We expect that the anticipated expansion of our UTX facilities,
including the addition of six UTX facilities during the year 2000 (at an
estimated average cost of $3.2 million per facility), and our anticipated
funding of negative cash flow from operating activities, will require
substantial capital. In addition, part of our expansion strategy includes
acquiring complementary businesses and technology, which may require us to raise
additional funds. We do not expect to generate significant cash flow from
operations in the near term. Accordingly, our ability to meet our additional
future capital needs will depend upon our ability to renegotiate, extend or
replace our credit facilities, obtain supplemental financing or raise additional
capital. Additional debt financing may limit our financial and operating
flexibility. We may not be able to renegotiate or replace our credit and
equipment lease facilities on a timely basis, on acceptable terms or at all.
Additional equity financing may not be available or may be dilutive to existing
stockholders. If we are unable to obtain future financing when needed or on
acceptable terms we may have to delay or abandon our development and expansion
plans, which could materially adversely affect our growth and ability to
compete.
WE MUST EXPAND OUR MARKETING AND SALES OPERATIONS SUBSTANTIALLY TO INCREASE
MARKET AWARENESS AND SALES OF OUR SERVICES.
Our services require a sophisticated sales effort that targets key people
within our prospective clients' organizations. This sales effort requires the
efforts of select personnel as well as specialized system and consulting
engineers within our organization. We have recently expanded our sales force and
plan to hire additional marketing and sales personnel and system and consulting
engineers, particularly individuals with experience in the telecommunications
industry. Competition for these individuals is intense, and we may not be able
to hire the number of qualified sales personnel and system and consulting
engineers we need. In addition, we may substantially increase our budget as part
of our marketing program. If we are unable to expand our marketing and sales
operations, we may not be able to increase market awareness or sales of our
products and services, which may prevent us from achieving and maintaining
profitability.
IF WE DO NOT EXPAND OUR CLIENT SUPPORT ORGANIZATION SUBSTANTIALLY, SALES OF OUR
SERVICES MAY BE SIGNIFICANTLY REDUCED.
We currently have a small client support organization and will need to
increase our staff to support new clients and the expanding needs of existing
clients. Our client support organization is responsible for providing our
clients with technical and operational support, and for identifying and
developing opportunities to provide additional services to our existing clients.
Competition for qualified client support personnel is intense because few people
have the necessary level of technical skills and experience in
telecommunications provisioning and network management. If we fail to expand our
client support organization, we may be limited in our ability to gain more
business from existing clients, and we may be unable to obtain or maintain
current information regarding our clients' and suppliers' communications
networks, which could limit our ability to provision future circuits for our
clients.
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IF WE DO NOT ESTABLISH AND MAINTAIN KEY CLIENT RELATIONSHIPS, OUR REVENUES MAY
DECLINE.
Our success will depend upon our ability to develop and manage key client
relationships in order to generate additional revenues from existing clients.
Our ability to develop and manage our client relationships depends on, among
other things:
- our ability to maintain the timeliness and quality of our provisioning
services;
- our ability to deliver our clients additional services, such as network
monitoring, maintenance and troubleshooting services;
- our ability to expand our client support organization with additional,
qualified personnel; and
- performance by the transport suppliers with whom we contract to provide
circuits to our clients.
If we fail to establish and maintain these client relationships, our
revenues may stagnate or decline.
IF WE FAIL TO MANAGE EXPANSION EFFECTIVELY, OUR BUSINESS COULD BE SERIOUSLY
HARMED.
Our ability to successfully offer our services and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We continue to increase the scope of our operations and have
substantially increased the number of our employees. At December 31, 1997, we
had a total of five employees and at November 30, 1999, we had a total of 117
full-time employees. In addition, we plan to continue to hire a significant
number of employees. This growth has placed, and our anticipated growth in
future operations will continue to place, a significant strain on our management
systems and resources. We expect that we will need to continue to improve our
financial and managerial controls, reporting systems and procedures, and will
need to continue to expand, train and manage our work force. Furthermore, we
expect that we will be required to manage multiple relationships with various
clients, suppliers and other third parties. We cannot be sure that we will be
able to manage our expansion effectively.
WE ARE STILL IMPLEMENTING OUR MANAGEMENT INFORMATION SYSTEMS.
We are in the process of augmenting our management information systems to
facilitate management of client orders, client service, billing and financial
applications. Our business could be harmed if we fail to successfully and
promptly:
- implement all applications of our management information systems;
- integrate all the client records and the billing, ordering, inventory,
management, accounting and other financial information systems of the
businesses we have acquired or may acquire into our management
information systems;
- identify all of our information and processing needs;
- repair "bugs" and design defects that may exist in our management
information systems;
- implement a wide area network connecting our main offices and our UTX
facilities in different geographic locations; or
- maintain and upgrade our management information systems as necessary.
In addition, our business could suffer if the software which runs our
information systems malfunctions.
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WE DEPEND ON OUR KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A RAPIDLY
CHANGING MARKET, AND IF WE ARE UNABLE TO RETAIN OUR KEY PERSONNEL AND HIRE
ADDITIONAL PERSONNEL, OUR BUSINESS COULD BE HARMED.
Our future success depends upon the continued services of our executive
officers and other key sales, marketing and support personnel. In particular, we
rely upon the services of our President and Chief Executive Officer, Patrick C.
Shutt, and Chief Operating Officer, Robert J. Pommer, Jr. We do not have "key
person" life insurance policies covering any of our employees.
In addition, we depend on the ability of a relatively new management team
to effectively execute our strategies. We recently hired several of our key
employees. Between June and September 1999, we hired our Executive Vice
President of Marketing and Executive Vice President of Client Services. Because
some members of our management team have worked together only for a short period
of time, we need to integrate these officers into our operations.
We will need to hire additional personnel in our communications
provisioning, sales, marketing and support areas in the future, and we believe
our success depends, in large part, upon our ability to attract and retain these
key employees. Competition for these persons is intense, especially in the
communications provisioning area. In particular, we have experienced difficulty
in hiring qualified network engineers, and we may not be successful in
attracting and retaining these individuals. The loss of the services of any of
our key employees, the inability to attract or retain qualified personnel in the
future, or delays in hiring required personnel could harm our business.
WE HAVE LIMITED ABILITY TO PROTECT OUR PROPRIETARY INFORMATION.
We have no patented technology that would preclude or inhibit competitors
from entering our market. We rely on a combination of copyright, trademark,
service mark and trade secret laws and contractual restrictions to establish and
protect our intellectual property. We have no federally registered trademarks or
service marks, although we have applied for registration of certain of our
service marks. Even if registration is granted, we may be limited in the scope
of services for which we may exclusively use our service marks. We enter into
confidentiality agreements with our employees, consultants and partners, and we
control access to, and distribution of, our proprietary information. Our
intellectual property may be misappropriated or a third party may independently
develop similar intellectual property. Moreover, the laws of certain foreign
countries may not protect our intellectual property rights to the same extent as
do the laws of the United States. Unauthorized use of any of our proprietary
information could seriously harm our business.
WE FACE A NUMBER OF UNKNOWN RISKS ASSOCIATED WITH YEAR 2000 PROBLEMS.
The year 2000 computer problem refers to the potential for system and
processing failures of date-related data as a result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date represented as "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including a temporary inability to process transactions, send invoices or engage
in similar normal business activities.
Our UIX databases were designed for use in the year 2000 and beyond, and we
believe they are year 2000 compliant. However, if year 2000 problems surface in
our operation of the databases, our ability to implement our operations could be
disrupted and our business could be seriously harmed.
If our suppliers, vendors, major distributors, partners, clients and
service providers fail to correct their year 2000 problems, these failures could
disrupt our operations, damage our relationships with our clients and harm our
business. If a year 2000 problem occurs, it may be difficult to determine which
party's products caused the problem. Due to the general uncertainty inherent in
the year 2000 readiness of third-party suppliers and vendors, we are unable to
determine at this time whether year 2000 failures could harm our business and
our financial results.
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Our clients' purchasing plans could be affected by year 2000 issues if they
need to expend significant resources to fix their existing systems to become
year 2000 compliant. This situation may reduce funds available to employ our
services. In addition, some clients may wait to purchase our services until
after the year 2000, which may reduce our revenues in the short term. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000 Compliance".
THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK, AND A PUBLIC MARKET MAY NOT
DEVELOP OR BE SUSTAINED.
Prior to this offering, you could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after this offering, and the market price might fall below the initial
public offering price. The initial public offering price may bear no
relationship to the price at which our common stock will trade upon completion
of this offering. The initial public offering price will be determined based on
negotiations between us and the representatives of the underwriters, based on
factors that may not be indicative of future market performance. See
"Underwriting".
CERTAIN STOCKHOLDERS WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER UNIVERSAL
ACCESS AFTER THIS OFFERING AND COULD DELAY OR PREVENT A CHANGE IN CORPORATE
CONTROL.
We anticipate that Internet Capital Group, Inc., funds affiliated with
ComVentures and other stockholders, directors and officers will, in the
aggregate, beneficially own approximately % of our outstanding common stock
following the completion of this offering. In addition, Internet Capital Group,
Inc. has indicated its intention to purchase additional shares in the public
market after this offering. These stockholders, acting alone or together, would
be able to influence significantly all matters requiring approval by our
stockholders, including the election of directors and the approval of mergers or
other business combination transactions. See "Principal and Selling
Stockholders".
PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD
PREVENT A CHANGE IN CORPORATE CONTROL.
Provisions of our amended and restated certificate of incorporation,
bylaws, and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be a benefit to our stockholders. See
"Description of Capital Stock".
THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AFTER THIS
OFFERING THAT COULD CAUSE OUR STOCK PRICE TO FALL.
Our current stockholders hold a substantial number of shares of our common
stock, which they will be able to sell in the public market in the near future.
All of the shares sold in this offering will be freely tradable.
The remaining shares outstanding, based on the number of shares
outstanding as of November 30, 1999, are restricted securities as defined in
Rule 144 of the Securities Act of 1933. Approximately of these
shares will be freely tradable beginning 180 days after the effective date of
this offering, and the remainder will become freely tradable at various times
thereafter. Sales of a substantial number of shares of our common stock after
this offering, or market expectations that these sales may occur, could cause
our stock price to fall. In addition, the sale of these shares could impair our
ability to raise capital by selling additional common stock. See "Shares
Eligible for Future Sale".
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WE EXPECT TO EXPERIENCE VOLATILITY IN OUR SHARE PRICE WHICH COULD NEGATIVELY
AFFECT YOUR INVESTMENT.
The market price of our common stock may fluctuate significantly in
response to a number of factors, some of which are beyond our control,
including:
- quarterly variations in operating results;
- changes in financial estimates by securities analysts;
- changes in market valuations of Internet-related companies;
- announcements by us or our competitors of new products and services or of
significant acquisitions, strategic partnerships or joint ventures;
- any loss of a major customer;
- additions or departures of key personnel;
- any deviations in net revenues or in losses from levels expected by
securities analysts;
- future sales of common stock; and
- volume fluctuations, which are particularly common among highly volatile
securities of Internet-related companies.
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.
The initial public offering price is substantially higher than the book
value per share of our outstanding common stock immediately after the offering.
Accordingly, if you purchase common stock in the offering, you will incur
immediate dilution of approximately $ . You will incur further dilution
if outstanding stock options and warrants are exercised. See "Dilution".
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may", "will", "expect",
"anticipate", "believe", "estimate", "plan" and "continue" or similar words. You
should read statements that contain these words carefully because they: (1)
discuss our future expectations; (2) contain projections of our future results
of operations or of our financial condition; or (3) state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our investors. However, there may be events in the
future that we have not accurately predicted or which we cannot control. These
events may include our future operating results, our ability to implement our
business plan, our efforts to address Year 2000 issues and potential
competition, among other things. The risk factors listed under "Risk Factors",
as well as any cautionary language in this prospectus, provide examples of
risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
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USE OF PROCEEDS
We estimate that the net proceeds to us from the sale of the
shares of common stock we are selling in the offering will be
approximately $ million (or $ million if the underwriters'
option to purchase additional shares as described in "Underwriting" is exercised
in full), based on an assumed initial public offering price of $ per share
and after deducting an assumed underwriting discount and estimated offering
expenses payable by us. We will not receive any proceeds from the sale of shares
by the selling stockholders.
We expect to use the net proceeds from this offering for working capital,
capital expenditures and general corporate purposes. In addition, we may use a
portion of the net proceeds to acquire complementary products, technologies or
businesses; however, we currently have no commitments or agreements, nor are we
involved in any negotiations, with respect to any such transactions. Pending use
of the net proceeds of this offering, we intend to invest the net proceeds in
interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, to operate and expand our
business and do not expect to pay any cash dividends in the foreseeable future.
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CAPITALIZATION
The following table sets forth our capitalization as of September 30, 1999:
- on an actual basis;
- on a pro forma basis giving effect to the acquisition of Stuff Software,
Inc., the sale of 1,557,385 shares of Series E Cumulative Convertible
Preferred Stock and warrants to purchase 40,000 shares of Series E
preferred stock on November 10, 1999, and the sale of 2,733 shares of
Series D Cumulative Convertible Preferred Stock on December 6, 1999 for
aggregate proceeds of $28.3 million, and the conversion of all
outstanding shares of preferred stock into common stock and all preferred
stock warrants to common stock warrants upon the closing of the offering;
and
- on a pro forma as adjusted basis to reflect the sale by us of
shares of common stock in the offering at an assumed
initial public offering price of $ per share, after deducting an
assumed underwriting discount and estimated offering expenses.
This information should be read in conjunction with our financial
statements and the notes to those statements appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Notes payable, net of current portion....................... $ 131 $ 131 $ 131
Obligations under capital leases, net of current portion.... 254 254 254
Stockholders' equity:
Preferred stock:
Cumulative Convertible Series A -- $0.01 par value;
1,000,000 shares authorized, 772,331 shares issued and
outstanding actual; no shares issued and outstanding
pro forma and pro forma as adjusted................... 2,161 -- --
Series A preferred stock warrants...................... 83 -- --
Cumulative Convertible Series B -- $0.01 par value;
2,400,000 shares authorized, 2,233,335 issued and
outstanding actual; no shares issued and outstanding
pro forma and pro forma as adjusted................... 5,448 -- --
Series B preferred stock warrants...................... 500 -- --
Convertible Series C -- $0.01 par value; 667,000 shares
authorized, 666,667 shares issued and outstanding
actual; no shares issued and outstanding pro forma and
pro forma as adjusted................................. 1,941 -- --
Cumulative Convertible Series D -- $0.01 par value;
7,058,823 shares authorized, 6,039,964 shares issued
and outstanding actual; no shares issued and
outstanding pro forma and pro forma as adjusted....... 25,630 -- --
Cumulative Convertible Series E -- $0.01 par value; no
shares authorized, no shares issued and outstanding
actual; no shares issued and outstanding pro forma and
pro forma as adjusted................................. -- -- --
Series E preferred stock warrants...................... -- -- --
Common stock, $0.01 par value; 300,000,000 shares
authorized; 31,925,000 shares issued and outstanding
actual; shares issued and outstanding pro
forma; shares issued and outstanding pro
forma as adjusted...................................... 2,170 65,839
Common stock warrants..................................... 13 732 732
Additional paid-in-capital................................ 4,750 4,750 4,750
Deferred stock option plan compensation................... (1,569) (1,569) (1,569)
Accumulated deficit....................................... (11,256) (11,256) (11,256)
Notes receivable -- employees............................. (1,685) (1,685) (1,685)
-------- -------- --------
Total stockholders' equity........................ 28,186 56,811
-------- -------- --------
Total capitalization............................ $ 28,571 $ 57,196 $
======== ======== ========
</TABLE>
21
<PAGE> 24
The table above does not reflect the exercise of any stock options
outstanding at September 30, 1999. As of September 30, 1999, there were options
outstanding to purchase a total of 10,074,000 shares.
The table above also does not reflect the exercise of any warrants. As of
September 30, 1999 on a pro forma basis giving effect to the sale of warrants to
purchase 40,000 shares of Series E Preferred Stock on November 10, 1999, there
were Series A preferred stock warrants, Series B preferred stock warrants,
Series E preferred stock warrants and common stock warrants outstanding to
purchase an aggregate of common or common equivalent shares. If these
warrants are exercised, there will be further dilution to new stockholders.
22
<PAGE> 25
DILUTION
If you invest in our common stock, your interest will be diluted to the
extent of the difference between the initial 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 after this offering. We calculate net tangible book value
per share by dividing the net tangible book value (total assets less intangible
assets and total liabilities) by the number of outstanding shares of common
stock.
Our pro forma net tangible book value at September 30, 1999 was $54.3
million, or $ per share, based on shares of our common stock
outstanding after giving effect to the acquisition of Stuff Software, Inc., the
sale of 1,560,118 shares of preferred stock and warrants to purchase 40,000
shares of preferred stock on various dates subsequent to September 30, 1999 for
aggregate proceeds of $28.3 million and the conversion of all outstanding shares
of preferred stock into common stock.
After giving effect to the sale of the shares of common stock by
us at an assumed initial public offering price of $ per share (less an
assumed underwriting discount and estimated offering expenses payable by us),
our pro forma net tangible book value at September 30, 1999 would be $
million, or $ per share. This represents an immediate increase in the 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 September 30,
1999........................................................ $
Increase per share attributable to new investors............
-----
Pro forma net tangible book value per share after this
offering..................................................
--------
Dilution per share to new investors......................... $
===== ========
</TABLE>
The following table shows on a pro forma basis at September 30, 1999, after
giving effect to the conversion of all outstanding shares of our preferred stock
into an aggregate of shares of common stock upon the closing of this
offering, the number of shares of common stock purchased from us, the total
consideration paid to us and the average price paid per share by existing
stockholders and by new investors purchasing common stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ % $ % $
New stockholders.............
-------- --- -------- --- --------
Total.............. % $ % $
======== === ======== === ========
</TABLE>
The computations in the tables above assume no exercise of any stock
options outstanding at September 30, 1999. As of September 30, 1999, there were
options outstanding to purchase a total of 10,074,000 shares of common stock at
a weighted average exercise price of $0.80 per share. If any of these options
are exercised, there will be further dilution to new public investors.
The table above also does not reflect the exercise of any warrants. As of
September 30, 1999 on a pro forma basis giving effect to the sale of warrants to
purchase 40,000 shares of Series E Preferred Stock on November 10, 1999, there
were Series A preferred stock warrants, Series B preferred stock warrants,
Series E preferred stock warrants and common stock warrants outstanding to
purchase an aggregate of common or common equivalent shares. If these
warrants are exercised, there will be further dilution to new stockholders.
23
<PAGE> 26
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with our financial statements and the notes to our financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", included elsewhere in this prospectus. The statement of operations
data for the period from inception through December 31, 1997, the year ended
December 31, 1998 and the nine months ended September 30, 1999, and the balance
sheet data as of December 31, 1997 and 1998 and September 30, 1999 are derived
from, and are qualified by reference to, the audited financial statements
included elsewhere in this prospectus.
The statement of operations data for the nine months ended September 30,
1998 are derived from the unaudited financial statements appearing elsewhere in
this prospectus. The unaudited financial statements have been prepared on the
same basis as the audited financial statements and, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the information set forth
therein. The historical results are not necessarily indicative of operating
results to be expected in the future.
Unaudited pro forma basic and diluted net loss per share have been
calculated assuming the conversion into common stock of all preferred stock
outstanding during the relevant period, as if the shares had converted
immediately upon their issuance.
<TABLE>
<CAPTION>
INCEPTION NINE MONTHS ENDED
THROUGH YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ---------------------
1997 1998 1998 1999
------------ ------------ ----------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues............................... $ 77 $ 1,629 $ 730 $ 8,583
------- -------
Operating expenses:
Cost of revenues........................... 66 1,256 592 7,477
Operations and administration.............. 180 1,516 890 7,144
Depreciation............................... -- 47 1 290
Stock option plan compensation............. -- 65 46 3,085
------- ------- ------- -------
Total operating expenses................ 246 2,884 1,529 17,996
------- ------- ------- -------
Operating loss.......................... (169) (1,255) (799) (9,413)
------- ------- ------- -------
Other income (expense):
Interest expense........................... (1) (27) (8) (19)
Interest income............................ -- 8 -- 373
Other expense.............................. -- (100) -- --
------- ------- ------- -------
Total other income (expense)............ (1) (119) (8) 354
------- ------- ------- -------
Net loss..................................... (170) (1,374) (807) (9,059)
Accretion and dividends on redeemable and
nonredeemable cumulative convertible
preferred stock............................ -- (28) -- (625)
------- ------- ------- -------
Net loss applicable to common stockholders... $ (170) $(1,402) $ (807) $(9,684)
======= ======= ======= =======
Basic and diluted net loss per share......... $ (0.01) $ (0.05) $ (0.03) $ (0.31)
Shares used in computing basic and diluted
net loss per share......................... 23,799 29,063 28,631 30,867
Pro forma basic and diluted net loss per
share...................................... $ (0.05) $ (0.18)
Shares used in computing pro forma basic and
diluted net loss per share................. 30,069 51,513
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------- SEPTEMBER 30,
1997 1998 1999
---- ------- -------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash........................................................ $ 1 $ 844 $21,703
Working capital............................................. (35) (562) 13,928
Total assets................................................ 100 1,969 40,009
Total long-term debt, net of current portion................ -- 149 385
Total stockholders' equity (deficit)........................ (34) (1,282) 28,186
</TABLE>
24
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with "Selected Financial Data" and our
financial statements and the notes to our financial statements included
elsewhere in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors including the risks described in "Risk Factors" and
elsewhere in this prospectus.
OVERVIEW
We commenced operations on October 2, 1997. To date, we have derived
substantially all of our revenues from providing on-going, dedicated circuit
access. Monthly recurring circuit revenues are generated under client contracts
with terms ranging from 12 to 60 months. Contracts with our clients may be
terminated by the client at any time. However, a client that cancels a contract
is required to pay us substantially all of the amounts payable over the
remaining term of the contract. Circuit charges are billed monthly in advance,
and circuit revenues are recognized in the month that service is provided.
Amounts billed in advance are recorded on the balance sheet as unearned revenue.
At September 30, 1999, unearned revenue was $1.5 million.
Monthly recurring UTX revenues are generated from leasing space in our UTX
facilities. To date we have derived minimal revenue from UTX activities. Our UTX
billing and revenue recognition policies are the same as those described above
for circuits. In addition, we facilitate the provisioning, installation and
servicing of point-to-point dedicated circuits for our clients. To date, we have
not charged our clients for provisioning, installation or network management
services.
At September 30, 1999, we had two operational UTX facilities and five UTX
facilities under construction. Construction, equipment and facility leasing
costs incurred in connection with the construction of a UTX facility are
capitalized until the facility becomes operational. Once the facility becomes
operational, these costs are amortized over the lesser of the term of the lease,
ranging from seven to 15 years, or the estimated useful life of the equipment.
At September 30, 1999, we had in excess of $11.1 million of capitalized UTX
construction costs. In addition, at September 30, 1999, we had outstanding
commitments of approximately $8.7 million with respect to UTX construction
services and approximately $28.5 million with respect to facility leases.
Our clients are communications service providers and transport suppliers,
such as Internet service providers, competitive local exchange carriers,
incumbent telecommunication service providers and other application and network
service providers. Our largest two clients represented an aggregate of
approximately 29% of total revenues for the year ended December 31, 1998. Our
largest client represented approximately 35% of total revenues for the nine
months ended September 30, 1999.
Cost of revenues consists primarily of amounts paid to transport suppliers
for circuits. We have negotiated volume discounts and network route-specific
discounts under contracts with the majority of our suppliers. These contracts
generally have terms ranging from three to ten years and include minimum monthly
purchase commitments. At September 30, 1999, these minimum purchase commitments
totaled approximately $500,000 per month. In addition, we are party to contracts
that will impose additional minimum purchase commitments totaling approximately
$750,000 per month beginning at various points in 2000.
Operations and administration costs consist primarily of salaries and
employee benefits, facilities expenses for our headquarters and sales offices,
and sales and marketing expenses. We did not open our first sales offices until
June 1999 at which time we began to significantly expand our sales and marketing
staff. As a result, we have not historically segregated sales and marketing
expenses from operations and administration expenses.
25
<PAGE> 28
In July 1999, we acquired substantially all of the assets of Pacific Crest
Networks in a transaction accounted for as a purchase. Intangible assets of
approximately $1.2 million were recorded in connection with the acquisition and
are amortized over five years. In addition, in November 1999, we acquired
substantially all of the assets of Stuff Software, Inc. Intangible assets of
$1.3 million will be recorded in connection with the acquisition and will be
amortized over five years.
In each quarter since our inception, we have incurred operating losses and
net losses and experienced negative cash flows from operations. At September 30,
1999, we had an accumulated deficit of $11.3 million.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999
REVENUES
Revenues increased from $730,000 for the nine months ended September 30,
1998 to $8.6 million for the nine months ended September 30, 1999. Substantially
all of our revenues consisted of circuit revenues in each of these periods. UTX
revenues represented less than 3% of revenues during these periods. The increase
in revenues was attributable to growth in the number of clients and to
additional sales to existing clients, resulting from increased sales and
marketing efforts.
COST OF REVENUES
Cost of revenues increased from $592,000 for the nine months ended
September 30, 1998 to $7.5 million for the nine months ended September 30, 1999.
As a percentage of revenues, cost of revenues increased from 81% for the nine
months ended September 30, 1998 to 87% for the nine months ended September 30,
1999. The increase in cost of revenues in absolute dollars was primarily
attributable to an increase in the number of circuits purchased from transport
suppliers. The increase in cost of revenues as a percentage of revenues was in
part attributable to the fact that we deliberately reduced our margins on
certain high capacity circuits in an effort to attract large clients, and in
part attributable to $350,000 of circuit charges incurred for circuits that are
yet to be sold to clients.
OPERATIONS AND ADMINISTRATION
Operations and administration expenses increased from $890,000 for the nine
months ended September 30, 1998 to $7.1 million for the nine months ended
September 30, 1999. The increase in operations and administration expenses was
primarily attributable to an increase in personnel and continued expansion of
our sales and marketing efforts. During the nine months ended September 30,
1999, we opened sales offices in Vienna, Virginia and San Jose, California. The
number of our employees increased from 11 at September 30, 1998 to 107 at
September 30, 1999. In addition, we increased our doubtful account expense from
$33,000 for the nine months ended September 30, 1998 to $784,000 for the nine
months ended September 30, 1999. Approximately one-half of the increase in
doubtful account expense related to one substantial client account, which
represented over four months of billings. We have revised our credit and
collection procedures so that service is now discontinued within two months of
non-payment. The remainder of this expense related to the creation of a general
reserve for doubtful accounts. We expect total operations and administration
expenses to continue to increase in absolute dollars as we continue to grow our
revenues, but expect that operations and administration expenses will ultimately
decrease as a percentage of revenues as we leverage our existing infrastructure.
At November 30, the number of our employees totaled 117.
DEPRECIATION
Depreciation expense includes depreciation of furniture, fixtures and
equipment at our office facilities and of equipment at our UTX facilities. We
expect depreciation expense to increase substantially in the future as we
continue to place our UTX facilities into service.
26
<PAGE> 29
STOCK OPTION PLAN COMPENSATION
During 1998, we recorded a total of $487,000 and during the nine months
ended September 30, 1999, we recorded a total of $1.4 million in deferred stock
option plan compensation as a result of granting options to employees and
non-employees with per share exercise prices deemed to be below the fair market
value of our common stock at the date of grant. Deferred stock option plan
compensation is amortized over the vesting period of the related options.
Amortization expense totaled $215,000 for the nine months ended September 30,
1999. We expect to recognize additional deferred stock option plan compensation
expense of approximately $1.6 million over the next four years, based upon
options outstanding at September 30, 1999.
In addition, during the nine months ended September 30, 1999 we recorded
$2.9 million of stock option plan compensation expense, related to loans issued
to three officers of the Company, in connection with exercise of stock options.
We expect to recognize an additional $1.9 million of stock option plan
compensation during the three months ended December 31, 1999, related to these
officer loans.
INTEREST EXPENSE AND INTEREST INCOME
Interest expense increased from $8,000 for the nine months ended September
30, 1998 to $19,000 for the nine months ended September 30, 1999. The increase
was attributable to additional borrowings under a term loan and line of credit
facility used for general working capital requirements and to fund capital
expenditures.
Interest income totaling $373,000 was generated during the nine months
ended September 30, 1999 by investing a portion of the proceeds from our Series
C and Series D preferred stock offerings in short-term money market instruments.
INCOME TAXES
From our inception through September 27, 1998, we elected to be treated as
a subchapter S-corporation for income tax purposes. On September 27, 1998, we
converted to a C-corporation. At December 31, 1998, we had approximately
$227,000 of federal and state net operating loss carryforwards, and we have
incurred additional losses for tax purposes through September 30, 1999. These
carryforwards may be available to offset future taxable income. Our federal and
state net operating loss carryforwards expire at various dates beginning in
2018. Due to the uncertainty that we will generate future earnings sufficient to
enable us to realize the benefit of these net operating loss carryforwards, we
have recorded a valuation allowance for the full amount of our deferred tax
asset. As a result, no income tax benefit has been recorded in our statement of
operations. We assess the realizability of our deferred tax asset on an ongoing
basis and adjust the valuation allowance based on this assessment. Additionally,
Section 382 of the Internal Revenue Code of 1986, as amended imposes annual
limitations on the use of net operating loss carryforwards if there is a change
in ownership, as defined, within any three year period. The utilization of
certain net operating loss carryforwards may be limited due to our capital stock
transactions.
PERIOD FROM INCEPTION TO DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31,
1998
REVENUES
We commenced operations on October 2, 1997. Revenues increased from $77,000
during the period ended December 31, 1997 to $1.6 million during the year ended
December 31, 1998. The increase in revenues was attributable to growth in the
number of our clients.
COST OF REVENUES
Cost of revenues increased from $66,000 for the period ended December
31,1997 to $1.3 million for the year ended December 31, 1998. As a percentage of
total revenues, cost of revenues
27
<PAGE> 30
decreased from 86% for the period ended December 31, 1997 to 77% for the year
ended December 31, 1998. The increase in cost of revenues in absolute dollars
was attributable to an increase in the number of circuits purchased. The
decrease in cost of revenues as a percentage of revenues was attributable to
volume discounts negotiated with our transport suppliers, reflecting higher
purchasing levels.
OPERATIONS AND ADMINISTRATION
Operations and administration expenses increased from $180,000 for the
period ended December 31, 1997 to $1.5 million for the year ended December 31,
1998. The increase was primarily attributable to growth in headcount and
expansion of our corporate headquarters. Our employee headcount increased from
five at December 31, 1997 to 20 at December 31, 1998.
STOCK OPTION PLAN COMPENSATION
During 1998, we recorded a total of $487,000 in deferred stock option plan
compensation as a result of granting options to employees with per share
exercise prices determined to be below the fair market value of our common stock
at the date of grant. Amortization expense totaled $25,000 for the year ended
December 31, 1998. In addition, during 1998, we recorded $40,000 of stock option
plan compensation in connection with options issued to non-employees in exchange
for services.
INTEREST EXPENSE AND INTEREST INCOME
Interest expense increased from $1,000 for the period ended December 31,
1997 to $27,000 for the year ended December 31, 1998. The increase was
attributable to additional borrowings from stockholders and under a term loan
used to fund our working capital needs.
OTHER EXPENSE
Other expense totaled $100,000 for the year ended December 31, 1998. The
amount related to a settlement paid upon termination of an executed letter of
intent to acquire a network access service provider.
SUMMARY QUARTERLY FINANCIAL DATA
The table below presents unaudited quarterly statement of operations data
for each of the last eight quarters through September 30, 1999. This information
has been derived from unaudited financial statements that have been prepared on
the same basis as the audited financial statements included elsewhere in this
prospectus and, in our opinion, includes all adjustments, consisting only of
normal recurring adjustments, that are necessary for a fair presentation of the
information.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1998 1998 1998 1998
------------ --------- -------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues...................... $ 77 $168 $ 227 $ 335 $ 899
----- ---- ----- ----- ------
Operating expenses:
Cost of revenues............ 66 125 194 273 664
Operations and
administration............ 180 135 274 481 626
Depreciation................ -- -- -- 1 46
Stock option plan
compensation.............. -- -- -- 46 19
----- ---- ----- ----- ------
Total operating
expenses................ 246 260 468 801 1,355
----- ---- ----- ----- ------
Operating loss................ $(169) $(92) $(241) $(466) $ (456)
===== ==== ===== ===== ======
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,
1999 1999 1999
--------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues...................... $1,531 $ 2,719 $ 4,333
------ ------- -------
Operating expenses:
Cost of revenues............ 1,285 2,316 3,876
Operations and
administration............ 1,175 2,470 3,499
Depreciation................ 25 28 237
Stock option plan
compensation.............. 28 108 2,949
------ ------- -------
Total operating
expenses................ 2,513 4,922 10,561
------ ------- -------
Operating loss................ $ (982) $(2,203) $(6,228)
====== ======= =======
</TABLE>
28
<PAGE> 31
Our future revenues and operating results may vary significantly from
quarter to quarter due to a number of factors, many of which we cannot control.
These factors include those described in "Risk Factors" included elsewhere in
this prospectus.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations primarily through private placements as
well as through borrowings from stockholders and financial institutions. Since
inception through September 30, 1999, we have raised $37.5 million in capital
through private placements of common and convertible preferred stock. Our
principal uses of cash are to fund operating losses, working capital
requirements and capital expenditures. At September 30, 1999, we had $21.7
million in cash and cash equivalents. Subsequent to September 30, 1999 we raised
an additional $28.3 million through private placements of convertible preferred
stock.
At November 30, 1999 we had repaid all outstanding borrowings owed to
stockholders and banks.
In March 1999, we entered into a credit agreement with a bank under which
we may request the bank to issue letters of credit or we may borrow up to a
total of $4.0 million. The agreement provides that outstanding borrowings bear
interest at the bank's prime rate and expires in April 2000. Letters of credit
totaling $1.7 million were outstanding under the agreement as of November 30,
1999.
In September 1999, we entered into a credit agreement with a bank under
which we may request the bank to issue letters of credit or we may borrow up to
a total of $6.0 million. The agreement expires in August 2000. Outstanding
borrowings under the agreement bear interest at rates ranging from the bank's
prime rate to the bank's prime rate plus 3% and are secured by substantially all
of our assets. The agreement requires that we maintain specified financial
ratios. Letters of credit totaling $411,000 were outstanding under the agreement
as of November 30, 1999.
In December 1999, we entered into a credit agreement with a bank to borrow
up to $3.3 million. Outstanding borrowings bear interest at approximately 15%
and are secured by specifically identified assets. The agreement expires in
November 2002 and requires that we maintain an unrestricted cash balance of at
least $15 million.
Net cash used in operating activities increased from $537,000 for the nine
months ended September 30, 1998 to $4.6 million for the nine months ended
September 30, 1999. The increase in net cash used was primarily due to increased
net losses and increased accounts receivable, partially offset by increased
accounts payable, accrued expenses and unearned revenue. We anticipate that we
will continue to require cash to support our future operating activities.
Net cash used in investing activities totaled $54,000 for the nine months
ended September 30, 1998 and related to purchases of property and equipment. Net
cash used in investing activities totaled $6.7 million for the nine months ended
September 30, 1999, and related to purchases of property and equipment, funds
advanced in exchange for notes receivable and the purchase of Pacific Crest
Networks. We expect to increase our investments in equipment in the near term
substantially as we increase our number of UTX facilities.
During the next fiscal year, we plan to spend at least $37 million on
capital expenditures, including approximately $19 million on the construction of
four UTX facilities.
Net cash provided by financing activities increased from $1.4 million for
the nine months ended September 30, 1998 to $32.2 million for the nine months
ended September 30, 1999. The increase was primarily due to the receipt of
proceeds from the issuance of convertible preferred stock. Pending their use, we
invested these proceeds primarily in marketable securities, with an original
maturity of not greater than six months. We intend to continue investing surplus
cash in similar securities.
In July 1999, we acquired substantially all of the assets of Pacific Crest
Networks for $1.1 million in cash and the assumption of debt, and 82,353 shares
of Series D convertible preferred stock. In
29
<PAGE> 32
October 1999, we acquired substantially all of the assets of Stuff Software,
Inc. for $930,000 in cash and 50,021 shares of common stock. The cash portion of
these purchases was funded with proceeds from the issuance of convertible
preferred stock.
Our future capital requirements will depend on a number of factors,
including market acceptance of our services, the resources we devote to
developing, selling and marketing our services and the rate at which we expand
our UTX facilities. In addition, we plan to continue to evaluate possible
investments in complementary businesses, products and technologies. Although we
believe that the net proceeds from this offering, together with existing cash
balances, will be sufficient to fund our operations for at least the next twelve
months, we may require additional financing within this time frame. Additional
funding may not be available on terms acceptable to us, or at all.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
We maintain our cash equivalents and short-term investments primarily in a
portfolio comprised of commercial paper, money market funds and investment grade
debt securities. As of September 30, 1999, all of our investments had maturities
of less than six months. Accordingly, we do not believe that our investments
have significant exposure to interest rate risk.
EXCHANGE RATE SENSITIVITY
We operate primarily in the United States, and all our revenues and
expenses to date have been in US dollars. Accordingly, we have had no material
exposure to foreign currency rate fluctuations.
YEAR 2000
IMPACT OF THE YEAR 2000 COMPUTER PROBLEM
The year 2000 computer problem refers to the potential for system and
processing failures of date-related data as a result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date represented as "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
STATE OF READINESS
We are actively engaged in addressing year 2000 issues and have implemented
a program to assess the year 2000 readiness of our hardware, software,
facilities and operating systems. Our year 2000 assessment program includes:
- identifying all items to be assessed for year 2000 readiness;
- assessing the readiness of each item;
- validating year 2000 compliance with external suppliers; and
- where appropriate, testing year 2000 compliance and implementing
corrective actions.
We have completed our assessment of our year 2000 readiness and our
inventory and testing of certain internal systems. We are currently requesting
confirmation of year 2000 compliance from our suppliers.
Based upon our year 2000 assessment, we do not believe that we have any
significant systems that are not year 2000 compliant. We have represented to
some of our customers that our computer systems will continue to process date
data into and between the years 1999 and 2000 including leap year calculations.
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The applications for our UIX databases were developed internally within the
last two years using year 2000 compliant equipment, operating systems and
software development tools. We developed these databases and systems to be year
2000 compliant. We have obtained assurances from third parties or internally
verified that the systems and equipment in our UTX facilities are year 2000
compliant.
We have used commercially available software to verify that our internally
used hardware and software, including applications used for accounting, order
entry and invoicing are year 2000 compliant.
COST
Based on our assessments to date we believe that we will be able to manage
our year 2000 transition without any material adverse effect on our business or
results of operations. To date our costs of assessing our year 2000 readiness
have not been material.
RISKS
We believe that our most significant year 2000 risk is that third parties,
such as transport suppliers and utility providers, do not fully address their
year 2000 issues.
Failure of our transport suppliers to adequately address their year 2000
issues could result in circuit outages. We generally provide outage credits to
our clients if circuit disruptions occur. A high circuit failure rate may result
in lost revenues and lost customers and may divert resources from the expansion
of our services and adversely affect our business and results of operations.
Failure of our internal systems to be ready for year 2000 could delay order
processing, provisioning of circuits and issuing invoices.
CONTINGENCY PLAN
We will continue to assess our year 2000 issues. We have developed a
contingency plan in the event our efforts to identify year 2000 problems are not
effective. This plan includes:
- temporary relocation of head office functions;
- using contract personnel to correct any problems;
- using alternative sources of transport capacity; and
- increasing work hours for our personnel.
Based upon our evaluation of these issues, we believe that year 2000 issues
will not have a material impact on our financial condition or results of
operation. However, we cannot assure you that we will not be affected by such
issues. In addition, if any significant transport supplier, utility provider or
other third party with whom we deal fails to ensure year 2000 compliance, our
financial condition or results of operations could suffer.
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BUSINESS
OVERVIEW
We are a web-enabled, business-to-business intermediary that facilitates
the provisioning, installation and servicing of dedicated point-to-point
communications links, commonly known as circuits, for service providers who buy
network capacity, and transport suppliers who sell network capacity. We
aggregate network information, operate facilities where communications networks
can be physically interconnectioned, provide ongoing dedicated circuit access
and offer client support services. Through these services, we provide our
clients with an outsourced, integrated solution to the challenges they face
within a fragmented network services market.
As an independent intermediary, we have been able to collect and aggregate
network information from multiple transport suppliers. Our UIX consists of
several proprietary, interconnected databases containing pricing, capacity,
availability, location and interconnection information, currently from over 35
transport suppliers and more than 75,000 physical sites. Our UIX enables us to
efficiently and cost-effectively facilitate the design, provisioning,
installation and maintenance of circuits across multiple vendor networks for our
clients. Our UTX facilities are physical sites where transport capacity
suppliers and our clients lease space to locate communications equipment and
interconnect with the networks of transport suppliers. Our UTX facilities enable
our clients to more easily extend the geographic reach of their networks through
interconnection. We also provide a single point of contact for network
management services, including network monitoring, maintenance and restoration.
By aggregating network information, managing physical network
interconnections and providing dedicated support services, we intend to improve
the overall efficiency of the network infrastructure services market and,
ultimately, create the foundation for a ubiquitous communications network.
INDUSTRY BACKGROUND
MARKET OPPORTUNITY
The Internet is emerging as a global medium for communications and
commerce. According to International Data Corporation (IDC), the number of
Internet users will grow from 142 million at the end of 1998 to 502 million by
2003. Businesses in particular are becoming increasingly dependent on Internet
enabled applications to facilitate transactions and are using the Internet for a
variety of activities, including disseminating corporate information,
advertising, sales, customer service, training and communications with business
partners. Forrester Research estimates that U.S. business trade on the Internet
will grow from $43 billion in 1998 to $1.3 trillion in 2003.
The growth in Internet usage, and in particular the adoption and use of the
Internet by businesses, has created substantial global demand for additional
network infrastructure and underlying transport capacity. We believe that the
increased reliance by businesses on data-intensive applications, including data
communications, electronic commerce, video and graphics, will continue to
support this trend. In addition, we believe that the resulting demand for
network capacity to transport data will accelerate as service providers
increasingly offer high speed data access to businesses.
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According to the Yankee Group, the U.S. market for Internet transport
capacity and network infrastructure services will total $56.8 billion by 2002.
Network infrastructure services include network access, circuit provisioning and
installation and network monitoring. Service providers currently rely on
multiple transport suppliers who focus on any one or a combination of
geographically dispersed network segments, including long-haul, local loop,
cross connect and riser, to obtain these services. The ability of a service
provider to obtain point-to-point dedicated circuits and infrastructure services
quickly and efficiently across multiple geographically dispersed network
segments is becoming increasingly difficult as the number of transport suppliers
increases.
"Transport supplier" refers to an entity which supplies circuit capacity on a
physical communications network infrastructure over which information is
transmitted.
"Long haul" refers to network connections between cities or metropolitan areas.
"Local loop" refers to network connections within a city or a metropolitan area.
"Cross connect" refers to a physical connection between two network points
within the same facility.
"Riser" refers to a vertical or horizontal conduit within a building which
connects tenants with transport and network service providers located within the
building.
"Provisioning" refers to the act of supplying communications circuits to users.
FRAGMENTED MARKET
The market for transport capacity and infrastructure services is complex,
competitive and fragmented due to the growth in the number of transport
suppliers and service providers. This growth is attributed to the deregulation
of the telecommunications industry beginning with the 1984 divestiture of AT&T
and continuing with the Telecommunications Act of 1996. The Telecommunications
Act of 1996 has spawned a rapid increase in the number of transport suppliers
and service providers, including competitive local exchange carriers or CLECs,
interexchange carriers or IXCs, Internet service providers or ISPs, application
service providers or ASPs, cable operators and public utility companies. Similar
deregulation is occurring in international markets. The increase in the number
of transport suppliers and service providers competing in and across different
geographically dispersed network segments has impeded the development of
seamless communications networks.
A "competitive local exchange carrier" or "CLEC" is a communications company
authorized by local regulatory authorities to offer competing local
communication services within an incumbent telecommunication supplier's
territory.
An "interexchange carrier" or "IXC" is a communications company that offers
service between local service areas in different geographic areas.
An "application service provider" or "ASP" is a company that offers individuals
or enterprises access over the Internet to application programs and related
services that would otherwise have to be located in their own personal or
enterprise computers.
With the growth in Internet communications and commerce and the
increasingly competitive market for transport capacity and infrastructure
services, new entrants and incumbent transport suppliers have employed a variety
of business strategies to compete. These strategies include building or
acquiring additional network infrastructure, entering into interconnection
agreements, reselling or exchanging network capacity and offering new services.
As a result, multiple networks have developed serving various geographic regions
and focusing on different network segments. In this competitive, multiple vendor
landscape, we believe that to date, transport suppliers have not
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been able to effectively support point-to-point circuit connections on their own
networks, or through efficient interconnection with other suppliers, to fully
meet their customers' requirements.
Compounding the problems associated with a fragmented, multiple-vendor
landscape, transport suppliers and service providers have placed a higher
priority on obtaining customers to build market share rather than on
interconnecting their independently built networks. In addition, network
connectivity continues to be hindered by the fact that transport suppliers and
service providers do not have access to pricing, capacity, availability, and
location information for the networks of other suppliers. Because transport
suppliers compete with each other, they have little incentive to share this
information or to locate their equipment within competitors' facilities in order
to connect their networks.
CHALLENGES FOR SERVICE PROVIDERS
This fragmented market environment causes a number of challenges for
telecommunications service providers, ISPs, ASPs and other buyers of capacity,
including:
- significant time and expense related to quoting, provisioning and
installing circuits across multiple vendor networks;
- lack of information about vendor networks, making it difficult to
determine the availability of capacity in a timely manner, and which may
result in significant backlog of customer orders, lost revenues and
possibly lost customers; and
- inability to maintain, monitor and restore connections across multiple
vendor networks.
CHALLENGES FOR TRANSPORT SUPPLIERS
This fragmented market environment also causes a number of challenges for
IXC, local loop, and other transport suppliers, including:
- inability to efficiently fulfill customer demand for point-to-point
dedicated circuits due to the limited reach of their networks and limited
interconnections with other carrier networks;
- costs associated with selling excess network capacity on existing routes
to multiple buyers; and
- inability to provide a consistent level of service due to the lack of
information about and control over network segments in a multiple vendor
landscape.
OUR SOLUTION
Our integrated solution addresses these challenges and provides the
following key advantages:
OUTSOURCED SOLUTION. We provide clients with a single point of contact for
provisioning, installation and network management services. Our outsourced
solution provides significant time, effort and cost savings to our clients who
would otherwise be forced to independently analyze the capacity, availability
and pricing of circuits from multiple vendors to construct and maintain
circuits.
EFFICIENT, COST EFFECTIVE CIRCUIT PROVISIONING AND INSTALLATION ACROSS
MULTIPLE VENDOR NETWORKS. We provide buyers of transport capacity efficient and
cost-effective circuit provisioning and installation across multiple vendor
networks. As an independent intermediary, we have been able to collect and
aggregate network information from multiple transport suppliers. By leveraging
this information, which is contained in our UIX databases, we are able to
provide our clients point-to-point solutions across geographically dispersed
network segments efficiently and cost effectively.
EASILY EXTENDED NETWORK REACH. Transport suppliers are able to easily
extend the reach of their networks by purchasing access to dedicated,
point-to-point circuits from us. We provide clients a single point of contact
from which to access the networks of over 35 transport suppliers. In addition,
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by locating in our UTX facilities, we believe that transport suppliers can
access these networks faster and more cost-effectively, utilizing a cross
connect circuit connection within our UTX facility rather than a local loop
connection. With access to a greater number of circuit routes, our clients are
better positioned to offer a broader range of point-to-point options to their
customers. We currently have two operational UTX facilities in two cities in the
United States and are in the process of constructing five additional sites.
ONGOING CLIENT SUPPORT. Our approach to client support involves developing
an understanding of our clients' business objectives, competitive environment,
market initiatives and service needs by maintaining close contact with our
clients through our Client Advocacy Services group. This group places highly
trained technical personnel in the field that are responsible for understanding
and rapidly responding to our clients' needs. Client Advocacy Services personnel
provide technical and administrative support during the planning, ordering,
provisioning and installation processes and are available for ongoing
consultation.
NETWORK MANAGEMENT SERVICES. Through our network management service
organization, we provide a single point of contact for 24-hour-a-day,
seven-day-a-week network monitoring, maintenance and restoration across multiple
vendor networks. Our organization interfaces with the network management
organizations of our transport suppliers, which enables us to identify and
isolate circuit outages and facilitate their restoration throughout each segment
of a point-to-point circuit. Without these services a client would have to
contact multiple vendors to determine the source of a circuit outage and to
restore the circuit. Currently we provide these services in conjunction with an
outsourcing arrangement with a third party until our own facility becomes
operational.
SIGNIFICANT SOURCE OF DEMAND FOR TRANSPORT SUPPLIERS. Through our UIX
databases, we are able to match our clients' demand with the available capacity
of transport suppliers. We represent a significant source of demand for
transport suppliers because we purchase a large volume of circuits. We believe
our transport suppliers consider us to be a valuable partner because we provide
them efficient access to the capacity requirements of our clients. We believe
that by working with us, transport suppliers can reduce their costs associated
with selling excess network capacity on existing routes to multiple buyers.
OUR STRATEGY
Our objective is to facilitate the creation of a ubiquitous, global
communications network by improving the overall efficiency of the market for
transport capacity and infrastructure services. To achieve this objective, we
intend to:
CONTINUE TO ENHANCE INTERNET FUNCTIONALITY OF OUR UIX. We are currently
developing the infrastructure to provide an enhanced, web-based interface that
will enable our clients to obtain quotes, order circuits and receive dedicated
monitoring and support services, all in real time. We believe these Internet
initiatives will enhance the efficiency and reliability of our web-based
services and will enable us to offer a more complete, e-commerce solution to our
clients.
CONTINUE TO EXPAND AND POPULATE OUR UIX DATABASES. We plan to continue to
gather data elements from our existing transport suppliers, including
information about pricing, capacity, availability, location and interconnection
information and other network elements for inclusion in our UIX databases. We
also plan to add information to our UIX on the networks of domestic and
international transport suppliers from whom we do not currently gather
information. We believe that our UIX databases provide us with a competitive
advantage and will become more difficult for a competitor to replicate as we
enhance the data and functionality of our UIX over time.
CONTINUE TO DEVELOP UTX FACILITIES. We plan to continue to construct
additional UTX facilities in strategic locations within North America, Europe,
Asia and South America. In addition, we intend to construct UTX facilities that
are designed to meet the specific service requirements of major metropolitan
areas, regional sites and high occupancy buildings. We believe these facilities
will
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provide our clients a convenient and cost-effective method to interconnect with
multiple service providers and transport suppliers. We also believe that our UTX
facilities represent a platform for offering new services to our clients and
transport suppliers alike. For example, once a transport supplier places its
network in our UTX facility, the supplier may utilize our UTX services to
interconnect with other suppliers in that UTX facility to extend the geographic
reach of its network.
AGGREGATE NETWORK DEMAND. We intend to aggregate discrete circuits between
network access points in order to optimize circuit configurations and realize
network and economic efficiencies. We will use the information available in our
UIX and the extensive connections in our UTX facilities to enable this
aggregation.
EXPAND INTERNATIONALLY. A number of international markets, such as Europe,
Asia and South America, have experienced deregulation similar to that in North
America and are therefore experiencing problems associated with fragmentation of
the transport capacity market. We plan to offer our UIX, UTX and client support
services in international markets. We believe we can leverage our experience in
the U.S. market to achieve a competitive advantage by being one of the first to
address the network capacity constraints currently developing in international
markets. Given the high rates of interconnection between our clients and
emerging European suppliers, we believe that Europe represents our most
compelling international opportunity at this time.
ENHANCE CAPABILITIES THROUGH ACQUISITIONS AND PARTNERSHIPS. We plan to
continue to acquire complementary businesses or technologies and to enter into
strategic partnerships. For example, in 1999 we completed two acquisitions to
expand and enhance the capabilities of our UIX databases.
SERVICES
We offer our clients an integrated solution utilizing our UIX databases,
our UTX facilities and our client support services.
UNIVERSAL INFORMATION EXCHANGE (UIX)
Our web-based UIX consists of several proprietary, interconnected databases
containing capacity, availability, physical location and pricing information
from over 35 transport suppliers and more than 75,000 physical sites. The UIX
databases contain over 3.3 million data elements. We expect this number will
grow as we continue to add information to our UIX about the networks of new
transport suppliers. By utilizing our UIX we are able to provide our clients
with a single point of contact for the provisioning and installation of circuits
from multiple vendors, as well as circuit access and network monitoring. We
believe our UIX enables us to provide these services more efficiently and cost-
effectively than traditional transport suppliers.
We utilize our UIX to offer our clients a comprehensive range of services
including:
QUOTING. Our quoting system is a web-based system that enables clients to
request and receive quotes for circuit configuration, provisioning and
installation. We are generally able to provide a basic quote within 24 hours of
our clients' request.
ORDER PROCESSING. Clients can place orders online by directly entering
information about their desired circuit, including capacity requirement,
physical location, contract terms, technical specifications and special
instructions.
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PROVISIONING AND INSTALLATION. Our UIX contains information on the
provisioning and installation processes of over 35 transport suppliers. By using
this information we are able to work with the provisioning personnel and field
technicians of multiple vendors to provide dedicated, point-to-point circuits to
our clients. As part of our provisioning and installation service we provide our
clients with a graphical design layout record showing critical network points
and a weekly status update.
[In this space we will insert a diagram depicting representative circuit
segments (local loop, long haul, local loop) that could create a single
end-to-end circuit between end customers in New York City and San Francisco.]
CIRCUIT ACCESS. We provide our clients with ongoing dedicated circuit
access over the networks of multiple vendors through long term contracts, with
terms typically ranging from 12 to 60 months. Our clients remit payment to us
for this ongoing circuit access on a monthly recurring basis for the life of the
contract.
A circuit can be delivered at different speeds and capacities. We currently
are able to provide our clients circuit access at data rates ranging from DS-1
circuits carrying data at a rate of 1.536 million bits per second to OC-192
circuits carrying data at a rate of 192 OC-1 signals or 9.952 billion bits per
second.
BILLING. We compile the costs of multiple vendor circuit segments and
present our clients with a single monthly invoice containing a single line item
for each service. This eliminates the need for our clients to process multiple
vendor bills and reduces our clients' processing time and costs.
NETWORK MANAGEMENT SERVICES. We provide 24-hour-a-day, seven-day-a-week
network management services, offering a single point of contact for network
monitoring, maintenance and restoration across multiple vendor networks. Through
this single point of contact, we generate one client reference record of a
problem, which we use to provide network management across multiple vendor
networks and to provide our clients with reporting and trouble resolution. This
single client reference record increases response time and decreases down time
in a circuit outage.
Our organization interacts with the network management organizations of our
transport suppliers, enabling us to identify and isolate circuit outages and to
facilitate their restoration throughout each segment of a circuit. Without these
services a client would have to contact multiple vendors to determine the source
of a circuit outage and to restore the circuit. Currently, our network
management services are partially outsourced through a third party until our own
facility becomes operational.
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<TABLE>
<S> <C>
UNIVERSAL TRANSPORT EXCHANGE (UTX) ---------------------------------------------
Our UTX facilities provide A "local exchange carrier" (LEC) is a public
interconnection points between multiple telephone company in the U.S. that provides
network service providers and transport local service.
suppliers. Network service providers and An "incumbent local exchange carrier"
transport suppliers lease space in our (ILEC) is one of the telephone companies,
facilities to place network equipment that including the regional Bell operating
may be connected to other network service companies, that were the dominant providers
providers and transport suppliers in the of local telecommunications services prior
facility. Our UTX facilities may range in to the Telecommunications Act of 1996.
size from 500 square feet to 10,000 square
feet. -----------------------------------------
Our facilities do not depend on any
particular technology and are open to
multiple competing network service providers
and transport suppliers,
</TABLE>
such as local exchange carriers, interexchange carriers, competitive local
exchange carriers, ISPs and ASPs. We are not aligned with or reliant upon any
single or group of transport suppliers. We believe that our UTX clients are
attracted to our neutral position, which both alleviates their competitive
concerns and provides them a broader range of solutions.
As of November 30, 1999 we had operational UTX facilities in Chicago and
Santa Clara, and UTX facilities under construction in Dallas, Los Angeles,
Miami, San Francisco and Washington, D.C.
Our UTX facilities are integrated with our UIX databases. Our UTX
facilities enable us to obtain additional information regarding available
network capacity and points of access that is entered into our UIX databases.
This additional information enables us to use our UIX databases to provide more
efficient circuit provisioning and network monitoring services for our clients.
CLIENT SUPPORT SERVICES
CLIENT ADVOCACY SERVICES. We provide high quality client support services
through our Client Advocacy Services organization. Our Client Advocacy Services
personnel are highly trained field representatives with extensive knowledge of
our services and an understanding of our client's business objectives. These
representatives team with both our sales and provisioning organizations to meet
client service expectations, and also provide technical assistance and field
support during circuit testing and installation.
CARRIER DEVELOPMENT SERVICES. Our development services personnel are
responsible for managing our relationships with our existing transport suppliers
and for identifying new relationships.
SALES AND MARKETING
Our sales and marketing efforts are focused on achieving broad market
penetration and increasing brand name recognition. Our sales efforts target
ISPs, telecommunications service providers and ASPs that we believe have the
greatest need for transport capacity and infrastructure services.
SALES
We have developed a two-tiered sales strategy which is designed to (a)
target new accounts through our direct sales representatives and (b) identify
opportunities for additional sales to our existing client base through our
account managers. As of November 30, 1999 our sales staff consisted of 17 direct
sales representatives, including six account managers in 12 sales offices in the
United States, including offices in California, Virginia, New York and Illinois.
The direct sales force is divided into two geographic regions in the United
States and is supervised by regional directors, each of whom has responsibility
for all sales functions in his geographic region. The account management group
is supervised by a director and targets larger clients, based on recurring
monthly revenue.
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We have developed programs to attract and retain a highly skilled,
motivated sales staff that possesses the necessary technical skills,
consultative sales experience and knowledge of its assigned territory markets.
These programs include technical and sales process training and instruction in
consultative selling techniques. Our sales representatives and account managers
are compensated through a combination of base salary and performance-based
bonuses.
MARKETING
We intend to use a variety of marketing programs and media to raise
awareness of our services and solutions and to generate sales leads and
opportunities, including:
- advertising in magazines and trade journals;
- participating in trade shows; and
- public relations campaigns.
We intend to increase marketing expenditures in future periods in an effort
to stimulate demand for our services and build brand awareness.
CLIENTS
As of September 30, 1999, we had more than 75 clients, including ISPs,
CLECs, ILECs and ASPs. For the nine months ended September 30, 1999, AboveNet
Communications (MFN) accounted for 35% of our revenues. For the year ended
December 31, 1998, Carmen Associates accounted for approximately 16% of our
revenues and GTE Internetworking accounted for approximately 13% of our
revenues. The following is a list of all of our clients accounting for over 1%
of our monthly recurring revenues generated under client contracts as of
September 30, 1999:
AboveNet Communications (MFN)
AIT/PrePay Worldwide
Atlas Communications
BCE Nexxia
Business Technology Services
Computer Enhancement Technologies
Corecom, a division of NTL
Fiber Network Solutions
GTE Internetworking
IDT
Internet 1st
InterXchange
Kivex
Teleglobe Communications
COMPETITION
The market for the services we provide is highly fragmented. We believe
that at this time no single competitor competes directly with us with respect to
all of the services we offer. However, we currently or potentially compete with
a variety of companies with respect to our services on an individual basis.
There are few substantial barriers to entry into our market, and we expect that
we will face additional competition from existing and new global entrants in the
future. We believe that any entrant in this market must grow rapidly and achieve
a significant presence in the market in order to compete effectively. We believe
that the principal competitive factors in this market include:
- the ability to access information regarding multiple vendor networks;
- the ability to provide connections to networks of multiple vendors;
- the ability to provide comprehensive network management services
including troubleshooting and circuit restoration across multiple network
environments;
- the ability to secure strategic relationships with carriers and clients;
- the ability to provide a high level of ongoing client service and
support;
- the ability to locate interconnection facilities in strategic locations;
and
- brand recognition.
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We might not have the resources or expertise to compete successfully in the
future. For additional information on the competitive risks that we face, you
should read the section entitled "Risk Factors -- Competition in our industry is
intense and growing, and we may be unable to compete effectively".
INTELLECTUAL PROPERTY RIGHTS
We rely on a combination of copyright, trademark, service mark and trade
secret laws and contractual restrictions to establish and protect proprietary
rights in our intellectual property. We have no patented technology that would
preclude or inhibit competitors from entering our market. We have no federally
registered trademarks or service marks, although we have applied for
registration of certain of our service marks. Even if registration is granted,
we may be limited in the scope of services for which we may exclusively use our
service marks. We enter into confidentiality agreements with our employees,
consultants and partners, and we control access to, and distribution of, our
proprietary information. Our intellectual property may be misappropriated or a
third party may independently develop similar intellectual property. Moreover,
the laws of certain foreign countries may not protect our intellectual property
rights to the same extent as do the laws of the United States. Unauthorized use
of any of our proprietary information could seriously harm our business.
GOVERNMENT REGULATION
We plan to offer communications common carrier services that will be
subject to regulation by federal, state and local government agencies. Most data
and Internet services are not subject to regulation, although communications
services used for access to the Internet are regulated. We have obtained certain
federal and state regulatory authorizations for our regulated service offerings,
and are in the process of applying for additional authorizations.
The FCC will exercise jurisdiction over our facilities and services to the
extent those facilities are used to provide, originate or terminate interstate
domestic or international common carrier communications. State regulatory
commissions will have jurisdiction over our services to the extent they are used
to originate or terminate intrastate common carrier communications.
Municipalities and other local government agencies may require carriers to
obtain licenses or franchises regulating use of public rights-of-way to install
and operate their networks. Many of the regulations issued by these regulatory
bodies may change and are the subject of various judicial proceedings,
legislative hearings and administrative proposals. In addition, federal, state
and local authorities may seek to tax the services which we provide, which could
impair the profitability of our business. We cannot predict the results of any
changes.
As we expand our business to other countries, we will become subject to
similar regulatory issues in each country in which we do business. Although the
trend in regulation globally is towards less regulation of competitive
telecommunications markets, regulations in particular countries may limit our
service offerings or our ability to compete effectively.
FEDERAL REGULATION
The FCC regulates us as a non-dominant communications common carrier. The
FCC's generally applicable regulations permit us to provide interstate domestic
common carrier services without any further authorization, and we also have
received authority from the FCC to provide international services between the
United States and foreign countries. Our interstate domestic and international
services are not subject to significant federal regulation, although we are
required to file schedules of our prices, terms, and conditions, or tariffs with
the FCC for our telecommunications services, and to pay regulatory fees and
assessments based on our interstate and international telecommunications
revenues. The FCC has the authority to condition, modify, cancel, terminate or
revoke our licenses and authorizations for failure to comply with federal laws
or the rules, regulations and policies of the FCC. The FCC may also impose fines
or other penalties for violations. The FCC also imposes prior
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approval requirements on transfers of control and assignments of authorizations.
While we believe we are in compliance with applicable laws and regulations, we
cannot assure you that the FCC or third parties will not raise issues with
regard to our compliance.
INTERNATIONAL SERVICES. The FCC has adopted rules for a multi-year
transition to lower international settlements payments by U.S. common carriers.
We believe that these rules are likely to lead to lower rates for certain
international services and increased demand for these services, including
capacity on the U.S. facilities that provide these services.
LOCAL COMPETITION RULES
The FCC's role with respect to local telephone competition arises
principally from the Telecommunications Act of 1996. This Act preempts state and
local laws to the extent that they prevent competitive entry into the provision
of any telecommunications service and gives the FCC jurisdiction over important
issues related to local competition.
Incumbent local exchange carriers, such as the regional Bell operating
companies and affiliates of GTE and Sprint, are required to negotiate in good
faith with competing carriers on rates, terms and conditions for
interconnection, access to unbundled elements, resale, and other duties imposed
by the Telecommunications Act. The Telecommunications Act provides procedures
and timetables for negotiation, arbitration and approval of interconnection
agreements. Arbitration decisions involving interconnection arrangements in
several states have been challenged and appealed to Federal courts. We may
experience difficulty in obtaining timely implementation of local
interconnection agreements, and we can provide no assurance we will offer local
services in these areas in accordance with our projected schedule, if at all.
The duties imposed on ILECs by the Telecommunications Act of 1996 include
the following:
INTERCONNECTION. ILECs are required to provide interconnection for
competing local telecommunications carriers at any technically feasible point,
on rates, terms and conditions that are just, reasonable and nondiscriminatory.
ACCESS TO UNBUNDLED ELEMENTS. ILECs are required to provide access to
network elements on an unbundled basis at any technically feasible point, on
rates, terms, and conditions that are just, reasonable, and nondiscriminatory.
On November 5, 1999, the FCC, in response to a recent U.S. Supreme Court
decision, released an Order revising its rules on the network elements that
incumbents must make available, particularly those used in the provision of
advanced services. Among other things, this Order confirms that dedicated
transport, including dark fiber, is among the network elements that ILECs must
provide on a unbundled basis. While we do not believe that these revisions will
have significant impact on our business, other parties may request an appeal of
this Order, which will create continued uncertainty.
COLLOCATION. ILECs are required to provide physical collocation of
equipment necessary for interconnection or access to unbundled network elements
at the ILEC's premises, except that the ILEC may provide virtual collocation, if
it demonstrates to the state regulatory commission that physical collocation is
not practical for technical reasons, or because of space limitations. On March
18, 1999, the FCC adopted measures designed to facilitate a competitor's ability
to access ILEC collocation space, including a requirement that ILECs make new
collocation arrangements, for example, shared collocation and cageless
collocation, available to competing carriers and a requirement that competitors
be able to locate all equipment necessary for interconnection, among other
things.
TRANSPORT AND TERMINATION CHARGES. ILECs and CLECs must enter into
reciprocal arrangements for transport and termination of local telephone calls.
State regulatory commissions, during arbitrations, should set symmetrical prices
for these services based on forward-looking economic costs, using the Total
Element Long Run Incremental Cost, or TELRIC, methodology.
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<PAGE> 44
PRICING METHODOLOGIES. State commissions are required to set arbitrated
rates for interconnection and unbundled elements based on the ILEC's TELRIC,
plus a reasonable share of forward-looking joint and common costs.
RESALE. State commissions are required to identify which marketing,
billing, collection, and other costs will be avoided, or that are avoidable, by
ILECs when they provide services on a wholesale basis and to calculate the
portion of the retail rates for those services that is attributable to the
avoided and avoidable costs.
ACCESS TO RIGHTS-OF-WAY. Telecommunications carriers and utilities are
required to provide nondiscriminatory access to their poles, ducts, conduits,
and rights-of-way.
The Telecommunications Act of 1996 also eliminates previous prohibitions on
the provision of long distance services by the regional Bell operating companies
and GTE's telephone operating company subsidiaries. These companies are now
generally permitted to compete in providing long distance services, except that
the regional Bell operating companies will not be allowed to provide long
distance service within the regions in which they also provide local exchange
service, known as "in-region service," until they receive specific approval of
the FCC on a state-by-state basis, based on satisfying several conditions,
including a checklist of requirements intended to open local telephone markets
to competition.
The FCC has not yet found that any regional Bell operating company has met
these requirements, although an application by Bell Atlantic to provide long
distance service in New York state is currently pending before it. If the FCC
does permit regional Bell operating companies to provide long distance service
in their local service regions before they meet our local interconnection needs,
they would be able to offer integrated local and long distance services and
could have a significant competitive advantage in marketing those services to
their existing local clients.
ILEC PRICING FLEXIBILITY
In an Order issued in August 1999, the FCC granted the major local exchange
carriers increased pricing flexibility upon demonstration of increased
competition (or potential competition) in relevant markets. That process will
give ILECs progressively greater flexibility in setting rates as competition
develops, gradually replacing regulation with competition as the primary means
of setting prices. This ruling will permit the ILECs to charge different rates
for the same service in different geographic markets, and in some cases to
negotiate customer-specific price terms. Although currently under appeal at the
FCC and the District of Columbia Circuit Court, this FCC decision is likely to
have a significant impact on the interstate access prices charged by the ILECs
with which we compete, and hence on our operations, expenses, pricing and
revenue. The ILECs' prices for these services will affect us both directly, as a
customer buying services from the ILECs for resale to our customers, and
indirectly, as a competitor.
UNIVERSAL SERVICE REFORM
On May 8, 1997, the FCC issued an order to implement the provisions of the
Telecommunications Act relating to the preservation of advancement of universal
telephone service. All telecommunications carriers providing interstate
telecommunications services, including us, must contribute to the universal
service support fund. These contributions became due beginning in 1998 for all
providers of interstate telecommunications services. Contributions are assessed
based on interstate and international end user telecommunications. Contribution
factors vary quarterly and carriers, including us, are billed monthly.
STATE REGULATION
We will offer intrastate common carrier services and are subject to various
state laws and regulations. Most public utility commissions require some form of
certification or registration. We must
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<PAGE> 45
acquire such authority before commencing service. In most states, we are also
required to file tariffs or price lists setting forth the terms, conditions and
prices for services that are classified as intrastate. We are required to update
or amend these tariffs when we adjust our rates or add new products and are
subject to various other regulatory requirements, including payment of fees and
filing of reports, in these states.
Many states also require prior approval for transfers of control of
certified carriers, corporate reorganizations, acquisitions of
telecommunications operations, assignment of carrier assets, carrier stock
offerings and incurrence of significant debt obligations. Some states treat the
transfer of only 10% of the voting stock of a regulated company, or its parent
company, as a transfer of control that requires prior approval. The need to
obtain these approvals may delay, and therefore may affect the terms of, major
financing transactions in the future.
States generally retain the right to sanction a carrier or to revoke
certification if a carrier violates relevant laws or regulations. If any state
regulatory agency were to conclude that we are or were providing intrastate
services without the appropriate authority, the agency could initiate
enforcement actions, which could include the imposition of fines, a requirement
to disgorge revenues, or the refusal to grant the regulatory authority necessary
for the future provision of intrastate communications services.
We have applications pending to provide resold and network-based
competitive local exchange and interexchange services in many states and plan to
submit applications nationwide by the end of the year. We cannot be sure that we
will receive the authorizations we seek currently or in the future.
LOCAL GOVERNMENT AUTHORIZATIONS
In some municipalities, we may be required to pay license or franchise fees
based on a percentage of gross revenue, as well as post performance bonds or
letters of credit. In many markets, the incumbent providers do not pay these
franchise fees or pay fees that are substantially less than those that we will
be required to pay. To the extent that competitors do not pay the same level of
fees as we do, we could be at a competitive disadvantage.
At present, we have no plans to construct transmission facilities (such as
fiber optic lines) in public rights-of-way, but if we do so in the future we may
become subject to more extensive local government regulations.
INTERNATIONAL REGULATION
In some countries where we plan to operate, local laws or regulations limit
or require prior government approval for the provision of international
telecommunications service in competition with authorized carriers. For example,
our provision of services over facilities using our own network or by purchasing
minutes from other carriers for resale to our customers may be affected by
increased regulatory requirements in a foreign jurisdiction. Also, local laws
and regulations differ significantly among the jurisdictions in which we operate
or plan to operate, and, within such jurisdictions, the interpretation and
enforcement of these laws and regulations can be unpredictable. We cannot be
sure that future regulatory, judicial, legislative or political changes will
permit us to offer to residents of these countries all or any of its services or
will not have a material adverse effect on us. In addition, we cannot be sure
that regulators or third parties will not raise material issues regarding our
compliance with applicable laws or regulations, or that governmental decisions
will not harm our business.
In addition, the World Trade Organization Agreement, which reflects efforts
to eliminate government-owned telecommunications monopolies throughout Asia,
Europe and Latin America, may affect us. Although we believe that these
deregulation efforts will create opportunities for new entrants in the
telecommunications service industry, they also create enhanced opportunities for
foreign telecommunications carriers to compete against us.
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<PAGE> 46
LEGAL PROCEEDINGS
We are not the subject of any material legal proceedings.
EMPLOYEES
As of November 30, 1999, we had 117 full-time employees, none of whom was
represented by a labor union. Our future performance depends, in significant
part, upon the continued service of our key technical, sales and senior
management personnel. All of our executive officers are subject to employment
agreements for specific terms. For additional information on these employment
agreements, please see "Management -- Employment Agreements" and "-- Change of
Control Agreements". The loss of the services of one or more of our key
employees could have a material adverse effect on our business, financial
condition and results of operations. To date, we have not experienced any work
stoppages, and we consider our relations with our employees to be good.
FACILITIES
Our headquarters are located in Chicago, Illinois, where we lease 19,106
square feet of office space under a lease expiring in December 2000. We
anticipate that we will need to secure additional space for our headquarters
within the next six months. We also currently lease office space for sales
offices in 12 cities in the United States, and space for UTX facilities in seven
cities in the United States. Our UTX leases expire on various dates between May
2009 and November 2014.
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<PAGE> 47
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers and directors and their ages, as of November 30,
1999, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Patrick C. Shutt(1)(2).................... 32 President and Chief Executive Officer,
Director
Robert J. Pommer, Jr.(1)(2)............... 32 Chief Operating Officer, Secretary,
Director
Donna M. Shore............................ 31 Chief Financial Officer, Treasurer
Holly A. Weller........................... 47 Executive Vice President, Marketing
Kenneth A. Napier......................... 53 Executive Vice President, Client Services
Scott D. Fehlan........................... 31 General Counsel and Assistant Secretary
Mark A. Dickey............................ 35 Senior Vice President, Sales and Marketing
George A. King............................ 40 Senior Vice President, Corporate
Development
Paolo Guidi............................... 57 Director
Thomas Kapsalis(3)........................ 64 Director
Robert A. Pollan(4)....................... 39 Director
Joseph L. Schocken(2)(3)(4)............... 53 Director
Roland A. Van der Meer(2)(3)(4)........... 39 Director
</TABLE>
- ---------------
(1) Member of nominating committee
(2) Member of option committee
(3) Member of compensation committee
(4) Member of audit committee
PATRICK C. SHUTT co-founded Universal Access in October 1997 and has served
as our President and as one of our directors since our inception. Mr. Shutt has
been our Chief Executive Officer since December 1998. Prior to founding
Universal Access, from March 1996 to September 1997, Mr. Shutt was Senior Vice
President of Operations at Arista Communications, a telecommunications agency
firm. From February 1994 to March 1996, he was a sales manager with TCG, a
telecommunications company. From October 1993 to February 1994, Mr. Shutt was
the Vice President in charge of Business Development for Valuation Counselors, a
business services company.
ROBERT J. POMMER, JR. co-founded Universal Access in October 1997, has
served as our Secretary since our inception and was our Treasurer from October
1997 to August 1999. Mr. Pommer has served as our Chief Operating Officer since
December 1998 and as one of our directors since July 1998. Prior to founding
Universal Access, from March 1996 to September 1997, Mr. Pommer was Vice
President of Operations for Arista Communications, a telecommunications agency
firm. From May 1994 to March 1996, he was a Manager for Strategic Accounts with
TCG, a telecommunications company. From November 1993 to May 1994, Mr. Pommer
was a consultant for Delta Communications, a telecommunications consulting firm.
DONNA M. SHORE has served as Chief Financial Officer and Treasurer since
August 1999. From December 1998 to March 1999 she served as our Vice President
of Finance and from March 1999 to August 1999 she served as our Senior Vice
President of Finance. From May 1991 to May 1998, Ms. Shore worked for
PricewaterhouseCoopers LLP, a public accounting firm, most recently as a manager
in their mergers and acquisitions division.
HOLLY A. WELLER has served as Executive Vice President of Marketing since
July 1999. Prior to joining Universal Access, from December 1998 until July
1999, she was Vice President of Business Development and Marketing for Amteva
Technologies, a computer software developer which was acquired by Cisco Systems,
Inc., a manufacturer of network equipment. From July 1997 to August 1998, Ms.
Weller was with ADC Wireless Systems, a telecommunications equipment
manufacturer, as the Vice President of Marketing and Sales. From January 1995
until July 1997 she was the Vice
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<PAGE> 48
President and General Manager of the Wireless Data Group of Comcast Cellular
Communications, a cellular communications company. Prior to January 1995, Ms.
Weller spent 10 years working for NYNEX Corporation, a telephone company.
KENNETH A. NAPIER has served as Executive Vice President of Client Services
since June 1999. Prior to joining us, from May 1997 to June 1999, Mr. Napier was
Vice President of Business Development for Klein Technologies, Inc., a computer
systems design company. From February 1991 to May 1997, he was a Senior Vice
President of Strategic Development and a General Manager of Commercial
Operations for Automation Research Systems, a computer systems engineering and
computer management services company. From March 1988 to February 1991, he
worked for Tracor, a computer systems design and integration company.
MARK A. DICKEY has served as our Vice President of Sales since December
1998. From June 1996 to June 1998, Mr. Dickey was Director of Sales for USN
Communications, an investment holding company. From April 1994 to May 1996, Mr.
Dickey worked as a manager at TCG, a telecommunications company. From May 1992
to April 1994, Mr. Dickey was a sales manager with Cable and Wireless, a
telephone communications company.
SCOTT D. FEHLAN has served as our General Counsel and Assistant Secretary
since September 1999. From January 1995 to May 1998, Mr. Fehlan was an
associate, and from June 1998 to September 1999 he was a shareholder of Shefsky
& Froelich Ltd., a law firm. From January 1993 to January 1995, he was an
associate with Kirkland & Ellis, a law firm. Mr. Fehlan holds a J.D. from Yale
Law School.
THOMAS KAPSALIS has served as one of our directors since October 1997. From
October 1997 to February 1999, Mr. Kapsalis was our Chairman of the Board,
Assistant Secretary and Assistant Treasurer. Since June 1986, Mr. Kapsalis has
been Chairman of K&D Facilities Resource Corporation, a business consulting
firm. Mr. Kapsalis has also been a member of the Cole Taylor Bank Advisory Board
since September 1993.
GEORGE A. KING has served as our Senior Vice President of Corporate
Development since August 1999. From our inception to August 1999, Mr. King
served as an advisor to the executive officer group. From our inception to
February 1999, Mr. King was one of our directors. Prior to joining Universal
Access, from February 1995 to November 1996, Mr. King was a Managing Director of
Cambridge Partners, an investment banking firm. From December 1996 to August
1999, was a Senior Managing Director of Hudson AIPF, LLC, a financial advisory
firm. From January 1994 to February 1995, Mr. King was a Vice President of
Credit Suisse First Boston, an investment banking firm.
ROBERT A. POLLAN has served as one of our directors since February 1999.
Mr. Pollan has been a Managing Director of Internet Capital Group, an internet
holding company, since June 1998. From August 1995 to June 1998, Mr. Pollan
served as a Chief Technology Officer and Vice President of Business Development
at General Electric Capital Corporation. From September 1991 to July 1995, Mr.
Pollan was co-founder and Managing Director of OFR, Ltd., an advisory firm
focused on the organizational and financial restructuring of industrial
enterprises in Central Europe.
JOSEPH L. SCHOCKEN has served as one of our directors since October 1998.
He founded Broadmark Capital Corporation, an investment banking firm, in
November 1986 and serves as its Chairman. Mr. Schocken is also a director of
Broadmark Asset Management Company, an asset management firm. Mr. Schocken is
also the head of Broadmark Capital Corporation's Corporate Finance Group where
he serves as an advisor to a number of Broadmark's clients and portfolio
companies.
ROLAND A. VAN DER MEER has served as one of our directors since February
1999. In June 1987, Mr. Van der Meer founded and became a partner of
ComVentures, a venture capital firm. From June 1993 to June 1997, Mr. Van der
Meer was a partner at the venture capital firm of Partech International.
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<PAGE> 49
PAOLO GUIDI has served as one of our directors since August 1999. He has
been the President and Chief Executive Officer of Teleglobe Communications
Corporation, a provider of intercontinental telecommunications services, since
February 1995. From July 1986 to February 1995, Mr. Guidi was employed by Sprint
International Corporation, a provider of intercontinental telecommunications
services, in various capacities, most recently as President.
BOARD OF DIRECTORS
Our board of directors currently consists of seven authorized members. When
this offering is completed, our certificate of incorporation and bylaws will
provide for a classified board of directors consisting of seven directors
divided into three classes, each serving staggered three-year terms. As a
result, a portion of our board of directors will be elected each year. To
implement the classified structure, before this offering is completed, two of
the nominees of our board of directors will be elected to one-year terms, two
will be elected to two-year terms and three will be elected to three-year terms.
Thereafter, directors will be elected for three-year terms. Messrs.
and have been designated Class I Directors, whose terms expire at the
2000 annual meeting of stockholders. Messrs. and have been
designated Class II Directors, whose terms expire at the 2001 annual meeting of
stockholders. Messrs. , and have been designated
Class III Directors, whose terms expire at the 2002 annual meeting of
stockholders. This classification of our board of directors may delay or prevent
a change in control of our company or in our management. See "Description of
Capital Stock -- Delaware Anti-Takeover Law and Certain Charter and Bylaw
Provisions".
Our executive officers are appointed by our board of directors on an annual
basis and serve until their successors have been elected and qualified. There
are no family relationships among any of our directors, officers or key
employees.
BOARD COMMITTEES
We established an audit committee and a compensation committee in August
1999. The audit committee consists of Messrs. Pollan, Schocken and Van der Meer.
The audit committee reviews our internal accounting procedures and consults with
and reviews the services provided by our independent accountants.
The compensation committee consists of Messrs. Kapsalis, Schocken and Van
der Meer. The compensation committee reviews and recommends to our board of
directors the compensation of all of our officers and directors, including stock
compensation and loans and establishes and reviews general policies relating to
the compensation and benefits of our employees.
We established an option committee consisting of Messrs. Pommer, Schocken,
Shutt and Van der Meer in March 1999. The option committee reviews and approves
equity grants pursuant to our stock option plans to our employees other than
executive officers.
We established a nominating committee in February 1999, consisting of
Messrs. Pommer and Shutt. The nominating committee reviews and approves the
appointment of directors to our board of directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of our compensation committee are Messrs. Kapsalis, Schocken
and Van der Meer. None of the members of the compensation committee is currently
or has been, at any time since our formation, one of our officers or employees.
None of our executive officers currently serves or in the past has served as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our board or compensation
committee. Mr. Kapsalis is a holder of approximately 5.3% of our outstanding
stock. He is also principal of K&D Consulting. We paid K&D Consulting $3,000 per
month from April 1999 to October 1999 for
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<PAGE> 50
management consulting services. Mr. Van der Meer is a partner of ComVentures, a
holder of approximately 17.4% of our outstanding stock that has purchased shares
of Series B preferred stock, Series C preferred stock and Series D preferred
stock. Mr. Schocken is the chairman of Broadmark Capital Corporation, a holder
of approximately 1.9% of our outstanding stock that has purchased shares of our
common stock, Series A preferred stock and Series D preferred stock. Broadmark
Capital Corporation provided financial services to us in connection with the
placement of our Series A preferred stock and Series D preferred stock. As
consideration for these services, we paid them approximately $502,190 and issued
them warrants for our common stock and our Series A preferred stock. In
addition, they received options to purchase a total of 839,994 shares of our
common stock from John Drummond, one of our 5% stockholders, Thomas Kapsalis,
one of our 5% stockholders and a director, and Sam Zarcone, one of our 5%
stockholders. See "Transactions with Related Parties and Insiders." Prior to the
formation of the compensation committee, compensation decisions were made by our
entire board of directors.
DIRECTOR COMPENSATION
Other than our stock option grant to Paolo Guidi in August 1999 which is
described in "Transactions With Related Banks and Insiders -- Option Grants to
Executive Officers and Directors," we do not currently compensate our directors
in cash for their service as members of our board of directors, although they
are reimbursed for certain expenses in connection with attendance at board of
director and committee meetings. Our 1999 Director Option Plan provides for the
automatic grant of non-statutory stock options to nonemployee directors. For
further information regarding the provisions of the 1999 Director Option Plan,
see "-- Incentive Stock Plans".
LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION
Our certificate of incorporation will, upon the closing of this offering,
limit the liability of 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 for:
- 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 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 certificate of incorporation and bylaws provide that we will indemnify
our directors and officers and may indemnify our employees and other agents to
the fullest extent permitted by law. We believe that indemnification under our
bylaws covers at least negligence on the part of indemnified parties. Our 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 their
capacity as an officer, director, employee or other agent, regardless of whether
the bylaws would permit indemnification.
We have entered into agreements to indemnify our directors and executive
officers, in addition to the indemnification provided for in our bylaws. These
agreements, among other things, provide for indemnification for judgments,
fines, settlement amounts and certain expenses, including attorneys' fees
incurred by the director, executive officer or controller in any action or
proceeding, including any action by or in our right, arising out of the person's
services as a director, executive officer or controller of us, any of our
subsidiaries or any other company or enterprise to which the person
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<PAGE> 51
provides services at our request. We believe that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers.
The limited liability and indemnification provisions in our certificate of
incorporation and bylaws may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors and
officers under these indemnification provisions.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.
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<PAGE> 52
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned, awarded or paid for
services rendered to us in all capacities for the fiscal year ended December 31,
1998 by our Chief Executive Officer and our next most highly compensated
executive officer who earned more than $100,000 in salary and bonus during the
fiscal year ended December 31, 1998, whom we refer to in this prospectus
collectively as the "named executive officers":
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
COMPENSATION AWARDS
ANNUAL ----------------------
COMPENSATION SECURITIES
NAME AND PRINCIPAL ----------------- STOCK UNDERLYING ALL OTHER
POSITIONS SALARY BONUS AWARDS OPTIONS COMPENSATION
------------------ -------- ----- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Patrick C. Shutt......... $118,344 7,476 $ --(1) 300,000 --
President and Chief
Executive Officer
Robert J. Pommer, Jr..... $112,003 7,476 --(1) 300,000 --
Chief Operating Officer
and Secretary
</TABLE>
- ---------------
(1) In March 1998, Mr. Shutt and Mr. Pommer each purchased 150,000 fully vested
shares of our common stock at a purchase price of .000033 per share under a
stock purchase agreement. As of December 31, 1998, Mr. Shutt and Mr. Pommer
each held 5,708,000 shares of our common stock which had an aggregate fair
market value of $1,512,620. No dividends were paid on this stock during
fiscal year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information regarding stock options granted to
the named executive officers during the fiscal year ended December 31, 1998. The
potential realizable value is based on the assumption that our common stock
appreciates at the annual rate shown, compounded annually, from the date of
grant until the expiration of the ten-year term. These numbers are calculated
based on Securities and Exchange Commission requirements and do not reflect
projections or estimates of future stock price growth. Potential realizable
values are computed by:
- Multiplying the number of shares of common stock underlying each option
by $ per share, the assumed initial public offering price per
share;
- Assuming that the total stock value derived from that calculation
compounds at the annual 0%, 5% or 10% rate shown in the table for the
entire ten-year term of the option; and
- Subtracting from that result the total option exercise price.
Actual gains, if any, on stock option exercises will be dependent on the
future performance of our common stock.
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The percentage of total options granted is based on an aggregate of
3,504,000 options granted by us during the fiscal year ended December 31, 1998,
to our employees including the named executive officers. Options were granted
with an exercise price equal to the fair market value of our common stock, as
determined in good faith by our board of directors at the time of the grants.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO OF STOCK APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS DURING PRICE PER EXPIRATION ---------------------------
NAME GRANTED(#) PERIOD SHARE DATE 0% 5% 10%
---- ----------- ------------ ---------- ------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Patrick C. Shutt........ 300,000(1) 8.56% $0.0000033 July 10, 2008 $ $ $
Robert J. Pommer, Jr.... 300,000(1) 8.56% 0.0000033 July 10, 2008
</TABLE>
- ---------------
(1) The fair market value of our common stock on the date of this grant was
$.067 per share. These options to purchase our common stock were fully
vested on July 10, 1998.
AGGREGATE OPTION EXERCISES DURING LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table presents information regarding the named executive
officers, concerning option exercises for the year ended December 31, 1998 and
exercisable and unexercisable options held as of December 31, 1998. The value of
unexercised in-the-money options is based on a price of $0.265 per share, the
fair market value of our stock on December 31, 1998, as determined by our board
of directors, minus the per share exercise price, multiplied by the number of
shares underlying the option.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998
ACQUIRED ON --------------------------- ---------------------------
NAME EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Patrick C. Shutt........... -- 300,000 -- $79,499 --
Robert J. Pommer, Jr....... -- 300,000 -- $79,499 --
</TABLE>
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<PAGE> 54
INCENTIVE STOCK PLANS
1998 EMPLOYEE STOCK OPTION PLAN
Our 1998 Employee Stock Option Plan, referred to as the "1998 Plan", was
adopted by our board of directors on July 10, 1998 and approved by our
stockholders on May 1, 1998. Our board of directors has decided that as of the
effective date of this offering no further options will be granted under the
1998 Plan. However, the provisions of our 1998 Plan will continue to govern
outstanding options issued under the 1998 Plan. Our 1998 Plan provides for the
grant of incentive stock options, within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, referred to as the "Code", to our
employees and for the grant of nonstatutory stock options to our employees,
directors and consultants.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE 1998 PLAN. The maximum
number of shares that may be issued under the 1998 Plan is 13,000,000 shares of
our common stock. As of November 30, 1999 options to purchase 10,405,500 shares
of our common stock were outstanding under the 1998 Plan.
ADMINISTRATION OF THE 1998 PLAN. Our board of directors or a committee
appointed by our board of directors administers the 1998 Plan. The board or
committee has the authority to determine the terms of the option grants under
the 1998 Plan including the exercise price, the number of shares covered by each
option, the vesting of options and the form of consideration payable upon
exercise.
OPTIONS. The exercise price of incentive stock options granted under the
1998 Plan may not be lower than the fair market value, as determined by our
board of directors on the date of grant, of our common stock and the term of an
option may not exceed 10 years. If one of our stockholders owned 10% of the
voting power of all classes of our outstanding capital stock and is granted an
incentive stock option, the exercise price may not be lower than 110% of the
fair market value on the date of grant and the term may be no longer than five
years.
If an optionee's employment is terminated due to death or disability, he or
she generally will have one year to exercise any of his or her outstanding
options. If an optionee's employment is terminated due to retirement, he or she
generally will have three years to exercise each outstanding option. If an
optionee's employment is terminated for any other reason, he or she generally
will have three months to exercise any options held by him or her; provided,
however an optionee's options will terminate immediately upon his or her
termination for cause.
Options granted under our 1998 Plan are not transferable other than by
will, the laws of inheritance or pursuant to a qualified domestic relations
order.
ADJUSTMENTS UPON MERGER OR ASSET SALE. Our 1998 Plan provides that if we
merge with or into another corporation or sell substantially all of our assets,
the successor corporation will assume or substitute each option. If the
outstanding options are not assumed or substituted by the successor corporation,
the committee has the discretion to allow each option to be exercisable in full,
including shares that would not otherwise be exercisable at the time of such
merger or sale of assets. If the outstanding options are not assumed or
substituted by the successor corporation and the committee chooses to accelerate
the exercisability of outstanding options, all options will terminate if not
exercised during the 30-day period prior to the merger or sale of assets.
1999 STOCK PLAN
Our board of directors adopted the 1999 Stock Plan, referred to as the
"1999 Plan", in November 1999. The 1999 Plan will be submitted to our
stockholders for their approval. Our 1999 Plan provides for the grant of
incentive stock options, within the meaning of Section 422 of the Code, to our
employees, and for the grant of nonstatutory stock options and stock purchase
rights to our employees, directors and consultants.
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NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE 1999 PLAN. As of
November 30, 1999, a total of 10,000,000 shares of our common stock were
reserved for issuance pursuant to the 1999 Plan, of which options to acquire no
shares were issued and outstanding as of that date. Our 1999 Plan provides for
annual increases in the number of shares available for issuance under our 1999
Plan on the first day of each fiscal year, beginning with our fiscal year 2001,
equal to the lesser of 5% of the outstanding shares of common stock on the first
day of fiscal year 2001, 10,000,000 shares of our common stock, or an amount
determined by our board of directors.
ADMINISTRATION OF THE 1999 PLAN. Our board of directors or a committee of
our board of directors administers the 1999 Plan. In the case of options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, the committee will consist of two or more "outside
directors" within the meaning of Section 162(m) of the Code. The administrator
has the authority to determine 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 exercisability of the options and the form
of consideration payable upon exercise.
OPTIONS. The administrator determines the exercise price of options granted
under the 1999 Plan, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code and all incentive stock options, the exercise price must at least be
equal to the fair market value of our common stock on the date of the grant. The
term of an incentive stock option may not exceed ten years, except that with
respect to any participant who owns 10% of the voting power of all classes of
our outstanding capital stock, the term must not exceed five years and the
exercise price must equal at least 110% of the fair market value on the grant
date. The administrator determines the term of all other options.
No optionee may be granted an option to purchase more than 3,000,000 shares
in any fiscal year; except that an optionee in his initial term of service may
receive options to purchase up to an additional 2,000,000 shares.
After termination of the employment of one of our employees, directors or
consultants, he or she may exercise vested options for the period of time
subsequent to termination stated in the option agreement or for 3 months if a
period is not stated in the option agreement. If termination of employment is
due to death or disability, vested options will remain exercisable for 12 months
or for the period stated in the option agreement. However, an option may never
be exercised later than the expiration of its term.
STOCK PURCHASE RIGHTS. Stock purchase rights, which represent the right to
purchase our common stock, may be issued under our 1999 Plan. The administrator
determines the exercise price of stock purchase rights granted under our 1999
Plan. Unless the administrator determines otherwise, a restricted stock purchase
agreement, an agreement between us and an optionee which governs the terms of
stock purchase rights, will grant us a repurchase option that we may exercise
upon the voluntary or involuntary termination of the purchaser's service with us
for any reason, including death or disability. The purchase price for shares we
repurchase will generally be the original price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to us. The
administrator determines the rate at which our repurchase option will lapse.
TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Our 1999 Plan
generally does not allow for the transfer of options or stock purchase rights,
and, during the lifetime of the optionee, only the optionee may exercise an
option and stock purchase right. However, the administrator has the authority to
allow for the transferability of options.
ADJUSTMENTS UPON MERGER OR ASSET SALE. Our 1999 Plan provides that if we
merge with or into another corporation or sell substantially all of our assets,
the successor corporation will assume or substitute each option or stock
purchase right. If the outstanding options or stock purchase rights are not
assumed or substituted, the administrator will provide notice to the optionee
that he or she has the right to exercise the option or stock purchase right as
to all of the shares subject to the option or
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stock purchase right, including shares which would not otherwise be exercisable,
for a period of 15 days from the date of the notice. The option or stock
purchase right will terminate upon the expiration of the 15-day period provided
for in the notice.
AMENDMENT AND TERMINATION OF OUR 1999 PLAN. Our 1999 Plan will
automatically terminate in 2009, unless our board of directors terminates it
sooner. However, our board of directors may amend, suspend or terminate the 1999
Plan provided it does not adversely affect any option previously granted under
our 1999 Plan.
1999 EMPLOYEE STOCK PURCHASE PLAN
Concurrently with this offering, we intend to establish an employee stock
purchase plan. The employee stock purchase plan was adopted by our board in
November 1999 and will be submitted to our stockholders for their approval.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE PURCHASE PLAN. A total
of 500,000 shares of our common stock will be made available for issuance under
the employee stock purchase plan. In addition, our employee stock purchase plan
provides for annual increases in the number of shares available for issuance
under the employee stock purchase plan on the first day of each fiscal year,
beginning with our fiscal year 2001, equal to the lesser of 2% of the
outstanding shares of our common stock on the first day of the fiscal year,
3,000,000 shares, or such other amount as our board of directors may determine.
ADMINISTRATION OF THE PURCHASE PLAN. Our board of directors or a committee
of our board administers the employee stock purchase plan. Our board of
directors or its committee has full and exclusive authority to interpret the
terms of the employee stock purchase plan.
ELIGIBILITY TO PARTICIPATE. Our 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, an
employee may not be granted an option to purchase stock under the employee stock
purchase plan if such employee:
- immediately after grant will own stock possessing 5% or more of the total
combined voting power or value of all classes of our capital stock, or
- has rights to purchase stock under any of our employee stock purchase
plans that accrue at a rate that exceeds $25,000 worth of stock for each
calendar year.
OFFERING PERIODS AND CONTRIBUTIONS. Our employee stock purchase plan is
intended to meet the requirements of Section 423 of the Internal Revenue Code
and contains consecutive, overlapping 24-month offering periods. Each offering
period includes four 6-month purchase periods. The offering periods generally
start on the first trading day on or after May 1st and November 1st of each
year, except for the first such offering period which will commence on the first
trading day on or after the effective date of this offering and will end on the
last trading day on or before January 31, 2002.
Our employee stock purchase plan permits participants to purchase common
stock through payroll deductions of up to 15% of their eligible compensation
which includes a participant's base salary, wages, overtime pay, commissions,
bonuses and other compensation remuneration paid directly to the employee. A
participant may purchase a maximum of 3,000 shares during a 6-month purchase
period, except as otherwise prohibited in the employee stock purchase plan.
PURCHASE OF SHARES. Amounts deducted and accumulated by the participant are
used to purchase shares of our common stock at the end of each six-month
purchase period. The price is 85% of the lower of the fair market value of our
common stock at the beginning of an offering period or at the end of a purchase
period. If the fair market value at the end of a purchase period is less than
the fair market value at the beginning of the offering period, participants will
be withdrawn from the current offering period following their purchase of shares
on the purchase date and will be automatically re-enrolled in a new offering
period. Participants may end their participation at any time
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<PAGE> 57
during an offering period, and will be paid their payroll deductions to date.
Participation ends automatically upon termination of employment with us.
TRANSFERABILITY OF RIGHTS. A participant may not transfer rights granted
under the employee stock purchase plan other than by will, the laws of descent
and distribution or as otherwise provided under the employee stock purchase
plan.
ADJUSTMENTS UPON MERGER OR ASSET SALE. If we merge with or into another
corporation or sell substantially all of our assets, a successor corporation may
assume or substitute each outstanding option. 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.
AMENDMENT AND TERMINATION OF THE PURCHASE PLAN. Our employee stock purchase
plan will terminate in 2009. However, our board of directors may at any time and
for any reason amend or terminate our employee stock purchase plan, except that,
subject to certain exceptions described in the employee stock purchase plan, no
such action may adversely affect any outstanding rights to purchase stock under
our employee stock purchase plan.
1999 DIRECTOR OPTION PLAN
Our board of directors adopted the 1999 Director Option Plan in November
1999. The director plan has been submitted to our stockholders for their
approval. Subject to stockholder approval, the director plan will become
effective on the effective date of this offering. The director plan provides for
the periodic grant of nonstatutory stock options to our non-employee directors.
NUMBER OF SHARES AVAILABLE UNDER THE DIRECTOR PLAN. As of November 30,1999,
a total of 500,000 shares were reserved for issuance under the director plan. No
options will be granted under the director plan until the effective date of this
offering.
OPTIONS. All grants of options to our non-employee directors under the
director plan are automatic. We will grant each non-employee director an option
to purchase 20,000 shares upon the later of (i) the effective date of the
director plan, or (ii) when such person first becomes a non-employee director;
however those directors who became non-employee directors by ceasing to be
employee directors will not receive such an option grant. All non-employee
directors who have been a director for at least 6 months will on the date of
grant receive an option to purchase 5,000 shares on June 30th of each year.
All options granted under our director plan have a term of ten years and an
exercise price equal to fair market value on the date of grant. Each
20,000-share option becomes exercisable as to 25% of the shares subject to the
option on each anniversary of the date of grant, provided the non-employee
director remains a director on such dates. Each annual 5,000-share option
becomes exercisable as to 100% of the shares subject to the option on the first
anniversary of the date of grant, provided the non-employee director remains a
director on such dates.
After termination as a non-employee director, an optionee must exercise an
option within the time set forth in his or her option agreement. If termination
is due to death or disability, the option will remain exercisable for 12 months.
In all other cases, the option will remain exercisable for a period of three
months. However, an option may never be exercised later than the expiration of
its term.
TRANSFERABILITY OF OPTIONS. A non-employee director may not transfer
options granted under our director plan other than by will or the laws of
descent and distribution. Only the non-employee director may exercise the option
during his or her lifetime.
ADJUSTMENTS UPON MERGER OR AN ASSET SALE. If we merge with or into another
corporation or sell substantially all of our assets, the successor corporation
will assume or substitute each option. If such assumption or substitution
occurs, the options will continue to be exercisable according to the same terms
as before the merger or sale of assets. Following such assumption or
substitution, if a non-employee director is terminated other than by voluntary
resignation, the option will become fully
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exercisable, including as to shares for which it would not otherwise be
exercisable and generally will remain exercisable for a period of three months.
If the outstanding options are not assumed or substituted for, our board of
directors will notify each non-employee director that he or she has the right to
exercise the option as to all shares subject to the option for a period of 30
days following the date of the notice. The option will terminate upon the
expiration of the 30-day period.
AMENDMENT AND TERMINATION OF THE DIRECTOR PLAN. Unless terminated sooner,
our director plan will automatically terminate in 2009. Our board of directors
may amend, alter, suspend, or discontinue the director plan, but no such action
may adversely affect any grant made under the director plan.
401(k) PLAN
In 1999, we adopted the Universal Access, Inc. 401(k) Savings Plan and
Trust, covering our eligible full-time employees located in the United States.
The 401(k) plan is intended to meet the requirements of Sections 401(a) and
401(k) of the Internal Revenue Code, as amended, so that contributions to the
401(k) plan by employees, and the investment earnings thereon, are not taxable
to employees until withdrawn from the 401(k) plan. Under the 401(k) plan,
employees may elect to reduce their current eligible compensation by up to the
lesser of 15% of their annual compensation or the statutorily prescribed annual
limit ($10,000 in 1999) and to have the amount of the reduction contributed to
the 401(k) plan. The 401(k) plan does permit discretionary matching
contributions to the 401(k) plan by us on behalf of participants in the 401(k)
plan who have completed at least a year of service to us. To date, there have
been no matching contributions.
EMPLOYMENT AGREEMENTS
From time to time, we have entered into employment agreements with our
executive officers, including the executive officers listed in the "Summary
Compensation Table."
Patrick Shutt. In September 1998, Patrick Shutt entered into an employment
agreement with us. In February 1999 and August 1999, we amended our employment
agreement with Mr. Shutt. Mr. Shutt is currently entitled to an annual salary of
$235,000 with an annual bonus of up to $72,000 to be paid upon the completion of
performance-based milestones. Mr. Shutt is also entitled to a car allowance of
$600 per month. Mr. Shutt's employment agreement is for a renewable one-year
term.
Robert Pommer. In September 1998, Robert Pommer entered into an employment
agreement with us. In February 1999 and August 1999 we amended our employment
agreement with Mr. Pommer. Mr. Pommer is currently entitled to an annual salary
of $215,000 with an annual bonus of up to $68,000 to be paid upon the completion
of performance-based milestones. Mr. Pommer is also entitled to a car allowance
of $600 per month. Mr. Pommer's employment agreement is for a renewable one-year
term.
Donna Shore. In November 1998, Donna Shore entered into an employment
agreement with us. We amended our employment agreement with Ms. Shore in August
1999. Ms. Shore is currently entitled to an annual salary of $175,000 with an
annual bonus of up to $60,000 to be paid upon the completion of
performance-based milestones. Ms. Shore is also entitled to a car allowance of
$600 per month. Ms. Shore's employment agreement has an initial term of three
years and is renewable for additional one-year terms.
Holly Weller. In August 1999, Holly Weller entered into an employment
agreement with us. Ms. Weller is currently entitled to an annual salary of
$155,000 with a quarterly bonus of up to $15,000 to be paid upon the completion
of performance-based milestones. Ms. Weller's employment agreement is for a
renewable one-year term.
Kenneth Napier. In July 1999, Kenneth Napier entered into an employment
agreement with us. Mr. Napier is currently entitled to an annual salary of
$145,000 with an annual bonus to be paid at our discretion. Mr. Napier's
employment agreement is for a renewable one-year term.
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Scott Fehlan. In September 1999, Scott Fehlan entered into an employment
agreement with us. Mr. Fehlan is currently entitled to an annual salary of
$155,000 with a quarterly bonus of up to $10,000 to be paid upon the completion
of performance-based milestones. Mr. Fehlan's employment agreement is for a
renewable one-year term.
Mark Dickey. In November 1998, Mark Dickey entered into an employment
agreement with us. Mr. Dickey is currently entitled to an annual salary of
$120,000 with a quarterly bonus to be paid at our discretion. Mr. Dickey's
employment agreement is for a renewable one-year term.
George King. In August 1999, George King entered into an employment
agreement with us. Mr. King is currently entitled to an annual salary of
$135,000 with an annual bonus to be paid at our discretion. Mr. King's
employment agreement is for a renewable one-year term.
Our executive officers listed under "Management" have provisions in their
employment agreements which provide that if we terminate their individual
employment terms for any reason other than cause, death or total disability, or
if their authority, duties or responsibilities with us have been substantially
reduced, then we will provide them with health, life and disability insurance
for the one-year period after their termination. In addition, other than for
Mark Dickey, we must also pay them the balance of their base salaries and bonus
for the lesser of six months or the remaining term of their employment terms.
For Mark Dickey, we must pay him the balance of his base salary and bonus for
the lesser of four months or the remaining term of his employment term.
CHANGE OF CONTROL ARRANGEMENTS
Excluding Mark Dickey's August 1999 option grant for 150,000 shares of our
common stock, any unvested options to purchase shares held by our executive
officers will fully vest if there is a change of control which results in both:
- any sale of all or substantially all of our assets, any merger of us with
another company or any other corporate reorganization in which more than
50% of our voting power is transferred; and
- the officer no longer being employed by us or the successor entity under
substantially similar terms and conditions that existed prior to the
change of control.
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TRANSACTIONS WITH RELATED PARTIES AND INSIDERS
Other than the employment agreements described under "Management" and the
transactions described below, there has not been, nor is there currently
proposed, any transaction or series of similar transactions to which we were or
are to be a party in which the amount involved exceeds $60,000, and in which any
director, executive officer, holder of more than 5% of our common stock or any
member of the immediate family of any of these people had or will have a direct
or indirect material interest.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS
COMMON STOCK. The following table summarizes the private placement
transactions in which we sold common stock or granted warrants to acquire common
stock to our directors, executive officers, 5% stockholders and persons and
entities affiliated with them.
<TABLE>
<CAPTION>
WARRANTS TO
SHARES OF PURCHASE
DATES OF PRICE PER COMMON COMMON
PURCHASER PURCHASE SHARE STOCK STOCK
--------- ---------------- --------- --------- -----------
<S> <C> <C> <C> <C>
Patrick C. Shutt........................... October 7, 1997 $0.000002 4,725,000 --
(executive officer, director and March 1, 1998 $ 0.00003 150,000 --
5% stockholder) August 4, 1999 $ 1.5125 500,000 --
Robert J. Pommer, Jr....................... October 7, 1997 $0.000002 4,725,000 --
(executive officer, director and March 1, 1998 $ 0.00003 150,000 --
5% stockholder) August 4, 1999 $ 1.5125 300,000 --
Donna M. Shore............................. August 4, 1999 $ 1.375 200,000 --
(executive officer)
Sam Zarcone (5% stockholder)............... October 7, 1997 $ 0.0025 4,050,000 --
(includes stock held as joint tenants
with March 1, 1998 $ 0.00003 450,000 --
right of survivorship with his daughter,
Giuseppina Zarcone, and individually)
Giuseppina Zarcone (5% stockholder)........ October 7, 1997 $ 0.0025 4,050,000 --
(includes stock held as joint tenants
with October 7, 1997 $ 0.0025 4,050,000 --
right of survivorship with her father,
Sam Zarcone, and individually)
Thomas Kapsalis............................ October 7, 1997 $0.000004 4,725,000 --
(director and 5% stockholder) March 1, 1998 $ 0.00003 1,050,000 --
John D. Drummond (5% stockholder).......... October 7, 1997 $0.000004 4,725,000 --
(Mr. Drummond beneficially holds our
stock in a family limited partnership and
in a trust)
George A. King............................. March 1, 1998 $ 0.00003 900,000 --
(executive officer)
Entities affiliated with Broadmark Capital
Corporation.............................. February 8, 1999 $ 0.50 -- 360,000
(Joseph L. Schocken, one of our
directors, is the chairman of Broadmark
Capital Corporation)
</TABLE>
For current information on the holdings of these individuals, see
"Principal Stockholders".
SERIES A PREFERRED STOCK. On several dates in 1998 and 1999, we sold our
Series A preferred stock and granted warrants to acquire Series A preferred
stock, each share of which is convertible
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into six shares of common stock. The following includes all purchasers who are
officers, directors, 5% stockholders and persons and entities affiliated with
them:
<TABLE>
<CAPTION>
WARRANTS TO
SHARES OF PURCHASE
SERIES A SERIES A
PRICE PER PREFERRED PREFERRED
PURCHASER DATES OF PURCHASE SHARE STOCK STOCK
--------- ------------------ --------- --------- -----------
<S> <C> <C> <C> <C>
Entities affiliated with Broadmark
Capital Corporation............... September 15, 1998 $3.00 33,334 --
(Joseph L. Schocken, one of our September 15, 1998 $3.00 -- 33,333
directors, is the chairman of March 5, 1999 $3.00 19,999 --
Broadmark Capital Corporation) March 8, 1999 $3.00 -- 43,900
</TABLE>
SERIES B PREFERRED STOCK. In February and April 1999, we sold Series B
preferred stock and warrants to acquire Series B preferred stock, each share of
which is convertible into six shares of common stock. The following includes all
purchasers who are officers, directors, 5% stockholders and persons and entities
affiliated with them:
<TABLE>
<CAPTION>
WARRANTS TO
SHARES OF PURCHASE
SERIES B SERIES B
DATES OF PRICE PER PREFERRED PREFERRED
PURCHASER PURCHASE SHARE STOCK STOCK
--------- ---------------- --------- --------- -----------
<S> <C> <C> <C> <C>
Entities affiliated with ComVentures... February 8, 1999 $3.00 1,166,666 --
(5% stockholder; Roland Van der Meer, February 8, 1999 0.01 -- 11,112
one of our directors, is a partner of February 8, 1999 0.01 -- 222,223
ComVentures)
Entities affiliated with Internet
Capital Group........................ February 8, 1999 $3.00 833,334 --
(5% stockholder; Robert Pollan, one
of our directors, is a managing
director of Internet Capital Group) February 8, 1999 0.01 -- 166,667
</TABLE>
SERIES C PREFERRED STOCK. In May, 1999, we sold our Series C preferred
stock at a purchase price of $3.00 per share. Each share of Series C preferred
stock is convertible into three shares of common stock. The following includes
all purchasers who are officers, directors, 5% stockholders and persons and
entities affiliated with them:
<TABLE>
<CAPTION>
SHARES OF
SERIES C
DATES OF PREFERRED
PURCHASER PURCHASE STOCK
--------- ------------ ---------
<S> <C> <C>
Entities affiliated with ComVentures........................ May 13, 1999 325,001
(5% stockholder; Roland Van der Meer, one of our
directors, is a partner in ComVentures)
Entities affiliated with Internet Capital Group............. May 13, 1999 325,000
(5% stockholder; Robert Pollan, one of our directors, is a
managing director in Internet Capital Group)
</TABLE>
SERIES D PREFERRED STOCK. On several dates in 1999, we sold our Series D
preferred stock at a purchase price of $4.25 per share. Each share of Series D
preferred stock is convertible into three
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shares of common stock. The following includes all purchasers who are officers,
directors, 5% stockholders and persons and entities affiliated with them:
<TABLE>
<CAPTION>
SHARES OF
SERIES D
PREFERRED
PURCHASER DATES OF PURCHASE STOCK
--------- ------------------ ---------
<S> <C> <C>
Entities affiliated with ComVentures (5% stockholder; Roland
Van der Meer, one of our directors, is a partner in
ComVentures).............................................. August 25, 1999 823,529
Entities affiliated with Internet Capital Group (5%
stockholder; Robert Pollan, one of our directors, is a
managing director in Internet Capital Group).............. June 30, 1999 3,764,706
Entities affiliated with Broadmark Capital Corporation
(Joseph Schocken, one of our directors, is the chairman of
Broadmark Capital Corporation)............................ September 30, 1999 37,332
</TABLE>
LOANS TO EXECUTIVE OFFICERS
Patrick Shutt. In August 1999 we loaned $756,250 to Patrick Shutt under a
promissory note secured by a stock pledge agreement, in connection with his
purchase of 500,000 shares of our common stock. This loan accrues interest at a
rate of 6% and is due and payable on or before August 2004. The principal amount
outstanding under his loan on November 30, 1999 was $756,250.
Robert Pommer. In May 1999, we loaned $200,000 to Robert Pommer under a
promissory note secured by a stock pledge agreement. This loan accrues interest
at an annual rate of 6% and will be due and payable in April 2004. In August
1999 we loaned $453,750 to Robert Pommer under a non-recourse promissory note
secured by a stock pledge agreement, in connection with his purchase of 300,000
shares of our common stock. This loan accrues interest at an annual rate of 6%
and is due and payable on or before August 2004. The principal amount
outstanding under his loans on November 30, 1999 was $653,750.
Donna Shore. In August 1999 we loaned $275,000 to Donna Shore, under a
non-recourse promissory note secured by a stock pledge agreement, in connection
with her purchase of 200,000 shares of our common stock. This loan accrues
interest at a rate of 6% and is due and payable on or before August 2004. No
principal amounts were outstanding under Ms. Shore's loan during fiscal year
ended December 31, 1998. The principal amount outstanding under her loan on
November 30, 1999 was $275,000.
OPTION GRANTS TO EXECUTIVE OFFICERS AND DIRECTORS
Patrick Shutt. In July 1998 we granted to Patrick Shutt an option to
purchase 300,000 shares of our common stock at an exercise price of $0.0000033
per share. In August 1999 we granted to Mr. Shutt an option to purchase 500,000
shares of our common stock at an exercise price of $1.5125 per share.
Robert Pommer. In July 1998 we granted to Robert Pommer an option to
purchase 300,000 shares of our common stock at an exercise price of $0.0000033
per share. In August 1999 we granted to Mr. Pommer an option to purchase 300,000
shares of our common stock at an exercise price of $1.5125 per share.
Donna Shore. In November 1998 we granted to Donna Shore an option to
purchase 450,000 shares of our common stock at an exercise price of $0.001667
per share. In August 1999 we granted to Ms. Shore an option to purchase 200,000
shares of our common stock at an exercise price of $1.375 per share.
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Holly Weller. In August 1999 we granted to Holly Weller an option to
purchase 500,000 shares of our common stock at an exercise price of $1.375 per
share.
Kenneth Napier. In June 1999 we granted to Kenneth Napier an option to
purchase 400,000 shares of our common stock at an exercise price of $0.27 per
share. In August 1999 we granted to Mr. Napier an option to purchase 100,000
shares of our common stock at an exercise price of $1.375 per share. In November
1999 we granted to Mr. Napier an option to purchase 50,000 shares of our common
stock at an exercise price of $6.10 per share.
Scott Fehlan. In September 1999 we granted to Scott Fehlan an option to
purchase 500,000 shares of our common stock at an exercise price of $2.79 per
share.
Mark Dickey. In November 1998 we granted to Mark Dickey an option to
purchase 450,000 shares of our common stock at an exercise price of $0.001667
per share. In August 1999 we granted Mr. Dickey an option to purchase 150,000
shares of our common stock at an exercise price of $1.375 per share.
George King. In August 1999, we granted to George King an option to
purchase 100,000 shares of our common stock at an exercise price of $2.11 per
share. In November 1999, we granted Mr. King an option to purchase 25,000 shares
of our common stock at an exercise price of $6.10 per share.
Paolo Guidi. In August 1999, we granted to Paolo Guidi an option to
purchase a total of 200,000 shares of our common stock at an exercise price of
$1.375 per share.
OTHER TRANSACTIONS
We entered into an engagement letter agreement with Broadmark Capital
Corporation in August 1998 and amended this agreement in October 1998 and in
February 1999. Joseph Schocken, one of our directors, is the Chairman of
Broadmark Capital Corporation. Broadmark Capital Corporation provided services
to us in connection with the placement of our Series A preferred stock, Series B
preferred stock and Series D preferred stock. As consideration for their
services, we paid them approximately $502,190 and we issued them warrants to
purchase our common stock and our Series A preferred stock. In addition, they
received options to purchase a total of 839,994 shares of our common stock from
John Drummond, a 5% stockholder, Thomas Kapsalis, a 5% stockholder and a
director, and Sam Zarcone, a 5% stockholder.
In April 1999, we entered into a consulting agreement with K&D Consulting
for management consulting services. Thomas Kapsalis, one of our directors and 5%
stockholder and John Drummond, a 5% stockholder, are principals of K&D
Consulting. K&D Consulting was paid $3,000 per month as consideration for their
consulting services. The consulting agreement terminated on October 31, 1999.
Before we moved to our current location at 100 North Riverside Plaza,
Chicago, Illinois, we leased real property located at 1021 West Adams Street,
Chicago, Illinois from a corporation owned in part by Thomas Kapsalis, one of
our directors and 5% stockholder, and John Drummond, a 5% stockholder. This
lease was terminated in December 1998. The monthly rent on this lease was
$2,619.
In September 1998, we began making payments to LaSalle National Trust for a
lease agreement between LaSalle National Trust and a company owned by Sam
Zarcone for property located at 600-780 S. Federal Street, Chicago, Illinois.
INDEMNIFICATION
We have entered into indemnification agreements with each of our directors
and officers. These indemnification agreements and our certificate of
incorporation and bylaws require us to indemnify our directors and officers to
the fullest extent permitted by Delaware law.
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<PAGE> 64
All future transactions, including any loans from us to our officers,
directors, principal stockholders or affiliates, will be approved by a majority
of the board of directors, including a majority of the independent and
disinterested members of the board of directors or, if required by law, a
majority of disinterested stockholders, and will be on terms no less favorable
to us than could be obtained from unaffiliated third parties.
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<PAGE> 65
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of November 30, 1999, and as adjusted to
reflect the sale of common stock offered by this prospectus, by:
- each of the individuals listed on the "Summary Compensation Table" above;
- each of our directors;
- each person (or group of affiliated persons) who is known by us to own
beneficially 5% or more of our common stock; and
- all current directors and executive officers as a group.
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 percentage ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of September 30, 1999, are deemed
issued and outstanding. These shares, however, are not deemed outstanding for
purposes of computing percentage ownership of each other stockholder.
Except as indicated in the footnotes to this table and subject to
applicable community property laws, each stockholder named in the table has sole
voting and investment power with respect to the shares shown as beneficially
owned by them. This table also includes shares owned by a spouse as community
property.
The percentage of common stock outstanding as of November 30, 1999 is
calculated in accordance with the rules of the Securities and Exchange
Commission and assumes, for purposes of this calculation, that all outstanding
preferred stock has been converted into common stock. This table assumes no
exercise of the underwriters' over-allotment option. Unless otherwise indicated,
the address of each of the individuals named below is: c/o Universal Access,
Inc., 100 North Riverside Plaza, Suite 2200, Chicago, Illinois 60606.
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<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
PRIOR TO OFFERING
-----------------------------------
SHARES ISSUABLE
PURSUANT TO OPTIONS PERCENT
NUMBER OF AND WARRANTS BENEFICIALLY OWNED
SHARES EXERCISABLE WITHIN --------------------
BENEFICIALLY 60 DAYS OF BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED NOVEMBER 30, 1999 OFFERING OFFERING
- ------------------------------------ ------------ ------------------- -------- --------
<S> <C> <C> <C> <C>
DIRECTORS, EXECUTIVE OFFICERS AND 5%
STOCKHOLDERS
Entities Affiliated with
ComVentures(1)..................... 13,008,738 -- 17.39%
505 Hamilton Avenue
Suite 305
Palo Alto, CA 94301
Entities Affiliated with Internet
Capital Group(2)................... 17,839,122 1,000,002 24.85%
435 Devon Park Drive
Suite 800
Wayne, PA 19087
John D. Drummond(3).................. 4,131,000 -- 5.52%
Giuseppina Zarcone(4)................ 7,530,000 1,500 10.07%
Sam Zarcone(5)....................... 3,930,000 -- 5.25%
Patrick C. Shutt..................... 5,375,000 300,000 7.56%
Robert J. Pommer..................... 5,175,000 300,000 7.29%
Paolo Guidi.......................... -- 200,000 *
Teleglobe Communications
11440 Commerce Park Drive
Reston, VA 20191
Thomas Kapsalis...................... 3,987,000 -- 5.33%
Robert A. Pollan(2).................. 17,839,122 1,000,002 24.85%
Joseph L. Schocken(6)................ 431,994 1,039,266 1.94%
2800 One Union Square
600 University Street
Seattle, WA 98101
Roland A. Van der Meer(1)............ 13,008,738 -- 17.39%
All directors and executive officers
as a group (13 persons)............ 46,916,854 3,376,768 64.33%
SELLING STOCKHOLDERS
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of common stock.
(1) Includes 12,390,375 shares held by Communication Ventures III, L.P. and
618,363 shares held by Communication Ventures III CEO & Entrepreneurs' Fund,
L.P. Roland Van der Meer is one of our directors and is founder of
ComVentures. Mr. Van der Meer disclaims beneficial ownership of the shares
held by Communication Ventures III, L.P. and Communication Ventures III CEO
& Entrepreneurs' Fund, except to the extent of his pecuniary interest
therein.
(2) Includes 17,839,122 shares held by Internet Capital Group and a warrant to
purchase 1,000,002 shares held by Internet Capital Group. Robert Pollan is a
managing director of Internet Capital Group. Mr. Pollan disclaims beneficial
ownership of the shares held by Internet Capital Group, except to the extent
of his pecuniary interest therein.
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(3) Includes 2,631,000 shares held by John Drummond as Trustee for the John
Drummond Declaration of Trust dated July 7, 1999 and 1,500,000 shares held
by John Drummond Family Limited Partnership.
(4) Includes 4,050,000 shares held by Giuseppina Zarcone and 3,480,000 shares
held by Sam and Giuseppina Zarcone as joint tenants with right of
survivorship.
(5) Includes 450,000 shares held by Sam Zarcone and 3,480,000 held by Sam and
Giuseppina Zarcone as joint tenants with right of survivorship.
(6) Includes 431,994 shares held by Broadmark Investments, L.L.C. and warrants
and options to purchase 624,120 shares held by Broadmark Investments, L.L.C.
and warrants and options to purchase 415,146 shares held by Broadmark
Capital Corporation. Mr. Schocken disclaims beneficial ownership of the
shares held by Broadmark Investments, LLC and Broadmark Capital Corporation,
except as to his pecuniary interest therein.
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<PAGE> 68
DESCRIPTION OF CAPITAL STOCK
GENERAL
We are authorized to issue 300,000,000 shares of common stock, $0.01 par
value, and 20,000,000 shares of undesignated preferred stock, $0.01 par value.
The following description of our capital stock does not purport to be complete
and is subject to and qualified by our certificate of incorporation and amended
and restated bylaws, which are included as exhibits to the Registration
Statement of which this prospectus forms a part, and by the provisions of
applicable Delaware law.
COMMON STOCK
As of November 30, 1999, there were shares of common stock
outstanding, as adjusted to reflect the conversion of all outstanding shares of
preferred stock into common stock (assuming no adjustment to the Series E
preferred stock conversion ratio as discussed below), which were held of record
by approximately 170 stockholders.
Our Amended Certificate of Designations provides that each share of Series
E preferred stock will be initially convertible into three shares of common
stock upon the completion of this offering. However, the Series E conversion
ratio for the Series E preferred stock will be multiplied by the lesser of 3.75
and X, where X equals the greater of (A) 1 or (B) the quotient obtained by
dividing (i) $750,000,000 by (ii) the product of (x) the number of shares of
common stock outstanding immediately before this offering is completed (on a
fully diluted and as converted basis, without taking into account additional
shares of common stock that would be issuable to Series E preferred stock as a
result of this adjustment) and (y) the initial public offering price per share
in this offering.
The following examples illustrate the effect that this adjustment to the
Series E preferred stock's conversion ratio would have on the number of shares
of our common stock outstanding upon completion of this offering, based on the
shares of common stock outstanding on an as-converted and
fully-diluted basis as of , 1999:
- If the initial public offering price per share is $ (the
midpoint of the assumed range as set forth in this prospectus), then the
conversion ratio would be multiplied by . As a consequence, each
share of Series E preferred stock would be convertible into
shares of common stock, and we would have an aggregate of
shares of common stock outstanding upon completion of this
offering.
- If the initial public offering price per share is $ or greater,
no adjustment would be made to the conversion ratio. As a consequence,
each share of Series E preferred stock would be convertible into three
shares of common stock, and we would have an aggregate of
shares of common stock outstanding upon completion of this offering.
- If the initial public offering price per share is $ or less,
then the conversion ratio would be multiplied by 3.75. As a consequence,
each share of Series E preferred stock would be convertible into 11.25
shares of common stock, and we would have an aggregate of
shares of common stock outstanding upon completion of this offering.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. 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 the board of directors out of funds legally available for that
purpose. See "Dividend Policy". In the event of a liquidation, dissolution or
winding up of Universal Access, the holders of 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. The
common stock has no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are
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<PAGE> 69
fully paid and nonassessable, and the shares of common stock to be issued upon
the closing of this offering will be fully paid and nonassessable.
PREFERRED STOCK
The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, any or all
of which may be greater than the rights of the common stock. We cannot state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of the preferred stock. However, the effects
might include, among other things, restricting dividends on the common stock,
diluting the voting power of the common stock, impairing the liquidation rights
of the common stock and delaying or preventing a change in control of Universal
Access without further action by the stockholders. We have no present plans to
issue any shares of preferred stock.
WARRANTS
At November 30, 1999, there were the following warrants outstanding:
- a warrant to purchase a total of 360,000 shares of common stock which
will expire on February 8, 2004, unless earlier exercised;
- a warrant to purchase a total of 199,998 shares of common stock which
will expire on September 20, 2003, unless earlier exercised; and
- a warrant to purchase a total of 1,000,002 shares of common stock which
will expire on February 8, 2004, unless earlier exercised;
- a warrant to purchase a total of 263,400 shares of common stock which
will expire on March 8, 2004, unless earlier exercised; and
- a warrant to purchase a total of shares of common stock
(assuming no adjustment to the Series E preferred stock conversion ratio)
which will expire on November 10, 2004, unless earlier exercised.
All five of these warrants will remain outstanding after the completion of
this offering and may be exercised on a "net" basis. If a warrant is exercisable
on a "net" basis, instead of paying the exercise price in cash, the holder may
instruct us to retain a number of shares that has a fair market value at the
time of exercise equal to the aggregate exercise price.
REGISTRATION RIGHTS
As of November 30, 1999 the holders of shares of common stock, as
converted, and the holders of warrants and options to purchase shares
of common stock, as converted, or their permitted transferees are entitled to
certain rights with respect to registration under the Securities Act of the
shares held by them at any time after 180 days following the closing of this
offering. Subject to limitations specified in the agreements, these registration
rights include the following:
- Piggyback Registration Rights: We must allow the holders of registrable
securities to register all or, any portion of the holder's registrable
securities concurrently with any registration statement we file. These
rights are subject to the right of the underwriter to reduce the number
of shares proposed to be registered in view of market conditions.
- S-3 Registration Rights: The holders of at least twenty percent of the
then outstanding registrable securities may require us to register all or
a portion of their registrable securities on Form S-3 when use of this
form becomes available to us.
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<PAGE> 70
- Demand Registration Rights: If at any time prior to February 5, 2007, we
receive a registration request from at least a majority of the holders of
Series B and Series D preferred stock who have registration rights, then
we must prepare, file and use our best efforts to effect up to two
registration statements.
We will bear all registration expenses other than underwriting discounts
and commissions for holders exercising piggyback rights and S-3 registration
rights.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
Certain provisions of Delaware law and our certificate of incorporation and
bylaws could make it more difficult to acquire us by means of a tender offer, a
proxy contest or otherwise to remove incumbent officers and directors. These
provisions, summarized below, are expected to discourage certain types of
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 our potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging takeover or acquisition proposals because, among
other things, negotiation of these proposals could result in an improvement of
their terms.
We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became an
interested stockholder, unless (with certain exceptions) the "business
combination" or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior to the determination of interested
stockholder status, did own) 15% or more of a corporation's voting stock. The
existence of this provision would be expected to have an anti-takeover effect
with respect to transactions not approved in advance by the board of directors,
including discouraging attempts that might result in a premium over the market
price for the shares of common stock held by stockholders.
Our certificate of incorporation and bylaws require that any action
required or permitted to be taken by our stockholders must be effected at a duly
called annual or special meeting of the stockholders and may not be effected by
a consent in writing. In addition, special meetings of our stockholders may be
called only by the board of directors or certain of our officers. Our
certificate of incorporation and bylaws also provide that, beginning upon the
closing of this offering, our board of directors will be divided into three
classes, with each class serving staggered three-year terms, and that certain
amendments of the certificate of incorporation and of the bylaws require the
approval of holders of at least 66 2/3% of the voting power of all outstanding
stock. These provisions may have the effect of deterring hostile takeovers or
delaying changes in control or management of Universal Access.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Norwest
Shareholder Services.
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<PAGE> 71
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of common stock in the public
market could adversely affect the market price of the common stock.
Upon completion of this offering, we will have outstanding
shares of common stock, assuming the issuance of shares of common
stock offered by us and no exercise of options after November 30, 1999, and
assuming no exercise of the underwriters' option to purchase additional shares
in the offering. All of the shares sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act; provided, however, that if shares are purchased by "affiliates" as that
term is defined in Rule 144 under the Securities Act, their sales of shares
would be subject to certain limitations and restrictions that are described
below.
The remaining shares of common stock held by existing
stockholders were issued and sold by us in reliance on exemptions from the
registration requirements of the Securities Act. Of these shares, all
shares will be subject to "lock-up" agreements described below on
the effective date of this offering. On the effective date of this offering,
shares not subject to the lock-up agreements described below will not be
eligible for sale pursuant to Rule 144(k). All of the directors and officers as
well as stockholders collectively holding more than % of the outstanding
common stock have entered into lock-up agreements with the underwriters that
provide that the shares set forth in the table below will become eligible for
sale on the dates set forth in the table below, subject in most cases to the
limitations of Rule 144. In addition, holders of stock options could exercise
such options and sell certain of the shares issued upon exercise as described
below.
<TABLE>
<CAPTION>
APPROXIMATE SHARES
RELEVANT DATES ELIGIBLE FOR FUTURE SALE COMMENT
-------------- ------------------------ -------
<S> <C> <C>
</TABLE>
- ---------------
(1) Assumes no exercise of underwriters' option to purchase additional shares in
the offering.
(2) Assumes effective date of , 2000.
(3) Assumes quarterly results are released on .
Our officers, directors and stockholders have agreed not to sell or
otherwise dispose of any of their shares until the third business day following
the public release of our earnings for the full fiscal quarter next following
the fiscal quarter in which the date of this prospectus falls, at which time
they may sell or otherwise dispose of 10% of their shares. The remaining 90% of
their shares may be sold or otherwise disposed of on the date that is 180 days
after the date of this prospectus. Goldman, Sachs & Co., however, may in its
sole discretion, at any time without notice, release all or any portion of the
shares subject to lock-up agreements.
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
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would be entitled to sell, within any three-month period, a number of shares
that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding, which will
equal approximately 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 preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain other requirements
regarding the manner of sale, notice filing and the availability of current
public information about us.
RULE 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our
"affiliates" at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an "affiliate", is
entitled to sell such shares without complying with the manner of sale, notice
filing, volume limitation or notice provisions of Rule 144. Therefore, unless
otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchases shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to resell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with certain restrictions, including the holding period, contained in
Rule 144.
The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, along with the shares acquired upon
exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, beginning 90 days
after the date of this prospectus, may be sold by persons other than
"affiliates", as defined in Rule 144, subject only to the manner of sale
provisions of Rule 144 and by "affiliates" under Rule 144 without compliance
with its one year minimum holding period requirement.
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UNDERWRITING
Universal Access, the selling stockholders and the underwriters for the
offering (the "Underwriters") named below have entered into an underwriting
agreement with respect to the shares being offered. Subject to certain
conditions, each Underwriter has severally agreed to purchase the number of
shares indicated in the following table. Goldman, Sachs & Co., FleetBoston
Robertson Stephens Inc. and Hambrecht & Quist LLC are the representatives of the
Underwriters.
<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Goldman, Sachs & Co. .......................................
FleetBoston Robertson Stephens Inc. ........................
Hambrecht & Quist LLC.......................................
--------
Total.............................................
========
</TABLE>
If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
shares from us to cover such sales. They may exercise that option for
30 days. If any shares are purchased pursuant to this option, the Underwriters
will severally purchase shares in approximately the same proportion as set forth
in the table above.
The following tables show the per share and total underwriting discounts
and commissions to be paid to the Underwriters by us and the selling
stockholders. Such amounts are shown assuming both no exercise and full exercise
of the Underwriters' option to purchase additional shares.
PAID BY UNIVERSAL ACCESS
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per Share................................................... $ $
Total....................................................... $ $
</TABLE>
PAID BY SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per Share................................................... $ $
Total....................................................... $ $
</TABLE>
Shares sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the Underwriters to
certain other brokers or dealers at a discount of up to $ per share from the
initial public offering price. If all the
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<PAGE> 74
shares are not sold at the initial offering price, the representatives may
change the offering price and the other selling terms.
Universal Access, its directors, officers, employees, and certain
stockholders have agreed with the Underwriters not to sell, contract to sell,
pledge, grant an option to purchase, make a short sale or otherwise dispose of
any of our common stock or securities convertible into or exchangeable for
shares of our common stock during the period from the date of this prospectus
continuing through the lock-up period, except with the prior written consent of
Goldman, Sachs & Co. At any time beginning on the third business day following
the public release of our earnings for the full fiscal quarter next following
the fiscal quarter in which the date of this prospectus falls, each stockholder
may sell, contract to sell, pledge, grant an option to purchase, make a short
sale or otherwise dispose of up to 10% of his or her shares owned as of the date
of this prospectus. Each stockholder may sell, contract to sell, pledge, grant
an option to purchase, make a short sale or otherwise dispose of his or her
remaining shares at any time on or following the date which is 180 days after
the date of this prospectus. This agreement does not apply to any existing
employee benefit plans. See "Shares Available for Future Sale" for a discussion
of certain transfer restrictions.
Prior to the offering, there has been no public market for the shares. The
initial public offering price will be negotiated among Universal Access and the
representatives. Among the factors to be considered in determining the initial
public offering price of the shares, in addition to prevailing market
conditions, will be our historical performance, estimates of our business
potential and earnings prospects, an assessment of our management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.
Universal Access will apply for quotation of the common stock on the Nasdaq
National Market under the symbol "UAXS".
In connection with the offering, the Underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock while
the offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
The Underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
Universal Access and the selling stockholders estimate that the total
expenses of the offering, excluding underwriting discounts and commissions, will
be approximately $ .
Universal Access and the selling stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.
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WHERE YOU MAY FIND ADDITIONAL INFORMATION
We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act for the shares of common stock in
this offering. This prospectus does not contain all of the information in the
registration statement and the exhibits and schedule that were filed with the
registration statement. For further information with respect to Universal Access
and our common stock, we refer you to the registration statement and the
exhibits and schedule that were filed with the registration statement.
Statements contained in this prospectus about the contents of any contract or
any other document that is filed as an exhibit to the registration statement are
not necessarily complete, and we refer you to the full text of the contract or
other document filed as an exhibit to the registration statement. A copy of the
registration statement and the exhibits and schedule that were filed with the
registration statement may be inspected without charge at the public reference
facilities maintained by the Securities and Exchange Commission at the SEC's
Public Reference Room at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and copies of all or any part of the registration statement may be
obtained from the SEC upon payment of the prescribed fee. Information on the
operations of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. The Securities and Exchange Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the site is http://www.sec.gov.
Upon completion of this offering, Universal Access will become subject to
the information and periodic reporting requirements of the Securities Exchange
Act of 1934, and, in accordance with the requirements of the Securities Exchange
Act of 1934, will file periodic reports, proxy statements and other information
with the Securities and Exchange Commission. These periodic reports, proxy
statements and other information will be available for inspection and copying at
the regional offices, public reference facilities and web site of the Securities
and Exchange Commission referred to above.
VALIDITY OF COMMON STOCK
The validity of the shares of common stock offered hereby will be passed
upon for Universal Access by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California and for the underwriters by Sullivan &
Cromwell, Los Angeles, California. As of the date of this prospectus, WS
Investment Company 99B, an investment partnership composed of certain current
and former members of and persons associated with Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and certain other members and employees of
Wilson Sonsini Goodrich & Rosati beneficially own 105,894 shares of our common
stock.
EXPERTS
The financial statements as of December 31, 1997 and 1998 and September 30,
1999 and for the period from October 7, 1997 (inception) to December 31, 1997,
the year ended December 31, 1998 and the nine month period ended September 30,
1999 included in this prospectus have been so included in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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<PAGE> 77
UNIVERSAL ACCESS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNIVERSAL ACCESS, INC.
Report of Independent Accountants........................... F-2
Balance Sheet as of December 31, 1997 and 1998 and September
30, 1999.................................................. F-3
Statement of Operations for the period from inception
through December 31, 1997, the year ended December 31,
1998 and the nine months ended September 30, 1998
(unaudited) and 1999...................................... F-4
Statement of Cash Flows for the period from inception
through December 31, 1997, the year ended December 31,
1998 and the nine months ended September 30, 1998
(unaudited) and 1999...................................... F-5
Statement of Changes in Stockholders' (Deficit) Equity for
the period from inception through December 31, 1997, the
year ended December 31, 1998 and the nine months ended
September 30, 1999........................................ F-6
Notes to Financial Statements............................... F-7
PACIFIC CREST NETWORKS, INC. D/B/A THE POND
Report of Independent Accountants........................... F-22
Balance Sheet as of December 31, 1997 and 1998 and June 30,
1999 (unaudited).......................................... F-23
Statement of Operations for the years ended December 31,
1997 and 1998 and the six months ended June 30, 1998 and
1999 (unaudited).......................................... F-24
Statement of Cash Flows for the years ended December 31,
1997 and 1998 and the six months ended June 30, 1998 and
1999 (unaudited).......................................... F-25
Statement of Changes in Stockholders' Equity (Deficit) for
the years ended December 31, 1997 and 1998 and the six
months ended June 30, 1999 (unaudited).................... F-26
Notes to Financial Statements............................... F-27
STUFF SOFTWARE, INC.
Report of Independent Accountants........................... F-34
Balance Sheet as of December 31, 1997 and 1998 and September
30, 1999 (unaudited)...................................... F-35
Statement of Operations for the years ended December 31,
1997 and 1998 and the nine months ended September 30, 1998
and 1999 (unaudited)...................................... F-36
Statement of Cash Flows for the years ended December 31,
1997 and 1998 and the nine months ended September 30, 1998
and 1999 (unaudited)...................................... F-37
Statement of Changes in Stockholders' Deficit for the years
ended December 31, 1997 and 1998 and the nine months ended
September 30, 1999 (unaudited)............................ F-38
Notes to Financial Statements............................... F-39
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Unaudited Pro Forma Combined Financial Information.......... F-41
Unaudited Pro Forma Combined Balance Sheet as of September
30, 1999.................................................. F-42
Unaudited Pro Forma Combined Statement of Operations for the
year ended December 31, 1998.............................. F-43
Unaudited Pro Forma Combined Statement of Operations for the
nine months ended September 30, 1999...................... F-44
Notes to Unaudited Pro Forma Combined Financial
Statements................................................ F-45
</TABLE>
F-1
<PAGE> 78
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Universal Access, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of cash flows and of changes in stockholders' (deficit) equity
present fairly, in all material respects, the financial position of Universal
Access, Inc. at December 31, 1997 and 1998 and September 30, 1999, and the
results of its operations and its cash flows for the period from October 2, 1997
(date of inception) through December 31, 1997, the year ended December 31, 1998
and the nine month period ended September 30, 1999, in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
December 10, 1999
F-2
<PAGE> 79
UNIVERSAL ACCESS, INC.
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
--------------- SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1999 1999
----- ------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1 $ 844 $ 21,703
Accounts receivable, net.................................. 44 657 2,666
Prepaid expenses and other current assets................. -- 15 142
Security deposits......................................... 54 85 360
Other receivables......................................... -- -- 255
----- ------- --------
Total current assets................................ 99 1,601 25,126
Restricted cash............................................. -- 149 149
Property and equipment, net................................. 1 219 13,512
Intangible assets, net...................................... -- -- 1,204
Other....................................................... -- -- 18
----- ------- --------
Total assets........................................ $ 100 $ 1,969 $ 40,009
===== ======= ========
LIABILITIES, REDEEMABLE CUMULATIVE CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable.......................................... $ 56 $ 577 $ 8,401
Regulatory taxes payable.................................. -- 28 911
Accrued expenses and other current liabilities............ 2 47 222
Unearned revenue.......................................... -- 381 1,461
Notes payable -- shareholders............................. 76 126 --
Notes payable............................................. -- -- 54
Current obligations under capital leases.................. -- -- 149
Unissued Series A......................................... -- 1,004 --
----- ------- --------
Total current liabilities........................... 134 2,163 11,198
Notes payable............................................... -- 149 131
Obligations under capital leases, net of current portion.... -- -- 254
Security deposits payable................................... -- -- 240
----- ------- --------
Total liabilities................................... 134 2,312 11,823
Commitments and contingencies (Note 7)
Series A Redeemable Cumulative Convertible Preferred Stock,
no par value; 1,000,000 shares authorized; 335,334 shares
issued and outstanding plus accrued dividends of $20
(liquidation value of $903) (Note 12)..................... -- 903 --
Series A warrants (Note 12)................................. -- 36 --
----- ------- --------
Total redeemable cumulative convertible preferred
stock............................................. -- 939 --
----- ------- --------
Stockholders' (deficit) equity:
Preferred Stock:
Series A Cumulative Convertible, $.01 par value;
1,000,000 shares authorized; 772,331 shares issued and
outstanding plus accrued dividends of $150
(liquidation value of $2,161)......................... -- -- 2,161 --
Series A Warrants....................................... -- -- 83 --
Series B Cumulative Convertible, $.01 par value;
2,400,000 shares authorized; 2,233,335 shares issued
and outstanding plus accrued dividends of $215
(liquidation value of $5,448)......................... -- -- 5,448 --
Series B warrants....................................... -- -- 500 --
Series C Convertible, $.01 par value; 667,000 shares
authorized; 666,667 shares issued and outstanding
(liquidation value of $1,941)......................... -- -- 1,941 --
Series D Cumulative Convertible, $.01 par value;
7,058,823 shares authorized; 6,039,964 shares issued
and outstanding plus accrued dividends of $278
(liquidation value of $25,785)........................ -- -- 25,785 --
Series D Cumulative Convertible subscriptions
receivable............................................ -- -- (155) --
Common stock, $.01 par value; 300,000,000 shares
authorized; 23,799,000, 30,300,000 and 31,925,000 shares
issued and outstanding;
70,078,889 September 30, 1999 pro forma shares issued
and outstanding......................................... 136 225 2,170 37,350
Common stock warrants..................................... -- -- 13 596
Additional paid-in-capital................................ -- 487 4,750 4,750
Deferred stock option plan compensation................... -- (422) (1,569) (1,569)
Accumulated deficit....................................... (170) (1,572) (11,256) (11,256)
Notes receivable -- employees............................. -- -- (1,685) (1,685)
----- ------- -------- --------
Total stockholders' (deficit) equity................ (34) (1,282) 28,186 28,186
----- ------- -------- --------
Total liabilities, redeemable cumulative convertible
preferred stock and stockholders' (deficit)
equity............................................ $ 100 $ 1,969 $ 40,009 $ 40,009
===== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 80
UNIVERSAL ACCESS, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FROM FOR THE FOR THE NINE MONTHS
INCEPTION TO YEAR ENDED ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ---------------------
1997 1998 1998 1999
------------ ------------ ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Circuit access..................... $ 77 $ 1,589 $ 718 $ 8,368
Universal Transport
Exchange.................... -- 40 12 215
------- ------- ------ -------
Total revenues........... 77 1,629 730 8,583
------- ------- ------ -------
Operating expenses:
Cost of revenues................. 66 1,256 592 7,477
Operations and administration.... 180 1,516 890 7,144
Depreciation..................... -- 47 1 290
Stock option plan compensation... -- 65 46 3,085
------- ------- ------ -------
Total operating
expenses............... 246 2,884 1,529 17,996
------- ------- ------ -------
Operating loss........... (169) (1,255) (799) (9,413)
------- ------- ------ -------
Other (expense) income:
Interest expense................. (1) (27) (8) (19)
Interest income.................. -- 8 -- 373
Other expense.................... -- (100) -- --
------- ------- ------ -------
Total other (expense)
income................. (1) (119) (8) 354
------- ------- ------ -------
Net loss........................... (170) (1,374) (807) (9,059)
Accretion and dividends on
redeemable and nonredeemable
cumulative convertible preferred
stock............................ -- (28) -- (625)
------- ------- ------ -------
Net loss applicable to common
stockholders..................... $ (170) $(1,402) $ (807) $(9,684)
======= ======= ====== =======
Basic and diluted net loss per
share............................ $ (0.01) $ (0.05) $(0.03) $ (0.31)
Shares used in computing basic and
diluted net loss per share....... 23,799 29,063 28,631 30,867
Unaudited pro forma basic and
diluted net loss per share....... $ (0.05) $ (0.18)
Shares used in computing unaudited
pro forma basic and diluted net
loss per share................... 30,069 51,513
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 81
UNIVERSAL ACCESS, INC.
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE
FROM FOR THE MONTHS ENDED
INCEPTION TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ---------------------
1997 1998 1998 1999
------------ ------------ ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................ $(170) $(1,374) $ (807) $(9,059)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation................................ -- 47 1 230
Amortization................................ -- -- -- 60
Stock option plan compensation.............. -- 65 46 3,085
Stock issued for services................... -- -- -- 110
Provision for doubtful accounts............. 4 42 32 513
Changes in operating assets and liabilities:
Accounts receivable....................... (48) (655) (275) (2,420)
Prepaid expenses and other current
assets................................. -- (15) (42) (673)
Security deposits......................... (54) (31) (20) 240
Accounts payable.......................... 56 521 300 1,142
Accrued expenses and other current
liabilities............................ 2 73 14 1,047
Unearned revenue.......................... -- 381 214 1,080
----- ------- ------ -------
Net cash used for operating
activities........................... (210) (946) (537) (4,645)
----- ------- ------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Pacific Crest Networks, Inc....... -- -- -- (907)
Purchase of property and equipment............ (1) (265) (54) (5,836)
----- ------- ------ -------
Net cash used for investing
activities........................... (1) (265) (54) (6,743)
----- ------- ------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on line of credit.................... -- 378 378 750
Payments on line of credit.................... -- (378) -- (900)
Proceeds from notes payable................... 76 199 50 100
Payments on notes payable..................... -- -- -- (267)
Payments on capital lease obligations......... -- -- -- (15)
Disbursements under note
receivable -- employee...................... -- -- -- (200)
Proceeds from unissued Series A Preferred
Stock....................................... -- 1,004 -- --
Proceeds from issuance of Series A Preferred
Stock....................................... -- 875 875 122
Proceeds from issuance of Series B Preferred
Stock....................................... -- -- -- 4,565
Proceeds from issuance of Series C Preferred
Stock....................................... -- -- -- 1,941
Proceeds from issuance of Series D Preferred
Stock....................................... -- -- -- 24,892
Proceeds from issuance of common stock........ 136 89 89 --
Proceeds from issuance of Series A Preferred
Stock warrants.............................. -- 36 36 47
Proceeds from issuance of Series B Preferred
Stock warrants.............................. -- -- -- 1,197
Proceeds from issuance of common stock
warrants.................................... -- -- -- 13
Proceeds from exercise of Series B Preferred
Stock warrants.............................. -- -- -- 2
Cash deposit to collateralize note payable,
net......................................... -- (149) -- --
----- ------- ------ -------
Net cash provided by financing activities... 212 2,054 1,428 32,247
----- ------- ------ -------
Net increase in cash and cash equivalents....... 1 843 837 20,859
Cash and cash equivalents, beginning of
period........................................ -- 1 1 844
----- ------- ------ -------
Cash and cash equivalents, end of period........ $ 1 $ 844 $ 838 $21,703
===== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 82
UNIVERSAL ACCESS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DEFERRED
PREFERRED STOCK PREFERRED COMMON STOCK COMMON ADDITIONAL STOCK OPTION
------------------- STOCK ------------------- STOCK PAID-IN PLAN
SHARES AMOUNT WARRANTS SHARES AMOUNT WARRANTS CAPITAL COMPENSATION
--------- ------- --------- ---------- ------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 2, 1997........ -- $ -- $ -- -- $ -- $-- $ -- $ --
Issuance of common stock.......... -- -- -- 23,799,000 136 -- -- --
Net loss.......................... -- -- -- -- -- -- -- --
--------- ------- ------ ---------- ------ --- ------ -------
Balance at December 31, 1997...... -- -- -- 23,799,000 136 -- -- --
Issuance of common stock.......... 6,201,000 89 -- -- --
Issuance of Series A Preferred
Stock............................ -- -- -- --
Issuance of Series A Preferred
Stock Warrants................... -- -- -- --
Exercise of stock options......... -- -- -- 300,000 -- -- -- --
Deferred stock option plan
compensation..................... -- -- -- -- -- -- 487 (487)
Stock option plan compensation.... -- -- -- -- -- -- -- 65
Net loss.......................... -- -- -- -- -- -- -- --
Accretion and dividends on
Redeemable Series A Preferred
Stock............................ -- -- -- -- -- -- -- --
--------- ------- ------ ---------- ------ --- ------ -------
Balance at December 31, 1998...... -- -- -- 30,300,000 225 -- 487 (422)
Accretion and dividends on
Redeemable Series A
Preferred Stock.................. -- -- -- -- -- -- -- --
Termination of mandatory
redemption feature of Series A
Preferred Stock.................. 335,334 912 36 -- -- -- -- --
Issuance of Series A Preferred
Stock............................ 436,997 1,126 -- -- -- -- -- --
Issuance of Series A Preferred
Stock warrants................... -- -- 47 -- -- -- -- --
Issuance of Series B Preferred
Stock............................ 2,000,000 4,534 -- -- -- -- -- --
Issuance of Series B Preferred
Stock warrants................... -- -- 1,197 -- -- -- -- --
Issuance of Series C Preferred
Stock............................ 666,667 1,941 -- -- -- -- -- --
Issuance of Series D Preferred
Stock............................ 6,039,964 25,507 -- -- -- -- -- --
Issuance of common stock.......... -- -- -- 325,000 460 -- -- --
Issuance of common stock
warrants......................... -- -- -- -- -- 13 -- --
Issuance of common stock options
by certain shareholders.......... -- -- -- -- -- -- 31 --
Exercise of Series B Preferred
Stock warrants................... 233,335 699 (697) -- -- -- -- --
Exercise of common stock
options.......................... -- -- -- 1,300,000 1,485 -- -- --
Note receivable -- employee....... -- -- -- -- -- -- -- --
Deferred stock option plan
compensation..................... -- -- -- -- -- -- 1,362 (1,362)
Stock option plan compensation.... -- -- -- -- -- -- 2,870 215
Net loss.......................... -- -- -- -- -- -- -- --
Dividends on Series A Preferred
Stock............................ -- 123 -- -- -- -- -- --
Dividends on Series B Preferred
Stock............................ -- 215 -- -- -- -- -- --
Dividends on Series D Preferred
Stock............................ -- 278 -- -- -- -- -- --
--------- ------- ------ ---------- ------ --- ------ -------
Balance at September 30, 1999..... 9,712,297 $35,335 $ 583 31,925,000 $2,170 $13 $4,750 $(1,569)
========= ======= ====== ========== ====== === ====== =======
<CAPTION>
NOTES RECEIVABLE --
EMPLOYEES AND
SERIES D
ACCUMULATED SUBSCRIPTIONS
DEFICIT RECEIVABLE TOTAL
----------- ------------------- -------
<S> <C> <C> <C>
Balance at October 2, 1997........ $ -- $ -- $ --
Issuance of common stock.......... -- -- 136
Net loss.......................... (170) -- (170)
-------- ------- -------
Balance at December 31, 1997...... (170) -- (34)
Issuance of common stock.......... -- -- 89
Issuance of Series A Preferred
Stock............................
Issuance of Series A Preferred
Stock Warrants...................
Exercise of stock options......... -- -- --
Deferred stock option plan
compensation..................... -- -- --
Stock option plan compensation.... -- -- 65
Net loss.......................... (1,374) -- (1,374)
Accretion and dividends on
Redeemable Series A Preferred
Stock............................ (28) -- (28)
-------- ------- -------
Balance at December 31, 1998...... (1,572) -- (1,282)
Accretion and dividends on
Redeemable Series A
Preferred Stock.................. (9) -- (9)
Termination of mandatory
redemption feature of Series A
Preferred Stock.................. -- -- 948
Issuance of Series A Preferred
Stock............................ -- -- 1,126
Issuance of Series A Preferred
Stock warrants................... -- -- 47
Issuance of Series B Preferred
Stock............................ -- -- 4,534
Issuance of Series B Preferred
Stock warrants................... -- -- 1,197
Issuance of Series C Preferred
Stock............................ -- -- 1,941
Issuance of Series D Preferred
Stock............................ -- (155) 25,352
Issuance of common stock.......... -- -- 460
Issuance of common stock
warrants......................... -- -- 13
Issuance of common stock options
by certain shareholders.......... -- -- 31
Exercise of Series B Preferred
Stock warrants................... -- -- 2
Exercise of common stock
options.......................... -- (1,485) --
Note receivable -- employee....... -- (200) (200)
Deferred stock option plan
compensation..................... -- -- --
Stock option plan compensation.... -- -- 3,085
Net loss.......................... (9,059) -- (9,059)
Dividends on Series A Preferred
Stock............................ (123) -- --
Dividends on Series B Preferred
Stock............................ (215) -- --
Dividends on Series D Preferred
Stock............................ (278) -- --
-------- ------- -------
Balance at September 30, 1999..... $(11,256) $(1,840) $28,186
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 83
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Universal Access, Inc. (the "Company" or "UAI"), was organized and
commenced operations on October 2, 1997 for the purpose of facilitating the
provisioning, installation and servicing of dedicated, point-to-point
communication circuits for service providers who buy network capacity and
transport suppliers who sell network capacity. UAI's primary services include
providing dedicated circuit access and leasing space in the Company's Universal
Transport Exchanges, or UTXs, where transport suppliers can access the network
connections of other transport suppliers. UAI operated as a subchapter
S-Corporation until September 27, 1998, at which time it converted to a
C-Corporation.
BASIS OF PRESENTATION
The accompanying interim financial statements for the nine months ended
September 30, 1998 and the related notes have not been audited. However, they
have been prepared in conformity with the accounting principles stated in the
audited financial statements for the period from October 2, 1997 through
December 31, 1997, the year ended December 31, 1998 and the nine month period
ended September 30, 1999 and include all adjustments, which were of a normal and
recurring nature, which in the opinion of management are necessary to present
fairly the financial position of UAI and results of operations and cash flows
for the periods presented. The operating results for the interim periods are not
necessarily indicative of results expected for the full years.
UNAUDITED PRO FORMA BALANCE SHEET
Upon the closing of UAI's initial public offering, all of the shares of
preferred stock outstanding as of September 30, 1999 will automatically convert
into 38,153,889 shares of common stock and all preferred stock warrants
outstanding as of September 30, 1999 will automatically convert into warrants to
purchase an aggregate of 1,463,400 shares of common stock. These conversions
have been reflected in the unaudited pro forma balance sheet as of September 30,
1999.
NET LOSS PER SHARE
Basic net loss per share is computed using the weighted average number of
shares of common stock outstanding. Diluted loss per share does not differ from
basic loss per share since potential common shares from conversion of preferred
stock, stock options and warrants are anti-dilutive for all periods presented.
Pro forma basic and diluted net loss per share have been calculated assuming the
conversion of all shares of preferred stock outstanding during each period
presented into common shares, as if the shares had converted immediately upon
their issuance.
REVENUE RECOGNITION
Circuit access and Universal Transport Exchange services are billed monthly
in advance under contracts with terms ranging from twelve to sixty months. UAI
recognizes revenue in the month in which the service is provided. Advance
billings are recorded by the Company as unearned revenue. UAI recognizes revenue
from one-time fees for installation and maintenance when the related services
are performed.
F-7
<PAGE> 84
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, money market funds and all
investments with an initial maturity of three months or less. All cash
equivalents are recorded at cost.
ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $4,000, $46,000 and $553,000 at
December 31, 1997 and 1998 and September 30, 1999, respectively.
Financial instruments that could potentially subject UAI to concentration
of credit risk primarily include accounts receivable. As of September 30, 1999,
two customers, represented 49% of accounts receivable. During the nine months
ended September 30, 1999, one customer represented 35% of total revenues. As of
December 31, 1998, two customers represented 38% of total accounts receivable
and an aggregate of 29% of total revenues during 1998. As of December 31, 1997,
three customers represented 94% of total accounts receivable and 81% of total
revenues during 1997. If any of these individually significant customers are
unable to meet their financial obligations, results of operations of the Company
could be adversely affected.
STOCK-BASED COMPENSATION
The Company accounts for stock-based awards to employees using the
intrinsic value method as prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, no compensation expense is recorded for options
issued to employees in fixed amounts and with fixed exercise prices at least
equal to the fair market value of the Company's common stock at the date of
grant. The Company has adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," through disclosure only (Note 10). All stock-based
awards to non-employees are accounted for at their fair value in accordance with
SFAS No. 123.
COMPREHENSIVE INCOME
SFAS No. 130 requires that a full set of general purpose financial
statements include the reporting of "comprehensive income." Comprehensive income
is comprised of two components: net income and other comprehensive income, with
other comprehensive income being comprised of foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. During the periods ended December 31,
1997 and 1998 and September 30, 1999, comprehensive income was comprised solely
of net income. As a result, the adoption of SFAS No. 130 had no impact on the
Company's financial statements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost with depreciation and
amortization provided for using the straight-line method. Leasehold improvements
are amortized over the life of the lease. Depreciable lives used by the Company
for its classes of assets are as follows:
<TABLE>
<S> <C>
Furniture and fixtures...................................... 3 years
UTX equipment............................................... 7 years
Computer hardware and other equipment....................... 3 years
</TABLE>
F-8
<PAGE> 85
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
Repairs and maintenance, which do not significantly increase the life of
the related assets, are expensed as incurred.
INTANGIBLE ASSETS
The excess of purchase price over net assets of acquired businesses is
allocated among the identifiable intangible assets purchased and goodwill.
Intangible assets are amortized on a straight-line basis over their estimated
useful lives, generally five years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets, including property, equipment
and intangibles, whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The Company estimates the future cash
flows expected to result from the asset, and if the sum of the expected
undiscounted future cash flows is less than the carrying amount of the long-
lived asset, the Company recognizes an impairment loss by reducing the
depreciated cost of the long-lived asset to its estimated fair value. To date,
the Company has not recognized impairment losses on any long-lived assets.
INCOME TAXES
On September 27, 1998, UAI changed status from an S-Corporation to a
C-Corporation. As of this date, the Company established a deferred tax asset
which reflects the tax consequences in future years of differences between the
tax basis of assets and liabilities and their financial reporting amounts. The
deferred tax asset was recorded net of a valuation allowance to reduce the
deferred tax asset to an amount that is more likely than not to be realized.
Prior to September 27, 1998, all attributes for federal income taxes passed
through to the stockholders. Accordingly, no income tax provision or deferred
tax amounts were recorded prior to this date. Had the Company been a
C-Corporation from October 2, 1997 (inception) to December 31, 1998, no income
taxes would have been due since the Company incurred losses during this time
period.
NOTE 2 -- STOCK SPLITS AND DIVIDEND
The Company effected a 500-for-1 common stock split in July 1998, a 2-for-1
common stock split in February 1999, a 3-for-2 common stock split in June 1999
and declared a 1-for-1 stock dividend in September 1999. All share and per share
amounts have been retroactively restated to reflect such splits and the
dividend.
NOTE 3 -- ACQUISITIONS
On July 30, 1999, UAI acquired substantially all of the assets and
liabilities of Pacific Crest Networks, Inc ("PCN") in exchange for $833,000 in
cash, $224,000 in the assumption of debt, and
F-9
<PAGE> 86
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
82,353 shares of Series D Preferred Stock with a fair market value of $4.25 per
share. Assets purchased included all property and equipment, cash accounts,
receivables, software, customer lists and intellectual property. Also, as part
of purchase, UAI assumed certain liabilities of PCN including $276,000 of
accounts payable, $418,000 of obligations under capital leases, and obligations
under operating leases and vendor contracts. This acquisition was accounted for
under the purchase method of accounting. UAI assigned $1,245,000 to identifiable
intangible assets and goodwill and is amortizing this amount on a straight-line
basis over a period of five years, which represents the estimated useful lives
of these intangible assets.
The following unaudited pro forma information presents the results of
operations as if the PCN acquisition had occurred at the beginning the periods
shown after taking into account the effect of certain adjustments and
eliminations. This summary is not necessarily indicative of what the results of
operations of UAI and PCN would have been if they were a single entity during
such periods, nor does it purport to represent results of operations for any
future periods (in thousands).
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Revenues.................................. $2,180 $9,107
Net loss.................................. 2,159 9,754
Basic and fully diluted loss per share.... 0.07 0.32
</TABLE>
On November 1, 1999, UAI acquired substantially all of the assets of Stuff
Software, Inc. ("SSI") in exchange for $930,000 in cash and 50,021 shares of UAI
common stock with an estimated fair market value of $6.10 per share. Assets
purchased include accounts receivable, customer lists, software and intellectual
property. This acquisition was accounted for under the purchase method of
accounting. SSI developed software and databases for the telecommunications
industry. UAI will use the assets acquired from SSI to further enhance the
development of Universal Information Exchange services.
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment consists of the following, stated at cost (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------ SEPTEMBER 30,
1997 1998 1999
---- ---- -------------
<S> <C> <C> <C>
Furniture and fixtures............................. $-- $119 $ 654
UTX equipment...................................... -- 85 10,963
Computer hardware.................................. -- -- 2,109
Other equipment.................................... 1 62 73
--- ---- -------
266 13,799
Less: Accumulated depreciation and amortization.... -- (47) (287)
--- ---- -------
Property and equipment, net...................... $ 1 $219 $13,512
=== ==== =======
</TABLE>
At September 30, 1999, $510,000 of the gross amount of computer hardware is
subject to capital leases. Accumulated amortization on this equipment was
$20,000 at September 30, 1999.
F-10
<PAGE> 87
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
NOTE 5 -- NOTES PAYABLE
Notes payable are summarized as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------ SEPTEMBER 30,
1997 1998 1999
---- ---- -------------
<S> <C> <C> <C>
Note payable -- Bank (interest at 7.5%)............ $-- $149 $111
Notes payable to shareholders (weighted average
interest at 9.7%).................................. 76 126 --
Note payable (interest at 10%)..................... -- -- 20
Note payable -- City of Eugene, OR (interest at
7%).............................................. -- -- 54
--- ---- ----
Notes payable.................................... $76 $275 $185
=== ==== ====
</TABLE>
In November 1997 and March 1998, the Company entered into separate note
payable agreements with two of its shareholders in the original principal
amounts of $76,000 and $50,000, respectively. The notes payable bear interest at
rates of 8.25% and 12%, respectively, and are due upon demand. The note with the
original principal amount of $76,000 is collateralized by a $63,000 security
deposit. The $50,000 note payable is unsecured.
In November 1998, the Company entered into a 36-month term loan agreement
with a bank, in the original principal amount of $149,000, for the purchase of
office furniture and equipment. The note payable is collateralized by the
Company's property and equipment, cash deposits and money market accounts with
the Bank. The Company is required to maintain a balance in their money market
account of an amount not less than the original principal of the note.
In connection with the July 30, 1999 purchase of PCN, UAI assumed the
following debt: $150,000 note payable with a bank, $20,000 note payable to an
individual and a $54,000 note payable to the City of Eugene, OR. The $150,000
note payable to the bank was paid in full prior to September 30, 1999. The other
notes remain outstanding at September 30, 1999.
The $20,000 note payable bears interest at a rate of 10% payable monthly.
The entire principal is due on December 17, 2000. The note can be prepaid by the
Company at any time without penalty.
The $54,000 City of Eugene, OR note payable bears interest at 7%. The
entire balance was due on August 1, 1999. As of September 30, 1999, the Company
had not paid this balance.
The Company executed unsecured promissory notes with a shareholder dated
December 29, 1998, in the original aggregate principal amount of $100,000. The
notes bear interest at a rate of 10% per year and are due upon demand, after
March 31, 1999. The Company did not receive the proceeds of these promissory
notes until after December 31, 1998; as such the notes payable were offset by
the proceeds receivable at that date for presentation purposes.
At September 30, 1999, the Company has two line of credit arrangements to
borrow up to a total of $10,000,000. The line of credit arrangements permit
borrowings of $6,000,000 and $4,000,000 and expire in August of 2000 and April
of 2000, respectively. The available line of credit is reduced by the amount of
outstanding letters of credit. As of September 30, 1999, UAI has outstanding
letters of credit of $2,108,000, resulting in a total available line of credit
of $7,892,000.
F-11
<PAGE> 88
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
NOTE 6 -- INCOME TAXES
There is no current provision or benefit for income taxes recorded for the
period from September 27, 1998, the date of C-Corporation conversion, to
December 31, 1998, as the Company has generated net operating losses for income
taxes purposes for which there is no carryback potential. There is no deferred
provision or benefit for income taxes recorded as the Company is in a net
deferred tax asset position for which a full valuation allowance has been
recorded due to uncertainty of realization.
The components of the deferred income tax asset are as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
Net operating loss.......................................... $ 93
Stock option plan compensation.............................. 18
Allowance for doubtful accounts............................. 19
Other....................................................... 21
-----
151
-----
Valuation allowance......................................... (151)
-----
Total..................................................... $ --
=====
</TABLE>
At December 31, 1998, the Company had federal and state net operating loss
carryforwards of $227,000. The Company incurred taxable losses of $5,318,000
during the nine months ended September 30, 1999, which may be available to
offset future taxable income. These federal and state net operating loss
carryforwards expire at various dates beginning in 2018. Due to the uncertainty
that UAI will generate future earnings sufficient to realize the benefit of
these net operating loss carryforwards, a valuation allowance for the full
amount of the deferred tax asset has been recorded. Additionally, Section 382 of
the Internal Revenue Code imposes annual limitations on the use of net operating
loss carryforwards if there is a change in ownership, as defined, within any
three-year period. The utilization of certain net operating loss carryforwards
may be limited due to the Company's capital stock transactions.
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
The Company leases UTX facilities, office facilities and certain equipment
over periods ranging from two to fifteen years. Total rent expense for the years
ended December 31, 1997 and 1998 and the nine months ended September 30, 1999
was $0, $46,000 and $463,000, respectively. Future rentals for operating leases
are as follows at September 30, 1999 (in thousands):
<TABLE>
<S> <C>
October 1, 1999 to December 31, 1999........................ $ 487
2000........................................................ 2,480
2001........................................................ 2,307
2002........................................................ 2,332
2003........................................................ 2,402
2004........................................................ 2,485
Thereafter.................................................. 16,849
-------
Total minimum lease payments.............................. $29,342
=======
</TABLE>
F-12
<PAGE> 89
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
In addition to the leases, the Company has entered into leased line
agreements with telecommunications vendors for high-capacity bandwidth. These
leases are cancelable at any time with a maximum 30-day notice. The Company, in
turn, contracts with customers for the use of the leased high-capacity
bandwidth. The customer contracts generally provide for cancellation penalties
equal to the sum of all payments due through the remainder of the contract, less
6%.
The Company also leases certain equipment under capital leasing
arrangements with periods ranging from two to five years. Future minimum lease
payments as of September 30, 1999 related to the capital leasing arrangements
are as follows (in thousands):
<TABLE>
<S> <C>
October 1, 1999 to December 31, 2000........................ $ 53
2000........................................................ 250
2001........................................................ 168
2002........................................................ 1
-----
Total minimum capital lease payments........................ 472
Less: imputed interest...................................... (69)
-----
Present value of minimum capital lease payments............. 403
Less: current portion....................................... (149)
-----
Long-term capital lease obligations......................... $ 254
=====
</TABLE>
The Company also has entered into non-cancelable agreements with various
telecommunications vendors to purchase minimum amounts of network services on a
monthly basis. The total amount of these purchase commitments at September 30,
1999 are as follows (in thousands):
<TABLE>
<S> <C>
October 1, 1999 to December 31, 1999........................ $ 1,548
2000........................................................ 11,356
2001........................................................ 18,065
2002........................................................ 18,043
2003........................................................ 16,025
2004........................................................ 15,001
Thereafter.................................................. 34,250
--------
Total minimum purchase commitments........................ $114,288
========
</TABLE>
In November of 1999, UAI entered into an additional agreement with a
telecommunications vendor that requires UAI to purchase a minimum of $250,000
per month, beginning in May 2000 and continuing for a period of seven years.
UAI has standby letters of credit which have been issued on its behalf
totaling $2,108,000 securing performance of certain contracts with carriers and
landlords. These letters of credit expire in April 2000.
NOTE 8 -- RELATED PARTY TRANSACTIONS
During 1998, UAI entered into certain transactions with shareholders and
directors for the lease of office space and pager equipment. Rent expense for
these leases approximated $65,000 in 1998.
During 1998 and the nine months ended September 30, 1999, UAI paid
Broadmark Capital Corporation ("Broadmark"), an entity for which a member of the
UAI Board of Directors serves as Chairman, certain consideration in exchange for
services rendered related to the sale of preferred
F-13
<PAGE> 90
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
stock. During the nine months ended September 30, 1999, UAI paid cash amounts of
$162,000, $200,000 and $140,000 to Broadmark in connection with the sale of
Series A, B and D Cumulative Convertible Preferred Stock, respectively. These
amounts were recorded as issuance costs, and deducted from the gross proceeds of
the respective preferred stock series. During the nine months ended September
30, 1999, UAI issued to Broadmark 360,000 common stock warrants with an exercise
price of $.50 in connection with services rendered related to the issuance of
Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock").
UAI also issued to Broadmark 77,233 Series A Cumulative Convertible Preferred
Stock Warrants ("Series A Warrants") in connection with services rendered
related to the issuance of Series A Cumulative Convertible Preferred Stock. UAI
issued 33,333 and 43,900 Series A Warrants in 1998 and the nine months ended
September 30, 1999, respectively. The common stock warrants and the Series A
Warrants were valued at $13,000 and $83,000, respectively, using the
Black-Scholes valuation model. UAI issued $36,000 of the Series A Warrants in
1998 and $47,000 of the Series A Warrants in the nine months ended September 30,
1999. Also, in connection with services rendered related to the sale of Series B
Preferred Stock, UAI caused options to purchase 840,000 shares of common stock
at $.50 per share to be granted by certain principal shareholders of the
Company's common stock. The 840,000 common stock options granted by the
principal shareholders were valued at $31,000 using the Black-Scholes valuation
model. This amount was recorded as paid-in capital.
On May 27, 1999, UAI executed a full-recourse promissory note in connection
with a loan to an officer of the Company for a principal amount of $200,000 with
a per annum interest rate of 6%. The promissory note will become immediately due
and payable on April 30, 2004.
On August 4, 1999, three of the Company's officers were granted options to
purchase a total of 1,000,000 shares of common stock at exercise prices ranging
from $1.38 to $1.51 per share. These stock options vested immediately and were
exercised on the date of grant. In connection with the exercise, the UAI board
of directors authorized loans to these officers, pursuant to non-recourse
promissory notes for a total amount of $1,485,000 with an annual interest rate
of 6%. The promissory notes will become immediately due and payable on August 4,
2004. During the nine months ended September 30, 1999, UAI recorded $2,870,000
of stock option plan compensation expense related to the issuance of these notes
receivable. UAI estimates that an additional $1.9 million of stock option
compensation expense will be recognized in the three months ended December 31,
1999 related to these notes receivable.
NOTE 9 -- INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
From its inception through September 30, 1999, substantially all of the
Company's identifiable assets were located in the United States. During that
same period, substantially all of the Company's revenues were derived from sales
to customers based in the United States. The Company currently operates under
one operating segment. Operating activities of this segment primarily consist of
the provision of dedicated circuit access and related Universal Transport
Exchange and Universal Information Exchange services.
NOTE 10 -- EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
EMPLOYEE SAVINGS AND BENEFIT PLANS
As of January 1, 1999, UAI implemented a retirement savings plan pursuant
to Section 401(k) of the Internal Revenue Code, which covers substantially all
of the Company's employees. Employer
F-14
<PAGE> 91
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
contributions to the retirement savings plan are discretionary. For the nine
months ended September 30, 1999, no employer contributions were made to the
retirement savings plan.
EMPLOYMENT AGREEMENTS
UAI has entered into employment agreements with several of its key
employees which have initial terms ranging from one to three years, after which
they are renewable for additional one-year periods. The employment agreements
entitle the employee to receive certain severance payments for termination of
employment without cause, as defined by the agreements.
STOCK OPTION PLANS
In July of 1998, UAI's Board of Directors adopted the 1998 Employee Stock
Option Plan (the "1998 Plan") for the Company's directors, officers, employees
and key advisors. The total number of shares of UAI no par value Common Stock
(the "Common Stock") reserved for issuance under the Plan is 13,000,000. Awards
granted under the plan are at the discretion of the Company's Board of
Directors, or a compensation committee appointed by the Board of Directors, and
may be in the form of either incentive or nonqualified stock options. At
September 30, 1999, 1,326,000 shares of Common Stock were available for
additional awards under the plan. In November 1999, UAI's Board of Directors
adopted the 1999 Stock Plan and the 1999 Director Option Plan. Upon an qualified
initial public offering, no further options will be granted under the 1998 Plan.
If the Company had elected to recognize compensation cost based on the fair
value of the options as prescribed by Statement of Financial Accounting Standard
No. 123, "Accounting for Stock-Based Compensation", the following results would
have occurred using the Black-Scholes option-pricing model with the listed
assumptions:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Pro forma net loss (in thousands).................. $1,375 $9,506
Pro forma basic and diluted net loss per share..... 0.05 0.31
Volatility......................................... 0% 0%
Dividend yield..................................... 0% 0%
Risk-free interest rate............................ 5% 5%
Expected life in years............................. 5.00 4.34
</TABLE>
The Company recognized $65,000 and $3,085,000 of option plan compensation
expense during the year ended December 31, 1998 and the nine months ended
September 30, 1999, respectively, and expects to recognize additional expense of
approximately $1,569,000 over the next four years relating to such options as
they vest. The $3,085,000 of option plan compensation expense for the nine
months ended September 30, 1999 consisted of $215,000 related to the
amortization of deferred stock option plan compensation and $2,870,000 related
to the options exercised in exchange for notes receivable as described in Note
8.
The vesting term of options granted under the Plan shall be fixed by the
Board of Directors, or compensation committee elected by the Board of Directors,
but in no case shall be exercisable for more than 10 years after the date the
option is granted. For option grants to persons owning 10% of the voting power
of all outstanding classes of UAI capital stock, the exercise price may not be
lower
F-15
<PAGE> 92
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
than 110% of the fair market value on the date of the grant and the option term
may not exceed 5 years.
The following information relates to stock options with an exercise price
which was less than the fair market value of the underlying stock on the date of
grant:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
------------------------ ------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at beginning of period...... -- -- 2,850,000 $ 0.0008
Granted............................. 3,450,000 $ 0.000654 2,355,500 0.228221
Exercised......................... (600,000) 0.000003 -- --
Forfeited......................... -- -- (155,500) 0.370418
---------- ---------- ---------- ----------
Balance at end of period............ 2,850,000 $ 0.0008 5,050,000 $ 0.095045
========== ========== ========== ==========
Weighted average fair value of
options granted during the
period............................ $ 0.14 $ 0.63
</TABLE>
The following information relates to stock options with an exercise price
which equaled the fair market value of the underlying common stock on the date
of grant:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
--------------------- ----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE
--------- -------- ---------- --------
<S> <C> <C> <C> <C>
Balance at beginning of period.......... -- -- 648,000 $0.0880
Granted................................. 654,000 $0.0910 4,622,000 1.6938
Exercised............................. -- -- (200,000) 1.3750
Forfeited............................. (6,000) 0.3800 (46,000) 1.1630
-------- ------- ---------- -------
Balance at end of period................ 648,000 $0.0880 5,024,000 $1.5042
======== ======= ========== =======
Weighted average fair value of options
granted during the period............. $ 0.02 $ 0.37
</TABLE>
F-16
<PAGE> 93
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
The following information relates to stock options with an exercise price
which was greater than the fair value of the underlying stock on the date of
grant:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
--------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Balance at beginning of period.......... -- -- -- $ --
Granted................................. -- -- 800,000 1.5125
Exercised............................. -- -- (800,000) 1.5125
Forfeited............................. -- -- -- --
-- -- -------- -------
Balance at end of period................ -- -- -- --
== == ======== =======
Weighted average fair value of options
granted during the period............. $ 0.19
</TABLE>
The following information relates to stock options as of September 30,
1999:
<TABLE>
<CAPTION>
EXERCISE PRICES
-----------------------------------------------------------------------
$0.000003 $0.065 $0.2533 $1.38 $2.11 $3.21
TO $0.0017 TO $0.11 TO $0.27 TO $1.83 TO $2.79 TO $4.25
---------- -------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Stock Options Outstanding
Number....................................... 2,850,000 582,000 3,292,000 1,594,000 1,404,000 352,000
Weighted average exercise price............ $0.0000006 $ 0.07 $ 0.27 $ 1.38 $ 2.73 $ 3.26
Weighted average remaining contractual life
(years).................................. 3.98 3.81 4.56 4.84 4.95 4.96
Stock Options Exercisable
Number..................................... 882,000 181,000 -- 300,000 100,000 176,000
Weighted average exercise price............ $ 0.000001 $ 0.07 -- $ 1.38 $ 2.11 $ 2.79
</TABLE>
During 1998, 600,000 stock options were issued to non-employees for
services rendered during 1998. These options were issued with an exercise price
of $0.000003, were immediately exercisable, and comprised $40,000 of the $65,000
stock option plan compensation expense recognized during 1998. During 1998, all
options issued to non-employees were exercised.
The above disclosures include 200,000 options granted on August 4, 1999 to
a non-employee director.
F-17
<PAGE> 94
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
NOTE 11 -- NET LOSS PER SHARE
The following is a reconciliation of the numerators and denominators used
in computing basic and diluted net loss per share.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
PERIOD ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ----------------------------
1997 1998 1998 1999
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net loss applicable to
common Stockholders (in
thousands)............... $ (170) $ (1,402) $ (807) $ (9,684)
=========== =========== =========== ===========
Basic and diluted weighted
average common shares
outstanding................ 23,799,000 29,063,000 28,631,000 30,867,000
=========== =========== =========== ===========
Basic and diluted net loss
per share................ $ (0.01) $ (0.05) $ (0.03) $ (0.31)
=========== =========== =========== ===========
</TABLE>
The Company had securities outstanding which could potentially dilute basic
earnings per share in the future, but were excluded in the computation of
diluted net loss per share in the periods presented, as their effect would have
been anti-dilutive. Such outstanding securities consist of the following at
December 31, 1998 and September 30, 1999. There were no potentially dilutive
securities outstanding from inception through December 31, 1997.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Series A cumulative convertible preferred stock............ 335,334 772,331
Series A cumulative convertible preferred stock warrants... 33,333 77,233
Series B cumulative convertible preferred stock............ -- 2,233,335
Series B cumulative convertible preferred stock warrants... -- 166,667
Series C convertible preferred stock....................... -- 666,667
Series D cumulative convertible preferred stock............ -- 6,039,964
Common stock options....................................... 3,498,000 10,074,000
Common stock warrants...................................... -- 360,000
</TABLE>
NOTE 12 -- CONVERTIBLE PREFERRED STOCK AND WARRANTS
During 1998, UAI issued 335,334 shares of Series A Redeemable Cumulative
Convertible Preferred Stock ("Series A Preferred Stock") for gross proceeds of
$1,006,000. Additionally, UAI received cash and accepted subscription documents
for 385,830 shares of Series A Redeemable Cumulative Convertible Preferred Stock
("Unissued Series A Preferred Stock") for gross proceeds of $1,157,000. As of
December 31, 1998, the Company had authorized 1,000,000 shares of Series A
Preferred Stock. On February 8, 1999, UAI issued 436,997 shares of Series A
Preferred Stock for gross proceeds of $1,311,000. Included in this issuance were
the 385,830 shares related to the amount presented as Unissued Series A
Preferred Stock at December 31, 1998.
In connection with the 1998 sale of Series A Preferred Stock, UAI issued
warrants (the "Series A Warrants") to purchase an additional 33,333 shares of
Series A Preferred Stock at $3.00 per share. These warrants were valued at
$36,000 using the Black-Scholes valuation model. In connection with
F-18
<PAGE> 95
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
the February 1999 sale of Series A Preferred Stock UAI issued warrants to
purchase 43,900 shares of Series A Preferred Stock at $3.00 per share. These
warrants were valued at $47,000 using the Black-Scholes option valuation model.
The Series A Warrants are exercisable for a period of five years after the
issuance date. The Series A Preferred Stock is shown net of the fair value of
the Series A Warrants.
As of December 31, 1998, the holders of Series A Preferred Stock had the
right to demand the Company to redeem one-third of the shares originally
purchased on each of the fourth, fifth, and sixth anniversaries of the closing
and UAI had the right to redeem not less than all of the outstanding Series A
Preferred Stock between the third and sixth anniversaries of the closing. All
redemptions were to be made at amount equal to the sum of the original purchase
price of the Series A Preferred Stock plus accumulated but unpaid dividends. On
February 3, 1999, the Series A Preferred Stock holders approved an amended
Certificate of Designations, Rights and Preferences whereby this mandatory
redemption feature was terminated.
Changes in redeemable cumulative convertible preferred stock and redeemable
cumulative convertible preferred stock warrants are as follows (in thousands,
except share amounts):
<TABLE>
<CAPTION>
REDEEMABLE REDEEMABLE
CUMULATIVE CUMULATIVE
CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED
------------------ STOCK
SHARES AMOUNT WARRANTS
-------- ------ -----------
<S> <C> <C> <C>
Balance at December 31, 1997.......................... -- $ -- $ --
Issuance of Series A Preferred Stock.................. 335,334 875 --
Issuance of Series A Preferred Stock warrants......... -- -- 36
Accretion and dividends on Redeemable Series A
Preferred Stock..................................... -- 28 --
-------- ----- ----
Balance at December 31, 1998.......................... 335,334 903 36
Accretion and dividends on Redeemable Series A
Preferred Stock..................................... -- 9 --
Termination of mandatory redemption feature of Series
A
Preferred Stock..................................... (335,334) (912) (36)
-------- ----- ----
Balance at September 30, 1999......................... -- $ -- $ --
======== ===== ====
</TABLE>
On February 8, 1999, UAI issued 2,000,000 shares of Series B Redeemable
Cumulative Convertible Preferred Stock ("Series B Preferred Stock") for gross
proceeds of $6,000,000. In conjunction with the issuance of the Series B
Preferred Stock, the Company issued warrants to purchase an additional 400,002
shares of Series B Preferred Stock (the "Series B Warrants") at an exercise
price of $0.01 per share and warrants to purchase 360,000 shares of Common Stock
at $.50 per share, and caused options to purchase 840,000 shares of Common Stock
at $.50 per share to be granted by certain principal shareholders of the
Company's Common Stock. The 840,000 common stock options granted by the
principal shareholders were valued at $31,000 using the Black-Scholes valuation
model. This amount was recorded as additional paid-in capital. Series B
Preferred Stock is convertible into Common Stock on a 6-for-1 basis. During the
six month period ended June 30, 1999, 233,335 of the Series B Warrants were
exercised.
F-19
<PAGE> 96
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
On April 30, 1999, UAI issued 666,667 shares of Series C Convertible
Preferred Stock ("Series C Preferred Stock") for gross proceeds of $1,950,000.
During the period from June 30, 1999 to September 30, 1999, UAI issued
5,957,611 shares of Series D Cumulative Convertible Preferred Stock ("Series D
Preferred Stock") for gross proceeds of $25,319,847. The Company also issued
82,353 shares valued at $4.25 per share in connection with the purchase of
certain assets of PCN (see Note 3). The Company also issued 2,733 shares of
Series D Preferred Stock on December 6, 1999 for gross proceeds of $50,014.
On November 10, 1999, UAI issued 1,557,385 shares of Series E Cumulative
Convertible Preferred Stock ("Series E Preferred Stock") and warrants to
purchase an additional 40,000 shares of Series E Preferred Stock for gross
proceeds of $28.5 million. Series E Preferred Stock is convertible into Common
stock on a 3-for-1 basis. The conversion ratio for the Series E Preferred Stock
will be multiplied by the lesser of 3.75 or the quotient of $750 million divided
by the product of the number of fully diluted shares of common stock outstanding
immediately before an initial public offering multiplied by the initial public
offering per share price (such quotient is not to be less than 1).
Upon liquidation or dissolution, shareholders of Preferred Stock will be
distributed available assets up to the sum of the original purchase price plus
accumulated but unpaid dividends. This distribution has preference over any
distribution to common stock holders.
Holders of the Company's Preferred Stock are entitled to cumulative
dividends (payable in cash or stock at the Company's discretion) and have the
right to convert their shares at any time into shares of UAI Common Stock as
follows:
<TABLE>
<CAPTION>
ANNUAL
DIVIDEND CONVERSION
RATE RATIO
-------- ----------
<S> <C> <C> <C>
Series A.............................. 8% 6-to-1
Series B.............................. 5% 6-to-1
Series C.............................. None 3-to-1
Series D.............................. 6% 3-to-1
3-to-1 (subject
to
Series E.............................. 1.4% adjustment)
</TABLE>
A qualified initial public offering of at least $1 per share triggers a
mandatory conversion of all outstanding Preferred Stock into Common Stock, and
of all outstanding Preferred Stock Warrants into warrants to purchase Common
Stock at the above conversion ratios.
The holders of the Preferred Stock and the holders of Common Stock vote as
one class, subject to certain provisions. Each share of Preferred Stock is
entitled to cast the number of votes equal to the number of Common Shares into
which their preferred stock is convertible.
NOTE 13 -- COMMON STOCK
At September 30, 1999, UAI had authorized 300,000,000 shares of $.01 par
value Common Stock and 31,925,000 shares were issued and outstanding.
The Company has a sufficient number of authorized Common Stock shares
available to issue upon the conversion of the outstanding preferred stock,
warrants and stock options.
F-20
<PAGE> 97
UNIVERSAL ACCESS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1998 IS UNAUDITED
As of September 30 1999, Common Stock shares reserved for issuance are as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
<S> <C>
Series A cumulative convertible preferred stock............. 4,633,986
Series A cumulative convertible preferred stock warrants.... 463,398
Series B cumulative convertible preferred stock............. 13,400,010
Series B cumulative convertible preferred stock warrants.... 1,000,002
Series C convertible preferred stock........................ 2,000,001
Series D cumulative convertible preferred stock............. 18,119,892
Common stock options........................................ 10,074,000
Common stock warrants....................................... 360,000
</TABLE>
NOTE 14 -- SUPPLEMENTAL CASH FLOW DISCLOSURE
On July 30, 1999, UAI acquired certain assets and assumed certain
liabilities from Pacific Crest Networks, Inc. Assets acquired included $510,000
of computer hardware subject to capital leases, and liabilities assumed included
$418,000 of obligations under capital leases.
On August 4, 1999, UAI executed notes receivable with three of the
Company's officers in consideration for the exercise of stock options as
described in Note 8.
On August 12, 1999, UAI issued 325,000 shares of common stock in exchange
for UTX equipment. The common stock had a fair market value of $1.42 per share
on the date of issuance.
On September 15, 1999, UAI agreed to issue 35,294 shares of Series D
Preferred Stock at a price below fair market value in exchange for services. UAI
recorded $110,000 of operations and administration expense related to this
transaction.
At September 30, 1999, $6.4 million of equipment purchases were included in
accounts payable.
At September 30, 1999, UAI had issued $155,000 of Series D Preferred Stock
for which the Company did not receive the related cash until October 1999.
No amounts were paid for income taxes in 1997, 1998 or the nine months
ended September 30, 1999. UAI paid interest of $0, $0 and $18,000 in 1997, 1998
and the nine months ended September 30, 1999, respectively.
NOTE 15 -- SUBSEQUENT EVENT (UNAUDITED)
On December 15, 1999, UAI entered into a credit agreement with a bank, to
borrow up to $3.3 million. Outstanding borrowings bear interest at approximately
15% and are collateralized by specifically identified assets. This agreement
expires in November 2002 and requires that we maintain an unrestricted cash
balance of at least $15.0 million.
F-21
<PAGE> 98
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Pacific Crest Networks, Inc. d/b/a The Pond
In our opinion, the accompanying balance sheets and the related statements
of operations, of cash flows, and of changes in stockholders' equity (deficit)
present fairly, in all material respects, the financial position of Pacific
Crest Networks, Inc. at December 31, 1997 and 1998, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
July 30, 1999
F-22
<PAGE> 99
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- JUNE 30,
1997 1998 1999
----- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 12 $ -- $ --
Accounts receivable:
Trade, net of allowance of $6, $1 and $7............. 34 43 97
Other................................................ -- 5 --
Other current assets.................................... -- 10 3
----- ------ -------
Total current assets............................... 46 58 100
Property and equipment, net............................... 160 725 804
Other assets, net......................................... 6 4 1
----- ------ -------
Total assets....................................... $ 212 $ 787 $ 905
===== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank overdraft.......................................... $ -- $ 1 $ 31
Accounts payable........................................ 25 87 186
Accrued expenses........................................ 3 42 --
Notes payable........................................... 18 64 54
Current obligations under capital leases................ 21 185 142
Note payable, shareholder............................... -- 158 369
Due to shareholders..................................... 6 -- --
Line of credit, bank.................................... -- 150 150
Customer deposits....................................... 40 6 9
----- ------ -------
Total current liabilities.......................... 113 693 941
Obligations under capital leases, net of current
portion................................................. 25 342 298
Notes payable, net of current portion..................... 62 20 20
Due to Universal Access, Inc.............................. -- -- 341
----- ------ -------
Total liabilities.................................. 200 1,055 1,600
----- ------ -------
Commitments (Note 5)
Stockholders' equity (deficit):
Common stock, no par value; 100,000,000 shares
authorized; 5,800,000, 13,449,275 and 13,449,275
shares issued and outstanding at December 31, 1997,
1998, and June 30, 1999, respectively................ 100 108 108
Additional paid-in capital.............................. 73 321 321
Accumulated deficit..................................... (161) (697) (1,124)
----- ------ -------
Total stockholders' equity (deficit)............... 12 (268) (695)
----- ------ -------
Total liabilities and stockholders' equity
(deficit)....................................... $ 212 $ 787 $ 905
===== ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 100
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
-------------- --------------
1997 1998 1998 1999
---- ------ ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................................ $370 $ 551 $ 260 $ 424
---- ------ ----- -----
Costs and operating expenses:
Cost of revenues...................................... 54 206 85 298
Operations and administration......................... 298 498 160 418
Stock option compensation............................. 20 248 232 --
Depreciation and amortization......................... 33 91 20 86
---- ------ ----- -----
Total operating expenses........................... 405 1,043 497 802
---- ------ ----- -----
Operating loss........................................ (35) (492) (237) (378)
Interest expense........................................ 11 44 6 49
---- ------ ----- -----
Net loss.............................................. $(46) $ (536) $(243) $(427)
==== ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 101
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
------------- --------------
1997 1998 1998 1999
---- ----- ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(46) $(536) $(243) $(427)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Stock option compensation.......................... 20 248 232 --
Depreciation....................................... 27 38 12 36
Amortization....................................... 6 53 8 50
Provision for doubtful accounts.................... 6 (5) -- 6
Loss on disposition of assets...................... -- 1 -- --
Changes in operating assets and liabilities:
Accounts receivable.............................. (11) (4) (5) (60)
Other assets..................................... (3) (15) (4) 15
Accounts payable................................. 8 62 48 99
Accrued expenses................................. 6 39 (3) (42)
Customer deposits................................ 24 (34) 3 3
---- ----- ----- -----
Net cash provided by (used in) operating
activities.................................. 37 (153) 48 (320)
---- ----- ----- -----
Cash flows used in investing activities:
Purchases of property and equipment................... (30) (106) (23) (165)
Proceeds from disposal of equipment................... -- 2 -- --
---- ----- ----- -----
Net cash used in investing activities......... (30) (104) (23) (165)
---- ----- ----- -----
Cash flows from financing activities:
Bank overdraft........................................ -- 1 -- 30
Payments on capital leases............................ (17) (70) (15) (87)
Proceeds from issuance of notes payable............... 20 --
Payments on notes payable............................. (21) (16) (8) (10)
Proceeds from note payable to Universal Access,
Inc................................................ -- -- -- 341
Proceeds from notes payable to and advances from
shareholders....................................... 6 156 -- 211
Payments on notes payable to and advances from
shareholders....................................... -- (4) -- --
Proceeds from line of credit, bank.................... -- 150 -- --
Proceeds from exercise of stock options............... -- 8 -- --
---- ----- ----- -----
Net cash provided by (used in) financing
activities.................................. (32) 245 (23) 485
---- ----- ----- -----
Net increase (decrease) in cash and cash equivalents.... (25) (12) 2 --
Cash and cash equivalents, beginning of year............ 37 12 12 --
---- ----- ----- -----
Cash and cash equivalents, end of year.................. $ 12 $ -- $ 14 $ --
==== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE> 102
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
------------------- ------------------- ADDITIONAL
$1 STATED PAID-IN ACCUMULATED
SHARES VALUE SHARES AMOUNT CAPITAL DEFICIT TOTAL
------- --------- ---------- ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996.... 90,000 $ 90 580,000 $ 10 $ -- $ (115) $ (15)
Conversion of preferred stock to
common stock.................. (90,000) (90) 5,220,000 90 -- -- --
Stock option plan
compensation.................. -- -- -- -- 20 -- 20
Conversion of shareholder loan
to additional paid-in
capital....................... -- -- -- -- 53 -- 53
Net loss........................ -- -- -- -- -- (46) (46)
------- ---- ---------- ---- ---- ------- -----
Balance at December 31, 1997.... -- -- 5,800,000 100 73 (161) 12
Stock option plan
compensation.................. -- -- -- -- 248 -- 248
Common stock issued upon
exercise of stock options..... -- -- 7,649,275 8 -- -- 8
Net loss........................ -- -- -- -- -- (536) (536)
------- ---- ---------- ---- ---- ------- -----
Balance at December 31, 1998.... -- -- 13,449,275 108 321 (697) (268)
Net loss (unaudited)............ -- -- -- -- -- (427) (427)
------- ---- ---------- ---- ---- ------- -----
Balance at June 30, 1999
(unaudited)................... -- $ -- 13,449,275 $108 $321 $(1,124) $(695)
======= ==== ========== ==== ==== ======= =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE> 103
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
NOTE 1 -- DESCRIPTION OF THE COMPANY
Pacific Crest Networks, Inc. (the "Company" or "PCN"), an Oregon
Corporation, was originally organized in 1995 as Cascade Communications Group
("Cascade"), a partnership, for the purpose of providing internet access
services. In May 1996, the partners of Cascade formed a new corporation, Pacific
Crest Interactive, Inc., and assigned all of the assets and liabilities of
Cascade to the new corporation. During 1997, Pacific Crest Interactive continued
to provide internet access services; however, it also began to focus on the
development and deployment of broadband network access and introduced its core
broadband network products in 1998. In October 1998, the Company changed its
name to Pacific Crest Networks, Inc. The Company presently provides internet
access services to the general public and high-speed broadband network
technologies and data transport services primarily to internet service providers
and business customers. During 1998, all of the Company's customers were located
in the State of Oregon, and in 1999, operations were expanded to the State of
Washington.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying interim financial statements as of June 30, 1999 and for
the six months ended June 30, 1998 and 1999 and the related notes have not been
audited. However, they have been prepared in conformity with the accounting
principles stated in the audited financial statements for the years ended
December 31, 1997 and 1998 and include all adjustments, which were of a normal
and recurring nature, which in the opinion of management are necessary to
present fairly the financial position of the Company and results of operations
and cash flows for the periods presented. The operating results for the interim
periods are not necessarily indicative of results expected for the full years.
REVENUE RECOGNITION
Substantially all revenue for services is billed and recognized in the same
month that service is provided. Certain excess usage charges are billed to
customers in the month following service. The Company records the excess usage
charges in the month they are earned.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, money market funds and all
investments with an initial maturity of three months or less. All cash
equivalents are recorded at cost.
STOCK-BASED COMPENSATION
The Company accounts for stock-based awards to employees using the
intrinsic value method as prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, no compensation expense is recorded for options
issued to employees in fixed amounts and with fixed exercise prices at least
equal to the fair market value of the Company's common stock at the date of
grant. The Company has adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," through disclosure only (Note 7). All stock-based
awards to non-employees are accounted for at their fair value in accordance with
SFAS No. 123.
F-27
<PAGE> 104
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
COMPREHENSIVE INCOME
SFAS No. 130 requires that a full set of general purpose financial
statements include the reporting of "comprehensive income." Comprehensive income
is comprised of two components: net income and other comprehensive income, with
other comprehensive income being comprised of foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. During the years ended December 31,
1997 and 1998, comprehensive income was comprised solely of net income. As a
result, the adoption of SFAS No. 130 had no impact on the Company's financial
statements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost with depreciation provided for
under the straight-line method. Leasehold improvements are amortized over the
remaining life of the lease. Depreciable lives used by the Company for its
classes of assets are as follows:
<TABLE>
<S> <C>
Furniture and fixtures..................................... 7 years
Computer hardware.......................................... 5 years
Computer software.......................................... 3 years
</TABLE>
Certain property and equipment has been acquired through capital leasing
arrangements. This property and equipment is recorded at the present value of
total lease payments using the rate of interest implicit in the lease. The
recorded amount is then amortized over the lesser of the useful life of the
related asset or the term of the lease.
INCOME TAXES
Deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis and for tax
carryforwards. Deferred tax assets are offset by a valuation allowance to the
extent it is more likely than not that the future tax benefit of the deferred
tax asset will not be realized.
The Company has established a net deferred tax asset which reflects the tax
consequences in future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts. The deferred tax asset was
recorded net of a valuation allowance to reduce the deferred tax asset to an
amount that is more likely than not going to be realized.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
F-28
<PAGE> 105
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
NOTE 3 -- PROPERTY AND EQUIPMENT
Property and equipment not subject to capital leases consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Office equipment and furniture.............................. $ 4,000 $ 14,000
Leasehold improvements...................................... 4,000 9,000
Computer hardware........................................... 131,000 210,000
Computer software........................................... 8,000 14,000
-------- --------
147,000 247,000
Less: accumulated depreciation.............................. (37,000) (72,000)
-------- --------
Property and equipment, not subject to capital leases,
net....................................................... $110,000 $175,000
======== ========
</TABLE>
Property and equipment subject to capital leases consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
------- --------
<S> <C> <C>
Office equipment and furniture.............................. $18,000 $ 18,000
Computer hardware........................................... 38,000 573,000
Computer software........................................... -- 16,000
------- --------
56,000 607,000
Less: accumulated amortization.............................. (6,000) (57,000)
------- --------
Property and equipment subject to capital leases, net....... $50,000 $550,000
======= ========
</TABLE>
Amortization expense on capital leases was $6,000 and $51,000 for the years
ended December 31, 1997 and 1998, respectively.
NOTE 4 -- DEBT
Debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
------- --------
<S> <C> <C>
Current:
Notes payable............................................... $18,000 $ 64,000
Notes payable, shareholders............................... -- 158,000
Due to shareholders......................................... 6,000 --
Line of credit, bank...................................... -- 150,000
------- --------
Total current debt................................ 24,000 372,000
Notes payable, noncurrent................................... 62,000 20,000
------- --------
Total debt........................................ $86,000 $392,000
======= ========
</TABLE>
During 1998, the Company issued an unsecured note payable to an unrelated
individual for $20,000. The note bears interest at a rate of 10% payable
monthly. The entire principal is due on December 17, 2000. The note can be
prepaid by the Company at any time without penalty.
F-29
<PAGE> 106
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
During 1998, the Company obtained an unsecured line of credit of $400,000
from a shareholder. At December 31, 1998, the balance outstanding was $158,000.
The line of credit does not bear interest and all outstanding borrowings are due
on December 31, 1999 or upon the sale of the Company. An interest rate on the
borrowings was imputed at a rate of 12%, which represents management's estimate
of the Company's unsecured borrowing rate. Interest expense on this note was
$2,000 in 1998. The imputed interest is included in the balance of the note
since the Company intends to repay the shareholder the principal balance plus
all imputed interest.
During 1997, two shareholders advanced funds to the Company. As of December
31, 1997, the balance of the outstanding borrowings was $6,000. During 1998,
$4,000 of this balance was paid in full, and the remaining $2,000 was added to
the $158,000 note payable described above. These borrowings were not subject to
any written agreement. The Company did not record imputed interest on these
borrowings since the estimated interest charges were insignificant.
In August 1998, the Company issued a $150,000 note payable to a Bank. This
note bears interest at a rate of prime plus 3% with interest payments due
monthly. The interest rate at December 31, 1998 was 10.75%. The entire balance
of this note is due upon demand with an established final maturity of August 1,
1999. The note is collateralized by substantially all of the assets of the
Company. Further, the entire principal balance of the note and accrued interest
are personally guaranteed by the three stockholders of the Company.
In September 1996, the Company entered into a business loan agreement with
the City of Eugene, Oregon in the amount of $100,000. The note bears interest at
7%. The Company is currently paying monthly interest and principal payments of
approximately $2,000 with a final principal payment of $51,000 due on August 1,
1999. This loan is collateralized by substantially all of the assets of the
Company. In addition, a stockholder of the Company personally guaranteed the
entire loan balance and accrued interest and also pledged certain personal real
property as collateral.
Debt maturities are as follows:
<TABLE>
<S> <C>
1999............................................. $372,000
2000............................................. 20,000
--------
$392,000
========
</TABLE>
NOTE 5 -- COMMITMENTS
The Company leases office facilities over periods of up to three years.
Total rent expense during 1997 and 1998 was $17,000 and $32,000, respectively.
Future rentals for operating leases at December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999.............................................. $39,000
2000.............................................. 24,000
2001.............................................. 12,000
-------
Total minimum operating lease
payments.............................. $75,000
=======
</TABLE>
F-30
<PAGE> 107
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
The Company also leases certain equipment under capital leasing
arrangements with periods ranging from two to five years. Future minimum lease
payments as of December 31, 1998 related to the capital leasing arrangements are
as follows:
<TABLE>
<S> <C>
1999........................................................ $ 247,000
2000........................................................ 233,000
2001........................................................ 151,000
---------
Total minimum capital lease payments........................ 631,000
Less: imputed interest...................................... (104,000)
---------
Present value of minimum capital lease payments............. 527,000
Less: current portion....................................... (185,000)
---------
Long-term capital lease obligations......................... $ 342,000
=========
</TABLE>
The Company has entered into non-cancellable contracts with certain vendors
whereby such vendors provide the Company network access, domain name service and
certain other services. Commitments under these contracts are as follows as of
December 31, 1998:
<TABLE>
<S> <C>
1999........................................................ $204,000
2000........................................................ 106,000
2001........................................................ 65,000
2002........................................................ 43,000
2003........................................................ 25,000
Thereafter.................................................. 1,000
--------
$444,000
========
</TABLE>
NOTE 6 -- INCOME TAXES
There is no current provision or benefit for income taxes recorded for the
years ended December 31, 1997 and 1998, as the Company has generated net
operating losses for income tax purposes for which there is no carryback
potential. There is no deferred provision or benefit for income taxes recorded
as the Company is in a net asset position for which a full valuation allowance
has been recorded due to the uncertainty of realization.
The components of the net deferred income tax asset are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Net operating loss carryforwards..................... $ 53,000 $210,000
Basis of property and equipment...................... (10,000) (45,000)
Other................................................ 2,000 4,000
-------- --------
Net deferred tax asset............................... 45,000 169,000
Less: valuation allowance............................ (45,000) (169,000)
-------- --------
Total...................................... $ -- $ --
======== ========
</TABLE>
At December 31, 1997 and 1998, the Company had a federal and state net
operating loss carryforwards of $131,000 and $518,000, respectively. The net
operating losses will expire in 2016
F-31
<PAGE> 108
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
through 2018 for federal purposes, and 2011 through 2013 for state purposes.
Upon cumulative ownership changes of more than 50% over a three year period (see
Note 10), certain limitations apply to the amount of net operating loss that can
be deducted from taxable income in each future year. The net operating loss
carryforward limitation in each year in the carryforward period approximates the
product of the fair market value of the Company immediately before ownership
transfer multiplied by the long-term federal interest rate.
NOTE 7 -- STOCK OPTIONS
During 1997 and 1998, the Company's Board of Directors granted stock
options to two individuals who were both employees of the Company and members of
the Board of Directors. The Company does not have a formal stock option plan,
nor are there any shares specifically reserved for stock option grants. All
options issued had an exercise price of $.001, were immediately exercisable, and
expired three years after the date of grant.
During 1997 and 1998, the Company calculated compensation cost based on the
fair value of the underlying Common Stock on the date of grant. The fair value
of the Common Stock was deemed to represent the fair value of the stock options,
since the exercise price of the stock options was de minimis.
During 1997 and 1998, the Company recognized stock option plan compensation
expense of $20,000 and $248,000, respectively.
The following summarizes stock option activity:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C>
Balance at December 31, 1996................................ --
Granted................................................... 664,444
----------
Balance at December 31, 1997................................ 664,444
Granted................................................... 6,984,831
Exercised................................................. (7,649,275)
----------
Balance at December 31, 1998................................ --
==========
</TABLE>
The weighted average fair value of all options granted during 1997 and 1998
was $.0305 and $.0354, respectively.
As set forth in Note 2, the Company accounts for stock based awards to
employees in accordance with APB 25. Compensation cost would remain unchanged
had the Company elected to recognize compensation cost in accordance with SFAS
123.
NOTE 8 -- PREFERRED STOCK CONVERSION
Effective January 1, 1997, the sole shareholder of the Company converted
all of the issued and outstanding preferred stock to common stock. This action
was authorized by the Company's Board of Directors at a conversion rate equal to
the initial issuance price of the common stock.
F-32
<PAGE> 109
PACIFIC CREST NETWORKS, INC.
D/B/A THE POND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1998 AND 1999 IS UNAUDITED
NOTE 9 -- SUPPLEMENTAL CASH FLOW DISCLOSURES
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Interest paid......................................... $ 27,000 $11,000
======== =======
Property and equipment acquired subject to capital
leases................................................ $551,000 $56,000
======== =======
</TABLE>
NOTE 10 -- SUBSEQUENT EVENT
On July 30, 1999, substantially all of the assets and liabilities of the
Company were sold to Universal Access, Inc. ("UAI") in exchange for $833,000 in
cash, $224,000 of debt assumed by UAI, and 82,353 shares of UAI Series D
Convertible Preferred Stock ("Series D"). The Series D had a per share value of
$4.25 on the date of sale. Assets sold included all property and equipment,
cash, accounts receivable, software, customer lists and intellectual property.
Also, as part of the sale, UAI assumed certain liabilities of the Company
including $276,000 of accounts payable, obligations under leases and vendor
contracts, and advances made by UAI to the Company during 1999.
F-33
<PAGE> 110
REPORT OF INDEPENDENT ACCOUNTANTS
INFORMATION FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
To the Board of Directors and
Stockholders of Stuff Software, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in stockholders' deficit and of cash flows present
fairly, in all material respects, the financial position of Stuff Software, Inc.
at December 31, 1997 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
October 1, 1999
F-34
<PAGE> 111
STUFF SOFTWARE, INC.
BALANCE SHEET
(IN THOUSANDS)
INFORMATION FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1997 1998 1999
---- ---- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................... $ 1 $ 5 $ 6
Accounts receivable, net................................ 11 16 16
---- ---- ----
Total current assets............................ 12 21 22
---- ---- ----
Total assets.................................... $ 12 $ 21 $ 22
==== ==== ====
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Unearned revenue........................................ $ 29 $ 41 $ 58
Total current liabilities....................... 29 41 58
---- ---- ----
Stockholders' deficit:
Common stock, $.01 par value; 1,000 shares authorized
issued and outstanding............................... -- -- --
Additional paid-in capital.............................. 5 5 5
Accumulated deficit..................................... (22) (25) (41)
---- ---- ----
Total stockholders' deficit..................... (17) (20) (36)
---- ---- ----
Total liabilities and stockholders' deficit..... $ 12 $ 21 $ 22
==== ==== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE> 112
STUFF SOFTWARE, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS)
INFORMATION FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE
ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------- -------------
1997 1998 1998 1999
---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................................. $ 70 $114 $ 56 $113
Operating expenses:
Cost of revenues....................................... (9) (6) (5) (4)
Operations and administration.......................... (20) (23) (16) (33)
---- ---- ---- ----
Total operating expenses............................ (29) (29) (21) (37)
---- ---- ---- ----
Operating income.................................... 41 85 35 76
---- ---- ---- ----
Interest expense......................................... (1) (1) (1) --
---- ---- ---- ----
Net income............................................... $ 40 $ 84 $ 34 $ 76
==== ==== ==== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE> 113
STUFF SOFTWARE, INC.
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
INFORMATION FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE
ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
-------------- --------------
1997 1998 1998 1999
---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 40 $ 84 $ 34 $ 76
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in operating assets and liabilities:
Accounts receivable............................ (5) (5) (2) --
Unearned revenue............................... 13 12 6 17
---- ---- ---- ----
Net cash provided by operating activities... 48 91 38 93
---- ---- ---- ----
Cash flows from financing activities:
Distributions to stockholders....................... (50) (87) (34) (92)
---- ---- ---- ----
Net (decrease) increase in cash....................... (2) 4 4 1
Cash, beginning of period............................. 3 1 1 5
---- ---- ---- ----
Cash, end of period................................... $ 1 $ 5 $ 5 $ 6
==== ==== ==== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 114
STUFF SOFTWARE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT SHARE DATA)
INFORMATION FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCK
--------------- ADDITIONAL
PAR PAID-IN ACCUMULATED
SHARES VALUE CAPITAL DEFICIT TOTAL
------ ----- ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996.......... 1,000 $-- $5 $(12) $ (7)
Distributions to stockholders......... -- -- -- (50) (50)
Net income............................ -- -- -- 40 40
------ --- -- ---- ----
Balance at December 31, 1997.......... 1,000 -- 5 (22) (17)
Distributions to stockholders......... -- -- -- (87) (87)
Net income............................ -- -- -- 84 84
------ --- -- ---- ----
Balance at December 31, 1998.......... 1,000 -- 5 (25) (20)
Distributions to stockholders
(unaudited)......................... -- -- -- (92) (92)
Net income (unaudited)................ -- -- -- 76 76
------ --- -- ---- ----
Balance at September 30, 1999
(unaudited)......................... 1,000 $-- $5 $(41) $(36)
====== === == ==== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE> 115
STUFF SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Stuff Software, Inc. (the "Company") operates as a Florida Subchapter S
Corporation. From its inception through November 30, 1998, Stuff Software, Inc.
operated as a sole proprietorship. The November 30, 1998 reorganization is
reflected retroactively throughout the financial statements for all periods
presented. The Company develops software and databases for use in the area of
telecommunications cost and benefit analysis.
BASIS OF PRESENTATION
The accompanying interim financial statements as of September 30, 1999 and
for the nine months ended September 30, 1998 and 1999 and the related notes have
not been audited. However, they have been prepared in conformity with the
accounting principles stated in the audited financial statements for the years
ended December 31, 1997 and 1998 and include all adjustments, which were of a
normal and recurring nature, which in the opinion of management are necessary to
present fairly the financial position of the Company and results of operations
and cash flows for the periods presented. The operating results for the interim
periods are not necessarily indicative of results expected for the full years.
REVENUE RECOGNITION
Services are billed annually, monthly, and quarterly in advance. Stuff
Software recognizes revenue in the month in which the service is provided.
Advance billings are recorded by the Company as unearned revenue. Stuff Software
recognizes revenue from one-time fees for special projects when the related
services are performed.
ACCOUNTS RECEIVABLE
Financial instruments that could potentially subject Stuff Software to
concentration of credit risk primarily include accounts receivable. As of
December 31, 1998, three customers represented 43% of total accounts receivable
and no customer represented more than 10% of total revenues during 1998. As of
December 31, 1997, no customer represented more than 10% of total accounts
receivable and no customer represented more than 10% of total revenues during
1997. If any of these individually significant customers are unable to meet
their financial obligations, results of operations of the Company could be
adversely affected.
COMPREHENSIVE INCOME
SFAS No. 130 requires that a full set of general purpose financial
statements include the reporting of "comprehensive income." Comprehensive income
is comprised of two components: net income and other comprehensive income, with
other comprehensive income being comprised of foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. During the years ended December 31,
1997 and 1998, comprehensive income was comprised solely of net income. As a
result, the adoption of SFAS No. 130 had no impact on the Company's financial
statements.
F-39
<PAGE> 116
STUFF SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INFORMATION FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED
ADVERTISING COSTS
The Company expenses advertising costs as incurred. For the years ended
December 31, 1997 and 1998, advertising expense totaled $5,000 and $6,000,
respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 2 -- INCOME TAXES
Stuff Software, Inc. changed status from a sole proprietor to a
S-Corporation on November 30, 1998. For both a sole proprietorship and a
S-Corporation, all attributes for federal and state income taxes pass through to
the stockholder. Accordingly, no income tax provision or deferred tax amounts
have been recorded.
NOTE 3 -- INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
During the years ended December 31, 1997 and 1998, substantially all of the
Company's identifiable assets were located in the United States. During that
same period, substantially all of the Company's revenues were derived from sales
to customers based in the United States.
F-40
<PAGE> 117
UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma combined financial information assumes
the acquisition of Pacific Crest Networks, Inc. d/b/a The Pond ("Pacific Crest
Networks" or "PCN") and Stuff Software, Inc. ("Stuff Software") by Universal
Access, Inc. ("Universal Access" or "UAI") accounted for on the purchase method
of accounting and are based on the respective historical financial statements
and the notes thereto, which are included in this Registration Statement. The
unaudited pro forma combined balance sheet gives effect to the Stuff Software
acquisition as if it had occurred on September 30, 1999 and combines UAI's
September 30, 1999 balance sheet with the September 30, 1999 unaudited balance
sheet of Stuff Software. The unaudited pro forma statements of operations give
effect to the acquisitions as if they had occurred on January 1, 1998. The
unaudited pro forma combined statement of operations for the year ended December
31, 1998 combines UAI's historical results for the year ended December 31, 1998
with the historical results of Pacific Crest Networks and Stuff Software for
that same year. The unaudited pro forma combined statement of operations for the
nine months ended September 30, 1999 combines UAI's unaudited historical results
for the nine months ended September 30, 1999 with the unaudited historical
statement of operations of Stuff Software for that same period, and the
unaudited historical statement of operations of Pacific Crest Networks for the
period from January 1, 1999 to July 30, 1999, the acquisition date.
There were no material differences between the accounting policies of UAI
and those of Pacific Crest Networks and Stuff Software. Certain financial
statement balances of Pacific Crest Networks have been reclassified to conform
with UAI's financial statement presentation.
The unaudited pro forma information included herein is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred had the acquisitions been
consummated at the beginning of the periods presented, nor is it necessarily
indicative of future operating results or financial position.
These pro forma financial statements are based on, and should be read in
conjunction with, the historical financial statements and the related notes
thereto of Universal Access, Pacific Crest Networks and Stuff Software included
in this Registration Statement.
F-41
<PAGE> 118
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
UNIVERSAL STUFF PRO FORMA PRO FORMA
ACCESS, INC. SOFTWARE, INC. ADJUSTMENTS COMBINED
------------ -------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 21,703 $ 6 $ (965)(2) $ 20,744
Accounts receivable, net.................... 2,666 16 -- 2,682
Prepaid expenses and other current assets... 142 -- -- 142
Security deposits........................... 360 -- -- 360
Regulatory taxes receivable................. 255 -- -- 255
-------- ---- ------ --------
Total current assets.................... 25,126 22 (965) 24,183
Restricted cash............................... 149 -- -- 149
Property and equipment, net................... 13,512 -- -- 13,512
Intangible assets, net........................ 1,204 -- 1,306(1) 2,510
Other......................................... 18 -- -- 18
-------- ---- ------ --------
Total assets............................ $ 40,009 $ 22 $ 341 $ 40,372
======== ==== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................ $ 8,401 $ -- $ -- $ 8,401
Regulatory taxes payable.................... 911 -- -- 911
Accrued expenses and other current
liabilities............................... 222 -- -- 222
Unearned revenue............................ 1,461 58 -- 1,519
Notes payable............................... 54 -- -- 54
Current obligations under capital leases.... 149 -- -- 149
-------- ---- ------ --------
Total current liabilities............... 11,198 58 -- 11,256
Note payable.................................. 131 -- -- 131
Obligations under capital leases, net of
current portion............................. 254 -- -- 254
Security deposits payable..................... 240 -- -- 240
-------- ---- ------ --------
Total liabilities....................... 11,823 58 -- 11,881
-------- ---- ------ --------
Stockholders' equity (deficit):
Preferred stock:
Cumulative Convertible Series A........... 2,161 -- -- 2,161
Cumulative Convertible Series A
warrants................................ 83 -- -- 83
Cumulative Convertible Series B........... 5,448 -- -- 5,448
Convertible Series B warrants............. 500 -- -- 500
Convertible Series C...................... 1,941 -- -- 1,941
Cumulative Convertible Series D........... 25,785 -- -- 25,785
Cumulative Convertible Series D
subscriptions receivable................ (155) -- -- (155)
Common stock................................ 2,170 -- 305(3) 2,475
Common stock warrants....................... 13 -- -- 13
Additional paid-in-capital.................. 4,750 5 (5)(4) 4,750
Deferred stock option plan compensation..... (1,569) -- -- (1,569)
Accumulated deficit......................... (11,256) (41) 41(4) (11,256)
Notes receivable -- employees............... (1,685) -- -- (1,685)
Total stockholders' equity (deficit).... 28,186 (36) 341 28,491
-------- ---- ------ --------
Total liabilities and stockholders'
equity (deficit)..................... $ 40,009 $ 22 $ 341 $ 40,372
======== ==== ====== ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
combined financial statements.
F-42
<PAGE> 119
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PACIFIC CREST
NETWORKS, INC.
UNIVERSAL D/B/A STUFF PRO FORMA PRO FORMA
ACCESS, INC. THE POND SOFTWARE, INC. ADJUSTMENTS COMBINED
------------ -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Circuit access......... $ 1,589 $ 551 $ -- $ -- $ 2,140
UTX................. 40 -- -- -- 40
Other............... -- -- 114 -- 114
------- ------ ---- ----- -------
Total
revenues..... 1,629 551 114 -- 2,294
------- ------ ---- ----- -------
Operating expenses:
Cost of revenues....... 1,256 206 6 -- 1,468
Operations and
administration...... 1,516 498 23 -- 2,037
Depreciation and
amortization........ 47 91 -- 510(5) 648
Stock option plan
compensation........ 65 248 -- -- 313
------- ------ ---- ----- -------
Total operating
expenses..... 2,884 1,043 29 510 4,466
------- ------ ---- ----- -------
Operating
(loss)
income....... (1,255) (492) 85 (510) (2,172)
------- ------ ---- ----- -------
Other income (expense):
Interest expense....... (27) (44) (1) -- (72)
Interest income........ 8 -- -- -- 8
Other expense.......... (100) -- -- -- (100)
------- ------ ---- ----- -------
Total other
income
(expense).... (119) (44) (1) -- (164)
------- ------ ---- ----- -------
Net (loss) income........ (1,374) (536) 84 (510) (2,336)
Accretion and dividends
on redeemable
cumulative convertible
preferred stock........ (28) -- -- -- (28)
------- ------ ---- ----- -------
Net (loss) income
applicable to common
stockholders........... $(1,402) $ (536) $ 84 $(510) $(2,364)
======= ====== ==== ===== =======
Basic and diluted net
loss per share......... $ (0.05) $ (0.08)(6)
Shares used in computing
basic and diluted net
loss per share......... 29,063 29,113(6)
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
combined financial statements.
F-43
<PAGE> 120
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
PACIFIC CREST
NETWORKS, INC.
UNIVERSAL D/B/A STUFF PRO FORMA PRO FORMA
ACCESS, INC. THE POND(7) SOFTWARE, INC. ADJUSTMENTS COMBINED
------------ -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Circuit access................. $ 8,368 $ 524 -- $ -- $ 8,892
UTX....................... 215 -- -- -- 215
Other..................... -- -- 113 -- 113
------- ------ ---- ----- --------
Total revenues.......... 8,583 524 113 -- 9,220
------- ------ ---- ----- --------
Operating expenses:
Cost of revenues............. 7,477 380 4 -- 7,861
Operations and
administration............ 7,144 580 33 -- 7,757
Depreciation and
amortization.............. 290 113 -- 341(5) 744
Stock option plan
compensation.............. 3,085 -- -- -- 3,085
------- ------ ---- ----- --------
Total operating
expenses............. 17,996 1,073 37 341 19,447
------- ------ ---- ----- --------
Operating (loss)
income............... (9,413) (549) 76 (341) (10,227)
------- ------ ---- ----- --------
Other income (expense):
Interest expense............. (19) -- -- -- (19)
Interest income.............. 373 -- -- -- 373
------- ------ ---- ----- --------
Total other income
(expense)............ 354 -- -- -- 354
------- ------ ---- ----- --------
Net (loss) income.............. (9,059) (549) 76 (341) (9,873)
Accretion and dividends on
redeemable and nonredeemable
cumulative convertible
preferred stock.............. (625) -- -- -- (625)
------- ------ ---- ----- --------
Net (loss) income applicable to
common stockholders.......... $(9,684) $ (549) $ 76 $(341) $(10,498)
======= ====== ==== ===== ========
Basic and diluted net loss per
share........................ $ (0.31) $ (0.34)(6)
Shares used in computing basic
and diluted net loss per
share........................ 30,867 30,917(6)
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
combined financial statements.
F-44
<PAGE> 121
NOTES TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
(1) To record the acquisition of Stuff Software. The purchase price is comprised
of the following components:
<TABLE>
<CAPTION>
SSI
--------------
(IN THOUSANDS)
<S> <C>
Cash........................................................ $ 930
Transaction costs........................................... 35
Issuance of preferred stock................................. --
Issuance of common stock.................................... 305
Assumption of PCN debt...................................... --
------
Total purchase price................................... 1,270
Fair value of net tangible liabilities acquired............. 36
------
Fair value of intangible assets acquired............... $1,306
======
</TABLE>
Intangible assets acquired include customer lists, software, copyrights,
business name and domain name. Excess purchase price not specifically
assigned to tangible or intangible assets was allocated to goodwill.
(2) This adjustment represents cash due to Stuff Soft of $930,000 plus
transaction costs of $35,000.
(3) UAI issued 50,021 shares of common stock with a fair value of $6.10 per
share in conjunction with the purchase of SSI.
(4) To eliminate additional-paid-capital and accumulated deficit of SSI.
(5) To record amortization expense on acquired intangibles. All identifiable
intangible assets and goodwill are being amortized on a straight-line basis
over a period of five years.
(6) To reflect the pro forma basic and diluted net loss per share based on pro
forma net loss and the issuance of 50,021 additional shares of common stock
to SSI related to the purchase.
(7) This column includes PCN results of operations from January 1, 1999 to July
30, 1999, the date UAI acquired PCN.
F-45
<PAGE> 122
- ------------------------------------------------------
- ------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.
----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Note Regarding Forward-Looking
Statements.......................... 19
Use of Proceeds....................... 20
Dividend Policy....................... 20
Capitalization........................ 21
Dilution.............................. 23
Selected Financial Data............... 24
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 25
Business.............................. 32
Management............................ 45
Transactions With Related Parties and
Insiders............................ 58
Principal and Selling Stockholders.... 63
Description of Capital Stock.......... 66
Shares Eligible for Future Sale....... 69
Underwriting.......................... 71
Where You May Find Additional
Information......................... 73
Validity of Common Stock.............. 73
Experts............................... 73
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
----------------------
Through and including , 2000 (the 25th day after the date of
this prospectus), all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or
subscription.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
Shares
UNIVERSAL ACCESS, INC.
Common Stock
----------------------
UNIVERSAL LOGO
----------------------
GOLDMAN, SACHS & CO.
HAMBRECHT & QUIST
ROBERTSON STEPHENS
Representatives of the Underwriters
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 123
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 Universal Access in
connection with the sale of Common Stock being registered. All amounts are
estimates except the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $30,360
NASD filing fee............................................. 12,000
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 VIII of Universal Access' Restated Certificate of Incorporation
provides for the indemnification of directors to the fullest extent permissible
under Delaware law.
Article VI of Universal Access' Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of Universal Access if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of Universal Access, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his or her conduct was unlawful.
Universal Access has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
Universal Access' 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
During the past three years, Universal Access has issued unregistered
securities to a limited number of persons as described below. The common stock
share information presented below has been adjusted to give effect to the five
hundred-for-one stock split of the Registrant's common stock approved by the
board of directors of the Registrant on July 10, 1998, the two-for-one stock
split of the Registrant's common stock approved by the board of directors of the
Registrant on February 17, 1999, the three-for-two stock split of the
Registrant's common stock approved by the board of directors of the Registrant
on June 23, 1999 and the two-for-one stock split, effected as a stock dividend,
of the Registrant's common stock approved by the board of directors of the
Registrant on September 15, 1999. Our Series A and Series B Preferred Stock are
convertible into 6 shares of our
II-1
<PAGE> 124
common stock. Our Series C, Series D and Series E Preferred Stock are
convertible into 3 shares of our common stock.
1. From inception through September 30, 1999 (the latest practical
date), we granted stock options to purchase an aggregate of 11,881,500
shares of our common stock at exercise prices ranging from $.000003 to
$4.25 per share to our employees, consultants, and directors pursuant to
our 1998 Stock Plan.
2. From inception through September 30, 1999 (the latest practical
date), we issued and sold an aggregate of 1,600,000 shares of our common
stock to employees, consultants and directors for an aggregate
consideration of $1,485,001 pursuant to the exercise of options granted
under the 1998 Stock Plan.
3. During September 1998 and December 1998 and during January,
February and March of 1999, we sold an aggregate of 772,331 shares of
Series A Preferred Stock for $3.00 per share to private investors for an
aggregate purchase price of $2,316,993.
4. On February 8, 1999, we issued three warrants to purchase an
aggregate of 400,002 shares of our Series B Preferred Stock at an exercise
price of $.01 per share to Communications Ventures III, L.P.,
Communications Venture III CEO & Entrepreneurs' Fund, L.P. and Internet
Capital Group in connection with the Series B Preferred Financing.
5. On February 8, 1999 we sold 2,000,000 shares of Series B Preferred
Stock for $3.00 per share to private investors for an aggregate purchase
price of $6,000,000.
6. On May 13, 1999 we sold 666,667 shares of Series C Preferred Stock
for $3.00 per share to private investors for an aggregate purchase price of
$2,000,001.
7. From June 30, 1999 through September 30, 1999 we sold an aggregate
of 5,957,611 shares of Series D Preferred Stock at a purchase price of
$4.25 per share to private investors for an aggregate purchase price of
$25,319,846.
8. On July 31, 1999, in connection with our acquisition of assets from
Pacific Crest Network, Inc. we issued 82,353 shares of Series D Preferred
Stock with a fair market value of $4.25 per share for an aggregate
valuation of $350,000.
9. On November 1, 1999, in connection with our acquisition of assets
from Stuff Software, Inc., we issued 50,021 shares of our common stock with
a fair market value of $6.10 per share for an aggregate valuation of
$305,128.
10. On November 10, 1999 we sold 1,557,385 shares of Series E
Preferred Stock at a purchase price of $18.30 per share to private
investors for an aggregate purchase price of $28,500,146.
11. On December 6, 1999 we sold 2,733 shares of Series D Preferred
Stock at a purchase price of $18.30 per share to a private investor for an
aggregate purchase price of $50,014.
Broadmark Capital Corporation provided services to us in connection with
the placement of our Series A Preferred Stock, Series B Preferred Stock and
Series D Preferred Stock. As consideration for their services, we paid them
approximately $502,190 and we issued them warrants to purchase 360,000 shares of
our common stock and 77,233 shares of our Series A Preferred Stock. In addition,
they received options to purchase a total of 839,994 shares of our common stock
from three of our stockholders.
We issued Advanced Equities a warrant to purchase 40,000 shares of Series E
Preferred Stock with an exercise price of $18.30 per share in connection with
the November 1999 sale of our Series E Preferred Stock.
Except as indicated above, none of the foregoing transactions involved any
underwriters, underwriting discounts or commissions, or any public offering, and
Universal Access believes that
II-2
<PAGE> 125
each transaction was exempt from the registration requirements of the Securities
Act by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or
Rule 701 pursuant to compensatory benefit plans and contracts relating to
compensation as provided under such Rule 701. The recipients in 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 instruments
issued in such transactions. All recipients had adequate access, through their
relationships with Universal Access to information about Universal Access.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------- -----------------------
<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 Amended and Restated Bylaws of the Registrant.
4.1* Form of Registrant's Common Stock certificate.
4.2* Warrant to purchase shares of Common Stock of the Registrant
issued to Broadmark Capital Corporation.
4.3* Form of warrant to purchase shares of Series A Cumulative
Convertible Preferred Stock of the Registrant issued to
Broadmark Capital Corporation.
4.4* Form of warrant to purchase shares of Series B Cumulative
Convertible Preferred Stock of the Registrant issued to
Internet Capital Group.
4.5 Amended and Restated Registration and Informational Rights
Agreement, dated June 28, 1999.
4.6 Amended and Restated Registration and Informational Rights
Agreement, dated June 30, 1999.
4.7 Registration Rights Agreement, dated November 10, 1999.
4.8* Form of warrant to purchase shares of Series E Cumulative
Convertible Preferred Stock of the Registrant issued to
Advanced Equities.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional
Corporation.
10.1 Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2 Amended 1998 Employee Stock Option Plan and forms of
agreements thereunder.
10.3 1999 Employee Stock Option Plan and forms of agreements
thereunder.
10.4 1999 Director Option Plan and forms of agreements
thereunder.
10.5 1999 Employee Stock Purchase Plan.
10.6 Form of Private Line Service Contract.
10.7 Master Loan and Security Agreement with Charter Financial,
Inc. dated December 15, 1999.
10.8 Lease Agreement with One Hundred North Riverside, Inc.,
dated October 30, 1998.
10.8.1 Amended Lease Agreement with One Hundred North Riverside,
Inc., dated July 26, 1999.
10.9 Sublease Agreement with Morton International, Inc. dated May
15, 1999, for property located at 100 N. Riverside Plaza,
22nd Floor-East, Chicago, Illinois.
10.10 Lease Agreement with Dallas Carrier Associates, Ltd. dated
May 20, 1999, for property located at 400 S. Akard Street,
Dallas, Texas.
10.11 Lease Agreement with Telecom Center LA, LLC dated March 31,
1999, for property located at 530 W. Sixth Street, Los
Angeles, California.
</TABLE>
II-3
<PAGE> 126
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------- -----------------------
<S> <C>
10.12 Lease Agreement with EWE Office Investments II, Ltd., as
amended on July 20, 1999, for property located at 200 S.E.
First Street, Miami, Florida.
10.13 Lease Agreement with Lafayette Business Park, LLC dated
April 1, 1999, for property located at 1900 Lafayette
Street, Santa Clara, California.
10.14 Lease Agreement with The Cambay Group Inc. dated March 19,
1999, for property located at 200 Paul Avenue, San
Francisco, California.
10.15 Lease Agreement with 1120 Vermont Avenue Associates dated
March 19, 1999, for property located at 1120 Vermont Avenue,
N.W., Washington, D.C.
10.16 Lease Agreement with 601 West Associates LLC dated September
23, 1999, for property located at 601 W. 26th Street, New
York, New York.
10.17 License Agreement for Use of Telecommunications Conduit and
Conduit Interconnection Room with One Wilshire Arcade
Imperial, Ltd. dated July 6, 1999, for property located at
One Wilshire Building, 624 S. Grand Avenue, Los Angeles,
California.
10.18+ Master Service Agreement with IXC Communications Services,
Inc. dated November 6, 1997.
10.18.1+ Amendment No. 1, dated March 23, 1999, to Master Service
Agreement.
10.18.2+ Amendment No. 2, dated July 19, 1999, to Master Service
Agreement.
10.19+ Carrier Services Agreement with Williams Communications,
Inc. d/b/a Williams Network Services, dated June 29, 1998.
10.19.1+ Amendment No. 1, dated March 12, 1999, to Carrier Services
Agreement.
10.19.2+ Amendment No. 2, dated July 1, 1999, to Carrier Services
Agreement.
10.20+ Capacity Agreement with GTE Telecom Incorporated dated
August 20, 1999.
10.21* Employment Agreement with Patrick C. Shutt, dated September
15, 1998.
10.22* Employment Agreement with Robert J. Pommer, Jr., dated
September 15, 1998.
10.23* Employment Agreement with Donna M. Shore, dated November 16,
1998.
10.24* Employment Agreement with Holly A. Weller, dated August 4,
1999.
10.25* Employment Agreement with Kenneth A. Napier, dated July 1,
1999.
10.26* Employment Agreement with Mark A. Dickey, dated November 16,
1998.
10.27* Employment Agreement with Scott D. Fehlan, dated September
9, 1999.
10.28* Employment Agreement with George A. King, dated August 27,
1999.
10.29 Promissory Note held by the Registrant for Robert Pommer
dated May 28, 1999.
10.30 Lease Agreement with Lafayette Business Park, LLC dated
August 31, 1999, for property located at 1940 Lafayette
Street, Santa Clara, California.
10.31+ Terms and Conditions for Delivery of Service with Level 3
Communications, LLC dated November 17, 1999.
10.31.1+ Addendum, dated November 17, 1999, to Terms and Conditions
for Delivery of Service.
21.1 Subsidiaries of Registrant.
23.1 Consent of independent accountants.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential treatment requested.
(b) FINANCIAL STATEMENT SCHEDULES
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
II-4
<PAGE> 127
ITEM 17. UNDERTAKINGS
Universal Access 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 Universal Access for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Universal Access pursuant to the provisions referenced in
Item 14 of this Registration Statement or otherwise, Universal Access 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 Universal Access of expenses
incurred or paid by a director, officer, or controlling person of Universal
Access 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, Universal Access will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Universal Access hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, 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 Universal Access 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> 128
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, 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 CHICAGO,
STATE OF ILLINOIS, ON THE 17TH DAY OF DECEMBER, 1999.
UNIVERSAL ACCESS, INC.
By: /s/ PATRICK C. SHUTT
------------------------------------
Patrick C. Shutt
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Patrick Shutt and Donna Shore, and
each of them acting individually, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution, for him in any and all capacities,
to sign any and all amendments to this Registration Statement (including post-
effective amendments or any abbreviated registration statement and any
amendments thereto filed pursuant to Rule 462(b) increasing the number of
securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof. Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ PATRICK C. SHUTT President, Chief Executive December 17, 1999
- ----------------------------------------------------- Officer and Director
Patrick C. Shutt (Principal Executive
Officer)
/s/ ROBERT J. POMMER, JR. Chief Operating Officer, December 17, 1999
- ----------------------------------------------------- Secretary and Director
Robert J. Pommer, Jr.
/s/ DONNA M. SHORE Chief Financial Officer, December 17, 1999
- ----------------------------------------------------- Treasurer
Donna M. Shore (Principal Financial and
Accounting Officer)
/s/ THOMAS KAPSALIS Director December 17, 1999
- -----------------------------------------------------
Thomas Kapsalis
/s/ ROLAND A. VAN DER MEER Director December 17, 1999
- -----------------------------------------------------
Roland A. Van der Meer
</TABLE>
II-6
<PAGE> 129
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ ROBERT A. POLLAN Director December 17, 1999
- -----------------------------------------------------
Robert A. Pollan
/s/ JOSEPH L. SCHOCKEN Director December 17, 1999
- -----------------------------------------------------
Joseph L. Schocken
/s/ PAOLO GUIDI Director December 17, 1999
- -----------------------------------------------------
Paolo Guidi
</TABLE>
II-7
<PAGE> 130
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------- -----------------------
<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 Amended and Restated Bylaws of the Registrant.
4.1* Form of Registrant's Common Stock certificate.
4.2* Warrant to purchase shares of Common Stock of the Registrant
issued to Broadmark Capital Corporation.
4.3* Form of warrant to purchase shares of Series A Cumulative
Convertible Preferred Stock of the Registrant issued to
Broadmark Capital Corporation.
4.4* Form of warrant to purchase shares of Series B Cumulative
Convertible Preferred Stock of the Registrant issued to
Internet Capital Group.
4.5 Amended and Restated Registration and Informational Rights
Agreement, dated June 28, 1999.
4.6 Amended and Restated Registration and Informational Rights
Agreement, dated June 30, 1999.
4.7 Registration Rights Agreement, dated November 10, 1999.
4.8* Form of warrant to purchase shares of Series E Cumulative
Convertible Preferred Stock of the Registrant issued to
Advanced Equities.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional
Corporation.
10.1 Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2 Amended 1998 Employee Stock Option Plan and forms of
agreements thereunder.
10.3 1999 Employee Stock Option Plan and forms of agreements
thereunder.
10.4 1999 Director Option Plan and forms of agreements
thereunder.
10.5 1999 Employee Stock Purchase Plan.
10.6 Form of Private Line Service Contract.
10.7 Master Loan and Security Agreement with Charter Financial,
Inc. dated December 15, 1999.
10.8 Lease Agreement with One Hundred North Riverside, Inc.,
dated October 30, 1998.
10.8.1 Amended Lease Agreement with One Hundred North Riverside,
Inc., dated July 26, 1999.
10.9 Sublease Agreement with Morton International, Inc. dated May
15, 1999, for property located at 100 N. Riverside Plaza,
22nd Floor-East, Chicago, Illinois.
10.10 Lease Agreement with Dallas Carrier Associates, Ltd. dated
May 20, 1999, for property located at 400 S. Akard Street,
Dallas, Texas.
10.11 Lease Agreement with Telecom Center LA, LLC dated March 31,
1999, for property located at 530 W. Sixth Street, Los
Angeles, California.
10.12 Lease Agreement with EWE Office Investments II, Ltd., as
amended on July 20, 1999, for property located at 200 S.E.
First Street, Miami, Florida.
10.13 Lease Agreement with Lafayette Business Park, LLC dated
April 1, 1999, for property located at 1900 Lafayette
Street, Santa Clara, California.
10.14 Lease Agreement with The Cambay Group Inc. dated March 19,
1999, for property located at 200 Paul Avenue, San
Francisco, California.
10.15 Lease Agreement with 1120 Vermont Avenue Associates dated
March 19, 1999, for property located at 1120 Vermont Avenue,
N.W., Washington, D.C.
10.16 Lease Agreement with 601 West Associates LLC dated September
23, 1999, for property located at 601 W. 26th Street, New
York, New York.
10.17 License Agreement for Use of Telecommunications Conduit and
Conduit Interconnection Room with One Wilshire Arcade
Imperial, Ltd. dated July 6, 1999, for property located at
One Wilshire Building, 624 S. Grand Avenue, Los Angeles,
California.
</TABLE>
<PAGE> 131
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------- -----------------------
<S> <C>
10.18+ Master Service Agreement with IXC Communications Services,
Inc. dated November 6, 1997.
10.18.1+ Amendment No. 1, dated March 23, 1999, to Master Service
Agreement.
10.18.2+ Amendment No. 2, dated July 19, 1999, to Master Service
Agreement.
10.19+ Carrier Services Agreement with Williams Communications,
Inc. d/b/a Williams Network Services, dated June 29, 1998.
10.19.1+ Amendment No. 1, dated March 12, 1999, to Carrier Services
Agreement.
10.19.2+ Amendment No. 2, dated July 1, 1999, to Carrier Services
Agreement.
10.20+ Capacity Agreement with GTE Telecom Incorporated dated
August 20, 1999.
10.21* Employment Agreement with Patrick C. Shutt, dated September
15, 1998.
10.22* Employment Agreement with Robert J. Pommer, Jr., dated
September 15, 1998.
10.23* Employment Agreement with Donna M. Shore, dated November 16,
1998.
10.24* Employment Agreement with Holly A. Weller, dated August 4,
1999.
10.25* Employment Agreement with Kenneth A. Napier, dated July 1,
1999.
10.26* Employment Agreement with Mark A. Dickey, dated November 16,
1998.
10.27* Employment Agreement with Scott D. Fehlan, dated September
9, 1999.
10.28* Employment Agreement with George A. King, dated August 27,
1999.
10.29 Promissory Note held by the Registrant for Robert Pommer
dated May 28, 1999.
10.30 Lease Agreement with Lafayette Business Park, LLC dated
August 31, 1999, for property located at 1940 Lafayette
Street, Santa Clara, California.
10.31+ Terms and Conditions for Delivery of Service with Level 3
Communications, LLC dated November 17, 1999.
10.31.1+ Addendum, dated November 17, 1999, to Terms and Conditions
for Delivery of Service.
21.1 Subsidiaries of Registrant.
23.1 Consent of independent accountants.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential treatment requested.
<PAGE> 1
UNIVERSAL ACCESS, INC.
COMMON STOCK, $0.01 PAR VALUE
[ ]
UNDERWRITING AGREEMENT
____________ __, 2000
Goldman, Sachs & Co.,
FleetBoston Robertson Stephens Inc.,
Hambrecht & Quist LLC,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
2765 Sand Hill Road,
Menlo Park, California 94025
Ladies and Gentlemen:
Universal Access, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of . . . . . . .shares and, at the election of the Underwriters, up to . . . . .
. additional shares of Common Stock, $0.01 par value ("Stock") of the Company
and the stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of . . . . . . . shares of Stock. The
aggregate of . . . . shares to be sold by the Company and the Selling
Stockholders is herein called the "Firm Shares" and the aggregate of . . . . .
additional shares to be sold by the Company is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-....) (the
"Initial Registration Statement") in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission");
the Initial Registration Statement and any posteffective amendment
thereto, each in the form heretofore delivered to you, and, excluding
exhibits thereto, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule_424(b) under the Act in accordance
with Section 5(a) hereof and deemed by virtue of Rule 430A under the
Act
1
<PAGE> 2
to be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; and
such final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and did not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein or
by a Selling Stockholder expressly for use in the preparation of the
answers therein to Items 7 and 11(l) of Form S-1;
(iii) The Registration Statement conforms, and any further
amendments or supplements to the Registration Statement will conform,
in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not,
as of the applicable effective date as to the Registration Statement
and any amendment thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Goldman, Sachs & Co. expressly for use therein or by a Selling
Stockholder expressly for use in the preparation of the answers therein
to Items 7 and 11(l) of Form S-1;
(iv) The Prospectus and any further amendments or supplements to
the Prospectus will conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable filing date as
to the Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein, in light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Goldman,
Sachs & Co. expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Items 7
and 11(m) of Form S-1;
(v) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, except as would not have a material
adverse effect on the current or future consolidated financial
position,
2
<PAGE> 3
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect");
(vi) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except where failure to
be so qualified would not have a Material Adverse Effect; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(viii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description of the Stock
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except
for directors' qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(ix) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable and
will conform to the description of the Stock contained in the
Prospectus;
(x) The issue and sale of the Shares to be sold by the Company
and the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or Bylaws of the
Company or, to the Company's knowledge, any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties, except where such breach or violation could not
reasonably be expected to have a Material Adverse Effect; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state
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<PAGE> 4
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or Bylaws or in default
in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound,
except where such default would not have a Material Adverse Effect;
(xii) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock, and under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate and materially
complete;
(xiii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material Adverse Effect; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xiv) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company", as such
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xv) To the Company's knowledge, PricewaterhouseCoopers LLP, who
have certified certain financial statements of the Company and its
subsidiaries, are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder;
(xvi) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations
of the Company or any of its subsidiaries will be affected by the Year
2000 Problem. As a result of such review, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a
Material Adverse Effect. The "Year 2000 Problem" as used herein means
any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000;
(xvii) Except as described in the Prospectus, the Company and its
subsidiaries own, possess or have the right to employ sufficient
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property Rights") reasonably necessary to conduct their
businesses as now conducted; and the expected expiration of any such
Intellectual Property Rights would not, individually or in the
aggregate, result in a Material Adverse Effect or any development that
could reasonably be expected to result in a Material Adverse Effect.
Except as described in the Prospectus, the Intellectual Property Rights
presently employed by the Company and its subsidiaries in connection
with the businesses now operated by them or which are proposed to be
operated by them, as described in the Prospectus, are owned, to the
Company's knowledge, free and clear of and without violating any right,
claimed rights, charge, encumbrance, pledge, security interest,
restriction or
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<PAGE> 5
lien of any kind of any other person and neither the Company nor any of
its subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
except as would not reasonably be expected to individually or in the
aggregate, result in a Material Adverse Effect, or any development that
could reasonably be expected to result in a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business. Except as described in the Prospectus, to the Company's
knowledge, the use of the Intellectual Property in connection with the
business and operations of the Company and its subsidiaries does not
infringe on the rights of any person, except as could not reasonably be
expected to individually or in the aggregate result in a Material
Adverse Effect, or any development that could reasonably be expected to
result in a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business; and
(xviii) To the Company's knowledge, the Company and each of its
subsidiaries have all necessary authorizations, approvals, orders,
consents, certificates, permits, registrations or qualifications of and
from all applicable regulatory authorities to conduct its businesses as
described in the Prospectus, or is subject to no material liability or
disability by reason of the failure to have such authorizations,
approvals, orders, consents, licenses, certificates, permits,
registrations or qualifications; and none of the Company or any of its
subsidiaries has received any notification from any regulatory
authority to the effect that any additional authorization, approval,
order, consent, license, certificate, permit, registration or
qualification from such regulatory authority is needed to be obtained
by any of the Company or its subsidiaries except as would not
reasonably be expected to individually or in the aggregate, result in a
Material Adverse Effect, or any development that could reasonably be
expected to result in a Material Adverse Effect, whether or not arising
from transactions in the ordinary course of business.
(b) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement and the Power of Attorney and the Custody Agreement
hereinafter referred to, and for the sale and delivery of the Shares to
be sold by such Selling Stockholder hereunder, have been obtained; and
such Selling Stockholder has full right, power and authority to enter
into this Agreement, the Power-of-Attorney and the Custody Agreement
and to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney and
the Custody Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or
to which any of the property or assets of such Selling Stockholder is
subject, nor will such action result in any violation of the provisions
of the Certificate of Incorporation or Bylaws of such Selling
Stockholder if such Selling Stockholder is a corporation, the
Partnership Agreement of such Selling Stockholder if such Selling
Stockholder is a partnership or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder, except in each case as would not adversely affect
the ability of the Selling Stockholder to consummate the transactions
contemplated by this Agreement;
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<PAGE> 6
(iii) Such Selling Stockholder has, and immediately prior to each
Time of Delivery (as defined in Section 4 hereof) such Selling
Stockholder will have, good and valid title to the Shares to be sold by
such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; assuming the Underwriter purchased
the Shares to be sold by such Selling Stockholder for value, in good
faith and without notice of any adverse claims within the meaning of
the Uniform Commercial Code, and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares,
free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, such Selling Stockholders will not offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, Stock or
any such substantially similar securities (other than pursuant to
employee stock option plans existing on, or upon the conversion or
exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement), without your prior written consent;
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof);
(viii) Certificates in negotiable form representing all of the
Shares to be sold by such Selling Stockholder hereunder have been
placed in custody under a Custody Agreement, in the form heretofore
furnished to you (the "Custody Agreement"), duly executed and delivered
by such Selling Stockholder to Norwest Shareowner Services, as
custodian (the "Custodian"), and such Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore
furnished to you (the "Power of Attorney"), appointing the persons
indicated in Schedule II hereto, and each of them, as such Selling
Stockholder's attorneysinfact (the "AttorneysinFact") with authority to
execute and deliver this Agreement on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the
Underwriters to the Selling Stockholders as provided in Section 2
hereof, to authorize the delivery of the Shares to be sold by such
Selling
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<PAGE> 7
Stockholder hereunder and otherwise to act on behalf of such Selling
Stockholder in connection with the transactions contemplated by this
Agreement and the Custody Agreement; and
(ix) The Shares represented by the certificates held in custody
for such Selling Stockholder under the Custody Agreement are subject to
the interests of the Underwriters hereunder; the arrangements made by
such Selling Stockholder for such custody, and the appointment by such
Selling Stockholder of the AttorneysinFact by the Power of Attorney,
are to that extent irrevocable; the obligations of the Selling
Stockholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling
Stockholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such estate
or trust, or in the case of a partnership or corporation, by the
dissolution of such partnership or corporation, or by the occurrence of
any other event; if any individual Selling Stockholder or any such
executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should
occur, before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of the
Selling Stockholders in accordance with the terms and conditions of
this Agreement and of the Custody Agreements; and actions taken by the
AttorneysinFact pursuant to the Powers of Attorney shall be as valid as
if such death, incapacity, termination, dissolution or other event had
not occurred, regardless of whether or not the Custodian, the
AttorneysinFact, or any of them, shall have received notice of such
death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
and each of the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Stockholders,
at a purchase price per share of $.............., the number of Firm Shares (to
be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Shares to be sold by the Company and each of
the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling Stockholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to ................... Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
sales of shares in excess of the number of Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof)
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<PAGE> 8
or, unless you and the Company otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to Goldman, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company and the Custodian, as their interests may
appear, to Goldman, Sachs & Co. at least forty-eight hours in advance. The
Company will cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New
York time, on ............., 2000 or such other time and date as Goldman, Sachs
& Co. and the Company and the Selling Stockholders may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs
& Co. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as Goldman, Sachs & Co. and the Company and may agree upon
in writing. Such time and date for delivery of the Firm Shares is herein called
the "First Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a "Time of
Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices
of Wilson Sonsini Goodrich & Rosati Professional Corporation, 650 Page Mill
Road, Palo Alto, California 94304 (the "Closing Location"), and the Shares will
be delivered at the Designated Office, all at such Time of Delivery. A meeting
will be held at the Closing Location at 3:00 p.m., Pacific time, on the New York
Business Day next preceding such Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of this Section
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the
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<PAGE> 9
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or prospectus or suspending any such qualification,
promptly to use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of the time a
Prospectus is required to be delivered pursuant to Rule 174 under the Securities
Act and if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time other than pursuant to Rule 174 under the Securities Act, upon your
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock plans
existing on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement), without your prior
written consent; provided, however, that the restrictions of this paragraph
shall not apply to securities of the Company issued in an acquisition
transaction where the recipients of such securities agree to acquire and hold
such securities subject to the provisions of subsection_1(b)(iv) hereof;
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash
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<PAGE> 10
flows of the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement), to make
available to its stockholders consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
System ("NASDAQ");
(j) To file with the Commission such information on Form 10-Q of
Form 10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company and each of the Selling Stockholders covenant and agree
with one another and with the several Underwriters that (a) the Company will pay
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, the Blue
Sky Memorandum, closing documents (including any compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection with listing the
Shares on the NASDAQ; and the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares; (v) the cost of preparing stock certificates;
(vi) the cost and charges of any transfer agent or registrar; (vii) any fees and
expenses of counsel for the Selling Stockholders; (viii) the fees and expenses
of the AttorneysinFact and the Custodian; and (ix) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section; and (b) such Selling Stockholder will
pay or cause to be paid all costs and expenses incident to the performance of
such Selling Stockholder's obligations hereunder which are not otherwise
specifically provided for in this Section, including all expenses and taxes
incident to the sale and delivery of the Shares to be sold by
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<PAGE> 11
such Selling Stockholder to the Underwriters hereunder. In connection with
clause (b) of the preceding sentence, Goldman, Sachs & Co. agrees to pay New
York State stock transfer tax, and the Selling Stockholder agrees to reimburse
Goldman, Sachs & Co. for associated carrying costs if such tax payment is not
rebated on the day of payment and for any portion of such tax payment not
rebated. It is understood, however, that the Company shall bear, and the Selling
Stockholders shall not be required to pay or to reimburse the Company for, the
cost of any other matters not directly relating to the sale and purchase of the
Shares pursuant to this Agreement, and that, except as provided in this Section,
and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of each such opinion
is attached as Annex II(a) hereto), dated such Time of Delivery, with respect to
such matters as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them to
pass upon such matters. In rendering the opinions pursuant to this Section 7(b),
such counsel may rely upon the opinions of Shefsky & Froelich Ltd. delivered
pursuant to Section 7(d) as to matters of Illinois law.
(c) Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel for the Company, shall have furnished to you their written opinion (a
draft of such opinion is attached as Annex II(b) hereto), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
Delaware, with power and authority (corporate and other) to own
its properties and conduct its business as described in the
Prospectus;
(ii) The Company is duly qualified as a foreign
corporation for the transaction of business in the states
specified in such opinion (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of Swidler
Berlin Shereff Friedman, LLP as well as local counsel and in
respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such
opinions and certificates);
(iii) The Shares have been duly and validly authorized
and issued and are fully paid and non-assessable; the Shares
conform to the description of the Stock contained in the
Prospectus;
(iv) This Agreement has been duly authorized, executed
and delivered by the Company;
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<PAGE> 12
(v) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not (A) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument contained in a
certificate of an executive officer of the Company setting forth
as of such time of delivery, such agreements or instruments as
are material to the Company, which certificate is attached to
such opinion to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any
of its subsidiaries is subject, (B) result in any violation of
any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any
of their properties; or (C) result in any violation of the
Company's Certificate of Incorporation or Bylaws, except in the
case of clauses (A) and (B), for such breaches, violations and
defaults as would not, individually or in the aggregate, have a
Material Adverse Effect, impair the validity of the Shares, this
Agreement or the transactions contemplated hereby, or hinder or
delay the transactions contemplated hereby; and
(vi) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the
Act of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters (such counsel
being entitled to rely upon the opinion of Swidler Berlin Shereff
Friedman, LLP delivered pursuant to Section 7(e) as to matters
arising under federal and state laws regulating
telecommunications services;
(vii) To such counsel's knowledge, neither the Company
nor any of its subsidiaries is in violation of its Certificate of
Incorporation or Bylaws;
(viii) The statements set forth in the Prospectus under
the caption "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Stock, and
under the caption "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to
therein, are accurate and materially complete;
(ix) The Company is not an "investment company", as such
term is defined in the Investment Company Act; and
(x) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the rules
and regulations thereunder; although they do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus, except for those referred to in the opinion in
subsection (viii) of this Section 7(c), they have no reason to
believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of
a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made
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<PAGE> 13
by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which
such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that,
as of such Time of Delivery, either the Registration Statement or
the Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules therein, as to
which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as
required.
In rendering the opinions pursuant to this Section 7(c), such
counsel may rely upon the opinions of Shefsky & Froelich Ltd. delivered pursuant
to Section 7(d) as to matters of Illinois law.
(d) Shefsky & Froelich Ltd., counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(c) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) Immediately prior to the merger (the "Merger") of
Universal Access, Inc., an Illinois corporation (the "Illinois
Company"), with and into the Company on June 24, 1999, the
Illinois Company was duly incorporated and was validly existing
as a corporation in good standing under the laws of Illinois,
with power and authority (corporate and other) to own its
properties and conduct its business;
(ii) Immediately prior to the Merger, all of the issued
shares of capital stock of the Illinois Company had been duly and
validly authorized and issued and were fully paid and
nonassessable;
(iii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; and
(iv) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect;
and, to the best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(e) Swidler Berlin Shereff Friedman, LLP, regulatory counsel for
the Company, shall have furnished to you their written opinion (a draft
of such opinion is attached as Annex II(d) hereto), dated such Time of
Delivery, in form and substance reasonably satisfactory to you, to the
effect that:
(i)The Company and its subsidiary have all necessary
authorizations, approvals, orders, consents, certificates,
permits, registrations or qualifications, if any, required by the
Federal Communications Commission ("FCC") and the rules,
regulations and orders of comparable state regulatory commissions
("Applicable State Regulatory Authorities") to conduct their
13
<PAGE> 14
businesses as presently conducted, as described in the
Prospectus, or are subject to no material liability or disability
by reason of the failure to have such authorizations, approvals,
orders, consents, licenses, certificates, permits, registrations
or qualifications;
(ii) To such counsel's knowledge, neither the FCC nor any
Applicable State Regulatory Authority has notified the Company or
its subsidiary that any additional authorization, approval,
order, consent, license, certificate, permit, registration or
qualification from such regulatory authority is needed to be
obtained by the Company or its subsidiary except as would not
reasonably be expected to individually or in the aggregate,
result in a Material Adverse Effect; nor has the FCC or any
Applicable State Regulatory Authority notified the Company or its
subsidiary of any complaint, investigation, or proceeding
relating to the Company or its subsidiary that could reasonably
be expected to result in a Material Adverse Effect; and
(iii) The statements set forth in the Prospectus under
the captions "Risk Factors -- The regulatory framework under
which we operate and new regulatory requirements or new
interpretations of existing regulatory requirements could harm
our business", "-- Required regulatory approvals may interfere
with or delay corporate transactions", "-- Telecommunications
regulations of other countries may restrict our operations" and
"Business -- Government Regulation" fairly summarize the matters
relating to the laws and regulatory decisions therein described
and the descriptions of the Telecommunications Act of 1996 and
the rules, regulations and orders of the FCC and Applicable State
Regulatory Authorities. 26
(f) The respective counsel for each of the Selling Stockholders,
as indicated in Schedule II hereto, each shall have furnished to you
their written opinion with respect to each of the Selling Stockholders
for whom they are acting as counsel (a draft of each such opinion is
attached as Annex II(e) hereto), dated the First Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) A Power-of-Attorney and a Custody Agreement have been
duly executed and delivered by such Selling Stockholder and
constitute valid and binding agreements of such Selling
Stockholder in accordance with their terms;
(ii) This Agreement has been duly executed and delivered
by or on behalf of such Selling Stockholder; and the sale of the
Shares to be sold by such Selling Stockholder hereunder and the
compliance by such Selling Stockholder with all of the provisions
of this Agreement, the Power-of-Attorney and the Custody
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach
or violation of any terms or provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such
counsel to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound or to which any of the property
or assets of such Selling Stockholder is subject, nor will such
action result in any violation of the provisions of the
Certificate of Incorporation or Bylaws of such Selling
Stockholder if such Selling Stockholder is a corporation, the
Partnership Agreement of such Selling Stockholder if such Selling
Stockholder is a partnership or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over such Selling Stockholder or the property
of such Selling Stockholder, except in each case as would not
adversely affect the ability of such Selling Stockholder to
consummate the transactions contemplated by this Agreement;
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<PAGE> 15
(iii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement
in connection with the Shares to be sold by such Selling
Stockholder hereunder, except such as have been obtained under
the Act and such as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of
such Shares by the Underwriters;
(iv) Immediately prior to the First Time of Delivery,
such Selling Stockholder had good and valid title to the Shares
to be sold at the First Time of Delivery by such Selling
Stockholder under this Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and
authority to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder hereunder; and
(v) Good and valid title to such Shares, free and clear
of all liens, encumbrances, equities or claims, has been
transferred to each of the several Underwriters who have
purchased such Shares in good faith and without notice of any
such lien, encumbrance, equity or claim or any other adverse
claim within the meaning of the Uniform Commercial Code.
In rendering the opinion in paragraph (iv), such counsel may rely upon
a certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold by
such Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(g) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any posteffective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, PricewaterhouseCoopers LLP shall have furnished
to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered
prior to the execution of this Agreement is attached as Annex I(a)
hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(h)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(i) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on NASDAQ; (ii) a suspension or material
limitation in trading in the Company's securities on NASDAQ; (iii) a
general
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<PAGE> 16
moratorium on commercial banking activities declared by either Federal,
New York or California State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the judgment
of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered
at such Time of Delivery on the terms and in the manner contemplated in
the Prospectus;
(j) The Shares at such Time of Delivery shall have been duly
listed for quotation on NASDAQ;
(k) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of its directors and officers
and each stockholder listed on Schedule III hereto, substantially to
the effect set forth in Subsection 1(b)(iv) hereof in form and
substance satisfactory to you;
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(m) The Company and the Selling Stockholders shall have furnished
or caused to be furnished to you at such Time of Delivery certificates
of officers of the Company and of the Selling Stockholders,
respectively, satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Selling
Stockholders, respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Stockholders of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to
be furnished certificates as to the matters set forth in subsections
(a) and (h) of this Section.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.
(b) Each of the Selling Stockholders, severally and not jointly, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact known to the
Selling Stockholders and contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
16
<PAGE> 17
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact known to the Selling Stockholder and required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Selling Stockholders shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. expressly for use therein. Notwithstanding anything in this Agreement to the
contrary, (i)_no Selling Stockholder shall be obligated to make payment to an
indemnified party in respect thereof unless such indemnified party shall first
have made demand for payment against the Company in respect of such payment and
the Company shall have failed to pay all or any portion of such demand by such
indemnified party within 30 days following such demand and (ii)_the liability of
each Selling Stockholder under the representations, warranties, covenants and
agreements contained herein and under the indemnity agreements contained in the
provisions of this Agreement shall not exceed the product of the number of
Shares sold by such Selling Stockholder and the initial public offering price of
the Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or each Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Goldman, Sachs & Co.
expressly for use therein; and will reimburse the Company and each Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
and each Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not
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<PAGE> 18
be liable to such indemnified party under such subsection for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bears to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Selling
Stockholders on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, each of the Selling
Stockholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection (e) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (e). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (e),
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
no Selling Stockholder shall be required to contribute any amount in excess of
the amount equal to the product of the number of Shares to be sold by such
Selling Stockholder and the initial public offering price
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<PAGE> 19
of the Shares as set forth in the Prospectus. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section_8 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company (including any person
who, with his or her consent, is named in the Registration Statement as about to
become a director of the Company) and to each person, if any, who controls the
Company or any Selling Stockholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirtysix hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholders shall be entitled to
a further period of thirtysix hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Stockholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Stockholders shall have the right to postpone a Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed oneeleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each nondefaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each nondefaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds oneeleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require nondefaulting Underwriters to
purchase Shares of a defaulting Underwriter or
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<PAGE> 20
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares) shall thereupon terminate, without liability on the
part of any nondefaulting Underwriter or the Company or the Selling
Stockholders, except for the expenses to be borne by the Company and the Selling
Stockholders and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Stockholders, or any officer
or director or controlling person of the Company, or any controlling person of
any Selling Stockholder, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company will
reimburse the Underwriters through you for all outofpocket expenses approved in
writing by you, including fees and disbursements of counsel, reasonably incurred
by the Underwriters in making preparations for the purchase, sale and delivery
of the Shares not so delivered, but the Company and the Selling Stockholders
shall then be under no further liability to any Underwriter in respect of the
Shares not so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the AttorneysinFact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 32 Old Slip, 21st Floor, New York, New York 10005, Attention: Registration
Department; if to any Selling Stockholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for such Selling Stockholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(d) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholders by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling
Stockholder or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
20
<PAGE> 21
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Stockholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company and the Selling Stockholders for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
Any person executing and delivering this Agreement as AttorneyinFact for
a Selling Stockholder represents by so doing that he has been duly appointed as
AttorneyinFact by such Selling Stockholder pursuant to a validly existing and
binding Power-of-Attorney which authorizes such AttorneyinFact to take such
action.
Very truly yours,
Universal Access, Inc.
By:
---------------------------------------
Name:
Title:
[NAMES OF SELLING STOCKHOLDERS]
By:
---------------------------------------
Name:
Title:
As AttorneyinFact acting on behalf of
each of the Selling Stockholders
named in Schedule II to this
Agreement.
Accepted as of the date hereof at
-------------------
Goldman, Sachs & Co.
FleetBoston Robertson Stephens Inc.
Hambrecht & Quist LLC
By:
--------------------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
21
<PAGE> 22
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ------------------
<S> <C> <C>
Goldman, Sachs & Co.................................................
FleetBoston Robertson Stephens Inc..................................
Hambrecht & Quist LLC...............................................
Total......................................................
</TABLE>
22
<PAGE> 23
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD IF
FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
---------------- -------------------
<S> <C> <C>
The Company........................................................
The Selling Stockholder(s): (a)..............................
[NAMES OF SELLING STOCKHOLDERS]......................
Total.....................................................
- -------------
(a) The Selling Stockholders are represented by ______________ and have
appointed ______________ and ________________, and each of them, as their
AttorneysinFact for such Selling Stockholder.
</TABLE>
23
<PAGE> 24
SCHEDULE III
[STOCKHOLDERS SUBJECT TO
LOCK-UP AGREEMENTS
24
<PAGE> 25
ANNEX I
Pursuant to Section 7(g) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon copies
of which have been separately furnished to the Representatives and on
the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (vi)(A)(i) below comply
as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Company's Annual Reports on Form 10K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
25
<PAGE> 26
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in clause (B)
were not determined on a basis substantially consistent with the
basis for the audited consolidated financial statements included
in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earnouts of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated longterm debt of
the Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity or other
items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts of
26
<PAGE> 27
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in
each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
27
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
UNIVERSAL ACCESS, INC.
Universal Access, 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 Universal Access, Inc.
B. The date of filing of this Corporation's original Certificate of
Incorporation with the Secretary of State of Delaware was June 24, 1999.
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 Universal Access, 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
300,000,000, with a par value of $0.01, and the total number of shares of
Preferred Stock which this corporation is authorized to issue is 20,000,000,
with a par value of $0.01.
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 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.
<PAGE> 2
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 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.
-2-
<PAGE> 3
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 by
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.
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. Exclusive authority to amend the Bylaws
to change the authorized number of Directors shall reside in the Board of
Directors.
-3-
<PAGE> 4
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.
-4-
<PAGE> 5
IN WITNESS WHEREOF, Universal Access, Inc. has caused this Amended and
Restated Certificate of Incorporation to be signed by Patrick C. Shutt, its
President, and attested by Robert J. Pommer, Jr., its Secretary, this ____ day
of ________, 2000.
UNIVERSAL ACCESS, INC.
----------------------------------------
Patrick C. Shutt, President
Attested:
- ----------------------------------------
Robert J. Pommer, Jr., Secretary
-5-
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
UNIVERSAL ACCESS, INC.
a Delaware Corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CORPORATE OFFICES......................................................................1
1.1 REGISTERED OFFICE.................................................................1
1.2 OTHER OFFICES.....................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS..............................................................1
2.1 PLACE OF MEETINGS.................................................................1
2.2 ANNUAL MEETING....................................................................1
2.3 SPECIAL MEETING...................................................................1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS..................................................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS.................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................3
2.7 QUORUM............................................................................3
2.8 ADJOURNED MEETING; NOTICE.........................................................4
2.9 VOTING............................................................................4
2.10 WAIVER OF NOTICE..................................................................4
2.11 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING........................4
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.......................5
2.13 PROXIES...........................................................................5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................5
2.15 CONDUCT OF BUSINESS...............................................................6
ARTICLE III DIRECTORS............................................................................6
3.1 POWERS............................................................................6
3.2 NUMBER............................................................................6
3.3 CLASSES OF DIRECTORS..............................................................6
3.4 RESIGNATION AND VACANCIES.........................................................7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE..........................................8
3.6 REGULAR MEETINGS..................................................................8
3.7 SPECIAL MEETINGS; NOTICE..........................................................8
3.8 QUORUM............................................................................8
3.9 WAIVER OF NOTICE..................................................................9
3.10 ADJOURNED MEETING; NOTICE.........................................................9
3.11 CONDUCT OF BUSINESS...............................................................9
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.................................9
3.13 FEES AND COMPENSATION OF DIRECTORS................................................9
3.14 REMOVAL OF DIRECTORS.............................................................10
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV COMMITTEES...........................................................................10
4.1 COMMITTEES OF DIRECTORS..........................................................10
4.2 COMMITTEE MINUTES................................................................11
4.3 MEETINGS AND ACTION OF COMMITTEES................................................11
ARTICLE V OFFICERS..............................................................................11
5.1 OFFICERS.........................................................................11
5.2 APPOINTMENT OF OFFICERS..........................................................11
5.3 REMOVAL AND RESIGNATION OF OFFICERS..............................................12
5.4 CHAIRMAN OF THE BOARD............................................................12
5.5 CHIEF EXECUTIVE OFFICER..........................................................12
5.6 PRESIDENT........................................................................12
5.7 VICE PRESIDENT...................................................................13
5.8 SECRETARY........................................................................13
5.9 CHIEF FINANCIAL OFFICER..........................................................13
5.10 ASSISTANT SECRETARY..............................................................14
5.11 AUTHORITY AND DUTIES OF OFFICERS.................................................14
ARTICLE VI INDEMNITY............................................................................14
6.1 THIRD PARTY ACTIONS..............................................................14
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION....................................15
6.3 SUCCESSFUL DEFENSE...............................................................16
6.4 DETERMINATION OF CONDUCT.........................................................16
6.5 PAYMENT OF EXPENSES IN ADVANCE...................................................16
6.6 INDEMNITY NOT EXCLUSIVE..........................................................17
6.7 INSURANCE INDEMNIFICATION........................................................17
6.8 THE CORPORATION..................................................................17
6.9 EMPLOYEE BENEFIT PLANS...........................................................17
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES......................18
ARTICLE VII RECORDS AND REPORTS.................................................................18
7.1 MAINTENANCE AND INSPECTION OF RECORDS............................................18
7.2 INSPECTION BY DIRECTORS..........................................................18
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS...................................18
ARTICLE VIII GENERAL MATTERS....................................................................19
8.1 CHECKS...........................................................................19
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.................................19
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES...........................................19
8.4 SPECIAL DESIGNATION ON CERTIFICATES..............................................20
8.5 LOST CERTIFICATES................................................................20
8.6 CONSTRUCTION; DEFINITIONS........................................................20
8.7 DIVIDENDS........................................................................21
8.8 FISCAL YEAR......................................................................21
8.9 SEAL.............................................................................21
8.10 TRANSFER OF STOCK................................................................21
8.11 STOCK TRANSFER AGREEMENTS........................................................21
8.12 REGISTERED STOCKHOLDERS..........................................................21
ARTICLE IX AMENDMENTS...........................................................................22
ARTICLE X DISSOLUTION...........................................................................22
ARTICLE XI CUSTODIAN............................................................................22
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES......................................22
11.2 DUTIES OF CUSTODIAN..............................................................23
ARTICLE XII LOANS TO OFFICERS...................................................................23
</TABLE>
-iii-
<PAGE> 5
BYLAWS
OF
UNIVERSAL ACCESS, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the Corporation shall be 1209 Orange Street, in
the City of Wilmington, County of New Castle, State of Delaware, 19801. The name
of the registered agent of the Corporation at such location is The Corporation
Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the Corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated by the board of directors. At the meeting, directors shall
be elected and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
(i) board of directors, (ii) the chairman of the board, (iii) the president, or
(iv) the chief executive officer.
If a special meeting is called by any person other than the board of
directors, the request shall be in writing, specifying the time of such meeting
and the general nature of the business proposed to
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be transacted, and shall be delivered personally or sent by registered mail or
by telegraphic or other facsimile transmission to the chairman of the board, the
president, any vice president, or the secretary of the corporation. No business
may be transacted at such special meeting otherwise than specified in such
notice. The officer receiving the request shall cause notice to be promptly
given to the stockholders entitled to vote, in accordance with the provisions of
Sections 2.4 and 2.5 of this Article II, that a meeting will be held at the time
requested by the person or persons who called the meeting, not less than
thirty-five (35) nor more than sixty (60) days after the receipt of the request.
If the notice is not given within twenty (20) days after the receipt of the
request, the person or persons requesting the meeting may give the notice.
Nothing contained in this paragraph of this Section 2.3 shall be construed as
limiting, fixing, or affecting the time when a meeting of stockholders called by
action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.6 of these Bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
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.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors, (b) otherwise properly brought before the
meeting by or at the direction of the board of directors, or (c) otherwise
properly brought before the meeting by a stockholder. For such nominations or
other business to be considered properly brought before the meeting by a
stockholder, such stockholder must have given timely written notice and in
proper form of his intent to bring such business before such meeting. To be
timely, such stockholder's notice must be delivered to or mailed and received by
the secretary of the Corporation not less than ninety (90) days prior to the
date of the Corporation's proxy statement released to stockholders in connection
with the Corporation's previous year's annual meeting of stockholders. To be in
proper form, a stockholder's notice to the secretary shall set forth:
(i) the name and address of the stockholder who intends to
make the nominations, propose the business, and, as the
case may be, the name and address of the person or persons
to be nominated or the nature of the business to be
proposed;
(ii) a representation that the stockholder is a holder of
record of stock of the Corporation entitled to vote at
such meeting and, if applicable, intends to
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appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice or introduce
the business specified in the notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee
and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations
are to be made by the stockholder;
(iv) such other information regarding each nominee or each
matter of business to be proposed by such stockholder as
would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or
intended to be proposed by the board of directors; and
(v) if applicable, the consent of each nominee to serve as
director of the Corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (i) the chairman of the meeting, or
(ii) the stockholders entitled to vote thereat, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the
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statutes or of the Certificate of Incorporation, a different vote is required,
in which case such express provision shall govern and control the decision of
the question.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
Bylaws otherwise require, notice need not be given of the adjourned meeting if
the 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
that might have been transacted at the original meeting. If the adjournment is
for more than 30 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.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Sections 2.12 and 2.14 of
these Bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the Certificate of Incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
2.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
these Bylaws, a written waiver thereof, 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 need be specified in any written waiver of notice unless so
required by the Certificate of Incorporation or these Bylaws.
2.11 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
The stockholders of the Corporation may not take action by written
consent without a meeting but must take any such actions at a duly called annual
or special meeting.
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2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
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 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, in advance, a record date, which shall
not be more than 60 nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action.
If the board of directors does not so fix a record date, the fixing of
such record date shall be governed by the provisions of Section 213 of the
General Corporation Law of Delaware.
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.
2.13 PROXIES
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the Corporation, but no such
proxy shall be voted or acted upon after 3 years from its date, unless the proxy
provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a Corporation shall
prepare and make, at least 10 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,
during ordinary business hours, for a period of at least 10 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 stock ledger 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. 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 and
of the number of shares held by each such stockholder.
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2.15 CONDUCT OF BUSINESS
Meetings of stockholders shall be presided over by the 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. The chairman of any meeting of stockholders shall
determine the order of business and the procedures at the meeting, including
such matters as the regulation of the manner of voting and conduct of business.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the Certificate of Incorporation or these Bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER
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. No reduction of the authorized
number of directors shall have the effect of removing any director before that
director's term of office expires.
3.3 CLASSES OF DIRECTORS
The 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 closing of
the Corporation's first registered offering of its securities to the public (an
"Initial Public Offering"), 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 closing of the Initial
Public Offering, 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 closing of the Initial Public
Offering, 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
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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 successor is duly elected and qualified or until his
earlier death, resignation or removal. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
Corporation. Stockholders may remove directors with or without cause. Any
vacancy occurring in the board of directors with or without 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 shall hold office until the
expiration of the term of office of the director whom he has replaced.
Unless otherwise provided in the Certificate of Incorporation or these
Bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected
by all of the stockholders having the right to vote as a
single class may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole
remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors
by the provisions of the Certificate of Incorporation,
vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the
directors elected by such class or classes or series
thereof then in office, or by a sole remaining director so
elected.
If at any time, by reason of death or resignation or other cause, the
Corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may apply to the Court of Chancery for a decree summarily
ordering an election as provided in Section 211 of the General Corporation Law
of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least 10% of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
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election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the Corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the Corporation. If the notice is mailed, it
shall be deposited in the United States mail at least 4 days before the time of
the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least 48 hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice has reason to believe will promptly communicate it to
the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
Corporation.
3.8 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the Certificate of
Incorporation.
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3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
these Bylaws, a written waiver thereof, 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 directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the Certificate of
Incorporation or these Bylaws.
3.10 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
3.11 CONDUCT OF BUSINESS
Meetings of the board of directors shall be presided over by the
chairman of the board, if any, or in his absence by the chief executive officer,
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. The chairman of any
meeting shall determine the order of business and the procedures at the meeting.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, 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 or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, the board of directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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3.14 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the Certificate of
Incorporation or by these Bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors. If at any time a class
or series of shares is entitled to elect one or more directors, the provisions
of this Article 3.14 shall apply to the vote of that class or series and not to
the vote of the outstanding shares as a whole.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the Corporation. The board 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 a 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 the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the Bylaws of the Corporation, 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 that may require it; but no
such committee shall have the power or authority to (i) amend the Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the Corporation or a revocation
of a dissolution, or (v) amend the Bylaws of the Corporation; and, unless the
board resolution establishing the committee, the Bylaws or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
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4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these Bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), Section 3.10 (adjournment and notice of
adjournment), Section 3.11 (conduct of business) and 3.12 (action without a
meeting), with such changes in the context of those Bylaws as are necessary to
substitute the committee and its members for the board of directors and its
members; provided, however, that the time of regular meetings of committees may
also be called by resolution of the board of directors and that notice of
special meetings of committees shall also be given to all alternate members, who
shall have the right to attend all meetings of the committee. The board of
directors may adopt rules for the government of any committee not inconsistent
with the provisions of these Bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the Corporation shall be a chief executive officer, one
or more vice presidents, a secretary and a chief financial officer. The
Corporation may also have, at the discretion of the board of directors, a
chairman of the board, a president, a chief operating officer, one or more
executive, senior or assistant vice presidents, assistant secretaries and any
such other officers as may be appointed in accordance with the provisions of
Section 5.2 of these Bylaws. Any number of offices may be held by the same
person.
5.2 APPOINTMENT OF OFFICERS
Except as otherwise provided in this Section 5.2, the officers of the
Corporation shall be appointed by the board of directors, subject to the rights,
if any, of an officer under any contract of employment. The board of directors
may appoint, or empower an officer to appoint, such officers and agents of the
business as the Corporation may require (whether or not such officer or agent is
described in this Article V), each of whom shall hold office for such period,
have such authority, and perform such duties as are provided in these Bylaws or
as the board of directors may from time to time determine. Any vacancy occurring
in any office of the Corporation shall be filled by the board of directors or
may be filled by the officer, if any, who appointed such officer.
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5.3 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors or, in the case of an officer appointed by
another officer, by such other officer.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the officer is a
party.
5.4 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these Bylaws. If there is no chief
executive officer, then the chairman of the board shall also be the chief
executive officer of the Corporation and shall have the powers and duties
prescribed in Section 5.5 of these Bylaws.
5.5 CHIEF EXECUTIVE OFFICER
The Chief Executive Officer of the Corporation shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the business and the officers of the Corporation. He or she shall
preside at all meetings of the stockholders and, in the absence or nonexistence
of a Chairman of the Board at all meetings of the Board of Directors. He or she
shall have the general powers and duties of management usually vested in the
chief executive officer of a Corporation, including general supervision,
direction and control of the business and supervision of other officers of the
Corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws.
The Chief Executive Officer shall, without limitation, have the
authority to execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation.
5.6 PRESIDENT
Subject to such supervisory powers as may be given by these Bylaws or
the Board of Directors to the Chairman of the Board or the Chief Executive
Officer, if there be such officers, the president shall have general
supervision, direction and control of the business and supervision of
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other officers of the Corporation, and shall have such other powers and duties
as may be prescribed by the Board of Directors or these Bylaws. In the event a
Chief Executive Officer shall not be appointed, the President shall have the
duties of such office.
5.7 VICE PRESIDENT
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the chief executive officer and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the chief executive
officer. The vice presidents shall have such other powers and perform such other
duties as from time to time may be prescribed for them respectively by the board
of directors, these Bylaws, the chief executive officer or the chairman of the
board.
5.8 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the Corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the Corporation or at the office of the Corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these Bylaws. He shall keep the seal of the Corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these Bylaws.
5.9 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director.
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The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the Corporation with such depositaries as may
be designated by the board of directors. He shall disburse the funds of the
Corporation as may be ordered by the board of directors, shall render to the
chief executive officer and directors, whenever they request it, an account of
all of his transactions as treasurer and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these Bylaws.
5.10 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.11 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
Corporation shall respectively have such authority and perform such duties in
the management of the business of the Corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 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 an agent of the Corporation), or is or was serving at
the request of the Corporation, any predecessor of the Corporation, or any
subsidiary of the Corporation, as a director or officer of another corporation,
partnership, joint venture trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
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, any predecessor
of the Corporation, or any subsidiary 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,
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any predecessor of the Corporation, or any subsidiary of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
The Corporation may 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 an agent of the Corporation), or is or was serving at
the request of the Corporation, any predecessor of the Corporation, or any
subsidiary of the Corporation, as an 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
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, any predecessor
of the Corporation, or any subsidiary 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, any predecessor of the
Corporation, or any subsidiary of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
6.2 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, any predecessor of the Corporation,
or any subsidiary of the Corporation, to procure a judgment in its favor by
reason of the fact that he is or was a director or officer of the Corporation,
any predecessor of the Corporation, or any subsidiary of the Corporation, or is
or was serving at the request of the Corporation, any predecessor of the
Corporation, or any subsidiary of the Corporation, as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in 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, any predecessor of the Corporation, or
any subsidiary 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, any predecessor of the
Corporation, or any subsidiary of 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.
The Corporation may 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, any predecessor of the Corporation,
or any subsidiary of the Corporation, to procure a judgment in
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its favor by reason of the fact that he is or was an employee or agent of the
Corporation, any predecessor of the Corporation, or any subsidiary of the
Corporation, or is or was serving at the request of the Corporation, any
predecessor of the Corporation, or any subsidiary of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in 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, any predecessor of the Corporation, or any subsidiary 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, any predecessor of the Corporation, or any subsidiary
of 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.
6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
Corporation, any predecessor of the Corporation, or any subsidiary 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.
6.4 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 director, officer, employee
or 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 the 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.
6.5 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.
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6.6 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 or limiting any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any by-law,
certificate of incorporation, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another while holding such office.
6.7 INSURANCE INDEMNIFICATION
The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, any predecessor of the Corporation, or any subsidiary 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.
6.8 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, officers, and employees or agents, so that
any person who is 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, 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.
6.9 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 deemed to have acted in a manner "not opposed to the best interests
of the Corporation" as referred to in this Article VI.
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6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advanced of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided 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
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The Corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the Corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his position as a director. The Court of Chancery is
hereby vested with the exclusive jurisdiction to determine whether a director is
entitled to the inspection sought. The Court may summarily order the Corporation
to permit the director to inspect any and all books and records, the stock
ledger, and the stock list and to make copies or extracts therefrom. The Court
may, in its discretion, prescribe any limitations or conditions with reference
to the inspection, or award such other and further relief as the Court may deem
just and proper.
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the chief executive officer, any vice
president, the chief financial officer, the secretary or assistant secretary of
this Corporation, or any other person authorized by the
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board of directors or the chief executive officer or a vice president, is
authorized to vote, represent, and exercise on behalf of this Corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of this Corporation. The authority granted herein may be
exercised either by such person directly or by any other person authorized to do
so by proxy or power of attorney duly executed by such person having the
authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the Corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these Bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The stock of a corporation shall be represented by certificates,
provided that the board of directors of the Corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated stock. Any such resolution shall not apply to
stock represented by a certificate until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares 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, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
Corporation representing the number of shares registered in certificate form.
Any or all of 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 has to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
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The Corporation may issue the whole or any part of its stock as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid stock, upon the books and records of the Corporation in the
case of uncertificated partly paid stock, the total amount of the consideration
to be paid therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid stock, the Corporation shall declare a
dividend upon partly paid stock of the same class, but only upon the basis of
the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the Corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the Corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the Corporation shall issue to represent
such class or series of stock a statement that the Corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the Corporation and cancelled at the same time. The Corporation
may issue a new certificate of stock or uncertificated shares 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 or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a Corporation and a natural
person.
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8.7 DIVIDENDS
The directors of the Corporation, subject to any restrictions contained
in the Certificate of Incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the Corporation's
capital stock.
The directors of the Corporation may set apart out of any of the funds
of the Corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
Corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The Corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The Corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
Corporation to restrict the transfer of shares of stock of the Corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the
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part of another person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
ARTICLE IX
AMENDMENTS
The original or other Bylaws of the Corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
Corporation may, in its Certificate of Incorporation, confer the power to adopt,
amend or repeal Bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal Bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of
directors of the Corporation that the Corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the Corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the Corporation shall be dissolved.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the Corporation is insolvent, to be
receivers, of and for the Corporation when:
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(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect
successors to directors whose terms have expired or would
have expired upon qualification of their successors; or
(ii) the business of the Corporation is suffering or is
threatened with irreparable injury because the directors
are so divided respecting the management of the affairs of
the Corporation that the required vote for action by the
board of directors cannot be obtained and the stockholders
are unable to terminate this division; or
(iii) the Corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve,
liquidate or distribute its assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the Corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
ARTICLE XII
LOANS TO OFFICERS
The Corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the Corporation or of its
subsidiaries, including any officer or employee who is a Director of the
Corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the Corporation. The loan, guarantee or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Bylaw shall be deemed to deny, limit
or restrict the powers of guaranty or warranty of the Corporation at common law
or under any statute.
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EXHIBIT 4.5
AMENDED AND RESTATED REGISTRATION
AND INFORMATIONAL RIGHTS AGREEMENT
This Amended and Restated Registration and Informational Rights
Agreement (the "Agreement") is made and entered into as of June 28, 1999, by and
between UNIVERSAL ACCESS, INC., a Delaware corporation (the "Company") and the
persons executing this Agreement in the space provided on the signature page
hereto (each, a "Holder" and collectively, the "Holders").
WITNESSETH:
A. Each of the Holders and the Company entered into an Amended and
Restated Registration and Informational Rights Agreements (the "Original
Registration Rights Agreements"), dated February 8, 1999, in connection with the
Holders' purchase of the Company's Series A Cumulative Convertible Preferred
Stock (the "Series A Preferred Shares").
B. The Company and the Holders desire to amend and restate the Original
Registration Rights Agreements in their entirety.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree that the Original Registration
Rights Agreements are amended and restated in their entirety to read as follows:
1. (a) Piggyback Registration. If the Company files a registration
statement (other than a registration statement on Form S-4, Form S-8 or on any
other form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities (as hereinafter defined)) with the Securities and
Exchange Commission (the "Commission") while any Registrable Securities are
outstanding, the Company shall give each Holder at least 30 days' prior written
notice of the filing of such registration statement. If requested by a Holder in
writing within 20 days after receipt of any such notice, the Company shall
register all or, at such Holder's option, any portion of such Holder's
Registrable Securities concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of the Registrable Securities through the facilities of all appropriate
securities exchanges, if any, on which the Company's Common Stock is being sold
or on the over-the-counter market, and will use its best efforts through its
officers, directors, auditors, and counsel to cause such registration statement
to become effective as promptly as practicable.
As used herein, "Registrable Securities" shall mean (i) the shares of
Common Stock acquired or to be acquired by a Holder pursuant to the conversion
of the Series A Preferred Shares or any warrants (the "Warrants") to acquire
Series A Preferred Shares which have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), and (ii) any Common Stock issued (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued) by way of a stock split, stock
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dividend, recapitalization, merger or other distribution with respect to, or in
exchange for, or in replacement of, the Series A Preferred Shares, excluding in
all cases, however, any Registrable Securities sold by a person in a transaction
in which its rights under this Section 1 are not assigned.
(b) S-3 Registration Rights. If, and only if, the Company is eligible
to file a Registration Statement on Form S-3 (or any equivalent successor form)
and the Company shall receive from Holders of at least 20% of the then
outstanding Registrable Securities a written request or requests that the
Company prepare and file a Registration Statement on Form S-3 (or any equivalent
successor form) and any related qualification or compliance with respect to all
or a part of the Registrable Securities owned by such Holder or Holders, the
Company will (i) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders, and (ii) as soon
as practicable, use its best efforts to effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 15
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1(b) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than One
Million Dollars ($1,000,000).
Subject to the foregoing, the Company shall file and use its best
efforts to prepare and file a registration statement covering the Registrable
Securities and other securities so requested to be registered, and to cause the
registration statement to become effective, as soon as practicable after receipt
of the request or requests of the Holders.
(c) Underwriting. If a registration pursuant to Section 1 is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as part of the notice given pursuant hereto. The Company
shall (together with all Holders proposing to distribute their securities
through such underwriting), if requested by the underwriter, enter into an
underwriting agreement in customary form with a managing underwriter selected
for such underwriting by the Company. The underwriting agreement shall also
satisfy the conditions described in Section 1(m) below. Notwithstanding any
other provision of this Section 1, if the managing underwriter advises the
Company in writing that market factors require exclusion of shares to be sold by
selling stockholders, or a limitation of the number of shares to be so sold,
then the Company shall so advise all Holders of Registrable Securities and the
number of shares of Registrable Securities that may be included in the
registration and the underwriting shall be allocated among all Holders thereof
and including any holders of Common Stock (the "Additional Registrable
Securities") acquired upon conversion of Series B Cumulative Convertible
Preferred Stock and Series D Cumulative Convertible Preferred Stock entitled to
participate in the registration (the "Additional Holders") (except those Holders
or Additional Holders who have indicated to the Company their decision not to
distribute any of their Registrable Securities or Additional Registrable
Securities
2
<PAGE> 3
through such underwriting) in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities or Additional Registrable
Securities held by such Holders or Additional Holders at the time of filing the
registration statement. No Registrable Securities or Additional Registrable
Securities excluded from the underwriting by reason of the underwriter market
limitation shall be included in such registration.
Notwithstanding anything to the contrary herein, (a) no reduction
shall be made with respect to securities offered by the Company for its own
account in connection with the Company's initial registered public offering, (b)
in any subsequent offering, the securities registered by the Holders owning
Series A Preferred Shares for their own account pursuant to such offering,
together with securities registered by any Series A Holder may not be reduced
below twenty percent (20%) of all of the shares included in such offering, and
(c) in any offering undertaken pursuant to Section 1 hereof, no reduction in the
securities to be registered by any Holder shall occur until all other
securities, other than those offered by the Company or by the Series A Holders,
have been excluded from such offering. If any Holder of Registrable Securities
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the managing underwriter and the
other Holders. In such event, the Registrable Securities and/or other securities
held by such Holder affected shall be withdrawn from registration. However, if
such withdrawal is made, the registration will be deemed to have been completed
with respect to the withdrawing Holder for purposes of determining whether the
Company has satisfied its registration obligations under this Section 1.
If the managing underwriter of any underwritten offering pursuant to
Section 1(a) shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Registrable Securities requested to be
included in the registration concurrently with the securities being registered
by the Company would materially adversely affect the distribution of such
securities by the Company for its own account, then the Holders shall delay the
offer and sale of the Registrable Securities (or the portions thereof so
designated by such managing underwriter) for such period, not to exceed 90 days
(the "Delay Period"), as the managing underwriter shall request, provided that
no such delay shall be required as to any Registrable Securities if any
securities of the Company are included in such registration statement and
eligible for sale during the Delay Period for the account of any person other
than the Company and the Holders unless the securities included in such
registration statement and eligible for sale during the Delay Period for such
other person shall have been reduced pro rata to the reduction of the
Registrable Securities which were requested to be included and eligible for sale
during the Delay Period in such registration.
(d) Definition of Expenses.
(i) "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 1 hereof, including, without limitation, all
registration, filing and qualification fees, underwriters expense allowances,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).
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<PAGE> 4
(ii) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of the Registrable Securities in the
registration and all fees and disbursements of any special counsel (other than
the Company's regular counsel) for any Holder (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company).
(e) Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1(a) and 1(b) shall be borne by the Company. Selling Expenses incurred
in connection with any registration pursuant to Section 1, shall be borne by the
Holders of the securities so registered, pro rata on the basis of the number of
shares so registered (provided that each Holder shall bear the full amount of
the fees and disbursements of any counsel retained by it).
(f) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holders may reasonably
request; provided, however, that the Company shall not be required to qualify to
do business in any state by reason of this Section 1(f) in which it is not
otherwise required to qualify to do business.
(g) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall prepare and file with the Commission a registration
statement with respect to the Registrable Securities requested to be registered
and use its best efforts to cause such registration statement to become
effective, and shall keep effective any registration or qualification
contemplated by this Section 1 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period of time as
shall be required to permit the Holders to complete the offer and sale of the
Registrable Securities covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of 24 months from the date on which the Holders are first free to sell
all such Registrable Securities; provided, however, that, if the Company is
required to keep any such registration or qualification in effect with respect
to securities other than the Registrable Securities beyond such period, the
Company shall keep such registration or qualification in effect as it relates to
the Registrable Securities for so long as such registration or qualification
remains or is required to remain in effect in respect of such other securities.
(h) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall promptly furnish to the Holders such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, and such other documents, as the Holders may reasonably request to
facilitate the disposition of the Registrable Securities included in such
registration.
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<PAGE> 5
(i) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall promptly furnish the Holders with an opinion of its
counsel to the effect that (i) the registration statement has become effective
under the Securities Act and no order suspending the effectiveness of the
registration statement, preventing or suspending the use of the registration
statement, any preliminary prospectus, any final prospectus, or any amendment or
supplement thereto has been issued, nor has the Commission or any securities or
blue sky authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (ii) the registration statement and
each prospectus forming a part thereof (including each preliminary prospectus),
and any amendment or supplement thereto, comply as to form with the Securities
Act and the rules and regulations thereunder, and (iii) such counsel has no
knowledge of any material misstatement or omission in such registration
statement or any prospectus, as amended or supplemented. The opinions described
in clauses (ii) and (iii) of the preceding sentence shall be delivered only if
the registration is made pursuant to an underwritten public offering and the
underwriter requires similar opinions to be delivered by Company counsel as a
closing condition. In such an underwritten offering, if required by the
underwriter, the opinion also shall state the jurisdictions in which the
Registrable Securities have been registered or qualified for sale pursuant to
the provisions of Section 1(f).
(j) The Company agrees that until all the Registrable Securities have
been sold under a registration statement or pursuant to Rule 144 under the
Securities Act, the Company agrees to:
(i) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 promulgated
under the Securities Act, at all times after 90 days after the effective date of
the first registration statement filed by the Company;
(ii) at any time when the Company is eligible to file a registration
statement on Form S-3 (or any successor form), take such action, including the
voluntary registration of its Common Stock under Section 12 of the Exchange Act
of 1934, as amended (the "Exchange Act"), as is necessary to enable the Holders
to utilize Form S-3 for the sale of their Registrable Securities, such action to
be taken as soon as practicable after the end of the fiscal year in which the
first registration statement filed by the Company for the offering of its
securities to the general public is declared effective or such earlier date as
may be required by any stock exchange or quotation system upon which the Common
Stock may be traded;
(iii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iv) furnish to any Holder, so long as the Holder owns any
Registrable Securities, promptly upon request: (i) a written statement by the
Company that it has used its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), complied in all material respects with the reporting
requirements of the Exchange Act
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<PAGE> 6
(at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies); (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company; and (iii) such other information as may be reasonably
requested in order to permit any Holder to avail itself of any rule or
regulation of the Commission or any state securities authority which permits the
selling of any such securities without registration or pursuant to such form.
(k) The Company shall notify the Holders promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
(l) The Company shall promptly notify the Holders at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the reasonable request of the
Holders prepare and furnish to it such number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities or securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.
(m) If requested by the underwriter for any underwritten offering of
Registrable Securities on behalf of the Holders, the Company and the Holders
will enter into an underwriting agreement with such underwriter for such
offering, which shall be reasonably satisfactory in substance and form to the
Company, and the Company's counsel, the Holders and the underwriter, and such
agreement shall contain such representations and warranties by the Company and
the Holders and such other terms and provisions as are customarily contained in
an underwriting agreement with respect to secondary distributions solely by
selling stockholders, including, without limitation, indemnities substantially
to the effect and to the extent (but in no event greater than those) provided in
Section 2 hereof.
2. Indemnification. (a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Holder, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act, from and against any and all loss,
liability, charge, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 2, but not be limited to, attorneys' fees and
any and all reasonable expenses whatsoever incurred in investigating, preparing,
or defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or
6
<PAGE> 7
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Registrable Securities or (B) in any application or other
document or communication (in this Section 2 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Registrable Securities under the
securities or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company with
respect to such Holder by or on behalf of such person expressly for inclusion in
any registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to indemnify shall
be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.
(a) If any action is brought against a Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (the failure to notify the Company within a reasonable time of
the commencement of any such action, to the extent prejudicial to the Company's
ability to defend such action, shall relieve the Company of liability to the
indemnified party pursuant to this Section 2(a), but the failure so to notify
shall not relieve the Company from any liability other than pursuant to this
Section 2(a)) and the Company shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such indemnified
party or parties), provided that the indemnified party shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company shall not
have promptly employed counsel reasonably satisfactory to such indemnified party
or parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respective of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent, or termination includes an
7
<PAGE> 8
unconditional release of each indemnified party from all liability in respect of
such action. The Company agrees promptly to notify the Holder of the
commencement of any litigation or proceedings against the Company or any of it
officers or directors in connection with the sale of any Registrable Securities
or any preliminary prospectus, prospectus, registration statement, or amendment
or supplement thereto, or any application relating to any sale of any
Registrable Securities.
(b) Each Holder agrees to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall have signed
any registration statement covering Registrable Securities held by such Holder,
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnify from the
Company to the Holder in Section 2(a), but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to the
Holder by or on behalf of the Holder, expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this Section 2(b), the Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
2(a). Notwithstanding the foregoing, the liability of each Holder under this
Section 2 shall be limited to an amount equal to the proceeds to such Holder of
Registrable Securities sold as contemplated herein.
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and each Holder as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, (after contribution from others) on the
basis of relevant equitable considerations such as the relative fault of the
Company and such Holder in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to
8
<PAGE> 9
information supplied by the Company or by such Holder, and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement, alleged statement, omission, or alleged omission.
The Company and the Holders agree that it would be unjust and
inequitable if the respective obligations of the Company and the Holders for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the
Holders and the other indemnified parties were treated as one entity for such
purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 2(c). Notwithstanding
anything to the contrary contained herein, the liability of each Holder under
this Section 2(c) shall be limited to an amount equal to the proceeds to such
Holder of Registrable Securities as contemplated herein. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 2(c),
each person, if any, who controls any Holder within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of any Holder or control person
shall have the same rights to contribution as such Holder or control person and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed any such registration statement, each director of
the Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 2(c). Anything in this Section 2(c) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 2(c) is
intended to supersede any right to contribution under the Securities Act, the
Exchange Act or otherwise.
3. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be assigned by a
Holder to a transferee or assignee of such securities: (i) if such transferee or
assignee was a Holder of Registrable Securities hereunder prior to such
transfer, (ii) if such transfer is made in connection with the transfer of all
Registrable Securities held by the transferor, (iii) if such transferee or
assignee acquires at least 600,000 shares (as adjusted for any stock splits,
combination, recapitalization or exchange) of the then outstanding Registrable
Securities; or (iv) in connection with a distribution by such Holder, to any
partner, former partner, member, former member, stockholder or former
stockholder, or the estate of any such person, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; provided, however, that such
assignment shall be effective only if immediately following such transfer the
transferee is bound by the terms and conditions of this Agreement and such
transfer of any Registrable Securities is lawful under all applicable securities
laws.
4. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of at least a
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<PAGE> 10
majority of the Series A Preferred Shares then outstanding, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would: (i) allow such holder or prospective holder to include such
securities in any registration filed by the Company, unless under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that this inclusion of such holder
securities will not reduce the amount of the Registrable Securities of Holders
which is included; (ii) permit such holder or prospective holder to require the
Company to initiate any registration of any securities of the Company; or (iii)
otherwise be in conflict with the terms hereof.
5. Market Stand-off Agreement. Each Holder agrees that, in connection
with the Company's initial underwritten public offering of Common Stock, upon
request of the Company or the underwriters managing such underwritten offering
of Common Stock, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Common Stock (other than Common
Stock included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the underwriters and as is agreed to by each
beneficial owner of 1% or more of the outstanding Common Stock and each officer
and director of the Company.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares of securities of every other person subject to the
foregoing restriction) until the end of such period.
6. Information Rights
(a) Financial Information. The Company will provide financial
information to (i) each Holder of Series A Preferred Shares and (ii) any
previous Holder of Series A Preferred Shares who after converting the Series A
Preferred Shares owns 5% or more of the Company's Common Stock into which the
Series A Preferred Shares are convertible or have been converted. The financial
information requirements are (i) unaudited quarterly financial statements
delivered within 60 days of the end of the quarter; (ii) annual audited
financial statements (commencing with the fiscal year ending December 31, 1998)
delivered within 120 days of the end of the fiscal year; (iii) as soon as
practicable (and in any event within ten (10) days), copies of any reports or
communications delivered to any class of the Company's security holders; (iv)
within 20 days after the end of each month, an unaudited balance sheet,
statement of operations and of cash flows and comparison to prior year results
and budget for and as of the end of such month; (v) as soon as practicable, but
in any event 30 days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year, prepared on a monthly basis, including balance
sheets and sources and applications of funds statements for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
and (vi) within 30 days after the end of each fiscal quarter, a report on
operational highlights with respect to such quarter.
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(b) Termination of Information Covenants. The covenants set forth in
this Section 6 shall terminate and be of no further force or effect immediately
upon the closing of a Qualified Public Offering.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, the Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
(c) Notices. Except as otherwise specified herein. any notice. demand
or request required or permitted to be given pursuant to the terms of this
Agreement, and any information delivered pursuant to Section 6. shall be in
writing and shall be deemed given (i) when delivered personally or by verifiable
facsimile transmission (with a hard copy to follow) on or before 5:00 p.m.,
central time, on a business day or, if the day is not a business day, on the
next succeeding business day, (ii) on the next business day after timely
delivery to an overnight courier and (iii) on the third business day after
deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
If to the Company:
Universal Access, Inc.
100 North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Phone: 312-660-5000
Fax: 312-660-5050
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With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Mitchell D. Goldsmith, Esq.
Phone: 312-836-4006
Fax: 312-527-3194
and if to a Holder. to:
Broadmark Capital Corp.
3030 U.S. Bank Centre
1420 Fifth Avenue
Seattle, Washington 98101
Attn: Mr. Joseph Schocken
Phone: 206-623-1200
Fax: 206-623-2213
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation, transferees or assignees of the Registrable
Shares subject to Section 3.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of this
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<PAGE> 13
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are not restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, concerning the
registration rights granted by the Company pursuant to this Agreement.
(j) Future Purchasers. The Company shall not grant to holders of any
of its equity securities registration rights superior to those granted to the
Holders hereunder unless the Company (i) obtains the prior written consent of
the holders of a majority of the Registrable Securities or (ii) grants equal
rights to the Holders. The Company shall not grant registration rights with
respect to the Common Stock outstanding at the closing of the Preferred Shares.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
UNIVERSAL ACCESS, INC.
By: /s/ PATRICK SHUTT
------------------------------
Name: Patrick Shutt
Title: President and CEO
HOLDERS:
________________________________________
________________________________________
________________________________________
________________________________________
*Signed pursuant to power of attorney dated June 28, 1999 granted to Patrick
Shutt, as President of Universal Access, Inc.
________________________________
Patrick Shutt, President
Universal Access, Inc.
606650-1
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<PAGE> 1
EXHIBIT 4.6
AMENDED AND RESTATED
REGISTRATION AND INFORMATIONAL RIGHTS AGREEMENT
This Amended and Restated Registration and Informational Rights
Agreement (the "Agreement") is made and entered into as of June 30, 1999, by and
between UNIVERSAL ACCESS, INC., a Delaware corporation (the "Company"), and the
persons executing this Agreement in the space provided on the signature page
hereto (each, a "Holder" and collectively, the "Holders").
WITNESSETH:
A. Certain of the Holders (the "Original Holders") and the Company
entered into Registration and Informational Rights Agreements (the "Original
Registration Rights Agreements"), each dated February 8, 1999, in connection
with the Original Holders' purchase of the Company's Series B Cumulative
Convertible Preferred Stock (the "Series B Preferred Shares").
B. Pursuant to a Stock Purchase Agreement dated as of the date hereof
between the Company and each Holder, each Holder has agreed to purchase shares
of Series D Cumulative Convertible Preferred Stock of the Company (the "Series D
Preferred Shares") convertible into shares of common stock of the Company, $.01
par value per share (the "Common Stock").
C. As additional consideration for the purchase of the Series D
Preferred Shares by the Holder, the Company desires to grant to each Holder
registration and informational rights with respect to the Common Stock and the
Company and the Original Holders desire to amend and restate the Original
Registration Rights Agreements in their entirety.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows, and the Company and
the Original Holders agree that the Original Registration Rights Agreements are
amended and restated in their entirety to read as follows:
1. (a) Piggyback Registration. If the Company files a registration
statement (other than a registration statement on Form S-4, Form S-8, or on any
other form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities (as hereinafter defined)) with the Securities and
Exchange Commission (the "Commission") while any Registrable Securities are
outstanding, the Company shall give each Holder at least 30 days' prior written
notice of the filing of such registration statement. If requested by a Holder in
writing within 20 days after receipt of any such notice, the Company shall
register all or, at such Holder's option, any portion of such Holder's
Registrable Securities concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of the Registrable Securities through the facilities of all appropriate
securities exchanges, if any, on which the Company's Common Stock is being sold
or on the over-the-counter
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market, and will use its best efforts through its officers, directors, auditors,
and counsel to cause such registration statement to become effective as promptly
as practicable.
As used herein, "Registrable Securities" shall mean (i) the shares of
Common Stock acquired or to be acquired by a Holder pursuant to the conversion
of the Series B Preferred Shares or the Series D Preferred Shares (together with
the Series B Preferred Shares, collectively, the "Preferred Shares") or any
warrants (the "Warrants") to acquire Series B Preferred Shares which have not
been previously sold pursuant to a registration statement or Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and (ii) any Common Stock issued (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued) by way of a stock split,
stock dividend, recapitalization, merger or other distribution with respect to,
or in exchange for, or in replacement of, the Preferred Shares, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which its rights under this Section 1 are not assigned.
(b) S-3 Registration Rights. If, and only if, the Company is eligible
to file a Registration Statement on Form S-3 (or any equivalent successor form)
and the Company shall receive from Holders of at least 20% of the then
outstanding Registrable Securities a written request or requests that the
Company prepare and file a Registration Statement on Form S-3 (or any equivalent
successor form) and any related qualification or compliance with respect to all
or a part of the Registrable Securities owned by such Holder or Holders, the
Company will (i) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders, and (ii) as soon
as practicable, use its best efforts to effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 15
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1(b) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than One
Million Dollars ($1,000,000).
Subject to the foregoing, the Company shall file and use its best
efforts to prepare and file a registration statement covering the Registrable
Securities and other securities so requested to be registered, and to cause the
registration statement to become effective, as soon as practicable after receipt
of the request or requests of the Holders.
(c) Demand Registration. If, at any time during (x) the three-year
period commencing after the closing of a firmly underwritten public offering of
the Company's common stock resulting in net proceeds to the Company of at least
$15,000,000 at a per share price of at least $5.00 (as adjusted for any stock
split, combination, recapitalization or exchange) (a "Qualified Public
Offering") by the Company or (y) the five-year period commencing February 5,
2002 and ending February 5, 2007, the Company shall receive a written request
from Holders who in the aggregate
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<PAGE> 3
own at least 50% of the total number of Preferred Shares to register the sale of
all or part of such Registrable Securities, the Company shall, as promptly as
practicable, and in any event not later than 45 days after such request, prepare
and file with the Commission a registration statement sufficient to permit the
public offering and sale of the Registrable Securities and will use its best
efforts through its officers, directors, auditors, and counsel to cause such
registration statement to become effective as promptly as practicable; provided,
however, that the Company shall only be obligated to prepare, file and use its
best efforts to cause to become effective, two such registration statements. The
Company shall not be obligated to effect any registration of its securities
pursuant to this Section within nine months after the effective date of a
previous registration statement. Within three business days after receiving any
request contemplated by this Section, the Company shall give written notice to
all the other Holders, advising each of them that the Company is proceeding with
such registration and offering to include therein all or any portion of any such
other Holder's Registrable Securities, provided that the Company receives a
written request to do so from such Holder within 30 days after receipt.
(d) Underwriting. If a registration pursuant to Section 1 is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as part of the notice given pursuant hereto. The Company
shall (together with all Holders proposing to distribute their securities
through such underwriting), if requested by the underwriter, enter into an
underwriting agreement in customary form with a managing underwriter selected
for such underwriting by the Company and, in the case of a registration pursuant
to Section 1(c) only, reasonably acceptable to a majority of the Holders
proposing to distribute securities through such underwriting. The underwriting
agreement shall also satisfy the conditions described in Section 1(n) below.
Notwithstanding any other provision of this Section 1, if the managing
underwriter advises the Company in writing that market factors require exclusion
of shares to be sold by selling stockholders, or a limitation of the number of
shares to be so sold, then the Company shall so advise all Holders of
Registrable Securities and the number of shares of Registrable Securities that
may be included in the registration and underwriting shall be allocated among
all Holders thereof and including any holders of Common Stock (the "Series A
Registrable Securities") acquired upon conversion of Series A Cumulative
Convertible Preferred Stock (the "Series A Preferred Stock") entitled to
participate in the registration (the "Series A Holders") (except those Holders
or Series A Holders who have indicated to the Company their decision not to
distribute any of their Registrable Securities or Series A Registrable
Securities through such underwriting) in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities or Series A Registrable
Securities held by such Holders or Series A Holders at the time of filing the
registration statement. No Registrable Securities or Series A Registrable
Securities excluded from the underwriting by reason of the underwriter market
limitation shall be included in such registration.
Notwithstanding anything to the contrary herein, (a) no reduction shall
be made with respect to securities offered by the Company for its own account in
connection with the Company's initial registered public offering, (b) in any
subsequent offering, the securities registered by the Holders owning Preferred
Shares for their own account pursuant to such offering, together with securities
registered by any Series A Holder, may not be reduced below twenty percent (20%)
of the shares
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<PAGE> 4
included in such offering, and (c) in any offering undertaken pursuant to
Section 1 hereof, no reduction in the securities to be registered by any Holder
shall occur until all other securities, other than those offered by the Company
or by the Series A Holders, have been excluded from such offering. If any Holder
of Registrable Securities disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the other Holders. In such event, the Registrable
Securities and/or other securities held by such Holder affected shall be
withdrawn from registration. However, if such withdrawal is made, the
registration will be deemed to have been completed with respect to the
withdrawing Holder for purposes of determining whether the Company has satisfied
its registration obligations under this Section 1.
If the managing underwriter of any underwritten offering pursuant to
Section 1(a) shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Registrable Securities requested to be
included in the registration concurrently with the securities being registered
by the Company would materially adversely affect the distribution of such
securities by the Company for its own account, then the Holders shall delay the
offering and sale of the Registrable Securities (or the portions thereof so
designated by such managing underwriter) for such period, not to exceed [90]
days (the "Delay Period"), as the managing underwriter shall request, provided
that no such delay shall be required as to any Registrable Securities if any
securities of the Company are included in such registration statement and
eligible for sale during the Delay Period for the account of any person other
than the Company and the Holders unless the securities included in such
registration statement and eligible for sale during the Delay Period for such
other person shall have been reduced pro rata to the reduction of the
Registrable Securities which were requested to be included and eligible for sale
during the Delay Period in such registration.
(e) Definition of Expenses.
(i) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 1 hereof, including,
without limitation, all registration, filing and qualification fees,
underwriters expense allowances, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses
(but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
(ii) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of the
Registrable Securities in the registration and all fees and
disbursements of any special counsel (other than the Company's regular
counsel) for any Holder (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the
Company).
(f) Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1(a) and 1(b) shall be borne by the Company. All Registration Expenses
incurred in connection with any registration pursuant
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<PAGE> 5
to Section 1(c), and all Selling Expenses incurred in connection with any
registration pursuant to Section 1, shall be borne by the Holders of the
securities so registered, pro rata on the basis of the number of shares so
registered (provided that each Holder shall bear the full amount of the fees and
disbursements of any counsel retained by it).
(g) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holders may reasonably
request; provided, however, that the Company shall not be required to qualify to
do business in any state by reason of this Section 1(g) in which it is not
otherwise required to qualify to do business.
(h) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall prepare and file with the Commission a registration
statement with respect to the Registrable Securities requested to be registered
and use its best efforts to cause such registration statement to become
effective, and shall keep effective any registration or qualification
contemplated by this Section 1 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period of time as
shall be required to permit the Holders to complete the offer and sale of the
Registrable Securities covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of 24 months from the date on which the Holders are first free to sell
all such Registrable Securities; provided, however, that, if the Company is
required to keep any such registration or qualification in effect with respect
to securities other than the Registrable Securities beyond such period, the
Company shall keep such registration or qualification in effect as it relates to
the Registrable Securities for so long as such registration or qualification
remains or is required to remain in effect in respect of such other securities.
(i) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall promptly furnish to the Holders such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, and such other documents, as the Holders may reasonably request to
facilitate the disposition of the Registrable Securities included in such
registration.
(j) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall promptly furnish the Holders with an opinion of its
counsel to the effect that (i) the registration statement has become effective
under the Securities Act and no order suspending the effectiveness of the
registration statement, preventing or suspending the use of the registration
statement, any preliminary prospectus, any final prospectus, or any amendment or
supplement thereto has been issued, nor has the Commission or any securities or
blue sky authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (ii) the registration
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<PAGE> 6
statement and each prospectus forming a part thereof (including each preliminary
prospectus), and any amendment or supplement thereto, comply as to form with the
Securities Act and the rules and regulations thereunder, and (iii) such counsel
has no knowledge of any material misstatement or omission in such registration
statement or any prospectus, as amended or supplemented. The opinions described
in clauses (ii) and (iii) of the preceding sentence shall be delivered only if
the registration is made pursuant to an underwritten public offering and the
underwriter requires similar opinions to be delivered by Company counsel as a
closing condition. In such an underwritten offering, if required by the
underwriter, the opinion also shall state the jurisdictions in which the
Registrable Securities have been registered or qualified for sale pursuant to
the provisions of Section 1(g).
(k) The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Securities Act, the Company agrees to:
(i) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144
promulgated under the Securities Act, at all times after 90 days after
the effective date of the first registration statement filed by the
Company;
(ii) at any time when the Company is eligible to file a
registration statement on Form S-3 (or any successor form), take such
action, including the voluntary registration of its Common Stock under
Section 12 of the Exchange Act of 1934, as amended (the "Exchange Act"),
as is necessary to enable the Holders to utilize Form S-3 for the sale
of their Registrable Securities, such action to be taken as soon as
practicable after the end of the fiscal year in which the first
registration statement filed by the Company for the offering of its
securities to the general public is declared effective or such earlier
date as may be required by any stock exchange or quotation system upon
which the Common Stock may be traded;
(iii) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and
the Exchange Act; and
(iv) furnish to any Holder, so long as the Holder owns any
Registrable Securities, promptly upon request: (i) a written statement
by the Company that it has used its best efforts to make and keep public
information available, as those terms are understood and defined in Rule
144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company), complied in all material
respects with the reporting requirements of the Exchange Act (at any
time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies); (ii) a copy of
the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such other
information as may be reasonably requested in order to permit any Holder
to avail itself of any
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<PAGE> 7
rule or regulation of the Commission or any state securities authority
which permits the selling of any such securities without registration or
pursuant to such form.
(l) The Company shall notify the Holders promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
(m) The Company shall promptly notify the Holders at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the reasonable request of the
Holders prepare and furnish to it such number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities or securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.
(n) If requested by the underwriter for any underwritten offering of
Registrable Securities on behalf of the Holders, the Company and the Holders
will enter into an underwriting agreement with such underwriter for such
offering, which shall be reasonably satisfactory in substance and form to the
Company, and the Company's counsel, the Holders and the underwriter, and such
agreement shall contain such representations and warranties by the Company and
the Holders and such other terms and provisions as are customarily contained in
an underwriting agreement with respect to secondary distributions solely by
selling stockholders, including, without limitation, indemnities substantially
to the effect and to the extent (but in no event greater than those) provided in
Section 2 hereof.
2. Indemnification. (a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Holder, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act, from and against any and all loss,
liability, charge, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 2, but not be limited to, attorneys' fees and
any and all reasonable expenses whatsoever incurred in investigating, preparing,
or defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, relating to the sale of any of the Registrable Securities or
(B) in any application or other document or communication (in this Section 2
collectively called an "application") executed by or on behalf of the Company or
based upon written information furnished
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<PAGE> 8
by or on behalf of the Company filed in any jurisdiction in order to register or
qualify any of the Registrable Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities exchange; or any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to such Holder by or on behalf
of such person expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
(a) If any action is brought against a Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (the failure to notify the Company within a
reasonable time of the commencement of any such action, to the extent
prejudicial to the Company's ability to defend such action, shall relieve the
Company of liability to the indemnified party pursuant to this Section 2(a), but
the failure so to notify shall not relieve the Company from any liability other
than pursuant to this Section 2(a)) and the Company shall promptly assume the
defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties), provided that the
indemnified party shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall be
borne by the Company and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties. Anything
in this Section 2 to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld. The Company shall
not, without the prior written consent of each indemnified party that is not
released as described in this sentence, settle or compromise any action, or
permit a default or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, in respective of which indemnity may
be sought hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in respect of
such action. The Company agrees promptly to notify such Holder of the
commencement of any litigation or proceedings against the Company or any of it
officers or directors in connection with the sale of any Registrable Securities
or any preliminary prospectus, prospectus, registration statement, or amendment
or supplement thereto, or any application relating to any sale of any
Registrable Securities.
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(b) Each Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
such Holder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and its
or their respective counsel, to the same extent as the foregoing indemnify from
the Company to the Holder in Section 2(a), but only with respect to statements
or omissions, if any, made in any registration statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, or in any application, in reliance upon
and in conformity with written information furnished to the Company with respect
to the Holder by or on behalf of the Holder, expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this Section 2(b), the Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
2(a). Notwithstanding the foregoing, the liability of each Holder under this
Section 2 shall be limited to an amount equal to the proceeds to such Holder of
Registrable Securities sold as contemplated herein.
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and each Holder as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, (after contribution from others) on the
basis of relevant equitable considerations such as the relative fault of the
Company and such Holder in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Holder, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission.
The Company and the Holders agree that it would be unjust and
inequitable if the respective obligations of the Company and the Holders for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the
Holders and the other indemnified parties were treated as one entity for such
purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 2(c).
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Notwithstanding anything to the contrary contained herein, the liability of each
Holder under this Section 2(c) shall be limited to an amount equal to the
proceeds to such Holder of Registrable Securities as contemplated herein. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. For purposes of this
Section 2(c), each person, if any, who controls any Holder within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act and each
officer, director, partner, employee, agent, and counsel of any Holder or
control person shall have the same rights to contribution as such Holder or
control person and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed any such registration
statement, each director of the Company, and its or their respective counsel
shall have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 2(c). Anything in this Section 2(c) to the
contrary notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written consent.
This Section 2(c) is intended to supersede any right to contribution under the
Securities Act, the Exchange Act or otherwise.
3. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be assigned by a
Holder to a transferee or assignee of such securities: (i) if such transferee or
assignee was a Holder of Registrable Securities hereunder prior to such
transfer, (ii) if such transfer is made in connection with the transfer of all
Registrable Securities held by the transferor, (iii) if such transferee or
assignee acquires at least 600,000 shares (as adjusted for any stock split,
combination, recapitalization or exchange) of the then outstanding Registrable
Securities; or (iv) in connection with a distribution by such Holder, to any
partner, former partner, member, former member, stockholder or former
stockholder, or the estate of any such person, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; provided, however, that such
assignment shall be effective only if immediately following such transfer the
transferee is bound by the terms and conditions of this Agreement and such
transfer of any Registrable Securities is lawful under all applicable securities
laws.
4. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of at least a majority of the Preferred Shares and the Series A
Preferred Stock then outstanding, voting together as a single class, enter into
any agreement with any holder or prospective holder of any securities of the
Company which would: (i) allow such holder or prospective holder to include such
securities in any registration filed by the Company, unless under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that this inclusion of such holder
securities will not reduce the amount of the Registrable Securities of Holders
which is included; (ii) permit such holder or prospective holder to require the
Company to initiate any registration of any securities of the Company; or (iii)
otherwise be in conflict with the terms hereof.
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5. Market Stand-off Agreement. Each Holder agrees that, in connection
with the Company's initial underwritten public offering of Common Stock, upon
request of the Company or the underwriters managing such underwritten offering
of Common Stock, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Common Stock (other than Common
Stock included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the underwriters and as is agreed to by each
beneficial owner of 1% or more of the outstanding Common Stock and each officer
and director of the Company.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares of securities of every other person subject to the
foregoing restriction) until the end of such period.
6. Information Rights
(a) Financial Information. The Company will provide financial
information to (i) each Holder of Preferred Shares and (ii) any previous Holder
of Preferred Shares who after converting the Preferred Shares owns 5% or more of
the Company's Common Stock into which the Preferred Shares are convertible or
have been converted. The financial information requirements are (i) unaudited
quarterly financial statements delivered within 60 days of the end of the
quarter; (ii) annual audited financial statements (commencing with the fiscal
year ending December 31, 1999) delivered within 120 days of the end of the
fiscal year; (iii) as soon as practicable (and in any event within ten (10)
days), copies of any reports or communications delivered to any class of the
Company's security holders; (iv) within 20 days after the end of each month, an
unaudited balance sheet, statement of operations and of cash flows and
comparison to prior year results and budget for and as of the end of such month;
(v) as soon as practicable, but in any event 30 days prior to the end of each
fiscal year, a budget and business plan for the next fiscal year, prepared on a
monthly basis, including balance sheets and sources and applications of funds
statements for such months and, as soon as prepared, any other budgets or
revised budgets prepared by the Company; and (vi) within 30 days after the end
of each fiscal quarter, a report on operational highlights with respect to such
quarter.
(b) Inspection Rights. Each Holder owning at least 400,000 Preferred
Shares shall have the right to visit and inspect any of the properties of the
Company or any of its subsidiaries, and to discuss the affairs, finances and
accounts of the Company or any of its subsidiaries with its officers, and to
review such information as is reasonably requested all at such reasonable times;
provided, however, that the Company shall not be obligated to grant inspection
rights under this Section 6(b) to a Holder who is a competitor of the Company or
with respect to information which the Company determines in good faith is
confidential; and provided further that the Company shall be obligated to
disclose confidential information to a Holder only if the Holder enters into
such confidentiality agreements as are reasonably requested by the Company.
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(c) Termination of Information Covenants. The covenants set forth in
this Section 6 shall terminate and be of no further force or effect immediately
upon the closing of a Qualified Public Offering.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, the Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
(c) Notices. Except as otherwise specified herein, any notice, demand
or request required or permitted to be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with a hard copy to follow)
on or before 5:00 p.m., central time, on a business day or, if the day is not a
business day, on the next succeeding business day, (ii) on the next business day
after timely delivery to an overnight courier and (iii) on the third business
day after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
If to the Company:
Universal Access, Inc.
100 North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Phone: 312-660-5000
Fax: 312-660-5050
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Mitchell D. Goldsmith, Esq.
Phone: 312-836-4006
Fax: 312-527-3194
and if to a Holder, at its address as shown on the stock records of the Company;
or such other address as any such party shall deliver to the Company.
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<PAGE> 13
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation transferees or assignees of the Registrable Shares
subject to Section 3.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not restrictions, promises
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
(j) Future Purchasers. The Company shall not grant to holders of any
of its equity securities registration rights superior to those granted to the
Holders hereunder unless the Company (i) obtains the prior written consent of
the holders of a majority of the Registrable Securities or (ii) grants equal
rights to the Holders. The Company shall not grant registration rights with
respect to the Common Stock outstanding at the closing of the Preferred Shares.
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<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
UNIVERSAL ACCESS, INC.
By: /s/ PATRICK SHUTT
-------------------------------------
Name: Patrick Shutt
Title: President
HOLDERS:
COMMUNICATIONS VENTURES III, L.P.
By:
-------------------------------------
Name: Roland A. Van der Meer
Title: Managing Member
COMMUNICATIONS VENTURES III CEO &
ENTREPRENEURS' FUND, L.P.
By:
-------------------------------------
Name: Roland A. Van der Meer
Title: Managing Member
INTERNET CAPITAL GROUP, INC.
By:
-------------------------------------
Name: Robert A. Pollan
Title: Managing Director
14
<PAGE> 15
SOUTHERN CROSS INDUSTRIES L.L.C.
By: /s/ Signature Illegible
-------------------------------------
Name: Nienke A. Nooteboom
Title: Managing Member
By:
-------------------------------------
Name:
Title:
STRATEGIC TIMING INVESTORS
CORPORATION
By:
-------------------------------------
Name: Luis D. Piana
Title: President
15
<PAGE> 1
EXHIBIT 4.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of November 10, 1999, by and between UNIVERSAL ACCESS, INC., a Delaware
corporation (the "Company"), and the parties executing this Agreement in the
space provided on the signature page hereto (each, a "Holder" and collectively,
the "Holders").
W I T N E S S E T H:
A. Pursuant to a Stock Purchase Agreement dated as of the date hereof
between the Company and each Holder, each Holder has agreed to purchase shares
of or has received warrants to purchase Series E Cumulative Convertible
Preferred Stock of the Company (the "Series E Preferred Shares") convertible
into shares of common stock of the Company, $.01 par value per share (the
"Common Stock").
B. As additional consideration for the purchase of the Series E
Preferred Shares or acceptance of such warrants by the Holder, the Company
desires to grant to each Holder registration rights with respect to the Common
Stock.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. (a) Piggyback Registration. If the Company files a registration
statement (other than a registration statement on Form S-4, Form S-8, or on any
other form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities (as hereinafter defined)) with the Securities and
Exchange Commission (the "Commission") while any Registrable Securities are
outstanding, the Company shall give each Holder at least 30 days' prior written
notice of the filing of such registration statement. If requested by a Holder in
writing within 20 days after receipt of any such notice, the Company shall
register all or, at such Holder's option, any portion of such Holder's
Registrable Securities concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of the Registrable Securities through the facilities of all appropriate
securities exchanges, if any, on which the Company's Common Stock is being sold
or on the over-the-counter market, and will use its best efforts through its
officers, directors, auditors, and counsel to cause such registration statement
to become effective as promptly as practicable.
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<PAGE> 2
As used herein, "Registrable Securities" shall mean (i) the shares of
Common Stock acquired or to be acquired by a Holder pursuant to the conversion
of Series E Preferred Shares or any warrants (the "Warrants") to acquire Series
E Preferred Shares which have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), and (ii) any Common Stock issued (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued) by way of a stock split, stock dividend, recapitalization, merger or
other distribution with respect to, or in exchange for, or in replacement of,
the Series E Preferred Shares, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which its rights under this
Section 1 are not assigned.
(b) Underwriting. If a registration pursuant to Section
1(a) is for a registered public offering involving an underwriting, the Company
shall so advise the Holders as part of the notice given pursuant hereto. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting), if requested by the underwriter, enter
into an underwriting agreement in customary form with a managing underwriter
selected for such underwriting by the Company. The underwriting agreement shall
also satisfy the conditions described in Section 1(l) below.
Notwithstanding any other provision of this Section 1, if the managing
underwriter advises the Company in writing that market factors require exclusion
of shares to be sold by selling stockholders, or a limitation of the number of
shares to be so sold, then Registrable Securities may be included in the
registration only to the extent it would not reduce the inclusion of the
following:
(i) Common Stock acquired upon conversion of Series A Cumulative
Convertible Preferred Stock owned by holders entitled to participate in the
registration;
(ii) Common Stock acquired upon conversion of Series B Cumulative
Convertible Preferred Stock (the "Series B Preferred Stock") or upon exercise of
warrants or options held by the placement agent for the Series B Preferred Stock
(or its transferees) owned by holders entitled to participate in the
registration; and
(iii) Common Stock acquired upon conversion of Series D
Cumulative Convertible Preferred Stock owned by holders entitled to participate
in the registration.
If Registrable Securities may be included in the registration pursuant
to the immediately preceding paragraph, and if the managing underwriter advises
the Company in writing that market factors require exclusion of shares to be
sold by selling stockholders, or a limitation of the number of shares to be so
sold, then the Company shall so advise all Holders of Registrable Securities and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof
(except for any Holders who have indicated to the Company their decision not to
distribute any of their Registrable Securities through such underwriting) in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the
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<PAGE> 3
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter market limitation shall be included in such
registration.
Notwithstanding anything to the contrary herein, no reduction shall be
made with respect to securities offered by the Company for its own account in
connection with the Company's initial registered public offering. If any Holder
of Registrable Securities disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the other Holders. In such event, the Registrable
Securities and/or other securities held by such Holder affected shall be
withdrawn from registration. However, if such withdrawal is made, the
registration will be deemed to have been completed with respect to the
withdrawing Holder for purposes of determining whether the Company has satisfied
its registration obligations under this Section 1.
If the managing underwriter of any underwritten offering pursuant to
Section 1(a) shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Registrable Securities requested to be
included in the registration concurrently with the securities being registered
by the Company would materially adversely affect the distribution of such
securities by the Company for its own account, then the Holders shall delay the
offering and sale of the Registrable Securities (or the portions thereof so
designated by such managing underwriter) for such period, not to exceed ninety
(90) days (the "Delay Period"), as the managing underwriter shall request,
provided that no such delay shall be required as to any Registrable Securities
if any securities of the Company are included in such registration statement and
eligible for sale during the Delay Period for the account of any person other
than the Company and the Holders unless the securities included in such
registration statement and eligible for sale during the Delay Period for such
other person shall have been reduced pro rata to the reduction of the
Registrable Securities which were requested to be included and eligible for sale
during the Delay Period in such registration.
(c) Definition of Expenses.
(i) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 1 hereof, including,
without limitation, all registration, filing and qualification fees,
underwriters expense allowances, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses
(but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
(ii) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of the
Registrable Securities in the registration and all fees and
disbursements of any special counsel (other than the Company's regular
counsel) for any Holder (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the
Company).
(d) Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 1 (a) shall be borne by the Company. All Selling
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<PAGE> 4
Expenses incurred in connection with any registration pursuant to Section 1,
shall be borne by the Holders of the securities so registered, pro rata on the
basis of the number of shares so registered (provided that each Holder shall
bear the full amount of the fees and disbursements of any counsel retained by
it).
(e) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall use its best efforts to cause
the Registrable Securities so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as the Holders may
reasonably request; provided, however, that the Company shall not be required to
qualify to do business in any state by reason of this Section 1(e) in which it
is not otherwise required to qualify to do business.
(f) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall prepare and file with the
Commission a registration statement with respect to the Registrable Securities
requested to be registered and use its best efforts to cause such registration
statement to become effective, and shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Holders to complete the offer and sale
of the Registrable Securities covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of 6 months from the date on which the Holders are first free to sell
all such Registrable Securities; provided, however, that, if the Company is
required to keep any such registration or qualification in effect with respect
to securities other than the Registrable Securities beyond such period, the
Company shall keep such registration or qualification in effect as it relates to
the Registrable Securities for so long as such registration or qualification
remains or is required to remain in effect in respect of such other securities.
(g) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall promptly furnish to the Holders
such number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Securities Act and the
rules and regulations thereunder, and such other documents, as the Holders may
reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.
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<PAGE> 5
(h) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall promptly furnish the Holders
with an opinion of its counsel to the effect that (i) the registration statement
has become effective under the Securities Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use of
the registration statement, any preliminary prospectus, any final prospectus, or
any amendment or supplement thereto has been issued, nor has the Commission or
any securities or blue sky authority of any jurisdiction instituted or
threatened to institute any proceedings with respect to such an order, (ii) the
registration statement and each prospectus forming a part thereof (including
each preliminary prospectus), and any amendment or supplement thereto, comply as
to form with the Securities Act and the rules and regulations thereunder, and
(iii) such counsel has no knowledge of any material misstatement or omission in
such registration statement or any prospectus, as amended or supplemented. The
opinions described in clauses (ii) and (iii) of the preceding sentence shall be
delivered only if the registration is made pursuant to an underwritten public
offering and the underwriter requires similar opinions to be delivered by
Company counsel as a closing condition. In such an underwritten offering, if
required by the underwriter, the opinion also shall state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section 1(e).
(i) The Company agrees that until all the Registrable
Securities have been sold under a registration statement or pursuant to Rule 144
under the Securities Act, the Company agrees to:
(i) use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule
144 promulgated under the Securities Act, at all times after 90 days
after the effective date of the first registration statement filed by
the Company;
(ii) at any time when the Company is eligible to file
a registration statement on Form S-3 (or any successor form), take such
action, including the voluntary registration of its Common Stock under
Section 12 of the Exchange Act of 1934, as amended (the "Exchange Act"),
as is necessary to enable the Holders to utilize Form S-3 for the sale
of their Registrable Securities, such action to be taken as soon as
practicable after the end of the fiscal year in which the first
registration statement filed by the Company for the offering of its
securities to the general public is declared effective or such earlier
date as may be required by any stock exchange or quotation system upon
which the Common Stock may be traded;
(iii) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
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<PAGE> 6
(iv) furnish to any Holder, so long as the Holder owns
any Registrable Securities, promptly upon request: (i) a written
statement by the Company that it has used its best efforts to make and
keep public information available, as those terms are understood and
defined in Rule 144 (at any time after 90 days after the effective date
of the first registration statement filed by the Company), complied in
all material respects with the reporting requirements of the Exchange
Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may
be resold pursuant to Form S-3 (at any time after it so qualifies); (ii)
a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company; and (iii) such
other information as may be reasonably requested in order to permit any
Holder to avail itself of any rule or regulation of the Commission or
any state securities authority which permits the selling of any such
securities without registration or pursuant to such form.
(j) The Company shall notify the Holders promptly when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed.
(k) At any time when a prospectus relating thereto is
required to be delivered under the Securities Act, the Company shall promptly
notify the Holders of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, would
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and at the
reasonable request of the Holders prepare and furnish to it such number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Securities or securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made.
(l) If requested by the underwriter for any underwritten
offering of Registrable Securities on behalf of the Holders, the Company and the
Holders will enter into an underwriting agreement with such underwriter for such
offering, which shall be reasonably satisfactory in substance and form to the
Company, and the Company's counsel, the Holders and the underwriter, and such
agreement shall contain such representations and warranties by the Company and
the Holders and such other terms and provisions as are customarily contained in
an underwriting agreement with respect to secondary distributions solely by
selling stockholders, including, without limitation, indemnities substantially
to the effect and to the extent (but in no event greater than those) provided in
Section 2 hereof.
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<PAGE> 7
2. Indemnification. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Holder, its officers,
directors, partners, members, managers, employees, agents, and counsel, and each
person, if any, who controls any such person within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act, from and against any
and all loss, liability, charge, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 2, but not be limited to,
attorneys' fees and any and all reasonable expenses whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), as and when incurred, arising out of, based upon,
or in connection with (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any registration statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, relating to the sale of any of the
Registrable Securities or (B) in any application or other document or
communication (in this Section 2 collectively called an "application") executed
by or on behalf of the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to register or
qualify any of the Registrable Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities exchange; or any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to such Holder by or on behalf
of such Holder expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
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<PAGE> 8
(a) If any action is brought against a Holder or any of
its officers, directors, partners, members, managers, employees, agents, or
counsel, or any controlling persons of such person (an "indemnified party") in
respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly notify the
Company in writing of the institution of such action (the failure to notify the
Company within a reasonable time of the commencement of any such action, to the
extent prejudicial to the Company's ability to defend such action, shall relieve
the Company of liability to the indemnified party pursuant to this Section 2(a),
but the failure so to notify shall not relieve the Company from any liability
other than pursuant to this Section 2(a)) and the Company shall promptly assume
the defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties), provided that the
indemnified party shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties, or such indemnified party or
parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify such Holder of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of any Registrable Securities or any preliminary prospectus, prospectus,
registration statement, or amendment or supplement thereto, or any application
relating to any sale of any Registrable Securities.
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<PAGE> 9
(b) Each Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
such Holder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and its
or their respective counsel, to the same extent as the foregoing indemnity from
the Company to the Holder in Section 2(a), but only with respect to statements
or omissions, if any, made in any registration statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, or in any application, in reliance upon
and in conformity with written information furnished to the Company with respect
to the Holder by or on behalf of the Holder, expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this Section 2(b), the Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
2(a). Notwithstanding the foregoing, the liability of each Holder under this
Section 2 shall be limited to an amount equal to the proceeds to such Holder of
Registrable Securities sold as contemplated herein.
(c) To provide for just and equitable contribution, if (i)
an indemnified party makes a claim for indemnification pursuant to Section 2(a)
or 2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and each Holder as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, (after contribution from others) on the
basis of relevant equitable considerations such as the relative fault of the
Company and such Holder in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Holder, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission.
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<PAGE> 10
The Company and the Holders agree that it would be unjust and
inequitable if the respective obligations of the Company and the Holders for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the
Holders and the other indemnified parties were treated as one entity for such
purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 2(c). Notwithstanding
anything to the contrary contained herein, the liability of each Holder under
this Section 2(c) shall be limited to an amount equal to the proceeds to such
Holder of Registrable Securities as contemplated herein. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 2(c),
each person, if any, who controls any Holder within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of any Holder or control person
shall have the same rights to contribution as such Holder or control person and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed any such registration statement, each director of
the Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 2(c). Anything in this Section 2(c) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 2(c) is
intended to supersede any right to contribution under the Securities Act, the
Exchange Act or otherwise.
3. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder to a transferee or assignee of such securities: (i) if such
transferee or assignee was a Holder of Registrable Securities hereunder prior to
such transfer, (ii) if such transfer is made in connection with the transfer of
all Registrable Securities held by the transferor, or (iii) in connection with a
distribution by such Holder, to any partner, former partner, member, former
member, stockholder or former stockholder, or the estate of any such person,
provided the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; provided, however, that such assignment shall be effective only if
immediately following such transfer the transferee is bound by the terms and
conditions of this Agreement and such transfer of any Registrable Securities is
lawful under all applicable securities laws.
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<PAGE> 11
4. Market Stand-off Agreement. Each Holder agrees that, in
connection with the Company's initial underwritten public offering of Common
Stock, upon request of the Company or the underwriters managing such
underwritten offering of Common Stock, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than Registrable Securities included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as may
be requested by the underwriters and as is agreed to by each beneficial owner of
1% or more of the outstanding Common Stock and each officer and director of the
Company.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares of securities of every other person subject to the
foregoing restriction) until the end of such period.
5. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of
its obligations under this Agreement, the Holder, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, unless such amendment, modification or supplement is
in writing and signed by the Company and a majority in interest of holders of
Registrable Securities who are parties hereto. Notwithstanding the foregoing, no
amendment to Section 4 which would impose restrictions on a Holder's ability to
dispose of any securities of the Company other than the Registrable Securities
shall be binding upon a Holder unless such Holder has agreed to such amendment.
(c) Notices. Except as otherwise specified herein, any
notice, demand or request required or permitted to be given pursuant to the
terms of this Agreement shall be in writing and shall be deemed given (i) when
delivered personally or by verifiable facsimile transmission (with a hard copy
to follow) on or before 5:00 p.m., central time, on a business day or, if the
day is not a business day, on the next succeeding business day, (ii) on the next
business day after timely delivery to an overnight courier and (iii) on the
third business day after deposit in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed as follows:
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<PAGE> 12
If to the Company:
Universal Access, Inc.
100 North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Phone: 312-660-5000
Fax: 312-660-5050
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Mitchell D. Goldsmith, Esq.
Phone: 312-836-4006
Fax: 312-527-3194
and if to a Holder, at its address as shown on the stock records of the Company;
or such other address as any such party shall deliver to the Company.
(d) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation transferees or assignees of the
Registrable Shares subject to Section 3.
(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of references only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without reference
to its conflicts of law provisions.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions contained herein shall not be affected or
impaired thereby.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of this
12
<PAGE> 13
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are not restrictions, promises warranties or
undertakings, other than those set forth or referred to herein, concerning the
registration rights granted by the Company pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
UNIVERSAL ACCESS, INC.
By: /s/ DONNA M. SHORE
-------------------------------
Name: Donna M. Shore
Title: Chief Financial Officer
HOLDERS:
[to follow]
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<PAGE> 1
EXHIBIT 10.1
UNIVERSAL ACCESS, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("AGREEMENT") is entered into as of
____________, ___ by and between Universal Access, Inc., a Delaware corporation
(the "COMPANY") and ____________________________________ ("INDEMNITEE").
RECITALS
A. The Company and Indemnitee recognize the significant increases in the
cost of liability insurance for its directors, officers, employees, agents and
fiduciaries.
B. The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.
C. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers, employees, agents and fiduciaries of the Company may not be willing to
continue to serve in such capacities without additional protection.
D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.
E. In view of the considerations set forth above, the Company desires
that Indemnitee be indemnified by the Company as set forth herein.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Indemnification of Expenses. The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "CLAIM") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company, or is or was serving at the request
of the Company as a director, officer, employee, agent or fiduciary of another
<PAGE> 2
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action or inaction on the part of Indemnitee while serving in such
capacity (hereinafter an "INDEMNIFIABLE EVENT") against any and all expenses
(including attorneys' fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in, any such action, suit, proceeding, alternative dispute
resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter "EXPENSES"), including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses.
Such payment of Expenses shall be made by the Company as soon as practicable but
in any event no later than five days after written demand by Indemnitee therefor
is presented to the Company.
(b) Reviewing Party. Notwithstanding the foregoing, (i) the
obligations of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "EXPENSE ADVANCE") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitees' obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 1(c) hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.
(c) Change in Control. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has been
approved by a majority of the
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<PAGE> 3
Company's Board of Directors who were directors immediately prior to such
Change in Control) then, with respect to all matters thereafter arising
concerning the rights of Indemnitees to payments of Expenses and Expense
Advances under this Agreement or any other agreement or under the Company's
Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.
(d) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit, proceeding, inquiry or investigation referred to in Section (1)(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all Expenses
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
days after written demand by Indemnitee therefor to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitees' 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 Chief
Executive Officer 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). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitees'
power.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law, shall be a defense to Indemnitee's claim
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<PAGE> 4
or create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the Company
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim 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 action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.
(e) Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim, the Company shall be entitled to
assume the defense of such Claim with counsel approved by Indemnitee, which
approval shall not be unreasonably withheld, upon the delivery to Indemnitee of
written notice of its election so to do. After delivery of such notice, approval
of such counsel by Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same Claim;
provided that, (i) Indemnitee shall have the right to employ Indemnitees'
counsel in any such Claim at Indemnitee 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 is a conflict of interest
between the Company and Indemnitee in the conduct of any such defense, or (C)
the Company shall not continue to retain such counsel to defend such Claim, then
the fees and expenses of Indemnitee counsel shall be at the expense of the
Company. The Company shall have the right to conduct such defense as it sees fit
in its sole discretion, including the right to settle any claim against
Indemnitee without the consent of the Indemnitee.
3. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. 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, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. 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, employee, agent or fiduciary, such change, 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 except as set forth in Section 8(a) hereof.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of
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<PAGE> 5
Incorporation, its Bylaws, any agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification provided under this Agreement shall continue
as to Indemnitee for any action Indemnitee took or did not take while serving in
an indemnified capacity even though Indemnitee may have ceased to serve in such
capacity.
4. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee are 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, officers, employees, agents or
fiduciaries 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. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies 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 of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
8. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Excluded Action or Omissions. (i) To indemnify Indemnitee for
Indemnitee's acts, omissions or transactions from which Indemnitee or the
Indemnitee may not be indemnified under applicable law; or (ii) to indemnify
Indemnitee for Indemnitee's intentional acts or transactions in violation of the
Company's policies;
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or Bylaws now or hereafter in effect relating to
Claims for
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<PAGE> 6
Indemnifiable Events, (ii) in specific cases if the Board of Directors has
approved the initiation or bringing of such Claim, or (iii) as otherwise
required under Section 145 of the Delaware General Corporation Law, regardless
of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be;
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by 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 Indemnitee in such
proceeding was not made in good faith or was frivolous; 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.
9. 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.
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 which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, 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; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or its 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.
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<PAGE> 7
(c) For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, (A) who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting Securities,
increases his beneficial ownership of such securities by 5% or more over the
percentage so owned by such person, or (B) becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than 20% of the total voting power represented by
the Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets.
(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).
(e) For purposes of this Agreement, a "Reviewing Party" shall mean
any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
of Directors who is not a party to the particular Claim for which Indemnitee are
seeking indemnification, or Independent Legal Counsel.
(f) For purposes of this Agreement, "Voting Securities" shall mean
any securities of the Company that vote generally in the election of directors.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to
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all or substantially all of the business and/or assets of the Company, spouses,
heirs, and personal and legal representatives. The Company shall require and
cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business and/or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary of the Company or of any other enterprise at the
Company's request.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee counterclaims and cross-claims made in such
action), and shall be entitled to the advancement of Expenses with respect to
such action, unless, as a part of such action, a court having jurisdiction over
such action determines that each of Indemnitee material defenses to such action
was made in bad faith or was frivolous.
14. Notice. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one day after the business day of delivery by
facsimile transmission, if delivered by facsimile transmission, with copy by
first class mail, postage prepaid, and shall be addressed if to Indemnitee, at
the Indemnitee address as set forth beneath Indemnitee signatures to this
Agreement and if to the Company at the address of its principal corporate
offices (attention: Secretary) or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.
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 commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the
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<PAGE> 9
remaining provisions shall remain enforceable to the fullest extent permitted by
law. Furthermore, to the fullest extent possible, the provisions of this
Agreement (including, without limitations, each portion of this Agreement
containing any provision held to be invalid, void or otherwise unenforceable,
that is not itself invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement shall be governed by and its
provisions construed and enforced 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 the State of Delaware, without regard to the
conflict of laws principles thereof.
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 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.
21. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE
FOLLOWS IMMEDIATELY HEREAFTER]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
UNIVERSAL ACCESS, INC.
By: ____________________________________
Title: _________________________________
Address: _______________________________
AGREED TO AND ACCEPTED BY:
Signature: _________________________
Name: ______________________________
Address: ___________________________
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EXHIBIT 10.2
UNIVERSAL ACCESS, INC.
AMENDED 1998 EMPLOYEE STOCK OPTION PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Universal Access, Inc. 1998 Employee Stock Option Plan
(the "Plan") is to enable Universal Access, Inc. (the "Company") to attract,
retain and reward directors, officers, employees, service providers and key
advisors to the Company and its Subsidiaries and Affiliates, and strengthen the
mutuality of interests between such persons and the Company's shareholders, by
offering them performance-based stock incentives in the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Company directly or indirectly owns at
least 20% of the combined voting power of all classes of stock of such
entity or more than 50% of the ownership interests in such entity.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony, or a
participant's willful misconduct or dishonesty, or other unauthorized
activity any of which, in the good faith opinion of the Committee, is
directly and materially harmful to the business or reputation of the
Company, a Subsidiary or an Affiliate.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(e) "Committee" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions
of the Committee specified in the Plan may be exercised by the Board, as
set forth in Section 2 hereof.
(f) "Company" means Universal Access, Inc., a corporation organized
under the laws of the State of Illinois, or any successor corporation.
(g) "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan and shall in all
events be interpreted and applied so as to be consistent with the
definition of disability provided in Section 22(e)(3) or 422 of the Code
(or any successor provision).
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(h) "Disinterested Person" shall have the meaning set forth in Rule
16b-3 as promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
definition adopted by the Commission. To be a "Disinterested Person"
pursuant to such rule, as of the date hereof, a director may not, during
the one-year period prior to service or during such service, be granted or
awarded equity securities of the Company pursuant to the plan or any other
plan of the Company (subject to certain exceptions).
(i) "Early Retirement" means retirement, with the express written
consent of the Company (or subsidiary, if appropriate) at or before the
time of such retirement, from active employment with the Company and any
Subsidiary pursuant to the early retirement provisions of the applicable
pension plan of such entity.
(j) "Fair Market Value" means, as of any given date, unless
otherwise determined by the Committee in good faith:
(i) if the Stock is listed on an established stock exchange or
exchanges, or traded on the NASDAQ National Market System
("NASDAQ/NMS") the highest closing price of the Stock as listed
thereon on the applicable day, or if no sale of Stock has been made
on any exchange or on NASDAQ/NMS on that date, on the next day on
which there was sale of Stock;
(ii) if the Stock is not listed on an established stock exchange
or NASDAQ/NMS but is instead traded over-the-counter, the mean of the
"bid" and "ask" prices of the Stock in the over-the-counter market on
the applicable day, as reported by the National Association of
Security Dealers, Inc.;
(iii) if the Stock is not listed on any exchange or traded
over-the-counter, the value determined in good faith by the Committee
in a manner designed to comply with Treasury Regulation Section
1.422A-2(e).
(k) "Incentive Stock Option" means any Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section
422 of the Code (or any successor provision).
(l) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(m) "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 65.
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(n) "Option Agreement" means an agreement between the Company and a
Participant granting Options to the Participant and containing specific
terms and procedures related to the rights and obligations of the
Participants and the Company.
(o) "Outstanding Stock" shall include all shares of Common Stock, no
par value, of the Company as well as the number of shares of Common stock
into which then outstanding shares of capital stock of the Company, of
whatever class, are convertible as of the year-end immediately preceding
the date of calculation thereof (as adjusted by the Committee for certain
events).
(p) "Participant" means an officer, director, employee, advisor or
other service provider to the Company, its Subsidiaries or Affiliates to
whom Options are granted hereunder.
(q) "Plan" means this Universal Access, Inc. 1998 Employee Stock
Option Plan, as hereinafter amended from time to time.
(r) "Retirement" means Normal or Early Retirement.
(s) "Stock" means the Common Stock, no par value per share, of the
Company.
(t) "Stock Option" or "Option" means any option(s) to purchase
shares of Stock granted pursuant to Section 5 below.
(u) "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of
the corporations (other than the last corporation in the unbroken chain)
owns stock possessing 100% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
In addition, the term "Cause" shall have the meaning set forth in Section
5(i) below.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
persons, who need not be Disinterested Persons unless the Company's securities
are registered under the Exchange Act, who shall be members of the Board and
who shall serve at the pleasure of the Board. The functions of the Committee
specified in the Plan may be exercised by the Board, if and to the extent that
no Committee exists which has the authority to so administer the Plan and if a
resolution to such effect is adopted by the Board after due consideration of
the impact of such resolution upon the status of the Plan under Rule 16b-3
promulgated pursuant to the Exchange Act. The Committee as of the date of this
Plan shall be the Board. The Board, by subsequent duly adopted resolution, may
alter to the composition of the Committee as it deems necessary and proper.
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All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Company and Participants. The Committee shall
have full authority to grant, pursuant to the terms of the Plan, to directors,
officers and other employees eligible under Section 4.
In particular, the Committee shall have the authority:
(i) subject to Section 4 hereof, to select the Participants to
whom Stock Options may from time to time be granted hereunder.
(ii) to determine whether and to what extent Incentive Stock
Options and/or Non-Qualified Stock Options, or any combination
thereof, are to be granted hereunder to one or more Participants;
(iii) to determine the number of shares of Stock to be covered
by each such Option granted hereunder;
(iv) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Options granted hereunder
(including, but not limited to, the share price and any restriction or
limitation (including vesting requirements, forfeiture provisions and
non-compete and non-solicitation requirements), or any modification to
the terms of any previously granted Option (including vesting
acceleration or waiver of forfeiture restrictions) regarding any Stock
Option or other award and/or the shares of Stock relating thereto,
based in each case on such factors as the Committee shall determine,
its sole discretion);
(v) to determine the terms and provisions of each Option
Agreement;
(vi) to determine whether and under what circumstances a Stock
Option may be settled in cash;
(vii) to determine whether, to what extent and under what
circumstances Option grants and/or other awards under the Plan and/or
other cash awards made by the Company are to be made, and operate, on
a tandem basis vis-a-vis other awards under the Plan and/or cash
awards made outside of the Plan, or on an additive basis;
(viii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining
the amount (if any) of any deemed earnings on any deferred amount
during any deferral period);
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(ix) to adopt, alter and repeal such rules, guidelines and
practices governing the Plan as it shall, from time to time, deem
advisable, as well as to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating
thereto); and
(x) to otherwise supervise the administration of the Plan.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 13,000,000 shares (the "Option Shares").
Such Option Shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
Subject to Section 6(b)(iv) below, if any Option Shares that have been
optioned hereunder cease to be subject to a Stock Option, or any such award
otherwise terminates without a payment being made to the participant in the
form of Stock, such Options shall again be available for distribution in
connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividends, stock split or other changes in corporate
structure affecting the Stock, and subject to Sections 5(k) and 5(m), such
substitution or adjustment shall be made in the aggregate number of Option
Shares reserved for issuance under the Plan, in the number and option price of
Option Shares subject to other outstanding awards granted under the Plan as may
be determined to be appropriate by the Committee, in its sole discretion,
provided that the number of Option Shares subject to any award shall always be a
whole number.
SECTION 4. ELIGIBILITY.
Directors, officers, employees, advisors and other service provides of the
Company or its Subsidiaries and Affiliates who are responsible for, or
contribute to, the management, growth and/or profitability of the business of
the Company and/or its Subsidiaries and Affiliates are eligible to be
Participants and receive Stock Options under the Plan; provided, however,
Options shall not be transferred to any member of the Committee and Incentive
Stock Option shall not be granted to any person who is not an employee of the
Company or its Subsidiaries and Affiliates. In addition, the Committee may
grant awards, other than Incentive Stock Options, to consultants or advisors
who have provided bona fide services to the Company, its Subsidiaries and
Affiliates in connection with matters other than the offer and sale of
securities in a capital-raising transaction.
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SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options, and (ii) Non-Qualified Stock Options.
Subject to the restrictions contained in Section 4 hereof, the Committee
shall have the authority to grant Incentive Stock Options, Non-Qualified Stock
Options or both types of Stock Options to any Participant.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable
to include in the applicable Option Agreement:
(a) Exercise Price. The Option exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant but shall be not less than 100% (or, not less than 110% in the
case of a Participant who is an employee and who owns stock possessing more
than 10% of the total combined voting power of all classes of capital stock of
the Company, a Subsidiary or an Affiliate) of the Fair Market Value of the
Stock at grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercised more than ten years (or, more
than five years in the case of a Participant who is an employee and who owns
stock possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company, a Subsidiary or an Affiliate) after the date
the Option is granted.
(c) Exercisability. Stock Options shall be exercised at such time or
times to such terms and conditions as shall be determined by the Committee at
or after grant; provided, however, that, except as provided in Section 5(f),
5(g), or 5(k) unless otherwise determined by the Committee in an Option
Agreement or after grant, no Stock Option shall be exercisable prior to the
first anniversary date of the granting of the Option. If the Committee
provides, in its sole discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time at or after grant in whole or in part, based on such factors as the
Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c) and the terms of the Option Agreement
entered into at the time of the grant, Stock Options may be exercised in whole
or in part at any time during the option period, by
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giving written notice of exercise to the Company specifying the number of
Option Shares to be purchased.
Such notice shall be accompanied by payment in full of the purchase price,
either by check, note or such other instrument as the Committee may accept. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may also be made in the form of shares of unrestricted Stock
already owned by the Participant based, in each case, on the Fair Market Value
of the Stock on the date the Option is exercised.
No shares of Stock shall be issued until full payment therefor has been
made. A Participant shall generally have the rights to dividends or other
rights of a shareholder with respect to shares subject to the Option only when
the Participant has: (i) given written notice of exercise; (ii) has paid in
full for such Option Shares; and (iii) has given any requested representation
and warranties.
(e) Non-Transferability of Options. No Stock Option shall be transferable
by the Participant otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended 26 U.S.C. Section 1 et. seq. or
Title I of the Employee Retirement Income Security Act, or the rules
thereunder, and all Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant.
(f) Termination by Death. Subject to Section 5(k), if a Participant's
employment by the Company, a Subsidiary or an Affiliate terminates by reason of
death any Stock Option held by such Participant may thereafter be exercised to
the extent such Option was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant (or as may
be determined in accordance with procedures established by the Committee), by
the legal representative of the estate or by the legatee of the Participant
under the will of the Participant, for a period of up to one (1) year (or such
other period as the Committee may specify in the Option Agreement) from the
date of such death or until the expiration of the stated term of such Option,
whichever period is the shorter.
(g) Termination by Reason of Disability. Subject to Section 5(k), if a
Participant's employment by the Company, a Subsidiary or an Affiliate
terminates by reason of Disability, any Stock Option held by such Participant
may thereafter be exercised by the Participant, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), for a period of up to
one (1) year (or such other period as the Committee may specify at grant) from
the date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter; provided,
however, that if the Participant dies within such one-year period (or such
other period as the Committee shall specify at grant), any unexercised Stock
Option held by such Participant shall thereafter be exercisable pursuant to
Section 5(f). In the event of
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termination of employment by Disability, if a Stock Option heretofore
designated as an Incentive Stock Option is exercised more than one (1) year
after such termination of employment, such Option shall be treated as a
Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Subject to Section 5(k), if an
Participant's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option held by
such Participant may be exercised by the Participant, to the extent it was
exercisable at the time of such Retirement or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), for a period of three
years (or such other period as the Committee may specify in the Option
Agreement) from the date of such termination or the expiration of the stated
term of such Stock Option, whichever period is the shorter; provided, however,
that if the Participant dies within such three-year period (or such other
period as the Committee may specify in the Option Agreement), any unexercised
Option held by such Participant shall thereafter be exercisable pursuant to
Section 5(f). In the event of termination of employment by Retirement, if a
Stock Option theretofore designated as an Incentive Stock Option is exercised
more than three (3) months after such termination of employment, such Option
shall be treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at or after grant, if a
Participant's employment by or otherwise qualifying relationship with, the
Company and any Subsidiary or Affiliate terminates:
(i) due to voluntary resignation of employment by the
Participant (other than Normal or Early Retirement), all unexercised Stock
Option shall thereupon terminate;
(ii) due to death, Disability, Normal or Early Retirement, then
the provisions of Sections 5(f), 5(g), 5(h), as appropriate, shall apply;
(iii) due to involuntary termination of the Participant's
employment by the Company, any Subsidiary or Affiliate without Cause,
unexercised Stock Option shall thereupon terminate, except that the Stock
Option may be exercised, to the extent otherwise then exercisable, for the
lesser of three months or the balance of such Option's term;
(iv) for any other reason, including termination of the
Participant's employment for Cause, the Stock Option shall thereupon
terminate.
(j) Buy-Out Provisions. The Committee may at any time offer to purchase
an Option previously granted, based on such terms and conditions as the
Committee shall establish in the Option Agreement or at the time that such
offer is made.
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(k) Certain Recapitalizations. In general, if the Company is merged into
or consolidated with another corporation under circumstances in which the
Company is not the surviving corporation, or if the Company is liquidated, or
sells or otherwise disposes of substantially all of its assets to another
corporation (any such merger, consolidation, etc., being hereinafter referred
to as a "Non-Acquiring Transaction") while unexercised Stock Options are
outstanding under the Plan, after the effective date of a Non-Acquiring
Transaction each holder of an outstanding Option shall be entitled, upon
exercise of such Stock Option, to receive such stock or other securities as the
holders of the same class of stock as those shares subject to the Stock Option
shall be entitled to receive in such Non-Acquiring transaction based upon the
agreed upon conversion ratio or per share distribution. However, in the
discretion of the Committee, determined at the time of grant or at any time in
the future, any limitations on exercisability of Stock Options may be waived so
that all Stock Options, from and after a date prior to the effective date of
such Non-Acquiring Transaction shall be exercisable in full. Furthermore, in
the discretion of the Committee, the right to exercise may be given to each
Participant during a 30-day period preceding the effective date of such
Non-Acquiring Transaction. Any outstanding Stock Options not exercised within
such 30-day period may be canceled by the Committee as of the effective date of
any such Non-Acquiring Transaction. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments
shall be made by the Committee, whose determination in that respect shall be
final, binding and conclusive.
(l) Subdivision or Consolidation. Except as set forth in this Plan,
Participants shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class or the payment of any stock divided or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spinoff of stock of
another corporation, and no issue by the Company of shares of stock of any class
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to the Option. The grant of any Stock Option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or to transfer all or any part of its business or assets.
(m) Reclassification, Recapitalization, etc. If the Company at any time
shall, by subdivision, combination or reclassification of securities,
recapitalization, automatic conversion, or other similar event affecting the
number or character of outstanding shares of Stock, or otherwise (collectively,
the "Event"), change any of the securities as to which purchase rights under
any Stock Option exist into the same or a different number of securities of any
other class or classes, the Stock Options theretofore granted shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change as if the Event had occurred
immediately prior to the issuance of the Stock Options in question.
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If the Company at any time while this Plan remains outstanding and
unexpired shall split, subdivide or combine the securities as to which
purchase rights under Stock Options exist, the purchase price in the Stock
Options then outstanding shall be proportionately decreased in the case of
a split or subdivision or proportionately increased in the case of a
combination.
(n) Common Stock Dividends. If the Company at any time while this
Plan is outstanding shall pay a dividend with respect to Stock payable in
shares, then the purchase price in the Stock Options then outstanding
shall be adjusted, from and after the date of determination of the
shareholders entitled to receive such dividend or distribution, to that
price determined by multiplying the exercise price in effect in each Stock
Option immediately prior to such date of determination by a fraction (i)
the numerator of which shall be the total number of shares outstanding
immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares outstanding
immediately after such dividend or distribution.
(o) Fractional Shares. If any adjustment referred to herein shall
result in a fractional share for any Participant under any option
hereunder, such fraction shall be completely disregarded and the
Participant shall only be entitled to the whole number of shares resulting
from such adjustment.
SECTION 6. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan (or any provision
hereof), but, except as otherwise provided herein, no amendment, alteration, or
discontinuation shall be made which would impair the rights of a Participant
under a Stock Option theretofore granted, without the Participant's consent, or
which, without the approval of the Company's stockholders, would:
(a) materially increase the benefits accruing to Participants under
the Plan;
(b) materially increase the number of securities which may be issued
under the Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan.
The Committee may amend the terms of any Option or other award theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without the holder's
consent. The Committee may also substitute new Options for previously granted
Options (on a one for one or other basis), including previously granted Options
having higher option exercise prices.
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Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 7. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or Participant by the Company, nothing contained herein shall give
any such participant or Participant any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments in lieu of or with respect
to awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 8. GENERAL PROVISIONS.
(a) (i) The Committee may require each person acquiring Option
Shares pursuant to a Stock Option to represent to and agree with the
Company in writing that they are acquiring the Option Shares for investment
and without a view to distribution thereof. The certificates for such
Option Shares may include any legend which the Committee deems appropriate
to reflect any restrictions on transfer.
(ii) All certificates for Option Shares or other securities
delivered under the Plan shall be subject to such conditions, stop-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed, and any
applicable Federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of
the Company, a Subsidiary or an Affiliate any right to continued employment
with the Company, a Subsidiary or an Affiliate, as the case may be, nor
shall it interfere in any way with the right of the Company, a Subsidiary
or an Affiliate to terminate the employment of any of its employees at any
time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal income tax
purposes with respect to the exercise
-11-
<PAGE> 12
of any Option or any award under the Plan, the Participant shall pay to the
Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law
to be withheld with respect to such amount. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements and the
Company and its Subsidiaries or Affiliates shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any
kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional types of Plan awards at the time of any dividend
payment shall only be permissible if sufficient shares of Stock are
available under Section 3 for such reinvestment, taking into account other
Plan awards then outstanding.
(f) The Plan and all awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Illinois.
SECTION 9. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of July __, 1998, upon the approval of the
Plan by a majority of the votes cast by the holders of the Company's capital
stock entitled to vote hereon.
SECTION 10. TERM OF PLAN.
No Stock Option shall be granted pursuant to the Plan on or after the
tenth anniversary of the effective date of the Plan, but awards granted prior
to such tenth anniversary may extend beyond that date, subject to the terms of
the Option Agreement entered into at the time of grant.
-12-
<PAGE> 13
INCENTIVE STOCK OPTION AGREEMENT
UNIVERSAL ACCESS, INC.
THIS AGREEMENT made as of this 10th day of July, 1998 between UNIVERSAL
ACCESS, INC. an Illinois corporation, having a principal place of business at
1021 West Adams, Suite 101, Chicago, Illinois 60601 (the "Corporation") and
_____________(the "Employee").
RECITALS:
A. The Corporation desires to grant to the Employee an incentive stock
option to purchase shares of its common stock (the "Shares") under and for the
purposes of the Corporation's 1998 Employee Stock Option Plan (the "Plan")
which has been approved by its stockholders; and
B. The Corporation and the Employee understand and agree that any terms
used herein have the same meanings as in the Plan (the "Employee" being
referred to in the Plan as a "Participant").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree
as follows:
1. GRANT OF INCENTIVE OPTION
The Corporation hereby grants to the Employee the right and option to
purchase all or any part of an aggregate of ________ (_______) Shares on the
terms and conditions and subject to and with the benefit of all the limitations
set forth herein and in the Plan, which is incorporated herein by reference.
The Employee acknowledges receipt of a copy of the Plan. The Incentive Option
granted hereunder is intended to qualify within the meaning of Section 422 of
the Internal Revenue Code as an incentive option.
2. PURCHASE PRICE
The purchase price per share of the Shares shall be $_____.
3. EXERCISE OF OPTION
The Incentive Option granted hereby shall be exercisable as to [insert
exercise provisions]
OPTIONAL:
[Notwithstanding the above, in the event of the sale of all or
substantially all of the assets or common stock of the Corporation or the
merger or consolidation of the Corporation into or with another entity of which
the beneficial owners of the Company shall own less than 51% of the successor
entity, then any of the Incentive Options shall be exercisable on the date
immediately preceding the consummation of such transaction.]
<PAGE> 14
4. TERM OF OPTION
a. Termination of Employment. The Incentive Option shall terminate ten
(10) years from the date of this Agreement, but shall be subject to earlier
termination as provided herein or in the Plan. If the Employee ceases to be
providing services for the benefit of the Corporation (other than for
termination by the Corporation of such services other than for "cause," to be
determined in accordance with the agreement entered into or to be entered into
between Employee and the Corporation), then his Incentive Option shall
terminate on the date of termination of his employment, provided that he may
exercise all or a portion of his Option to the extent that such right to
exercise has accrued on the date of his termination during the thirty (30) day
period following his termination. An Employee's employment shall not be deemed
terminated by reason of a transfer to another employer which is an affiliate of
the Corporation.
b. Total and Permanent Disability. If Employee ceases to be an employee
of the Corporation by reason of Disability, his Incentive Option shall
terminate on the date of Disability provided that he may exercise all or a
portion of this Incentive Option to the extent that the right to purchase
Shares hereunder has accrued on the date such Employee becomes Disabled as
determined by the Board (or the Committee if applicable) for a period of not
more than six months after the date that he became Disabled as determined by
the Board (or the Committee if applicable) (notwithstanding that Employee might
have been able to exercise the Incentive Option as to some or all of the Shares
on a later date if Employee had not become Disabled) or, if earlier, within the
originally prescribed term of the Incentive Option.
c. Death. In the event that Employee ceases to be an employee of the
Corporation by reason of such Employee's death, his Incentive Option shall
terminate on the date of death, provided that all or a portion of this
Incentive Option to the extent that the right is exercisable but not exercised
on the date of death may be exercised by Employee's Survivors. Such Incentive
Option must be exercised by the Survivors, if at all, within six (6) months
after the date of death of Employee or, if earlier, within the originally
prescribed term of the Incentive Option, notwithstanding that the decedent
might have been able to exercise the Incentive Option as to some or all of the
shares on a later date if the Employee were alive and had continued to be an
employee of the Corporation or of an Affiliate.
Paragraph 4(a) shall control and fix the rights of Employee if Employee
ceases to be an employee of the Corporation for any reason other than death or
Disability and who subsequently becomes Disabled (within the meaning of the
term "Disability" as used in the Plan) or dies. Nothing in Paragraphs 4(b) and
4(c) shall be applicable in any such case except only that, in the event of
such a subsequent death within the period allowed for exercise of the Incentive
Option by Paragraph 4(a) (i.e., within thirty (30) days after the termination
of employment or, if earlier, within the originally prescribed term of the
Incentive Option) Employee's Survivors may exercise the Incentive Option to the
extent permitted by Paragraph 4(a), within six (6) months after the date of
death of such participant but in no event beyond ten (10) years after the date
of the grant of an Incentive Option.
-2-
<PAGE> 15
5. EXERCISE OF OPTION AND ISSUE OF STOCK
The Incentive Option may be exercised in whole or in part (to the extent
that it is exercisable in accordance with its terms) by giving written notice
to the Corporation. Such written notice shall be signed by the person
exercising the Incentive Option, shall state the number of Shares with respect
to which the Incentive Option is being exercised, shall contain the legends, if
any, required by Section 6 of this Agreement and shall specify a date (other
than a Saturday, Sunday or legal holiday) not less than five (5) nor more than
ten (10) days after the date of such written notice, as the date on which the
Shares will be taken up and payment made therefor, at the principal office of
the Corporation during ordinary business hours, or at such other hour and place
agreed upon by the Corporation and the person or persons exercising the
Incentive Option. Such notice shall also otherwise comply with the terms and
conditions of this Agreement and the Plan. (The conditions specified above may
be waived in the sole discretion of the Corporation.) On the date specified in
such written notice (which date may be extended by the Corporation if any law
or regulation requires the Corporation to take any action with respect to the
Incentive Option Shares prior to the issuance thereof, the Corporation shall
accept payment for the Incentive Option Shares and shall deliver an appropriate
certificate or certificates for the Shares as to which the Incentive Option was
exercised to the Employee.
The Incentive Option price of any shares shall be payable at the time of
exercise either:
a. in cash or by certified check or bank check; or
b. in whole Shares of the Corporation's common stock owned by the
person exercising the option for six months or more, with a fair market
value equal to the option price provided, however, that if such shares were
acquired pursuant to an incentive stock option plan as defined in Code
Sections 422 or prior Code Section 422A of the Corporation or Affiliate
including this Plan or a qualified stock option plan as defined in prior
Code Section 422 that the applicable holding period requirements of said
Sections 422 and 422A have been met with respect to such shares; or
c. any combination of (a) and (b) above.
The fair market value of the stock to be applied toward the Incentive
Option price shall be determined as of the date of exercise of the Incentive
Option in a manner consistent with the determination of fair market value with
respect to the grant of an option under the Plan. Any certificate for shares of
outstanding stock of the Corporation used to pay the purchase price shall be
accompanied by a stock power duly endorsed in blank by the registered holder of
the certificate, with signature guaranteed in the event the certificate shall
also be accompanied by instructions from Employee to the Corporation's transfer
agent with respect to disposition of the balance of the shares covered thereby.
-3-
<PAGE> 16
The Corporation shall pay all original issue taxes with respect to the
issue of Shares pursuant hereto and all other fees and expenses necessarily
incurred by the Corporation in connection therewith. The holder of this
Incentive Option shall have the rights of a shareholder only with respect to
those Shares covered by the Incentive Option which have been registered in the
holder's name in the share register of the Corporation upon the due exercise of
the Incentive Option.
6. LEGENDS
Certificates representing Shares which are purchased pursuant to this
Agreement shall bear the following legends in addition to such other legends as
counsel to the Company may deem appropriate:
"The shares represented by this certificate are subject to all of the
terms, conditions, limitations and restrictions set forth in the
Universal Access, Inc. 1998 Employee Stock Option Plan ("Plan") as
approved by the Corporation's stockholders, a copy of which is on file
with the Company and the Incentive Stock Option Agreement under which
the shares were purchased. All terms, conditions, limitations and
restrictions of the Plan and the Incentive Stock Option Agreement are
fully binding upon the holder of the certificate, his or her
successors, estate, heirs, assigns, personal representative,
administrator, executor or guardian as the case may be, for all
purposes until such time that all terms, conditions, limitations and
restrictions of the Plan are removed, waived, or otherwise vacated in
the Plan as expressly authorized thereunder;" and
"These shares have not been registered under the federal or applicable
state securities laws and instead are being issued pursuant to
exemption contained in said laws. The shares represented by this
certificate may not be transferred unless (1) a registration statement
with respect to such shares shall be effective under the Securities
Act of 1933, as amended, or (2) the Corporation shall have received an
opinion of counsel satisfactory to it that no violation of such act or
similar state acts will be involved in such transfer, or (3) the
Corporation shall have received a "no action" letter from the
Securities and Exchange Commission covering such transfer and an
opinion as referred to above relating to state law."
7. NON-ASSIGNABILITY
Except as provided in Section 4(c), this Incentive Option shall not be
transferable by the Employee and shall be exercisable only by the Employee.
-4-
<PAGE> 17
8. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by registered or certified mail, return receipt requested,
addressed as follows:
To the Corporation: Universal Access, Inc.
1021 West Adams St., Suite 101
Chicago, Illinois 60601
With a Copy to: Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2400
Chicago, IL 60611
Attention: Mitchell D. Goldsmith
To the Employee:
-----------------------------------
-----------------------------------
-----------------------------------
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
mailed in accordance with the foregoing provisions.
9. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.
10. BINDING AGREEMENT
This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties hereto.
-5-
<PAGE> 18
IN WITNESS WHEREOF, the Corporation has caused these presents to be
executed on its behalf and its corporate seal to be hereto affixed by its duly
authorized representative and the Employee has hereunto set his hand and seal,
all on the day and year first above written.
UNIVERSAL ACCESS, INC.
By:
--------------------------------
President
EMPLOYEE
--------------------------------
-6-
<PAGE> 19
NON-QUALIFIED STOCK OPTION AGREEMENT
UNIVERSAL ACCESS, INC.
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") made as of this
10th day of July, 1998, between UNIVERSAL ACCESS, INC., an Illinois corporation,
having its principal place of business at 1021 West Adams, Suite 101, Chicago,
Illinois 60601 (the "Company"), and Mitchell Goldsmith (the "Participant").
RECITALS:
A. The Company desires to grant to the Participant an option (the
"Option") to purchase shares of its common stock (the "Shares") under and for
the purposes of the Company's 1998 Employee Stock Option Plan (the "Plan");
B. The Participant desires to receive such option in connection with
services which the Participant shall provide to the Company; and
C. The Company and the Participant understand and agree that any terms
used herein have the same meanings as in the Plan.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good valuable consideration, the parties hereto agree as
follows:
1. GRANT OF OPTION
The Company hereby grants to the Participant the right and Option to
purchase all or any part of an aggregate of One Hundred (100) Shares on the
terms and conditions set forth herein and in the Plan, which is incorporated
herein by reference. Following the contemplated 500-for-1 stock split, the
Shares subject to this Agreement automatically shall be adjusted to Fifty
Thousand (50,000) Shares.
2. PURCHASE PRICE
The purchase price of the Shares shall be $.01 per share (pre split) or
_____ per share (post split).
3. EXERCISE OF OPTION
[Insert exercise provisions]
1
<PAGE> 20
Notwithstanding the above, in the event of the sale of all or
substantially all of the assets or common stock of the Company or the merger or
consolidation of the Company into or with another entity, then any of the
Options shall be exercisable on the date immediately preceding the consummation
of such transaction.
4. TERM OF OPTION
(a) Termination of Relationship with the Corporation. The Option shall
terminate eleven (11) years from the date of this Agreement, but shall be
subject to earlier termination as provided herein or in the Plan. If the
Participant ceases to provide services to the Company or its Affiliates for any
reason other than death or Disability, then his Option shall terminate on the
date when Participant shall cease providing such services, provided that he may
exercise all or a portion of his Option during the thirty (30) day period
following the cessation of such services.
(b) Total and Permanent Disability. If Participant ceases to provide
services to the Company, as set forth in Section 4(a), by reason of Disability,
his Option shall terminate on the date of Disability. However, he may exercise
all or a portion of this Option for a period of not more than six months after
the date that he became Disabled, as determined by the Board (or the Committee,
if applicable), (notwithstanding that Participant might have been able to
exercise the Option on a later date if Participant had not become Disabled) or,
if earlier, within the original prescribed term of the Option.
(c) Death. In the event that Participant ceases to provide services to
the Company as set forth in Section 4(a) by reason of such Participant's death,
his Option shall terminate on the date of death. However, this Option, to the
extent that the right is exercisable but not exercised on the date of death,
may be exercised by Participant's Survivors. Such Option must be exercised by
the Survivors, if at all, within nine months after the date of death of
Participant or, if earlier, within the originally prescribed term of the
Option, notwithstanding that the decedent might have been able to exercise the
Option on a later date if the Participant were alive and had continued to
provide services to the Company.
Paragraph 4(a) shall control and fix the rights of Participant if
Participant ceases to provide services to the Company as set forth in Section
4(a) for any reason other than death or Disability and subsequently becomes
Disabled (within the meaning of the term "Disability" as used in the Plan) or
dies. Nothing in Paragraphs 4(b) and 4(c) shall be applicable in any such case
except that, in the event of subsequent death within the period allowed for
exercise of the Option by Paragraph 4(a), Participant's Survivors may exercise
the Option to the extent permitted by Paragraph 4(a), within nine months after
the date of death of such participant but in no event beyond eleven 11 years
after the date of the grant of this Option.
2
<PAGE> 21
5. SERVICES TO BE PROVIDED BY PARTICIPANT IN CONSIDERATION OF THE
AGREEMENT
In consideration of the Company grant of options to the participant
pursuant to this Agreement, Participant has provided, and has agreed to provide
in the future, valuable consulting services to the Company, the receipt of
which is hereby acknowledged.
6. EXERCISE OF OPTION AND ISSUE OF STOCK
(a) Exercise of Option. The Option may be exercised in whole or in part by
giving written notice to the Company. Such written notice shall be signed by the
person exercising the Option, shall state the number of Shares with respect to
which the Option is being exercised and shall specify a date (other than a
Saturday, Sunday or legal holiday) not less than five nor more than ten days
after the date of such written notice, as the date on which the Shares will be
taken upon and payment made therefor, at the principal office of the Company
during ordinary business hours, or at such other hour and place agreed upon by
the Company and the person or persons exercising the Option and shall otherwise
comply with the terms and conditions of this Agreement and the Plan. On the date
specified in such written notice (which date may be extended by the Company if
any law or regulation requires the Company to take any action with respect to
the Shares prior to the issuance thereof) the Company shall accept payment for
the Shares and shall deliver an appropriate certificate or certificates for the
Shares as to which the Option was exercised to the Participant.
The option price of any shares shall be payable at the time of exercise
either:
(i) in cash or by check or certified or bank check;
(ii) in whole Shares of the Company's common stock, owned by the
person exercising the option for six months or more, with a fair market
value equal to the option price as agreed by the parties; provided,
however, that if such shares were acquired pursuant to an incentive stock
option plan, as defined in Code Section 422 or prior Code Section 422A of
the Company or an affiliate, including this Plan or a qualified stock
option plan as defined in Code Section 422, that the applicable holding
period requirements of said prior Sections 422 and 422A have been met with
respect to such Shares; or
(iii) any combination of (i) and (ii) above.
The Company shall pay all original issue taxes with respect to the issue
of Shares pursuant hereto and all other fees and expenses necessarily incurred
by the Company in connection therewith. The holder of this Option shall have
the rights of a shareholder only with respect to those Shares covered by the
Option which have been registered in the holder's name in the share register of
the Company upon the due exercise of the Option.
3
<PAGE> 22
(b) Tax Consequences of Option Exercise. Upon exercise of the Option
granted herein, the Participant will be taxed at ordinary income rates on the
difference between the exercise price of the Option and the fair market value
of the common stock issued pursuant to such exercise. Fair market value
generally will be determined on the date of exercise. The Participant,
generally, will have a tax basis for the common stock acquired equal to the
fair market value of the common stock at the date of exercise. Any gain or loss
realized upon the subsequent sale of the common stock issued upon exercise of
the Option will be taxed at either long-term or short-term capital gain (or
loss) rates, depending on the Participant's holding period.
7. LEGENDS
Certificates representing Shares which are purchased pursuant to this
Agreement shall bear the following legends in addition to such other legends as
counsel to the Company may deem appropriate:
"These shares have not been registered under the federal or applicable
state securities laws and instead are being issued pursuant to
exemption contained in said laws. The shares represented by this
certificate may not be transferred unless (1) a registration statement
with respect to such shares shall be effective under the Securities
Act of 1933, as amended, or (2) the Company shall have received an
opinion of counsel satisfactory to it that no violation of such act or
similar state acts will be involved in such transfer, or (3) the
Company shall have received a "no action" letter from the Securities
and Exchange Commission covering such transfer and an opinion as
referred to above relating to state law."
8. NON-ASSIGNABILITY
Except as provided in Section 4(c), this Option shall not be transferable
by the Participant and shall be exercisable only by the Participant.
9. NOTICES
All notices, demands, instructions and other communications required or
permitted to be given to or made upon either party hereto or any other person
shall be in writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service, or by telegram (with messenger delivery), or by
telecopier (confirmed by mail), and shall be deemed to be given for purposes
of this Agreement on the day that such writing is delivered or sent to the
intended recipient thereof in accordance with the provisions of this Section.
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective Parties
hereto at the following address:
4
<PAGE> 23
To the Company: Universal Access, Inc.
1021 West Adams, Suite 101
Chicago, Illinois 60601
With a Copy to: Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, IL 60611
Attention: Mitchell Goldsmith
To the Participant: At Participant's business address as set forth on the books
and records of the Company, or such other address as Participant shall provide
to the Company, in writing.
10. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
internal laws (and not the laws of conflict) of the State of Illinois.
11. BINDING AGREEMENT.
This Agreement shall (subject to the provisions of Section 8 hereof) be
binding upon the heirs, executors, administrators, successors and assigns of
the parties hereto.
12. ADJUSTMENTS
The Shares represented by this Agreement shall be equitably adjusted to
reflect any stock splits, reverse stock splits or other extraordinary changes
of the Company's Common Stock.
IN WITNESS WHEREOF, the Company has caused these presents to be executed
on its behalf and its corporate seal to be hereto affixed by its duly
authorized representative and the Participant has hereunto set his hand and
seal, all on the day and year first above written.
UNIVERSAL ACCESS, INC.
By:
-------------------------------------
Title:
-------------------------------
PARTICIPANT:
----------------------------------------
Mitchell Goldsmith
5
<PAGE> 24
EXHIBIT B
AMENDMENT TO ARTICLES OF INCORPORATION
<PAGE> 25
AMENDMENT TO
ARTICLES OF INCORPORATION
UNIVERSAL ACCESS, INC.
RESOLVED, that Article 4 of the Articles of Incorporation of the
Corporation be and hereby is amended and restated in its entirety to read as
follows:
4. PARAGRAPH 1: AUTHORIZED SHARES
Class Number of Shares Authorized
Common 30,000,000
Preferred 2,000,000
PARAGRAPH 2: THE PREFERENCES, QUALIFICATIONS, LIMITATIONS,
RESTRICTIONS AND SPECIAL OR RELATIVE RIGHTS IN RESPECT OF THE SHARES OF EACH
CLASS ARE:
Preferred
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Shares as Preferred Shares of any series, and, in
connection with the creation of each such series, to fix by the resolution or
resolutions providing for the issue of shares thereof, the number of shares of
such series, and the designations, powers, preferences and rights, and the
qualifications, limitations, and restrictions of such series, to the full extent
now or hereafter permitted by the laws of the State of Illinois.
<PAGE> 26
EXHIBIT C
FIRST AMENDMENT TO SHAREHOLDERS AGREEMENT
<PAGE> 27
FIRST AMENDMENT TO SHAREHOLDERS' AGREEMENT
This First Amendment to Shareholders' Agreement is made as of this 14th
day of April, 1998, among Sam Zarcone ("SZ"), Giuseppina Zarcone ("GZ"),
Patrick Shutt ("PS"), Robert Pommer ("RP"), Thomas Kapsalis ("TK"), John
Drummond ("JD"), George King ("GK") (collectively referred to as the
"Shareholders" and individually, each a "Shareholder") and Universal Access,
Inc. ("Company"). Also signatory hereto are additional Shareholders, if any,
admitted after the date of this First Amendment who agree to be bound by the
terms of the Shareholders Agreement, as amended by the terms hereof.
RECITALS
Reference is made to the Shareholders' Agreement dated October 22, 1997
among the parties other than GK to this First Amendment to Shareholders'
Agreement, which memorializes, among other things, certain restrictions on the
Shareholders' transfer of stock, and mandated a 50% majority vote on all
matters to the Zarcone Group (the "Shareholders' Agreement"). The Shareholders
and Company desire to modify the Shareholders' Agreement, among other things,
to eliminate the 50% majority vote on all matters granted to the Zarcone Group.
As of this date the common stock of the Company is owned as follows:
<TABLE>
<CAPTION>
$ Shares %
-------- ----
<S> <C> <C> <C>
RP 1625 16.25
PS 1625 16.25
TK 1925 19.25
JD 1575 15.75
SZ and GZ (j.t.w.r.o.s.) 1350 13.50
GZ 1350 13.50
SZ 150 1.50
GK 300 3.00
To Be Issued 100 1.00
------ -----
Total 10,000 100.00
</TABLE>
NOW THEREFORE, for valuable consideration, including the foregoing
recitals which are made a part hereof, the parties hereby amend the
Shareholders' Agreement as set forth below (capitalized terms used herein and
not otherwise defined shall have the same meaning as set forth in the
Shareholders' Agreement.
1. Recitals. The recitals set forth above are incorporated by reference
into the Shareholders Agreement and made a part thereof as if fully rewritten.
2. George King. George King is hereby added as a Shareholder of the
Company, and shall be deemed to be a member of the "Employee Group" in all
respects.
<PAGE> 28
3. GOVERNANCE. The Shareholders' Agreement is hereby amended and modified
by striking the provisions Sections 8.01, 8.02, 8.04, 8.06 and 8.07. As a
result of this amendment and modification, all matters of governance of the
Company shall be handled by the Shareholders (on a one person one vote basis)
and by the directors elected by the Company, without the Company acting as a
close corporation. It is expressly acknowledged and agreed that under no
circumstances will the Company or any other Shareholder be entitled to require
that a Shareholder forfeit his shares; the rights to purchase shares at Agreed
Value (pursuant to Article III) following death or involuntary transfer, and
the rights of first refusal pursuant to Article II, shall continue hereby. In
addition, the following Section 8.01 is hereby added to the Agreement:
"OWNERSHIP. Except to the extent expressly provided to the contrary
herein, no Shareholder shall be required to sell his or her shares of
common stock of the Company without the consent of such Shareholder."
4. AGREED VALUE. The second sentence of the definition of Agreed Value
is amended and restated as follows:
"The fair market value per share shall be the greatest of: (i) the per
Share value agreed upon by the Groups from time-to-time (which in all
events shall be no less than $10,000 per 1% of the Company); (ii) the
book value per Share of the Company as determined by the regular
accountants for the Company based or generally accepted accounting
principles, consistently applied; or (iii) sixty (60) times monthly
recurring gross revenues of the Company calculated as of end of the
month preceding the month in which the computation of fair market
value is being performed (the "Computation Date") divided by the
number of shares of common stock issued and outstanding as of the
Computation Date on a fully diluted basis as if all rights to acquire
or convert to common stock had been exercised."
5. INSURANCE. Section 3.01(ii) is hereby deleted. The following sentence
is added at the end of Section 3.01: "It is expressly acknowledged and agreed
that the Company may purchase key man insurance on the lives of one or more of
the Shareholders, and will not be obligated (unless it agrees to be obligated)
to pay over any of such insurance proceeds to the estate of the deceased
Shareholder or for the purchase of his Shares."
6. SALE OF SHARES UPON DEATH OF SHAREHOLDER. Section 3.03 is hereby
deleted.
7. TAG ALONG RIGHTS. Section 3.06 is amended and restated in its entirety
as followed (thereby eliminating old Section 3.06):
"3.06 RIGHT OF PARTICIPATION IN SALES BY FOUNDERS. If at any time any
of the Shareholders wish to sell or otherwise dispose of any of the
Common Stock of the Company owned by him or them ("Selling
Shareholders") to any person (the "Purchaser") in a transaction which
is not to an existing Shareholder or a spouse or lineal descendant of
a Shareholder (each such proposed sale being an "Offer"), then each
other Shareholder shall have the right to require, as a condition to
such sale or
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<PAGE> 29
disposition, that the Purchaser purchase from such other Shareholder
at the same price per share and on the same terms and conditions as
involved in such sale or disposition by the Selling Shareholders the
same percentage of shares of Common Stock owned by such other
Shareholder as such sale or disposition (as finally consummated)
represents with respect to said shares of Common Stock then owned by
whichever of the Selling Shareholders is selling. Such offeree
Shareholders may exercise this right by giving written notice to the
Selling Shareholders within fifteen (15) days after receipt of the
Offer."
8. TERMINATION. The following additional provision for termination of
this Agreement is added at the end of the first sentence of Section 6.01:
"or (vi) upon the issuance by the Company following the date of this
Agreement in one or more offerings, to persons other than the current
Shareholders, of capital stock and/or other instruments convertible
into or containing other rights, options or covenants to acquire
capital stock, where the aggregate consideration paid for the
foregoing totals of at least $2,000,000."
9. STOCK OPTION PLAN. The rest of the following Section 8.08 is added to
the Agreement:
a. "The Shareholders and Company agree that the board of
directors shall be authorized to establish an employee stock option
plan on such terms and conditions it deems necessary and proper,
provided such plan is approved by the holders of a majority of the
common stock of the Company."
10. S ELECTION. The Shareholders' Agreement is hereby amended and
modified by striking the provisions of 7.01 of the Shareholders' Agreement,
pertaining to S Corporation status. The Shareholders acknowledge that the
Company and the Shareholders may elect to create an additional class or classes
of stock, and upon the creation of this additional class or classes of stock,
The Company may no longer qualify as an S Corporation under the provisions of
the Internal Revenue Code, and upon direction of the Board of Directors (if
directed) will take the necessary steps to terminate the "S" status.
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<PAGE> 30
The First Amendment supersedes in its entirety the prior eight-section
draft First Amendment to Shareholders Agreement circulated among the parties.
In all other regards, the terms of the Shareholders' Agreement shall remain
unamended and in full force and effect. In witness whereof, the undersigned
have executed this Agreement as of the date first set forth above, in one or
more counterparts, whether by original, photocopy or facsimile, all of which
when taken together shall be deemed to be a binding obligation of the parties
hereto.
UNIVERSAL ACCESS, INC.
By:
------------------------------- ----------------------------------
Patrick Shutt, President Patrick Shutt
- ---------------------------------- ----------------------------------
Giuseppina Zarcone Sam Zarcone
- ---------------------------------- ----------------------------------
Robert Pommer Thomas Kapsalis
- ---------------------------------- ----------------------------------
John Drummond George King
ADDITIONAL SHAREHOLDERS:
----------------------------------
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<PAGE> 1
EXHIBIT 10.3
UNIVERSAL ACCESS, INC.
1999 STOCK PLAN
1. Purposes of the Plan. The purposes of this 1999 Stock Plan are:
o to attract and retain the best available personnel for positions
of substantial responsibility,
o to provide additional incentive to Employees, Directors and
Consultants, and
o 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 foreign 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 Universal Access, Inc., a Delaware corporation.
(h) "Consultant" means any 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.
<PAGE> 2
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(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, three (3) months following the 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 day 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 day 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.
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<PAGE> 3
(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.
(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) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1999 Stock.
(y) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "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.
(aa) "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.
(bb) "Section 16(b) " means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or Consultant.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "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 10,000,000
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<PAGE> 4
Shares, plus an annual increase to be added on the first day of the Company's
fiscal year beginning in fiscal year 2001 equal to the lesser of (i) 10,000,000
Shares, (ii) 5% of the outstanding shares of Common Stock on such date, or (iii)
a lesser amount determined by the Board. 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, or is surrendered pursuant to an Option
Exchange Program, 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 Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if 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;
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<PAGE> 5
(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;
(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 qualifying for preferred treatment under 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 (or less than) 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
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<PAGE> 6
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:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 3,000,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 2,000,000
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.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
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
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<PAGE> 7
(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.
(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 (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six 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
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<PAGE> 8
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. 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 in writing
otherwise, vesting of Options granted hereunder shall be tolled 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
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 shareholder 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
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<PAGE> 9
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 (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. 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, 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. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
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.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
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 Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when
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<PAGE> 10
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. Non-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 or 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
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, 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 Stock
Purchase Right, the number of Shares that may be added annually to the Shares
reserved under the Plan pursuant to Section 3(i), 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 ten (10) 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. 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, each outstanding
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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. 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 or sale of assets, 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 or
sale of assets, 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 or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets 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 or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received 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 or sale of assets.
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) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(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.
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<PAGE> 12
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. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
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<PAGE> 13
UNIVERSAL ACCESS, INC.
1999 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number ____________________________________
Date of Grant ____________________________________
Vesting Commencement Date ____________________________________
Exercise Price per Share $___________________________________
Total Number of Shares Granted ____________________________________
Total Exercise Price $___________________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ____________________________________
Vesting Schedule:
Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to the Optionee continuing to be a
Service Provider on such dates.
<PAGE> 14
Termination Period:
This Option may be exercised for three (3) months after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for twelve (12) months after Optionee ceases to be a
Service Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
A. Grant of Option.
The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
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<PAGE> 15
C. Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check; or
3. consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or
4. surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.
D. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
E. Term of Option.
This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement. F. Tax Consequences.
Some of the federal tax consequences relating to this Option, as of
the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
G. Exercising the Option.
1. Nonstatutory Stock Option. The Optionee may incur regular federal
income tax liability upon exercise of a NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.
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<PAGE> 16
2. Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.
3. Disposition of Shares.
(a) NSO. If the Optionee holds NSO Shares for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes.
(b) ISO. If the Optionee holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair
Market Value of the Shares acquired on the date of exercise and the aggregate
Exercise Price, or (B) the difference between the sale price of such Shares and
the aggregate Exercise Price. Any additional gain will be taxed as capital gain,
short-term or long-term depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
H. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Illinois.
I. NO GUARANTEE OF CONTINUED SERVICE.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED AN OPTION OR PURCHASING
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<PAGE> 17
SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: UNIVERSAL ACCESS, INC.
__________________________________ __________________________________
Signature By
__________________________________ __________________________________
Print Name Title
__________________________________
Residence Address
__________________________________
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<PAGE> 18
EXHIBIT A
UNIVERSAL ACCESS, INC.
1999 STOCK PLAN
EXERCISE NOTICE
Universal Access, Inc.
100 North Riverside Plaza, Suite 2200
Chicago, IL 60606
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________, _____,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Universal Access, Inc. (the "Company")
under and pursuant to the 1999 Stock Plan (the "Plan") and the Stock Option
Agreement dated, _____ (the "Option Agreement"). The purchase price for the
Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 19
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Illinois.
Submitted by: Accepted by:
PURCHASER: UNIVERSAL ACCESS, INC.
_________________________________ _________________________________
Signature By
_________________________________ _________________________________
Print Name Its
Address: Address:
_________________________________ Universal Access, Inc.
100 North Riverside Plaza, Suite 2200
Chicago, IL 60606
_________________________________
_________________________________
Date Received
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<PAGE> 1
EXHIBIT 10.4
UNIVERSAL ACCESS, INC.
1999 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 1999 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the common stock of the Company.
(d) "Company" means Universal Access, Inc., a Delaware
corporation.
(e) "Director" means a member of the Board.
(f) "Disability" means total and permanent disability as defined
in section 22(e)(3) of the Code.
(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "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 day 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 day of
<PAGE> 2
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(j) "Inside Director" means a Director who is an Employee.
(k) "Option" means a stock option granted pursuant to the Plan.
(l) "Optioned Stock" means the Common Stock subject to an Option.
(m) "Optionee" means a Director who holds an Option.
(n) "Outside Director" means a Director who is not an Employee.
(o) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(p) "Plan" means this 1999 Director Option Plan.
(q) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(r) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 500,000 Shares (the "Pool"). The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares that were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. All grants of Options to Outside
Directors under this Plan shall be automatic in accordance with the following
provisions:
(i) Each Outside Director shall be automatically
granted an Option to purchase 20,000 Shares (the "First Option") on the date on
which the later of the following events occurs: (A) the effective date of this
Plan, as determined in accordance with Section 6 hereof, or (B) the date on
which such person first becomes an Outside Director, whether through election by
the shareholders of the Company or appointment by the Board to fill a vacancy;
provided, however,
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<PAGE> 3
that an Inside Director who ceases to be an Inside Director but who remains a
Director shall not receive a First Option.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 5,000 Shares (a "Subsequent Option") on June 30 of
each year provided he or she is then an Outside Director and if as of such date,
he or she shall have served on the Board for at least the preceding six (6)
months.
(iii) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, any exercise of an Option granted before the Company has
obtained shareholder approval of the Plan in accordance with Section 16 hereof
shall be conditioned upon obtaining such shareholder approval of the Plan in
accordance with Section 16 hereof.
(iv) The terms of each First Option granted hereunder
shall be as follows:
(A) the term of the First Option shall be ten (10)
years.
(B) the First Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of
the Fair Market Value per Share on the date of grant of the First Option.
(D) subject to Section 10 hereof, the First Option
shall become exercisable as to 25% of the Shares subject to the First Option on
each anniversary of its date of grant, provided that the Optionee continues to
serve as a Director on such dates.
(v) The terms of a Subsequent Option granted hereunder
shall be as follows:
(A) the term of the Subsequent Option shall be ten
(10) years.
(B) the Subsequent Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of
the Fair Market Value per Share on the date of grant of the Subsequent Option.
(D) subject to Section 10 hereof, the Subsequent
Option shall become exercisable as to 100% of the Shares subject to the
Subsequent Option on the anniversary of its date of grant, provided that the
Optionee continues to serve as a Director on such date.
(vi) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made
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<PAGE> 4
until such time, if any, as additional Shares become available for grant under
the Plan through action of the Board or the shareholders to increase the number
of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate the Director's relationship with the
Company at any time.
6. Term of Plan. The Plan shall become effective on the date the Form
S-1 registration statement filed with the Securities and Exchange Commission
becomes effective in connection with the Company's initial public offering of
the Common Stock, subject to approval of the Plan by the shareholders of the
Company as described in Section 16 of the Plan. The Plan shall continue in
effect for a term of ten (10) years measured from the date of the Board's
adoption of the Plan in November 1999, unless sooner terminated under Section 11
of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) 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, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the
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<PAGE> 5
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment shall be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares that thereafter may be 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 Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. If an Optionee dies while an Outside
Director, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. 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, 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. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the 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.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
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<PAGE> 6
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per Share covered by each such outstanding Option, and the number
of Shares issuable pursuant to the automatic grant provisions of Section 4
hereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares 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 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." 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
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. 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, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and
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<PAGE> 7
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares). If such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, 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 or sale of assets.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option 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 by any of
the aforementioned relevant provisions of law.
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.
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<PAGE> 8
14. 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.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.
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<PAGE> 9
UNIVERSAL ACCESS, INC.
DIRECTOR OPTION AGREEMENT
(FIRST OPTION)
Universal Access, Inc. (the "Company"), has granted to _________________
(the "Optionee"), an option to purchase a total of 20,000 shares of the
Company's Common Stock (the "Optioned Stock"), at the price determined as
provided herein, and in all respects subject to the terms, definitions and
provisions of the Company's 1999 Director Option Plan (the "Plan") adopted by
the Company which is incorporated herein by reference. The terms defined in the
Plan shall have the same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is not
intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_______ for each share of
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
(a) This Option shall become exercisable in installments
cumulatively with respect to twenty-five percent (25%) of the Optioned Stock one
year after the date of grant, and as to an additional twenty-five percent (25%)
of the Optioned Stock on each anniversary thereafter, so that one hundred
percent (100%) of the Optioned Stock shall be exercisable four (4) years after
the date of grant; provided, however, that in no event shall any Option be
exercisable prior to the date the stockholders of the Company approve the Plan.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by written
notice, which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
(ii) check; or
<PAGE> 10
(ii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) 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; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the date of exercise of the Option, to the extent
not included in income as described above, will be treated as capital gain or
loss.
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<PAGE> 11
DATE OF GRANT: ______________
Universal Access, Inc.
a Delaware corporation
By: _________________________
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: _________________
_____________________________
Optionee
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<PAGE> 12
EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Universal Access, Inc.
100 North Riverside Plaza Suite 2200
Chicago, IL 60606
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Universal Access, Inc. (the "Company") under and pursuant to the
Company's 1999 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by reference.
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof. This
Exercise Notice and the Agreement are governed by Illinois law except for that
body of law pertaining to conflict of laws.
<PAGE> 13
Submitted by: Accepted by:
OPTIONEE: UNIVERSAL ACCESS, INC.
By: _______________________________ By: ______________________________
Its: _____________________________
Address:
Dated: ____________________________ Dated: ___________________________
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<PAGE> 14
UNIVERSAL ACCESS, INC.
DIRECTOR OPTION AGREEMENT
(SUBSEQUENT OPTION)
Universal Access, Inc. (the "Company"), has granted to _________________
(the "Optionee"), an option to purchase a total of 5,000 shares of the Company's
Common Stock (the "Optioned Stock"), at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of the
Company's 1999 Director Option Plan (the "Plan") adopted by the Company which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is not
intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_______ for each share of
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
(a) This Option shall become exercisable with respect to one
hundred percent (100%) of the Optioned Stock one year after the date of grant;
provided, however, that in no event shall any Option be exercisable prior to the
date the stockholders of the Company approve the Plan.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by written
notice, which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
(ii) check; or
<PAGE> 15
(iii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) 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; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the date of exercise of the Option, to the extent
not included in income as described above, will be treated as capital gain or
loss.
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<PAGE> 16
DATE OF GRANT: ______________
Universal Access, Inc.
a Delaware corporation
By: _________________________
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: _________________
_____________________________
Optionee
<PAGE> 17
EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Universal Access, Inc.
100 North Riverside Plaza Suite 2200
Chicago, IL 60606
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Universal Access, Inc. (the "Company") under and pursuant to the
Company's 1999 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by reference.
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof. This
Exercise Notice and the Agreement are governed by Illinois law except for that
body of law pertaining to conflict of laws.
<PAGE> 18
Submitted by: Accepted by:
OPTIONEE: UNIVERSAL ACCESS, INC.
By: ________________________________ By: _________________________________
Its: ________________________________
Address:
Dated: _____________________________ Dated: ______________________________
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<PAGE> 1
EXHIBIT 10.5
UNIVERSAL ACCESS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1999 Employee Stock
Purchase Plan of Universal Access, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company or
any committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the common stock of the Company.
(d) "Company" shall mean Universal Access, Inc. and any
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all salary, wages (including
amounts elected to be deferred by the employee, that would otherwise have been
paid, under a cash or deferred arrangement established by the Company), overtime
pay, commissions, bonuses and any other remuneration paid directly to the
employee, but excluding profit sharing, the cost of employee benefits paid for
by the Company, education or tuition reimbursements, imputed income arising
under any Company group insurance or benefit program, traveling expenses,
business and moving expense reimbursements, income recognized in connection with
stock options, contributions made by the Company under any employee benefit
plan, and similar items of compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary that has
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
<PAGE> 2
(h) "Enrollment Date" shall mean the first Trading Day of each
Offering Period.
(i) "Exercise Date" shall mean the last Trading Day of each
Purchase Period.
(j) "Fair Market Value" shall mean, 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 Board deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board; or
(iv) For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock (the
"Registration Statement").
(k) "Offering Periods" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1st and
November 1st of each year and terminating on the last Trading Day in the periods
ending twenty-four months later; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
April 30, 2002. The duration and timing of Offering Periods may be changed
pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 1999 Employee Stock Purchase Plan.
(m) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date; provided,
however, that the first Purchase Period shall end on the last Trading Day on or
before October 31, 2000.
(n) "Purchase Price" shall mean 85% of the Fair Market Value of a
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that the Purchase Price may be adjusted by the Board
pursuant to Section 20.
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<PAGE> 3
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or foreign,
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1st and November 1st each year, or on such other
date as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
April 30, 2002. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
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<PAGE> 4
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding 15% of the Compensation
which he or she receives on each pay day during the Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate; provided, however, that a participant may increase or decrease
the rate of his or her payroll deductions only once during each Purchase Period.
The Board may, in its discretion, limit the number of participation rate changes
during any Offering Period. The change in rate shall be effective with the first
full payroll period following five (5) business days after the Company's receipt
of the new subscription agreement unless the Company elects to process a given
change in participation more quickly. A participant's subscription agreement
shall remain in effect for successive Offering Periods unless terminated as
provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions
-4-
<PAGE> 5
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided that
in no event shall an Employee be permitted to purchase during each Purchase
Period more than 3,000 shares of the Company's Common Stock (subject to any
adjustment pursuant to Section 19), and provided further that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.
The Board may, for future Offering Periods, increase or decrease, in its
absolute discretion, the maximum number of shares of the Company's Common Stock
an Employee may purchase during each Purchase Period of such Offering Period.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire
on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
shareholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
-5-
<PAGE> 6
10. Withdrawal.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.
11. Termination of Employment.
Upon a participant's ceasing to be an Employee, for any reason,
he or she shall be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 500,000 shares plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 2001, equal to the lesser of (i)
3,000,000 shares, (ii) 2% of the outstanding shares of Common Stock on such date
or (iii) a lesser amount determined by the Board.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the participant
and his or her spouse.
-6-
<PAGE> 7
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
-7-
<PAGE> 8
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 13(a)(i)), as well as the price per share and the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised 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 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.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
-8-
<PAGE> 9
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its shareholders. Except as provided
in Section 19 and this Section 20 hereof, no amendment may make any change in
any option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain shareholder approval in such a manner
and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation
of the Plan may result in unfavorable financial accounting consequences, the
Board may, in its discretion and, to the extent necessary or desirable, modify
or amend the Plan to reduce or eliminate such accounting consequence including,
but not limited to:
(i) altering the Purchase Price for any Offering
Period including an Offering Period underway at the time of the change in
Purchase Price;
(ii) shortening any Offering Period so that Offering
Period ends on a new Exercise Date, including an Offering Period underway at the
time of the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
-9-
<PAGE> 10
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option 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 by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
-10-
<PAGE> 11
EXHIBIT A
UNIVERSAL ACCESS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in the Universal
Access, Inc. Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") and subscribes to purchase shares of the Company's Common Stock
in accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 0 to 15%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only).
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for
the shares. I hereby agree to notify the Company in writing within 30
days after the date of any disposition of my shares and I will make
adequate provision for Federal, state or other tax withholding
obligations, if any, which arise upon the
<PAGE> 12
disposition of the Common Stock. The Company may, but will not be
obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of the
2-year and 1-year holding periods, I understand that I will be treated
for federal income tax purposes as having received income only at the
time of such disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2)
15% of the fair market value of the shares on the first day of the
Offering Period. The remainder of the gain, if any, recognized on such
disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)___________________________________________________
(First) (Middle) (Last)
_________________________ ___________________________________
Relationship
___________________________________
(Address)
-2-
<PAGE> 13
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ____________________________________
Signature of Employee
____________________________________
Spouse's Signature (If beneficiary
other than spouse)
-3-
<PAGE> 14
EXHIBIT B
UNIVERSAL ACCESS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Universal
Access, Inc. Employee Stock Purchase Plan which began on ____________, ______
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
___________________________________
___________________________________
___________________________________
Signature:
___________________________________
Date:______________________________
<PAGE> 1
EXHIBIT 10.6
[GRAPHIC OMITTED]
UNIVERSAL ACCESS INCORPORATED PRIVATE LINE SERVICE CONTRACT
SERVICE ORDER
================================================================================
BILLING INFORMATION
================================================================================
Anchor Tenant: Date:
Address: UAI Circuit Number:
Contact Name:
City/State/Zip: Phone:
Quantity: Product: :
================================================================================
SERVICE LOCATION INFORMATION
(TERMINATION POINTS)
================================================================================
LOCATION A LOCATION Z
Company Name: Company Name:
Address: Address:
City/State/Zip: City/State/Zip:
D-Marc: D-Marc:
NPA/NXX: NPA/NXX:
Local Technical Local Technical
Contact: Contact:
Telephone: Telephone:
Fax: Fax:
================================================================================
CHARGES/ TERM
================================================================================
Customer MRR: Mileage:
Installation Fee: Term:
Expedite Fee:
Explanation:
================================================================================
AUTHORIZATIONS
================================================================================
CUSTOMER UNIVERSAL ACCESS, INC.
("UAI")
Signature: __________________________ Signature: __________________________
Print Name: _________________________ Print Name: _________________________
Title: ______________________________ Title: ______________________________
Date: _______________________________ Date: _______________________________
Please see the attached Circuit Feature Sheet for technical detail. To ensure
an accurate installation, this form must be completed and signed
before an order can be processed.
This Private Line Service Contract consists of this
Service Order and the Terms and Conditions.
<PAGE> 2
UNIVERSAL ACCESS INCORPORATED PRIVATE LINE SERVICE CONTRACT
TERMS AND CONDITIONS
1 RATES AND CHARGES. For the Service(s) described in the Service Order,
Customer shall pay to UAI the rates and charges set forth in said Service
Order, which is incorporated by reference as if set forth in full herein.
2 PAYMENT.
a) Nonrecurring charges, including, but not limited to, construction, are
due prior to the installation date. Billing shall commence upon
installation. All recurring charges shall be invoiced one month in
advance, and Customer shall make all payments due and payable hereunder
in U.S. Dollars within fifteen (15) calendar days of the date of
Seller's invoice. Any payment not received within the fifteen (15)
calendar day period shall be subject to UAI's standard late charge of
1 1/2% per month per annum.
b) Customer agrees to pay any sales, use, gross receipts, excise, access,
bypass or other local, state and Federal taxes or charges, imposed on or
based upon the provision, sale or use of the Services provided. Taxes
will be separately stated on Customer's invoice.
c) If Customer in good faith disputes any portion of an invoice, it must
pay the undisputed portion on or before the invoice due date and provide
written notice to UAI of the billing dispute with the undisputed payment
on or before the due date. If UAI in good faith disagrees with the
billing dispute, the disputed amount shall then become immediately due
and payable.
d) UAI, at its discretion, may require Customer to place a deposit with UAI
in an amount not to exceed two (2) months recurring charges.
e) Customer authorizes UAI to review Customer's credit history, and
Customer agrees to provide UAI with all necessary documentation to
conduct this review.
f) Customer may terminate this Contract upon thirty (30) calendar days
written notice to UAI. In the event Customer cancels this Contract prior
to the end of the Term of this Contract, Customer agrees to pay an early
termination fee equal to the monthly recurring fee multiplied by the
number of months remaining in the Term of this Contract. This
termination fee is due within five (5) calendar days of the Billing End
Date.
g) If Customer cancels this Contract within twenty (20) calendar days prior
to its estimated in-service date, Customer shall be liable for a
cancellation fee equal to UAI's standard installation charge as detailed
in the UAI Master Services Agreement, regardless of the installation
charge stated in this Contract.
3 USE. Customer may use the Services for any lawful purpose for which they are
intended, provided that Customer shall not use the Services so as to
interfere with or impair service over any of the facilities and associated
equipment comprising the UAI fiber optic cable network and associated
equipment, or to impair the privacy of any communications over the fiber
optic facilities and associated equipment of UAI.
4 SERVICE DATE AND TERM.
a) UAI shall use reasonable efforts to make Services available by the
estimated Service Date. UAI shall not be liable for any damages
whatsoever resulting from delays in meeting any Service Dates. If the
Services are in material non-compliance with applicable standard network
specifications, Customer shall give UAI written notice within five (5)
business days after Services are available to Customer. Customer shall
be deemed to have accepted Services, and billing shall begin from the
installation date, if no notice regarding material non-compliance is
received by UAI within the notice period.
b) Upon the expiration of the Term of this Contract (as printed on the
Service Order page of this Contract), if Customer is not then in default
hereunder and has not given UAI ninety (90) calendar days prior written
notice of its intent to terminate this Contract, then the Term of this
Contract shall be renewed automatically on a month-to-month basis.
5 CUSTOMER RESPONSIBILITIES.
a) ACCESS: Customer is responsible for arranging access to any of the
rights of way, conduit and equipment space necessary to provide Service
on the premises so that UAI-authorized personnel, employees, or agents
may install, repair, maintain, inspect, replace or remove any and all
facilities and associated equipment provided by UAI. Access to such
premises shall be made available at a time mutually agreeable to
Customer and UAI. UAI shall also have the right to obtain access to its
cable installed in Customer-provided conduit at any splice or junction
box.
b) PROVISION OF EQUIPMENT SPACE, CONDUIT, AND ELECTRICAL POWER: Customer
shall provide the necessary equipment space, conduit, and electrical
power required to terminate and maintain the facilities used to provide
Service on all applicable premises without charge or cost to UAI. The
space, conduit, and power must be made available to UAI on a timely
basis. Customer shall be responsible for assuring that the equipment
space and associated facilities, conduit and rights of way which it is
providing are a safe place to work and are protected against fire,
theft, vandalism or other casualty, and that the use thereof complies
with all applicable laws, rules and regulations and with all applicable
leases or other contractual agreements. C) GOVERNMENTAL AUTHORIZATIONS:
Customer shall be responsible to obtain and continue in effect all
government authorizations necessary to permit Customer to receive
Service and comply with its obligations under this Contract.
d) INTERCONNECTION FACILITIES: If Customer elects to order its own
interconnection facilities, then any delay, liability, incompatibility
or other impairment of interconnection facilities shall not excuse
Customer's obligation to pay UAI all rates or charges applicable to
Services, whether or not the Services are useable by Customer.
e) PAYMENT: Customer is liable for and shall pay to UAI all rates, fees and
charges which accrue hereunder for all Services during the entire Term
of this Contract, regardless of whether Customer utilizes all or part of
such Services during all or part of the Contract Term.
6 EQUIPMENT.
a) Title: Customer expressly disclaims any right, title, perpetual right of
use or any other interest in or to any equipment or property used or
supplied by UAI under this Contract. Customer shall not create or permit
to be created any liens or encumbrances relating to Customer's use of
the Service or arising from the location of the equipment. Upon
termination of Service, UAI shall remove its equipment and shall have
the right, but not the obligation, to remove all other facilities from
any applicable premises.
b) Maintenance: UAI shall use reasonable efforts to maintain the Services
in accordance with applicable performance standards thereof. Maintenance
may be provided under separate contract. Additional fees may be
applicable. Maintenance will be provided by UAI authorized vendors,
subcontractors and/or underlying carriers. However, UAI shall have no
responsibility for the maintenance and repair of facilities and
equipment that it does not furnish, and UAI may assess Customer its
standard charge for false call outs.
7 DEFAULT AND REMEDY.
a) DEFAULT: A default shall occur if Customer (i) fails to make any payment
required by this Contract and such failure remains uncorrected for five
(5) business days from the payment due date; (ii) fails to perform or
comply with any other material term or obligation required under this
Contract and such failure remains uncorrected for thirty (30) calendar
days after written notice of such failure is given to Customer from UAI;
or (iii) experiences a material adverse change in Customer's
creditworthiness.
b) REMEDY: If Customer is in default, UAI may, at its option, (i) suspend
all or part of Services to Customer; (ii) require additional assurances
of payment, including a deposit; (iii) disconnect Services and terminate
this Contract, requiring payment in full for all contracted Services;
and (iv) pursue all remedies as may be available at law or in equity.
8 LIMITATIONS OF LIABILITY.
a) LIABILITY FOR DAMAGES TO PROPERTY: UAI shall not be liable for any
damages whatsoever to property at any Customer premises resulting from
the installation, maintenance, repair or removal of equipment and
associated wiring by UAI, unless the damage is caused by UAI's willful
misconduct or gross negligence.
b) LIABILITY FOR SERVICES AND EQUIPMENT NOT PROVIDED BY UAI: UAI shall not
be liable for any damages whatsoever associated with any Service(s),
channels, or equipment which it does not furnish or for any act or
omission of any entity furnishing to Customer's facilities or equipment
used for or with the Service.
c) LIABILITY FOR FORCE MAJEURE EVENTS: UAI shall not be liable for any
failure of performance or Service for reasons beyond its reasonable
control including, but not limited to, Acts of God, fire, floods,
governmental action, casualty, condemnation or loss of rights-of-way.
d) LIABILITY FOR NEGLIGENCE OR FAULT OF CUSTOMER: UAI shall not be liable
for any interruptions or damages due to the fault or negligence of
Customer or due to the failure or malfunction of Customer-provided
equipment or facilities.
e) NO SPECIAL DAMAGES: IN NO EVENT SHALL UAI BE LIABLE TO CUSTOMER FOR ANY
LOSS OF PROFIT OR REVENUE, OR FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL, EXEMPLARY, PUNITIVE, OR SIMILAR DAMAGES AS A RESULT OF ITS
PERFORMANCE OR NONPERFORMANCE OF THIS CONTRACT.
f) CUMULATIVE LIABILITY: In no event shall the cumulative liability of UAI
under this Contract exceed the total payments paid by Customer to UAI
hereunder.
9 TERMINATION. Notwithstanding its remedies for Default, UAI may terminate
this Contract without liability and Customer's payment obligation will be
apportioned if: a) the facilities used to provide Service are taken by
exercise of condemnation or eminent domain; or
b) the facilities are, in UAI's sole judgment, made inoperable or are
economically or technologically infeasible to repair.
10 INDEMNIFICATION. Customer shall indemnify and hold harmless UAI and its
affiliates from and against, and shall reimburse UAI and its affiliates for
any and all losses, liabilities, deficiencies, claims, damages, costs and
expenses, including, but not limited to, reasonable attorneys' fees,
incurred by UAI or its affiliates arising from or in connection with: (a)
any breach of any covenant or agreement contained in this Contract; (b) any
misrepresentation or breach or any of the representations of Customer
contained in this Contract; or (c) any claims which may be asserted by
parties other than Customer who have use of or access to the Facilities
through Customer.
11 ASSIGNMENT. UAI may transfer, assign, or otherwise in any manner encumber
this Contract and its rights and obligations without Customer's prior
written consent. Customer shall not transfer, assign, sublet, sell, encumber
or otherwise its rights or obligation under this Contract without the prior
written consent of UAI, whose consent shall not be unreasonably withheld.
12 WARRANTIES. EXCEPT AS SET FORTH IN THIS CONTRACT, UAI MAKES NO WARRANTIES,
WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO ANY SERVICES. UAI SPECIFICALLY
DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, WITHOUT
LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
13 MISCELLANEOUS. This Contract may be modified, waived or amended only by a
written instrument signed by the party against which enforcement thereof is
sought, shall be binding upon the parties' respective successors and
assigns, and constitutes the entire agreement between UAI and Customer.
14 JURISDICTION. The rights and obligations of the parties under this Contract
shall be governed by, construed and enforced in accordance with the laws of
the State of Illinois, without regard to choice of law principles.
15 ATTORNEYS' FEES. In the event legal action is brought by UAI to enforce the
terms of this Contract or to collect any moneys due hereunder, UAI shall be
entitled to recover, in addition to any other remedy, reimbursement for
reasonable attorneys' fees, court costs, costs of investigation and other
related expenses incurred in connection therewith.
16 NOTICE. All notices required herein shall be in writing and delivered by
registered or certified mail, postage pre-paid, or overnight courier, at the
addresses stated in this Contract.
<PAGE> 1
EXHIBIT 10.07
MASTER LOAN AND SECURITY AGREEMENT NO. 4390
DEBTOR: UNIVERSAL ACCESS, INC. SECURED PARTY: Charter Financial, Inc.
100 N. RIVERSIDE PLAZA 530 Fifth Avenue
CHICAGO, IL 60606 New York, NY 10036
In consideration of the mutual covenants set forth herein, the above named
Debtor and the above named Secured Party hereby enter into this Master Loan and
Security Agreement and agree to the terms and conditions set forth herein. Each
Loan Schedule which may be executed by Debtor and Secured Party from time to
time pursuant to this Master Loan and Security Agreement shall be deemed to be a
separate loan transaction incorporating all of the terms and conditions of this
Master Loan and Security Agreement. References in this Master Loan and Security
Agreement to "Agreement", "hereunder" and "herein" shall mean a Loan Schedule
which incorporates this Master Loan and Security Agreement.
1. LOAN SCHEDULES. Debtor shall evidence its agreement to enter into
each Agreement incorporating the terms hereof by executing and delivering to
Secured Party a Loan Schedule in the form annexed hereto as Exhibit 1. Debtor's
execution of a Loan Schedule shall obligate Debtor to make all of the payments
set forth in the Schedule of Obligations as set forth in the Loan Schedule. The
Loan Schedule shall set forth the amount of the Loan, the Term of the Loan, the
number of payments to be made and the amount and dates upon which such payments
are due. The Loan Schedule shall also set forth the Time Balance which means the
aggregate amount of all payments which are payable under the Agreement evidenced
by such Loan Schedule. Secured Party shall have no obligation to enter into or
accept any Loan Schedule and no Loan Schedule shall be binding upon Secured
Party until accepted by Secured Party which acceptance shall be evidenced only
by the execution of such Loan Schedule by Secured Party.
2. GRANT OF SECURITY INTEREST. Debtor hereby grants to Secured Party a
security interest in the personal property referred to and/or described in each
Loan Schedule (hereinafter with all renewals, substitutions and replacements and
all parts, repairs, improvements, additions and accessories incorporated therein
or affixed thereto referred to as the "Equipment"), together with any and all
proceeds thereof and any and all insurance policies and proceeds with respect
thereto.
3. OBLIGATIONS SECURED. The aforesaid security interest is granted by
Debtor as security for (a) the payment of the Time Balance (as set forth in the
Loan Schedule) and the payment and performance of all other indebtedness and
obligations now or hereafter owing by Debtor to Secured Party, of any and every
kind and description under the Agreement evidenced by such Loan Schedule, and
any and all renewals and extensions of the foregoing, and all interest, fees,
charges, expenses and attorneys' fees accruing or incurred in connection with
any of the foregoing (all of which Time Balance, indebtedness and obligations
are hereinafter referred to as the "Liabilities") and (b) the payment and
performance of all other indebtedness and obligations now or hereafter owing by
Debtor to Secured Party, of any and every kind and description, howsoever
arising or evidenced including without limitation those arising under other Loan
Schedules, (all of which indebtedness and obligations are hereinafter referred
to as the "Other Liabilities"). Subject to Paragraph 16, any nonpayment of any
installment or other amounts due hereunder shall result in the obligation on the
part of Debtor promptly to pay also an amount equal to five percent (5%), (or
the maximum rate permitted by law, whichever is less) of the installment or
other amounts overdue.
4. DISCLAIMER OF WARRANTIES. DEBTOR ACKNOWLEDGES THAT SECURED PARTY
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN RESPECT OF THE EQUIPMENT, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE. Secured Party shall not be liable to Debtor for any loss,
damage or expense of any kind or nature caused, directly or indirectly, by any
Equipment secured hereunder or the use or maintenance thereof or the failure of
operation thereof, or the repair, service or adjustment thereof, or by any delay
or failure to provide any such maintenance, repairs, service or adjustment, or
by any interruption of service or loss of use thereof or for any loss of
business howsoever caused. The Equipment shall be shipped directly to Debtor by
the supplier thereof and Debtor agrees to accept such delivery. No defect or
unfitness of the Equipment, nor any failure or delay on the part of the
manufacturer or the shipper of the Equipment to deliver the Equipment or any
part
<PAGE> 2
thereof to Debtor, shall relieve Debtor of the obligation to pay the Time
Balance or any other obligation under this Agreement. Secured Party shall have
no obligation under this Agreement in respect of the Equipment and shall have no
obligation to install, erect, test, adjust or service the Equipment. Secured
Party agrees, so long as there shall not have occurred or be continuing any
Event of Default hereunder or event which with lapse of time or notice, or both,
might become an Event of Default hereunder, that Secured Party will permit
Debtor to enforce in Debtor's own name at Debtor's sole expense any supplier's
or manufacturer's warranty or agreement in respect of the Equipment to the
extent that such warranty or agreement is assignable.
5. ASSIGNMENT. Any transaction evidenced by a Loan Schedule shall be
assignable by Secured Party, and by its assigns, without the consent of Debtor,
but Debtor shall not be obligated to any assignee except upon written notice of
such assignment from Secured Party or such assignee. The obligation of Debtor to
pay and perform the Liabilities to such assignee shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever, and such
payments shall be made without interruption or abatement notwithstanding any
event or circumstance whatsoever, including, without limitation, the late
delivery, non-delivery, destruction or damage of or to the Equipment, the
deprivation or limitation of the use of the Equipment, the bankruptcy or
insolvency of Secured Party or Debtor or any disaffirmance of this Agreement by
or on behalf of Debtor and notwithstanding any defense, set-off, recoupment or
counterclaim or any other right whatsoever, whether by reason of breach of this
Agreement or of any warranty in respect of the Equipment or otherwise which
Debtor may now or hereafter have against Secured Party, and whether any such
event shall be by reason of any act or omission of Secured Party (including,
without limitation, any negligence of Secured Party) or otherwise; provided,
however, that nothing herein contained shall affect any right of Debtor to
enforce against Secured Party any claim which Debtor may have against Secured
Party in any manner other than by abatement, attachment or recoupment of,
interference with, or set-off, counterclaim or defense against, the
aforementioned payments to be made to such assignee. Debtor's undertaking herein
to pay and perform the Liabilities to an assignee of Secured Party shall
constitute a direct, independent and unconditional obligation of Debtor to said
assignee. Said assignee shall have no obligations under this Agreement or in
respect of the Equipment and shall have no obligation to install, erect, test,
adjust or service the Equipment. Debtor also acknowledges and agrees that any
assignee of Secured Party's interest in this Agreement shall have the right to
exercise all rights, privileges and remedies (either in its own name or in the
name of Secured Party) which by the terms of this Agreement are permitted to be
exercised by Secured Party.
6. DAMAGE TO OR LOSS OF THE EQUIPMENT; REQUISITION. Debtor assumes and
shall bear the entire risk of loss or damage to the Equipment from any and every
cause, whatsoever. No loss or damage to the Equipment or any part thereof shall
affect any obligation of Debtor with respect to the Liabilities and this
Agreement, which shall continue in full force and effect. Debtor shall advise
Secured Party in writing promptly of any item of Equipment lost or damaged and
of the circumstances and extent of such damage. If the Equipment is totally
destroyed, irreparably damaged, lost, stolen or title thereto shall be
requisitioned or taken by any governmental authority under the power of eminent
domain or otherwise, Debtor shall, at the option of Secured Party, replace the
same with like equipment in good repair, condition and working order, or pay to
Secured Party all Liabilities due and to become due, less the net amount of the
recovery, if any, actually received by Secured Party from insurance or otherwise
for such destruction, damage, loss, theft, requisition or taking. Whenever the
Equipment is destroyed or damaged and, in the sole discretion of Secured Party,
such destruction or damage can be repaired, Debtor shall, at its expense,
promptly effect such repairs as Secured Party shall deem necessary for
compliance with clause (a) of paragraph 8 below. Any proceeds of insurance
received by Secured Party with respect to such reparable damage to the Equipment
shall, at the election of Secured Party, be applied either to the repair of the
Equipment by payment by Secured Party directly to the party completing the
repairs, or to the reimbursement of Debtor for the cost of such repairs;
provided, however, that Secured Party shall have no obligation to make such
payment or any part thereof until receipt of such evidence as Secured Party
shall deem satisfactory that such repairs have been completed and further
provided that Secured Party may apply such proceeds to the payment of any of the
Liabilities or the Other Liabilities due if at the time such proceeds are
received by Secured Party there shall have occurred and be continuing any Event
of Default hereunder or any event which with lapse of time or notice, or both,
would become an Event of Default. Debtor shall, when and as requested by Secured
Party, undertake, by litigation or otherwise, in Debtor's name, the collection
of any claim against any person for such destruction, damage, loss, theft,
requisition or taking, but Secured Party shall not be obligated to undertake, by
litigation or otherwise, the collection of any claim against any person for such
destruction, damage, loss, theft, requisition
<PAGE> 3
or taking.
7. REPRESENTATIONS AND WARRANTIES OF DEBTOR. Debtor represents and
warrants that: it has the right, power and authority to enter into and carry out
the terms and provisions of this Agreement; this Agreement constitutes a valid
obligation of the Debtor and is enforceable in accordance with its terms; and
entering into this Agreement and carrying out its terms and provisions will not
violate the terms or constitute a breach of any other agreement to which Debtor
is a party.
8. AFFIRMATIVE COVENANTS OF DEBTOR. Debtor shall (a) cause the Equipment
to be kept in good condition and use the Equipment only in the manner for which
it was designed and intended so as to subject it only to ordinary wear and tear
and cause to be made all needed and proper repairs, renewals and replacements
thereto; (b) maintain at all times property damage, fire, theft and
comprehensive insurance for the full replacement value of the Equipment, with
loss payable provisions in favor of Secured Party and any assignee of Secured
Party as their interests may appear, and maintain public liability insurance in
amounts satisfactory to Secured Party, naming Secured Party and any assignee of
Secured Party as insureds with all of said insurance and loss payable provisions
to be in form, substance and amount and written by companies approved by Secured
Party, and deliver the policies therefor, or duplicates thereof, to Secured
Party; (c) pay or reimburse Secured Party for any and all taxes, assessments and
other governmental charges of whatever kind or character, however designated
(together with any penalties, fines or interest thereon) levied or based upon or
with respect to the Equipment, the Liabilities or this Agreement or upon the
manufacture, purchase, ownership, delivery, possession, use, storage, operation,
maintenance, repair, return or other disposition of the Equipment, or upon any
receipts or earnings arising therefrom, or for titling or registering the
Equipment, or upon the income or other proceeds received with respect to the
Equipment or this Agreement provided, however, that Debtor shall pay taxes on or
measured by the net income of Secured Party and franchise taxes of Secured Party
only to the extent that such net income taxes or franchise taxes are levied or
assessed in lieu of any other taxes, assessments or other governmental charges
hereinabove described; (d) pay all shipping and delivery charges and other
expenses incurred in connection with the Equipment and pay all lawful claims,
whether for labor, materials, supplies, rents or services, which might or could
if unpaid become a lien on the Equipment; (e) comply with all governmental laws,
regulations, requirements and rules, all instructions and warranty requirements
of Secured Party or the manufacturer of the Equipment, and with the conditions
and requirements of all policies of insurance with respect to the Equipment and
this Agreement; (f) mark and identify the Equipment with all information and in
such manner as Secured Party may request from time to time and replace promptly
any such marking or identification which are removed, defaced or destroyed; (g)
at any and all times during business hours, grant to Secured Party free access
to enter upon the premises wherein the Equipment shall be located and permit
Secured Party to inspect the Equipment; (h) reimburse Secured Party for all
charges, costs and expenses (including attorneys' fees) incurred by Secured
Party in defending or protecting its interests in the Equipment, in the
attempted enforcement or enforcement of the provisions of this Agreement or in
the attempted collection or collection of any of the Liabilities; (i) indemnify
and hold any assignee of Secured Party, and Secured Party, harmless from and
against all claims, losses, liabilities, damages, judgments, suits, and all
legal proceedings, and any and all costs and expenses in connection therewith
(including attorneys' fees) arising out of or in any manner connected with the
manufacture, purchase, ownership, delivery, possession, use, storage, operation,
maintenance, repair, return or other disposition of the Equipment or with this
Agreement, including, without limitation, claims for injury to or death of
persons and for damage to property, and give Secured Party prompt notice of any
such claim or liability; and (j) maintain a system of accounts established and
administered in accordance with generally accepted accounting principles and
practices consistently applied, and, within thirty (30) days after the end of
each fiscal quarter, deliver to Secured Party a balance sheet as at the end of
such quarter and statement of operations for such quarter, and, within one
hundred and twenty (120) days after the end of each fiscal year, deliver to
Secured Party a balance sheet as at the end of such year and statement of
operations for such year, in each case prepared in accordance with generally
accepted accounting principles and practices consistently applied and certified
by Debtor's chief financial officer as fairly presenting the financial position
and results of operation of Debtor, and, in the case of year end financial
statements, certified by an independent accounting firm acceptable to Secured
Party.
9. NEGATIVE COVENANTS OF DEBTOR. Debtor shall not (a) create, incur,
assume or suffer to exist any mortgage, lien, pledge or other encumbrance or
attachment of any kind whatsoever upon, affecting or with
<PAGE> 4
respect to the Equipment or this Agreement or any of Debtor's interests
hereunder; (b) make any changes or alterations in or to the Equipment except as
necessary for compliance with clause (a) of paragraph 8 above; (c) permit the
name of any person, association or corporation other than Secured Party to be
placed on the Equipment as a designation that might be interpreted as a claim of
interest in the Equipment; (d) part with possession or control of or suffer or
allow to pass out of its possession or control any of the Equipment or change
the location of the Equipment or any part thereof from the location shown above;
(e) assign or in any way dispose of all or any part of its rights or obligations
under this Agreement or enter into any lease of all or any part of the
Equipment; (f) change its name or address from that set forth above unless it
shall have given Secured Party no less than thirty (30) days prior written
notice thereof; (g) sell any shares of its capital stock or transfer any
ownership interest in the Debtor to any person, persons, entity or entities
(whether in one single transaction or in multiple transactions) which results in
a transfer of a majority interest in the ownership and/or the control of the
Debtor from the person, persons, entity or entities who hold ownership and/or
control of the Debtor as of the date of this Agreement; or (h) consolidate with
or merge into or with any other entity, or purchase or otherwise acquire all or
substantially all of the assets or stock or other ownership interest of any
person or entity or sell, transfer, lease or otherwise dispose of all or
substantially all of Debtor's assets to any person or entity.
10. EQUIPMENT PERSONALTY. The Equipment is, and shall at all times be
and remain, personal property notwithstanding that the Equipment or any part
thereof may now be, or hereafter become, in any manner affixed or attached to,
or imbedded in, or permanently resting upon, real property or attached in any
manner to real property by cement, plaster, nails, bolts, screws or otherwise.
If requested by Secured Party with respect to any item of Equipment, Debtor will
obtain and deliver to Secured Party waivers of interest or liens in recordable
form, satisfactory to Secured Party, from all persons claiming any interest in
the real property on which such item of Equipment is installed or located.
11. EVENTS OF DEFAULT AND REMEDIES. If any one or more of the following
events ("Events of Default") shall occur:
(a) Debtor shall fail to make any payment in respect of the Liabilities
when due; or
(b) any certification, statement, representation, warranty or financial
report or statement heretofore or hereafter furnished by or on behalf of Debtor
or any guarantor of any or all of the Liabilities proves to have been false in
any material respect at the time as of which the facts therein set forth were
stated or certified or has omitted any material contingent or unliquidated
liability or claim against Debtor or any such guarantor; or
(c) Debtor or any guarantor of any or all of the Liabilities shall fail
to perform or observe any covenant, condition or agreement to be performed or
observed by it hereunder or under any guaranty agreement; or
(d) Debtor or any guarantor of any or all of the Liabilities shall be in
breach of or in default in the payment and performance of any obligation
relating to any of the Other Liabilities; or
(e) Debtor or any guarantor of any of Debtor's obligations hereunder
shall be in breach of or in default in the payment or performance of any
obligation owing to any bank, lender, lessor or financial institution, howsoever
arising, present or future, contracted for or acquired, and whether joint,
several, absolute, contingent, secured, unsecured, matured or unmatured; or
(f) Debtor or any guarantor of any or all of the Liabilities shall cease
doing business as a going concern, make an assignment for the benefit of
creditors, admit in writing its inability to pay its debts as they become due,
file a petition commencing a voluntary case under any chapter of Title 11 of the
United States Code entitled "Bankruptcy" (the "Bankruptcy Code"), be adjudicated
an insolvent, file a petition seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
arrangement under any present or future statute, law, rule or regulation or file
an answer admitting the material allegations of a petition filed against it in
any such proceeding, consent to the filing of such a petition or acquiescence in
the appointment of a trustee, receiver or liquidator of it or of all or any part
of its assets or properties, or take any action looking to its dissolution or
liquidation; or
<PAGE> 5
(g) an order for relief against Debtor or any guarantor of any or all of
the Liabilities shall have been entered under any chapter of the Bankruptcy Code
or a decree or order by a court having jurisdiction in the premises shall have
been entered approving as properly filed a petition seeking reorganization,
arrangement, readjustment, liquidation, dissolution or similar relief against
Debtor or any guarantor of any or all of the Liabilities under any present or
future statute, law, rule or regulation, or within thirty (30) days after the
appointment without Debtor's or such guarantor's consent or acquiescence of any
trustee, receiver or liquidator of it or such guarantor or of all or any part of
its or such guarantor's assets and properties, such appointment shall not be
vacated, or an order, judgment or decree shall be entered against Debtor or such
guarantor by a court of competent jurisdiction and shall continue in effect for
any period of ten (10) consecutive days without a stay of execution, or any
execution or writ or process shall be issued under any action or proceeding
against Debtor whereby the Equipment or its use may be taken or restrained; or
(h) Debtor or any guarantor of any or all of the Liabilities shall
suffer an adverse material change in its financial condition as compared to such
condition as at the date hereof, and as a result of such change in condition
Secured Party deems itself or any of the Equipment to be insecure;
then and in any such event, Secured Party may, at the sole discretion of Secured
Party, without notice or demand and without limitation of any rights and
remedies of Secured Party under the Uniform Commercial Code, take any one or
more of the following steps:
(1) Declare all of the Time Balance to be due and payable, whereupon the
same shall forthwith mature and become due and payable as provided for in
paragraph 16 below, provided, however, upon the occurrence of any of the events
specified in subparagraphs (f) and (g) above, all sums as specified in this
clause (1) shall immediately be due and payable without notice to Debtor (the
date on which Secured Party declares all of the Time Balance to be due and
payable is hereinafter referred to as the "Declaration Date");
(2) proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceedings, whether for the specific performance of
any agreement contained herein, or for an injunction against a violation of any
of the terms hereof, or in aid of the exercise of any other right, power or
remedy granted hereby or by law, equity or otherwise; and
(3) at any time and from time to time, with or without judicial process
and the aid or assistance of others, enter upon any premises wherein any of the
Equipment may be located and, without resistance or interference by Debtor, take
possession of the Equipment on any such premises, and require Debtor to assemble
and make available to Secured Party at the expense of Debtor any part or all of
the Equipment at any place or time designated by Secured Party; and remove any
part or all of the Equipment from any premises wherein the same may be located
for the purpose of effecting the sale or other disposition thereof; and sell,
resell, lease, assign and deliver, grant options for or otherwise dispose of any
or all of the Equipment in its then condition or following any commercially
reasonable preparation or processing, at public or private sale or proceedings,
by one or more contracts, in one or more parcels, at the same or different
times, with or without having the Equipment at the place of sale or other
disposition, for cash and/or credit, and upon any terms, at such place(s) and
time(s) and to such persons, firms or corporations as Secured Party shall deem
best, all without demand for performance or any notice or advertisement
whatsoever, except that Debtor shall be given five (5) business days' written
notice of the place and time of any public sale or of the time after which any
private sale or other intended disposition is to be made, which notice Debtor
hereby agrees shall be deemed reasonable notice thereof. If any of the Equipment
is sold by Secured Party upon credit or for future delivery, Secured Party shall
not be liable for the failure of the purchaser to pay for same and in such event
Secured Party may resell such Equipment. Secured Party may buy any part or all
of the Equipment at any public sale and if any part or all of the Equipment is
of a type customarily sold in a recognized market or which is the subject of
widely distributed standard price quotations Secured Party may buy at private
sale and may make payment therefor by application of all or a part of the
Liabilities and of all or a part of any Other Liabilities. Any personalty in or
attached to the Equipment when repossessed may be held by Secured Party without
any liability arising with respect thereto, and any and all claims in connection
with such personalty shall be deemed to have been waived unless notice of such
claim is made by certified or registered mail upon Secured Party within three
business days after repossession.
<PAGE> 6
Secured Party shall apply the cash proceeds from any sale or other disposition
of the Equipment first, to the reasonable expenses of re-taking, holding,
preparing for sale, selling, leasing and the like, and to reasonable attorneys'
fees and other expenses which are to be paid or reimbursed to Secured Party
pursuant hereto, and second, to all outstanding portions of the Liabilities and
to any Other Liabilities in such order as Secured Party may elect, and third,
any surplus to Debtor, subject to any duty of Secured Party imposed by law to
the holder of any subordinate security interest in the Equipment known to
Secured Party; provided however, that Debtor shall remain liable with respect to
unpaid portions of the Liabilities owing by it and will pay Secured Party on
demand any deficiency remaining with interest as provided for in paragraph 16
below.
12. SECURED PARTY'S RIGHT TO PERFORM FOR DEBTOR. If Debtor fails to
perform or comply with any of its agreements contained herein Secured Party may
perform or comply with such agreement and the amount of any payments and
expenses incurred by Secured Party in connection with such performance or
compliance, together with interest thereon at the rate provided for in paragraph
16 below, shall be deemed a part of the Liabilities and shall be payable by
Debtor upon demand.
13. FURTHER ASSURANCES. Debtor will cooperate with Secured Party for the
purpose of protecting the interests of Secured Party in the Equipment,
including, without limitation, the execution of all Uniform Commercial Code
financing statements requested by Secured Party. Secured Party and any assignee
of Secured Party are each authorized to the extent permitted by applicable law
to file one or more Uniform Commercial Code financing statements disclosing any
security interest in the Equipment without the signature of Debtor or signed by
Secured Party or any assignee of Secured Party as attorney-in-fact for Debtor.
Debtor will pay all costs of filing any financing, continuation or termination
statements with respect to this Agreement, including, without limitation, any
documentary stamp taxes relating thereto. Debtor will do whatever may be
necessary to have a statement of the interest of Secured Party and of any
assignee of Secured Party in the Equipment noted on any certificate of title
relating to the Equipment and will deposit said certificate with Secured Party
or such assignee. Debtor shall execute and deliver to Secured Party, upon
request, such other instruments and assurances as Secured Party deems necessary
or advisable for the implementation, effectuation, confirmation or perfection of
this Agreement and any rights of Secured Party hereunder.
14. NON-WAIVER; ETC. No course of dealing by Secured Party or Debtor or
any delay or omission on the part of Secured Party in exercising any rights
hereunder shall operate as a waiver of any rights of Secured Party. No waiver or
consent shall be binding upon Secured Party unless it is in writing and signed
by Secured Party. A waiver on any one occasion shall not be construed as a bar
to or a waiver of any right and/or remedy on any future occasion. To the extent
permitted by applicable law, Debtor hereby waives the benefit and advantage of,
and covenants not to assert against Secured Party, any valuation, inquisition,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist which, but for this provision, might be applicable to any sale
or other disposition made under the judgment, order or decree of any court or
under the powers of sale and other disposition conferred by this Agreement or
otherwise. Debtor hereby waives any right to a jury trial with respect to any
matter arising under or in connection with this Agreement.
15. ENTIRE AGREEMENT; SEVERABILITY; ETC. This Agreement constitutes the
entire agreement between Secured Party and Debtor and all conversations,
agreements and representations relating to this Agreement or to the Equipment
are integrated herein. If any provision hereof or any remedy herein provided for
shall be invalid under any applicable law, such provision or remedy shall be
inapplicable and deemed omitted, but the remaining provisions and remedies
hereunder shall be given effect in accordance with the intent hereof. Neither
this Agreement nor any term hereof may be changed, discharged, terminated or
waived except in an instrument in writing signed by the party against which
enforcement of the change, discharge, termination or waiver is sought. This
Agreement shall in all respects be governed by and construed in accordance with
the internal laws of the State of New York, including all matters of
construction, validity and performance, and shall be deemed a purchase money
security agreement within the meaning of the Uniform Commercial Code. The
captions in this Agreement are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof. This Agreement shall
inure to the benefit of and be binding upon Secured Party and Debtor and their
respective successors and assigns, subject, however, to the limitations set
forth in this Agreement with respect to Debtor's assignment hereof. No right or
remedy referred to in this Agreement is intended to be exclusive but each shall
be cumulative and in addition to any other right or remedy referred to in
<PAGE> 7
this Agreement or otherwise available to Secured Party at law or in equity, and
shall be in addition to the provisions contained in any instrument referred to
herein and any instrument supplemental hereto. Debtor shall be liable for all
costs and expenses, including attorneys' fees and disbursements, incurred by
reason of the occurrence of any Event of Default or the exercise of Secured
Party's remedies with respect thereto. Time is of the essence with respect to
this Agreement and all of its provision.
16. PREPAYMENT; REBATE; INTEREST. Except for the installment payments of
the Time Balance as set forth in the Schedule of Obligations, the Debtor may not
prepay the Time Balance, in whole or in part, at any time. In the event Secured
Party declares all of the Time Balance to be due and payable pursuant to clause
(1) of paragraph 11 above, Debtor shall pay to Secured Party an amount equal to
the sum of (a) all accrued and unpaid amounts as of the Declaration Date plus
interest thereon, and (b) the present value of all future installments set forth
in this Agreement over the remaining unexpired term of this Agreement discounted
to present value using a discount rate of four percent (4%), provided that the
amount of interest earned by Secured Party computed as aforesaid shall not
exceed the highest amount permitted by applicable law. The Time Balance as
reduced to present value in accordance with the preceding sentence shall bear
interest from and after the Declaration Date, and all other Liabilities due and
payable under this Agreement (including past due installments) shall bear
interest from and after their respective due dates, at the lesser of 1.5% per
month or the highest rate permitted by applicable law, provided, however, that
Debtor shall have no obligation to pay any interest on interest except to the
extent permitted by applicable law.
17. CONSENT TO JURISDICTION. Debtor hereby irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such state in connection with any action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. Any such
action or proceeding will be maintained in the United States District Court for
the Southern District of New York or in any court of the State of New York
located in the County of New York and Debtor waives any objections based upon
venue or forum non conveniens in connection with any such action or proceeding.
Debtor consents that process in any such action or proceeding may be served upon
it by registered mail directed to Debtor at its address set forth at the head of
this Agreement or in any other manner permitted by applicable law or rules of
court. Debtor hereby irrevocably appoints Secretary of State of the State of New
York as its agent to receive service of process in any such action or
proceeding.
18. NOTICES. Notice hereunder shall be deemed given if served personally
or by certified or registered mail, return receipt requested, to Secured Party
and Debtor at their respective addresses set forth at the head of this
Agreement. Any party hereto may from to time by written notice to the other
change the address to which notices are to be sent to such party. A copy of any
notice sent by Debtor to Secured Party shall be concurrently sent by Debtor to
any assignee of Secured Party of which Debtor has notice.
The Debtor agrees to all the provisions set forth above. This Agreement
is executed pursuant to due authorization. DEBTOR ACKNOWLEDGES RECEIPT OF A
SIGNED TRUE COPY OF THIS AGREEMENT.
Date 12-15, 1999 Accepted on 12-15, 1999
UNIVERSAL ACCESS, INC. CHARTER FINANCIAL, INC.
- ----------------------------------- ------------------------------------
(Debtor) (Secured Party)
By /s/ ROBERT BROWN By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------- ----------------------------------
Its Vice President Finance Its Vice President
-------------------------------- ---------------------------------
(if Corporation, President or Vice (Title of Officer)
President should sign and give official
title; if Partnership, state partner;
if L.L.C., state member or manger)
Main Document - Master Loan and Security Agreement
<PAGE> 8
RIDER TO MASTER LOAN AND SECURITY AGREEMENT NO. 4390
(THE "AGREEMENT") BETWEEN CHARTER FINANCIAL, INC.
AS SECURED PARTY ("SECURED PARTY") AND
UNIVERSAL ACCESS, INC. AS DEBTOR ("DEBTOR")
Secured Party and Debtor covenant and agree to amend the Agreement as follows:
1. In the seventh line of Section 8 (i) of the Agreement, after the words
"damage to property", add the words "(except for any claims, losses,
liabilities, damages, judgments, suits, proceedings, costs or expenses to
the extent arising from the gross negligence or willful misconduct of
Secured Party or its assignees)".
2. In the third line of Section 8 (j) of the Agreement, change "thirty (30)"
to "forty-five (45)".
3. In the third line of Section 9 (d) of the Agreement, delete the word
"above" and insert instead "on the applicable Loan Schedule".
4. In the first line of Section 9 (g) of the Agreement, before the words "sell
any shares", insert the words "without Secured Party's prior written
consent," and in the fifth line of Section 9 (g), after the words "of this
Agreement", insert the words ", except that Debtor may conduct a public
offering(s) of shares of capital stock in Debtor without Secured Party's
prior written consent".
5. In the first line of Section 9 (h) of the Agreement, before the words
"consolidate with or merge" insert the words "without Secured Party's prior
written consent,".
6. At the end of the fourth line of Section 9 (h) of the Agreement, add the
following provision, "With respect to the consent provisions under both
Sections 9 (g) and 9 (h) of this Agreement, Secured Party shall, in its
reasonable discretion, review and consider whether (i) Secured Party is
satisfied as to the creditworthiness of the successor entity and as to such
successor's conformance to the other standard criteria then used by Secured
Party for such purposes, and (ii) such successor entity is willing to
execute and deliver to Secured Party an agreement satisfactory in form and
substance to Secured Party, in its reasonable discretion, containing the
successor entity's effective assumption of all obligations of the Debtor
under the Agreement and all Loan Schedules thereunder. In the event that
Secured Party does not give such consent, the Debtor may prepay its
obligations under all of the Loan Schedules under the Agreement at the
closing of the transaction for which Debtor sought Secured Party's consent
by paying to Secured Party the sum of (x) any accrued and unpaid
installments due under each of the Loan Schedules under the Agreement,
together with interest thereon (if any) in accordance with the Agreement;
(y) the then present value of all remaining installments due under each of
the Loan Schedules of the Agreement, computed using a discount rate of six
percent (6%); and (z) any and all other amounts whatsoever due and owing to
Secured Party in accordance with the Agreement.
7. In the first line of Section 11 (a) of the Agreement, after the words "of
the Liabilities", add the words "within five (5) days of".
8. In the second line of Section 11 (c) of the Agreement, after the words "any
guaranty agreement", insert the words "ten (10) days after notice from
Secured Party of such failure".
9. In the second line of Section 11 (d) of the Agreement, after the words
"Other Liabilities",
1
<PAGE> 9
insert the words "and such default is not cured within the time, if any,
specified therefor in any agreement governing the same".
10. In the second line of Section 11 (e) of the Agreement, after the words "any
obligation", insert the words "in excess of the aggregate of $100,000" and
in the fourth line of Section 11 (e) of the Agreement, after the word
"unmatured", add the words "and such default is declared and is not cured
within the time, if any, specified therefor in any agreement governing the
same".
11. In fifth line of Section 11 (g) of the Agreement, delete the words "or
within thirty (30)", insert instead the words ", except that if such order
results from an involuntary petition against Debtor or any guarantor, then
it shall not be an Event of Default until the expiration of thirty (30)
days after the filing of such involuntary proceeding, if such proceeding
remains pending or within forty-five (45)".
12. In the ninth line of Section 11 (g) of the Agreement, delete the words "ten
(10)" and insert instead "fifteen (15)" and in the eleventh line of such
section, after the words "or restrained", delete the word "or" and insert
instead the words ", unless such execution, writ or process is stayed or
discharged within fifteen (15) days"
13. Delete Section 11 (h) of the Agreement in its entirety.
14. In the eighteenth line of Section 15 of the Agreement, after the words
"expenses, including", insert the word "reasonable".
UNIVERSAL ACCESS, INC. CHARTER FINANCIAL, INC.
By: /s/ ROBERT BROWN By: [SIGNATURE ILLEGIBLE]
-------------------------------- ---------------------------------
Title: Vice President Finance Title: Vice President
----------------------------- ------------------------------
Date: 12-15-99 Date: 12-15-99
------------------------------ -------------------------------
<PAGE> 10
RIDER TO MASTER LOAN AND SECURITY AGREEMENT NO. 4390
DATED 12-15-99, (THE "AGREEMENT") BY AND BETWEEN
UNIVERSAL ACCESS, INC. AS DEBTOR ("DEBTOR") AND
CHARTER FINANCIAL, INC. AS SECURED PARTY ("SECURED PARTY")
Debtor and Secured Party covenant and agree as follows:
1. Debtor shall remain in compliance with the following provisions at all times
during the term of the Agreement or any Loan Schedule thereunder:
(i) there shall be no material adverse change in the Debtor's
financial condition as compared to the Debtor's financial
projections dated November 1, 1999, a copy of which is annexed
hereto as exhibit 1; and
(ii) Debtor's total Unrestricted Cash shall at no time be less than
$15,000,000.
As used herein:
Unrestricted Cash means the minimum cash balance on Debtor's balance
sheet in the form of cash or marketable securities traded on a
recognized market which has not been pledged, encumbered, restricted or
otherwise assigned to or by any third party.
All other accounting terms not defined herein shall have the meanings
ascribed to them according to Generally Accepted Accounting Principles
consistently applied ("GAAP").
2. Notwithstanding anything to the contrary contained herein, in the event that
Debtor completes a public offering(s) of shares of capital stock in the Debtor
and raises an aggregate of at least $100,000,000 in new equity through such
offering(s), Debtor shall not be required to remain in compliance with the
covenant contained in Section 1 (i) hereinabove for the remaining term of the
Agreement or any Loan Schedule hereunder. In such event, all of the remaining
terms and conditions of this Rider, including without limitation Section 1 (ii)
hereinabove, shall remain in full force and effect for the remainder of such
term.
3. Debtor shall be in compliance with each of the covenants under this Rider at
all times during the term of the Agreement or any Loan Schedule thereunder. In
order to enable Secured Party to review Debtor's compliance, Debtor shall (a)
within ten (10) days of the end of each month, provide Secured Party with a
certification of its chief financial officer stating that Debtor has complied
with each of the covenants contained in this Rider, and (b) within twenty (20)
days of the end of each month, provide Secured Party with an internally prepared
balance sheet, a profit and loss statement and a statement of cash flows for
such month.
4. The failure of Debtor to conform or comply with the terms, conditions and
covenants of this Rider shall constitute an "Event of Default" under the
Agreement. In the event that Debtor fails to be in compliance with any of the
provisions set forth hereinabove, Debtor shall cure the Event of Default
resulting from such failure by delivering to Secured Party within two (2)
business days an irrevocable standby letter of credit issued by a recognized
financial institution acceptable to Secured Party in an amount equal to the sum
of the present value of the then remaining payments
1
<PAGE> 11
due under the Agreement during the remaining term thereof, discounted at a rate
equal to four percent (4%), which letter of credit shall be substantially in the
form annexed hereto as exhibit 3 (the "LC"). Once an LC is required under this
Section 3, it shall be an Event of Default under the Agreement if at any time
prior to the end of the term of the Agreement the LC is not in full force and
effect or Secured Party receives notice that the LC will not be replaced or
renewed.
5. All other terms and conditions of the Agreement shall remain in full force
and effect. In the event that there is any conflict between the terms and
conditions of this Rider and the terms and conditions of the Agreement, the
terms and conditions of this Rider shall govern. All of the terms, conditions
and provisions hereunder shall be deemed to be an indivisible part of and
supplement to the Agreement.
UNIVERSAL ACCESS, INC. CHARTER FINANCIAL, INC.
By: /s/ ROBERT BROWN By: [SIGNATURE ILLEGIBLE]
-------------------------------- ---------------------------------
Title: Vice President Finance Title: Vice President
----------------------------- ------------------------------
Date: 12-15-99 Date: 12-15-99
------------------------------ -------------------------------
<PAGE> 12
LOAN SCHEDULE NO. 01 UNDER
MASTER LOAN AND SECURITY AGREEMENT NO. 4390
Pursuant to a Master Loan and Security Agreement No. 4390 dated _____ ("Master
Agreement") between Charter Financial, Inc. ("Secured Party") having a place of
business at 530 Fifth Avenue, 15th Floor, New York, NY 10036 and UNIVERSAL
ACCESS, INC. ("Debtor") a DELAWARE corporation having a place of business at 100
N. Riverside Plaza, Chicago , IL 60606 , Debtor hereby promises to pay to the
order of Secured Party the Loan Amount set forth in the schedule of obligations
below, in installments in the amounts and at the times specified below. This
Loan Schedule incorporates the terms and conditions of the Master Agreement and
constitutes an Agreement as referred to in the Master Agreement. Terms used
herein which are defined in the Master Agreement shall have the meanings as so
defined.
The Equipment in which Debtor grants to Secured Party a security interest in
accordance with the provisions of the Master Agreement is set forth and
described in Schedule A annexed hereto and made a part hereof. Said Equipment
shall be located at the addresses set forth and described in Schedule A at all
times until all payments hereunder have been paid in full.
- --------------------------------------------------------------------------------
SCHEDULE OF OBLIGATIONS
- --------------------------------------------------------------------------------
Loan Amount $2,283,780.00
Interest $ 527,712.00
Time Balance $2,811,492.00
Term of Loan Thirty-Six (36) months
Number of Payments 36
Payments Payable Monthly in advance
Amount of Each Payment $78,097.00
Debtor agrees to pay the Time Balance to Secured Party in thirty-six
(36) installments in the amount of $78,097.00 due and payable on the 15 day of
each month, commencing on 12-15-99 and continuing on the like date of each month
thereafter through and including 11-15-02.
The Debtor agrees to all the provisions set forth above. This Agreement
is executed pursuant to due authorization. DEBTOR ACKNOWLEDGES RECEIPT OF A
SIGNED TRUE COPY OF THIS AGREEMENT.
Date 12-15, 1999 Accepted on 12-15, 1999
UNIVERSAL ACCESS, INC. CHARTER FINANCIAL, INC.
(Debtor) (Secured Party)
By /s/ ROBERT BROWN By [SIGNATURE ILLEGIBLE]
--------------------------------- ----------------------------------
Its Vice President Finance Its Vice President
-------------------------------- ---------------------------------
(Title of Officer) (if Corporation, President or Vice President should sign and
give official title; if Partnership, state partner; if L.L.C., state member or
manger)
<PAGE> 13
LOAN SCHEDULE NO. 03 UNDER
MASTER LOAN AND SECURITY AGREEMENT NO. 4390
Pursuant to a Master Loan and Security Agreement No. 4390 dated _____ ("Master
Agreement") between Charter Financial, Inc. ("Secured Party") having a place of
business at 530 Fifth Avenue, 15th Floor, New York, NY 10036 and UNIVERSAL
ACCESS, INC. ("Debtor") a DELAWARE corporation having a place of business at 100
N. Riverside Plaza, Chicago , IL 60606 , Debtor hereby promises to pay to the
order of Secured Party the Loan Amount set forth in the schedule of obligations
below, in installments in the amounts and at the times specified below. This
Loan Schedule incorporates the terms and conditions of the Master Agreement and
constitutes an Agreement as referred to in the Master Agreement. Terms used
herein which are defined in the Master Agreement shall have the meanings as so
defined.
The Equipment in which Debtor grants to Secured Party a security interest in
accordance with the provisions of the Master Agreement is set forth and
described in Schedule A annexed hereto and made a part hereof. Said Equipment
shall be located at the addresses set forth and described in Schedule A at all
times until all payments hereunder have been paid in full.
- --------------------------------------------------------------------------------
SCHEDULE OF OBLIGATIONS
- --------------------------------------------------------------------------------
Loan Amount $ 702,501.00
Interest $ 162,327.00
Time Balance $ 864,828.00
Term of Loan Thirty-Six (36) months
Number of Payments 36
Payments Payable Monthly in advance
Amount of Each Payment $24,023.00
Debtor agrees to pay the Time Balance to Secured Party in thirty-six
(36) installments in the amount of $24,023.00 due and payable on the 15 day of
each month, commencing on 12-15-99 and continuing on the like date of each
month thereafter through and including 11-15-02.
The Debtor agrees to all the provisions set forth above. This Agreement
is executed pursuant to due authorization. DEBTOR ACKNOWLEDGES RECEIPT OF A
SIGNED TRUE COPY OF THIS AGREEMENT.
Date 12-15, 1999 Accepted on 12-15, 1999
UNIVERSAL ACCESS, INC. CHARTER FINANCIAL, INC.
(Debtor) (Secured Party)
By /s/ ROBERT BROWN By [SIGNATURE ILLEGIBLE]
--------------------------------- ----------------------------------
Its Vice President Finance Its Vice President
-------------------------------- ---------------------------------
(Title of Officer)
(if Corporation, President or Vice
President should sign and give official
title; if Partnership, state partner; if
L.L.C., state member or manger)
<PAGE> 14
LOAN SCHEDULE NO. 02 UNDER
MASTER LOAN AND SECURITY AGREEMENT NO. 4390
Pursuant to a Master Loan and Security Agreement No. 4390 dated _____ ("Master
Agreement") between Charter Financial, Inc. ("Secured Party") having a place of
business at 530 Fifth Avenue, 15th Floor, New York, NY 10036 and UNIVERSAL
ACCESS, INC. ("Debtor") a DELAWARE corporation having a place of business at 100
N. Riverside Plaza, Chicago , IL 60606 , Debtor hereby promises to pay to the
order of Secured Party the Loan Amount set forth in the schedule of obligations
below, in installments in the amounts and at the times specified below. This
Loan Schedule incorporates the terms and conditions of the Master Agreement and
constitutes an Agreement as referred to in the Master Agreement. Terms used
herein which are defined in the Master Agreement shall have the meanings as so
defined.
The Equipment in which Debtor grants to Secured Party a security interest in
accordance with the provisions of the Master Agreement is set forth and
described in Schedule A annexed hereto and made a part hereof. Said Equipment
shall be located at the addresses set forth and described in Schedule A at all
times until all payments hereunder have been paid in full.
- --------------------------------------------------------------------------------
SCHEDULE OF OBLIGATIONS
- --------------------------------------------------------------------------------
Loan Amount $ 314,080.00
Interest $ 72,560.00
Time Balance $ 386,640.00
Term of Loan Thirty-Six (36) months
Number of Payments 36
Payments Payable Monthly in advance
Amount of Each Payment $10,740.00
Debtor agrees to pay the Time Balance to Secured Party in thirty-six
(36) installments in the amount of $10,740.00 due and payable on the 15 day of
each month, commencing on 12-15-99 and continuing on the like date of each
month thereafter through and including 11-15-02.
The Debtor agrees to all the provisions set forth above. This Agreement
is executed pursuant to due authorization. DEBTOR ACKNOWLEDGES RECEIPT OF A
SIGNED TRUE COPY OF THIS AGREEMENT.
Date 12-15, 1999 Accepted on 12-15, 1999
UNIVERSAL ACCESS, INC. CHARTER FINANCIAL, INC.
(Debtor) (Secured Party)
By /s/ ROBERT BROWN By [SIGNATURE ILLEGIBLE]
--------------------------------- ----------------------------------
Its Vice President Finance Its Vice President
-------------------------------- ---------------------------------
(Title of Officer)
(if Corporation, President or Vice
President should sign and give official
title; if Partnership, state partner; if
L.L.C., state member or manger)
<PAGE> 1
EXHIBIT 10.8
----------------------------------
100 North Riverside Plaza
Chicago, Illinois
OFFICE LEASE
Between
ONE HUNDRED NORTH RIVERSIDE, INC.,
LANDLORD,
And
UNIVERSAL ACCESS, INC.
TENANT
DATED: October 30, 1998
----------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. LEASE OF PREMISES 2
2. TERM 2
3. RENT 2
4. ADDITIONAL RENT 3
5. USE OF PREMISES 7
6. SERVICES 8
7. TENANTS OBLIGATIONS 10
8. CONDITION AND CARE OF PREMISES 10
9. TELEPHONE, ELECTRIC AND OTHER SERVICES 11
10. QUIET ENJOYMENT 11
11. LEASE TERMINATION 11
12. RULES AND REGULATIONS 12
13. RIGHTS RESERVED TO LANDLORD 12
14. ALTERATIONS 14
15. ASSIGNMENT AND SUBLETTING 15
16. WAIVER OF CERTAIN CLAIMS; INDEMNITY BY TENANT 17
17. DAMAGE OR DESTRUCTION BY CASUALTY 17
18. EMINENT DOMAIN 18
19. SPRINKLERS 19
20. DEFAULT; LANDLORD'S RIGHTS AND REMEDIES 19
21. SUBORDINATION 21
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
22. MORTGAGEE AND GROUND LESSOR PROTECTION 22
23. DEFAULT UNDER OTHER LEASES 22
24. INSURANCE 23
25. NONWAIVER 23
26. ESTOPPEL CERTIFICATE 23
27. Intentionally omitted 24
28. REAL ESTATE BROKERS 24
29. NOTICES 24
30. MISCELLANEOUS 24
31. DELIVERY OF POSSESSION 26
32. LANDLORD 26
33. TITLE AND COVENANT AGAINST LIENS 26
34. SECURITY DEPOSIT 26
35. EXCULPATORY PROVISIONS 27
EXHIBIT A Preliminary Plan
EXHIBIT B Legal Description
EXHIBIT C 100 North Riverside Plaza Cleaning Specifications
EXHIBIT D Workletter
EXHIBIT E Rules and Regulation
</TABLE>
<PAGE> 4
LEASE
FOR
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS
THIS LEASE is made and entered into as of the 30th day of October, 1998,
by and between ONE HUNDRED NORTH RIVERSIDE, INC., a Delaware corporation
("Landlord"), and UNIVERSAL ACCESS, INC., an Illinois corporation ("Tenant").
Landlord and Tenant hereby agree as follows:
1. LEASE OF PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the office space outlined by a red or heavy line on
the plan attached hereto as Exhibit A (the "Premises") located on the
twenty-second (22nd) floor (Suite 2200) of the twenty-three (23) floor office
tower portion ("Tower") of the office building (the "Building") on the land
commonly known as 100 North Riverside Plaza, Chicago, Illinois, and more
particularly described on Exhibit B attached hereto (the "Land"), subject to the
covenants, terms, provisions and conditions of this Lease. In addition to the
Tower, the Building also contains the following areas (collectively, the
"Pedestal"): (i) six (6) floors to be occupied by Illinois Bell Telephone
Company, (ii) street level public areas, including, without limitation, a two
(2) story lobby for the Tower and a separate lobby for Illinois Bell Telephone
Company, and (iii) a four (4) level parking facility. The Building and said
land, together with the improvements now or hereafter located upon said land are
hereinafter collectively referred to as the "Property."
2. TERM. This Lease is for the term commencing on December 1, 1998 (the
"Commencement Date") and ending on December 31, 2000 (the "Term"), both dates
inclusive, unless sooner terminated as hereinafter provided.
3. RENT. All payments due from Tenant hereunder shall be made to
Landlord's building manager, OREE MANAGEMENT INC., at the Office of the
Building, or to such other persons or at such other places as Landlord may
direct from time to time by written notice to Tenant, in coin or currency which
at the time of payment is legal tender for the payment of public and private
debts in the United States of America. Tenant agrees to pay the aggregate of the
following, all of which are hereby declared to be "Rent":
A. Base rent (the "Base Rent") payable in the amount of six thousand
two hundred seventy-nine (6,279) square feet times $6.50 per square foot per
annum for the first twelve (12) months of the Lease Term, thereafter escalating
at the beginning of each successive twelve (12) month period in accordance with
the Base Rent Table below. Base Rent amounts due during the term are set forth
in the Base Rent Table below:
<PAGE> 5
BASE RENT TABLE
<TABLE>
<CAPTION>
Lease Month Base Annual Rent Base Monthly Rent Base Rent per Square Foot
- ----------- ---------------- ----------------- -------------------------
<S> <C> <C> <C>
1-12 $40,813.50 $3,401.13 $6.50
13-24 $43,953.00 $3,662.75 $7.00
25-26 NA $3,924.38 $7.50
</TABLE>
Base Rent shall be payable in monthly installments in the amounts set
forth in the Base Rent Table in advance promptly on the first day of each and
every calendar month during the Term without demand and without any set-off or
deduction whatsoever.
B. Additional Rent (hereinafter defined), including, without
limitation, all estimated monthly installments of the Expense Adjustment Amount;
C. All other sums payable by Tenant to Landlord pursuant to this
Lease; and
D. Interest at the "Default Rate" which shall accrue beginning on
the date each payment of Rent is due until such unpaid Rent is paid. The phrase
"Default Rate" means as of any time the lower of (i) the highest lawful rate of
interest or (ii) an annual rate of interest equal to the sum of three percent
(3%) plus the "Corporate Base Rate" as of such time. The term "Corporate Base
Rate" means that rate of interest announced by NBD/First National Bank of
Chicago ("First") from time to time as its "Corporate Base Rate" of interest,
changing automatically and simultaneously with each change in the Corporate Base
Rate made by First from time to time. Any publication issued or published by
First from time to time or a certificate signed by an officer of First stating
its Corporate Base Rate as of a date shall be conclusive evidence of the
Corporate Base Rate on that date.
Base Rent for the month in which the Term commences shall be paid by
Tenant concurrently with the execution of this Lease. Tenant's covenant to pay
Rent is independent of every other covenant set forth in this Lease.
Landlord may authorize Tenant to take possession of all or any part
of the Premises prior to the beginning of the Term. If Tenant does take
possession pursuant to authority so given, all of the covenants and conditions
of this Lease shall apply to and shall control such pre-Term occupancy. Rent for
such pre-Term occupancy shall be paid upon occupancy and on the first day of
each calendar month thereafter at the rate set forth in Paragraphs A and B of
Section 3 hereof. If the Premises are occupied for a fractional month, Rent
shall be prorated on a per diem basis for such fractional month. The payment of
Rent hereunder is independent of each and every other covenant and agreement
contained in this Lease.
4. ADDITIONAL RENT. In addition to paying the Base Rent specified in
Paragraph A of Section 3 hereof, Tenant shall pay, as "Additional Rent," the
amounts determined pursuant to Paragraph B of this Section 4. Without limitation
of other obligations of Tenant which shall survive the expiration of the
3
<PAGE> 6
Term, the obligations of Tenant to pay the Additional Rent provided in this
Section 4 shall survive the expiration of the Term.
A. Definitions. For purposes of this Section 4, each of the
following terms shall have the meaning hereinafter set forth:
(i) "Lease Year" means that period of time from the Commencement
Date of the Term (or such earlier date as Tenant takes possession of the
Premises as hereinafter provided) through the next succeeding December 31 and
each calendar year thereafter.
(ii) "Rentable Area of the Building" shall be deemed to be
758,506 square feet. If, during the Term of this Lease, the actual Rentable Area
of the Building is remeasured or increased or decreased as a result of adding
office space to the Building or removing office space from the Building,
Landlord may change the Rentable Area of the Building and Tenant's Building
Share by written notice to Tenant.
(iii) "Rentable Area of Premises" shall be deemed to be 6,279
square feet.
(iv) "Rentable Area of the Tower" shall be deemed to be 482,639
square feet. If, during the term of this Lease, the actual Rentable Area of the
Tower is remeasured or increased or decreased as a result of adding office space
to the Tower or removing office space from the Tower, Landlord may change the
Rentable Area of the Tower and Tenant's Tower Share by written notice to Tenant.
(v) "Tenant's Building Share" means eighty-six one hundredths
percent (.86%), which is the percentage obtained by dividing the Rentable Area
of the Premises by Ninety-Six and 7/10 Percent (96.7%) of the Rentable Area of
the Building.
(vi) "Tenant's Tower Share" means one point thirty-seven one
hundredths percent (1.37%) which is the percentage obtained by dividing the
Rentable Area of the Premises by Ninety-Five Percent (95%) of the Rentable Area
of the Tower.
(vii) "Operating Expenses" means Taxes (as hereinafter defined)
and all costs, expenses, disbursements of every kind, nature or description
(including, but not limited to, a reasonable management fee) which Landlord or
its beneficiaries shall pay or become obligated to pay in connection with the
ownership, management, operation, maintenance, repair and replacement of the
Property and the Building, and of the personal property, fixtures, machinery,
equipment, systems and apparatus located therein or used in connection
therewith, including off-site expenses except the following:
(a) Costs of alternations of any premises in the Building
for tenants of the Building;
(b) Costs of capital improvements to the Property, except
that Operating Expenses shall include the cost during the Term, as
reasonably amortized by Landlord with interest on the unamortized
amount, at a rate equal to Landlord's then applicable borrowing rate as
determined in good faith by Landlord, of (1) any capital improvement
completed after
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the date of substantial completion of the core and shell of the
Building ("Completion of the Building") which reduces any component
cost included within Operating Expenses, and (2) any capital
improvements made to keep the Property in compliance with applicable
governmental laws, ordinances, rules and regulations;
(c) Interest and principal payments on mortgages and other
debt costs and depreciation, except that Operating Expenses shall
include depreciation, interest and debt costs with respect to
machinery, equipment, systems, property or facilities first installed
in or used in connection with the Property after Completion of the
Building, if one of the principal purposes of such installation or use
was to reduce other items of Operating Expense;
(d) Ground rental payments;
(e) Leasing commissions or fees;
(f) Costs incurred by Landlord as a result of any
violation of law committed by Landlord or any breach of contract
committed by Landlord;
(g) Landlord's marketing expenses; and
(h) Costs incurred by Landlord to enforce Landlord's
rights under leases of space in the building (including attorney fees),
unless such enforcement action is for the benefit of other tenants of
the Building.
If the Building is not fully occupied during all or any portion of any
calendar year, then, at Landlord's election, those items of Operating Expenses
for such year that vary depending on the level of occupancy in the Building
shall be adjusted to an amount that Landlord in good faith determines is the
amount they would have been for such calendar year had the Building been
completed and fully occupied throughout the entire year.
"Operating Expenses" for a Lease Year or period shall mean those
Operating Expenses reasonably allocable to such Lease Year or period as
determined by Landlord in the reasonable exercise of its discretion without
regard to when such Operating Expenses are incurred or paid
(viii) "Building Operating Expenses" means Operating Expenses
less Tower Operating Expenses.
(ix) "Tower Operating Expenses" means all Operating Expenses
incurred by Landlord in providing to the Tower heating, ventilation and
air-cooling, passenger and freight elevator service, janitor services, garbage
removal and building supplies.
(x) "Tenant's Share of Operating Expenses" means the sum of (a)
Tenant's Building Share of Building Operating Expenses plus (b) Tenant's Tower
Share of Tower Operating Expenses.
(xi) "Taxes" means all federal, state and local governmental
taxes, assessments and charges (including transit, transit district or special
district taxes or assessments) of any kind or
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nature, whether general, special, ordinary or extraordinary, which Landlord or
its beneficiaries shall pay or become obligated to pay because of or in
connection with ownership, leasing, management, construction, development,
control or operation of the Property or any part thereof or of the personal
property, fixtures, machinery, equipment, systems and apparatus located therein
or used in connection therewith, including, without limitation, all ad valorem
taxes and lease taxes, if any. The amount included in Taxes for any Lease Year
or other annual period shall be the amount due and payable during that Lease
Year or period without regard to which year such tax is attributable (e.g., the
taxes includable in Taxes for 1998 shall be the tax designated as 1997 taxes,
because they are due and payable in 1998), except that if any special assessment
payable in installments is levied against the Property, Taxes for any Lease Year
or annual period shall include only the installments of such assessments and any
interest thereon payable in such year or period (all without regard to any right
to pay or payment of any such special assessment in a lump sum or single
payment). If the tax bills for a Lease Year are not available at the time any
payment is required hereunder on account of Operating Expenses for such Lease
Year, the amount of such taxes may be estimated by Landlord. In determining the
amount of Taxes for any Lease Year, there shall be deducted the amount of any
refund of taxes received by Landlord during such Lease Year, but only to the
extent such refund relates to Taxes for a period within the Term. Taxes shall
not include any federal or state franchise, capital stock, inheritance, income
or estate taxes, except that if a change occurs in the method of taxation
resulting in the substitution of any such taxes for any Taxes as hereinabove
defined, such substituted taxes shall (to the extent of the substitution) be
included in Taxes. Taxes include legal fees, court costs and expenses for the
contest of or protest of any Taxes or for seeking or obtaining any refund or
reduction of Taxes.
B. Expense Adjustment.
(i) Tenant shall pay as Additional Rent an amount (the "Expense
Adjustment Amount") equal to Tenant's Share of Operating Expenses for each Lease
Year, except that the Expense Adjustment Amount for any Lease Year that is not a
complete twelve month year shall be prorated on a daily basis.
(ii) On or about the commencement of each Lease Year, Landlord shall
notify Tenant of Landlord's estimate of the Expense Adjustment Amount for such
Lease Year and Tenant shall pay such amount in equal monthly installments on the
first day of each calendar month during such Lease Year. If at one or more times
during any such Lease Year Landlord revises its estimate of the Expense
Adjustment Amount for such Lease Year, Landlord may notify Tenant of such
revised estimate and of the increase or decrease in such monthly payments
thereafter payable during such Lease Year necessary to cause the total monthly
payments during such Lease Year to equal Landlord's then current estimate of the
Expense Adjustment Amount for such Lease Year, and Tenant shall thereafter pay
such revised monthly payment amount on the first day of each calendar month
thereafter during such Lease Year. Each such estimate provided by Landlord shall
show separately the amount thereof allocable to Taxes and the amount thereof
allocable to Operating Expenses other than Taxes.
(iii) Following the close of each Lease Year, Landlord shall furnish
to Tenant a statement setting forth the actual Expense Adjustment Amount for
such Lease Year (exclusive of Taxes) and, within thirty (30) days after receipt
of such statement, Tenant shall pay the excess, if any, of such actual Expense
Adjustment Amount (exclusive of Taxes) for such Lease Year as shown in said
statement over the amount of the payments theretofore made by Tenant with
respect to the
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Expense Adjustment Amount (exclusive of Taxes) for such Lease Year based upon
Landlord's estimates.
(iv) After Landlord receives the relevant tax bills for each Lease
Year, Landlord shall also furnish to Tenant a statement setting forth the actual
amount of Taxes for such Lease Year and, within thirty (30) days after receipt
of such statement, Tenant shall pay the excess, if any, of such actual amount of
Taxes for such Lease Year as shown in said statement over the amount of the
payments theretofore made by Tenant with respect to Taxes for such Lease Year
based upon Landlord's estimates.
(v) If the total estimated monthly payments paid by Tenant for any
Lease Year exceeds the actual Expense Adjustment Amount for such Lease Year,
such excess shall be credited against payments due or next becoming due
hereunder. Tenant or its representative shall have the right to examine
Landlord's books and records relative to Operating Expenses during normal
business hours at any time within ten (10) business days following the
furnishing by Landlord to Tenant of such statement. Unless Tenant shall, by
notice to Landlord, take exception to any item in such statement within twenty
(20) business days after the furnishing of said statement, said statement shall
be final and binding upon Tenant. Any amount due to Landlord as shown in said
statement, whether or not written exception is taken hereto, shall be paid by
Tenant within thirty (30) days after Landlord shall have submitted the notice,
without prejudice to any such written exception. If Tenant timely gives notice
of such exception, a statement as to the proper amount of Additional Rent shall
be given by Landlord's independent certified public accountant which shall be
final and conclusive. Tenant agrees to pay the cost of such statement unless it
is determined Landlord's original determination of actual (as distinguished from
estimated) Operating Expenses was in error by more than five percent (5%) of
said actual Operating Expenses.
5. USE OF PREMISES. Tenant shall use and occupy the Premises for
general office purposes, and for no other use or purpose. Tenant shall not use
or occupy the Premises or permit the use or occupancy of the Premises for any
purpose or in any manner which (i) is unlawful or in violation of any applicable
legal or governmental requirement, ordinance or rule; (ii) may be dangerous to
persons or property; (iii) may invalidate or increase the amount of premiums for
any policy of insurance affecting the Property, and if any additional amounts of
Insurance premiums are so incurred, Tenant shall pay to Landlord the additional
amounts on demand; or (iv) may create a nuisance, disturb any other tenant of
the Building or injure the reputation of the Building.
Tenant shall not exhibit, sell or offer for sale, use, rent or exchange
in or from the Premises or on the Property any article, thing or service except
those ordinarily embraced within the use of the Premises specified herein
without the prior written consent of Landlord. Tenant shall report all peddlers,
solicitors and beggars promptly to the Office of the Building or as Landlord
otherwise requests.
Tenant shall not install or operate any refrigerating (except small
refrigerators), heating (except microwave ovens) or air-cooling apparatus or
carry on any mechanical business without the prior written consent of Landlord;
use the Premises for housing, lodging or sleeping purposes or for any immoral or
illegal purposes; permit preparation or warming of food in the Premises (warning
of coffee and individual lunches of employees or other microwave warming
excepted); permit food to be brought into the Premises for sale or consumption
therein, except coffee and individual lunches of employees, without the prior
written consent of Landlord; or permit the manufacture, sale, purchase or use of
any spirituous, fermented, intoxicating or
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alcoholic liquors in the Premises or on the Property. Landlord may in its sole
discretion refuse such permission or impose any conditions in granting it, and
revoke it at will.
Tenant shall comply with all laws, governmental standards and
regulations applicable to Tenant or to the Premises in respect of occupational
health and safety, hazardous waste and substances and environmental matters.
Tenant shall promptly notify Landlord of its receipt of any notice of a
violation of any such law, standard or regulation. Tenant hereby agrees to
indemnify and hold Landlord harmless from all loss, cost, damage and expense
incurred by Landlord on account of Tenant's failure to perform the obligations
of this paragraph.
6. SERVICES. So long as Tenant is not in default, Landlord shall
furnish the following services, the cost of which shall all be deemed Operating
Expenses (except to the extent to be paid entirely by Tenant, as hereinafter
provided):
A. Heat and Air-Cooling. Landlord shall furnish air-cooling and heat
when necessary to provide a temperature condition required, in Landlord's
judgment, for comfortable occupancy of the Premises under normal business
operations, daily from 8:00 A.M. to 6:00 P.M. and Saturdays from 8:00 A.M. to
1:00 p.m., Sundays and Holidays (as defined on Schedule I attached hereto)
excepted. Tenant will be charged for all heating and cooling requested and
furnished before or after these hours at rates from time to time established by
Landlord (currently $85.00 per hour). Wherever heat generating machines or
equipment are used by Tenant in the Premises, which affect the temperature
otherwise maintained by the air-cooling system, Landlord reserves the right to
provide and install supplementary air conditioning units in the Premises, and
the cost of providing, installing, operating and maintaining such units shall be
paid by Tenant as Additional Rent within ten (10) days after Landlord's demand.
Landlord's agreements hereunder are subject to governmental restrictions on
energy use.
B. Water. Landlord shall furnish cold water in common with other
tenants from City of Chicago mains for drinking, lavatory and toilet purposes
drawn through fixtures installed by the Landlord, or by Tenant in the Premises
with Landlord's written consent, and hot water in common with other tenants for
lavatory purposes from regular Building supply. Tenant shall pay Landlord as
Additional Rent for the cost of water furnished for any other purpose at rates
fixed by Landlord. Tenant shall not waste or permit the waste of water.
C. Window Washing. Landlord shall furnish window washing of all
windows in the Premises, both inside and out, weather permitting, semi-annually.
D. Janitor Service. Landlord shall furnish janitor and cleaning
service in accordance with the specifications attached hereto as Exhibit C in
and about the Premises, Saturdays, Sundays and holidays excepted. Tenant shall
not provide any janitor services or cleaning without the Landlord's prior
written consent and then only subject to supervision of Landlord (but not as
agent or servant of Landlord) and at Tenant's sole responsibility, cost and
expense, and by a janitor or cleaning contractor or employees at all times
satisfactory to Landlord.
E. Elevator Service. Landlord shall furnish passenger elevator
service in common with Landlord and other tenants, daily from 8:00 A.M. to 6:00
P.M. (Saturdays from 8:00 A.M. to 1:00 P.M.), Sundays and holidays excepted, and
freight elevator service in common with Landlord and other tenants, daily from
8:00 A.M. to 12:00 P.M. and from 1:00 P.M. to 4:00 P.M.; Saturdays, Sundays and
holidays excepted. Any use of the freight elevator service by Tenant and
contractors and employees of Tenant shall
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be at Tenant's sole responsibility and expense. Such normal elevator service,
passenger or freight, if furnished at other times shall be optional with
Landlord and shall never be deemed a continuing obligation. Landlord, however,
shall provide limited passenger elevator service at all times such normal
passenger service is not furnished. Operator-less automatic elevator service
shall be deemed "elevator service" within the meaning of this paragraph.
F. Extra or Additional Services. Landlord shall not be obligated to
furnish any services other than those services specified in Sections A through E
of this Section 6 or to furnish such services at times other than as specified
in such Sections. Landlord shall provide such extra or additional services as is
reasonably possible for the Landlord to provide, and as the Tenant may from time
to time request, within a reasonable period after the time such extra or
additional services are requested. Tenant shall, for such extra or additional
services, pay one hundred twenty percent (120%) of Landlord's actual cost
reasonably incurred in providing them, except that after-hours heating and
air-cooling shall be at Landlord's scheduled rate charges for such services, all
such amounts to be considered Additional Rent hereunder. All charges for such
extra or additional services shall be due and payable at the same time as the
installment of Base Rent with which they are billed, or if billed separately,
shall be due and payable within ten (10) days after such billing. Any such
billings for extra or additional services shall include an itemization of the
extra or additional services rendered, and the charge for each such service.
G. Landlord's Right to Discontinue Services. Failure by Tenant to
promptly pay Landlord's proper charges for water, or other services shall give
Landlord, upon not less than the thirty (30) days' notice, the right to
discontinue furnishing the services, and no such discontinuance shall be deemed
an eviction or disturbance of Tenant's use of the Premises or render Landlord
liable for damages or relieve Tenant from performance of Tenant's obligations
under this Lease.
H. Interruption of Services. Except for the limited abatement of
rent upon a fire or casualty as provided in Section 17 hereof, Tenant agrees
that Landlord and its beneficiaries and their agents shall not be liable in
damages, by abatement of Rent or otherwise, for failure to furnish or delay in
furnishing any service or failure to perform or delay in performing any other
obligation required to be performed by Landlord under this Lease or by operation
of law, when such failure or delay is occasioned, in whole or in part, by
repairs, renewals or improvements, by any strike, lockout or other labor
trouble, by inability to secure electricity, gas, water, or other fuel at the
Building after reasonable effort so to do, by any accident or casualty
whatsoever, by the act of default of Tenant or other parties, or by any cause
beyond the reasonable control of Landlord. No such failures or delays shall be
deemed an eviction or disturbance of the Tenant's use and possession of the
Premises, or relieve Tenant from paying Rent or performing any of its
obligations under this Lease.
Notwithstanding the foregoing, the Rent otherwise payable under this
Lease shall abate in the manner described below in the last sentence of this
paragraph if all of the following conditions are met: (1) Landlord ceases to
furnish any service in the Building as a result of Landlord's gross negligence
or willful misbehavior, (2) the Premises is rendered untenantable and Tenant in
fact ceases to use such space as a result of such cessation and (3) Tenant
notifies Landlord in writing within one (1) business day after such cessation.
As Tenant's sole and exclusive remedy for such cessation, on the fifth day after
all of the foregoing conditions have been met, the Rent payable hereunder shall
be equitably abated based upon the percentage of the space in the Premises so
rendered untenantable and not being so used by Tenant, and such abatement shall
continue until the date the Premises become fully tenantable again.
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Tenant agrees to cooperate fully, at all times, with Landlord in
abiding by all reasonable regulations and requirements which Landlord may
prescribe for the proper functioning and protection of all utilities and
services reasonably necessary for the operation of the Premises and the
Building. Landlord, throughout the Term of this Lease, shall have free access to
any and all mechanical installations, and Tenant agrees that there shall be no
construction or partitions or other obstructions which might interfere with the
moving of the servicing equipment of Landlord to or from the enclosures
containing said installations. Tenant further agrees that neither Tenant nor its
servants, employees, agents, visitors, licensees or contractors shall at any
time tamper with, adjust or otherwise in any manner affect Landlord's mechanical
installations.
7. TENANT'S OBLIGATIONS.
A. Repairs. Except for ordinary wear and as otherwise provided in
this Lease, Tenant shall at all times during the Term hereof, at its sole
expense, keep the Premises and every part thereof in good order, repair and
condition, and Tenant shall arrange with Landlord at Tenant's sole expense for
the prompt repair of all damages to the Premises and the replacement or repair
of all damages or broken glass, fixtures and appurtenances (including hardware
and heating, cooling, ventilating, electrical, plumbing and other mechanical
facilities in the Premises), with materials equal or superior in quality and
class to the original materials damaged or broken, all repairs and replacements
to be made under the supervision and with the prior written approval of
Landlord, using contractors or persons designated by Landlord. If Tenant does
not promptly make such arrangements, Landlord may, but need not, make such
repairs and replacements and the amount paid by Landlord for such repairs and
replacements shall be deemed Additional Rent reserved under this Lease due and
payable forthwith. Landlord and its designees may, but shall not be required to,
enter the Premises at all reasonable times to make any repairs, alterations,
improvements or additions, including, but not limited to, ducts and all other
facilities for heating and air conditioning service, as Landlord shall desire or
deem necessary for the safety, preservation or improvement of the Building, or
as Landlord may be required to do by any governmental authority or court order
or decree. The cost of all repairs to the Property made necessary as a result of
misuse or neglect by Tenant or Tenant's employees, invitees or agents shall be
immediately paid as Additional Rent by Tenant to Landlord upon being billed for
same.
B. Holding Over. Tenant shall pay to Landlord for each day Tenant
retains possession of the Premises or any part thereof after the expiration of
the Term, by lapse of time or otherwise, the greater of the following (i) one
hundred fifty percent (150%) of the amount of the Rent, including Additional
Rent, then required by the terms hereof for the last monthly period prior to the
date of such termination, or (ii) one hundred fifty percent (150%) of the then
Fair Market Rent (as defined below) for the Premises, and also pay all damages,
consequential or direct, sustained by Landlord by reason of such retention, or,
if Landlord gives notice in writing to Tenant of Landlord's election thereof
(and not otherwise), such holding over, to the extent it exceeds sixty (60) days
in length shall constitute a renewal of this Lease for one (1) year at the
greater of (i) the annual rate in effect for the last year of the Term of this
Lease, or (ii) the then Fair Market Rent, but acceptance by Landlord of Rent
after such termination shall not, except in the case of Landlord's written
notification of its election to treat such holding over as a renewal of this
Lease for one (1) year, constitute a renewal nor waive of Landlord's right of
re-entry or any other right of Landlord. As used herein, the term "Fair Market
Rent" shall mean the product of (a) the fair net rental per annum (net of taxes
and all operating expenses) per rentable square foot for comparable space for a
term of not less than ten (10) years, for fully creditworthy tenants, and by
reference to comparable first class space in the Building, primarily, and in
other buildings in the vicinity of the Building and comparable to it in age and
quality, secondarily, but excluding those leases where the tenant has an equity
interest in the property, multiplied by (b) the Rentable Area of the Premises,
for a period commencing when the fair net rental being determined would first be
payable assuming no rent abatements of any kind.
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C. Laws and Regulations. With respect to the Premises and the use
and occupancy thereof, Tenant agrees that it and its employees, agents, clients,
customers, invitees, visitors and guests will comply with all laws, ordinances,
orders and regulations, and all decrees of court and with the directions of any
governmental department or agency.
8. CONDITION AND CARE OF PREMISES. Tenant's taking possession of the
Premises or any portion thereof shall be conclusive evidence that the Premises
or portion thereof, were then in good order, repair and satisfactory condition
(except for items of damage caused by Tenant or its agents, independent
contractors or suppliers for which Tenant shall be solely responsible) and
except for certain specified enumerated minor finishing items and adjustments
set forth in a written statement (Punch List) executed by Landlord and Tenant as
provided in the Work Letter attached hereto as Exhibit D. Except as may be set
forth in Exhibit D, no promise of the Landlord to alter, remodel, improve,
repair, decorate or clean the Premises or the Property or any part of either has
been made, and no representation respecting the condition of the Premises, the
Building or the Property, has been made to Tenant by or on behalf of Landlord.
This Lease does not grant any rights to light or air over or about the Property.
9. TELEPHONE, ELECTRIC AND OTHER SERVICES.
A. Charges and Maintenance. Tenant shall make arrangements directly
with the telephone company and the electric company servicing the Building for
such telephone service and electric service in the Premises as may be desired by
Tenant. Tenant shall pay the entire cost of all telephone charges, electricity
consumed within the Premises, maintenance of light fixtures and replacement of
lamps, bulbs, tubes, ballasts and starters. Landlord agrees its charges for
replacement of lamps, bulbs, tubes, ballasts and starters shall be reasonable in
light of Landlord's costs associated therewith.
B. Tenant's Obligations. Tenant covenants and agrees that Landlord
shall in no event be liable or responsible to Tenant for any loss, damage or
expense which Tenant may sustain or incur if either the quality or character of
electrical service is changed or is no longer suitable for Tenant's
requirements. Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing wiring or equipment or
feeders to the Building when reviewed in conjunction with electrical usage of
other Tenants in the Building or the Premises; and also that it shall make no
alterations or additions to the electric equipment and/or appliances without the
prior written consent of Landlord in each instance.
10. OUIET ENJOYMENT. Landlord covenants that Tenant, on paying the Rent
and performing the covenants of this Lease on its part to be kept, observed and
performed, shall and may peaceably and quietly have, hold and enjoy the Premises
for the Term of this Lease, subject to the provisions of this Lease.
11. LEASE TERMINATION. At the termination of this Lease by lapse of
time or otherwise or upon termination of Tenant's right of possession without
terminating this Lease:
A. Surrender of Keys. Tenant shall surrender all keys to the
Premises to Landlord and make known to the Landlord the combination of all locks
of vaults then remaining in the Premises.
B. Return of Premises. Tenant shall return to Landlord the Premises
and all equipment and fixtures of Landlord, and all flooring, attached carpeting
and other floor covering in the Premises to Landlord in as good condition as
when Tenant originally took possession, ordinary wear, loss or damage by
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fire or other insured casualty, damage resulting from the negligent act of
Landlord or its employees and agents, and alterations made with Landlord's
consent excepted, failing which Landlord may reenter the Premises and restore
the Premises, equipment and fixtures to such condition and state of repair and
Tenant shall, upon demand, pay the cost thereof to Landlord.
C. Removal of Additions. All installations, additions, partitions,
hardware, light fixtures, non-trade fixtures and improvements, temporary or
permanent, except movable furniture and equipment belonging to Tenant, in or
upon the Premises, whether placed there by Tenant or Landlord (each individually
an "Alteration"), shall be Landlord's property and shall be relinquished to
Landlord in good condition, ordinary wear and tear excepted, at the termination
of this Lease or Tenant's right to possession by lapse of time or otherwise, all
without compensation, allowance or credit to Tenant; provided, however, Landlord
hereby agrees that if Tenant affirmatively requests in writing, prior to the
installation of any Alteration, that Landlord specify whether it will require
the removal of the Alteration upon the termination or earlier termination of
this Lease, Landlord shall so specify. If Landlord fails to specify any such
statement, Landlord shall be deemed to have not required the removal of the
Alteration upon the termination or earlier expiration of this Lease and the
Alteration shall become Landlord's property at the termination of this Lease. As
designated in such notice Tenant, at Tenant's sole cost and expense, shall
promptly remove such of the installations, additions, partitions, hardware,
light fixtures, non-trade fixtures and improvements placed in or upon the
Premises by Tenant and repair any damage to the Premises caused by such removal,
failing which Landlord may remove the same and repair the Premises and Tenant
shall, upon demand, pay the cost of such removal and of any necessary
restoration of the Premises.
D. Property Presumed Abandoned. All fixtures, installations and
personal property belonging to Tenant not removed from the Premises upon
termination of this Lease or termination of Tenant's right to possession, and
not required by Landlord to have been removed as provided in Paragraph C of this
Section 11 shall be conclusively presumed to have been abandoned by Tenant and
title thereto shall pass to Landlord under this Lease as by bill of sale,
without any cost, whether by set-off, credit, allowance or otherwise, and
Landlord may, at its option, accept the title to such property or, at Tenant's
expense, may (i) remove the same or any part in any manner that Landlord shall
choose; and (ii) store, destroy or otherwise dispose of the same without
incurring liability to Tenant or any other person.
E. Survival of Tenant Obligations. All obligations of Tenant that
are not fulfilled prior to the termination of this Lease shall survive the
expiration of the Term or sooner termination of this Lease.
12. RULES AND REGULATIONS. Tenant agrees to observe the rights
reserved to Landlord contained in Section 13 hereof and agrees, for itself, its
employees, agents, clients, customers, invitees and guests, to comply with the
rules and regulations set forth in Exhibit E attached to this Lease and made a
part hereof and such other rules and regulations as shall be reasonably adopted
by Landlord pursuant to Paragraph L of Section 13 of this Lease.
Any violation by Tenant of any of the rules and regulations contained in
Exhibit E attached to this Lease or other Section of this Lease, or as may
hereafter be adopted by Landlord pursuant to Paragraph L of Section 13 of this
Lease, may be restrained; but whether or not so restrained, Tenant acknowledges
and agrees that it shall be and remain liable for all damages, loss, costs and
expense resulting from any violation by Tenant of any of said rules and
regulations. Nothing in this Lease contained shall be construed to impose upon
Landlord any duty or obligation to enforce said rules and regulations, or the
terms, covenants and conditions of any other lease against any other tenant or
any other persons, and Landlord and its beneficiaries
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shall not be liable to Tenant for violation of the same by any other tenant, its
employees, agents, invitees, or by any other person. Landlord agrees not to
administer any rules in an arbitrary manner.
13. RIGHTS RESERVED TO LANDLORD. Landlord reserves the following
rights, exercisable without notice (except as specified below) and the exercise
thereof shall not be deemed to effect an eviction or disturbance of Tenant's use
or possession or give rise to or affect any claim for setoff or abatement of
Rent or affecting any of Tenant's obligations under this Lease:
A. To change the name or street address of the Building.
B. To install and maintain signs on the exterior and interior of
the Building, and to prescribe the location and style of the suite number and
identification sign or lettering for the Premises occupied by Tenant.
C. To designate the character, shape, color, material and make of
all window coverings and treatments on all outside windows in the Premises.
D. To retain at all times, and to use in appropriate instances,
pass keys to the Premises.
E. To grant to anyone the right to conduct any business or render
any service in the Building, whether or not it is the same as or similar to the
use expressly permitted to Tenant by Section 5.
F. To exhibit the Premises at reasonable hours, and to decorate,
remodel, repair, alter or otherwise prepare the Premises for reoccupancy at any
time after Tenant vacates or abandons the Premises.
G. To have access for Landlord and other tenants or occupants of
the Building to all mail chutes according to the rules of the United States
Postal Service.
H. To enter the Premises at reasonable hours for reasonable
purposes, including inspection, exhibiting the Premises (upon reasonable prior
notice to Tenant) to prospective tenants, lenders, purchasers or others,
supplying janitor service or other service to be provided to Tenant hereunder,
or for other reasonable purposes.
I. To require all persons entering or leaving the Building during
such hours as Landlord may from time to time reasonably determine to identify
themselves to watchmen by registration or otherwise, and to establish their
right to enter or leave in accordance with the provisions of Exhibit E attached
to this Lease. Landlord shall not be liable in damages for any error with
respect to admission to or eviction or exclusion from the Building of any
person. In case of fire, invasion, insurrection, mob, riot, civil disorder,
public excitement or other commotion, or threat thereof, Landlord reserves the
right to limit or prevent access to the Building during the continuance of the
same, shut down elevator service, activate elevator emergency controls, or
otherwise take such action or preventive measures deemed necessary by Landlord
for the safety of the tenants or other occupants of the Building or the
protection of the Building and the property in the Building. Tenant agrees to
cooperate in any reasonable safety program developed by Landlord.
J. To control and prevent access to common areas and other
non-general public areas pursuant to Exhibit E attached to this Lease.
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K. Provided that reasonable access to the Premises shall be
maintained and the business of Tenant shall not be interfered with unreasonably,
to relocate, enlarge, reduce or change corridors, exits, entrances in or to the
Building and to decorate and to make repairs, alterations, additions and
improvements, structural or otherwise, in or to the Property or any part
thereof, and any adjacent building, land, street or alley, including for the
purpose of connection with or entrance into or use of the Property in
conjunction with any adjoining or adjacent building or buildings, now existing
or hereafter constructed, and may for such purposes erect scaffolding and other
structures reasonably required by the character of the work to be performed, and
during such operations may enter upon the Premises and take into and upon or
through any part of the Property, including the Premises, all materials that may
be required to make such repairs, alterations, improvements, or additions, and
in that connection Landlord may temporarily close public entry ways, other
public spaces, stairways or corridors and interrupt or temporarily suspend any
services or facilities agreed to be furnished by Landlord, all without the same
constituting an eviction of Tenant in whole or in part without abatement of Rent
by reason of loss or interruption of the business of Tenant or otherwise, and
without in any manner rendering Landlord liable for damages or relieving Tenant
from performance of Tenant's obligation under this Lease, Landlord may at its
option make any repairs, alterations, improvements and additions in and about
the Property and the Premises during ordinary business hours and, if Tenant
desires to have such work done during other than business hours, Tenant shall
pay all overtime and additional expenses resulting therefrom.
L. From time to time to make and adopt such reasonable rules and
regulations, in addition to or other than or by way of amendment or modification
of the rules and regulations contained in Exhibit E attached to this Lease, for
the protection and welfare of the Property and its tenants and occupants, as the
Landlord may determine, and Tenant agrees to abide by all such rules and
regulations.
M. To approve the weight, size and location of safes, computers,
all other heavy articles in and about the Premises and the Property and to
require all such items and other office furniture and equipment to be moved in
and out of the Property and Premises only at such time and in such manner as
Landlord shall direct and in all events at Tenant's sole risk and
responsibility.
N. To close the Building at 6:00 p.m. or at such other reasonable
time as Landlord may determine, subject, however, to Tenant's right to
admittance under such regulations as shall be prescribed from time to time by
Landlord.
O. To prohibit the placing of vending or dispensing machines of any
kind in or about the Premises.
P. To require Tenant to move to equivalent space with equivalent
views and equal or greater square footage on another floor in the Building upon
receipt of sixty (60) days' written notice from Landlord, in which event
Landlord shall pay all moving costs (including costs of new stationery), and the
Rent provided for herein shall remain the same.
Q. To exercise all other rights reserved to or by Landlord in this
Lease.
14. ALTERATIONS.
A. Restrictions. Without Landlord's prior written consent, Tenant
shall not make or caused to be made any exterior, structural, electrical,
ventilation, air conditioning or other types of alterations, any improvements,
additions, changes or repairs in or to the Premises or the Building. As a
condition to
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granting its consent, Landlord may impose reasonable requirements, including,
without limitation, requirements as to the manner and time for the performance
of any such work and the type and amount of insurance and bonds Tenant must
acquire and maintain in connection therewith. In addition, at Landlord's option,
Landlord shall have the right: to approve all plans and specifications relating
to the work; to review the work of Tenant's architects and engineers and to
control any construction or other activities being undertaken within the
Building, with Landlord to be reimbursed for any costs incurred in connection
with such review and/or control. All such alterations, improvements, additions,
changes or repairs to the Premises shall be performed by Landlord or its
designated contractors. Landlord, in connection with any alterations, additions,
changes or repairs performed by Landlord or under its supervision, may assess
upon Tenant a charge for Landlord's overhead costs and supervisory work, equal
to ten percent (10%) of the Landlord's total costs of construction. Except as
expressly provided herein, all alterations, improvements, additions, changes or
repairs shall be paid for by Tenant at its sole expense, but shall become the
property of Landlord and shall be surrendered with the Premises upon termination
of this Lease; provided, however, that Landlord may, by written notice to Tenant
as provided in Paragraph C of Section 11 of this Lease, require Tenant, at
Tenant's sole cost and expense, to remove any or all improvements, alterations,
additions or fixtures installed or made by Tenant on or to the Premises and to
repair any damages to the Premises caused by such removal.
B. Compliance with Laws. All work in connection with any
alterations' improvements, changes, additions or repairs in the Premises or the
Building made by or for the benefit of Tenant, shall be performed in full
compliance with all laws, ordinances, regulations, rules and requirements of all
governmental entities having jurisdiction and in full compliance with all
insurance rules, orders, directions, regulations and requirements.
C. Security. Before work is commenced as provided in this Section
14, Tenant shall give Landlord at least fifteen (15) days' written notice.
Tenant shall secure, at Tenant's own cost, a completion and lien indemnity bond
or other form of security, satisfactory to Landlord, for said work, and during
the progress of the work, Tenant shall, upon Landlord's request, furnish
Landlord with sworn contractor's statements and lien waivers covering all work
theretofore performed. Any mechanic's liens for work claimed to have been
performed for, or materials claimed to have been furnished to, Landlord or
Tenant shall be discharged by Tenant, by bond or otherwise, within ten (10) days
after the filing of such lien, at Tenant's sole expense. Tenant agrees to
indemnify, hold harmless and defend Landlord from any loss, cost, damage or
expense, including attorneys' fees, arising out of any such lien claim or out of
any other claim relating to work done or materials supplied to the Premises at
Tenant's request or on Tenant's behalf.
15. ASSIGNMENT AND SUBLETTING. Tenant shall not, without the prior
written consent of Landlord in each instance, which consent shall not be
unreasonably withheld, (i) assign, transfer, mortgage, pledge, hypothecate or
encumber or subject to or permit to exist upon or be subjected to any lien or
charge, this Lease or any interest under it; (ii) allow to exist or occur any
transfer of or lien upon this Lease or the Tenant's interest herein by operation
of law; (iii) sublet the Premises or any part thereof; or (iv) permit the use or
occupancy of the Premises, or any part thereof for any purpose not provided for
under Section 5 of this Lease or by anyone other than the Tenant, and Tenant's
employees. Landlord has the absolute right to withhold its consent without
giving any reason whatsoever, except as herein expressly provided to the
contrary. In no event shall this Lease be assigned or assignable by voluntary or
involuntary bankruptcy proceedings or otherwise, and in no event shall this
Lease or any rights or privileges hereunder be an asset of Tenant under any
bankruptcy, insolvency or reorganization proceedings.
Tenant shall, by notice in writing, advise Landlord of its intention
from, on and after a stated date (which shall not be less than thirty (30) days
after the date of Tenant's notice) to assign or transfer its interest
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as Tenant under this Lease or sublet any part or all of the Premises for the
balance or any part of the Term, and, in such event, Landlord shall have the
right, to be exercised by giving written notice to Tenant within fifteen (15)
days after receipt of Tenant's notice, to terminate this Lease with respect to
the space therein described as of the date stated in Tenant's notice. Tenant's
said notice shall state the name and address of the proposed subtenant or
assignee and a true and complete copy of the proposed sublease or assignment and
all related documents shall be delivered to Landlord with said notice. If
Tenant's notice shall cover all of the space hereby demised, and if Landlord
shall give the aforesaid termination notice with respect thereto, the Term of
this Lease shall expire and end on the date stated in Tenant's notice as fully
and completely as if that date had been herein definitely fixed for the
expiration of the Term. If, however, this Lease be terminated pursuant to the
foregoing with respect to less than the entire Premises, the Rent and the
Tenant's Share of Operating Expenses shall be adjusted on the basis of the
number of rentable square feet retained by Tenant in proportion to the number of
square feet of rentable area in the entire Premises, and this Lease, as so
amended, shall continue thereafter in full force and effect. If Landlord, upon
receiving Tenant's said notice with respect to any such space, shall not
exercise its right to terminate as aforesaid, Landlord will not unreasonably
withhold its consent to Tenant's assignment or subletting the space covered by
its notice; provided, however, that in addition to other circumstances under
which Landlord's consent may be withheld, Tenant agrees that the withholding by
Landlord of its consent to Tenant's assignment or subletting the space covered
by its notice will not be deemed "unreasonable" if (i) the proposed assignee or
subtenant is disreputable, non-creditworthy or otherwise not in keeping with the
nature or class of tenants in the Building, or (ii) the use of the Premises by
the proposed assignee or subtenant would, in Landlord's judgment, significantly
increase the pedestrian traffic in and out of the Building or would require
Landlord to perform any alterations to the Building to comply with applicable
building code requirements. If this Lease is terminated in whole or in part as
aforesaid, Landlord shall be free to deal directly with any such proposed
assignee or sublessee without any responsibility or liability to Tenant on
account thereof.
If Tenant, having first obtained Landlord's consent in accordance with
the foregoing provision of this Section, shall assign this Lease or sublet the
Premises, or any part thereof, at a rental or for other monetary consideration
in excess of the Rent or pro rata portion thereof due and payable by Tenant
under this Lease, then Tenant shall pay to Landlord, as Additional Rent (i) on
the first day of each month during the term of any sublease, if and to the
extent received from subtenant or assignee, one-half (1/2) of the excess of all
rent and other consideration due from the subtenant for such month over the Rent
then payable to Landlord pursuant to the provisions of this Lease for said month
(or if only a portion of the Premises is being sublet, the excess of all rent
and other considerations due from the subtenant for such month over the portion
of the Rent then payable to Landlord pursuant to the provisions of this lease
for said month which is allocable on a square footage basis to the space sublet)
and (ii) immediately upon receipt thereof, one-half (1/2) of any other profit or
gain realized by Tenant from such assignment or subletting; it being agreed,
however, that Tenant shall be responsible to Landlord for any deficiency
hereunder if Tenant shall assign this Lease or sublet the Premises or any part
thereof at a rental less than that provided for herein.
Notwithstanding anything to the contrary in this Section 15, if Tenant
at any time during the Term of this Lease is a corporation whose shares of stock
are not publicly traded or a partnership and if during the Term of this Lease,
the ownership of the shares of stock which constitute control of Tenant, or more
than fifty percent (50%) of all general partnership interests of Tenant, changes
other than by reason of gift or death, Tenant shall notify Landlord of such
change within five (5) days thereof, and Landlord, at its option may at any time
thereafter terminate this Lease by giving Tenant at least sixty (60) days' prior
written notice of said termination. The term "control" as used herein means the
power to directly or indirectly direct, or cause the direction of, the
management or policies of the Tenant. A change or series of changes in ownership
of stock which would result in direct or indirect change in ownership by the
stockholders or an affiliated group of
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stockholders of less than fifty percent (50%) of the stock outstanding as of the
date of the execution of this Lease by Tenant shall not be considered a change
of control.
Notwithstanding anything herein contained to the contrary, Tenant
expressly covenants and agrees not to enter into any lease, sublease, license,
concession or other agreement for use, occupancy or utilization of the Premises
which provides for rental or other payment for such use, occupancy or
utilization based in whole or in part on the net income or profits derived by
any person from the property leased, used, occupied or utilized (other than an
amount based on a fixed percentage or percentages of receipts or sales), and
that any such purported lease, sublease, license, concession or other agreement
shall be absolutely void and ineffective as a conveyance of any right or
interest in the possession, use, occupancy or utilization of any part of the
Premises.
Consent by Landlord to any assignment, subletting, use or occupancy, or
transfer shall not operate to relieve, release or discharge Tenant of or from
any liability, whether past, present or future, under the Lease, and Tenant
shall continue fully liable hereunder except to the extent, if any, expressly
provided for in such consent. Nor shall consent by Landlord in any one instance
be deemed to be a consent to or relieve Tenant from obtaining Landlord's consent
to any subsequent assignment, transfer, lien, charge, subletting, use or
occupancy. The subtenant or subtenants or assignees shall agree to comply with
and be bound by all of the terms, covenants, conditions, provisions and
agreements of this Lease to the extent of the space sublet or assigned, and
Tenant shall deliver to Landlord promptly after execution, an executed copy of
each such sublease or assignment and an agreement of compliance by each such
subtenant and assignee. Tenant shall pay all of Landlord's costs, charges and
expenses, including reasonable attorneys' fees incurred in connection with any
assignment or sublease requested or made by Tenant.
16. WAIVER OF CERTAIN CLAIMS: INDEMNITY BY TENANT. Except with respect
to matters which result from the negligence of Landlord and its beneficiaries,
and their employees and agents, Tenant releases Landlord and its beneficiaries,
and their respective officers, directors, agents, servants and employees, in
respect of and they shall not be liable for injury to person or damage to
property sustained by the Tenant or by any occupant of the Premises or the
Property, or by any other person, occurring in or about the Property resulting
directly or indirectly from fire or other casualty, cause or any existing or
future condition, defect, matter or thing in or about the Premises, the Property
or any part of it, or from any equipment or appurtenance therein, or from any
accident in or about the Property, or from any occurrence, act, negligence or
omission of any tenant or other occupant of the Property or any part thereof or
of any other person. This Section 16 shall apply especially, but not
exclusively, to damage caused by water, snow, frost, steam, excessive heat or
cold, sewerage, gas, odors or noise, or the bursting or leaking of pipes or
plumbing fixtures, broken glass, sprinkling or air conditioning devices or
equipment, or flooding of basements, and shall apply equally whether any such
damage results from the act or omission of other tenants, occupants or servants
of the Property or of any other person and whether such damage was due to any of
the acts specifically enumerated above, or from any other thing or circumstance,
whether of a like nature or of a wholly different nature. If any damage to the
Premises or the Property or any equipment or an appurtenance therein, whether
belonging to Landlord or to other tenants or occupants of the Property, or to
the tenants thereof, results from any act or omission or negligence of Tenant,
its employees, agents or invitees, Tenant shall be liable therefor and Landlord
may at its option repair such damage and Tenant shall upon demand by Landlord
reimburse Landlord for all costs of such repairs and damages in excess of
amounts, if any, paid to Landlord under insurance covering such damages. All
personal property belonging to its agents, employees or invitees, or to Tenant
or to any occupant of the Premises, shall be there at the risk of the Tenant or
other person only, and Landlord shall not be liable for damage thereto or theft,
misappropriation or loss thereof.
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Except with respect to matters which result from the negligence of
Landlord and its beneficiaries and their employees and agents, Tenant agrees to
protect, defend and hold Landlord and its beneficiaries, and their agents,
servants and employees, harmless and to indemnify each of them against claims
and liabilities, including reasonable attorneys' fees, for injuries to all
persons and damage to or about the Premises arising from Tenant's occupancy of
the Premises or the conduct of its business or from any activity, work, or thing
done, permitted or suffered by Tenant in or about the Premises or from any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease or due to any other act or omission of the Tenant, its agents or employees
or invitees.
17. DAMAGE OR DESTRUCTION BY CASUALTY. If the Premises or any part of
the Building shall be damaged by fire or other casualty and if such damage does
not render all or a substantial portion of the Premises or the Building
untenantable, then Landlord shall proceed to repair and restore the Premises
with reasonable promptness, subject to reasonable delays for insurance
adjustments and delays caused by matters beyond Landlord's control. If any such
damage renders all or a substantial portion of the Premises or the Building
untenantable, Landlord shall, with reasonable promptness after the occurrence of
such damage, estimate the length of time that will be required to substantially
complete the repair and restoration of such damage and shall by notice advise
Tenant of such estimate. If it is so estimated that the amount of time required
to substantially complete such repair and restoration will exceed one hundred
eighty (180) days from the date such damage occurred, then either Landlord or
Tenant (but as to Tenant, only if all or a substantial portion of the Premises
are rendered untenantable) shall have the right to terminate this Lease as of
the date of such damage upon giving notice to the other at any time within
twenty (20) days after Landlord gives Tenant the notice containing said estimate
(it being understood that Landlord may, if it elects to do so, also give such
notice of termination together with the notice containing said estimate). Unless
this Lease is terminated as provided in the preceding sentence, Landlord shall
proceed with reasonable promptness to repair and restore the Premises, subject
to reasonable delays for insurance adjustment and delays caused by matters
beyond Landlord's control, and also subject to zoning laws and building codes
then in effect. Landlord shall have no liability to Tenant, and Tenant shall not
be entitled to terminate this Lease if such repairs and restoration are not in
fact completed within the time period estimated by Landlord, as aforesaid, or
within said one hundred eighty (180) days, so long as Landlord shall proceed
with reasonable diligence to complete such repairs and restoration.
Notwithstanding anything to the contrary herein set forth, (i) Landlord
shall have no duty pursuant to this Section 17 to repair or restore any portion
of the alterations, additions or improvements made by or for Tenant in the
Premises or the decoration thereto (except those provided for in the Work Letter
attached hereto as Exhibit D) or to expend for any repair or restoration amounts
in excess of insurance proceeds paid to Landlord and available for repair or
restoration, and (ii) Tenant shall not have the right to terminate this Lease
pursuant to this Section 17 if the damage or destruction was caused by the act
or neglect of Tenant, its agents or employees.
In the event any such fire or casualty damage not caused by the act or
neglect of Tenant, its agents or employees, renders the Premises untenantable
and Tenant is not occupying the Premises, and if this Lease shall not be
terminated pursuant to the foregoing provisions of this Section 17 by reason of
such damage, then Rent shall abate during the period beginning with the date of
such damage and ending with the date when Landlord tenders the Premises to
Tenant as being ready for occupancy. Such abatement shall be in an amount
bearing the same ratio to the total amount of Rent for such period as the
portion of the Premises not ready for occupancy from time to time bears to the
entire Premises. In the event of termination of this Lease pursuant to this
Section 17, Rent shall be apportioned on a per diem basis and be paid to the
date of the fire or casualty.
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18. EMINENT DOMAIN. If all or a substantial part of the Building, or
any part thereof which includes all or a substantial part of the Premises, shall
be taken or condemned by any competent authority for any public or quasi-public
use or purpose, the Term of this Lease shall end upon and not before the date
when the possession of the part so taken shall be required for such use or
purpose, and without apportionment of the award to or for the benefit of Tenant.
If any condemnation proceeding shall be instituted in which it is sought to take
or damage any part of the Building, the taking of which would, in Landlord's
opinion, prevent the economical operation of the Building, or if the grade of
any street or alley adjacent to the Building is changed by any competent
authority, and such taking, damage or change of grade makes it necessary or
desirable to remodel the Building to conform to the taking, damage or changed
grade, Landlord shall have the right to terminate this Lease upon not less than
ninety (90) days' notice prior to the date of termination designated in the
notice. In either of the events above referred to, Rent at the then current rate
shall be apportioned as of the date of the termination. No money or other
consideration shall be payable by Landlord to Tenant for the right of
termination, and the Tenant shall have no right to share in the condemnation
award, whether for a partial or total taking, for loss of Tenant's leasehold or
improvements, or in any judgment or award.
19. SPRINKLERS. If the "sprinkler system" installed on the Property or
any of its appliances shall be damaged or injured or not in proper working order
by reason of any act or omission of Tenant, Tenant's agents, servants,
employees, licensees or visitors, Tenant shall forthwith restore the same to
good working condition at its own expense; and if the Board of Fire Underwriters
or Fire Insurance Exchange or any bureau, department or official of the state or
city government requires additional sprinkler heads or other equipment be made
or supplied by reason of Tenant's business or the location of partitions, trade
fixtures, or other contents of the Premises, or for any other reason, or if any
such changes, modifications, alterations, additional sprinkler heads or other
equipment become necessary to prevent the imposition of a penalty or charge
against the full allowance for a sprinkler system in the fire insurance rate as
fixed by said Exchange or by any fire insurance company, Tenant shall, at
Tenant's expense, promptly make and supply such changes, modifications,
alterations, additional sprinkler heads or other equipment.
20. DEFAULT: LANDLORD'S RIGHTS AND REMEDIES. All rights and remedies of
Landlord provided for in this Lease shall be cumulative and none shall exclude
any other right or remedy allowed by law or equity.
A. Default and Remedies. If (i) default shall be made in the prompt
payment of Rent or any installment thereof and such default shall continue for
five (5) or more days after written notice to Tenant, or (ii) default shall be
made in the payment of any sum required to be paid by Tenant under the terms of
any other agreement between Landlord and Tenant and such default shall continue
for five (5) days after written notice to Tenant, or (iii) default shall be made
in the observance or performance of any of the other covenants or conditions in
this Lease which Tenant is required to observe and perform and such default
shall continue for ten (10) business days after written notice to Tenant;
provided, however, if such default is of the nature that cannot be cured within
ten (10) business days and if Tenant commences to cure the default and
diligently pursues such cure, Tenant shall have such time as is reasonably
necessary to cure such default, not to exceed ninety (90) days, or (iv) a
default involves a hazardous condition and is not cured by Tenant immediately
upon written notice to Tenant, or (v) the interest of Tenant in this Lease shall
be levied or under execution or attached by process of law, or (vi) any
voluntary petition in bankruptcy or for corporate reorganization or any similar
relief shall be filed by Tenant, or (vii) any involuntary petition in bankruptcy
shall be filed against Tenant under any federal or state bankruptcy or
insolvency act and shall not have been dismissed within sixty (60) days from the
filing thereof, or (viii) a receiver shall be appointed for Tenant or any of the
property of Tenant by any court and such receiver shall not have been dismissed
within sixty (60)
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days from the date of his appointment, or (ix) Tenant shall make an assignment
for the benefit of creditors, or (x) Tenant shall admit in writing Tenant's
inability to meet Tenant's debts as they mature, or (xi) Tenant shall abandon or
vacate the Premises during the Term without paying Rent, then and in any such
event Landlord if it so elects, with or without notice or demand, may treat the
occurrence of any one or more of the foregoing events as a breach of this Lease,
and thereupon at its option may, with or without notice or demand of any kind to
Tenant or any other person, have any one or more of the following described
remedies (any of which may be pursued by Landlord in its own name or by and in
the name of the beneficiaries of Landlord or the agent of such beneficiaries) in
addition to all other rights and remedies provided at law or in equity or
elsewhere herein:
(a) Landlord may terminate this Lease and the Term
created hereby, in which event all Rent provided to be paid by Tenant
for the balance of the original Term shall immediately become due and
payable and Landlord may forthwith repossess the Premises and be
entitled to recover forthwith as damages (1) all of the Base Rent
accrued and unpaid for the period up to and including such termination
date, as well as Additional Rent payable by Tenant, (2) the unamortized
cost of leasehold improvements, additions, alterations, leasing
commissions, abatements, and other concessions, if any, paid for by
Landlord pursuant to this Lease, (3) any other sums for which Tenant is
liable or in respect of which Tenant has agreed to indemnify Landlord
under any provisions of this Lease which may be then due and owing and
(4) a sum of money equal to the value of the Rent provided to be paid by
Tenant for the balance of the original Term, less the rental value of
the Premises for said period net of the costs and expenses of reletting
("Rental Value"), and plus any other sum of money and damages owed by
Tenant to Landlord, all discounted to a net present value using an
interest rate of five percent (5%). Should the Rental Value exceed the
value of the Rent provided to be paid by Tenant for the balance of the
original Term of the Lease, Landlord shall have no obligation to pay to
Tenant the excess or any part hereof.
(b) Landlord may terminate Tenant's right of possession
and may repossess the Premises by forcible entry and detainer suit, by
taking peaceful possession or otherwise as provided in Paragraph B of
this Section 20, without terminating this Lease or releasing Tenant, in
whole or in part, from Tenant's obligation to pay Rent hereunder for the
full Term. Upon and after entry into possession without termination of
this Lease, Landlord shall use commercially reasonable efforts to relet
the Premises or any part thereof for the account of Tenant, for such
Rent, for such time, and upon such terms as shall be satisfactory to
Landlord and Landlord shall not be required to accept any tenant offered
by Tenant nor to observe any instructions given by Tenant at such
reletting. For the purpose of such reletting, Landlord is authorized to
decorate or to make any repairs, alterations or additions in or to the
Premises. If Landlord shall fail to relet the Premises, Tenant shall pay
to Landlord as damages a sum equal to the amount of the Rent reserved in
this Lease for the balance of its original Term. If the Premises are
relet and a sufficient sum shall not be realized from such reletting
after paying all of the costs and expenses of such decorations, repairs,
changes, alterations and additions and the other expenses of such
reletting and of the collection of the rent accruing therefrom to equal
or exceed the Rent provided for in this Lease for the balance of its
original Term, Tenant shall satisfy and pay such deficiency upon demand
therefor from time to time. Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this Section 20 from
time to time and that no suit or recovery of any portion due Landlord
hereunder shall be any defense to any subsequent action brought for any
amount theretofore reduced to judgment in favor of Landlord.
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B. Tenant's Duties Upon Default. If Landlord exercises either the
remedies provided for in subparagraphs (a) and (b) of the foregoing Paragraph A
of this Section 20, Tenant shall surrender possession and vacate the Premises
immediately and deliver possession thereof to Landlord, and Tenant hereby grants
to Landlord full and free license to enter into and upon the Premises in such
event and take complete and peaceful possession of the Premises, with or without
process of law, to expel or remove Tenant and any other occupants and to remove
any and all property therefrom, without being deemed in any manner guilty of
trespass, eviction, forcible entry and detainer, or conversion of property and
without relinquishing Landlord's right to Rent or any other right given to
Landlord hereunder or by operation of law. Tenant expressly waives the service
of any demand for payment of Rent or for possession and the service of any
notice of Landlord's election to terminate this Lease or to re-enter the
Premises, including any and every form of demand and notice prescribed by
statute or other law, and agrees that the breach of any covenant or provision of
this Lease by Tenant, which breach shall continue beyond the period, if any,
provided herein for the curing thereof, shall, of itself, without the service of
any further notice or demand whatsoever, constitute a forcible detainer by
Tenant of the Premises within the meaning of the statutes of the State of
Illinois.
C. Removal of Property. All property removed from the Premises by
Landlord pursuant to any provisions of this Lease or by law may be handled,
removed or stored in a commercial warehouse or otherwise by the Landlord at the
risk, cost and expense of Tenant, and Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof. Tenant shall pay Landlord,
upon demand, any and all expenses incurred by Landlord in such removal and for
storage charges against such property, so long as the same shall be, in
Landlord's possession or under Landlord's control. All property not removed from
the Premises or retaken from storage by Tenant within thirty (30) days after the
end of the Term, however terminated, shall be conclusively deemed to have been
conveyed by Tenant to Landlord as by bill of sale without further payment or
credit by Landlord to Tenant.
D. Costs and Expenses. The non-prevailing party in a majority of
the counts in a judicial proceeding to enforce the Lease shall pay upon demand
all costs, charges and expenses, including without limitation court costs and
reasonable attorneys' fees, incurred in enforcing such party's obligations under
this Lease or incurred by the prevailing party.
E. Bankruptcy. In the event that Tenant shall file for protection
under any Chapter of any state or federal bankruptcy or insolvency act now or
hereafter in effect or a trustee-in-bankruptcy shall be appointed for Tenant,
Landlord and Tenant agree, to the extent permitted by law, to request that the
debtor-in-possession or trustee-in-bankruptcy, if one is appointed, shall assume
or reject this Lease within sixty (60) days thereafter.
F. Landlord's Cure. If Tenant shall default in the observance of
any term, covenant, or condition on its part to be performed under this Lease,
and Tenant shall fail to remedy such default within the time periods provided in
this Lease after Landlord shall send Tenant written notice of such default,
Landlord, without being under any obligation to do so and without thereby
waiving such default, may remedy such default for the account and at the expense
of Tenant. If Landlord makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including, but not limited to,
reasonable attorneys' fees, in instituting, prosecuting or defending any action
or proceeding, then such sums paid or obligations incurred by Landlord shall be
due and payable by Tenant to Landlord upon demand.
G. Injunction. If Tenant violates any of the terms and provisions
of this Lease, or defaults in any of its obligations hereunder, other than the
payment of Rent or other sums payable hereunder, such violations may be
restrained or such obligation enforced by injunction.
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H. [Intentionally deleted].
21. SUBORDINATION. Landlord has heretofore and may hereafter from time
to time execute and deliver a mortgage or trust deed in the nature of a
mortgage, both referred to herein as the "Mortgage", against the Building and
the Property, or any interest therein, and may lease or sell and lease back the
Land. If requested by the mortgagee or trustee under any mortgage or the Lessor
of any ground or underlying lease ("ground lessor"), Tenant will either (i)
subordinate its interest in this Lease to said Mortgage and to any and all
advances made thereunder and to the interest thereto, or to said ground or
underlying lease, or to both, and to all renewals, replacements, supplements,
amendments, modifications and extensions thereof, or (ii) make Tenant's interest
in this Lease superior thereto. Tenant will promptly execute and deliver such
agreement or agreements (including, without limitation a subordination,
non-disturbance and attornment agreement) on a form as may be required by such
mortgagee or trustee under any Mortgage or by such ground lessor. Tenant
covenants it will not subordinate this Lease to any Mortgage without the prior
written consent of the holder of any prior Mortgages and any ground lessor.
It is further agreed that: (i) if any Mortgage shall be foreclosed or if
any ground or underlying lease be terminated (a) the liability of the mortgagee
or trustee hereunder or purchaser at such foreclosure sale or the liability of a
subsequent owner designated as Landlord under this Lease shall exist only so
long as such trustee, mortgagee, purchaser or owner is the owner of the Building
or Property and such liability shall not continue or survive after further
transfer of ownership; and (b) upon request of the mortgagee or trustee, if the
Mortgage shall be foreclosed, Tenant will attorn, as Tenant under this Lease, to
the purchaser at any foreclosure sale under any Mortgage or upon request of the
ground lessor, if any ground or underlying lease shall be terminated, Tenant
will attorn as Tenant under this Lease to the ground lessor, and Tenant will
execute such instruments as may be necessary or appropriate to evidence such
attornment; and (ii) this Lease may not be modified or amended so as to reduce
the Rent or shorten the Term provided hereunder, or so as to adversely affect in
any other respect to any material extent the rights of the Landlord, nor shall
this Lease be canceled or surrendered, without the prior written consent, in
each instance of the mortgagee or trustee under any Mortgage and of any ground
lessor.
Should any prospective mortgagee or ground lessor require a modification
or modifications of this Lease, which modification or modifications will not
cause an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, then and in
such event, Tenant agrees that this Lease may be so modified and agrees to
promptly execute whatever documents are required therefor and deliver the same
to Landlord within ten (10) business days following the request therefor. Should
any prospective mortgagee or ground lessor require execution of a short form of
lease for recording (containing the names of the parties, a description of the
Premises, and the Term of this Lease) or a certification from the Tenant
concerning the Lease in such form as may be required by a prospective mortgagee
or ground lessor, Tenant agrees to promptly execute such short form of Lease or
certificate and deliver the same to Landlord within ten (10) business days
following the request therefor.
22. MORTGAGEE AND GROUND LESSOR PROTECTION. Tenant agrees to give
any holder of any Mortgage and any ground lessor (as such terms are defined in
Section 21 hereof), by registered or certified mail, a copy of any notice of
default served upon the Landlord by Tenant, provided that prior to such notice,
Tenant has been notified in writing (by way of service on Tenant of a copy of an
Assignment of Rents and Leases, or otherwise) of the address of such Mortgage
holder or ground lessor (the "Notified Party"). Tenant further agrees that if
Landlord shall have failed to cure such default within twenty (20) days
22
<PAGE> 25
after such notice to Landlord (or if such default cannot be cured or corrected
within that time, then such additional time as may be necessary if Landlord has
commenced within such twenty (20) days and is diligently pursuing the remedies
or steps necessary to cure or correct such default), then the Notified Party
shall have an additional thirty (30) days within which to cure or correct such
default (or if such default cannot be cured or corrected within that time, then
such additional time as may be necessary if the Notified Party has commenced
within such thirty (30) days and is diligently pursuing the remedies or steps
necessary to cure or correct such default including the time necessary to obtain
possession if possession is necessary to cure or correct such default). Until
the time allowed, as aforesaid, for the Notified Party to cure such default has
expired without cure, Tenant shall have no right to and shall not terminate this
Lease on account of Landlord's default.
23. DEFAULT UNDER OTHER LEASES. If the term of any lease, other
than this Lease, heretofore or hereafter made by Tenant for any space in the
Building shall be terminated or terminable after the making of this Lease
because of any default by Tenant under such other lease, such fact shall empower
Landlord, at Landlord's sole option, to terminate this Lease by notice to Tenant
or to exercise any of the rights or remedies set forth in Section 20 above.
24. INSURANCE.
At all times during the Term of this Lease, Tenant shall, at its sole
cost and expense, maintain in full force and effect insurance protecting Tenant
and Landlord and Landlord's beneficiaries and their respective agents and any
other parties designated by Landlord from time to time, with terms, coverages
and in companies at all times satisfactory to Landlord, but initially as
follows:
(i) Comprehensive General Liability Insurance, with (a)
Contractual Liability including the indemnification provisions contained
in this Lease, (b) a severability of interest endorsement, (c) limits of
not less than One Million Dollars ($1,000,000) combined single limit per
occurrence for bodily injury, sickness or death, and property damage,
and umbrella coverage of not less than Two Million Dollars ($2,000,000),
and (d) Landlord and Landlord's building manager named as additional
insureds.
(ii) Insurance against "all risks" (including sprinkler
leakage, if applicable) for the fall replacement cost of all additions,
improvements and alterations to the Premises and of all office
equipment, furniture, trade fixtures, merchandise and all other items of
Tenant's property on the Premises. Tenant agrees to have such insurance
policies endorsed to provide for a waiver of subrogation against
Landlord by the insurance carrier.
Tenant shall, prior to the commencement of the Term hereof and
prior to the expiration of any policy, furnish Landlord with certificates
evidencing that all required insurance is in force and providing that such
insurance may not be canceled or changed without at least thirty (30) days'
prior written notice to Landlord and Tenant (unless such cancellation is due to
nonpayment of premiums, in which event ten (10) days' prior notice shall be
provided).
25. NONWAIVER. No waiver of any condition expressed in this Lease shall
be implied by any neglect of Landlord to enforce any remedy on account of the
violation of such condition whether or not such violation be continued or
repeated subsequently and no express waiver shall affect any condition other
than the one specified in such waiver and that one only for the item and in the
manner specifically stated. Without limiting the provisions of Paragraph B of
Section 7 above, it is agreed that no receipt of monies by Landlord
23
<PAGE> 26
from Tenant after the termination in any way of the Term or of Tenant's right of
possession hereunder or after the giving of any notice shall reinstate, continue
or extend the Term or affect any notice given to Tenant prior to the receipt of
such monies. It is also agreed that after the service of notice or the
commencement of a suit or after final judgment for possession of the Premises,
Landlord may receive and collect any monies due and the payment of said monies
shall not waive or affect said notice, suit or judgment.
26. ESTOPPEL CERTIFICATE. Tenant agrees that from time to time upon
written request by Landlord or the holder of any Mortgage or any ground lessor,
Tenant, or any permitted assignee, subtenant or other occupant of the Premises
claiming by, through or under Tenant ("Tenant-successor"), will deliver to
Landlord or to the holder of any Mortgage or ground lessor or contract purchaser
of an interest in Landlord or in the Building within twenty (20) days after such
written request shall have been served upon Tenant or Tenant-successor, a
statement in writing signed by Tenant or Tenant-successor certifying, (a) that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the Lease, as modified, is in full force and effect and
identifying the modifications); (b) the date upon which Tenant or
Tenant-successor began paying Rent and the dates to which the Rent and other
charges have been paid; (c) the date upon which the Term shall end; (d) that the
Landlord is not in default under any provision of this Lease or, if in default,
the nature thereof in detail; (e) that the Premises have been completed in
accordance with the terms hereof and Tenant or Tenant-successor is in occupancy
and paying Rent on a current basis with no rental offsets or claims; (f) that
there has been no prepayment of Rent other than that provided for in the Lease;
(g) the amount of any security deposit made by Tenant or Tenant-successor; (h)
that there are no actions, whether voluntary or otherwise, pending against
Tenant under the bankruptcy laws of the United States or any State thereof; and
(i) such other matters as may be required by the Landlord, holder of a Mortgage,
ground lessor or contract purchaser. In the event Tenant fails to provide such
written statement within twenty (20) days after demand in writing, Tenant shall
be considered in default under this Lease.
27. INTENTIONALLY OMITTED.
28. REAL ESTATE BROKERS. Landlord and Tenant represent to each other
that they have directly dealt with and only with OREE Management Inc. and Dean
Topping & Company (whose commission, if any, shall be paid by Landlord pursuant
to separate agreement) as broker in connection with this Lease and each party
agrees to indemnify and hold the other harmless from all damages, liability and
expense (including attorneys' fees) arising from any claims or demands of any
broker or brokers or finders for any commission alleged to be due such broker or
brokers or finders in connection with its participating in the negotiation of
this Lease.
29. NOTICES. All notices to or demands upon Landlord or Tenant desired
or required to be given under any of the provisions hereof shall be in writing.
Any notices or demands from Landlord to Tenant shall be deemed to have been
given if a copy thereof has been personally delivered to Tenant or Tenant's
agent (including without limitation, delivery by messenger or courier, with
evidence of receipt) or mailed by United States registered or certified mail,
return receipt requested, addressed to Tenant at the address of the Premises
after Tenant's occupancy of the Premises and at the following address if Tenant
has not taken occupancy of the Premises:______________________. Any notices or
demands from Landlord to Tenant may be signed by Landlord, its beneficiaries,
the managing agent for the Building or any agent of any of them. Any notices or
demands from Tenant to Landlord shall be deemed to have been given if a copy
thereof has been personally delivered to Landlord or the managing agent of the
Building (including without limitation delivery by messenger or courier, with
evidence of receipt) or mailed by United States registered or certified mail,
return receipt requested, to Landlord in care of OREE Management Inc., 100 North
Riverside Plaza, Chicago, Illinois 60606. Landlord, its beneficiaries, or the
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<PAGE> 27
managing agent of the Building may, upon notice to Tenant, change either the
address for, or the party who shall receive, notices or demands from Tenant to
Landlord on Landlord's behalf. All notices to or demands upon Landlord or Tenant
mailed by registered or certified mail, return receipt requested, shall be
deemed served at the time the same were posted.
30. MISCELLANEOUS.
A. Successors and Assigns. Each provision of this Lease shall
extend to and shall bind and inure to the benefit not only of Landlord and
Tenant, but also their respective heirs, legal representatives, successors and
assigns, but this provision shall not operate to permit any transfer,
assignment, mortgage, encumbrance, lien, charge, or subletting contrary to the
provisions of Section 15.
B. Amendments. All of the agreements of Landlord and Tenant with
respect to the Premises are contained in this Lease and no modification, waiver
or amendment of this Lease or of any of its conditions or provisions shall be
binding upon either party hereto unless in writing signed by both parties.
C. Execution and Delivery. Submission of this instrument for
examination shall not constitute a reservation of or option for the Premises or
in any manner bind Landlord and no lease or obligation on Landlord shall arise
until this instrument is signed and delivered by Landlord and Tenant; provided,
however, the execution and delivery by Tenant of this Lease to Landlord or the
agent of Landlord's beneficiary shall constitute an irrevocable offer by Tenant
to lease the Premises on the terms and conditions herein contained, which offer
may not be revoked for twenty (20) days after such delivery.
D. Tenant. The word "Tenant" whenever used herein shall be
construed to mean Tenant or any one or more of them in all cases where there is
more than one Tenant, and the necessary grammatical changes required to make the
provisions hereof apply either to corporations or other organizations,
partnerships, or other entities, or individuals, shall in all cases be assumed
as though in each case fully expressed. In all cases where there is more than
one Tenant, the liability of each shall be joint and several.
E. Riders. Clauses, plats, and riders, if any, signed by Landlord
and Tenant and endorsed on or affixed to this Lease are part hereof and in the
event of variation or discrepancy the duplicate original hereof, including such
clauses, plats and riders, if any, held by Landlord shall control.
F. Headings. The headings of Sections and Paragraphs are for
convenience only and do not limit, expand or construe the contents of the
Sections.
G. Time of Essence. Time is of the essence of this Lease and of
each and all provisions thereof.
H. Severability. The invalidity of any provisions of this Lease
shall not impair or affect in any manner the validity, enforceability or effect
of the rest of this Lease.
I. Entire Agreement. All understandings and agreements, oral or
written, heretofore made between the parties hereto are merged in this Lease,
which alone fully and completely expresses the agreement between Landlord, its
agents and Tenant.
J. Recording. The parties hereto agree this Lease shall not be
recorded and any action in violation of the terms of this Paragraph J will
constitute a default under this Lease.
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K. No Joint Venturer. Nothing herein and no action or inaction
whatsoever on the part of Landlord, shall be deemed to make Landlord a partner
or joint venturer with Tenant.
L. Application of Payments. Landlord shall have the right to
determine the priority of application of Tenant payments to outstanding
obligations of Tenant.
M. Governing Law. This Lease has been negotiated, executed and
delivered in the State of Illinois, and the parties agree that the rights and
obligations of the parties under this Lease shall be governed by and construed
in accordance with the laws of the State of Illinois, without reference of
Illinois choice-of-law precedent.
N. Lease Tax. Tenant agrees, as and when required by Landlord, to
pay to Landlord all amounts due, if any, pursuant to any tax on this Lease
imposed by the City of Chicago or other federal, state or local governing body.
31. DELIVERY OF POSSESSION. If the Landlord shall be unable to give
possession of the Premises on the date of the commencement of the Term for any
reason, Landlord shall not be subject to any liability for failure to give
possession. Under such circumstances the Rent reserved and covenanted to be paid
herein shall not commence until the Premises are available for occupancy, and no
such failure to give possession on the date of commencement of the Term shall
affect the validity of this Lease or the obligations of the Tenant hereunder,
nor shall the same be construed to extend the Term.
32. LANDLORD. The term "Landlord" as used in this Lease means only the
owner or owners at the time being of the Building and the Land so that in the
event of any assignment, conveyance or sale, once or successively, of said Land
and Building, or any assignment of this Lease by Landlord, said Landlord making
such sale, conveyance or assignment shall be and hereby is entirely freed and
relieved of all covenants and obligations of Landlord hereunder accruing after
such conveyance, sale or assignment, and Tenant agrees to look solely to such
purchaser, grantee or assignee with respect thereto. This Lease shall not be
affected by any such conveyance, assignment or sale, and Tenant agrees to attorn
to the purchaser, grantee or assignee.
33. TITLE AND COVENANT AGAINST LIENS. The Landlord's title is and
always shall be paramount to the title to the Tenant and nothing in this Lease
contained shall empower the Tenant to do any act which can, shall or may
encumber the title of the Landlord. Tenant covenants and agrees not to suffer or
permit any lien of mechanics or materialmen to be placed upon or against the
Property, the Building, or the Premises or against the Tenant's leasehold
interest in the Premises and, in case of any such lien attaching, to immediately
pay and remove same. Tenant has no authority or power to cause or permit any
lien or encumbrance of any kind whatsoever, whether created by act of Tenant,
operation of law or otherwise, to attach to or be placed upon the Property,
Building or Premises, and any and all liens and encumbrances created by Tenant
shall attach only to Tenant's interest in the Premises. If any such liens
created, caused or permitted by Tenant so attach and Tenant fails to pay and
remove same within ten (10) business days, Landlord, at its election, may pay
and satisfy the same and in such event the sums so paid by Landlord, with
interest from the date of payment at the Default Rate for amounts owed Landlord
by Tenant shall be deemed to be Additional Rent due and payable by Tenant at
once without notice or demand.
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34. SECURITY DEPOSIT.
A. Tenant shall deposit with Landlord on the date of this Lease
security for the performance of all of its obligation initially in the amount of
$52,000 and in the form described below. If Tenant defaults under this Lease,
Landlord may use any part of the security deposit to make any defaulted payment,
to pay for Landlord's cure of any defaulted obligation, or to compensate
Landlord for any loss or damage resulting from any default. To the extent any
portion of the security deposit is used, Tenant shall within five (5) days after
written demand from Landlord reinstate the Letter of Credit (as defined below)
or restore the deposit, as the case may be, to the full amount Tenant is then
obligated to maintain as the security deposit. When the security deposit is not
in the form of a Letter of Credit, Landlord may keep the security deposit in its
general funds and shall not be required to pay interest to Tenant on the deposit
amount. If Tenant shall perform all of its obligations under this Lease and
return the Premises to Landlord at the end of the Term, Landlord shall return
all of the remaining security deposit or Letter of Credit to Tenant within a
reasonable time period not to exceed forty-five (45) days. The security deposit
shall not serve as an advance payment of Rent or a measure of Landlord's damages
for any default under this Lease.
B. The Security Deposit shall initially be in the form of an
unconditional and irrevocable letter of credit (the "Letter of Credit"), which
Letter of Credit shall (a) be in the amount of $52,000 during the period of the
Commencement Date through and including April 30, 1999, and after April 30, 1999
through the end of the Lease Term, the security deposit shall be in the amount
of $11,380.69 and be in the form of either a Letter of Credit or cash, (b) be in
form and substance reasonably satisfactory to Landlord, (c) name Landlord as its
beneficiary, (d) expressly allow Landlord to draw upon it at any time or from
time to time by delivering to the issuer written notice that Landlord is
entitled to draw thereunder, (e) be drawn on an FDIC-insured financial
institution satisfactory to Landlord, and (f) be freely assignable by Landlord
to any successor to Landlord's interest in the Property. If Landlord is not
provided with either a substitute Letter of Credit complying with all of the
requirements hereof or with an amendment to the existing Letter of Credit
extending the expiration thereof at least ten (10) days before the stated
expiration date thereof, then Landlord shall have the right to draw under such
Letter of Credit then held by Landlord and hold such funds as a security deposit
in accordance with the terms of this Section 34 until such time as Tenant
delivers Landlord a substitute Letter of Credit. If Landlord transfers its
interest in the Property or this Lease, Landlord may transfer the security
deposit to its transferee if the security deposit is in cash or Tenant will
cause either the issuance of a new Letter of Credit for the benefit of the
transferee or the existing Letter of Credit to be amended to reflect issuance in
favor of the new beneficial transferee. Upon such transfer, Landlord shall have
no further obligation to return the security deposit to Tenant, and Tenant's
right to the return of the security deposit shall apply solely against
Landlord's transferee.
35. EXCULPATORY PROVISIONS. It is expressly understood and agreed by
and between the parties hereto, anything herein to the contrary notwithstanding,
that each and all of the representations, warranties, covenants, undertakings
and agreements herein made on the part of Landlord while in form purporting to
be the representations, warranties, covenants, undertakings and agreements of
Landlord are nevertheless each and every one of them made and intended, not as
personal representations, warranties, covenants, undertakings and agreements by
Landlord or for the purpose or with the intention of binding Landlord
personally, but are made and intended for the purpose only of subjecting
Landlord's interest in the Building, the Property and the Premises to the terms
of this Lease and for no other purpose whatsoever, and in case of default
hereunder by Landlord (or default through, under or by any of its beneficiaries,
or agents or representatives of said beneficiaries), the Tenant shall look
solely to the interest of Landlord in the Building and Property.
[signature page follows]
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<PAGE> 30
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
on the day and year first above written.
LANDLORD:
ONE HUNDRED NORTH RIVERSIDE, INC.,
a Delaware corporation
ATTEST: /s/ JAY RAGHAVAN By: /s/ Signature Illegible
Name: JAY RAGHAVAN
-------------------------------
Title: Vice President
------------------------------
By:
------------------------------
Name:
------------------------
Title:
-----------------------
TENANT:
UNIVERSAL, ACCESS, INC.,
an Illinois corporation
ATTEST: /s/ PATRICK C. SHUTT By: /s/ Signature Illegible
Name: Patrick C. Shutt
-------------------------------
Title: President & CEO
------------------------------
By: /s/ JOHN DRUMMOND
Name: John Drummond
-------------------
Title: Board Member
------------------
28
<PAGE> 31
EXHIBIT A
Preliminary Plan
A-1
<PAGE> 32
EXHIBIT B
Legal Description
PARCEL 1 (THE FEE PARCEL):
ALL OF WEST WATER STREET LYING SOUTH OF THE SOUTH LINE OF RANDOLPH STREET, LYING
NORTH OF THE NORTH LINE OF WASHINGTON STREET, LYING WEST OF AND ADJOINING
WHARFING LOTS 1 TO 5, BOTH INCLUSIVE, IN BLOCK "0" IN ORIGINAL TOWN OF CHICAGO
IN THE SOUTH PART OF SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD
PRINCIPAL MERIDIAN AND LYING EAST OF A DIRECT LINE DRAWN FROM A POINT ON THE
SOUTH LINE OF LOT 9 IN BLOCK 44 IN ORIGINAL TOWN OF CHICAGO, 41.87 FEET EAST OF
THE SOUTH WEST CORNER OF SAID LOT 9, TO A POINT ON THE NORTH LINE OF LOT 1 IN
SAID BLOCK 44, 85.70 FEET EAST OF THE NORTH WEST CORNER OF SAID LOT 1, AS SHOWN
AND LOCATED ON THE PLAT RECORDED AUGUST 18, 1855, AS DOCUMENT NUMBER 62008 IN
COOK COUNTY, ILLINOIS.
PARCEL 2 (THE GROUND LEASE PARCEL):
THAT PART OF LOTS 1, 4, 5, 8 AND 9 LYING WEST OF A DIRECT LINE DRAWN FROM THE
POINT OF INTERSECTION OF THE WEST LINE OF WEST WATER STREET AND THE SOUTH LINE
OF SAID LOT 9, BEING A POINT ON THE SOUTH LINE OF LOT 9 APPROXIMATELY 41.87 FEET
EAST OF THE SOUTH WEST CORNER OF LOT 9, TO THE POINT OF INTERSECTION OF THE WEST
LINE OF WEST WATER STREET AND THE NORTH LINE OF LOT 1, BEING APPROXIMATELY 85.70
FEET EAST OF THE NORTH WEST CORNER OF LOT 1 IN BLOCK 44 IN ORIGINAL TOWN OF
CHICAGO IN SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, ACCORDING TO THE MAP OF THE TOWN OF CHICAGO BY JAMES THOMPSON DATED
AUGUST 4, 1830 AND FILED FOR RECORD MAY 29, 1837 AND RECORDED JULY 6, 1837 IN
BOOK H OF MAPS, PAGE 298 AS DOCUMENT 5060 IN COOK COUNTY, ILLINOIS.
Common Address: 100 North Riverside Plaza
Chicago, Illinois 60606
B-1
<PAGE> 33
EXHIBIT C
100 NORTH RIVERSIDE PLAZA
CLEANING SPECIFICATIONS
Nightly (between the hours of 5:00 P.M. and 6:00 A.M., Monday through Friday,
Union Holidays excepted):
*Dust and wipe elevator door, walls, metal work and saddles in elevator cab.
*Empty and clean all waste receptacles, ash trays and sand urns.
*Wash, clean and disinfect all water fountains and water coolers.
*Hand dust office furniture tops.
*Remove all rubbish and trash to a designated area.
*Spot vacuum as necessary.
*Dust mop all uncarpeted areas, using treated mops and damp mop as necessary to
remove any stains and spills.
*Damp mop floors in entrance foyers, public corridors, if applicable, and other
heavily trafficked areas.
*Dust and rub down mail chutes, mail depository, etc.
*Wet sponge wipe table tops in employee lounge, including cleaning of any
spills, if applicable.
*During nightly tour, extinguish lights, lock doors and report any malfunctions.
*Keep locker, storage and slop sink rooms in a clean and orderly condition.
*Maintain front elevator lobbies, cabs and vacuum elevator door tracks.
*Clean all wash and rest rooms.
a. All cleaning will be performed with approved germicidal detergents at
disinfectant strengths.
b. All toilets and urinals will be cleaned on all surfaces nightly; acid
bowl cleaner to be used in the interior.
c. All wash basins, shelves, dispensers and all other washroom fixtures
will be cleaned nightly.
d. All mirrors will be cleaned and polished nightly.
e. All chrome and other bright work including exposed plumbing, toilet
seat hinges, etc. will be cleaned and polished nightly.
C-1
<PAGE> 34
f. All partitions and tiled walls to be spot cleaned nightly and
thoroughly cleaned weekly.
g. All waste receptacles are to be emptied and cleaned nightly.
h. All lavatory floors will be swept and mopped with a germicidal
detergent solution nightly.
i. All lavatory floors will be machine scrubbed once every three months.
j. Washroom supplies will be replenished nightly.
k. Washroom supplies in common area washrooms to be furnished by
Landlord.
Weekly:
*Vacuum all rugs and carpeting, moving light furniture other than desks, file
cabinets, etc. (separate sections each night so that each carpeted area is
thoroughly vacuumed at least once weekly).
*Damp wipe waste receptacles, ash trays and sand urns as necessary.
*Damp mop all uncarpeted areas and/or spray buff for heavy scuffs.
*Spot clean carpet.
*Remove all finger marks and smudges from doors, partitions, woodwork, window
ledges and window mullions.
*Wash all directory board, display, entry door and side light glass, as
necessary.
*Damp wipe tops of desks, file cabinets.
Monthly:
*All uncarpeted floor areas to be washed.
*Shampoo all elevator carpeting.
Quarterly:
High Dusting
a. Dust in place all pictures, frames, charts, graphs and similar wall
hangings.
b. Dust clean all vertical surfaces, such as walls, partitions, doors,
books and other surfaces not reached in nightly cleaning.
c. Sweep or dust mop stairwell landings and heads.
*Dust clean all exposed pipes, air-conditioning louvers, ducts and other areas
not reached in nightly cleaning.
C-2
<PAGE> 35
*Dust clean all lighting fixtures.
*All lavatory floors will be machine scrubbed.
Tri-Annually:
*All tile floor areas to be scrubbed, waxed (using buffable and non-slip type
floor finish) and buffed.
Annually:
*Shampoo all rugs and carpeting in common areas.
As Required:
*Remove snow and ice from sidewalks serving the property.
*Spot clean glass partitions and doors.
*Wash windows inside and out (not to exceed two times per year).
*Dust vinyl base.
*Clean mechanical louvers (not to exceed two times per year).
C-3
<PAGE> 36
EXHIBIT D
WORK LETTER
One Hundred North Riverside, Inc. (the "Landlord") and Universal
Access, Inc. (the "Tenant") are executing simultaneously herewith a lease (the
"Lease") leasing certain office space (the "Premises") more particularly
described in the Lease. In connection with the execution of that Lease, the
parties have further agreed as follows:
1. Preliminary Plans. Landlord has prepared a plan of the Premises
depicting the construction work which is to be performed in order to prepare the
Premises for Tenant's use and occupancy (the "Preliminary Plan") which is
attached to the Lease as Exhibit A, which has been approved and initiated by
Landlord and Tenant. All construction work depicted on the Preliminary Plans
shall be performed for Tenant by Landlord ("Landlord's Work"). Landlord and
Tenant agree that the cost of constructing and installing Landlord's Work shall
be paid by Landlord up to the amount of Landlord's Contribution (as defined
below) and any excess shall be paid for by Tenant.
2. Working Drawings. Landlord shall cause to be prepared the final
architectural, mechanical (including heating, ventilating and air-conditioning),
electrical, plumbing, structural plans and specifications ("Working Drawings")
necessary to complete the work depicted on the Preliminary Plans.
Landlord shall submit the finished Working Drawings to Tenant. If within
five (5) business days after receipt from Landlord Tenant fails to initial, and,
if Tenant has any corrections thereon, to make such corrections on the Working
Drawings, and return said Working Drawings, the Working Drawings shall be deemed
approved by Tenant, and Landlord, in its sole discretion, may proceed to
complete the work in accordance with the Working Drawings.
3. Extra Work. From time to time, Tenant may request Landlord to do
additional work not depicted on the Preliminary Plans ("Extra Work") provided
that said Extra Work, in Landlord's sole judgment, (i) shall not delay
completion of the Premises and the commencement of the Term of the Lease; (ii)
shall be practicable and consistent with existing physical conditions in the
Building and with the plans for the Building; (iii) shall not impair Landlord's
ability to perform any of Landlord's obligations hereunder or under the Lease or
any other lease of space in the Building; and (iv) shall not affect any portion
of the Building other than the Premises.
a. In the event Tenant requests Landlord to perform Extra Work
and if Landlord accedes to such request, then and in that event, prior
to commencing such Extra Work, Landlord shall submit to Tenant a written
estimate ("Estimate") for said Extra Work to be performed. Within five
(5) days after Landlord's submission of the Estimate, Tenant shall, in
writing, either accept or reject the Estimate. Tenant's failure either
to accept or reject the Estimate within said five (5) business day
period shall be deemed a rejection thereof and Landlord shall proceed
with the work depicted on the Preliminary Plans as if no request for
Extra Work had been made.
b. In the event Landlord performs Extra Work hereunder, the cost
of such Extra Work shall be paid by Tenant to Landlord within five (5)
days of demand therefor.
D-1
<PAGE> 37
4. Landlord's Contribution. Landlord shall contribute an amount not to
exceed the product obtained by multiplying $7.00 by the number of rentable
square feet comprising the Premises (which equates to $43,953: 6,279 rentable
square feet x $7) (the "Landlord's Contribution") to be applied toward the costs
incurred by Tenant in connection with the Landlord's Work. If the costs incurred
by Landlord in connection with the Landlord's Work exceed the Landlord's
Contribution, Tenant shall pay all of such excess costs.
5. Punch List. When Landlord is of the opinion that the Work described
in this Work Letter is complete, then the Landlord shall notify the Tenant of
the date of substantial completion of the Work. Tenant agrees that following
such notification Tenant will inspect the Premises at a mutually agreeable date
and furnish to Landlord a written statement that the Premises have been
substantially completed in accordance with this Work Letter. Tenant shall also
execute Landlord's form of inspection report listing any items which Landlord
and Tenant agree are not yet completed (the "Punch List"). If Tenant or Tenant's
duly authorized representative does not appear for inspection on the date
designated by Landlord, Tenant shall be deemed to have accepted the Premises as
substantially completed, and Landlord or its representative may, but shall not
be obligated to, execute the Punch List on behalf of both Landlord and Tenant.
At the request of the Landlord, from time to time thereafter, the Tenant shall,
upon completion of items previously listed on a Punch List, promptly furnish to
the Landlord a revised Punch List acknowledging completion of said item.
Provided Punch List items would not materially impair the Tenant's use or
occupancy of the Premises, then, in such event, the Tenant shall accept
possession of the Premises. The date which is the earlier of either (i) the date
upon which the Tenant accepts possession of the Premises, or (ii) the date upon
which the Premises are complete and ready for occupancy is referred to herein as
the "Completion Date". The Premises shall not be deemed incomplete or not ready
for occupancy if only insubstantial details of construction, decoration or
mechanical adjustments remain to be done. The determination of Landlord's
architect or the interior space planner for the Building shall be final and
conclusive as to whether the Premises are complete and ready for occupancy.
Under no circumstances shall the occurrence of any of the events described in
this paragraph be deemed to accelerate or defer the expiration date of the Term.
6. Possession. The Tenant will take possession of the Premises as of
and on the Completion Date. Landlord has not agreed or represented that the
Premises will be substantially ready for occupancy on the date specified in
Section 2 of the Lease for the commencement of the Term. If, for any reason
whatsoever, the Premises are not complete or ready for occupancy on said date,
this Lease shall nevertheless continue in full force and effect, and no
liability shall arise against Landlord because of any such delay; provided,
however, that all Rent due hereunder shall abate on a per diem basis until the
Completion Date. Notwithstanding the foregoing, if the Premises are not complete
or ready for occupancy due to any special equipment, fixtures or materials,
changes, alterations or additions or Extra Work requested by Tenant or any delay
of Tenant in complying with the terms and Submission Date as set forth in this
Work Letter, the payment of Rent shall not be affected or deferred on account
thereof. All of the covenants and conditions of this Lease, including the
obligation to pay Rent, shall be binding upon the Tenant in respect to such
occupancy as if the first day of the Term had been the date when Tenant began
such occupancy.
7. Landlord's Entry After Substantial Completion. At any time after the
Completion Date, Landlord may enter the Premises to complete the Punch List
items and such entry by Landlord, its agents, servants, employees or contractors
for such purpose shall not constitute an actual or constructive eviction, in
whole or in part, or entitle Tenant to any abatement or diminution of Rent, or
relieve Tenant from any of its obligations under this Lease, or impose any
liability upon Landlord or its agents.
8. Delays. Notwithstanding the date provided in the Lease for
commencement of the Term, Tenant's obligation to pay Rent under the Lease shall
not commence until the Completion Date; provided,
D-2
<PAGE> 38
however, if Landlord shall be delayed in substantially completing the Work for
any reason set forth in the following subparagraphs (a) through (g) of this
Paragraph 7 ("Tenant Delay"), then the commencement of the Term of the Lease and
the payment of Rent thereunder shall not be affected or deferred on account of
such delay:
a. Tenant's failure to furnish information required for the
preparation of the Working Drawings as and when required hereby; or
b. Tenant's failure to accept or reject the Estimate for Extra
Work within the time prescribed in this Work Letter; or
c. Tenant's request for materials, finishes or installations
other than Building Standard; or
d. Tenant's failure to pay for any portion of the Work as and
when payable by Tenant hereunder; or
e. Tenant's change in the Work, the Preliminary Plans, the
Working Drawings, or the Extra Work after initial approval by Landlord
(notwithstanding Landlord's further approval of any such changes); or
f. Any other act, omission or delay by Tenant, its agents,
contractors or persons employed by any of such persons; or
g. Tenant's failure to comply with the terms of others
Workletter.
D-3
<PAGE> 39
EXHIBIT E
RULES AND REGULATIONS
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS
1. The sidewalks, halls, passages, elevators and stairways shall not be
obstructed by the Tenant. The halls, passages, entrances, elevators, stairways,
balconies and roof are not for the use of the general public and the Landlord
shall in all cases retain the right of control and prevent access thereto of all
persons whose presence in the judgment of the Landlord shall be prejudicial to
the safety, character, reputation and interests of the Building and its tenants
provided that nothing herein contained shall be construed to prevent such access
to persons with whom the Tenant normally deals in the ordinary course of its
business unless such persons are engaged in illegal activities. The Tenant and
its employees shall not go upon the roof of the Building without the written
consent of the Landlord.
2. The sashes, sash doors, windows, glass lights and any lights or
skylights that reflect or admit light into multi-tenant halls or other common
areas of the building shall not be covered or obstructed. The toilet rooms,
water and wash closets and other water apparatus shall not be used for any
purpose other than that for which they were constructed and no foreign
substances of any kind whatsoever shall be thrown therein and the expense of any
breakage, stoppage or damage, resulting from the violation of this rule, shall
be banned by the Tenant who, or whose clerk, agents, servants or visitors shall
have caused it.
3. If the Landlord, by a notice in writing to the Tenant, shall object
to any curtain, blind, shade or screen attached to, or hung in, or used in
connection with, any window or door of the Premises, such use of such curtain,
blind, shade or screen shall be forthwith discontinued by the Tenant. No awnings
shall be permitted on any part of the Premises.
4. No safes or other objects heavier than the lift capacity of the
freight elevators of the building shall be brought into or installed on the
Premises. The Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. The moving of safes shall occur only between such hours
as may be designated by, and only upon previous notice to, the manager of the
Building, and the persons employed to move safes in or out of the Building must
be acceptable to the Landlord. No freight, furniture or bulky matter of any
description shall be received into the Building or carried into the elevators
except during hours and in a manner approved by the Landlord.
5. The Tenant shall not use, keep or permit to be used or kept any foul
or noxious gas or substance in the Premises or permit or suffer the Premises to
be occupied or used in a manner offensive or objectionable to the Landlord or
other occupants of the Building by reason of noise, odors and/or vibrators, or
interfere in any way with other Tenants or those having business therein, nor
shall any animals or birds (except seeing-eye dogs) be kept in or about the
Building.
6. Tenant shall not use or permit to be brought into or kept in the
Premises or on the Property any inflammable oils or fluids, or any explosive or
other articles deemed hazardous to person or property; or do or permit to be
done any act or thing which will invalidate or be in conflict with fire or other
insurance policies covering the Property or its operation, or the Premises, or
part of either; or do or permit to be done anything in or upon the Premises,
which shall not comply with all rules, orders, regulations or requirements of
the Illinois Inspection and Rating Bureau, the Fire Insurance Rating
Organization, the Board of Fire
E-1
<PAGE> 40
Underwriters, or any similar organization (and Tenant shall at all times comply
with all such rules, regulations or requirements), or which shall increase the
rate of insurance on the Building, its appurtenances or contents. If by reason
of the failure of Tenant to comply with the provisions of this paragraph,
including, but not limited to, the mere use to which Tenant shall put the
Premises, any insurance coverage is jeopardized or insurance premiums are at any
time increased above what they otherwise would be, Landlord shall have the
option, in addition to its other rights and remedies, either to terminate this
Lease or to require Tenant to make immediate payment of the increased insurance
premium as Additional Rent.
7. If the Tenant desires telephonic, telegraphic, burglar alarm,
computer installations or signal service (which service shall be at Tenant's
sole expense), the Landlord shall, upon request, direct electricians as to where
and how all connections and wires for such service are to be introduced and run.
No boring or cutting for wires or otherwise shall be made without specific
directions from the Landlord.
8. The Tenant, upon termination of the tenancy, shall deliver to the
Landlord all the keys of offices, rooms and toilet rooms which shall have been
furnished the Tenant or which the Tenant shall have made, and in the event of
loss of any keys so furnished, shall pay the Landlord therefor.
9. The Tenant shall not put down any floor covering in the Premises
without the Landlord's prior approval of the manner and method of applying such
floor covering.
10. On Saturdays, Sundays and legal holidays and on other days between
the hours of 6:00 p.m. and 8:00 a.m., access to the Building or to the halls,
corridors, elevators or stairways in the Building, or to the Premises may be
refused unless the person seeking access is known to the watchman of the
Building in charge and has a pass or is properly identified. The Landlord shall,
in no case, be liable for damages for the admission to or exclusion from the
Building of any person whom the Landlord has the right to exclude under Rule 1
above. In case of invasion, mob, riot, public excitement or other commotion, the
Landlord reserves the right to prevent access to the Building during the
continuance of the same by closing the doors or otherwise, for the safety of the
tenants or the Landlord and protection of property in the Building.
11. The Tenant assumes full reasonable responsibility for protecting the
Premises from theft, robbery and pilferage which includes keeping doors locked
and windows and other means of entry to the Premises closed. Any damage
resulting from a failure to do so shall be paid by Tenant.
12. The Tenant shall not alter any lock or install a new or additional
lock or any bolt on any door, window or transom of the Premises without prior
written consent of the Landlord. If the Landlord shall give its consent, the
Tenant shall in each case furnish the Landlord with a key for any such lock.
13. The Tenant shall not waste electricity, water or air conditioning
and agrees to cooperate fully with Landlord to assure the most effective
operation of the Building's heating and air conditioning and shall not allow the
adjustment (except by Landlord's authorized building personnel) of any controls
other than room thermostats installed for the Tenant's use. The Tenant shall
keep corridor doors closed and shall not open any windows except that if the air
circulation shall not be in operation, windows which are operable may be opened
with Landlord's consent.
14. Tenant shall not do any cooking in the Premises, except in an
employee cafeteria, or engage any commercial coffee cart service.
E-2
<PAGE> 41
15. Prior to removing furniture equipment or other items from the
Premises or the Building, Tenant must submit a written list of such items to
Landlord and obtain a removal permit thereof from the building manager
authorizing Building employees to permit such articles to be removed.
16. Tenant shall not paint, display, inscribe or affix any sign,
trademark, picture, advertising, notice, lettering or direction on any part of
the outside or inside of the Building, or on the Premises, except on the public
hallway doors of the Premises, and then only such name or names or matter and of
such color, size, style, character and material as shall be first approved by
Landlord in writing. Landlord reserves the right to remove any other matter
without notice to Tenant at the cost and expense of Tenant.
17. Tenant shall not advertise the business, profession or activities of
Tenant in any manner which violates the letter or spirit of any code of ethics
adopted by any recognized association or organization pertaining thereto or use
the name of the Building for any purpose other than that of the business address
of Tenant, or use any picture or likeness of the Building or "100 North
Riverside Plaza", or any other name by which the Building may from time to time
be known, on any letterhead, envelope, circular, notice, advertisement,
container or wrapping material, without the prior written consent of Landlord.
18. Tenant shall not place any radio or television antenna aerial wires
or other equipment on the roof or on or in any part of the inside or outside of
the Building other than the inside of the Premises; operate or permit to be
operated any musical or sound producing instrument or device inside or outside
the Premises which may be heard outside the Premises, operate any electrical
device which may interfere with or impair radio or television broadcasting or
reception from or in the Building or elsewhere.
19. Tenant shall not place anything or allow anything to be placed near
the glass of any door, partition, or window which may be unsightly from outside
the Premises; take or permit to be taken in or out of other entrances of the
Building, or take or permit on other elevators, any item normally taken in or
out through the trucking concourse or service doors or in or on freight
elevators; or, whether temporarily, accidentally, or otherwise, allow anything
to remain in, place or store anything in, or obstruct in any way, any
passageway, exit, stairway, elevator, shipping platform, or truck concourse.
Tenant shall lend its full cooperation to keep such areas free from all
obstruction and in a clean and sightly condition and move all supplies,
furniture and equipment as soon as received directly to the Premises and move
all such items and waste, other than waste customarily removed by employees of
the Building, being taken from the Premises, directly to the shipping platform
at or about the time arranged for removal therefrom.
20. Tenant shall not do any painting or decorating in the Premises, or
mark, paint, cut or drill into, drive nails or screws into, or in any way deface
any part of the Premises or the Building, outside or inside, without the prior
written consent of Landlord.
E-3
<PAGE> 42
SCHEDULE I
New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving,
Christmas and such other holidays observed customarily in comparable first class
office buildings in the City of Chicago with major service industry tenants,
such as accounting firms and law firms.
E-4
<PAGE> 1
EXHIBIT 10.8.1
FIRST AMENDMENT TO OFFICE LEASE
THIS FIRST AMENDMENT TO OFFICE LEASE (this "Amendment") is made and
entered into as of this 26th day of July, 1999 by and between ONE
HUNDRED NORTH RIVERSIDE, INC., a Delaware corporation ("Landlord") and
UNIVERSAL ACCESS, INC., a Delaware corporation ("Tenant").
W I T N E S S E T H :
WHEREAS, Landlord and Tenant entered into that certain Office Lease dated
October 30, 1998 (the "Original Lease"), pursuant to which Landlord leased to
Tenant 6,279 square feet on the 22nd floor (the "Original Premises") in a
building commonly known as 100 North Riverside Plaza situated in Chicago,
Illinois (the "Building"), as more particularly set forth in the Original
Lease; and
WHEREAS, Landlord and Tenant desire to amend the Lease according to the
terms hereof to expand the Original Premises (as amended by this Amendment, the
Original Lease is hereinafter referred to as the "Lease");
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Controlling Language. Insofar as the specific terms and provisions
of this Amendment purport to amend or modify or are in conflict with the
specific terms, provisions and exhibits of the Lease, the terms and provisions
of this Amendment shall govern and control; in all other respects, the Lease
shall remain unmodified and in full force and effect.
2. Expansion of Premises. On the later of (i) the date that is twenty
(20) days after the date Landlord approves Tenant's plans for the Expansion
Space Improvements (as defined below), or (ii) August 15, 1999 (such later date
being the "Expansion Space Commencement Date"), the Original Premises shall be
expanded to include the space depicted on Exhibit A attached hereto on the 22nd
floor (Suite 2202) consisting of 565 rentable square feet (the "Expansion
Space"), such that on and after the Expansion Space Commencement Date, the
Premises, for purposes of the Lease, shall include the Expansion Space, except
as otherwise described herein. The Expansion Space shall be delivered to Tenant
upon Landlord's execution of this Amendment in its then "as-is, where-is"
condition and Landlord shall have no obligation to make or pay for any
alterations or improvements to the Expansion Space. Any improvements or
alterations Tenant makes to the Expansion Space (the "Expansion Space
Improvements") shall be subject to the terms and conditions of Section 14 of
the Lease.
<PAGE> 2
3. Term. The Term of the Lease as to the Expansion Space shall be for
approximately one (1) year and four and one-half months beginning on the
Expansion Space Commencement Date and ending on December 31, 2000, inclusive
(the "Expansion Space Term"), on all the terms, covenants and conditions of the
Lease, except as hereinafter set forth.
4. Rent.
During the Expansion Space Term, Tenant agrees to pay rent in the
manner as set forth in the Lease and in the amounts as set forth below.
A. Base Rent. Tenant shall pay to Landlord Base Rent with respect
to the Expansion Space as set forth in the following schedule:
<TABLE>
<CAPTION>
Annual Monthly Installment
Period Base Rent of Base Rent
------ --------- -------------------
<S> <C> <C>
Expansion Space $22.00 psf $1,035.83
Commencement Date-
August 14, 2000
August 15, 2000 - $22.50 psf $1,059.38
December 31, 2000
</TABLE>
B. Tenant's Share of Operating Expenses for the Original Premises
and the Expansion Space in an amount equal to the sum of (i) Tenant's Building
Share (as re-defined in Paragraph 5 below) of Building Operating Expenses, plus
(ii) Tenant's Tower Share (as re-defined in Paragraph 5 below) of Tower
Operating Expenses.
5. Tenant's Building and Tower Share. During the Expansion Space Term,
Tenant's Building Share for the Premises shall be equal to .93% (6,279 rentable
square feet plus 565 rentable square feet over 96.7% times 758,506 rentable
square feet in the Building). During the Expansion Space Term, Tenant's Tower
Share for the Premises only shall be equal to 1.49% (6,279 rentable square feet
plus 565 rentable square feet over 95% times 482,639 rentable square feet in the
Tower).
6. Real Estate Broker. Landlord and Tenant represent to each other that
they have not dealt with any real estate broker except for ORIX Real Estate
Equities, Inc. and Dean Topping & Company with respect to this Amendment and,
to their knowledge no other broker initiated or participated in the
negotiations of this Amendment, submitted or showed the Expansion Space to
Tenant or is entitled to any commissions in connection with this Amendment.
Both parties agree to indemnify and hold the other harmless from all claims
from any other real estate broker claiming through such party for commission or
fees in connection with this Amendment.
-2-
<PAGE> 3
7. Miscellaneous.
A. Landlord and Tenant hereby agree that (i) this Amendment is
incorporated into and made a part of the Lease, (ii) any and all references to
the Lease hereinafter shall include this Amendment, and (iii) the Lease and all
terms, conditions and provisions of the Lease are in full force and effect as
of the date hereof, except as expressly modified and amended hereinabove.
B. All terms capitalized but not defined herein shall have the same
meaning ascribed to such terms in the Lease.
C. This Amendment shall be governed by and construed under the laws
of the State of Illinois.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
LANDLORD: TENANT:
ONE HUNDRED NORTH RIVERSIDE, UNIVERSAL ACCESS, INC.,
INC., a Delaware corporation a Delaware corporation
By: /s/ JAY RAGHAAN By: /s/ ROBERT J. POMMER
------------------------ --------------------
Name: Jay Raghaan Name: Robert J. Pommer
---------------------- ------------------
Title: Vice President Title: COO
--------------------- -----------------
-4-
<PAGE> 5
EXHIBIT A
DEPICTION OF EXPANSION SPACE
A
<PAGE> 6
UNIVERSAL ACCESS
[FLOORPLAN]
EXHIBIT A
UNIVERSAL ACCESS, INC.
EXPANSION SPACE
<PAGE> 1
EXHIBIT 10.9
SUBLEASE
For
East Side of 22nd Floor, 100 North Riverside Plaza
Chicago, Illinois
dated
May 15, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Sublease 1
2. Term 1
3. Master Lease 1
(a) Sublessor's Rights Under Master Lease 2
(b) Sublessor's Consent 2
(c) Landlord's Obligations 2
(d) Sublessor's Performance Under the Master Lease 2
(e) Sublessee's Quiet Enjoyment 2
(f) Right of Sublessor to Perform Sublessee's Obligations 3
4. Use and Improvements 3
5. Rent 3
(a) Gross Base Rent 4
(b) Additional Rent 4
6. Representations and Warranties Regarding Master Lease 4
(a) Status 4
(b) Rent 4
(c) No Default 5
7. Master Lease Notices 5
8. Insurance 5
(a) Insurance under Master Lease 5
(b) Other Insurance 5
(c) Insurance Certificates 5
(d) Waiver of Subrogation 6
9. Damage or Destruction 6
(a) Repair and Restoration 6
(b) Abatement of Rent 6
10. Indemnification and Waiver 6
11. Condemnation 7
(a) Total 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(b) Partial 7
12. Sublessee's Estoppel Certificate 7
13. Assignment and Subleases 8
(a) Sublessee Assignment 8
(b) Sublessor Assignment 8
14. Condition of Sublease Premises 8
(a) Condition 8
(b) Upon Termination 8
15. Access to the Sublease Premises 8
16. Sublessee's Default 9
(a) Default 9
(b) Termination 9
(c) Other Remedies 9
(d) Costs and Expenses 11
17. Security Deposit 11
18. Notices 11
19. Brokers 12
20. Late Payments 12
21. Miscellaneous 12
(a) No Waiver 12
(b) Memorandum of Lease 12
(c) Governing Law 12
(d) Successors and Assigns 13
(e) Amendments 13
(f) Time of Essence 13
(g) Severability 13
(h) Entire Agreement 13
(i) Relationship Between the Parties 13
(j) Remedies Cumulative 13
(k) Conflict 13
(l) Representative 13
</TABLE>
ii
<PAGE> 4
SUBLEASE
THIS SUBLEASE (the "SUBLEASE") is made and entered into as of this 15th
day of May, 1999, by and between MORTON INTERNATIONAL, INC., an Indiana
corporation, ("SUBLESSOR") and UNIVERSAL ACCESS, INC., a Illinois corporation
("SUBLESSEE").
WITNESSETH:
WHEREAS, pursuant to that certain Office Lease dated as of August 31,
1988 (the "Master Lease") by and between Chicago Title and Trust Company as
Trustee u/t/a dated April 16, 1985, known as Trust No. 1086781 ("LANDLORD") and
Sublessor, a portion of the building commonly known as 100 North Riverside
Plaza, Chicago, Illinois 60606 (the "PREMISES") was demised and let to
Sublessor; and
WHEREAS, Sublessor desires to sublease, subdemise and sublet unto
Sublessee and Sublessee desires to sublease, subhire and take from Sublessor, a
portion of the Premises, located on the east side of the 22nd Floor of 100 North
Riverside Plaza, Chicago, Illinois, depicted on Exhibit A (the "Sublease
Premises") which shall be deemed to have 12,262 rentable square feet, subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the rents hereinafter reserved and
the mutual covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Sublessor and Sublessee hereby agree as follows:
1. Sublease. Sublessor hereby subleases, subdemises and sublets unto
Sublessee, and Sublessee hereby subleases, subhires and takes from Sublessor,
the Sublease Premises, for the Term (as hereinafter defined) and subject to the
terms and conditions hereinafter set forth. Sublessee shall be entitled to
receive from Landlord those services and benefits with respect to Sublessee's
use and occupancy of the Sublease Premises that Sublessor is entitled to as
Tenant under the Master Lease.
2. Term. The term of this Sublease (the "Term") shall commence on May
15, 1999 (the "SUBLEASE COMMENCEMENT DATE"), and shall terminate on December 31,
2000 (the "EXPIRATION DATE"), unless sooner terminated as provided herein.
3. Master Lease. This is a Sublease, and this Sublease is subject to
and subordinate in all respects, to the Master Lease. Those portions of the
Master Lease constituting covenants by Tenant under the Master Lease, attached
hereto as Exhibit B (the "MASTER LEASE COVENANTS") are incorporated herein by
reference as if fully set forth herein. Sublessee agrees that nothing herein
contained shall be deemed to grant Sublessee any rights that would conflict with
any of the covenants and conditions of the Master Lease, and Sublessee agrees
that it will do nothing in, on or about the Sublease Premises which would result
in the breach by Sublessor of Sublessor's undertakings and obligations under the
Master Lease. Nothing contained in this Sublease shall be construed as a
guarantee by Sublessor of any of the obligations, covenants, warranties,
agreements
<PAGE> 5
or undertakings of Landlord in the Master Lease, nor as an undertaking by
Sublessor to Sublessee on the same or similar terms as are contained in the
Master Lease. During the term of this Sublease except as set forth herein, with
respect to the Sublease Premises Sublessee agrees to assume and be bound by all
of the non-rental payment covenants and agreements made by Sublessor under the
Master Lease Covenants and to perform all of the non-rental payment duties,
responsibilities and obligations of Sublessor under the Master Lease Covenants
(the "MASTER LEASE OBLIGATIONS"), in each case respecting such covenants,
substituting Sublessor for Landlord (as defined in the Master Lease) and
Sublessee for Tenant (as defined in the Master Lease), and to hold Sublessor
harmless from any damages, responsibility or liability which Sublessor may incur
by virtue of Sublessee's use of the Sublease Premises or any failure of
Sublessee to perform under this Sublease, including, but not limited to,
performance of the Master Lease Obligations.
In order to effectuate the understandings and intent of Sublessor and
Sublessee as set forth in this Sublease, Sublessor and Sublessee agree as
follows:
(a) Sublessor's Rights Under Master Lease. Subject to the terms and
provisions of this Sublease, whenever Sublessor, as the Tenant under the Master
Lease, has reserved a right under the Master Lease, such right shall inure only
to Sublessor, as Tenant under the Master Lease, and Sublessee shall have no
right, power or authority to amend, revise, terminate or waive any provision of
or otherwise adversely affect the Master Lease or to sell, assign, transfer or
convey the leasehold interest of Sublessor in the Master Lease.
(b) Sublessor's Consent. Subject to the terms and provisions of this
Sublease, to the extent that Landlord under the Master Lease has reserved the
power to consent to or to object to an action to be performed by the Tenant
under the Master Lease, Sublessor reserves the same right to consent to or
object to such action by Sublessee under this Sublease.
(c) Landlord's Obligations. With respect to the performance of any
obligations of Landlord under the Master Lease ("LANDLORD OBLIGATIONS"),
Sublessor shall have no obligation to perform Landlord Obligations. Sublessor
agrees to use all reasonable efforts to cause Landlord to provide for Sublessee
each and all the services and repairs affecting Sublessee's use and occupancy of
the Sublease Premises that Sublessor is entitled to receive from Landlord under
the Master Lease ("Landlord Obligations"); provided, however, nothing contained
in this Sublease shall be construed as a guarantee by Sublessor that such
Landlord Obligations will be performed, nor as an undertaking by Sublessor to
provide such services or repairs to Sublessee on the same or similar terms. If,
after written request from Sublessee, Sublessor fails to take action for the
enforcement of Sublessor's rights (as Tenant under the Master Lease) against
Landlord, Sublessee shall have the right to make demand upon Landlord with
respect thereto and if such failure is within Landlord's control not remedied
within 10 business days Sublessee may set off its Rent against the cost to cure
the failure to provide such services or repairs. To the extent that Sublessor's
rent abates under the Master Lease with respect to the Sublease Premises as a
result of the interruption of or failure of Landlord to provide services in
accordance with Paragraph 8 of the Master Lease, Sublessee's Rent hereunder
shall abate on a comparable basis.
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<PAGE> 6
(d) Sublessor's Performance Under the Master Lease. Sublessor covenants
and agrees that from and after the date hereof and during the term of the Master
Lease, Sublessor shall comply in all respects with the requirements of the
Master Lease and not take any action or enter into any agreements which shall be
in conflict with Sublessor's obligations under this Sublease.
(e) Sublessee's Quiet Enjoyment. Sublessor covenants that so long as
Sublessee keeps, observes and performs all of the terms, conditions, provisions
and agreements herein contained on the part of Sublessee to be kept, observed
and performed, including, without limitation, payment of Rent (as hereinafter
defined), Sublessee shall during the Term peaceably and quietly hold the
Sublease Premises, subject to the Master Lease and subject to the terms,
covenants, conditions, provisions and agreements hereof, free from hindrance by
Sublessor. The foregoing covenant shall not, however, in any way limit,
supersede or override any other provision of this Sublease nor shall it make
Sublessor in any way guarantor of or require Sublessor to guarantee or assure
Sublessee against claims of Landlord or any other third party which do not arise
out of a failure by Sublessor to comply with its obligations under this
Sublease.
(f) Right of Sublessor to Perform Sublessee's Obligations. If Sublessee
shall fail to make any payment or perform any act required to be made or
performed by Sublessee under the Master Lease Covenants, and such default is not
cured by Sublessee by the first to occur of (i) one-half of the period specified
in the Master Lease for curing such default if such period is ten (10) days or
less or (ii) five (5) days prior to the expiration of such Master Lease cure
period, Sublessor, without waiving or releasing any obligation or default
hereunder, may (but shall be under no obligation to) make such payment or
perform such act for the account and at the expense of Sublessee, and may take
any and all such actions as Sublessor in its sole discretion deems necessary or
appropriate to accomplish such cure. If Sublessor shall reasonably incur any
expense in remedying such default, Sublessor shall be entitled to recover such
sums upon demand from Sublessee as Additional Rent under this Sublease and such
sums shall bear interest from their due date at the prime rate as announced from
time to time by Bank One, N.A. plus three percent (3%) per annum (the "DEFAULT
RATE"). In the event that Bank One, N.A. shall no longer announce a "prime rate"
then the interest rate which shall serve as the Default Rate shall be the 90-day
United States Treasury Bill interest rate plus four percent (4%) per annum.
4. Use and Improvements. Sublessee shall use the Sublease Premises as
an office facility only. Sublessee's use of the Sublease Premises shall at all
times comply with any and all laws, rules, regulations and ordinances of all
governmental authorities having jurisdiction over the Sublease Premises.
Sublessee hereby agrees to take and accept the Sublease Premises "AS IS,"
without requiring any alterations, improvements, repairs or decorations to be
made by any party. Sublessee shall not make or cause to be made any additions,
improvements or alterations to the Sublease Premises or the Premises without
Sublessor's prior written consent, which shall not be unreasonably withheld,
delayed or conditioned. Notwithstanding the foregoing, subject to any necessary
approval thereof by Landlord, Sublessor hereby approves those alterations to the
Subleased Premises set forth on Exhibit C attached hereto ("Sublessee
Alterations") provided that the quality of those Sublease Alterations is at
least comparable to that of existing improvements. Upon the expiration or
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<PAGE> 7
termination of this Sublease, Sublessee shall have no obligation to remove the
Sublessee Alterations. In the event that Sublessor consents to any additions,
improvements or alterations, such additions, improvements and alterations shall
be completed at Sublessee's sole cost and expense in accordance with plans
approved by Sublessor and Landlord and in compliance with all applicable laws,
statutes, ordinances, codes, rules and regulations of governmental authorities
having jurisdiction over the Sublease Premises and the Premises. Sublessee shall
be wholly responsible for any and all costs of securing card-keys for its
personnel for the building security system and for any charges under the Master
Lease for or in connection with any adjustments to or changes of the security
system resulting from this Sublease and Sublessee's occupancy hereunder.
Sublessee shall provide Sublessor with prior written notices of any work
involving electrical, communications, HVAC or other building systems and shall
have any such work performed by qualified and licensed contractors.
Sublessee shall pay all costs and expenses incurred in connection with
special services requested by it for or in connection with the Sublease Premises
that are beyond those services normally provided to tenants of the Premises,
including but not limited to, after-hours HVAC and after-hours freight elevator
service ("SPECIAL SERVICES").
5. Rent. Sublessee shall pay as rent for the Sublease Premises, the
aggregate of the following, all of which are hereby declared to be "RENT":
(a) Gross Base Rent. Sublessee shall pay to Sublessor at such place as
Sublessor may from time to time designate, in coin or currency, which, at the
time of payment, is legal tender for private or public debts in the United
States of America, at annual rates as hereinafter specified, gross base rent
("GROSS BASE RENT"). Gross Base Rent shall be paid in monthly installments as
hereinafter provided, in advance on or before the first day of each and every
month during the Term, without any set-off or deduction whatsoever. If the Term
commences other than on the first day of a month, Gross Base Rent for such month
shall be prorated. The Gross Base Rent for the portion of the month in which the
Term commences shall be paid on the first day of the Term.
Gross Base Rent for the Term shall be the sum of Six Hundred
Thirty-Eight Thousand One Hundred Fifty-One and 53/100 Dollars
($638,151.53), payable in monthly installments as follows:
(1) Sublessee shall pay to Sublessor on the Sublease
Commencement Date the sum of Sixteen Thousand Eight Hundred
Seventy-Six and 80/100 Dollars ($16,876.80), representing Base
Rent for May, 1999; and
(2) Beginning on June 1, 1999, and thereafter on the
first day of each month through and including December 1, 2000,
Sublessee shall pay monthly installments of Base Rent of
Thirty-Two Thousand Six Hundred Ninety-Eight and 67/100 Dollars
($32,698.67) each.
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<PAGE> 8
(b) Additional Rent.
(1) Sublessee shall pay any and all additional sums for
Special Services as and when such charges may become due. Sublessee
shall pay to Sublessor, an electricity charge for the Sublease
Premises, equal to Sublessor's actual cost of all electricity
consumed on the Sublease Premises based on Sublessee's monthly
metered usage for the Sublease Premises. Such sums shall be due
with the next installment of Gross Base Rent.
(2) Any sums due to Sublessor by Sublessee under this
Sublease which are not Gross Base Rent shall be deemed and
considered to constitute "ADDITIONAL RENT".
6. Representations, Warranties and Covenants Regarding Master Lease. As
of the date hereof Sublessor hereby represents, warrants and covenants to
Sublessee as follows:
(a) Status. Sublessor is the current tenant under the Master Lease and
the Master Lease is in full force and effect. The stated expiration date of the
term of the Master Lease extends beyond the Term of this Sublease.
(b) Rent. All rents and other amounts (including additional rents and
other charges) reserved or required under the Master Lease have been paid to the
extent they were payable prior to the date hereof.
(c) No Default. Sublessor is not in default under the Master Lease and
to the best of Sublessor's knowledge, there is no existing default by Landlord
under the Master Lease.
(d) This Sublease will not conflict with, constitute a default under or
result in a breach of or a violation of any provision of the Master Lease.
(e) Sublessor will not amend or modify any term of the Master Lease in
a manner that would materially decrease Sublessee's benefits or materially
increase Sublessor's obligations hereunder.
7. Master Lease Notices. From and after the date hereof Sublessor and
Sublessee shall each immediately deliver to the other true, complete and exact
copies of any notices, demands, communications or other instruments or documents
received from, or given by or to Landlord, by either of them pertaining to any
default under the Master Lease. Sublessor and Sublessee shall each immediately
furnish the other with any and all information such party may request concerning
performance by the other party of the covenants of the Master Lease. Any notice
of default delivered by Landlord relating to the Sublease Premises, pursuant to
the Master Lease, with respect to a Master Lease Obligation, shall be deemed and
considered to be a notice of default by Sublessor pursuant to this Sublease.
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<PAGE> 9
8. Insurance.
(a) Insurance under Master Lease. From and after the Sublease
Commencement Date Sublessee shall, at a minimum, obtain, pay for and provide or
cause to be provided any and all liability insurance policies with the coverages
and types of insurance carriers all as may be required to be obtained and
carried under, and in strict conformance and compliance with, the Master Lease.
From and after the Sublease Commencement Date Sublessee shall, at a minimum,
provide or cause to be provided to Landlord and Sublessor in a timely fashion
and in strict compliance and conformance with the Master Lease all appraisals,
certificates, endorsements and notices relating to or respecting such insurance
required by the Master Lease. Sublessor and Landlord shall be named as an
additional insured under each of such insurance policies.
(b) Other Insurance. In addition to the insurance policies and
coverages required to be provided under the foregoing Section 8(a), from and
after the Sublease Commencement Date Sublessee shall also provide or cause to be
provided the following insurance policies or increased coverages under the
foregoing policies:
(1) A standard form of fire insurance policy insuring leasehold
improvements, personal property, equipment and fixtures of Sublessee on
the Sublease Premises ("Sublessee's Property") in an amount equal to the
full replacement value of Sublessee's Property, with broad form extended
coverage endorsement (including explosion and sprinkler leakage
coverage); and
(2) Workers' compensation insurance in an amount required by
applicable law.
(c) Insurance Certificates. All policies provided for under this
Sublease shall provide for at least thirty (30) days prior written notice of
cancellation by the insurer to Sublessor. Sublessee shall furnish to Sublessor
on the Sublease Commencement Date and not less than thirty (30) days before the
expiration of any such policy a certificate evidencing, or if requested by
Sublessor a certified copy of, each insurance policy. Sublessor and Landlord
shall be named as an additional insured with respect to the foregoing insurance
policies.
In case Sublessee fails to furnish Sublessor with any policy of
insurance or certificate thereof, or in case Sublessee fails to furnish
Sublessor with a renewal policy of insurance or certificate thereof, as
hereinabove provided, Sublessor, after ten (10) days written notice to
Sublessee, may, at its option, but shall not be required to, procure the same
and the cost thereof shall be payable by Sublessee within ten (10) days after
written demand therefor and shall be deemed and collectible as Additional Rent
and shall bear interest at the Default Rate from the date of such payment by
Sublessor and demand to Sublessee until the same shall be repaid by Sublessee.
(d) Waiver of Subrogation. Sublessee agrees that each policy of
insurance shall contain a waiver of subrogation clause as to Sublessor and
Landlord and their officers, directors, employees, agents and invitees (the
"SUBLESSOR INDEMNIFIED PARTIES"); and Sublessee waives, releases and
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<PAGE> 10
discharges Sublessor and the Sublessor Indemnified Parties from all claims or
demands whatsoever which Sublessee may have or acquire arising out of damage to
or destruction of the machinery, equipment, furniture, fixtures, personal
property and business of Sublessee occasioned by fire or other cause, whether
such claim or demand may arise because of the negligence or fault of Sublessor
and the Sublessor Indemnified Parties and Sublessee agrees to look to the
insurance coverage only in the event of such loss. Sublessor agrees that each
policy of insurance insuring the leasehold improvements, personal property,
equipment and Fixtures of Sublessor shall contain a waiver of subrogation clause
as to Sublessee and its officers, directors, employees, agents and invitees (the
"SUBLESSEE INDEMNIFIED PARTIES"); and Sublessor waives, releases and discharges
Sublessee and the Sublessee Indemnified Parties from all claims or demands
whatsoever which Sublessor may have or acquire arising out of damage to or
destruction of the machinery, equipment, furniture, fixtures, personal property
and business of Sublessor occasioned by fire or other cause, whether such claim
or demand may arise because of the negligence or fault of Sublessor and the
Sublessee Indemnified Parties and Sublessor agrees to look to the insurance
coverage only in the event of such loss.
9. Damage or Destruction.
(a) Repair and Restoration. If the Property or the Premises or any part
thereof, or the Sublease Premises or any part thereof, shall, at any time or
times after the Sublease Commencement Date during the continuance of the Term,
be destroyed or damaged by fire or other casualty, Sublessor shall not be
obligated to undertake any repair or restoration of the Sublease Premises. In
the event that the Master Lease is terminated pursuant to Section 13 of the
Master Lease, this Sublease shall also terminate as of the date of termination
of the Master Lease. In the event that the Master Lease is not terminated and
Landlord undertakes to repair the property pursuant to Section 13 of the Master
Lease, then, at Sublessor's option, this Sublease shall continue in full force
and effect and Sublessee's rights shall at all times remain subject to the
rights of Landlord and Sublessor under the Master Lease. In the event that this
Sublease is not terminated, Sublessee shall take possession of the Sublease
Premises within two (2) days after notice from Sublessor that repairs to the
Sublease Premises have been substantially completed by Landlord.
(b) Abatement of Rent. In the event of fire or other casualty, Rent
shall be abated pursuant to the terms and provisions of Section 13.A of the
Master Lease.
10. Indemnification and Waiver. In addition to and not in derogation of
the obligations of Sublessee under the Master Lease, except to the extent
prohibited by law, Sublessee hereby agrees to defend, indemnify and hold
Sublessor and Sublessor's officers, directors, invitees, employees, agents,
successors and assigns, harmless from all loss, damage, expense, claims and
actions that Sublessor or Sublessor's officers, directors, invitees, employees,
agents, successors and assigns may suffer or sustain or be held liable for,
arising out of loss of life or damage or injury to persons or property to
whomsoever belonging, arising out of or connected with the following:
(a) The use of the Sublease Premises or any portion of the Premises by
Sublessee or its beneficiaries, officers, agents, employees, tenants, invitees
or licensees; or
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<PAGE> 11
(b) Failure by Sublessee to comply with its obligations hereunder or
under the Master Lease Covenants.
Sublessee agrees, to the extent not expressly prohibited by law, that
Sublessor and the Sublessor Indemnified Parties shall not be liable, and
Sublessee waives all claims, for damage to property and business sustained
during the Term of this Sublease by Sublessee occurring in or about the Premises
or the Sublease Premises resulting directly or indirectly from any existing or
future condition, defect, matter or thing in the Premises, the Sublease Premises
or any part thereof, or from equipment or appurtenances becoming out of repair
or from accident, or from any occurrence or act or omission of Sublessor or any
of the Sublessor Indemnified Parties, or any other person. All property of
Sublessee shall be solely at the risk of Sublessee and Sublessee relieves and
releases Sublessor of all responsibility for theft, robbery or pilferage.
Indemnification of Sublessee: Sublessor hereby indemnifies and holds
Sublessee harmless from and against any and all claims, damages, losses,
expenses and liabilities (including reasonable attorneys' fees) incurred as a
result of or arising out of:
(a) any claim for personal injury or property damage asserted against
Sublessee in connection with the land or the building that arise on any portion
of the Sublease Premises not during the Term, and
(b) any termination of this Sublease resulting from (i) a default by
Sublessor under the Master Lease not directly caused by Sublessee's default
hereunder, or (ii) any act of Sublessor.
11. Condemnation.
(a) Total. Subject to the rights of Landlord under the Master Lease,
after the date hereof in the event that the entire Sublease Premises shall be
taken or damaged by the exercise of the power of eminent domain, then (whether
or not this Sublease shall terminate by operation of law upon such exercise of
the power of eminent domain) this Sublease shall terminate effective as of the
date of such taking and Rent shall be prorated to such date of termination.
Sublessee shall not be entitled to any award or portion thereof arising from
such taking.
(b) Partial. In the event that after the date hereof a portion of the
Premises or the Sublease Premises is taken or damaged by the exercise of the
power of eminent domain and the Master Lease is not terminated pursuant to the
provisions of the Master Lease, then this Sublease shall not terminate but Rent
shall be apportioned based upon the proportion of the Sublease Premises not so
taken or damaged. Sublessee shall not be entitled to any award or any portion
thereof arising from such partial taking.
12. Estoppel Certificate. Sublessee and Sublessor agree, at any time and
from time to time, upon not less than ten (10) business days prior written
request to execute, acknowledge and deliver a statement in writing in recordable
form certifying (i) that this Sublease is unmodified and
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<PAGE> 12
in full force and effect (or, if there have been modifications, that this
Sublease is in full force and effect, as modified, and stating the
modifications), (ii) the date to which Rent and other charges have been paid,
(iii) whether or not there is any existing default under this Sublease and
specifying any such breach or default known to such party.
13. Assignment and Subleases.
(a) Sublessee Assignment. Sublessee shall not assign or sub-sublease all
or any part of its right, title and interest in this Sublease or any part of its
interest in the Sublease Premises or any part thereof.
(b) Sublessor Assignment. From and after the Sublease Commencement Date,
Sublessor shall be entitled to assign its interest in the Master Lease, subject
to this Sublease, and/or this Sublease to any person it shall so desire free of
any obligation or duty to secure the consent of Sublessee. Any assignment
permitted under this Section 13(b) shall be effective to release Sublessor from
any and all future obligations under this Sublease, provided the assignee
assumes Sublessor's obligations hereunder.
14. Condition of Sublease Premises.
(a) Condition. Sublessee acknowledges that Sublessor has made no
representations regarding the Sublease Premises as to adequacy and/or fitness
for Sublessee's proposed use thereof, or for any use, provided, however,
Sublessor states that to the best of its knowledge the HVAC and mechanical
systems in the Sublease Premises are in good condition. From and after the
Sublease Commencement Date Sublessee shall, at its own expense, maintain and
repair the Sublease Premises including, without limitation, any and all HVAC,
electrical or plumbing systems serving the Sublease Premises consistent with the
Master Lease in at least as good of a condition as exists on the Sublease
Commencement Date. Sublessee's maintenance and repair obligations with respect
to the Sublease Premises shall be identical to Sublessor's maintenance and
repair obligations as set forth in the Master Lease.
(b) Upon Termination. At the Expiration Date or upon any other
termination of this Sublease, Sublessee shall deliver up the Sublease Premises
and all improvements and fixtures existing thereon in good order and condition,
reasonable wear and tear from normal use and fire or casualty excepted; and all
improvements existing on the Sublease Premises upon the termination of this
Sublease which have been put in at the expense of Sublessee shall remain upon
and be surrendered with the Sublease Premises as a part thereof and thereupon
become the property of Sublessor without cost, charge or reimbursement to
Sublessee; provided, however, that upon request from Sublessor, all improvements
and alterations made by Sublessee shall be removed by Sublessee, at Sublessee's
sole cost and expense and the Sublease Premises shall be restored by Sublessee
to the same condition as of the Sublease Commencement Date, wear and tear, fire
or other casualty and condemnation excepted.
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<PAGE> 13
15. Access to the Sublease Premises. From and after the Sublease
Commencement Date, Sublessee agrees that it will permit Sublessor, or any duly
authorized agent of Sublessor, access to the Sublease Premises at any reasonable
time for the purpose of examination and inspection of the same and to show the
space to other prospective subtenants upon reasonable prior notice. In addition,
Sublessor, after notice to Sublessee (except in the case of emergency when no
notice shall be required) shall be entitled to access to the Sublease Premises
to install, maintain, repair or replace any wiring, piping or other facilities
located above the drop ceiling of the Sublease Premises.
16. Sublessee's Default.
(a) Default. Each of the following shall be a default of Sublessee under
this Sublease:
(1) The non-payment by Sublessee to Sublessor of Gross Base Rent
within five (5) days after such sum is due, or the non-payment of any
other Rent after five (5) days written notice.
(2) Breach, default, or non-compliance by Sublessee with any
covenant contained in this Sublease other than those described in
Section 1(a)(1), followed by notice as herein provided from Sublessor to
Sublessee and failure of Sublessee to remedy or correct such breach,
default or non-compliance (i) as respects matters that are defaults
under the Master Lease, within the earlier to occur of one-half (1/2) of
the period specified in the Master Lease for curing such defaults or ten
(10) days or less or five (5) days prior to the expiration of such
Master Lease cure period, or (ii) as respects defaults which are
defaults hereunder but not under the Master Lease, within thirty (30)
days after receipt of such notice.
(3) A petition is filed by or against Sublessee to declare
Sublessee bankrupt or seeking a plan of reorganization or arrangement or
substitution, therefor, or to delay payment of, reduce or modify
Sublessee's debts; or any petition is filed or other action taken to
reorganize or modify Sublessee's capital structure; or Sublessee is
declared insolvent by law or any assignment of Sublessee's property is
made for the benefit of creditors; or a receiver is appointed for
Sublessee or Sublessee's property; provided, however, that in the event
of any involuntary proceeding or appointment brought against Sublessee,
Sublessee shall have sixty (60) days in which to have such a proceeding
or appointment dismissed.
(b) Termination. In the event a default as provided in Section 16(a)
above shall occur and not be timely cured within the time period provided,
Sublessor shall have the right immediately to terminate this Sublease, and
Sublessor shall have the immediate right to re-enter and repossess the Sublease
Premises and remove all persons therefrom without being guilty of trespass and
without prejudice to any remedies for accrued Rents or damages, and in such
event Sublessor shall be additionally entitled to recover reasonable attorneys'
fees incurred in connection with effecting such cancellation and termination.
Sublessee shall quit and peacefully surrender the Sublease Premises to Sublessor
upon or at any time after such termination, and after such termination Sublessor
may
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dispossess Sublessee and all persons from the Sublease Premises, and may have,
hold and enjoy the Sublease Premises and the right to receive all rental income
from the same.
(c) Other Remedies. In addition to the right of Sublessor to cancel and
terminate this Sublease as above provided for in this Section 16, and without
waiver or limitation of such right, Sublessor may after a default by Sublessee
which is not timely cured (i) recover damages from Sublessee for non-compliance
with any covenant, agreement or warranty contained in this Sublease or for
non-payment of any sum required to be paid by Sublessee to Sublessor, (ii) seek
specific performance or other equitable relief with respect to any covenant of
this Sublease and (iii) terminate Sublessee's right to possession without
terminating this Sublease, whereupon the right of Sublessee to possession of the
Sublease Premises or any part thereof shall cease. The waiver of any one event
of default shall not be construed as the waiver of any other event of default.
If Sublessor terminates Sublessee's right to possession of the Sublease
Premises without terminating this Sublease, such termination of possession shall
not release Sublessee, in whole or in part, from Sublessee's obligations
hereunder for the full Term. Sublessor shall have the right from time to time,
to recover from Sublessee, and Sublessee shall remain liable for, all Rent for
the period from the date of such termination of possession to the Expiration
Date. In any such case, Sublessor shall use reasonable efforts to relet the
Sublease Premises or any part thereof, for such time (which may be for a term
extending beyond the Term) and upon such terms as Sublessor, in Sublessor's
discretion, shall determine, and Sublessor shall not be required to accept any
subtenant offered by Sublessee or to observe any instructions given by Sublessee
relative to such reletting. Also, in any such case, Sublessor may change the
locks or other entry devices of the Sublease Premises and make repairs,
alterations and additions in or to the Sublease Premises and redecorate the same
to the extent deemed by Sublessor necessary or desirable, and Sublessee shall
upon ten (10) days written notice, pay the cost thereof (but only to the extent
necessary to restore the Sublease Premises to the condition as existed on the
Sublease Commencement Date) together with Sublessor's expenses of rereletting,
including, without limitation, customary brokerage commissions. Sublessor may
collect the rents from any such reletting and shall apply the same, first to the
payment of the expenses of reentry, redecoration, repair and alterations and the
expenses of reletting and second to the payment of Rent and any excess or
residue shall operate only as an offsetting credit against the amount of Rent
due and owing as the same thereafter becomes due and payable hereunder; but the
use of such offsetting credit to reduce the amount of Rent due Sublessor, if
any, shall not be deemed to give Sublessee any right, title or interest in or to
such excess or residue and any such excess or residue shall belong to Sublessor
solely; provided that in no event shall Sublessee be entitled to a credit on its
indebtedness to Sublessor in excess of the aggregate sum (including Rent) due
and owing or which would have been paid for the period for which the credit to
Sublessee is being determined, had no default occurred, as applicable. No such
re-entry, repossession, repairs, alternations, additions or reletting shall be
construed as an eviction or ouster of Sublessee or as an election on Sublessor's
part to terminate this Sublease, unless a written notice of such intention is
given to Sublessee, or shall operate to release Sublessee in whole or in part
from any of Sublessee's obligations hereunder, and Sublessor may, at any time
and from time to time, sue and recover judgment for any deficiencies from to
time remaining after the application from time to time of the proceeds of any
such reletting.
11
<PAGE> 15
In the event of the termination of this Sublease by Sublessor as
provided for above, Sublessor shall be entitled to recover from Sublessee all
sums which Sublessor is entitled to recover under any provision of this Sublease
including, but not limited to, all the fixed dollar amounts of Rent accrued and
unpaid for the period up to and including such termination date, as well as all
other additional sums payable by Sublessee and an amount equal to the excess of
the present value of Base Rent plus the Additional Rent provided to be paid for
the remainder of the Term over the rental value of the Sublease Premises for the
remainder of the Term after deduction of all anticipated expenses of reletting.
Should the rental value of the Sublease Premises after deduction of all
anticipated expenses of reletting exceed the present value of the Base Rent plus
the Additional Rent provided to be paid by Sublessee for the remainder of the
Term, Sublessor shall not be obligated to pay to Sublessee any part of such
excess.
(d) Costs and Expenses. Sublessee shall pay upon demand all of
Sublessor's costs, charges and expenses, including without limitation, court
costs and reasonable attorneys' fees incurred in successfully enforcing
Sublessee's obligations under this Sublease or incurred by Sublessor in any
litigation, negotiation or transaction in which Sublessee causes Sublessor to
become involved or concerned. The prevailing party in any proceedings between
Sublessor and Sublessee shall be entitled to recover its reasonable attorney's
fees incurred in such proceeding as a part of any judgment.
17. Sublessor's Default. Upon a default by Sublessor of any obligations
hereunder that adversely affects Sublessee, Sublessee may after thirty (30) days
written notice to Sublessor pursue any remedies it may have at law or in equity
against Sublessor.
Notwithstanding any other provision of this Sublease to the contrary
Sublessee waives any and all right to claim punitive damages and consequential
damages, including but not limited to loss of profits, and in no event shall
damages recoverable by Sublessee from Sublessor for any breach or breaches this
Sublease or any representation, warranty or covenant under or with respect to
this Sublease exceed $400,000 in the aggregate. Sublessor shall pay upon demand
all of Sublessee's costs charges and expenses, including without limitation
courts costs and reasonable attorneys' fees incurred in successfully enforcing
Sublessor's obligations under this Sublease.
18. Security Deposit. As additional security for the faithful and prompt
performance of its obligations hereunder, Sublessee has, concurrently with the
execution of this Sublease, paid to Sublessor an amount equal to $32,698.67 (the
"SECURITY DEPOSIT"). The Security Deposit may be applied by Sublessor for the
purpose of curing any default or defaults of Sublessee hereunder, in which event
Sublessee shall replenish the Security Deposit in full by promptly paying to
Sublessor the amount so applied. Sublessor shall not pay any interest on the
Security Deposit. If Sublessee has not defaulted hereunder, Sublessor has not
applied the Security Deposit to cure a default, or Sublessor has applied the
Security Deposit to cure a default and Sublessee has replenished the same, then
the Security Deposit, or such applicable portion thereof, shall be paid to
Sublessee after the termination of this Sublease and the surrender of the
Sublease Premises to Sublessor. The Security Deposit shall not be deemed an
advance payment of Rent or a measure of Sublessor's damages for
12
<PAGE> 16
any default hereunder by Sublessee, nor shall it be a bar or defense to any
action that Sublessor may at any time commence against Sublessee.
19. Notices. All notices or demands upon Sublessor or Sublessee desired
or required to be given under any provisions hereof shall be in writing. Any
notices or demands given under this Sublease shall be deemed to have been given
if a copy thereof has been delivered as herein provided addressed as follows:
If to Sublessor:
Morton International, Inc.
100 North Riverside Plaza
Chicago, Illinois 60606
Attention: Vice President of Legal Affairs
and General Counsel
If to Sublessee:
Universal Access, Inc.
100 North Riverside Plaza
22nd Floor
Chicago, Illinois 60606
Attention: Robert Pommer
or to such other address or addresses as the party entitled to such notice may
hereafter from time to time specify by written notice to the other party.
Failure to provide copies of notices to those designated as entitled to a copy
shall not result in a notice being ineffective. Unless personal delivery is
specifically required under the provision of this Sublease the delivery of all
notices shall be deemed effective upon receipt if by personal delivery or two
(2) days after posting if by registered or certified United States mail. Any
parties' failure to accept delivery shall be deemed to constitute receipt for
the purposes of this Section 18.
20. Brokers. Sublessee and Sublessor each represent and warrant unto
each other that it has not dealt with any real estate brokers in connection with
this Sublease except for Dean Topping & Company (the "Broker") and, to its
knowledge, no person other than the Broker is entitled to any commission in
connection with this Sublease. Each party hereby indemnifies, defends and holds
the other party harmless from and against any and all claims of any real estate
broker for commissions in connection with this Sublease other than the Broker
pursuant to Sublessor's written agreement with Broker, which claims arise from
alleged dealings with such party. Sublessor shall pay the brokerage fee to
Broker set forth in the statement delivered by Broker dated April 23, 1999.
21. Late Payments. All payments becoming due under this Sublease and
remaining unpaid for more than five (5) days after the due date shall bear
interest from the due date until paid
13
<PAGE> 17
at the Default Rate (but in no event at a rate that is more than the highest
rate that is at the time lawful in the State of Illinois). In the event that in
any calendar year Sublessee shall be more than five (5) days delinquent in
paying any Gross Base Rent due hereunder on more than two occasions, then,
thereafter, during such calendar year any late payment shall bear a late payment
charge equal to five percent (5%) of the payment made, which charge shall be
payable with the payment and shall be in addition to and not in lieu of the
Default Rate of interest due on such sum.
22. Miscellaneous.
(a) No Waiver. The failure of either party to insist on strict
performance of any covenant or condition hereof, or to exercise any option
contained herein, shall not be construed as a waiver of such covenant, condition
or option in any other instance.
(b) Memorandum of Lease. Sublessee shall not record this Sublease or any
memorandum hereof.
(c) Governing Law. This Sublease has been negotiated, executed and
delivered in the State of Illinois, and the parties agree that the rights and
obligations of the parties under this Sublease shall be governed and construed
in accordance with the laws of the State of Illinois.
(d) Successors and Assigns. Each provision of this Sublease shall extend
to and shall bind and inure to the benefit not only of Sublessor and Sublessee,
but also their respective successors and assigns, but this provision shall not
operate to permit any transfer, assignment, mortgage, encumbrance, lien, charge
or subletting contrary to the provisions of the Master Lease or of this
Sublease. The terms "Tenant" and "Landlord" as employed herein shall include and
refer to the respective successors and assigns under the Master Lease of the
parties so identified in the Master Lease.
(e) Amendments. No modification, waiver or amendment of this Sublease or
of any of its conditions shall be binding upon Sublessor or Sublessee unless in
writing signed by both parties.
(f) Time of Essence. Time is of the essence of this Sublease and each
and all of the provisions thereof.
(g) Severability. The invalidity of any of the provisions of this
Sublease will not impair or affect in any manner the validity, enforceability or
effect of the rest of this Sublease.
(h) Entire Agreement. All understandings and agreements, oral or
written, heretofore made between the parties hereto are merged in this Sublease,
which alone fully and completely expresses the agreement between Sublessor and
Sublessee.
(i) Relationship Between the Parties. This Sublease does not create the
relationship of principal and agent, nor does it create any partnership, joint
venture, or any association or
14
<PAGE> 18
relationship between Sublessor and Sublessee other than as and to the extent
specifically provided in this Sublease, the sole relationship of Sublessor and
Sublessee being that of sublandlord and subtenant as provided in this Sublease.
(j) Remedies Cumulative. Except as specifically provided herein, all
rights and remedies of Sublessor and Sublessee under this Sublease shall be
cumulative and none shall exclude any other rights and remedies allowed by law.
(k) Conflict. In the event that any of the terms and provisions of this
Sublease vis-a-vis Landlord are inconsistent with the Master Lease, the terms
and provisions of the Master Lease shall control.
(l) Representative. Until changed by written notice from Sublessee to
Sublessor, the person designated to receive notice on behalf of Sublessee under
Section 18 shall be Sublessee's representative who is authorized to act on
behalf of Sublessee hereunder.
(m) Limitation. Any liability of Sublessor for damages or breach or
non-performance by Sublessor hereunder shall be subject to the limitation set
forth in Section 17, and no personal liability beyond or in excess of such limit
shall be asserted against Sublessor or its officers, agents, employees, legal
representatives, successors or assigns for a breach of this Sublease. The
limitation of Section 34 of the Master Lease covenants applies for the benefit
of Landlord but does not limit Sublessor's liability.
(n) Consent of Landlord. The obligations of Sublessor and Sublessee
under this Sublease are conditioned and contingent upon the Landlord's consent
to this Sublease. In the event, Landlord's consent is not obtained on or before
May 20, 1999 this Sublease shall automatically terminate and become null and
void and Sublessor shall return any Rent or Security Deposit delivered to it and
neither Sublessor nor Sublessee shall have any further obligations or
liabilities hereunder to each other or with respect to the Subleased Premises.
Sublessee shall not be entitled to possession of the Sublease Premises until the
Landlord's consent has been received. If such consent has not been received by
May 15, 1999, and is later received on or prior to May 20, 1999, Gross Base Rent
shall abate for each day that possession is not available to Sublessee at a rate
of $1,054.80 per day and Sublessor shall promptly refund any such abatement
amount.
15
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of
the day and year first above written.
SUBLESSOR:
MORTON INTERNATIONAL, INC.,
an Indiana corporation
By: /s/ THOMAS F. McDEVITT
Name: /s/ THOMAS F. McDEVITT
-----------------------------
Title: Vice President Finance & CEO
----------------------------
SUBLESSEE:
UNIVERSAL ACCESS, INC.,
an Illinois corporation
By: /s/ ROBERT J. POMMER
Name: /s/ ROBERT J. POMMER
-----------------------------
Title: Chief Operating Officer
----------------------------
16
<PAGE> 20
EXHIBIT A
[Plan of the Sublease Premises]
<PAGE> 21
EXHIBIT B
OFFICE LEASE
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
CHICAGO, ILLINOIS
----------------------------------------
MORTON THIOKOL, INC.,
A DELAWARE CORPORATION
<PAGE> 22
OFFICE LEASE
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
CHICAGO, ILLINOIS
MORTON THIOKOL, INC.,
a Delaware corporation
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. PREMISES 1
A. Premises 1
B. Common Area Rights 1
C. Rentable Area 2
2. DESIGN AND CONSTRUCTION 3
A. Shell 3
B. Additional Work 4
3. TERM 4
A. Commencement Date 4
B. Substantial Completion 5
C. Unavoidable Delay 6
D. Delay 6
E. Dispute Regarding Commencement Date 8
F. Amendment 8
4. BASE RENT 8
A. Part 1 9
B. Part 2 9
C. Part 3 9
5. ADDITIONAL RENT 9
A. Certain Definitions 9
B. CPI Adjustment 14
C. Expense and Tax Adjustment 15
D. Electricity Payments 18
E. Allocation of Operating Expenses and Tax Expense 19
F. Delay in Computing Additional Rent 19
G. Minimization of Additional Rent 19
H. Tax Refunds and Operating Expense Overcharges 19
6. USE OF PREMISES 20
7. CONDITION OF PREMISES 20
8. SERVICES 20
A. List of Services 22
B. Interruption of Services 22
C. Additional Services 23
D. Energy Conservation 23
E. Rights of Tenant 23
9. REPAIRS 24
A. Landlord 24
B. Tenant 25
C. Access 25
10. ADDITIONS AND ALTERATIONS 25
A. Tenant's Rights 25
B. Ownership and Removal 26
11. COVENANT AGAINST LIENS 26
12. INSURANCE 27
A. Mutual Waiver of Subrogation 27
</TABLE>
-i-
<PAGE> 23
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
B. Tenant Coverage 27
C. Avoid Action Increasing Rates 28
D. Landlord's Coverage 28
E. Hold Harmless and Indemnification 29
F. Waiver Provisions 30
13. FIRE OR CASUALTY 30
A. Rights Upon Loss 30
B. Proceeds 31
14. [INTENTIONALLY DELETED] 32
15. NONWAIVER 32
16. CONDEMNATION 32
A. Total 32
B. Partial 32
C. Termination Rights 33
D. Mortgagee Rights 33
17. ASSIGNMENT AND SUBLETTING 34
A. Limitations 34
B. Notice 34
C. Expenses 35
D. Recapture 35
18. POSSESSION/SURRENDER 36
A. Acceptance 36
B. Possession 36
C. Condition of Premises 36
19. HOLDING OVER 37
20. ESTOPPEL CERTIFICATES 37
21. SUBORDINATION 38
22. CERTAIN RIGHTS RESERVED BY LANDLORD 38
23. RULES AND REGULATIONS 40
24. LANDLORD'S REMEDIES 40
A. Default and Remedies 40
B. Surrender of Possession 41
C. Reletting 41
D. Termination of Lease 42
E. Costs and Expenses 42
F. Landlord's Cure 43
25. TENANT'S REMEDIES 43
A. Tenant's Cure 43
B. Set-Off 43
C. Immediate Set-Off 43
D. Remedies 43
E. Costs and Expenses 44
26. COVENANT OF QUIET ENJOYMENT 44
A. Quiet Enjoyment 44
B. Evidence of Title 44
27. REAL ESTATE BROKER 45
28. MISCELLANEOUS 45
A. Rights Cumulative 45
B. Late Payments 45
C. Terms 46
D. Binding Effect 46
E. Lease Contains All Terms 46
F. Delivery for Examination 46
G. No Air Rights 46
H. Captions 46
I. Time 46
J. Only Landlord/Tenant Relationship 46
K. Governing Law 47
L. Partial Invalidity 47
M. Memorandum 47
29. NOTICES 47
</TABLE>
-ii-
<PAGE> 24
<TABLE>
<S> <C> <C>
30. TENANT'S SPECIAL COVENANTS 48
A. Expenses 48
B. Lease Takeover 48
C. Communication System 52
D. Landlord's Changes After Construction 53
E. Signage 53
F. Janitorial 55
G. Security 55
H. Decorating 56
I. Cafeteria 56
J. Lobby 58
K. Storage 58
L. Shredder 59
31. PARKING 59
A. Spaces 59
B. Additional Spaces 59
C. Market Rate Spaces 60
32. OPTIONS 60
A. Part 4 60
B. Extension Options 60
C. Expansion Options 62
D. First Option 64
E. Term 65
F. Option Provisions 65
33. DETERMINATION BY ARBITRATION 66
A. Arbitration 66
B. Rent Arbitration 67
C. Mortgage Notice 67
34. LIMITATION ON LIABILITY 67
A. Landlord 67
B. Tenant 68
</TABLE>
-iii-
<PAGE> 25
EXHIBITS
<TABLE>
<CAPTION>
Lease Text
Reference
----------
<S> <C> <C>
EXHIBIT A LAND 1
EXHIBIT B-1 to B-17 PLAN OF PREMISES 1
EXHIBIT C BUILDING PLANS AND SPECIFICATIONS 3
EXHIBIT D WORK LETTER 4
EXHIBIT E HVAC STANDARDS 20
EXHIBIT F JANITORIAL SERVICES 21
EXHIBIT G-1 ESTOPPEL CERTIFICATE (TENANT) 37
EXHIBIT G-2 ESTOPPEL CERTIFICATE (LANDLORD) 37
EXHIBIT H NON-DISTURBANCE AGREEMENT 38
EXHIBIT I BUILDING RULES AND REGULATIONS 40
EXHIBIT J MEMORANDUM OF LEASE 47
EXHIBIT K ROOFTOP COMMUNICATIONS SPACE 52
EXHIBIT L CAFETERIA LOCATION 56
EXHIBIT M EXPANSION SPACE 62
EXHIBIT N CPI ADJUSTMENT LIMITS 14
EXHIBIT O ZONING LAWSUIT 44
EXHIBIT P IBT ENTRANCE SIGNAGE 54
EXHIBIT Q OFFERED SPACE ON 19TH FLOOR 64
</TABLE>
-iv-
<PAGE> 26
INDEX OF DEFINITIONS
--------------------
<TABLE>
<CAPTION>
Term Where Defined Page
- ---- ------------- ----
<S> <C> <C>
"Addendum" Paragraph 30.B.(1) 48
"Additional Rent" Paragraph 5. 9
"Adjustment Dates" Paragraph 4.A.(ii) 9
"Affiliate" Paragraph 17.A. 34
"Alterations" Paragraph 10.A. 26
"Architect" Paragraph 1.C. 3
"Base Month" Paragraph 5.A.(x) 14
"Base Rent" Paragraph 4. 8
"Base Year" Paragraph 5.A.(xi) 14
"Building" Recitals 1
"Building Arbiter" Paragraph 3.E. 8
"Building Operating Expenses" Paragraph 5.A.(vi) 13
"Cafeteria Premises" Paragraph 30.I. 57
"Collateral Agreement" Paragraph 28.E. 46
"Combined Amount" Paragraph 5.6.(vii) 17
"Comparison Month" Paragraph 5.A.(xiii) 14
"Commencement Date" Paragraph 3.A. 4
"Consumer Price Index" Paragraph 5.A.(xii) 14
"Contract Rate" Paragraph 1.C. 3
"CPI Adjustment" Paragraph 5.13. 14
"CPI Year" Paragraph 5.A.(xiv) 14
"Existing Lease" Paragraph 30.13.(i) 49
"Existing Space" Paragraph 30.B.(i) 48
"Expansion Space" Paragraph 32.C.(i) 62
"Expansion Term" Paragraph 32.C.(i) 63
"Expense Amount" Paragraph 5.C. 15
"Extended Terms" Paragraph 32.B. 60
"Fair Market Rent" Paragraph 32.B.(vi) 62
"Garage" Paragraph 31.A. 59
</TABLE>
-v-
<PAGE> 27
<TABLE>
<CAPTION>
Term Where Defined Page
- ---- ------------- ----
<S> <C> <C>
"Hold-Over Costs" Paragraph 3.D.(v) 7
"Hold-Over Date" Paragraph 3.D.(v) 7
"Holidays" Paragraph 8.A.(i) 20
"IBT" Paragraph 13.A. 31
"Interior's Arbiter" Paragraph 1.C. 3
"Janitorial Services" Paragraph 8.A.(iii) 21
"Land" Recitals 1
"Landlord" Recitals 1
"Landlord's Agent" Paragraph 4. 8
"Landlord's Space Planner" Paragraph 1.C. 3
"Lease" Recitals 1
"Lease Year" Paragraph 5.A.(i) 10
"Non-Disturbance Agreement" Paragraph 21. 38
"Offered Space" Paragraph 32.D.(i) 64
"Operating Expenses" Paragraph 5.A.(ii) 10
"Option Date" Paragraph 32.C.(i) 62
"Part 4" Paragraph 32.A. 60
"Payment Defaults" Paragraph 24. 40
"Plans" Paragraph 2.A. 3
"Premises" Paragraph 1. 1
"Present Landlord" Paragraph 30.B(1) 49
"Punch List Items" Paragraph 18.A. 36
"Recapture Space" Paragraph 17.D. 36
"Rentable Area" Paragraph 1.C. 2
"Rentable Area of the Building" Paragraph 1.C. 3
"Rules" Paragraph 23. 40
"Second Amendment" Paragraph 30.B.(1) 48
"Substantial Completion" Paragraph 3.B. 5
"Taking" Paragraph 16.A. 32
"Takeover Date" Paragraph 30.B. 49
</TABLE>
-vi-
<PAGE> 28
<TABLE>
<CAPTION>
Term Where Defined Page
- ---- ------------- ----
<S> <C> <C>
"Taxes" Paragraph 5.A.(iii) 12
"Tax Amount" Paragraph 5.C. 15
"Tenant" Recitals 1
"Tenants Building Share" Paragraph 5.A.(iv) 13
"Tenants Expense Share" Paragraph 5.A.(viii) 13
"Tenants Space Planner" Paragraph 1.C. 3
"Tenants Tax Share" Paragraph 5.A.(ix) 13
"Tenants Tower Share" Paragraph 5.A.(v) 13
"Term" Paragraph 3. 4
"Tower" Paragraph 1.C. 3
"Tower Operating Expenses" Paragraph 5.A.(vii) 13
"Unavoidable Delays" Paragraph 3.C. 6
"Work Letter" Paragraph 2.B. 4
"Zoning Litigation" Paragraph 26.B. 44
</TABLE>
-vii-
<PAGE> 29
3279/703/005
08/31/88
OFFICE LEASE
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS
THIS LEASE (the "Lease") made as of August 31, 1988 between
CHICAGO TITLE AND TRUST COMPANY as Trustee under a Trust Agreement dated April
16, 1985 and known as Trust No. 1086781 ("Landlord"), and MORTON THIOKOL, INC.,
a Delaware corporation, ("Tenant");
W I T N E S S E T H
- - - - - - - - - -
Landlord hereby agrees to lease to Tenant and Tenant hereby
agrees to lease from Landlord the premises determined in accordance with
Paragraph 1 of this Lease, subject to the covenants, terms, provisions and
conditions of this Lease, in the building to be located at 100 North Riverside
(the "Building") to be located on the land (the "Land") legally described in
Exhibit A, located immediately to the west of the public park located on the
west bank of the Chicago River between Randolph and Washington Streets in
Chicago, Illinois.
In consideration thereof, Landlord and Tenant covenant and agree
as follows:
1. PREMISES.
A. The Premises shall be floors 25 through 36 in the Building,
and the storage space and rooftop space, all as described in Exhibits B-1
through B-17 and Exhibit K (the "PREMISES"). The Premises shall be divided into
three areas as follows: Part 1 consisting of 200,000 square feet of Rentable
Area with 199,007 square feet of Rentable Area on floors 28 through 36, and 993
square feet of Rentable Area on that portion of floor 27 identified as Part 1 on
Exhibit B-3 and the storage space on such floors, in the clock tower and the
mezzanine level; Part 2 consisting of 30,000 square feet of Rentable Area with
21,121 square feet of Rentable Area on that portion of floor 27 identified as
Part 2 on Exhibit B-3, and 8,879 square feet of Rentable Area on that portion of
floor 26 identified as Part 2 on Exhibit B-2 and the storage space on floor 26;
and Part 3 consisting of 32,876 square feet of Rentable Area with 21,118 square
feet of Rentable Area on floor 25, and 11,758 square feet of Rentable Area on
that portion of floor 26 identified as Part 3 on Exhibit B-2 and the storage
space on floor 25. Unless otherwise specifically provided herein, the term
"Premises" shall from time to time include any space then leased in the Building
by Tenant under this Lease including space added as a result of the exercise of
Tenant's rights under Paragraph 32.
B. Common Area Rights. Landlord also grants to Tenant in
accordance with the terms of this Lease (1) the right to use in common with the
other tenants of the Building the public lobbies, public corridors, stairways,
escalators, parking facilities and other common areas and facilities of the
Building and Land, including, the right to use any truck docks, loading docks,
freight and passenger elevators and all security equipment and services serving
<PAGE> 30
the Building other than those areas designated on Exhibit B-13, (2) the
nonexclusive right to use those portions of the Building's utility systems
required to bring electricity, telephone and water service to the Premises, and
(3) the right to have an exclusive dedicated communications line to the Premises
from the utility service lines in adjacent right-of-ways, which line would be
installed and maintained at Tenant's expense to the extent not provided for in
the Space Plans.
C. Rentable Area. "RENTABLE AREA" in the Building shall be
computed by measuring the floor area to the inside finished surface of the
dominant portion (50% or more of the vertical floor-to-ceiling dimension) of the
permanent outer Building wall (including windows or glass panels; provided that
if the windows are thermal pane windows, the inside finished surface shall be
deemed to be the center line of the air space between such thermal panes)
without deduction for any columns or projections that are an integral part of
the structure or support of the Building and shall include all areas within such
inside finished surface [other than public stairs (stairs shall be deemed public
if they constitute part of the Building's public stair system even if used by
Tenant for access between floors of the Premises and are barred to other tenants
except in cases of emergency), elevator shafts, flues, stacks, vertical ducts,
pipe shafts and other major vertical penetrations of the floor and their
enclosing walls]. Rentable Area shall include:
(i) With respect to each single tenancy floor, toilets, air
conditioning rooms, fan rooms, janitor closets, lobbies, elevator
lobbies, electrical closets and telephone and other telecommunication
closets within and serving only such floor (or only floors occupied by
the same tenant);
(ii) With respect to each multiple tenancy floor, for each
particular premises on that floor, its share of the areas described in
the preceding clause (i), together with the particular premises' share
of all public corridors and other public areas on such floor, as they
may be adjusted from time to time. The tenant spaces on a multiple
tenancy floor shall share 100% of the Rentable Area of that full floor.
The share of each tenant's space shall be based upon the usable area
contained in that tenant's space (which shall be measured to the center
of partitions that separate such space from other tenant spaces or
public areas) compared to the total usable area on that full floor; and
(iii) With respect to each single or multiple tenancy floor,
such floor's proportionate share (based on such floor's Rentable Area
without such added factor compared to the Rentable Area of the Tower
without such added factor) of the public lobby area serving the Tower,
and any mechanical equipment and other common areas of the Building
serving the Tower which are not specifically excluded above; provided,
however, that Tenant's share of such areas shall be reduced to the
extent necessary so that, as of the Commencement Date, the ratio of
Tenant's Rentable Area with such added factor to Tenant's usable area
shall not exceed 1.08 to 1 for full floors. For multiple tenant floors
the foregoing ratio shall be increased by adding to the 1.08 to 1 (or
lesser) factor for a full floor an additional factor not to exceed .10
to 1 to reflect Tenant's share of those public corridors and public
areas on such floor.
-2-
<PAGE> 31
The "RENTABLE AREA OF THE BUILDING" shall not include (x) the
lobby of the Building (except to the extent provided in subparagraph (iii)
above), or (y) portions of the mezzanine to the extent such portions of the
mezzanine are used for storage or similar purposes, and the Garage to the extent
the Garage is being used for garage, storage or similar purposes.
Based on existing design plans for the Building, it is agreed
that the Rentable Area of the Building, the Rentable Area of the Building above
the 13th floor (the "TOWER") and the Rentable Area of each floor of the Tower
above the 13th floor shall all be set forth on Exhibit B-14. If the
architectural plans used for construction differ from the existing
design plans in a manner which results in a change to the foregoing Rentable
Area of the Building or of the Premises, the Rentable Area of the Building shall
be computed by Perkins & Will ("ARCHITECT") or a space planner retained by
Landlord ("LANDLORD'S SPACE PLANNER") and the Rentable Area of the Premises
shall be computed by (i) Architect or Landlord's Space Planner and (ii)
Mekus-Johnson, Inc. ("TENANT'S SPACE PLANNER"), in each case based on the
architectural plans used for construction and in accordance with the above
provisions. The term "TENANT'S SPACE PLANNER" shall mean Mekus-Johnson, Inc. or
such other space planner as may be engaged by Tenant to design the Premises and
perform such other acts as authorized by the Work Letter, which other space
planner shall be reasonably acceptable to Landlord. Architect, as the case may
be, and, in the case of the Premises, Tenant's Space Planner, shall certify such
Rentable Areas to Landlord and Tenant promptly after completing such
computations. If Architect or Landlord's Space Planner, as the case may be, and
Tenant's Space Planner shall be unable to agree as to the Rentable Area of the
Premises, the matter shall be determined by a principal of Kenneth N. Folgers
Architects (the "INTERIORS ARBITER") acceptable to both Landlord and Tenant.
Landlord and Tenant shall share equally in the cost of retaining the Interiors
Arbiter to make such determination. If the Rentable Area of either the Premises
or the Building changes in any Calendar Year during the Term of this Lease, or
any renewal thereof, such Rentable Areas shall be recomputed as aforesaid and
all applicable adjustments hereunder shall be made as of the date of each such
change. In the event of any dispute over Rentable Areas, Tenant shall make
payments based on the Rentable Areas determined by Landlord until resolution of
such dispute, at which time any necessary adjustments shall be made and any
amounts due to Landlord or Tenant as a result shall be paid within thirty (30)
days after demand together with interest on such adjusted amount at the
corporate base rate of The First National Bank of Chicago as announced from time
to time plus three percent (3%) per annum (the "CONTRACT RATE"); provided that
if such interest rate is no longer being announced the parties shall agree upon
another mutually acceptable interest rate to serve as the Contract Rate.
2. DESIGN AND CONSTRUCTION.
A. Shell. Landlord will diligently proceed, at Landlord's cost
and expense, to construct the Building as a first-class office building as
described in the Plans and Specifications described in Exhibit C (the "PLANS").
The Building is being designed by the Architect. If Landlord retains any other
architect to design the Building, or desires to materially change the design,
quality, equipment or materials for the Building, such changes shall be subject
to the approval of Tenant, which approval shall not be unreasonably withheld or
delayed as to design, but may be withheld if such change would lessen the
quality of the Building.
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B. Additional Work. Landlord will perform, at Landlord's cost and
expense, upon submission by Tenant of the necessary plans and specifications in
accordance with the Work Letter attached hereto as Exhibit D (the "WORK
LETTER"), all of Landlord's Work in the Premises (as defined in the Work
Letter), subject to the terms and conditions of the Work Letter.
3. TERM.
The term of this Lease for Parts 1, 2, and 3 shall begin on the
Commencement Date (as defined in Paragraph 3.A. hereof). Unless sooner
terminated as provided herein, the Term for each of the various Parts of the
Premises shall end with the last day of the following described full calendar
month subsequent to the Commencement Date as follows:
PART 1 TERM - 780th month
PART 2 TERM - 120th month
PART 3 TERM - 120th month
(for example, if the Commencement Date were to be May 18, 1990 the Part 2 Term
would end on May 31, 2000). Such dates may be extended by the exercise of any
one or more of the options conferred upon Tenant under Paragraph 32 of this
Lease and after the commencement of any such extension the word "TERM" shall be
deemed to refer and apply to and include any applicable extension Term.
A. Commencement Date. "COMMENCEMENT DATE" shall mean the last to
occur of (a) the date Tenant has received the certificate of Architect that the
Building has been substantially completed in accordance with Paragraph 3.B; (b)
sixty (60) days after the date Tenant has received the certificate of Landlord's
Space Planner and of Tenant's Space Planner that the Premises have been
substantially completed pursuant to the Tenant Improvement Plans; and (c) the
date on which Landlord has secured all necessary certificates, authorizations,
permits and approvals customarily given for occupancy of the Premises from the
applicable governmental authorities, provided that Tenant is allowed to occupy
the Premises. If and to the extent that Tenant Delay (as defined in the Work
Letter) shall be the sole cause of delay of the Commencement Date to a date
subsequent to that on which the Commencement Date would have occurred had such
Tenant Delay not occurred, then notwithstanding the foregoing definition of
Commencement Date, the Commencement Date for all purposes of this Lease shall be
deemed to be such earlier date as the Commencement Date would have occurred had
such Tenant Delay not occurred.
If the Landlord's Space Planner and Tenant's Space Planner are
unable to agree as to the date of such substantial completion of the entire
Premises, such matter shall be determined in accordance with Paragraph 3.E.
hereof.
Landlord shall provide Tenant with at least sixty (60) days prior
written notice of the anticipated substantial completion of the entire Premises
and Building as described in Paragraph 3.B. and a second written notice on the
date which Landlord claims as the actual substantial completion date for the
Premises which shall be sixty days prior to the Commencement Date. Landlord
shall from time to time during construction on the Premises provide Tenant with
at least sixty (60) days prior written notice of the anticipated substantial
completion date of each full floor portion of the Premises, and a second written
notice on the date which it claims as the actual substantial completion date of
each
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such floor. After the actual substantial completion date asserted by Landlord
for any floor of the Premises, upon five (5) business days prior written notice
to Landlord, Tenant shall be entitled to take possession of such floor and
occupy it for Tenant's business without charge, except for Landlord's
ascertainable out-of-pocket costs for those services specified in Paragraphs
8.A.(i) and (iii) and 8.A.(x) (if Tenant is the only tenant in the Building and
additional security is required because of Tenant's occupancy), which in each
case are directly attributable to Tenant's possession of the portion of the
Premises in question.
B. Substantial Completion. Landlord's obligations to
substantially complete the Premises shall be deemed to be met when the
Landlord's Work (as defined in the Work Letter) is completed as specified in the
Work Letter, notwithstanding the fact that minor or insubstantial details of
construction, decoration or mechanical adjustment remain to be completed,
provided that the noncompletion of such items does not materially interfere with
Tenant's use of or access to the Premises or the ability of Tenant to prepare
the Premises for Tenant's occupancy ("SUBSTANTIAL COMPLETION"). Except for minor
or insubstantial details of construction, decoration or mechanical adjustment,
which do not materially detract from the appearance or usability of the
Building, substantial completion of the Building shall mean the completion, of
(1) the structural and enclosure work to be performed in the construction of the
exterior portion of the Building, (2) the plaza area on the Land and public
lobbies of the Building that are necessary for access to Washington Street and
Randolph Street and access to the Premises and (3) all facilities necessary to
provide the services required to be performed by Landlord pursuant to Paragraph
8 of this Lease. Tenant agrees that substantial completion of the Building shall
not be deemed to have been delayed so long as the only remaining items
preventing substantial completion from occurring are:
(1) Completion of punch list items in the Building lobby
provided that the lobby shall be usable as designed and
Landlord has substantially completed all finishes and
fixtures;
(2) Completion of the plaza, which has been delayed because
of weather taking into account that the plaza is among
the last items to be completed under a customary
construction schedule; and
(3) Removal of the hoist from the exterior of Building and
exterior finishes on window bays with hoist located
below Tenant's lowest occupied floor, except in the
event of Tenant Delay which results in the necessity of
use of the hoist, for the period that the hoist is so
required.
Landlord shall promptly and diligently complete the punch list items for the
lobby. Any work in the lobby that interferes with access to the Premises or
materially detracts from the Tenant's ability to use the lobby areas shall be
done after normal business hours. Landlord shall promptly and diligently
complete the plaza landscaping as soon as weather conditions permit. The hoist
shall be removed and all window bays utilized in connection therewith shall be
completed within one hundred twenty (120) days of the Commencement Date;
provided that such date for removal shall be extended to the extent of Tenant
Delays which result in the necessity of use of the hoist. On or before a date
that is two months after the date of substantial completion of the Building,
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as defined above, Landlord shall complete all work to be performed in the
construction of the Building other than tenant improvements for persons other
than Tenant and the plaza, lobby and exterior portions affected by the hoist to
the extent specifically set forth above, subject to Unavoidable Delay (as
hereinafter defined).
C. Unavoidable Delay. Landlord shall use its reasonable efforts
to achieve substantial completion of the Building pursuant to the Plans and the
Premises pursuant to the Work Letter by November 30, 1990, which date shall be
extended as a result of Tenant Delays (as defined in the Workletter) and
Unavoidable Delays for a period equal to any and all such Delays. "UNAVOIDABLE
DELAYS" shall mean delays or interruptions caused by strikes, lockouts, failure
of power, shortages of material, restrictive governmental laws or regulations,
condemnations, riots, insurrections, war, fire, other casualty or acts of God,
or other similar matters not the fault of the party delayed in performing work
or doing acts required under the terms of this Lease other than from Landlord's
lack of funds or inability to obtain financing. It shall be a condition of the
right to claim an extension of time as a result of an Unavoidable Delay that the
party seeking such extension shall notify the other within thirty (30) days
after such party has knowledge of the existence of the Unavoidable Delay(s)
specifying the nature and estimated length thereof.
D. Delay. (i) If Landlord's construction of the Building has not
progressed so that (a) all of the caissons and the entire street-level
platform to support the Building, except for that portion which is hung
from the steel framework of the Building, are substantially completed by
June 1, 1991, or (b) all of the structural steel work for the Building
has been substantially completed by January 1, 1992, then in either such
event, Tenant may by written notice delivered to Landlord within sixty
(60) days after either of such events terminate this Lease. Upon such
notice this Lease shall terminate without further liability of Landlord
or Tenant, except that on such termination Landlord shall reimburse
Tenant for Tenant's Holdover Costs as provided in Paragraph 3.D.(v),
incurred or accruing on or prior to such termination date and pay or
cause to be paid to Tenant those liquidated damages provided in the
Collateral Agreement (as herein defined), which shall be Tenant's sole
and exclusive remedies. Landlord shall have no right to cure a failure
to satisfy any such hurdle date within such sixty (60) day period.
(ii) Landlord may by notice delivered to Tenant on or before
March 31, 1992, subject to extension for Tenant Delays, advise Tenant
that in Landlord's reasonable business judgement it will not be able to
cause the Commencement Date to occur prior to January 1, 1993, subject
to extension for Tenant Delays, which notice will contain the estimated
new date for delivery of the Premises. Tenant may within thirty (30)
days of receipt of such notice, by written notice delivered to Landlord
elect to terminate this Lease. Failure to respond within such thirty
(30) day period shall be deemed to constitute Tenant's acceptance of the
new Commencement Date set forth in the notice. In the event that Tenant
does not elect to so terminate this Lease in accordance with this
Paragraph 3.D.(ii) then this Lease shall continue in full force and
effect. Thereafter any delay in substantial completion of the Premises
resulting from Unavoidable Delays or Tenant Delays shall extend the
deadline for the Commencement Date specified in Paragraph 3.D.(iii)
hereof by an equivalent number of days, provided however, the maximum
amount of time
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for any such extension due to Unavoidable Delays shall be one (1) year.
(iii) If the Commencement Date has not occurred prior to the
later of (i) January 1, 1993, or (ii) the new date specified pursuant to
Paragraph 3.D.(ii), both of which dates shall be extended as a result of
Tenant Delays (to the extent such date is not met due to Tenant Delays)
for a period equal to any and all such Tenant Delays and for Unavoidable
Delays but only to the extent specifically provided in Paragraph
3.D.(ii) above, Tenant shall have the right to terminate this Lease
within thirty (30) days after such date by giving written notice to
Landlord. This Lease shall terminate upon such notice without further
liability of Landlord or Tenant, except that on such termination
Landlord shall reimburse Tenant for Tenant's Holdover Costs as provided
in Paragraph 3.D.(v) following, incurred or accruing on or prior to such
termination date and Tenant shall have the right to and be entitled to
those liquidated damages provided in the Collateral Agreement, which
shall be Tenant's sole and exclusive remedies. Tenant shall have a
period of thirty (30) days after its notice of termination to remove its
trade fixtures and its furniture and other personal property as
permitted under Paragraph 18.C. hereof. Neither Landlord nor Tenant
shall be responsible to make any reimbursement to the other for any
costs incurred or items delivered pursuant to this Lease, not then paid
or reimbursed, other than the Hold-over Costs. All improvements to the
Premises other than the items which Tenant may remove under Paragraph
18.C. hereof shall be and remain the property of Landlord.
(iv) Unless Tenant gives notice to terminate this Lease pursuant
to Paragraph 3.D., this Lease shall continue in full force and effect.
In the event that Tenant occupies all of the Premises, Tenant shall not
be entitled to exercise the right to terminate under Paragraph 3.D.
(v) Landlord shall reimburse Tenant for Holdover Costs (as
hereinafter defined) incurred by Tenant, as and when the Hold-over Costs
are incurred and promptly after notice thereof by Tenant, because the
Commencement Date has not occurred on or before January 31, 1991, which
date shall be extended as a result of and for a period equal to any and
all Unavoidable Delays and Tenant Delays to the extent such date is not
met by reason of Unavoidable Delays and Tenant Delays (the "HOLD-OVER
DATE"). As used herein, the term "HOLD-OVER COSTS" shall mean and
include (a) reasonable extra moving and storage expenses in excess of
the greater of (i) the sum specified in Paragraph 30.A. or (ii) what
such costs would have been if the move had occurred on the Hold-over
Date, (b) any increase in the costs of labor or material for
improvements to the Premises being made by Tenant in excess of
Landlord's Work because the Commencement Date has not occurred by the
Hold-over Date, and (c) any reasonable additional fees for Tenant's
Space Planner for performing additional or out-of-sequence services for
the Premises because the Commencement Date has not occurred by the
Hold-over Date.
(vi) Except as expressly provided in this Paragraph 3, Landlord
shall have no liability to Tenant as the result of a delay in the
Commencement Date.
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<PAGE> 36
Base Rent for the Premises shall be calculated utilizing the following
rental rates and time periods for the portions of the Premises specified:
A. Part 1. (i) The Base Rent for Part 1 for the Part 1 Term shall
be Twenty-Six and 50/100 Dollars ($26.50) per square foot of Rentable Area.
(ii) As of the first day of each of the 181st, 301st, 421st,
541st and 661st months of the Term ("ADJUSTMENT DATES"), the Base Rent
for Part 1 of the Premises shall be adjusted to the Fair Market Rent (as
herein defined) as of each such Adjustment Date and such Fair Market
Rent shall apply as the new Base Rent for Part 1 until the next
Adjustment Date.
(iii) Tenant shall not be required to pay any Base Rent for Part
1 of the Premises and such Base Rent shall abate entirely for a period
of sixteen (16) consecutive months commencing on the Commencement Date.
B. Part 2. (i) The Base Rent for Part 2 of the Premises for the
Part 2 Term shall be Twenty-Six and 50/100 Dollars ($26.50) per square
foot of Rentable Area.
(ii) Tenant shall not be required to pay any Base Rent for Part
2 of the Premises and such Base Rent shall abate entirely for a period
of one hundred twenty (120) consecutive months commencing on the
Commencement Date.
C. Part 3. (i) The Base Rent for Part 3 of the Premises shall be
Twenty-One and No/100 Dollars ($21.00) per square foot of Rentable Area
during the Part 3 Term through the first sixty (60) calendar months
thereof and Twenty-Seven and No/100 Dollars ($27.00) per square foot of
Rentable Area during the next sixty (60) calendar months of the Part 3
Term.
(ii) Tenant shall not be required to pay any Base Rent for Part
3 of the Premises and such Base Rent shall abate entirely for a period
of twenty-four (24) consecutive months commencing on the Commencement
Date.
In the event that this Lease provides for an abatement of rent
due to untenantability, fire, casualty or condemnation during any period when
rents are contractually abated pursuant to Paragraphs 4.A. (iii), 4.B. (ii) or
4.C. (ii), then the abatements otherwise available under Paragraph 4 shall be
available to reduce any other Base Rent sums due or coming due under this Lease.
5. ADDITIONAL RENT.
In addition to the Base Rent, Tenant shall pay as "ADDITIONAL
RENT" the amounts determined pursuant to Sub-Paragraphs B. through D., of this
Paragraph 5. Additional Rent shall be rent payable in the same manner, time and
place as the Base Rent and without any notice, set-off or deduction, except as
specifically provided in this Lease. Without limitation on other obligations of
Tenant that survive the expiration of the Term, the obligation of Tenant to pay
the Additional Rent shall survive the expiration of the Term.
A. Certain Definitions. As used in this Lease, the following
terms have the following meanings:
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(i) "LEASE YEAR" means each calendar year in which any part of
the Term falls, including the calendar years in which the Term begins
and ends.
(ii) "OPERATING EXPENSES" means the sum of all expenses, costs
and disbursements of every kind and nature paid or accrued (with
appropriate adjustments if the manner of accounting for any item is
changed at any time during the Term) by Landlord for the applicable
Lease Year in connection with the ownership, maintenance, management,
operation, and repair of the Building, including, without limitation,
the provision of tenant services, except the following:
(a) Taxes including any taxes excluded from the
definition thereof in Paragraph 5.A.(iii);
(b) Costs of electricity for individual tenant
spaces;
(c) Principal or interest payments on and any other
fees or charges on or in connection with loans
secured by mortgages or trust deeds on the
Building or on the Land;
(d) Ground or underlying lease rentals or any other
charges or fees payable on or with respect to
any such leases;
(e) Costs of capital improvements and any capital
expenditures, including, but not limited to all
costs of constructing the Building and any
improvements on the Land and any capital
expenditures under Paragraph 9.A., except that
Operating Expenses may include the cost during
the Term less salvage value, as amortized in
equal principal installments by Landlord over
its maximum useful life, with interest on the
unamortized amount, at a rate per annum equal to
the Contract Rate, of any capital improvement
installed after the Building has been
substantially completed (other than for tenant
improvements), which reduces any component of
Operating Expenses; provided, however, in no
event shall the Operating Expense attributable
to any such capital improvement in any Lease
Year exceed the actual reduction in Operating
Expense for such Lease Year resulting from such
capital improvement, and provided further that
only that portion of the useful life of such
capital improvements as falls within the Term
shall be included within Operating Expenses
under this Lease; Landlord shall provide Tenant
with prior notice of any such capital
improvements to be made in any Lease Year with
an aggregate cost in excess of $50,000;
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<PAGE> 38
(f) Costs of improvements to, or Alterations (as
such term is hereinafter defined) of, space
leased to any tenant;
(g) Depreciation or amortization of any improvements
except as specifically set forth in Paragraph
5.A.(ii)(e);
(h) The cost of repairing or restoring any portion
of the Building damaged by a hazard or casualty,
except the amount of the insurance deductible as
permitted under Paragraph 12.D. hereof;
(i) The cost of repairs, alterations or replacements
required as the result of the exercise of any
right of eminent domain;
(j) The cost of any special service rendered to a
tenant of the Building that is not rendered
generally to tenants of the Building;
(k) Costs and expenses incurred in connection with
leasing space in the Building, including, but
not limited to leasing commissions, tenant
allowances, space planner fees, advertising and
promotional expenses, legal fees for the
preparation of leases, rent abatements, lease
takeover expenses and rent payable with respect
to any leasing office;
(l) Court costs and legal fees incurred to enforce
the obligations of tenants under leases of
portions of the Building and any other legal
fees or expenses not directly related to the
operation and management of the Building and
Land;
(m) Fines or penalties resulting from violations of
laws, rules or regulations;
(n) Costs of correcting defects in the Building,
Building equipment or any other improvements on
the Land to the extent any such defect shall
become apparent within three (3) years of the
Commencement Date, except that the foregoing
shall not exclude normal maintenance and repairs
of any such equipment or improvements;
(o) Costs for which Landlord receives or is entitled
to receive reimbursement from any other person
other than such reimbursements as Additional
Rent;
(p) Costs of advertising and promotional materials,
except for a tenant newsletter, if any, which is
not
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<PAGE> 39
directed to securing tenants for the Building;
(q) Costs of maintaining any special facility such
as a club, restaurant or dining facility, and
the costs of any clerks, attendants or other
persons in any commercial concessions operated
by Landlord;
(r) Costs of any electric current furnished for
lighting and equipment (other than for operation
of elements of the Building's shared systems) in
areas of the Building rented or to be rented to
tenants;
(s) Any management fees in excess of the then
current market rate, which is currently three
percent (3%) of gross receipts, and any
management fees or other fees and expenses paid
to any person who is related to Landlord
(directly or indirectly) to the extent such fees
are in excess of the customary amounts that
would be paid absent such relationship;
(t) Executive salaries above the grade of Building
manager;
(u) Costs, expenses and fees of land trusts,
partnerships, title insurance, surveys and
corporations involved in the ownership,
operation or management of the Building and
Land;
(v) Costs of sculpture, paintings and other art
located within the Building or on the Land,
other than cleaning, insuring and maintaining
such objects in the public areas;
(w) The amount of any judgments in excess of the
amount of any liability policies required to be
carried by Landlord pursuant to this Lease; and
(x) Landlord's cost of insuring any tenant
improvements.
(iii) "TAXES" means (a) real estate taxes and assessments, both
general and special, assessed or imposed with respect to the Land or the
Building provided that any special assessments shall be paid over the
maximum permissible period and only installments falling due during the
Term shall be deemed Taxes and provided further that such real estate
taxes shall be adjusted as hereinafter provided, (b) the Building's
share of ad valorem taxes assessed or imposed upon personal property
owned by Landlord or Landlord's Agent and used in the operation of the
Land or Building, (c) transit taxes or sewer taxes relating to the Land
or Building and not otherwise recovered from users of the Building's
parking facilities, (d) lease taxes with respect to this
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<PAGE> 40
Lease (e) taxes that are adopted and first become effective after the
Commencement Date based upon taxes that are in lieu of any item
described in (a) through (c) above, and (f) reasonable fees and expenses
properly allocated to the Taxes and years in question and paid by
Landlord to obtain a reduction of or a limit on the increase in any of
items (a) through (e) above, regardless of whether or not any such
reduction or limitation is obtained; provided, however, that except as
provided above Taxes shall not include any inheritance, estate,
succession, transfer, gift, franchise, general net income or capital
stock tax imposed upon Landlord, unless the same are imposed
specifically in lieu of the taxes described in items (a), (b), (c) or
(d) above, or any late payment charges, interest or penalties unless
caused by Tenant. Notwithstanding the foregoing, "Taxes" as herein
defined shall, from and after the first to occur of (i) such time as the
Building shall achieve ninety percent (90%) occupancy or (ii) ten (10)
years after the date hereof, exclude Taxes assessed or imposed with
respect to the Garage (as hereinafter defined). Landlord and Tenant
shall mutually agree upon the portion of Taxes attributable to the
Garage, which portion shall be computed by multiplying the total Taxes
for the Land and Building by a fraction, the numerator of which is the
net income of the Garage to Landlord or any other owner of the Garage
whether as operator or under a bona fide lease, operating or management
agreement with a third party for the Garage, and the denominator of
which is the net income of the Land and Building to Landlord. The term
"net income" shall be computed in accordance with accounting principles
which are consistent with those utilized for first-class office
buildings in Chicago and shall be determined without regard to
depreciation, income taxes or debt service.
(iv) "TENANT'S BUILDING SHARE" shall from time to time be the
percentage calculated by dividing the Rentable Area of the Premises by
758,506 (being the Rentable Area of the Building);
(v) "TENANT'S TOWER SHARE" shall from time to time be the
percentage calculated by dividing the Rentable Area of the Premises by
482,639 (being the Rentable Area of the Tower);
(vi) "BUILDING OPERATING EXPENSES" means Operating Expenses less
Tower Operating Expenses;
(vii) "TOWER OPERATING EXPENSES" means Operating Expenses
incurred by Landlord in providing to the tower heating, ventilation and
air cooling, passenger and freight elevator service, janitor service,
garbage removal, building supplies, escalator service and window washing
of the Tower above the 13th floor;
(viii) "TENANT'S EXPENSE SHARE" means the sum of (a) Tenant's
Building Share of Building Operating Expenses, plus (b) Tenant's Tower
Share of Tower Operating Expense.
(ix) "TENANT'S TAX SHARE" shall from time to time be the
percentage calculated by dividing the Rentable Area of the Premises by
758,506, (being the Rentable Area of the Building);
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(x) "BASE MONTH" shall mean initially that month in which the
Commencement Date occurs. Thereafter, it shall mean the 180th, 300th,
420th, 540th and 660th months after the Base Month.
(xi) "BASE YEAR" shall mean that 12 month period commencing with
the first day of the first month after each Base Month.
(xii) "CONSUMER PRICE INDEX" shall mean the United States
Department of Labor, Bureau of Labor Statistics, Consumer Price
Index-Urban Wage Earners and Clerical Workers, U.S. City Average, All
Items (1982-1984=100).
(xiii) "COMPARISON MONTH" shall mean that same calendar month of
the year as the Base Month for each successive twelve (12) month period
during the Term.
(xiv) "CPI YEAR" shall mean that twelve (12) month period (other
than a Base Year) commencing with the first day of the first month after
each Comparison Month.
B. CPI Adjustment.
(i) In the event that the Consumer Price Index published for the
Base Month shall be less than the Consumer Price Index for any
Comparison Month, then Tenant shall pay to Landlord or Landlord's Agent,
as Additional Rent for and during the next CPI Year, commencing on the
first day of the next CPI Year, an amount (the "CPI ADJUSTMENT") equal
to the product obtained by multiplying thirty-five percent (35%) of the
actual Base Rent payable for those respective portions of the Premises
identified on Exhibit N for such CPI Year by a fraction, the numerator
of which is the Consumer Price Index for the Comparison Month minus the
Consumer Price Index for the Base Month and the denominator of which is
the Consumer Price Index for the Base Month, provided, however, that in
no event shall such fraction described above and used in computing the
CPI Adjustment for any Comparison Year exceed those amounts set forth on
the attached Exhibit N. No CPI Adjustment payment shall be payable for
any Base Year.
(ii) No CPI Adjustment payment shall be payable for a period of
sixteen (16) consecutive months commencing on the Commencement Date. The
CPI Adjustment for each CPI Year shall be paid during the CPI Year in
advance on the first day of each calendar month in installments each
equal to 1/12th of the CPI Adjustment, except in the second year of the
Term, when such payments shall be made in eight (8) equal monthly
installments during the last eight (8) months of such year. Prior to
such time as the Consumer Price Index shall be available for the
Comparison Month, Landlord shall be entitled to reasonably estimate what
the Consumer Price Index will be for the Comparison Month on a uniform
basis for all Building tenants, and Tenant shall make monthly CPI
Adjustment payments in accordance with such estimate. As soon as the
Consumer Price Index for the Comparison Month is published. Landlord
shall advise Tenant in writing of the actual Consumer Price Index for
the Comparison Month and if the estimated CPI Adjustment payments made
to that date by Tenant have been less than the CPI Adjustment payments
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<PAGE> 42
due through such date, Tenant shall within ten (10) days of such notice
pay such difference to Landlord. If the estimated CPI Adjustment
payments made by Tenant to that date have been more than the actual CPI
Adjustment payments due, Landlord shall within ten (10) days of such
notice pay such difference to Tenant.
(iii) If the manner in which the Consumer Price Index as
determined by the Department of Labor shall be substantially revised, or
if the 1982-1984 average shall no longer be used as an index of 100, an
equitable adjustment shall be made in such revised index so as to obtain
the result that would have been obtained if the Consumer Price Index had
not been so revised or if said average was still in use. If the Consumer
Price Index shall become unavailable to the public because publication
is discontinued, or otherwise, Landlord will substitute therefor a
comparable index based upon changes in the cost of living or purchasing
power of the consumer dollar published by another governmental agency
or, if no such index shall then be available, a comparable index
published by a major bank or other financial institution or by a
university or a recognized financial publication. If Tenant shall
deliver written notice of Tenant's objection to a substitute index
selected by Landlord then the dispute as to what index should be
substituted may be submitted to arbitration in accordance with Paragraph
33 hereof.
C. Expense and Tax Adjustment.
(i) Subject to the provisions of Paragraphs 5.C.(ii), (iii) and
(vii) Tenant shall pay as Additional Rent, (aa) an amount (the "EXPENSE
AMOUNT") equal to Tenant's Expense Share of the Operating Expenses for
each Lease Year, and (bb) an amount (the "TAX AMOUNT") equal to Tenant's
Tax Share of the Taxes for each Lease Year.
(ii) During the first five (5) years of the Term Tenant shall
pay 1/12th of the Combined Amount (as hereinafter defined) in equal
monthly installments on the first day of each month during the Lease
Year, and thereafter, subject to the limits of Paragraph 5.C.(vii)
during each Lease Year Tenant shall pay 1/12th of the actual Expense
Amount from the prior Lease Year in equal monthly installments on the
first day of each month during such Lease Year, provided, however, that
such monthly installments shall be subject to increase or decrease to
the extent that the Expense Amount for such Lease Year has actually
changed (or will actually change) over the prior year and Landlord can
provide reasonably adequate evidence to establish such changes;
(iii) The Expense Amount and the Tax Amount for the Lease Years
in which the Term begins and ends shall be prorated on a per diem basis
in relation to the portion of the Term falling within such Lease Years.
In the event that during a Lease Year the Rentable Area of the Premises
shall increase or decrease there shall be a pro-rata adjustment of the
Expense Amount and Tax Amount based upon the Rentable Area Leased by
Tenant per day.
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<PAGE> 43
(iv) Following the close of each Lease Year, Landlord shall
furnish to Tenant a detailed statement, certified to Tenant as true,
correct and complete by Landlord's Agent's chief financial officer or
another person reasonably acceptable to Tenant in an executive capacity
with Landlord's Agent with supervisory authority over the Building
manager setting forth the actual Expense Amount and Tax Amount for such
Lease Year. Such person shall certify to Tenant that the statements were
made in accordance with accounting principles which are consistent with
those utilized for first-class office buildings in Chicago (and Building
operating statements for prior years, except for such changes as are
specifically described therein). Except to the extent provided in
Paragraph 5.C.(vii), within forty-five (45) days. after receipt of such
statement, Tenant shall pay the excess, if any, of such actual Expense
Amount for such Lease Year as shown in said statement over the amount of
the payments theretofore made by Tenant with respect to the Expense
Amount for such Lease Year. Notwithstanding the foregoing, for the first
five (5) Lease Years, Landlord's obligation to furnish to Tenant a
detailed statement of the actual Expense Amount and Tax Amount, as
required above, shall be satisfied by delivering to Tenant the statement
of the actual Expense Amount and Tax Amount generally delivered to other
tenants of the Building.
(v) As Landlord receives the bills for Taxes payable during each
Lease Year, Landlord shall furnish to Tenant a detailed statement
setting forth Tenant's actual Tax Amount for such Taxes, specifying the
due date for such Taxes and Tenant's Tax Amount of such Taxes. Subject
to the limits of Paragraph 5.C.(vii), Tenant shall pay Tenant's Tax
Amount for each such Tax within the later to occur of ten (10) business
days after the date of any such notice or ten (10) business days prior
to the due date for such Taxes if paid by check, or five (5) business
days prior to the due date for such Taxes if paid by certified or
cashier's check.
(vi) If the total monthly payments of Expense Amounts or the Tax
Amounts paid by Tenant for any Lease Year exceed the actual Expense
Amount or Tax Amount for such Lease Year, or the applicable limits of
Paragraph 5.C.(vii), any such excess shall be paid to Tenant within
forty-five (45) days after receipt of such statement or at Tenant's
request credited against payments due or next becoming due under this
Lease. Tenant or its representative shall have the right to examine
copies of Landlord's books and records relative to Operating Expenses
and Taxes during normal business hours at any time within one hundred
twenty (120) days following the furnishing by Landlord to Tenant of any
statement pursuant to Paragraph 5.C.(iv) above and the right to make
copies of any invoices or receipts included in such records. Tenant
shall use all reasonable efforts to minimize any interference with
Landlord's operations caused by any such review. Unless Tenant shall, by
notice to Landlord, take exception to any item in any such statement
within one hundred twenty (120) days after the furnishing of said
statement, absent fraud, such statement shall be conclusively binding
upon Tenant and Landlord and shall not be contestable by Tenant or
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<PAGE> 44
Landlord. Any amount shown by such statement to be due to Landlord,
whether or not written exception is taken to such statement, shall be
paid by Tenant as provided in Paragraphs 5.C.(iv) and 5.C.(v) above,
without prejudice to any such written exception. If Tenant timely gives
notice of such exception, and Landlord and Tenant cannot reach agreement
within thirty (30) days of Tenant's written notice of exception, a
statement as to the proper Expense Amount and Tax Amount shall be
prepared by such certified public accounting firm as Landlord and Tenant
may agree. If Landlord and Tenant cannot agree on such a firm, it shall
be selected by arbitration pursuant to Paragraph 33. Such accounting
firm's decision shall be final, binding and conclusive upon Landlord and
Tenant and any adjustments determined to be due by such accountants
shall be promptly paid. Tenant agrees to pay the cost of such review
statement unless it is determined that Landlord's original determination
of either the actual Expense Amount or Tax Amount was overstated by more
than two percent (2%). If there was an overstatement of more than two
percent (2%) in either the Expense Amount or Tax Amount then in addition
to paying the amount determined by such accountant Landlord shall pay
the expense of the independent accounting firm and interest on the
amount in error, from the date of Tenant's overpayment as determined by
such accountant at the Contract Rate.
(vii) Notwithstanding anything contained in this Lease to the
contrary, the aggregate of the Expense Amount and Tax Amount payable by
Tenant under this Paragraph 5.C. ("Combined Amount") shall:
(a) during the first five years of the Term equal the
following:
<TABLE>
<CAPTION>
Combined Amount
per sq. ft. of
Period Rentable Area
---------------------- ---------------
<S> <C>
Months 1 through 12 $ 8.00
Months 13 through 24 9.00
Months 25 through 36 10.00
Months 37 through 48 11.00
Months 49 through 60 12.40
</TABLE>
(b) during the 6th through 10th years of the Lease Term not
exceed the following:
<TABLE>
<CAPTION>
Combined Amount
per sq. ft. of
Period Rentable Area
---------------------- ---------------
<S> <C>
Months 61 through 72 $13.02
Months 73 through 84 13.67
Months 85 through 96 14.35
Months 97 through 108 15.07
Months 109 through 120 15.83
</TABLE>
Tenant's monthly installments of the Expense Amount and payments of the
Tax Amount shall be established and periodically adjusted so that as
nearly as possible the aggregate payments of Expense Amounts and Tax
Amounts from time to time in any Lease Year shall not exceed
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<PAGE> 45
the applicable monthly proportions of the Combined Amount. In the event
that a tax shall be imposed upon Tenant's right to occupy the Premises
which shall be payable directly by Tenant, then the aggregate amount of
such tax paid by Tenant during any of the above described twelve (12)
month periods shall be subtracted from the Combined Amount stated above
for such period to arrive at a corrected Combined Amount which shall
apply to such period.
(viii) Commencing with the 10th Lease Year (as respects that
portion of the budget applicable to the 11th Lease Year) and thereafter
during the Term, Tenant shall have the right as set forth below to
approve the Operating Expense budget for the Land and Building, such
approval not to be unreasonably withheld or delayed. Any expenses
required by governmental action shall be deemed to be reasonable. Tenant
shall be provided with a copy of a detailed line-item budget of the type
utilized to operate the Building not less than thirty (30) days prior to
the commencement of any Lease Year during which Tenant has approval
rights under this Paragraph 5.C.(viii). In the event that within fifteen
(15) days of receipt of such budget, Tenant objects to any budgeted
Operating Expenses as being unnecessary, excessive or inappropriate for
the operation of a first-class office building in the City of Chicago,
or not in accordance with standard management practices for a
first-class office building in the City of Chicago and Landlord and
Tenant are unable to agree upon the budget within thirty (30) days of
delivery of Tenant's objection, then either party may submit the issues
presented by such objection to arbitration pursuant to Paragraph 33
hereof. Tenant's failure to object within such fifteen day period shall
be deemed to constitute Tenant's acceptance of such budget. Any such
budget shall be based upon the services to be provided by Landlord under
this Lease. In addition to those services to be provided by Landlord
under this Lease, Tenant may not require greater or lesser services than
those services customarily provided in comparable first-class office
buildings in the City of Chicago. Until the conclusion of such
arbitration the budget proposed by Landlord shall be the basis for
Tenant's Expense Amount payments. To the extent that the arbitrators
shall conclude that any expenses fail to satisfy the criteria of this
Paragraph 5.C.(viii) the Landlord shall not be entitled to treat such
expenses or proposed expenses as Operating Expenses under this Lease.
(ix) If less than one hundred percent (100%) of the Rentable
Area of the Building shall have been occupied by tenants during any
Lease Year, for purposes of computing Tenant's Expense Amount, those
Operating Expenses that will vary in direct proportion with the level of
Building occupancy such as but not limited to janitorial expenses, and
water and sewer charges shall be determined for such Lease Year to be
equal to the like expense that would normally and reasonably be expected
to be incurred for such item had such occupancy been one hundred percent
(100%) through such Lease Year.
D. Electricity Payments. Tenant shall pay directly to the public utility
providing such electric power for all electric power provided to Tenant for use
on the Premises.
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<PAGE> 46
E. Allocation of Operating Expenses and Tax Expense. Operating
Expenses "for" a Lease Year shall mean those Operating Expenses allocable to
such Lease Year as determined in accordance with generally accepted accounting
principles. Taxes "for" a Lease Year shall mean Taxes due and payable during
that Lease Year. In the event of a dispute by either party regarding the
allocation to any Lease Year or portion thereof of Operating Expenses or Taxes
the matter may be submitted to arbitration by either party pursuant to Paragraph
33.
F. Delay in Computing Additional Rent. Except as provided in
Paragraph 5.C.(vi), delay in computing any item of Additional Rent shall neither
be deemed a default by Landlord or a waiver of the right to collect the item of
Additional Rent in question.
G. Minimization of Additional Rent. Consistent with the operation
of a first-class office building, Landlord agrees to use all reasonable efforts
to minimize both Taxes and Operating Expenses to the same extent as if the
entire burden thereof were the unreimbursable obligation of Landlord, provided,
however, that Landlord shall have no obligation to make capital improvements to
reduce Operating Expenses. Landlord agrees to prosecute appropriate proceedings
for refunds of excessive real estate Taxes with diligence, and in the event that
after consultation with recognized tax experts Landlord shall determine that
pursuing any assessment reductions or tax refunds is not appropriate, Landlord
shall promptly advise Tenant thereof in writing in a timely fashion and shall
permit Tenant to review such determination with Landlord's tax experts. In the
event that a filing shall be required to preserve the right to contest taxes or
any assessment, (such as a complaint to the Cook County Board of Tax Appeals as
respects real estate taxes) Landlord shall upon the written request of Tenant
make such filing in a timely fashion. Landlord shall keep Tenant advised in
writing on a regular basis as to the progress of any proceedings to contest
Taxes or assessments. Tenant may elect to submit the question of whether Taxes
or assessments should be contested or whether Landlord is diligently contesting
Taxes or assessments to arbitration pursuant to Paragraph 33. If an arbitrator
shall determine that Landlord has failed to appropriately or diligently contest
any Taxes or assessments and Landlord fails to correct such situation within ten
(10) days after any such decision, Tenant shall have the right after notice to
Landlord to contest all such Taxes or assessments by legal proceedings or in
such other manner as it may deem suitable (which, if so instituted, Tenant shall
conduct promptly at its own initial cost and expense and free of any expense to
Landlord, and if necessary in the name of and with the cooperation of Landlord),
and Landlord shall execute all documents necessary to accomplish the foregoing.
H. Tax Refunds and Operating Expense Overcharges. Any refund or
reduction of Taxes secured by Tenant shall first be applied to the costs, fees
and expenses incurred by Tenant to secure such refund and then to the costs,
fees and expenses of Landlord in securing such refund. Any balance of such
refund or reduction of Taxes shall be deducted from the Taxes due and payable in
the Lease Year Landlord receives such refund, notwithstanding that the refund
may be of Taxes for a previous year. In the event that for any Lease Year
Landlord receives payments of (or has granted abatements of) Operating Expense
Amounts or Tax Amounts which exceed the actual Operating Expense or Tax Amounts
for such year then Landlord shall immediately pay to Tenant the Tenant's share
of any such amount based upon the percentages set forth in Paragraphs 5.A.(iv),
(v) and (ix).
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<PAGE> 47
Notwithstanding the foregoing, during the first sixty (60) months
of the Term, Tenant shall not be entitled to share in any such refund or rebate
of Operating Expenses or Taxes; and during the 61st through the 120th months of
the Term, Tenant shall share in any rebate or refunds of Operating Expenses and
Taxes only to the extent that the aggregate amount of such Operating Expenses
and Taxes for each successive twelve month period shall be less than the
Combined Amount for such period.
6. USE OF PREMISES.
Tenant shall use and occupy the Premises for general office
purposes and for any other ancillary and lawful purpose consistent with a
first-class office building. Tenant may also install vending machines,
employees' lounges, kitchen, cooking and dining facilities, and print shop and
duplicating facilities in the Premises generally consistent with the type of
facilities shown in the Space Plans. Such food service facilities shall be for
use of its executive employees and guests, but excluding use thereof by the
general public; and the printing and duplicating shall be solely for Tenant and
its Affiliates (as hereinafter defined). Any full service kitchen areas shall be
located on the uppermost three (3) floors of the Premises. Tenant may serve
anywhere throughout the Premises, beverages of any kind to its officers,
employees and guests; provided, however, Tenant shall at all times comply with
the laws of the State of Illinois respecting the serving of any alcoholic
beverages and will indemnify and hold Landlord harmless from all loss or damage
Landlord may suffer by virtue of any violation of such laws.
Tenant's occupancy shall comply with all applicable laws, rules
and regulations and Tenant shall not use the Premises so as to create a
nuisance. The foregoing provision shall in no way limit Landlord's obligation to
make repairs, installations, and additions to the Premises as provided in
Paragraph 9.A..
7. CONDITION OF PREMISES.
Except as specifically provided by this Lease, no promise of the
Landlord to alter, remodel or improve the Premises or the Building and no
representation by Landlord or its agents respecting the condition of the
Premises or the Building have been made to Tenant or relied upon by Tenant other
than as may be contained in this Lease, the Work Letter, any written amendment
hereto or to the Work Letter, or any other agreement signed by Landlord and
Tenant. The Work Letter attached hereto as Exhibit D is hereby incorporated into
this Lease by reference and Landlord and Tenant each agree to carry out their
respective obligations under the Work Letter.
8. SERVICES.
A. List of Services. Landlord shall provide the following
services, without additional cost to Tenant other than as specifically set
forth, at all times after Tenant's occupancy of the Premises during the Term:
(i) Heating, ventilating and air conditioning within the
performance standards of Exhibit E, from Monday through Friday
(excluding Holidays), during the period from 7:00 a.m. to 6:00
p.m. and on Saturday (excluding Holidays) during the period from
8:00 a.m. to 1:00 p.m. "Holidays" shall mean New Years Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving,
-20-
<PAGE> 48
Christmas and such other holidays observed customarily in
comparable first-class office buildings in the City of Chicago
with major service industry tenants, such as accounting firms
and law firms. Landlord shall provide after-hour and Holiday
heating, ventilating and air conditioning services at Landlord's
actual cost upon the request of Tenant;
(ii) City water from the regular Building outlets for
cooking, drinking, lavatory and toilet purposes, including hot
water in washrooms in the core of the Building at normal faucet
temperature; water shall be provided at water pressure of a
minimum of thirty-five (35) pounds per square inch;
(iii) Janitorial services as specified in Exhibit F
attached hereto and identified as "Janitorial Services";
(iv) Window washing for the inside and outside of
Windows in the Building's perimeter walls as may be situated in
the Premises at least once per season as determined by Landlord,
but not less than four (4) times per year and not less than two
(2) times per year for the outside of the windows in the balance
of the Building;
(v) Exclusive use of 6-car high-rise automatic
high-speed passenger elevators for floors above the 24th Floor,
with service to all of the Premises at all times; provided,
however, that Landlord may with the consent of Tenant, which
shall not be unreasonably withheld or delayed, limit the number
of cars serving the Premises to as few as two during after-hour
periods and provided further that in the event Tenant is not
occupying all floors above the 24th Floor, other persons
occupying such floors shall also be entitled to use of such
elevators; provided further, however, that Landlord may
routinely take one (1) elevator car out of service for routine
maintenance without Tenant's consent.
(vi) Freight elevator services and dock access in common
with other Tenants during normal business hours from Monday
through Friday (excluding Holidays) during the period from 7:30
a.m. to 4:30 p.m., and at other times subject to reasonable
scheduling; daily reserved times for first priority use of a
freight elevator from 7:30 a.m. to 8:00 a.m., from 12:00 p.m. to
12:30 p.m. and from 3:00 p.m. to 3:30 p.m. other than on Sundays
and Holidays; such first priority use shall entitle Tenant to
control of the freight elevator at such times during the
aforesaid periods as Tenant is using the freight elevator or
requires the use of the freight elevator;
(vii) Sufficient electrical capacity in the Building,
which can be delivered to the Premises, to operate printers,
telephones, computers, typewriters, calculating machines,
personal computers and peripherals, photocopying machines of
similar low electrical consumption (120/208 volts) and to
provide five (5) watts of connected load per square foot of
Rentable Area;
(viii) Tower condenser water at all times to operate
Tenant's special cooling equipment for its computer and
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<PAGE> 49
communication equipment initially installed on the Premises;
provided that Tenant shall pay the electrical costs for pumping
such water after hours;
(ix) Building directory with such entries for Tenant as
Tenant may from time to time reasonably request;
(x) Security services in the public space and common
areas of the Building consistent with operation of a first-class
office building in Chicago, Illinois of similar size including
coordination and control of elevator access to the Premises
during non-business hours as reasonably requested by Tenant;
such elevator controls shall include at Tenant's request during
non-business hours the ability (i) to move directly from floor
to floor in the Premises, and (ii) to restrict access to the
Premises to those persons designated by Tenant. Notwithstanding
the foregoing provisions of this subparagraph, Landlord shall
not be required to make capital expenditures to enhance the
security services for the Building beyond those contemplated by
the Plans. Tenant shall be entitled to secure and utilize the
signals from Landlord's security cameras monitoring the lobby
and garage areas of the Building in connection with Tenant's
security system. Selected employees of Tenant shall be kept
apprised of the radio frequencies utilized by Landlord's
personnel;
(xi) Maintenance of public and common areas of the Land
and Building consistent with the operation of a first-class
office building in Chicago, Illinois;
(xii) Such other services as are customarily furnished
generally to tenants by landlords of first-class office
buildings of a similar size in Chicago, Illinois, provided, that
Landlord shall not be required to make capital expenditures to
enhance Building systems to provide such services, and provided
further that the costs of such services shall be borne by the
users thereof if Landlord does not furnish such services
generally for the benefit of substantially all tenants in the
Building; and
(xiii) Landlord shall prior to the date of substantial
completion under Paragraph 3.B. provide Tenant in writing the
standard emergency procedures applicable to the Building and
Premises and shall from time to time during the Term promptly
furnish Tenant with any amendments, revisions, supplements or
additions to such procedures.
B. Interruption of Services. Tenant agrees that, except as
herein provided, Landlord shall not be liable in damages, by abatement of Base
Rent or otherwise, for failure to furnish or delay in furnishing any service, or
for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whole or in part, by governmental rule or
regulation, by repairs, renewals, or improvements, by any strike, lockout or
other labor trouble, by inability to secure electricity, gas, water, or other
fuel at the Building after Landlord's reasonable effort so to do, by any
accident or casualty whatsoever, by act or default of Tenant, or by any other
cause beyond Landlord's reasonable control; and, except as herein provided, no
such failure or delay or diminution shall be deemed
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<PAGE> 50
to constitute an eviction of Tenant or disturbance of the Tenant's use and
possession of the Premises nor shall any such failure or delay relieve the
Tenant from the obligation to pay rent or perform any of its obligations under
this Lease. Landlord agrees to use its reasonable efforts to promptly restore
services in the event of any failure, delay or diminution described in this
Paragraph. Notwithstanding the foregoing, if the Premises or any full floor
portion thereof are rendered untenantable or are rendered inaccessible or
incapable of use by Tenant in the ordinary course of business for in excess of
one (1) business day, in each case due to interruption of such service for any
cause other than by default of Tenant, all Base Rent and Additional Rent shall
abate for the portion of the Premises affected thereby and for the period of
such untenantability, inaccessibility or incapacity for use by Tenant in the
ordinary course of business; provided that such abatement is or would be
recoverable under any insurance that is commercially reasonable and available to
owners or first-class office buildings in Chicago, Illinois, whether or not
required to be carried by Landlord pursuant to the terms of this Lease.
C. Additional Services. Landlord shall have no obligation to
furnish services to Tenant of a different character other than those specified
in Paragraph 8.A. Should, however, Landlord provide additional services beyond
those provided for in Paragraph 8.A. to Tenant at Tenant's request, Tenant shall
pay separately for such additional service (including, but not limited to,
reserved time freight elevator services provided during reserved hours other
than those set forth in Paragraph 8.A.(vi)), at rates generally applicable to
all tenants to be established from time to time by Landlord to cover Landlord's
costs. Charges for any such additional service for which Tenant is required to
pay shall be due and payable with the next payment of rent that occurs more than
seven (7) days after Landlord bills Tenant therefor. If Tenant fails to make
payment for any such additional services, Landlord, in addition to all other
rights and remedies available to Landlord under this Lease may, with notice to
Tenant, discontinue any or all of such additional services and such
discontinuance shall not be deemed to constitute an eviction or disturbance of
the Tenant's use and possession of the Premises or relieve Tenant from paying
Base Rent and Additional Rent or otherwise performing any of its obligations
under this Lease.
D. Energy Conservation. Notwithstanding anything to the contrary
in this Paragraph 8 or elsewhere in this Lease, Landlord shall have the right to
institute such reasonable nondiscriminatory policies, programs and measures for
the conservation or preservation of energy, or energy related services as may be
legally required to comply with any applicable governmental codes, rules and
regulations.
E. Rights of Tenant. In addition to any other rights reserved to
Tenant under and pursuant to this Lease, Tenant shall have the right while a
Tenant under this Lease:
(i) to use Tenant's personnel at its cost and expense to replace
and repair lamps, tubes and ballasts in the lighting fixtures, subject
to Landlord's reasonable approval of the tubes and materials used
(consistent with Landlord's desire to maintain substantial uniformity in
color and intensity of interior lighting);
(ii) to use Tenant's own personnel to make Alterations (as
hereinafter defined) subject to the provisions of Paragraph 10.A; and
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<PAGE> 51
(iii) to use hand carts for mail and paper delivery on the
Building passenger elevators between the various floors of the Premises.
Personnel utilized by Tenant pursuant to this Paragraph 8.E. (i) and (ii), or to
perform janitorial services pursuant to Paragraph 8.A.(iii) or to perform
repairs or Alterations pursuant to Paragraphs 9.B. and 10. may be employees of
Tenant; otherwise such personnel, if performing services similar to those
rendered by Landlord with union personnel, shall if legally requested by
Landlord's union personnel, belong to unions that will not conflict with the
unions under contract with Landlord for the Building. In the event that the use
by Tenant of its employees or of other persons to perform services under
Paragraph 8.E.(i), janitorial services under Paragraph 8.A.(iii) or repairs or
Alterations under Paragraphs 9.B. or 10. shall cause Landlord's employees or
contractors to strike, picket or otherwise materially interfere with the
operation of the Building, Tenant shall upon the written request of Landlord
cease the use of such personnel until such time as it shall be established that
Tenant has the right to legally utilize such employees or contractors. If
requested by Tenant and provided that in the reasonable judgment of Tenant the
actions of Landlord's employees or contractors in so interfering with the
operation of the Building are illegal, Landlord shall commence and pursue
appropriate legal proceedings to protect Tenant's rights to select and use
employees or contractors selected by it to perform such services without such
illegal interferences. Such legal proceedings shall be at Landlord's expense,
unless a judgment is entered by a court of competent jurisdiction finding that
such interference was not illegal, in which event such legal proceedings shall
be at Tenant's expense and Tenant shall reimburse Landlord for all of Landlord's
reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees. Upon a finding that any such interference was illegal, Tenant
shall be entitled to continue to use such employees or contractors as it may
select. In the event that Landlord shall settle such dispute, Landlord and
Tenant shall each bear a reasonable allocable cost of such settlement. If the
parties are unable to agree on such allocation of settlement costs, either party
may submit that issue to arbitration pursuant to Paragraph 33 hereof.
Except in emergency, Landlord shall provide Tenant with one (1)
day's advance written notice of any interruption of any utility services in
connection with any repairs, replacements, alterations or additions to such
utility systems. Notwithstanding the foregoing, in the event that such
interruption in connection with repairs, replacements, alterations or additions
shall involve the Tower condenser water that operates Tenant's special cooling
equipment for its computer and communication equipment on the Premises, Landlord
shall provide Tenant with no less than ten (10) business days advance written
notice of such interruption, except in the event of an emergency, in which case
Landlord shall provide not less than one (1) hour advance notice to Tenant of
such interruption.
9. REPAIRS.
A. Landlord. Landlord at its expense, shall promptly and
adequately maintain, repair and keep in good condition at all times during the
Term (i) the Building structure, including, but not limited to roofs, subfloors,
structural perimeter walls, curtain wall windows, elevators, Building heating,
Building ventilating and Building air conditioning equipment, systems and con-
-24-
<PAGE> 52
trols, the Building plumbing, electrical, sprinkler and fire safety systems,
(ii) all common areas and public spaces in the Building or on the Land, and
(iii) the Building security system and equipment. Subject to the specific rights
of Tenant, Landlord shall be responsible for Janitorial Services (as hereinafter
defined) and shall also be responsible for those repairs and replacements
described in Paragraphs 13 and 16. In addition Landlord shall make all repairs,
installations and additions to the Building and to the Premises to the extent
that such items involve Tenant Improvements set forth in the System Plans
provided by Landlord as may be required by any ordinance, rule, regulation or
ruling of any governmental authority having jurisdiction over the Building. The
determination of whether a repair or replacement made by Landlord shall be a
capital expenditure shall be based upon generally accepted accounting principles
existing on the date hereof and the intent of the parties is that material
structural repairs to or replacement of exterior components of the Building
(other than routine maintenance) shall be deemed capital expenditures.
B. Tenant. Except to the extent required to be provided for by
Landlord under Paragraphs 8, 9.A., 13 and 16, after delivery of possession of
the Premises to Tenant (provided that Landlord shall remain obligated to
complete all Punch List items), Tenant shall at Tenant's expense, keep the
Premises in good order, repair and condition at all times during the Term, and
Tenant shall promptly and adequately repair all damage to the Premises and
replace or repair all damaged or broken fixtures and appurtenances on the
Premises with materials of comparable quality. If Tenant does not do so,
Landlord may, but need not, after notice to Tenant make any repairs,
replacements, installations, and additions that Tenant is obligated to make, and
Tenant shall pay to Landlord the cost thereof. The foregoing payments shall be
made with the next payment of rent due at least seven (7) days after Tenant is
billed for same. Except as specifically provided in Paragraph 9.A, Tenant shall
make all repairs, installations, and additions to the Premises to the extent
that such items involve Tenant Improvements set forth in the Working Plans
provided by Tenant, or relating to Tenant's unique use of the Premises (such as
kitchen and printing shop), as may be required by any ordinance, rule,
regulation or ruling of any governmental authority having jurisdiction over the
Premises. Landlord shall be entitled to supervise any repairs, installations and
additions required to be made under this Paragraph 9.B., but any costs of such
supervision shall be Landlord's expense.
C. Access. Landlord and Landlord's Agent may after three (3) days
advance written notice to Tenant (except in an emergency), but shall not be
required to, enter the Premises at all reasonable times with Tenant's
permission, which shall not be unreasonably withheld or delayed, to make such
repairs, installations, alterations, improvements and additions to the Premises
or to the Building or to any equipment located in the Building as Landlord shall
desire or deem necessary. Except in the case of emergency, or unless such
repairs, installations, alterations, improvements and additions can be made
without significantly interfering with Tenant's use of the Premises, they shall
be done during non-business hours.
10. ADDITIONS AND ALTERATIONS.
A. Tenant's Rights. From and after the Commencement Date, Tenant
may, at its expense and after notice to Landlord, make any alterations,
improvements or additions to the Premises
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as Tenant deems appropriate for Tenant to be able to operate its business
(collectively "Alterations"). Tenant shall provide Landlord with plans and
specifications for any Alterations (other than normal decorating and
refurbishing). Alterations shall not include any work covered by the Work
Letter. Tenant shall secure, at its cost, all required permits and
authorizations for Alterations from governmental authorities (and Landlord shall
cooperate in connection therewith whenever necessary); and such Alterations
shall be made free of liens, in a good and workmanlike manner in conformity with
applicable laws and the plans and specifications delivered pursuant hereto. If
any such Alterations shall (i) be structural in nature; or (ii) materially
affect the heating, ventilating, life safety and air conditioning or electrical,
plumbing or mechanical systems of the Building; such Alterations shall not be
performed unless and until System Plans (as hereinafter defined) and such
construction documents as Landlord may reasonably require have been submitted to
and approved by Landlord, which consent shall not be unreasonably withheld or
delayed. Landlord shall be entitled to supervise any Alterations of the type
described in the preceding sentence that require Landlord's approval, and Tenant
shall pay to Landlord the reasonable costs of such supervision and review by
Landlord with the next payment of rent due at least seven (7) days after Tenant
is billed for same. Any Alterations, whether prior to or subsequent to the
Commencement Date, shall be completed at Tenant's expense by employees of or
contractors hired by Tenant. Tenant shall promptly pay to Tenant's contractors,
when due, the cost of all such Alterations. Upon completion of such Alterations,
Tenant shall deliver to Landlord evidence of payment, contractors' affidavits,
full and final waivers of all liens for labor, services or materials and such
other supporting documentation as Landlord may reasonably require, all in form
reasonably satisfactory to Landlord. Tenant shall defend and hold Landlord, the
Land and the Building harmless from all costs, damages, liens and expenses
related to such Alterations. All Alterations and repairs done by Tenant or its
contractors pursuant to Paragraphs 9 or 10 of this Lease shall be done in a
first-class, workmanlike manner using only good grades of materials and shall
comply with all applicable laws, ordinances, rules and regulations of
governmental departments or agencies. At all times Tenant shall cause
contractors and others performing Alterations for Tenant to not interfere with
the contractors, agents, and employees performing work in the Building for
Landlord or others.
B. Ownership and Removal. Unless otherwise required in writing by
Landlord or agreed upon by Landlord and Tenant at or prior to the time such
Alterations are made, all Alterations, whether temporary or permanent in
character shall without compensation to Tenant, become Landlord's property at
the termination of this Lease by lapse of time or otherwise. Upon termination of
this Lease Tenant shall have no obligation to remove any tenant improvements
made pursuant to the Work Letter or any Alterations that Tenant had not
previously agreed to remove. If Landlord shall require Tenant to remove any
Alterations it must so notify Tenant within thirty (30) days of receipt of the
plans for such Alterations.
11. COVENANT AGAINST LIENS.
Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to attach to or be placed upon Landlord's title or interest
in the Land, Building or the Premises, and any and all liens and encumbrances
created by
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Tenant shall attach to Tenant's interest only. Tenant covenants and agrees not
to suffer or permit any lien of mechanics or materialmen or others to be placed
against the Land, Building or the Premises or Tenant's interest in the Premises
with respect to work or services claimed to have been performed for or materials
claimed to have been furnished to Tenant or the Premises, and, in case any such
lien attaches, or claim of lien is asserted, Tenant covenants and agrees to
cause such lien or claim of lien to be immediately released and removed of
record or to be bonded over by a title insurer or surety reasonably acceptable
to Landlord. In the event that after ten (10) days written notice to Tenant such
lien or claim of lien is not immediately released and removed or bonded as
provided herein, Landlord, at its sole option and in addition to any other
available rights or remedies, may take all action necessary to release and
remove such lien or claim of lien (it being agreed by Tenant that Landlord shall
have no duty to investigate the validity thereof) and Tenant shall promptly upon
notice reimburse Landlord for all reasonable sums, costs and expenses (including
reasonable attorneys' fees) incurred by Landlord in connection with such lien.
12. INSURANCE.
A. Mutual Waiver. Each of Landlord and Tenant hereby waives any
and every claim, including insurer's subrogation claims, for recovery from the
other for any and all loss or damage to the Building or Premises or to the
contents thereof, and including claims for deductible and self-insurance
retention amounts, whether such loss or damage is due to the negligence of
Landlord or Tenant or its respective officers, directors, agents, employees or
invitees of any of them. Furthermore, Landlord and Tenant agree that as respects
any rights or claims between them, they shall each look solely to their
respective insurance carriers to the extent of the physical damage insurance
required to be maintained hereunder in the event of any physical loss or damage
required to be insured against by them hereunder.
B. Tenant Coverage. From and after the date upon which Tenant
shall first occupy any portion of the Premises to carry on its business, Tenant
shall purchase and maintain insurance with terms, coverage and in companies
reasonably satisfactory to Landlord as follows: (i) comprehensive general
liability insurance, including contractual liability insurance, covering claims
of bodily injury, personal injury and property damage arising out of Tenant's
operations, assumed liabilities or use and occupancy of the Premises, (ii)
physical damage insurance covering any tenant improvements provided under the
Work Letter and any Alterations, and (iii) physical damage insurance for
Tenant's personal property located on the Premises.
All liability insurance shall initially have combined single
limits of at least Three Million Dollars ($3,000,000) per occurrence, which
limits or coverages shall be subject to increase or change from time to time as
Landlord may reasonably request consistent with the requirements of comparable
first-class office buildings in Chicago. All property insurance shall be written
on an "all risk" basis, shall be in amounts at least equal to one-hundred
percent (100%) of the replacement cost of the covered items, subject to a
reasonable deductible considering the size and financial capabilities of Tenant,
and shall not be subject to the application of any co-insurance clauses or
requirements.
Prior to the date on which it first occupies the Premises to
carry on its business and prior to the policy expiration dates,
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Tenant shall furnish to Landlord certificates evidencing the coverages required
by this Paragraph, which certificates shall state that such insurance coverage
may not be changed or cancelled without at least thirty (30) days prior written
notice to Landlord, except in the event that such cancellation is for nonpayment
of premiums in which event the notice to Landlord may be upon ten (10) days
notice, and shall name as additional insureds with respect to comprehensive
general liability insurance and loss payees with respect to property insurance
coverages as their interest appears in this Lease only (i) Landlord and the
partners in Landlord, (ii) the beneficial owner or owners of the Land and
Building, if such are other than Landlord, and Tenant is given notice of such
fact, (iii) the ground lessor, any mortgagee, and any other party or parties
having an interest in the Premises that is agreed to by Tenant.
Notwithstanding the foregoing Tenant may elect to self insure for
any of the insurance required to be furnished by Tenant pursuant to this Lease
(other than physical damage insurance), provided that Tenant has the financial
capacity commonly possessed by persons who would self-insure for coverages such
as those required under this Lease. In the event of a dispute as to such
capacity either party may submit that issue to arbitration pursuant to Paragraph
33 hereof.
In the event that after ten (10) days written notice to Tenant,
Tenant shall at any time fail to maintain any of the insurance herein required,
Landlord shall have the right, but not the obligation, to provide such
insurance, and Tenant shall promptly upon notice reimburse Landlord for all
reasonable sums, costs and expenses incurred by Landlord in connection with
providing such insurance.
C. Avoid Action Increasing Rates. Landlord and Tenant shall each
comply with all applicable laws and ordinances, all orders and decrees of court
of which it has notice, and all requirements of other governmental authorities,
with respect to the Building or Premises, and shall not, directly or indirectly,
make any use of the Building or Premises other than those permitted in this
Lease that may be prohibited by law or be dangerous to person or property, which
may jeopardize any insurance coverage, increase the cost of insurance, or
require additional insurance coverage. If either party after notice from the
other fails to comply with the provisions of this Paragraph 12.C, and
jeopardizes the insurance coverage required to be carried under this Lease, the
other party shall have the right to enjoin the use that is contrary to this
Lease and jeopardizes the coverage, and if their premium is increased as a
result of such use, the non-defaulting party may after notice to such party
require such party to make immediate payment of any such increase in the other
party's insurance costs.
D. Landlord's Coverage. Landlord hereby agrees to insure the
Building and all portions of the Premises not required to be insured by Tenant
on an "all risk" of physical loss or damage basis, not subject to the
application of any co-insurance clauses or requirements of the policy and equal
to one hundred percent (100%) of the full replacement cost of the Building (but
excluding the cost of foundation, excavation and footings below grade), subject
to a reasonable deductible not to exceed One Hundred Thousand Dollars ($100.000)
without Tenant's prior written approval. Landlord shall purchase and maintain
comprehensive general liability insurance, including contractual liability
insurance, covering claims of bodily injury, personal injury and
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property damage arising out of Landlord's or Landlord's Agent's operations,
assumed liabilities or use and occupancy of the Building (other than the
Premises) with combined single limits of at least Three Million Dollars
($3,000,000) per occurrence. Such limits or coverages shall be subject to
increase or change from time to time as Tenant may reasonably request consistent
with the requirements of comparable first-class office buildings in Chicago.
Landlord shall cause Tenant to be named as an additional insured under all
liability policies carried pursuant to this Lease, with respect to the common
areas of the Building only Landlord shall furnish to Tenant prior to the date of
Tenant's occupancy of any portion of the Premises and prior to the expiration
date for any existing policies certificates evidencing the coverages required by
this Paragraph, which certificates shall state that such insurance coverage may
not be changed or cancelled without at least thirty (30) days prior written
notice to Tenant, except in the event that such cancellation is for nonpayment
of premiums in which event the notice to Tenant may be upon ten (10) days
notice.
In the event that after ten (10) days written notice to Landlord,
Landlord shall at any time fail to maintain any of the insurance herein
required, Tenant shall have the right, but not the obligation, to provide such
insurance, and Landlord shall promptly upon notice reimburse Tenant for all
reasonable sums, costs and expenses incurred by Tenant in connection with
providing such insurance.
E. Hold Harmless and Indemnification. Unless caused by Tenant's
negligence, Landlord and Landlord's comprehensive general liability insurance
carrier shall have primary responsibility and liability for any claims for
personal injury or property damage asserted against Tenant in connection with
the Land or Building that arise (a) on any portion of the Premises prior to
Tenant's occupancy thereof, or (b) other than on the Premises. In the event
Tenant is named or joined in any proceeding that alleges such a claim, Landlord
shall upon written notice from Tenant promptly assume the defense of such
proceeding and diligently use all reasonable efforts to have Tenant dismissed
from such proceeding. Absent actual fault by Tenant with respect to any such
claim, Landlord shall indemnify and hold Tenant harmless in connection with any
such claim including but not limited to all expenses, fees and liabilities
arising in connection therewith. If it shall be established in the course of any
such proceeding that Tenant is to any material extent at fault in connection
with such a claim, then Tenant shall bear and be responsible for a share of the
costs of defense and liability arising in connection therewith, such share to be
determined by the court hearing such case, if feasible, or otherwise by
arbitration pursuant to Paragraph 33 hereof.
Unless caused by Landlord's negligence, Tenant and Tenant's
comprehensive general liability insurance carrier shall have primary
responsibility and liability for any claims for personal injury or property
damage asserted by any third party against Landlord in connection with the
Premises that arise on any portion of the Premises on and after Tenant's
occupancy thereof. In the event Landlord is named or joined in any proceeding
that alleges such a claim, Tenant shall upon written notice from Landlord
promptly assume the defense of such proceeding and diligently use all reasonable
efforts to have Landlord dismissed from such proceeding. Absent actual fault by
Landlord with respect to any such claim, Tenant shall indemnify and hold
Landlord harmless in connection with any such claim, including, but not limited
to,
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all expenses, fees, and liabilities arising in connection therewith. If it shall
be established in the course of any such proceeding that Landlord is to any
material extent at fault in connection with such a claim, then Landlord shall
bear and be responsible for a share of the costs of defense and liability
arising in connection therewith, such share to be determined by the court
hearing such case, if feasible, or otherwise by arbitration pursuant to
Paragraph 33 hereof.
F. Waiver Provisions. The obligation of Tenant to carry personal
property insurance shall exist only while the laws of the State of Illinois
shall prohibit a landlord from securing a release from its tenants for such
landlord's negligence and Landlord's sole remedy for any breach of such
provision requiring Tenant to carry personal property insurance shall be a right
to recover damages for losses incurred because such insurance was not in effect.
Landlord shall have no right or interest in the proceeds of any physical damage
insurance on personal property located on the Premises and Tenant shall be
entitled to all such proceeds and to handle and deal with all claims under any
policy.
Each party shall bear the loss of any deductible on any policy
carried by it pursuant to this Lease.
13. FIRE OR CASUALTY.
A. Rights Upon Loss. If the Premises or the Building (including
machinery or equipment used in its operation) shall be damaged by fire or other
casualty and if damage does not render all or a substantial portion of the
Premises or Building untenantable so as to give Landlord the right to terminate
this Lease, Landlord shall, subject to Tenant's duty to repair those parts of
the Premises that were provided at Landlord's cost during the Term pursuant to
the Work Letter and any replacements or additions thereto, as set forth in
Paragraph 13.B. below, repair or restore such damage with reasonable promptness,
subject to reasonable delays for insurance adjustments and delays caused by
matters beyond Landlord's reasonable control; provided that Landlord shall have
no obligation to repair, restore or replace Landlord's Work, Extra Work (each as
defined in the Work Letter), or Alterations and any replacements or additions
thereto. If any such damage renders all or a substantial portion of the Premises
or Building untenantable and Landlord has in good faith determined not to repair
or restore the Building and Premises, Landlord shall have the right to terminate
this Lease as of the date of such damage (with appropriate prorations of all
rents being made for Tenant's possession after the date of such damage of any
tenantable portions of the Premises) upon giving written notice to the Tenant at
any time within ninety (90) days after the date of such damage. Upon notice of
such termination Tenant shall within five (5) business days of receipt of
Landlord's notice choose and advise Landlord in writing of an effective date of
such termination not later than ninety (90) days after receipt of the notice
from Landlord.
If Landlord has not exercised its rights to terminate this Lease
as provided for in this Paragraph 13, then within ninety (90) days after the
loss Landlord shall advise Tenant of Landlord's reasonable good faith estimate
of the time required to make the necessary repairs. If such estimate is in
excess of one (1) year from the date of loss, then Tenant may, upon written
notice to Landlord, within thirty (30) days after receipt of Landlord's
estimate, exercise Tenant's right to terminate this Lease.
Tenant shall not have the aforesaid right to terminate
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this Lease in the event that the fire or casualty is caused solely by the
willful misconduct or negligence of Tenant.
If Landlord's reasonable good faith estimate of the time required
to make the necessary repairs is less than one (1) year, or if it is for more
than one (1) year and Tenant has not elected to terminate this Lease, then
Tenant may terminate this Lease on thirty (30) days prior written notice to
Landlord only if (a) Landlord shall have failed to commence to repair or restore
the Building within one hundred eighty (180) days after the loss; or (b)
Landlord shall have failed to complete such repair or restoration within the
later of three (3) months after such estimated date or one hundred twenty-five
percent (125%) of the estimated time, unless such failure results from
Unavoidable Delays.
For purposes of this Paragraph 13 a substantial portion of the
Building shall be deemed to have been damaged only if reconstruction or
significant repairs shall be required of more than twenty-five percent (25%) of
the Rentable Area in the entire Building, excluding, however, the space leased
to Illinois Bell Telephone Company ("IBT") in the non-Tower portion of the
Building; and a substantial portion of the Premises shall be deemed to have been
damaged only if reconstruction or significant repairs are required for more than
fifty percent (50%) of the Rentable Area in the Premises.
All rents and charges under this Lease, including Base Rents and
Additional Rents shall abate as to those portions of the Premises as are, from
time to time, untenantable as a result of damage until Landlord shall have
completed the repairs and restoration required of Landlord hereunder.
B. Proceeds. If neither Landlord nor Tenant have exercised the
right to terminate this Lease as provided in Paragraph 13.A., all insurance
proceeds with respect to the Premises received by Tenant as a result of such
damage by fire or other casualty to the Premises shall be used, to the extent
required, by Tenant to satisfy Tenant's duty to repair the Premises, which duty
is limited to repairing or restoring those parts of the Premises that were
provided at Landlord's cost during the Term pursuant to the Work Letter and any
replacements or additions thereto. Tenant may repair all Alterations, (to the
extent that Tenant desires to have such improvements on the Premises) at the
sole cost and expense of Tenant. All repairs and restorations required to be
performed by Tenant hereunder and any other or additional repairs or
restoration, if Landlord consents thereto, shall be done at Tenant's sole cost
and expense in accordance with the provisions of Paragraph 10 hereof. If either
Landlord or Tenant have exercised the right to terminate this Lease as provided
in Paragraph 13.A. during the first fifteen (15) years of the Part I Term,
insurance proceeds under the property damage insurance for the Premises required
to be carried by Tenant received by Tenant as a result of such damage by fire or
other casualty to the Premises shall be paid by Tenant to Landlord in an amount
equal to the unamortized value of the Landlord's Work provided pursuant to the
Work Letter and any replacements or additions thereto. Thereafter Landlord shall
be entitled to receive only its reasonable demolition costs for the tenant
improvements on the Premises from such insurance proceeds. For purposes of this
Paragraph 13.B such improvements shall be amortized on a straight line basis for
a fifteen (15) year period. If the parties are unable to agree as to such
amount, then the amount shall be determined by arbitration pursuant to Paragraph
33 hereof.
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14. [INTENTIONALLY DELETED]
15. NONWAIVER.
No waiver of any provision of this Lease shall be implied by any
failure of Landlord or Tenant to enforce any remedy on account of violation of
such provision, even if such violation be continued or repeated subsequently,
and no express waiver shall affect a provision other than the one specified in
such waiver and then only for the time and in the manner specifically stated. No
receipt of monies by Landlord from Tenant after the termination of this Lease
shall in any way alter the length of the Term or of Tenant's right of possession
hereunder or after the giving of any notice of termination shall reinstate,
continue or extend the Term or affect a notice of termination given to Tenant
prior to the receipt of such moneys, it being agreed that after the service of
such notice or the commencement of a suit or after final judgment for possession
of the Premises, Landlord may receive and collect any Base Rent or other sum
due, and the payment of said Base Rent or other sum shall not constitute a
waiver of or affect said notice, suit or judgment.
16. CONDEMNATION.
A. Total. If all or substantially all of the Land and the
Building is taken by condemnation or eminent domain (a "taking") this Lease
shall terminate automatically. The amount of damages resulting to Landlord and
Tenant respectively, and to their respective interests in and to the Land and
Building and in, to and in connection with this Lease, by reason of such
exercise of the power of eminent domain, shall be separately determined and
computed by the court having jurisdiction and separate awards and judgments with
respect to such damages to Landlord and Tenant, respectively, and to each of
their respective interests, shall be made and entered. In the event that such
court shall make a single award without separately determining the respective
interests of Landlord and Tenant, and if Landlord and Tenant shall not agree in
writing as to their respective portions of such award within twenty (20) days
after the date of the final determination by such court of the amount thereof,
Landlord and Tenant agree to submit the matter to such court on stipulation for
the purpose of a judgment determinative of their respective shares. In the event
for any reason the trial judge refuses to permit adjudication of the respective
interests of Landlord and Tenant, then such respective interests shall be
determined by arbitration pursuant to the provisions of Paragraph 33 hereof.
B. Partial. If the taking is of less than substantially all of
the Land and Building and if this Lease is for any reason not terminated
pursuant to the following Paragraph 16.C, Landlord shall as soon as possible
restore the Land and Building as nearly as can practicably be done (including
the Premises) using all of the award received by Landlord and Tenant (but not in
excess thereof) so as to provide to the extent reasonably possible, comparable
space and amenities to those enjoyed by Tenant under this Lease prior to the
taking; in such event this Lease shall continue in force at the square foot
rental rates and adjustment herein provided for the Premises applied to the
Rentable Area of the Premises existing in the Building as restored, but Base
Rent, Additional Rent and other charges due hereunder shall abate for the
portions of the Premises affected as to periods when the Premises is not
available for use by Tenant in the ordinary course of its business as a result
of such taking and work of restoration. In the event the taking is of less than
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substantially all of the Land and Building and does not affect the Premises or
any other interest of Tenant under this Lease to which an economic value can be
determined and computed by the court having jurisdiction, Tenant shall have no
right to a single award or share of the award as provided in the preceding
grammatical paragraph, provided that to the extent required, all of the award
received by Landlord shall be used by Landlord to restore the Land and Building
as provided above in this Paragraph. If the parties are unable to agree whether
a taking is of substantially all of the Land and Building or the extent of any
required restoration, then the matter shall be determined by arbitration
pursuant to Paragraph 33 hereof.
C. Termination Rights. If the taking is of less than
substantially all of the Land and Building then notwithstanding the foregoing
Paragraph 16.B, Landlord and Tenant shall have the right to terminate this Lease
in the following circumstances:
(i) Landlord may terminate if (1) in Landlord's reasonable
business judgment restoration of the Land and Building to substantially the same
size and quality is not economically justified, and (2) more than twenty-five
percent (25%) of the gross area of the Building is so taken by eminent domain,
excluding, however, the spaced leased to IBT in the non-Tower portion of the
Building;
(ii) Tenant may terminate if (1) more than twenty five percent
(25%) of the Premises is so taken by eminent domain, and (2) within sixty (60)
days after such taking Landlord has not been able to provide other comparable
space in the Building to temporarily add to the Premises to restore the size of
the Premises to at least seventy five percent (75%) of its Rentable Area prior
to such taking and Landlord will not, based on Landlord's reasonable estimate of
the Rentable Area of the restored Building (such estimate to be delivered to
Tenant not more than forty-five (45) days after such taking), be able to restore
the Premises to 100% of their Rentable Area prior to such taking by a date not
more than one (1) year after the date of such taking. If Tenant fails to
terminate this Lease as provided herein, the rent and other Lease factors such
as the Tenant's share of Taxes and Operating Expenses shall be adjusted based
upon the size of the Premises in proportion to that of the restored Building;
(iii) Either Landlord or Tenant may terminate if the taking
occurs within twelve (12) months prior to the then effective termination date of
the Part 1 Term.
In any of the above termination cases, such termination notice must be given not
more than sixty (60) days after the taking (the taking for purposes of this
Paragraph shall be the date when the taking authority requires possession) and
termination must be effective for the portion not taken not less than thirty
(30) or more than ninety (90) days after such notice is given. For the portion
taken, the termination shall be effective as of the date of the taking. In any
of the above termination cases, the award to Landlord and Tenant shall be
determined in accordance with Paragraph 16.A.
D. Mortgagee Rights. Tenant's right to receive a share of any
condemnation proceeds pursuant hereto shall be subject to any rights of any
mortgagees of the Land or Building to apply any condemnation proceeds to their
outstanding mortgage obligations.
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17. ASSIGNMENT AND SUBLETTING.
A. Limitations. Except as specifically prohibited in this
Paragraph 17 Tenant may at its discretion (i) assign, convey or mortgage this
Lease or any interest hereunder in whole or in part, subject to Paragraphs 17.B.
and 30.E. hereof; or (ii) sublet the Premises or any part thereof, in each case
subject to the consent of Landlord which shall not be unreasonably withheld or
delayed, as provided in Paragraph 17.B. Tenant may assign portions of the
Premises only on a full floor basis. Any mortgagee of Tenant's interest in the
Lease or successor in interest of such a mortgagee shall be entitled to take
possession of the Premises only subject to the restrictions on assignment set
forth in Paragraph 17.B. Tenant may not sublet all or any portion of the
Premises prior to Tenant's initial occupancy unless Tenant has undergone a
material corporate reorganization, restructuring or sale of assets resulting in
a materially reduced need for space. During the first ten (10) years of the Part
1 Term, Landlord may withhold its consent to a sublet of less than one-half of a
floor, in the event that Landlord can establish to Tenant's reasonable
satisfaction that such sublet shall cause the Expense Amount plus the Tax Amount
to exceed the Combined Amount provided in Paragraph 5(c)(vii) hereof and Tenant
has refused to adjust the Combined Amount to reflect such increase which will be
caused by the proposed subletting. Landlord's consent to any subletting, or
Landlord's election to accept any subtenant hereunder and to collect rent from
such subtenant, shall not release Tenant or any subsequent tenant from primary
liability to perform each covenant or obligation to be performed by Tenant under
this Lease. Tenant may sublet or permit the use and occupancy of the Premises,
in whole or in part by any subsidiary or person which is an Affiliate of Tenant
without the consent of Landlord, provided that in such event Tenant shall not be
released from its obligations under this Lease. For purposes of this Lease
"Affiliate" shall mean any trust, corporation or partnership: (i) which owns or
controls the majority of the ownership interests of Tenant either directly or
indirectly through other entities; (ii) the majority of whose ownership interest
is owned or controlled by Tenant; or (iii) the majority of whose ownership
interest is owned or controlled by an entity described in (i) above. The phrase
"ownership interest" shall mean general partnership interests if the entity is
ever a partnership and capital stock and voting rights if the entity is a
corporation, and beneficial interest if the entity is ever a trust. Landlord's
consent to any assignment, subletting or transfer shall not constitute a waiver
of Landlord's right to withhold its consent to any future assignment, subletting
or transfer.
B. Notice. Tenant shall submit to Landlord at least ten (10)
business days prior to the effective date of any proposed sublease (other than
with an Affiliate) and at least thirty (30) business days prior to the effective
date of any proposed assignment or mortgage, a written notice which describes
the proposed transaction, including then available copies of those agreements
regarding the proposed transaction along with a description of all financial
terms and information regarding the identity and financial condition of the
proposed subtenant, assignee or mortgagee. Landlord shall not be entitled to
withhold its consent to an assignment, mortgage or subletting unless (a) a
subtenant, mortgagee or assignee is of a character, or will be utilizing the
subleased or assigned Premises in a fashion, which would have a material adverse
affect on the Building, or (b) the proposed use of the Premises in question
would violate this Lease or the existing provisions of Landlord's lease with IBT
which were disclosed in writing to Tenant prior to the date hereof, or (c)
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Tenant is seeking a release of liability in connection with an assignment and
Landlord and its mortgagee are not satisfied in their reasonable business
judgment that the proposed assignee is reasonably creditworthy to satisfy the
obligations of this Lease. Absent written rejection of a proposed subtenant,
mortgagee or assignee in accordance herewith within the above specified notice
periods, the consent of Landlord shall be deemed to have been given by Landlord.
Upon an assignment to an assignee meeting the credit criteria and other
standards set forth above, Tenant shall be released from further liability with
respect to such assigned portion of the Premises. In the event Tenant desires to
assign less than all of the Premises, Tenant shall provide Landlord with the
proposed form of assignment of Lease not less than thirty (30) days prior to the
date of the proposed assignment, which form shall contain a statement by the
assignee whereby such assignee specifically disclaims any right to assert any
rights under the Lease that are not specifically assigned to such assignee and
acknowledges that it has not received an assignment of and is not entitled to
assert any such rights not so specifically assigned. Landlord shall be entitled
to object to the proposed form of assignment of Lease by delivering written
notice thereof to Tenant within such 30-day period, specifically stating the
grounds for such objection, based upon what Landlord believes is a reasonable
likelihood of multiple or conflicting claims to rights under or as a result of
the assignment of Lease. In the event that Landlord shall timely object to the
form of assignment based upon the reasonable likelihood of future conflicts as
to the right to assert rights under the Lease between Tenant and assignee (or
the proposed assignee and any prior assignee), Tenant shall have the option of
either (i) revising the proposed form of assignment to meet the specific
objections raised by Landlord to the form of assignment, or (ii) submitting to
arbitration in accordance with Paragraph 33 hereof the question of the
reasonable likelihood of multiple or conflicting claims to rights under or as a
result of the assignment of Lease. Notwithstanding the foregoing, Landlord shall
have no right to withhold its consent to the assignment of this Lease to a
purchaser of all or substantially all of the assets of Tenant nor to a mortgage
of this Lease to a lender which is financing any such purchase; provided,
however, that any mortgagee of Tenant's interest in the Lease or successor in
interest of such a mortgagee or purchaser at foreclosure of such mortgage shall
be entitled to take possession of the Premises only subject to the restrictions
on assignment set forth in this Paragraph 17.B. Except as provided in this
Paragraph 17.B, Tenant shall remain obligated under this Lease.
C. Expenses. Landlord shall be entitled to receive from Tenant
its reasonable out-of-pocket expenses in connection with Landlord's review of
information provided hereunder regarding any proposed subleases or assignments
to other than Affiliates.
D. Recapture. Landlord shall have no right to share in any
proceeds of any subleasing or assignment of the Premises, nor shall Landlord
have any right to recapture any portion of the Premises which Tenant has
subleased, assigned or proposed to sublease or assign. Notwithstanding the
foregoing provisions of this Paragraph 17.D., in the event that Tenant desires
to sublease the whole or any part of the Premises to any then existing tenant of
the Building for a term of more than five (5) years, Tenant shall send Landlord
written notice thereof not less than ten (10) business days prior to the
execution of any such sublease or assignment. Tenant's written notice shall
specify that portion of the Premises that Tenant desires to so sublease, the
rental to be paid by the proposed sublessee, the commencement date of the
sublease , and the term of the proposed sublease. The term
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"RECAPTURE SPACE" as used in this Paragraph 17.D. shall mean the Premises if
Tenant intends to sublease the entire Premises, or that portion of the Premises
that Tenant intends to sublease, if Tenant intends only to sublease a portion of
the Premises. Landlord shall have the right, exercisable by written notice
delivered to Tenant, along with all necessary approvals and consents of any
mortgagee or ground lessor pursuant to Paragraph 21, within such ten (10)
business days to recapture the Recapture Space and such recapture shall
terminate Tenant's obligations as tenant under this Lease with respect to the
Recapture Space arising from and after the date of such recapture. Failure of
Landlord to deliver the written notice, consents and approvals required to be
delivered by Landlord to Tenant within such ten (10) business day period shall
be deemed Landlord's election not to recapture the Recapture Space. In the event
Landlord has elected to recapture the Recapture Space, Landlord shall be
entitled to recover possession of and Tenant shall surrender possession of the
Recapture Space on the date specified in Tenant's written notice as the date of
commencement of the term of any such proposed sublease and in the condition
required under Paragraph 18.C. hereof. In the event that Landlord terminates
Tenant's obligations pursuant to this Lease with respect to the Recapture Space
as herein provided, Landlord and Tenant shall execute and deliver to each other
such amendments to this Lease as may reasonably be required to evidence the
partial termination of this Lease with respect to the Recapture Space. If this
Lease be so terminated with respect to less than the entire Premises, all rent
and other charges to be paid by Tenant under this Lease, including, without
limitation, Tenant's Expense Share and Tenant's Tax Share as set forth in
Paragraph 5 hereof, shall be proportionately decreased to reflect the deletion
of the Recapture Space based upon the number of square feet of Rentable Area of
the Recapture Space.
18. POSSESSION/SURRENDER.
A. Acceptance. The Premises shall be deemed substantially
complete and ready for occupancy if only minor or insubstantial details of
construction, decoration or mechanical adjustment remain to be completed (the
foregoing being collectively called "Punch List Items"). Acceptance of delivery
of possession of any part of the Premises by Tenant shall be deemed to
constitute Tenant's acceptance of the condition of such part of the Premises,
subject to Punch List Items and latent defects.
B. Occupancy. If Tenant takes possession of any part of the
Premises prior to the Commencement Date to carry on its business operations all
of the covenants and conditions of this Lease shall be binding upon the parties
with respect to the part of the Premises so occupied as though the Commencement
Date had occurred on the date when Tenant so took possession of such part of the
Premises, provided, however, no rents shall be due for or under this Lease for
the period of such occupancy prior to the Commencement Date, other than as
specifically provided in Paragraph 3.A. hereof.
C. Condition of Premises. Subject to Paragraph 13.B hereof, upon
the expiration of the Term, as to any part of the Premises or upon the
termination of Tenant's right of possession, Tenant shall remove its office
furniture, trade fixtures, office equipment and all other items of Tenant's
property from such part of the Premises as to which the Term has ceased and
surrender possession of such part of the Premises in good condition, reasonable
wear and tear and damage by fire or other casualty excepted. Tenant shall pay to
Landlord upon demand the reasonable cost of repairing any damage to the Premises
and to the Building caused
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by any such removal. If Tenant shall fail or refuse to so remove any such
property from the Premises within ten (10) business days of such termination,
Tenant shall be conclusively presumed to have abandoned the same, and title
thereto shall thereupon pass to Landlord without any cost to Landlord, whether
by set-off, credit, allowance or otherwise, and Landlord may at its option
accept the title to such property or at Tenant's expense may after written
notice to Tenant (i) remove the same or any part in any manner that Landlord
shall choose, repairing any damage to the Premises caused by such removal, and
(ii) store, destroy or otherwise dispose of the same without incurring liability
to Tenant or any other person. In the event Landlord incurs any storage or other
costs by reason of Tenant's failure to remove any property that Tenant is
obligated to remove under this Paragraph, or in the event Tenant fails to repair
any damage caused by any such removal or leave the Premises in good condition,
reasonable wear and tear and damage by fire or other casualty excepted, Tenant
upon demand shall pay to Landlord the amount of costs so incurred.
19. HOLDING OVER.
Tenant may upon written notice delivered to Landlord not less
than two (2) years prior to the expiration of the Part 1 Term by lapse of time
only, extend the Term of this Lease for all or any portion of the Premises for
up to one (1) additional year upon the terms of this Lease other than Paragraph
32 and the Base Rent. The Base Rent for such additional one year period shall be
established in accordance with the procedure for determining such rent for an
Extension Term. The foregoing right may be exercised by Tenant only once during
the Term of this Lease. In the event that Tenant does not exercise the foregoing
right, or upon the expiration of the extension of the Lease pursuant to the
foregoing right, if Tenant shall hold over, then in addition to performing all
of Tenant's other obligations set forth in this Lease, Tenant shall pay to
Landlord as Landlord's sole remedy as liquidated damages an amount equal to two
hundred (200%) percent of the Fair Market Rent attributable to that portion of
the Premises for which possession is retained, for each month or portion thereof
during which Tenant shall retain possession of the Premises or any part thereof
after the expiration or termination of the Term or of Tenant's right of
possession for such part of the Premises, whether by lapse of time or otherwise.
20. ESTOPPEL CERTIFICATES.
Tenant and Landlord each agree, from time to time upon not less
than ten (10) business days' prior request by the other party, to execute and
deliver statements in the forms of Exhibits G-1 and G-2 respectively, with such
changes and information as are required to reflect the then existent facts, it
being intended that any such statements and certificates may be relied upon by
any mortgagees or prospective mortgagees of the Land, Building or Premises, or
any prospective assignee of any such mortgagee, or any prospective or subsequent
purchaser or transferee of all or a part of Landlord's interest in the Land or
the Building or this Lease or any prospective transferee of all or any part of
the interests in Landlord or in any partner in Landlord or any subtenant,
assignee or other person interested or who might become interested in the
Premises or in Tenant.
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21. SUBORDINATION.
Tenant agrees to subordinate its rights hereunder at all times to
(i) the lien of any mortgage or mortgages designated by Landlord and to all
advances made or thereafter made upon the security thereof, and (ii) to all
ground leases or underlying leases of the Land and the Building designated by
Landlord and to execute any such reasonable agreements evidencing such
subordination as may be required by the mortgagee or ground or underlying
lessor, as the case may be, and to attorn to and to recognize, as landlord, the
purchaser at a foreclosure sale or the mortgagee or its nominee in the event the
mortgagee or such nominee accepts a deed in lieu of foreclosure, or the ground
or underlying lessor in the event of the termination of such underlying or
ground lease. Such subordination shall be conditioned upon and made and
delivered in return for and upon delivery to Tenant by such mortgagee or ground
or underlying lessor, as the case may be, of a Subordination, Attornment and
Non-Disturbance Agreement substantially in the form of Exhibit H, attached
hereto (the "NON-DISTURBANCE AGREEMENT"). It shall be a condition to Tenant's
obligations under this Lease and Landlord shall provide on the date hereof an
executed Non-Disturbance Agreement of the type described above from each
mortgagee and ground lessor or underlessor of the Land or Building existent or
in effect at the time of the execution of this Lease.
22. CERTAIN RIGHTS RESERVED BY LANDLORD.
Except as otherwise specifically provided in this Lease, Landlord
shall have the following rights, each of which Landlord may exercise without
notice to Tenant and without liability to Tenant for damage or injury to
property, person or business on account of such exercise, 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 nor shall such exercise give rise to
any claim for set-off or abatement of rent or any other claim:
(i) Subject to the requirements of Paragraph 30.D., to decorate
or to make repairs, alterations, additions or improvements, whether
structural or otherwise, in and about the Building, or any part thereof
(including, without limitation, alterations in the locations or
configurations of any common areas of the Building), and for such
purposes to enter upon the Premises, and during the continuance of any
of said work, to temporarily close doors, entryways, public space and
corridors in the Building and to interrupt or temporarily suspend
services or use of facilities, all without affecting any of Tenant's
obligations hereunder, so long as the Premises are reasonably accessible
and usable, Tenant's rights hereunder are not unreasonably interfered
with and provided that Landlord shall not interfere with Tenant's
telephone switch. Landlord, at its cost, shall use all reasonable
efforts to carry out such work affecting the Premises or reasonable
access thereto in a manner so as to minimize any interference with
Tenant's use of the Premises, and in the event any such work
unreasonably interferes with Tenant's access to or use of the Premises,
Landlord shall do such work during non-business hours, except in the
event of emergency;
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(ii) To retain at all times and, subject to the provisions of
Paragraph 30.G., to use, in appropriate instances, keys and other entry
devices within and into the Premises;
(iii) To designate and approve a building standard for all
window coverings used in the Building, provided, however that Tenant may
also have draperies of its choosing behind the blinds on the windows in
the Premises;
(iv) To approve the weight, size and location of safes, vaults,
computers and other heavy equipment and articles in and about the
Premises and the Building so as not to exceed the legal live load per
square foot designated by the structural engineers for the Building,
which shall be not less than 50 lbs. per square foot, and to require all
such items and furniture and similar items to be moved into or out of
the Building and Premises only at such times and in such manner as
Landlord shall reasonably direct in writing or as otherwise permitted
herein;
(v) To establish reasonable controls for the purpose of
regulating all property and packages, both personal and otherwise, to be
moved into or out of the Building and Premises and all persons using the
Building after normal office hours, which controls shall recognize and
be consistent with any governmental regulations applicable to classified
documents;
(vi) Subject to the rights of Tenant otherwise provided in the
Lease, to reasonably regulate delivery and service of supplies and the
usage of the loading docks, receiving areas and freight elevators and to
control and regulate access to and use of common areas of the Building;
(vii) Within the last fifteen (15) months of the Term for any
part of the Premises, and provided Tenant is not then acting to extend
the Term for such portion of the Premises pursuant to Paragraph 32.B.,
after reasonable advance notice to Tenant, to show such portion of
Premises to prospective tenants at reasonable times, and if vacated or
abandoned, to show such Premises at any time;
(viii) To erect, use and maintain pipes, ducts, wiring and
conduits, and appurtenances thereto, in and through the Premises at
reasonable locations which locations shall be subject to Tenant's
reasonable approval;
(ix) Except in the event of emergency when no notice shall be
required, upon prior notice to Tenant and subject to Tenant's security
requirements, to enter the Premises at any reasonable time to inspect
the Premises for compliance with this Lease or to show the Premises to
prospective lenders or purchasers; and
(x) To grant to anyone the nonexclusive right to conduct any
business or render any services in the Building.
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23. RULES AND REGULATIONS.
Tenant shall comply with the rules and regulations ("RULES")
attached to this Lease as Exhibit I. With the approval of Tenant, which shall
not be unreasonably withheld or delayed, such Rules may be reasonably
supplemented and revised by Landlord from time to time, as in the Landlord's
judgment may be desirable for the safety, care, and cleanliness of the Building,
or for the preservation of good order therein. Until notified of any such
violations of such Rules by any other person and unless Landlord fails or
refuses to take timely action to require such person to comply with the Rules,
Landlord shall not be liable to Tenant for violation of such Rules by, or for
Landlord's failure to enforce the same against, any other tenant, its subtenants
and occupants and its and their agents, employees, invitees or licensees, nor
shall any such violation or failure constitute, or be treated as contributing
to, an eviction, actual or constructive, or affect Tenant's covenants and
obligations hereunder, or subject to Paragraph 25 hereof, allow Tenant to
reduce, abate or offset the payment of any Base Rent or other sum under this
Lease, provided however, that all Rules shall to the extent applicable be
uniformly enforced by Landlord against all tenants of the Building. To the
extent that there shall be any conflict between the Rules as they may from time
to time exist and the body of this Lease, the terms and provisions of the body
of this Lease shall control.
24. LANDLORD'S REMEDIES.
A. Default and Remedies. If (i) Tenant defaults in the payment of
any monthly installment of Base Rent or Additional Rent, and such default is not
cured within five (5) business days after written notice to Tenant; (ii) Tenant
defaults in the payment of Additional Rent (other than monthly installments
thereof), or in the payment of any other sum required to be paid by Tenant under
this Lease, and such default is not cured within fifteen (15) business days
after written notice to Tenant (the defaults in the foregoing items (i) and (ii)
being collectively called "PAYMENT DEFAULTS"); (iii) Tenant fails to deliver an
estoppel certificate or subordination agreement pursuant to Paragraphs 20 or 21
hereof and such default is not cured within five (5) business days after written
notice to Tenant of such failure; (iv) Tenant defaults in the observance or
performance of any of the other covenants or conditions in this Lease which
Tenant is required to observe and perform (other than Payment Defaults) and such
default is not cured within thirty (30) days after written notice to Tenant
(except in the event of emergency conditions where an immediate cure shall be
required), unless such default cannot reasonably be cured within such thirty
(30) day period and Tenant after such notice shall have promptly commenced and
diligently prosecuted all action reasonably necessary to cure such default
(provided, however that such cure must be accomplished within one hundred twenty
(120) days of Landlord's notice absent Unavoidable Delay) or (v) Tenant becomes
the subject of commencement of an involuntary case under the Federal bankruptcy
law as now or hereafter constituted, or there is filed a petition against Tenant
seeking reorganization, arrangement, adjustment or composition of or in respect
of Tenant under the Federal bankruptcy law as now or hereafter constituted, or
under any applicable state bankruptcy or insolvency law, or seeking the
appointment of a receiver or liquidator of Tenant or seeking the winding-up or
liquidation of its affairs and such involuntary case or petition is not
dismissed within ninety (90) days after the filing thereof, or (vi) Tenant
commences a voluntary case or institutes proceedings to be adjudicated a
bankrupt or insolvent, or consents to the institution of
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bankruptcy or insolvency proceedings against it, under the Federal bankruptcy
laws as now or hereafter constituted, or any applicable state bankruptcy or
insolvency law, or consents to the appointment of or taking possession by a
receiver or liquidator of Tenant or makes any assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as they
become due, then Landlord may treat the occurrence of any one or more of the
foregoing events as a breach of this Lease, and thereupon at its option may,
with or without additional notice or demand of any kind to Tenant or any other
person, have any one or more of the following described remedies:
(i) Landlord may terminate this Lease by giving to Tenant
written notice of Landlord's election to do so, in which event the Term
and all right, title and interest of Tenant hereunder shall end on the
date stated in such notice;
I (ii) Landlord may terminate the right of Tenant to possession
of the Premises without terminating this Lease, by giving written notice
to Tenant that Tenant's right of possession shall end on the date stated
in such notice, whereupon the right of Tenant to possession of the
Premises or any part thereof shall cease on the date stated in such
notice; and
(iii) Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit or suits
in equity or at law for the (w) specific performance of any covenant or
agreement contained herein, (x) injunctive relief, (y) recovery of all
moneys due from Tenant under any of the provisions of this Lease and (z)
recovery of any other damages due under this Lease, provided, however,
that Landlord hereby waives any and all right to claim punitive damages
and consequential damages, including but not limited to loss of profits.
B. Surrender of Possession. If Landlord exercises any of the
remedies provided for in Paragraphs 24.A. (i) or (ii), Tenant shall surrender
possession of and vacate the Premises and immediately deliver possession thereof
to Landlord, and Landlord may re-enter and take complete and peaceful possession
of the Premises.
C. Reletting. If Landlord terminates the right of Tenant to
possession of the Premises without terminating this Lease, such termination of
possession shall not release Tenant, in whole or in part, from Tenant's
obligations hereunder for the full Term. Landlord shall have the right from time
to time, to recover from Tenant, and Tenant shall remain liable for, all rent
and any other sums accruing as they become due under this Lease during the
period from the date of such notice of termination of possession to the
expiration of the Term. In any such case, Landlord shall use all reasonable
efforts to relet the Premises or any part thereof for the account of Tenant for
such rent, for such time (which may be for a term extending beyond the Term of
this Lease) and upon such terms as Landlord in Landlord's reasonable discretion
shall determine, and Landlord shall not be required to accept any tenant offered
by Tenant or to observe any instructions given by Tenant relative to such
reletting. Also, in any such case, Landlord may change the locks or other entry
devices of the Premises and make repairs, alterations and additions in or to the
Premises and redecorate the same to the extent deemed by
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Landlord reasonably necessary or desirable, and Tenant shall upon ten (10) days
written notice pay the cost thereof together with Landlord's expenses of
reletting, including, without limitation, brokerage commissions payable to
Landlord's Agent or to others. Landlord may collect the rents from any such
reletting and apply the same first to the payment of the expenses of reentry,
redecoration, repair and alterations and the expenses of reletting and second to
the payment of Base Rent and Additional Rent herein provided to be paid by
Tenant, and any excess or residue shall operate only as an offsetting credit
against the amount of Base Rent and Additional Rent due and owing as the same
thereafter becomes due and payable hereunder. The use of such offsetting credit
to reduce the amount of Base Rent and Additional Rent due Landlord, if any,
shall not be deemed to give Tenant any right, title or interest in or to such
excess or residue and any such excess or residue shall belong to Landlord
solely; provided that in no event shall Tenant be entitled to a credit on its
indebtedness to Landlord in excess of the aggregate sum (including Base Rent and
Additional Rent) due and owing or which would have been paid by Tenant for the
period for which the credit to Tenant is being determined, had no default
occurred, as applicable. No such reentry, repossession, repairs, alterations,
additions or reletting shall be construed as an eviction or ouster of Tenant or
as an election on Landlord's part to terminate this Lease, unless a written
notice of such intention is given to Tenant, or shall operate to release Tenant
in whole or in part from any of Tenant's obligations hereunder, and Landlord
may, at any time and from time to time, sue and recover judgment for any
deficiencies from time to time remaining after the application from time to time
of the proceeds of any such reletting.
D. Termination of Lease. In the event of the termination of this
Lease by Landlord as provided for by Paragraph 24.A(ii). above, Landlord shall
be entitled to recover from Tenant all sums which Landlord is entitled to
recover under any provision of this Lease including, but not limited to, all
rent accrued and unpaid for the period up to and including such termination
date, as well as all other additional sums payable by Tenant and an amount equal
to the excess of the present value of Base Rent and the CPI component of the
Additional Rent provided to be paid for the remainder of the Term over the
present value of the Fair Market Rent value of the Premises and the CPI
component of the Additional Rent for the remainder of the Term after deduction
of all reasonably anticipated expenses of reletting. In the alternative,
Landlord shall have the right, from time to time, to recover from Tenant, and
Tenant shall remain liable for, all Base Rent, Additional Rent and other amounts
due and owing under this Lease accelerated and paid pursuant to the provisions
of this Lease. Should the present value of the Fair Market Rent value of the
Premises and the CPI component of the Additional Rent after deduction of all
anticipated expenses of reletting exceed the present value of the Base Rent and
the CPI component of the Additional Rent provided to be paid by Tenant for the
remainder of the Term, Landlord shall not be obligated to pay to Tenant any part
of such excess.
E. Costs and Expenses. Tenant shall pay upon demand all of
Landlord's reasonable costs, charges and expenses, including, without
limitation, court costs and reasonable attorneys' fees, incurred in successfully
enforcing Tenant's obligations under this Lease or incurred by Landlord in any
arbitration, litigation, negotiation or transaction in which Tenant causes
Landlord, without Landlord's fault, to become involved or concerned.
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F. Landlord's Cure. If Tenant shall default in the observance or
performance of any term, convenant, or condition on its part to be performed
under this Lease, and Tenant shall fail to remedy such default within the time
periods provided in the Lease after Landlord shall send Tenant written notice of
such default as required by this Lease, Landlord, without being under any
obligation to do so and without thereby waiving such default, may remedy such
default for the account and at the expense of Tenant. If Landlord makes any
expenditures or incurs any obligations for the payment of money in connection
therewith, including, but not limited to, reasonable attorneys' fees, in
instituting, prosecuting or defending any action or proceeding, then such sums
paid or obligations incurred by Landlord shall be due and payable by Tenant to
Landlord upon demand.
25. TENANT'S REMEDIES.
A. Tenant's Cure. If Landlord has defaulted in the performance of
any term or covenant required to be performed by it under this Lease, (a) so
that all or more than sixty-five percent (65%) of any floor of the Premises
shall be untenantable, inaccessible or incapable of use by Tenant in the
ordinary course of business, or (b) by failing to perform in accordance with an
arbitrators' award or court order, after notice to Landlord, and in either such
case provided Landlord has not promptly commenced and diligently pursued a cure,
Tenant may after ten (10) days written notice to Landlord (except in the event
of emergency conditions, which shall include, without limitation,
untenantability, inaccessibility or inability of Tenant to use the portion of
the Premises containing Tenant's telephone switch, where no notice shall be
required), but shall not be obligated to, remedy such default and in connection
therewith may pay reasonable sums to cure or alleviate such default and employ
counsel in connection therewith. All sums reasonably expended or obligations
incurred by Tenant in so curing a default and found to be due to Tenant by an
arbitrators' award pursuant to Paragraph 33 or court order shall be paid by
Landlord to Tenant upon demand.
B. Set-Off. If the Landlord fails to reimburse Tenant for any
sums due pursuant to an arbitrators' award or court order, notwithstanding any
other term, provision or covenant in this Lease, Tenant may in addition to any
other right or remedy that Tenant may have, deduct such amount from Base Rent,
Additional Rent or any other sums that from time to time thereafter become due
to Landlord.
C. Immediate Set-off. Notwithstanding the requirement of
Paragraph 25.B. that Tenant secure an arbitrators' award or court order before
exercising a set-off right against rents due under this Lease, Tenant shall have
an immediate right, without securing an arbitrators' award or court order, to
exercise a right to set-off sums due under this Lease (i) in connection with any
failure by Landlord after three (3) days notice to comply with its obligations
under Paragraphs 30.A. or 30.B. of this Lease or Paragraph 9 of the Work Letter,
or (ii) in the event that Tenant receives notice from the ground lessor (which
ground lessor is described in Paragraph 21 hereof), that Landlord is in default
of the ground lease or underlying lease of the Land and the Building until
receiving confirmation that such default has been cured or resolved.
D. Remedies. Tenant may enforce the provisions of this Lease and
may enforce and protect the rights of Tenant hereunder by a suit or suits in
equity or at law for the (i) specific performance of any covenant or agreement
contained herein, (ii) injunctive relief, (iii) recovery of all monies due
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from Landlord under any provisions of this Lease and, (iv) recovery of any other
damages due under this Lease, provided, however, that Tenant hereby waives any
and all right to claim punitive damages and consequential damages, including but
not limited to loss of profits. In addition, Tenant shall have the right to
terminate this Lease (i) upon thirty (30) days prior written notice to Landlord
for any breach of a non-monetary covenant of this Lease by Landlord established
by a final and non-appealable court order that is not cured within such thirty
(30) day period, provided, however, that in the event such breach is of the type
that cannot be cured within such thirty (30) day period, the cure period shall
be extended for so long as Landlord has promptly commenced and is diligently
pursuing a cure (provided, however, that such cure must be accomplished within
one hundred twenty (120) days of Tenant's notice absent Unavoidable Delay), or
(ii) within ninety (90) days after written notice from the ground lessor (which
ground lessor is described in Paragraph 21 hereof), that ground lessor has
elected to terminate its ground lease and that Landlord is in default of the
ground lease or underlying lease of the Land and the Building, which default has
not been cured by Landlord or Landlord's mortgagee (which mortgagee is described
in Paragraph 21 hereof) within such period of time as under the ground lease was
provided to Landlord and Landlord's mortgagee to remedy the default. This
provision shall not in any way limit, control or impair Tenant's rights under
Paragraph 3.D. hereof or under the Collateral Agreement.
E. Costs and Expenses. Landlord shall pay upon demand all of
Tenant's reasonable costs, charges and expenses including, without limitation,
court costs and reasonable attorneys' fees incurred in successfully enforcing
Landlord's obligations under this Lease or incurred by Tenant in any
arbitration, litigation, negotiation or transaction in which Landlord causes
Tenant, without Tenant's fault, to become involved or concerned.
26. COVENANT OF QUIET ENJOYMENT.
A. Quiet Enjoyment. Landlord represents and warrants that it
holds fee simple title to or has a ground lease estate extending beyond the Part
1 Term for the Land and has fee simple title to the Building and that the only
mortgages or ground or underlying leases thereon are with those persons who have
delivered Non-Disturbance Agreements on the date hereof, and that it has the
power and authority to enter into this Lease. Landlord agrees that Tenant, on
paying the Base Rent, Additional Rent and other payments herein reserved and on
keeping, observing and performing all the other terms, covenants, conditions,
provisions and agreements herein contained on the part of Tenant to be kept,
observed and performed, shall, during the Term, peaceably and quietly have, hold
and enjoy the Premises subject to the terms, covenants, conditions, provisions
and agreements hereof, free from hindrance by Landlord or any person.
B. Evidence of Title. As of the date hereof, except for the
lawsuit (the "Zoning Litigation") described in Exhibit O, Landlord represents
and warrants that the Land and Building are free and clear of all easements,
covenants, licenses and zoning ordinances that would prohibit Tenant's use of
the Premises in conformity with Paragraph 6 of this Lease. Landlord further
represents and warrants that Landlord has good and marketable title to the Land
and Building, subject to easements and restrictions of record and to those
mortgages and ground or underlying leases described in the commitment for title
insurance herein to be provided to Tenant for which mortgages and ground or
underlying leases, Non-Disturbance Agreements shall be delivered to Tenant
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as provided in Paragraph 21 hereof. Simultaneously with the execution of this
Lease, the Landlord is furnishing to Tenant, at Landlord's cost, to evidence
Landlord's compliance with the provisions of the foregoing sentences, a copy of
a current commitment for title insurance from Chicago Title Insurance Company,
updated within thirty (30) days of its delivery. In addition, Landlord covenants
and agrees that simultaneously with the execution of this Lease, Landlord shall
deliver to Tenant a copy of the Trust Agreement, and all amendments thereto as
of the date of execution of this Lease, and establishing the Land Trust which is
executing this Lease as Landlord and establishing the holder of the beneficial
interest in the Land Trust and all partners in any partnership holding such
beneficial interest, together with a copy of the direction to the Trustee to
execute and deliver this Lease, all documents to be certified by the Trustee of
said Land Trust, within five (5) days of the date of delivery of said documents.
27. REAL ESTATE BROKER.
Tenant represents that Tenant has dealt with (and only with)
Rubloff Inc. and Goldman, Sachs & Co. in connection with this Lease, and that
insofar as Tenant knows, no other person negotiated this Lease or is entitled to
any commission in connection herewith. Landlord shall bear and be responsible
for all fees, costs and expenses claimed by Rubloff Inc. Tenant shall bear and
be responsible for all fees, costs and expenses claimed by Goldman, Sachs & Co.
Tenant agrees to indemnify, defend and hold Landlord, the partners in Landlord,
Landlord's Beneficiaries and their respective officers, employees, agents and
partners, harmless from and against any claims made by any broker or finder
other than Rubloff Inc., successfully claiming by, through or under Tenant, for
a commission or fee in connection with this Lease. Landlord represents that
Landlord has dealt with (and only with) Rubloff Inc. and Goldman, Sachs & Co. in
connection with this Lease, and that insofar as Landlord knows, no other person
negotiated this lease or is entitled to any commission in connection herewith.
Landlord agrees to indemnify, defend and hold Tenant harmless from and against
any claims made by any broker or finder other than Goldman, Sachs & Co.,
successfully claiming by, through or under Landlord, for a commission or fee in
connection with this Lease. No commissions, or fees shall be considered due or
payable in connection with (i) any extension of the Terms of any part of this
Lease, or (ii) any exercise of any option for space in the Building under
Paragraph 32 for purposes of arriving at the rents for any Extension Term or
Expansion Space.
28. MISCELLANEOUS.
A. Rights Cumulative. All rights and remedies under this Lease
shall be cumulative and except as provided herein none shall exclude any other
rights and remedies allowed under this Lease.
B. Late Payments.
(i) All payments becoming due under this Lease and
remaining unpaid for more than five (5) days after the due date
shall bear interest from the due date until paid at a rate per
annum equal to the Contract Rate (but in no event at a rate that
is more than the highest rate that is at the time lawful in the
State of Illinois).
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(ii) The provisions of this Paragraph shall in no way
relieve Tenant of the obligation to pay Base Rent or other
payments on or before the date on which they are due, nor shall
the collection by Landlord of any amount hereunder impair
Landlord's remedies set forth in Paragraph 24 of this Lease.
C. Terms. The necessary grammatical changes required to make the
provisions hereof apply either to corporations or partnerships or individuals,
men or women, as the case may require, shall in all cases be assumed as though
in each case fully expressed.
D. Binding Effect. Each of the provisions of this Lease shall
extend to and shall, as the case may require, bind or inure to the benefit not
only of Landlord and of Tenant, but also of their respective successors and
assigns, provided this Paragraph shall not permit any assignment by Tenant
contrary to the provisions of this Lease.
E. Lease Contains All Terms. Except as set forth in that certain
Collateral Agreement of even date herewith by and between Landlord, Tenant, and
Chicago Title and Trust Company, under Trust Agreement dated August 30, 1988 and
known as Trust No. 1091100 (the "COLLATERAL AGREEMENT"), which permits Tenant to
terminate this Lease prior to the Commencement Date under those circumstances
described in such Collateral Agreement, all of the obligations of Landlord and
Tenant are contained herein and in the Work Letter and other Exhibits attached
hereto, and no modification, waiver or amendment of this Lease or any of its
conditions or provisions shall be binding upon Landlord or Tenant unless in
writing signed by Landlord and Tenant. In executing and delivering this Lease,
Tenant has not relied on any representation (including, but not limited to, any
representation whatsoever as to the amount of any item comprising Additional
Rent or the amount of the Additional Rent in the aggregate) or any warranty or
any statement of Landlord that is not set forth herein, in the Work Letter or in
one or more of the Exhibits attached hereto.
F. Delivery for Examination. Submission of the Lease for
examination shall not bind Landlord in any manner, and no Lease or obligations
of the Landlord or Tenant shall arise hereunder until this instrument is signed
by both Landlord and Tenant and delivery is made to each.
G. No Air Rights. No rights to any view or to light or air over
any property, belonging to any other person, are granted to Tenant by this
Lease. Landlord shall not, however, erect any structure on the Land or Building
other than as specifically provided in Exhibit C.
H. Captions. The captions of Paragraphs and subparagraphs are for
convenience only and shall not be deemed to limit, construe, affect, or alter
the meaning of such Paragraphs or subparagraphs.
I. Time. Time is of the essence of this Lease and each of its
provisions.
J. Only Landlord/Tenant Relationship. Nothing contained in this
Lease shall be deemed or construed by the parties hereto or by any third party
to create the relationship of principal and agent, partnership, joint venturer
or any association between Landlord and Tenant, it being expressly understood
and
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agreed that neither the method of computation of rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
K. Governing Law. Interpretation of this Lease shall be governed
by the law of Illinois.
L. Partial Invalidity. If any term, provision or condition
contained in this Lease shall, to any extent, be invalid or unenforceable, the
remainder of this Lease (or the application of such term, provision or condition
to persons or circumstances other than those in respect of which it is invalid
or unenforceable) shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
M. Memorandum. Upon the execution of this Lease, Landlord and
Tenant shall execute a Memorandum of Lease with respect to this Lease in the
form attached hereto as Exhibit J, for recording with the Cook County Recorder
of Deeds, and Tenant shall be entitled to record such Memorandum.
29. NOTICES.
All notices required or permitted to be given under this Lease
shall be in writing addressed as follows:
(a) If to Landlord:
Building Manager
Office of the Building
100 North Riverside
Chicago, Illinois
with copies to:
Rubloff Inc.
111 West Washington Street
Chicago, Illinois 60602
Attention: Corporate Secretary
Coffield, Ungaretti, Harris & Slavin
3500 Three First National Plaza
Chicago, Illinois 60602
Attention: Richard Ungaretti
(b) If to Tenant:
Morton Thiokol, Inc.
110 North Wacker Drive
Chicago, Illinois 60606-1560
Attention: Director Real Estate
with a copy to:
Morton Thiokol, Inc.
110 North Wacker Drive
Chicago, Illinois 60606-1560
Attention: Vice President for Legal Affairs and
General Counsel
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provided, however, that either Landlord or Tenant may change the location at
which it receives notices or the entities that receive notices, to another
location within the United States of America or another entity, upon not less
than ten (10) days' notice to the other; and further provided, however, that
notwithstanding the foregoing, at no time shall either Landlord or Tenant be
required to deliver more than three (3) copies of a notice to the other party.
All notices shall be deemed effectively given:
(i) when delivered, if delivered personally to the
party for which notice is intended, including,
without limitation, by special courier;
(ii) three (3) days after such notice has been deposited
in the United States mail addressed to the party
for which notice is intended, postage prepaid, if
mailed certified or registered mail, return receipt
requested; and
(iii) when received by the party for which notice is
intended, if given in any other manner.
Failure to provide copies of the notice as required hereunder shall result in a
notice being ineffective.
30. TENANT'S SPECIAL COVENANTS.
A. Expenses. Landlord agrees to reimburse Tenant for (i) the
moving-related expenses of Tenant in connection with the move to the Premises up
to a maximum of Five Hundred Thirty-Five Thousand Dollars ($535,000) and (ii)
the fees and expenses of Tenant's Space Planner (including Mekus-Johnson, Inc.
and any other space planner and/or architect engaged by Tenant with respect to
the Premises) for the Premises up to a maximum of Five Hundred Sixty-Five
Thousand Dollars ($565,000). Landlord shall reimburse Tenant within five (5)
business days after the date hereof for all sums expended for such items through
the date hereof as evidenced by Tenant's statement, and Tenant shall provide
receipts, invoices, waivers of lien or other documentation reasonably requested
by Landlord for such sums certified as true and correct. Thereafter such
reimbursement shall be made within forty-five (45) days of presentation of
statements for such items by Tenant. Tenant shall be entitled to select the
mover that will perform the moving and packing services for the move to the
Premises and the person who will provide any temporary furniture; Landlord shall
have the right to approve the mover selected, and shall not unreasonably
withhold or delay its approval. Tenant shall be entitled to select the times and
dates for Tenant's initial moves into the Premises with reasonable notice to and
coordination with Landlord.
B. Lease Takeover. Tenant hereby represents and warrants to
Landlord as follows:
(1) Tenant currently occupies office and storage space
at 333 W. Wacker Drive, Chicago, Illinois (the "EXISTING SPACE")
as lessee under that certain lease dated as of February 1, 1985,
an Addendum to Lease dated August 12, 1985 (the "ADDENDUM") and
a Second Amendment to Lease dated November 30, 1987 (the "SECOND
AMENDMENT"), each with 333 Wacker Drive Venture (said
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venture or its successor as Lessor under said lease is
hereinafter referred to as the "PRESENT LANDLORD") and Tenant
(said lease, the Addendum and the Second Amendment are
hereinafter referred to as the "Existing Lease").
(2) Tenant has delivered to Landlord a true, correct and
complete copy of the Existing Lease.
(3) The Existing Space consists of the space delineated
on Exhibit A to the Existing Lease and on the Addendum and
Second Amendment. Tenant has not exercised any option to lease
any other space subject to the Existing Lease (nor has Tenant
sublet any portion of the Existing Space to any other party).
(4) As of the date hereof, except for the vacation and
abandonment of the Existing Space by Tenant contemplated by this
Lease, to Tenant's knowledge no state of facts exists which,
with the lapse of time or giving of notice, or both, could
constitute a default by Tenant under the Existing Lease and the
Existing Lease is in full force and effect.
The foregoing representations and warranties of Tenant shall
terminate and be of no further force and effect upon delivery by Tenant to
Landlord of an estoppel certificate in the form of Exhibit C to the Existing
Lease from the Present Landlord. To the extent limited above, Tenant hereby
agrees to protect, defend, indemnify and hold harmless Landlord, its
beneficiaries, and their respective partners, officers, agents and employees
from and against any and all loss, cost, damage, expense and liability,
including, without limitation, reasonable attorneys' fees, arising out of or in
connection with any breach of any of the foregoing representations and
warranties of Tenant.
Tenant further hereby covenants and agrees with Landlord as
follows:
(5) Upon Tenant's vacating the Existing Space, Tenant
shall, subject to the Existing Lease including the expiration of
the term on March 15, 1990, of that portion of Existing Space
leased under the Second Amendment and the rights of Present
Landlord under the Existing Lease, be able to deliver exclusive
possession of all of the Existing Space to Landlord.
(6) Tenant has not exercised, and will not without
Landlord's prior written consent, which shall not be
unreasonably withheld or delayed, exercise any option to lease
any other space or otherwise take any other space subject to the
Existing Lease.
(7) As of the later to occur of (i) the date on which
Tenant vacates all of the Existing Space and moves into the
Premises, or (ii) the Commencement Date (herein referred to as
the "TAKEOVER DATE"), except for and subject to the effects of
Tenant's vacation and abandonment of the Existing Space
contemplated by this Lease due to Tenant's move, to Tenant's
knowledge no state of facts shall exist which, with the lapse of
time or giving of notice, or both, could constitute a default by
Tenant under the Existing Lease and the Existing Lease shall be
in full force and effect.
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(8) From and after the date hereof, Tenant (i) until the
Takeover Date will perform in a timely manner any and all duties
and obligations imposed upon it as lessee under the Existing
Lease, including, without limitation, paying all rent under the
Existing Lease that becomes due or payable or attributable to
any period prior to the Takeover Date, (ii) will not, without
Landlord's prior written consent, alter, amend, terminate,
modify, or renew the Existing Lease, and (iii) will not, without
Landlord's prior written consent, assign the Existing Lease or
sublet all or any part of the Existing Space.
(9) On or before the Takeover Date, Tenant shall remove
any and all of Tenant's furniture, equipment and trade fixtures
that Tenant desires to retain from the Existing Space and repair
any damage as a result of such removal and leave the Existing
Space in broom clean condition.
(10) On or before the Takeover Date, Tenant shall
deliver to Landlord an estoppel certificate in the form of
Exhibit C to the Existing Lease from the Present Landlord.
After the Takeover Date, Landlord shall be responsible to see that the Existing
Space is placed in broom-clean condition, free of debris, and in the condition
required by the Existing Lease upon expiration of the Existing Lease; provided,
however, that Landlord may elect to defer the removal of any tenant improvements
until the expiration of the term of the Existing Lease.
If space in the Premises sufficient to accomodate those employees
of Tenant previously occupying the 14th floor of the Existing Space is not
available for Tenant's possession by November 30, 1990 (subject to extension
resulting from Tenant Delay), then Landlord shall from and after such date as
extended pay to Tenant as an additional Hold-Over Cost under Paragraph 3.D.(v)
hereof, all moving costs occurring after the date hereof arising from the move
of Tenant's personnel from the portion of the Existing Space which is to expire
by the terms of the Second Amendment on March 30, 1990 to space other than the
Premises and any additional rental costs reasonably incurred after the date such
Existing Space is vacated over the costs which would have existed if the lease
for such space had continued on the terms existent on March 30, 1990. Upon the
expiration of the Second Amendment, Tenant covenants to use reasonable efforts
to relocate such personnel of Tenant located on the fourteenth (14) floor of the
Existing Space to space in the building located at 110 North Wacker Drive to the
extent that such space is available and useable at 110 North Wacker Drive.
The foregoing covenants and agreements of Tenant shall survive
for two (2) years from the Commencement Date and shall run solely and
exclusively to Landlord. Tenant's covenants to cooperate with Landlord with
respect to the Existing Lease and Tenant's negative covenants and agreements set
forth in subparagraph (6) and (8) above shall survive until the termination of
the Existing Lease. Tenant hereby agrees to protect, defend, indemnify and hold
harmless Landlord, its beneficiaries, and their respective partners, officers,
agents and employees from and against any and all loss, cost, damage, expense
and liability, including, without limitation, reasonable attorneys' fees,
arising out of or in connection with the claims of any third parties
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relating directly to any breach of any of the foregoing covenants and agreements
of Tenant.
Tenant agrees that Landlord or its beneficiaries may from time to
time, subject to the consent of the Present Landlord if required under the
Existing Lease, either in the name of Tenant or in the name of the Landlord or
its designee, assign the Existing Lease or sublet all or part of the Existing
Space to Landlord or to prospective tenants obtained by Landlord or by others,
for a term commencing on or after the Takeover Date. Tenant agrees, at the
request of Landlord, to enter into any assignment of the Existing Lease or
sublease of all or part of the Existing Space or modification of the Existing
Lease or to agree to a termination of the Existing Lease, all on terms
reasonably satisfactory to Landlord and Tenant (provided that the Present
Landlord consents thereto if required under the Existing Lease). Tenant shall
cooperate reasonably to obtain any such consents. Tenant shall not be required
to vacate the Existing Space prior to the Commencement Date, and Tenant may be
required to assign the Existing Lease only if it receives either a full and
complete release from the Present Landlord or an assumption agreement from an
assignee reasonably acceptable to Tenant in form and substance reasonably
acceptable to Tenant.
In connection with the subleasing or assignment of all or any
portion of the Existing Lease, Landlord agrees that in connection with any
assignment, Landlord shall deposit into a mutually agreeable form of escrow to
serve as security for Landlord's performance under Paragraph 30.B. any proceeds
from time to time received by Landlord in excess of the currently payable rents
under the Existing Lease, after paying all reasonably necessary costs and
recovering any concessions, which escrow shall be invested in U.S. Government
obligations or otherwise as mutually agreed by the parties hereto. Any such
funds shall be the property of Landlord unless and until the ground lessor has
terminated the ground lease, at which time such funds shall become the property
of Tenant. Otherwise, any such funds shall be returned to Landlord at the
termination of the Existing Lease. Landlord further agrees to collaterally
assign to Tenant to secure Landlord's indemnification obligation under this
Paragraph 30.B. and give Tenant a security interest in all right, title and
interest to any income received by Landlord from a sublease of the Existing
Space. Landlord shall provide Tenant with such financing statements and other
documents as may be required to perfect and maintain its rights hereunder. Such
collateral assignment and security interest shall be released at the termination
of the Existing Lease.
Landlord hereby agrees to protect, defend, indemnify and hold
Tenant harmless from and against any and all loss, cost, damage, expense and
liability, including, without limitation, reasonable attorneys' fees, arising
out of or in connection with the Existing Lease after the Takeover Date,
including but not limited to those relating to any assignment, sublease or
modification, other than those actions of Tenant with respect to the Existing
Lease taken without Landlord's consent (which consent shall not be required if
Landlord is in default under this Paragraph 30.B).
In consideration of Tenant entering into this Lease Landlord
agrees to pay any and all rent and other charges that shall accrue and that
Tenant shall be obligated to pay for the Existing Space pursuant to the Existing
Lease from and after the Takeover Date, including, without limitation, base rent
and additional rent due and payable or attributable to any period after the
Takeover Date and operating expense, real estate tax and Consumer Price Index
rental adjustments that relate to any period
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of time after the Takeover Date. To the extent permissible under the Existing
Lease such rental payments and all other sums due under the Existing Lease shall
be paid directly by Landlord. Otherwise, any such sums shall be paid to Tenant
in good funds not less than five (5) days prior to their due date under the
Existing Lease so that Tenant shall have such funds available to make the
required payments under the Existing Lease and Tenant shall utilize such funds
to make such payments in a timely fashion.
From and after the date hereof, Landlord and Tenant shall each
immediately deliver to the other true, complete and exact copies of any notices,
demands, communications or other instruments or documents received from or given
by or to Present Landlord by either of them pertaining to any default under the
Existing Lease or in any way relating to or affecting the Existing Lease or the
Existing Space, including but not limited to receipts, notices and letters.
Landlord and Tenant shall each immediately furnish the other with any and all
information such party may request concerning performance of the covenants of
the Existing Lease.
All costs, fees, expenses and other payments, including, without
limitation, any brokerage commissions, redecorating, alteration and other
re-renting costs, incurred in any assignment or subletting of the Existing Space
or in connection with collection of rents and other amounts from any assignee or
sublessee or in the enforcement of any assignment or sublease, and any costs,
fees, expenses and other payments paid or incurred to secure modification or
cancellation of or release from the Existing Lease or to secure agreements
consenting to the assignment of the Existing Lease or the subletting of the
Existing Space, will be at the expense of Landlord. Subject to any rights of the
Present Landlord under the Existing Lease, any and all rents, income and
revenues derived from any such assignment or subletting shall be paid to, belong
to and be retained by Landlord.
C. Communications System. Tenant shall have the right at any time
during the Term to lease from Landlord at no additional cost space on the roof
of the Building for one or more satellite, microwave or other communications
systems. Landlord shall notify Tenant of any proposed or actual rooftop
installations of Landlord or any other person and shall reserve for Tenant that
rooftop space designated on Exhibit K attached hereto, for Tenant's use pursuant
to this Paragraph 30.C.; provided that any communication system installed by
Tenant shall not interfere with any other communication systems previously
installed on the roof of the Building. Landlord shall require that any other
rooftop antenna, communications systems or devices shall not interfere with the
location or operation of any communication system of Tenant existing at the time
of installation of such other system. Tenant shall submit plans for any system
to be installed by Tenant and the names of the contractors who will be
installing such system, all of which shall be subject to Landlord's reasonable
approval which shall not be unreasonably withheld or delayed. Tenant shall pay
all costs related to the installation, operation and maintenance of such system.
Tenant shall, at Landlord's option, remove the system at the expiration of the
Part 1 Term. Tenant at its expense shall secure all zoning and regulatory
approvals necessary for the system that are not presently existent or cannot be
requested with any pending zoning code action of Landlord. Tenant shall restore
the roof after removal of any such communication system to the condition of the
roof prior to such installation, reasonable wear and tear and damage by fire and
other casualty excepted. Upon ninety (90) days advance written notice
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from Landlord to Tenant, Tenant shall cooperate with Landlord in the event that
Tenant's rooftop communications system must be temporarily removed incident to
required repairs to the roof. Absent actual fault by Landlord with respect
thereto, Tenant shall indemnify and hold Landlord harmless from and against any
damage to the roof arising from installation, use, maintenance, repair and
removal of such communication system.
D. Landlord's Changes After Construction. After construction of
the Building has been substantially completed in accordance with the Plans,
Landlord shall not, without in each case obtaining the prior written consent of
Tenant (which consent shall not be unreasonably withheld or delayed), construct,
install or make any material alteration or change in, to or of the exterior,
public space or common space in the Building or on the Land, including, but not
limited to loading docks, lobbies, elevators and plaza areas, unless such
alteration or change to such public space or common space shall not (a)
materially decrease the amount or location of the public or common space, (b)
materially limit or restrict Tenant's use of or access to the Premises, (c)
materially change the character of the Building as a first-class office
building, or (d) materially change the outward appearance of the Land or
Building or the appearance of the lobbies and public space, except any such
lobby that is for the exclusive use of IBT, provided that any alteration or
change of the IBT lobby shall be consistent with comparable first-class office
buildings in the City of Chicago.
E. Signage. (i) During the Part 1 Term, Tenant shall designate
the name of the Building, subject, however, to Landlord's consent which shall
not be unreasonably withheld or delayed; provided, however, that during the
first forty-five (45) years of the Term and while the lease between Landlord and
IBT is still in existence, Tenant may not name the Building for a company in the
business of telecommunications, transmission of information, or publication of
telephone directories, which is in competition in that business with IBT (or any
successor lessee whose principal business is one of the foregoing), American
Information Technologies Corporation or any subsidiary of American Information
Technologies Corporation, whose principal business is one of the foregoing.
Tenant hereby designates and Landlord approves the initial name for the Building
as the "MORTON THIOKOL BUILDING". Any name designated for the Building shall
utilize a corporate or tradename of Tenant or a significant Affiliate of Tenant,
or Landlord may within thirty (30) days after its designation by Tenant reject
such name in Landlord's sole discretion. Landlord shall at Landlord's expense
and in a form mutually agreed upon by Landlord and Tenant provide ordinary
exterior signage on the Building of a type, size, shape, and containing
materials and at locations as may be mutually agreeable to Landlord and Tenant
to identify the Building with the name initially so selected by Tenant. Upon not
less than one hundred eighty (180) days written notice, Tenant may change the
name of the Building; subject, however, to the provisions of the third sentence
of this Paragraph. Tenant shall bear the cost of any new signs and their
installation in the common areas of and on the exterior of the Building, which
results from such a change in the Building name. Notwithstanding any naming of
the Building, Landlord shall not receive, acquire or have any right, title or
interest in any corporate or tradename of Tenant, other than a license to use
such name to identify the Building in promotional and advertising materials for
the Building during the Term, provided that any style of type, logotype and logo
of Tenant used in such promotional or advertising material shall be approved by
Tenant, at Tenant's sole discretion. Landlord further acknowledges and agrees
that it shall not use any such name for the Building in a
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manner that is inconsistent with the operation of a first-class office building,
and acknowledges that Tenant will not have an adequate remedy at law for a
violation of this Paragraph and shall be entitled to seek an injunction with
respect thereto.
(ii) Landlord shall secure Tenant's prior written consent, which
consent shall not be unreasonably withheld or delayed and shall take
into account the requirements of Paragraph 30.E.(iii), before installing
or permitting the installation of any signage (which signage shall in
the case of any retail space be in keeping with a first-class office
building) in the public or common areas of the Building (including but
not limited to any signage for retail space tenants) or anywhere else on
the Land or Buildings, both interior and exterior, other than on office
floors not leased to Tenant, or in the interior of the IBT lobby or
signs on Washington Street identifying the entrance to the Garage (as
hereinafter defined). Tenant hereby consents to the sign and IBT logo
that shall identify the entrance to the IBT lobby in the form of and
located on the exterior of the Building as shown on Exhibit P attached
hereto.
(iii) The Building directory and where applicable all Building
signage shall clearly designate that Tenant is the principal occupant of
the Building and shall not give any other person remotely comparable or
greater prominence.
(iv) Subject to governmental approval, the address of the
Building shall be 100 North Riverside. Landlord shall not designate a
street address for the Building or designate or permit the designation
of the Building as a part of a larger development or project without the
prior written consent of Tenant. Tenant's consent under this Paragraph
30.E.(iv) shall not be unreasonably withheld or delayed unless in
Tenant's reasonable judgment the proposed name or address identifies or
is commonly associated with an enterprise, corporation or entity, in
which case Tenant may in its sole and absolute discretion refuse to
consent to or approve any such requested name or address.
(v) Tenant shall have the right to approve or disapprove any
proposed retail tenants of the Building based upon the proposed type of
products or services to be provided from the space and the quality and
style of the proposed tenant improvements; and Landlord shall provide
Tenant with all of the information available to Landlord regarding the
financial condition, methods of operation, and type of operations for
such retail tenant or any affiliated entities known to Landlord. Tenant
shall have the right to disapprove any proposed retail tenant of the
Building if the proposed tenant's operations in the Building would be
detrimental to or inconsistent with a first-class office building. In
the event that Tenant disapproves of any proposed retail tenant, the
matter of whether the proposed tenant's operations would be detrimental
to or inconsistent with a first-class office building may be submitted
to arbitration by Landlord pursuant to Paragraph 33. All retail leases
shall contain provisions regulating the displays, signs and lighting of
any retail space, including but not limited to, those elements visible
from any public space, in a fashion consistent with Tenant's rights
under this Lease and the operation of a first-class office building and
Landlord shall enforce such provisions with its retail tenants.
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(vi) Landlord shall secure Tenant's prior written consent, which
consent shall not be unreasonably withheld or delayed, for all
paintings, sculpture and other art objects that will be on display in
the public or common areas of the Building, or anywhere else on the Land
or Building, except the IBT lobby, both interior and exterior, other
than on office floors not leased to Tenant, which art objects shall in
each and every case be in keeping with comparable first-class office
buildings in the City of Chicago.
(vii) In the event of any sublease, assignment or termination of
the Lease as to any portion of the Premises the rights of Tenant under
this Paragraph 30.E. shall be governed as follows:
(a) Any tenant or subtenant of all of Part 1 shall be
entitled to exercise the name, signage and other rights provided
to Tenant under this Paragraph 30.E, except that during the
first forty-five (45) years of the Term and while the lease
between Landlord and IBT is still in existence, such tenant may
not name the Building for a company in the business of
telecommunications, transmission of information, or publication
of telephone directories, which is in competition in that
business with IBT (or any successor lessee whose principal
business is one of the foregoing), American Information
Technologies Corporation or any subsidiary of American
Information Technologies Corporation, whose principal business
is one of the foregoing.
(b) Notwithstanding that Tenant has assigned a portion
of Part 1, Tenant shall retain its rights under this Paragraph
30.E. so long as it is leasing at least 50,000 square feet of
Rentable Area in the Building, maintains its corporate
headquarters in the Building and executive officers of Tenant
are occupying a portion of the Premises.
F. Janitorial. Notwithstanding any other provisions of this Lease
to the contrary, but subject to the provisions of Paragraph 8.E. hereof, at the
election of Tenant upon not less than thirty (30) days written notice, Tenant
may discontinue the Janitorial Services being furnished by Landlord described in
Exhibit F and instead furnish at its own expense its own janitorial services for
all or any whole floor portions of the Premises (or the East 1/2 of the 36th
floor as designated in a drawing furnished to Landlord by Tenant). In the event
Tenant so elects to furnish its own janitorial services, Tenant shall receive a
reduction in its Additional Rent due under this Lease equal to Landlord's cost,
on a square foot basis, for the Janitorial Services specified in Exhibit F at
the square foot rate paid for such services. In the event that janitorial
services are discontinued by Tenant they shall be reinstituted by Landlord
within thirty (30) days of Tenant's notice requesting such service, and, the
level of service provided by Landlord shall be as provided in Exhibit F. In
addition to the foregoing rights, and without any right to a credit from
Landlord, Tenant may arrange for janitorial services that are supplemental and
in addition to those provided by Landlord, at Tenant's expense. Landlord shall
have the right to approve any contractor used by Tenant to provide janitorial
services, such approval not to be unreasonably withheld or delayed.
G. Security. Notwithstanding any other provisions of this Lease
to the contrary, Tenant shall have the right to establish, subject to applicable
laws, such security systems and
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procedures with respect to the Premises as Tenant deems necessary or desirable
and, except in the case of an emergency or under reasonable conditions
consistent with Tenant's security requirements, to restrict Landlord and any
other persons from access to the Premises. As a part of Tenant's security system
Landlord grants to Tenant (i) the right to exclusive use of the telephone
closets on any floor of the Building fully occupied by Tenant within Parts 1, 2,
3 or 4, or contiguous to Parts 1, 2, 3 or 4 and the right to use of the
telephone closets on any floor of the Building partially occupied by Tenant,
(ii) the right to maintain, at Tenant's expense, 2 three-quarter inch conduits
running from the 36th Floor to the Building security console and also between
any space leased in the Building by Tenant, including the Garage and any storage
space and (iii) the option to maintain, at Tenant's expense, wholly enclosed
security areas with security equipment for vehicles utilizing Tenant's parking
spaces as set forth in the Space Plan. If prior to the expiration of the Term,
Tenant shall abandon those parking spaces that have been enclosed by Tenant,
then Tenant shall upon the written request of Landlord, delivered within sixty
(60) days of such abandonment, remove such enclosure and any equipment at
Tenant's expense and repair any damage as a result of such removal.
H. Decorating. In the 10th Lease Year of the Part 1 Term and in
every 10th Lease Year thereafter at the request of Tenant Landlord shall (i)
repaint all the walls of Part 1 of the Premises or provide a decorating credit
equal to the cost savings as a result of Tenant electing not to repaint, and
(ii) replace all lobby and hallway carpeting in Part 1 as requested by Tenant
with new carpeting of a grade comparable to that being replaced. Alternatively,
at Tenant's election Landlord shall provide a decorating allowance in a sum
equivalent to the foregoing which Tenant may utilize as it determines to
refurbish the Premises.
I. Cafeteria. Landlord's Plans include a public cafeteria to be
located on the 1st floor of the Building; Tenant shall be entitled to have a
portion of such cafeteria of approximately 4,000 square feet located
substantially as indicated on Exhibit L partioned off for use exclusively by
Tenant's employees and invitees during normal business hours for food and
beverage service. Permitted uses of Tenant's reserved cafeteria area shall
include retirement parties, birthday parties and similar such social events for
Tenant's employees, but shall not include use for training meetings and business
meetings of Tenant or as an employee lounge. Such reserved area shall be
created, furnished and decorated in a fashion reasonably acceptable to Tenant
and maintained by Landlord or caused to be maintained by the food service
operator, including without limitation any periodic redecorating or
refurbishing, in each case at no cost to Tenant. Tenant shall have the right to
approve the food service operator for the Building cafeteria and the terms of
its lease or operating or management agreement, which approval shall not be
unreasonably withheld; and Landlord shall provide in any agreement with a food
service operator that Tenant may contract with such operator to enable Tenant to
subsidize its employee food expenses in Tenant's area of the cafeteria. In the
event that the operating agreement of the food service operator, or the lease of
the tenant of the cafeteria, as the case may be, is terminated, Landlord shall
have a reasonable period of time to find another food service operator or tenant
for the cafeteria, subject to Tenant's approval rights provided above. The
cafeteria may be out of service for reasonable periods of time in the event that
repairs or renovation to the cafeteria are reasonably necessary. The requirement
that Landlord provide a cafeteria as required in this subparagraph shall permit
Landlord to commence cafeteria operations up to six (6) months
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after the Commencement Date of this Lease.
Landlord shall provide the cafeteria facility and the separate
area therein for Tenant in accordance with this Paragraph 30.I during the first
one hundred eighty (180) months of the Term without regard to the profitability
of such operation to Landlord or any cafeteria operator. Within ninety (90) days
after the expiration of such 180-month Term, the profitability of the cafeteria
operation shall be evaluated during the last three (3) years of such 180-month
Term, and if it shall be determined by Landlord and Tenant that the cafeteria
operation was not profitable during each of such last three (3) years, then
Landlord may (i) upon not less than thirty (30) days prior written notice elect
to terminate the operation of the cafeteria, or (ii) elect to continue the
cafeteria operation for an additional ten (10) year period. Absent written
notice of termination by Landlord within the specified time period, Landlord
shall be deemed to have elected to continue the cafeteria operation. The
profitability of the cafeteria operation shall be determined with respect to
Landlord and depreciation, debt service, real estate taxes, and Building
management fees shall not be subtracted from revenues in arriving at a
determination of profitability. If Landlord and Tenant shall be unable to agree
upon whether the cafeteria operation has been profitable in any year, then that
question may be submitted to arbitration in accordance with Paragraph 33 hereof.
After the initial fifteen (15) year period of the Term,
Landlord's obligation to continue to provide and maintain a cafeteria operation
shall be extended from time to time on a ten (10) year per time basis. An
evaluation of profitability, as described above for the last three (3) years of
each such ten year period, shall be made and Landlord and Tenant shall have the
same rights with respect thereto and the results thereof as are set forth above.
Notwithstanding the foregoing, (i) in the event that the
cafeteria operation was not profitable during each of the last two (2) years of
the initial 180-month Term, or any ten year Term thereafter, and is not
profitable, as determined above, during the first one (1) year of the new ten
(10) year period, or (ii) in the event that the cafeteria operation was not
profitable during the last one (1) year of the initial 180-month Term, or any
ten year Term thereafter, and is not profitable, as determined above, during the
first two (2) years of the new ten (10) year period, in each case Landlord may
upon not less than thirty (30) days prior written notice elect to terminate the
operation of the cafeteria.
If Landlord shall at any time terminate the cafeteria operation
other than temporarily as permitted under the first paragraph of this Paragraph
30.I, then at the written request of Tenant, Landlord shall deliver possession
of that portion of the Building used for the cafeteria and identified on
Exhibit L ("CAFETERIA PREMISES") to Tenant and shall lease the same to Tenant
for the term equal to the then current balance of the Part 1 Term for an annual
gross rental of One Dollar ($1.00), Tenant being free of any other rental
obligations with respect to the Cafeteria Premises, including without limitation
all Base Rent and Additional Rent, and otherwise upon the same terms and
conditions as are otherwise provided in this Lease. Landlord shall
simultaneously with such lease sell to Tenant for the sum of One Dollar ($1.00)
all personal property, furnishings, fixtures and equipment utilized in the
operation of the cafeteria, free and clear of all liens, security interests and
claims, by a bill of
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sale in form and substance reasonably acceptable to Tenant. Landlord shall
provide to the Cafeteria Premises all services set forth in Paragraph 8.A.
hereof, to the extent applicable; provided, however, that heating, ventilating
and air conditioning services pursuant to Paragraph 8.A. (i) and janitorial
services pursuant to Paragraph 8.A. (iii) shall only be provided upon written
request of Tenant, as additional services pursuant to Paragraph 8.C.
From and after the date of such lease and sale (i) Tenant may
utilize such space for the operation of a cafeteria, or (ii) alternatively, in
Tenant's sole discretion, Tenant may use and occupy the Cafeteria Premises for
any legally permitted purpose consistent with a first-class office building and
so long as the outward appearance of such Cafeteria Premises shall be consistent
with a first-class office building, Tenant may utilize any portion of the
Cafeteria Premises for storage or other similar uses in connection with the
offices in the Premises; provided, however, if Tenant shall at any time elect to
not utilize any portion of the Cafeteria Premises for a cafeteria operation
(other than temporarily for renovations or repairs), Tenant shall give written
notice thereof to Landlord and Landlord shall have thirty (30) days from
Tenant's notice to offer to Tenant in lieu of Tenant's right to occupy such
portion of the Cafeteria Premises as herein provided, a total abatement of Base
Rent and Additional Rent on a then existing portion of the Part 1 portion of the
Premises equal in size to such portion of the Cafeteria Premises (provided,
however, that Tenant shall pay for heating, ventilating and air conditioning
services pursuant to Paragraph 8.A(i) and janitorial services pursuant to
Paragraph 8.A(iii)), for a term equal to the Part 1 Term of this Lease, in which
event Landlord may recover possession of such portion of the Cafeteria Premises.
Failure of Landlord to offer such an abatement within the 30-day period shall
waive Landlord's option to recover the Cafeteria Premises.
Tenant's rights under this Paragraph 30.I shall be assignable to
an assignee of all of Part 1, but otherwise may not be assigned by Tenant.
J. Lobby. In addition to the rights regarding signage otherwise
provided in this Lease, notwithstanding anything herein to the contrary,
provided that Tenant is then entitled to the rights under Paragraph 30.E.,
Tenant shall at all times be entitled to maintain product displays of prominent
visage in the Building lobby so long as the appearance of such displays
including, but not limited to, their type, subject matter, nature, size, color,
texture, location, number and material is reasonably satisfactory to Landlord
and consistent with comparable first-class office buildings in the City of
Chicago; and provided that such displays shall not materially adversely affect
the marketability of the Building.
Tenant's rights under this Paragraph 30.J shall be assignable to
an assignee of all of Part 1, but otherwise may not be assigned by Tenant.
K. Storage. Landlord has leased to Tenant for storage and any
other lawful use those areas described in Paragraph 1.A. and identified on
Exhibit B, mutually agreeable to Landlord and Tenant taking into account
Landlord's reasonable need for janitorial storage to serve the Premises. Tenant
shall be entitled to use such areas during the Part 1 Term without any cost or
expense for Base Rent or Additional Rent; provided that the storage areas on any
particular floor of the Premises shall be available to Tenant for so long as
Tenant, or an assignee of Tenant are in possession
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of all or any portion of such floor of the Premises. Tenant shall be entitled to
use without charge any available storage or non-office vacant space on any
mechanical floors of the tower portion of the Building. Tenant's mezzanine
storage space depicted on Exhibit B-16 shall be designed to include a small
locker room which shall be available for Building food service personnel
employed in the cafeteria and shall be provided with only those improvements
designated in the Space Plans. Landlord shall provide heating, ventilating and
air conditioning for the locker room and shall install the demising wall and
door to such area. Landlord shall bring electrical power to such space, but
other than as specifically provided in this Paragraph 30.K, Landlord shall have
no obligation to provide any other services to such space. The storage space in
the clock tower and mezzanine shall be assignable to an assignee of all of Part
1, but otherwise may not be assigned by Tenant. In addition, Tenant shall be
entitled to construct, at its own cost and expense, an enclosed walkway from the
mechanical space on the roof to the entrance to the storage space in the clock
tower.
L. Shredder. During the Part 1 Term Tenant shall be entitled to
maintain in the loading dock area of the Building other than on the IBT loading
dock, or other area of the Building designated by Landlord and reasonably
acceptable to Tenant, a paper shredder and necessary ancillary equipment and
receptacles used in disposal of Tenant's waste paper, without charge, other than
electricity used in the operation of such shredder, which electricity shall be
at Tenant's expense. Such shredder shall be installed and maintained by Tenant
at Tenant's expense. Tenant shall also maintain the area designated for the
shredder in a neat, clean and orderly condition. Landlord shall designate a
reasonably convenient location with appropriate access to electrical service for
the operation of such shredder metered to Tenant.
Tenant's rights under this Paragraph 30.L. shall be assignable to
an assignee of all of Part 1, but otherwise may not be assigned by Tenant.
31. PARKING.
A. Spaces. During the Part 1 Term Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord twenty-seven (27) assigned
location parking spaces in the garage of the Building (the "GARAGE") in
locations within the Building identified on Exhibit B-15, for a monthly rental
with respect to each of the aforesaid spaces equal to ninety percent (90%) of
the fair market rent for such spaces based on the annual rental rate generally
charged to other tenants for similar spaces. The rent for such spaces shall be
payable monthly on the first (1st) day of each calendar month during the Term,
without any set-off or deduction whatsoever except as specifically provided in
this Lease. In the event that Tenant elects at any time not to lease any of said
spaces and so notifies Landlord in writing, Landlord shall accept the return of
any such surrendered spaces and shall be free to lease such spaces to any other
party or person whatsoever, and thereafter Tenant shall have no further rights
or obligations under this Paragraph 31.A. with respect to such surrendered
parking space or spaces. The tenant of all of Part 1 shall have the right to
control the assignment or subletting of rights to parking spaces under this
Paragraph 31 to assignees or subtenants of portions of the Premises.
B. Additional Spaces. If during the Term Tenant increases the
space leased by it in the Building in excess of two hundred sixty-four thousand
(264,000) square feet of Rentable
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Area, Tenant shall be entitled to lease two additional assigned location parking
spaces in the Garage for each additional seven thousand five hundred (7,500)
square feet of Rentable Area leased by Tenant. Any such lease of additional
spaces shall be upon the same terms and conditions as are set forth in Paragraph
31.A.
C. Market Rate Spaces During the Part 1 Term of the Lease, Tenant
shall from time to time be entitled to lease parking spaces in the Garage which
when added to those leased under Paragraphs 31.A and 31.B equals a percentage of
total parking spaces in the garage equal to Tenant's Building Share. Tenant
shall provide at least ninety (90) days notice of its election to increase its
leased parking spaces in the Garage beyond those provided for under Paragraphs
31.A and 31.B, and spaces leased under this Paragraph 31.C. shall be leased at
fair market rent. Spaces rented under this Paragraph 31.C shall be unassigned
spaces permitting the user to park in the Garage but not allocating a specific
location; provided, however, that in the event no space is available in the
Garage, the user of the unassigned space shall be entitled to receive as
liquidated damages from the operator of the Garage an amount equal to double the
daily rate for an unassigned space in the Garage. Furthermore, Landlord may
delay for up to nine (9) months from the date of Tenant's notice in making such
spaces available if it has entered into commitments with others that limit the
availability of spaces.
32. OPTIONS.
A. Part 4. In addition to Parts 1, 2 and 3, Tenant may, at its
option by written notice delivered to Landlord on or prior to the Commencement
Date, also lease from Landlord all, or the following described portions of,
floors 22, 23 and 24 of the Building. To the extent that Tenant does not lease
all of floors 22, 23 and 24 pursuant to this Paragraph 32.A., Tenant's option
hereunder shall apply first to space on the 24th floor, then the 23rd floor and,
then the 22nd floor; and if Tenant leases less than a full floor hereunder, it
shall lease not less than five thousand (5,000) square feet of Rentable Area on
either the 23rd and 24th floors and not less than ten thousand (10,000) square
feet of Rentable Area on the 22nd floor (such partial floor space to be in such
location, size and configuration on the floor as Tenant shall designate, subject
to Landlord's approval, which shall not be unreasonably withheld or delayed).
Any space leased under the provisions of this Paragraph 32.A. shall be
designated as "PART 4" of the Premises and shall be leased to Tenant upon the
same terms as those applicable to Part 3 (subject, however, to necessary
adjustments of the Part 4 Commencement Date and references to time periods to
reflect the actual date of substantial completion and occupancy of Part 4)
except that the Part 4 Term shall be adjusted so as to end on the same date as
the Part 3 Term. Tenant shall be entitled to have constructed on Part 4 at
Landlord's cost in accordance with the Work Letter tenant improvements of the
same scope, quality and nature as are to be constructed on floor 31 of the
Premises.
B. Extension Options. The Term of this Lease (other than the Part
1 Term) may be extended, at the option of Tenant for all, or any full floor
portions, of the Premises (other than Part 1) for one period of five (5) years
and thereafter for five (5) periods of ten (10) years each, with the last day of
the final Extended Term being the same day as the last day of the Part 1 Term
(such periods being herein sometimes referred to as the "EXTENDED TERMS") as
follows:
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(i) Each such option to extend shall be exercised by Tenant
giving a written notice to Landlord, which notice shall specify which
floor or floors the exercised option shall apply to, on or before but
not later than the first day of the fifteenth (15th) full calendar month
prior to the expiration of the existent Term for the Premises in
question.
(ii) Each of the Extended Terms shall be on the same terms,
covenants and conditions contained in this Lease, excluding the
provisions of Paragraphs 4.A. (iii); 4.B. (ii) and 4.C. (ii) hereof, and
except for the payment of Base Rent during each such Extended Term that
shall be determined as set forth below. If Tenant shall elect not to
extend the Term pursuant to this Paragraph 32.B. for a portion of the
Premises, such portion shall be the lowest floors of Parts 2, 3, 4 or
any Expansion Space then leased by Tenant. Any termination of this Lease
for any portion of the Premises during the original Term of this Lease,
or during any Extended Term shall terminate all future extension option
rights under this Paragraph 32.B. as respects such space.
(iii) The Base Rent for each Extended Term shall be at a rate
per square foot of Rentable Area for the Premises in question, equal to
the Fair Market Rent (as hereinafter defined) commencing on the first
day of the applicable Extended Term. Landlord shall advise Tenant at
least eighteen (18) months prior to the commencement date of each
Extended Term, of the Base Rent that Landlord believes is applicable to
the Premises for such Extended Term, and Tenant shall advise Landlord of
any objection to such rent within thirty (30) days of receipt of such
notice. Failure to respond within such thirty (30) day period shall be
deemed to constitute Tenant's acceptance of such Base Rent. If Tenant
shall object to Landlord's proposed Base Rent for an Extended Term, it
shall so advise Landlord, and Landlord and Tenant shall commence
negotiations to attempt to agree upon the applicable Fair Market Rent
within thirty (30) days after receipt of notice of Tenant's objection.
If the parties cannot so agree on such Fair Market Rent, the Fair Market
Rent shall be determined by arbitration pursuant to Paragraph 33 hereof.
Tenant shall have the right to nullify the exercise of an option to
extend the Term in whole or as to any portion thereof, by written notice
to Landlord, given by the later to occur of (x) fifteen (15) months
prior to the expiration of the existing Term or (y) fifteen (15)
business days of the receipt by Tenant of the results of the arbitration
referred to above, in which event Tenant's exercise of the option to
extend shall be null and void and neither Landlord nor Tenant shall have
any further rights or liabilities with respect thereto. Tenant's failure
to give the notice of nullification described above within such period
shall constitute acceptance by Tenant of, and Tenant's agreement to pay,
the Fair Market Rent specified by the arbitrator as the Base Rent for
the applicable Extended Term.
(iv) Landlord shall have no obligation to make improvements or
additions to the Premises as a condition to Tenant's obligation to pay
rent during any Extended Term. For purposes of determining Fair Market
Rent under this Lease it shall be assumed that no commissions shall be
payable with respect to any Extended Term. In addition to the Base Rent
above provided, Tenant shall and hereby agrees during each Extended Term
to continue to pay to Landlord
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Additional Rent in accordance with the provisions of Paragraph 5 of this
Lease, provided, however, that as respects the Additional Rent resulting
from the CPI Adjustment described in Paragraph 5.B., the Base Month for
each Extended Term shall be adjusted to be that month specified in
Paragraph 5.A.(x)
(v) In the event Tenant exercises any of its options under this
Paragraph 32.B. and an Extended Term shall result from such exercise, on
or prior to the commencement date of any such Extended Term, Tenant and
Landlord agree in each such case to execute and deliver to the other
party a Lease amendment in form and substance mutually acceptable to
Landlord and Tenant setting forth the provisions applicable to the
portion of the Premises involved in such Extended Term. From and after
such commencement date of an Extended Term, as respects the portion of
the Premises in question, the word "Term" shall be deemed to include the
additional period of time for which this Lease was so extended.
(vi) As used in this Lease with reference to any particular
leasable space in the Building, the term "FAIR MARKET RENT" of that
leasable space shall mean the Base Rent per annum for a period
commencing when the rental being determined would first be payable
assuming no rent abatements of any kind for a term of ten (10) years,
for tenants of comparable creditworthiness to Tenant occupying space
comparable to the total space occupied by Tenant (reduced by the present
value of any broker's commission, tenant improvement, free rent,
takeover rent or other concession of any kind which would be available
to such a tenant, but increased by the present value of the cost of any
actual tenant improvement or other concession (if any) agreed by the
Landlord and Tenant to be payable, or to be granted to Tenant, in
connection with the particular option with respect to which Tenant has
given its initial nonbinding notice), taking into account the other
economic terms of this Lease, including the terms provided in Paragraph
5.B.(i) of this Lease, and by reference to comparable first-class space
in the Building and in other buildings in the vicinity of the Building
and comparable to it in age and quality. For purposes hereof it shall be
assumed that no rental fees, commissions, finder's fee, brokerage or
similar payments shall be due in connection with the extension of the
Term of the space in question. The rental for the option space shall be
based upon a rate which would apply for the entire leased Premises and
not just for the option areas or expansion areas in question.
C. Expansion Options. Tenant shall be entitled to expand the
Premises by leasing additional space from Landlord in accordance with the
following expansion option rights:
(i) During the Term of this Lease, Tenant shall have the option
right to lease additional space in the Building as hereinafter provided.
The space subject to Tenant's option rights under this Paragraph 32.C.
("EXPANSION SPACE") shall be available on each 5th annual Anniversary of
the first full calendar month after the Commencement Date during the
Part 1 Term (the "OPTION DATE"), in increments of one-half (1/2) floor
areas of the Building on a schedule to be affixed hereto as Exhibit M on
the Commencement Date, plus or minus one thousand five hundred (1,500)
square feet of Rentable Area, at Landlord's option. Each such Expansion
Space shall be contiguous space on each floor and for floors not
partially
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occupied by Tenant shall apply first to the easterly one-half (1/2) of
the floor, except as provided below. Tenant may defer its right to elect
to lease Expansion Space for five (5) years, but in the event Tenant
does not elect on the Option Date next occurring, to lease that
Expansion Space as to which it did not exercise its rights under this
Paragraph 32.C, its rights to such Expansion Space shall be waived and,
in the event Tenant does not elect to lease current Expansion Space as
well as accrued Expansion Space, future Expansion Space for floors not
partially occupied by Tenant may apply first either to the easterly
one-half (1/2) of the floor, or to the westerly one-half (1/2) of the
floor, at Landlord's option, to the extent necessary to enable Landlord
to lease such Expansion Space in a commercially reasonable manner. Such
waiver shall be accomplished by removing from the Expansion Space, areas
on the lowest floors of expansion areas in the inverse order of the
numbered areas reflected on Exhibit M. Expansion Space shall be leased
upon the same terms and conditions as are then applicable under this
Lease for Part 3 except for (1) the amount of Base Rent, (2) the Base
Month for the CPI Adjustment which shall be adjusted to be that month in
which the Expansion Term commences, (3) the Term which shall be
determined as hereinafter set forth. The Term for the Expansion Space,
("EXPANSION TERM") shall, depending upon the date of exercise, be the
period commencing on the applicable Option Date and extending through
the day prior to the date that is the next commencement date for an
Extended Term under Paragraph 32.B. To the extent that Tenant shall
lease any space within the expansion area described in Exhibit M under
Tenant's first offer rights pursuant to Paragraph 32.D., such space
shall be deemed to be occupied by Tenant pursuant to an agreed upon
acceleration of Tenant's Expansion Option and Landlord shall use
reasonable efforts to make available to Tenant and notify Tenant in
writing of the location of comparable additional expansion space to
replace such already utilized Expansion Space to the extent such
additional expansion space is not committed under a lease or option to
lease to an existing tenant of the Building or would materially and
adversely affect the marketability of such space. The Expansion Term
shall be subject to the provisions of Paragraph 32.E.
(ii) Tenant shall give written notice to Landlord of its
exercise of an option under this Paragraph 32.C. not less than fifteen
(15) months prior to the Option Date of Tenant's exercise of its option
rights under this Paragraph 32.C. Landlord shall notify Tenant within
ten (10) business days of receipt of Tenant's notice of exercise of an
option right hereunder of the Base Rent which Landlord believes is
applicable to the Expansion Space for the Expansion Term and Tenant
shall advise Landlord of any objection to such rent within (10) business
days of receipt of such notice. If Tenant shall object to Landlord's
proposed Base Rent for an Expansion Term, it shall so advise Landlord
and Landlord and Tenant shall commence negotiations to agree upon the
Fair Market Rent applicable thereto. If the Landlord and Tenant are
unable to reach agreement on the Fair Market Rent within fifteen (15)
business days after the date of receipt of Tenant's notice of objection,
then the Fair Market Rent shall be determined by arbitration pursuant to
Paragraph 33 hereof. Tenant shall have the right to nullify its exercise
of the option under this Paragraph 32.C. by written notice to Landlord,
given within fifteen (15) business days of the receipt by Tenant of the
results of the arbitration referred
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<PAGE> 91
to above, in which event neither Landlord nor Tenant shall have any
further rights or liabilities with respect thereto. Tenant's failure to
give the notice of nullification described above within such fifteen
(15) business day period shall constitute acceptance by Tenant of, and
Tenant's agreement to pay, the Base Rent specified by the arbitrator for
the applicable Expansion Term.
(iii) For any Expansion Space that has not as of Tenant's
exercise date had tenant improvements installed, Tenant shall be
entitled to receive improvements for such space comparable to those
under the Lease for floor 31 of the Premises under and pursuant to the
Work Letter to the extent applicable. Otherwise, Landlord shall have no
obligation to make improvements or additions to the Premises as a
condition to Tenant's obligation to pay rent during any Expansion Term,
nor shall Tenant be entitled to any abatement of Base Rent during any
Expansion Term. In addition to the Base Rent above provided, Tenant
shall and hereby agrees during each Expansion Term to pay to Landlord
Additional Rent in accordance with the provisions of Paragraph 5 of this
Lease, provided, however, that as respects the Additional Rent resulting
from the CPI Adjustment described in Paragraph 5.B., the Base Month for
each Option Term shall be the month in which the Expansion Term occurred
and the Comparison Month shall be the same as the next Comparison Month
for Part 1.
(iv) In the event Tenant exercises any of its options under this
Paragraph 32.C. and an Expansion Term shall result from such exercise,
on or prior to the commencement date of any such Expansion Term, Tenant
and Landlord agree in each such case to execute and deliver to the other
party a Lease Amendment setting forth the provisions applicable to the
portion of the Premises involved in such Expansion Term.
D. First Option.
(i) During the Term of Part 1, Tenant is hereby granted the
option to lease any space above the 13th floor of the Building that
becomes available upon the expiration or termination of any lease to any
third-party Tenant ("OFFERED SPACE"). Tenant's rights to any Offered
Space under this Paragraph 32.D. shall, however, be subject and
subordinate to the expansion rights and 30-day first option right of IBT
under IBT's lease with Landlord as it exists on the date hereof for
floors that are up to and including the 18th floor and 3,198 square feet
of Rentable Area on the 19th floor as shown on Exhibit Q (unless as of
the Commencement Date Tenant shall have elected to lease all of the Part
4 space in which event IBT's priority shall exist only below the 18th
floor.) Landlord shall keep Tenant fully advised in a timely manner as
to the availability or likely availability of space giving rise to
rights in Tenant under this Paragraph 32.D. and as to IBT's actions with
respect to IBT's option and expansion rights in the Building.
(ii) Tenant's option right under this Paragraph 32.D. shall
consist of a right to receive an offer to lease any space in the
Building located above the 13th floor other than Landlord's initial
lease of such space. As respects Offered Space where IBT has a priority
right to receive a first offer, the time periods for the commencement
and exercise of Tenant's rights under this Paragraph 32.D. shall
commence
-64-
<PAGE> 92
with the expiration of IBT's 30-day first offer right. Landlord shall
give Tenant written notice of the availability of such space and the
then available Base Rent for a term not less than five (5) years nor
exceeding fifteen (15) years ending on the day prior to the next
occurring commencement date of an Extension Term and otherwise on the
terms, covenants and conditions contained in this Lease. Tenant shall
have 30 days after receipt of such notice to accept or reject the
Offered Space. If Tenant does not elect to lease such Offered Space
within such thirty (30) day period, then Landlord may, for a period of
two hundred seventy (270) days after such thirty (30) day option period,
lease such space to other parties upon terms no less favorable to
Landlord than those offered to Tenant. During such 270 day period
Landlord may change its terms for the leasing of any Offered Space and
re-offer such space to Tenant for thirty (30) days in the same fashion
as if Landlord were initially submitting the offer for such space to
Tenant under this Paragraph 32.D. Landlord may vary the length of the
term of the lease of any Offered Space and Landlord may vary the
economic elements of an offer of any such space so that Landlord's offer
has substantially equivalent economic effect and the offer shall be
deemed to be substantially similar to that made available to Tenant.
(iii) Landlord shall not lease any Offered Space upon lease
terms that are less favorable to Landlord than those offered to Tenant
without first notifying Tenant in writing. Upon receipt of such a
notice, Tenant shall have the right for seven (7) business days after
the receipt of any such notice to lease the Offered Space on such new
terms, subject to adjustment of such terms to otherwise conform to this
Lease and reflect the equivalent economic effect on the offer as so
adjusted.
E. Term. Notwithstanding anything in this Lease to the contrary,
in no event shall the Term for any Expansion Space, or Offered Space extend
beyond the Part 1 Term.
F. Option Provisions. In the event Tenant exercises any of its
Options pursuant to Paragraphs, 32.C. or 32.D.:
(i) Landlord shall not be liable to Tenant in the event that
Landlord does not deliver possession of an Expansion Space or Offered
Space to Tenant due to a holding over by the prior tenant of such space
in violation of the terms of such tenant's lease, provided that Landlord
shall use its reasonable efforts to obtain possession of such space from
such other tenant (and Tenant hereby agrees to join in any action
brought for possession of such space upon Landlord's request and at
Landlord's sole cost and expense) and the Lease obligations of Tenant
for such space shall not be deemed to have commenced until Landlord
shall have delivered possession of such space to Tenant.
(ii) Unless otherwise specifically provided in this Paragraph
32, Tenant shall accept possession of such Expansion Space and Offered
Space in broom clean, "as is" condition at the time of delivery of
possession thereof.
(iii) Tenant's Expense Share and Tenant's Tax Share as set forth
in Paragraph 5 hereof shall be increased
-65-
<PAGE> 93
to reflect the addition of the Expansion Spaces and Offered Spaces to
the Premises effective on the date of the commencement of the term of
the Expansion Space or Option Space as provided herein with partial
years reflected by an appropriate per diem proration adjustment.
(iv) It shall be a condition of Tenant's right to exercise its
Expansion Options and its rights under this Paragraph 32 that Tenant has
not received a notice of default as to which any applicable cure periods
have expired under any of the terms, covenants or conditions of this
Lease at the time that it notifies Landlord of the exercise of any such
options and that Tenant shall be diligently pursuing a cure as to any
notice received.
(v) Any space that is leased by Tenant pursuant to any portion
of this Paragraph 32 shall automatically thereafter be subject to the
extension options of Paragraph 32.B. and shall become a part of the
Premises.
33. DETERMINATION BY ARBITRATION.
A. Arbitration. In the event of the failure of the parties to
agree as to any matter which under the terms of this Lease is to be determined
by arbitration (unless otherwise specifically provided), such dispute shall upon
the notice of either party hereto be determined by arbitration as hereinafter
provided. Landlord and Tenant shall each appoint a fit, impartial and
independent person as arbitrator who shall have had at least ten (10) years'
experience as to the subject matter of the dispute. Such appointment shall be
signified in writing by each party to the other. The arbitrators so appointed,
in the event of their failure to agree within fifteen (15) days upon the matter
so submitted, shall appoint an umpire within ten (10) days after said 15-day
period. In the case of the failure of such arbitrators (or the arbitrators
appointed as hereinafter provided) to agree upon an umpire, such umpire shall be
promptly appointed by the American Arbitration Association, or its successor,
from its qualified panel of arbitrators, and shall be a person having at least
ten (10) years' experience as to the subject matter in question. In case either
party shall fail to appoint an arbitrator within a period of ten (10) days after
written notice from the other party to make such appointment, then the
arbitrator appointed by the party not in default hereunder for failing to
appoint an arbitrator shall appoint a second arbitrator having at least ten (10)
years' experience as to the subject matter in question. The two (2) arbitrators
so appointed, in the event of their failure to agree upon the matter so
submitted within fifteen (15) days thereafter, shall appoint an umpire within
ten (10) days after said 15-day period.
The arbitrators and umpire (when necessary) shall proceed with
all reasonable dispatch to determine the question submitted. The decision of the
arbitrators and umpire shall in any event be rendered within thirty (30) days
after the appointment of the last of them, and such decision shall be in writing
and in duplicate, one counterpart thereof to be delivered to each of the parties
who appointed them. If any arbitrator shall fail to act so as to enable a
decision to be made within such thirty (30) day period then the umpire and the
other arbitrator shall render the decision within such thirty (30) day period.
The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association (or its successor) and applicable Illinois law, and the
decision of a majority of the arbitrators
-66-
<PAGE> 94
and umpire shall be binding, final and conclusive on the parties. If a majority
of the arbitrators and umpire believe that expert advice would materially assist
them in the resolution of the matter in dispute, they may retain one or more
qualified persons, including, but not limited to, legal counsel, architects or
engineers, to provide such expert advice. The fees of the arbitrators and umpire
and the expenses incident to the proceedings shall be borne equally between
Landlord and Tenant. The fees of respective counsel engaged by the parties, and
the fees of expert witnesses and other witnesses called by the parties, shall be
paid by the respective party engaging such counsel or calling or engaging such
witnesses.
B. Rent Arbitration. If Landlord and Tenant are unable to reach
agreement on Fair Market Rent in any situation, then prior to submitting their
dispute to the arbitrator(s) (which arbitrators shall, in the event of a dispute
on Fair Market Rent, be MAI Appraisers who shall have at least ten (10) years
experience in appraising office space in the downtown Chicago area), Landlord
and Tenant shall each simultaneously submit to the other its good faith estimate
of Fair Market Rent in such situation. If the higher estimate is not more than
one hundred five percent (105%) of the lower, then the Fair Market Rent shall be
the average of the two estimates. If the higher estimate is more than one
hundred five percent (105%) of the lower, then the arbitrators shall select from
the two estimates of Fair Market Rent submitted by Landlord and Tenant the one
that is closer to the Fair Market Rent as determined by the arbitrators.
C. Mortgagee Notice. Notice of appointment of the arbitrators
shall be given in all instances to any mortgagee who prior thereto shall have
given Tenant a written notice specifying its name and address. If a dispute
shall be submitted to arbitration as hereinabove provided, such mortgagee shall
have the right to participate in such arbitration proceedings; provided,
however, that such participation shall be in association with Landlord and shall
not be deemed to entitle such mortgagee to appoint an additional arbitrator nor
to enlarge Landlord's rights in such arbitration proceeding, it being the
intention of the parties that such mortgagee shall have the right to be present
and participate in the arbitration proceeding solely on behalf of Landlord.
34. LIMITATION ON LIABILITY.
A. Landlord. It is expressly understood and agreed by Tenant that
none of Landlord's covenants, undertakings or agreements in this Lease are made
or intended as personal covenants, undertakings or agreements by Landlord or the
partners or beneficiary in Landlord, and any liability of Landlord or the
partners or beneficiary in Landlord for damages or breach or nonperformance by
Landlord or otherwise arising under this Lease or the relationship of Landlord
and Tenant hereunder, shall be collectible only out of Landlord's interest in
the Land and Building (or if Landlord is the beneficiary of a land trust,
Landlord's right, title and interest in such land trust), in each case as the
same may then be encumbered, and no personal liability is assumed by, nor at any
time may be asserted against, Landlord or the partners in Landlord or any of its
or their officers, agents, employees, legal representatives, successors or
assigns for a breach of this Lease, all such liability, if any, being expressly
waived and released by Tenant and parties claiming through Tenant. Without
limiting the generality of the foregoing, there shall be no personal liability
to pay any indebtedness or sum accruing hereunder, or to perform any covenant or
agreement whether express or implied herein contained, it being agreed that
Landlord shall have sole responsibility therefor.
-67-
<PAGE> 95
Notwithstanding the foregoing this Paragraph 34 shall in no way
limit or affect any rights that Tenant may have pursuant to Paragraph 25 to
exercise any other remedy specifically provided to Tenant under this Lease or
the Collateral Agreement.
Landlord represents that Landlord's Agent has full power and
authority to manage the Building and to execute and deliver on behalf of
Landlord any and all ancillary documents with respect to the execution and
delivery of the Lease.
B. Tenant. It is expressly understood and agreed by Landlord that
no personal liability is assumed by or at any time may be asserted or enforced
against any of Tenant's board of directors, officers, employees or agents or any
of their heirs, legal representatives, successors or assigns on account of any
of the covenants, undertakings or agreements made by Tenant herein, all such
personal liability, if any being expressly waived and released by Landlord and
parties claiming through Landlord. Notwithstanding the foregoing this Paragraph
34.B. shall not limit or affect any rights that Landlord may have against Tenant
in Tenant's corporate capacity.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to
be executed as of the day and year first above written.
LANDLORD:
Chicago Title and Trust Company
as Trustee as aforesaid
IN WITNESS WHEREOF, Chicago Title and Trust Company, not personally but
as Trustee as aforesaid, has caused these presents to be signed by its Assistant
Vice-President, and its corporate seal to be hereunto affixed and attested by
its Assistant Secretary, the day and year first above written.
CHICAGO TITLE AND TRUST COMPANY, As Trustee as aforesaid and not
personally,
By /s/ Signature Illegible ASSISTANT VICE-PRESIDENT
Attest /s/ Signature Illegible ASSISTANT SECRETARY
Corporate Seal
STATE OF ILLINOIS,
SS.
COUNTY OF COOK
I, the undersigned, a Notary Public in and for the County and State aforesaid,
DO HEREBY CERTIFY, that the above named Assistant Vice President and Assistant
Secretary of the CHICAGO TITLE AND TRUST COMPANY, Grantor, personally known to
me to be the same persons whose names are subscribed to the foregoing instrument
as such Assistant Vice President and Assistant Secretary respectively, appeared
before me this day in person and acknowledged that they signed and delivered the
said instrument as their own free and voluntary act and as the free and
voluntary act of said Company for the uses and purposes therein set forth; and
the said Assistant Secretary then and there acknowledged that said Assistant
Secretary, as custodian of the corporate seal of said Company, caused the
corporate seal of said Company to be affixed to said instrument as said
Assistant Secretary's own free and voluntary act and as the free and voluntary
act of said Company for the uses and purposes therein set forth.
Given under my hand and Notarial Seal this _____ day of ________
[STAMP OMITTED]
/s/ Signature Illegible
--------------------------------------------
Notary Public
MORTON THIOKOL, INC.,
a Delaware corporation
By: /s/ Signature Illegible
Name: John R. Bowen
Title: Vice President
Attest: /s/ Signature Illegible
Name: P. Michael Phelps
Title: Secretary
-68-
<PAGE> 96
EXHIBIT A TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
LEGAL DESCRIPTION OF LAND
-------------------------
PARCEL 1 (THE FEE PARCEL):
ALL OF WEST WATER STREET LYING SOUTH OF THE SOUTH LINE OF RANDOLPH STREET, LYING
NORTH OF THE NORTH LINE OF WASHINGTON STREET, LYING WEST OF AND ADJOINING
WHARFING LOTS 1 TO 5, BOTH INCLUSIVE, IN BLOCK "O" IN ORIGINAL TOWN OF CHICAGO
IN THE SOUTH PART OF SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD
PRINCIPAL MERIDIAN, AND LYING EAST OF A DIRECT LINE DRAWN FROM A POINT ON THE
SOUTH LINE OF LOT 9 IN BLOCK 44 IN ORIGINAL TOWN OF CHICAGO, 41.87 FEET EAST OF
THE SOUTH WEST CORNER OF SAID LOT 9, TO A POINT ON THE NORTH LINE OF LOT 1 IN
SAID BLOCK 44, 85.70 FEET EAST OF THE NORTH WEST CORNER OF SAID LOT 1, AS SHOWN
AND LOCATED ON THE PLAT RECORDED AUGUST 18, 1855, AS DOCUMENT NUMBER 62008 IN
COOK COUNTY, ILLINOIS.
PARCEL 2 (THE GROUND LEASE PARCEL):
THAT PART OF LOTS 1, 4, 5, 8 AND 9 LYING WEST OF A DIRECT LINE DRAWN FROM THE
POINT OF INTERSECTION OF THE WEST LINE OF WEST WATER STREET AND THE SOUTH LINE
OF SAID LOT 9, BEING A POINT ON THE SOUTH LINE OF LOT 9 APPROXIMATELY 41.87 FEET
EAST OF THE SOUTH WEST CORNER OF LOT 9, TO THE POINT OF INTERSECTION OF THE WEST
LINE OF WEST WATER STREET AND THE NORTH LINE OF LOT 1, BEING APPROXIMATELY 85.70
FEET EAST OF THE NORTH WEST CORNER OF LOT 1 IN BLOCK 44 IN ORIGINAL TOWN OF
CHICAGO IN SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, ACCORDING TO THE MAP OF THE TOWN OF CHICAGO BY JAMES THOMPSON DATED
AUGUST 4, 1830 AND FILED FOR RECORD MAY 29, 1837 AND RECORDED JULY 6, 1837 IN
BOOK H OF MAPS, PAGE 298 AS DOCUMENT 5060 IN COOK COUNTY, ILLINOIS.
A-1
<PAGE> 97
EXHIBIT B TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
PLAN OF PREMISES
----------------
Exhibit B-1: Floor 25
Exhibit B-2: Floor 26
Exhibit B-3: Floor 27
Exhibit B-4: Floor 28
Exhibit B-5: Floor 29
Exhibit B-6: Floor 30
Exhibit B-7: Floor 31
Exhibit B-8: Floor 32
Exhibit B-9: Floor 33
Exhibit B-10: Floor 34
Exhibit B-11: Floor 35
Exhibit B-12: Floor 36
Exhibit B-13: First Floor Common Areas Not Available To Tenant
Exhibit B-14: Rentable S.F. of Building
Exhibit B-15: Parking Spaces
Exhibit B-16: Mezzanine Storage Space
Exhibit B-17: Parts 1, 2, and 3
B-0
<PAGE> 98
EXHIBIT B-1 TO THE OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
FLOOR 25
---------
[EXHIBIT OMITTED]
B-1
<PAGE> 99
EXHIBIT B-2 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 26
---------
[EXHIBIT OMITTED]
B-2
<PAGE> 100
EXHIBIT B-3 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 27
---------
[EXHIBIT OMITTED]
B-3
<PAGE> 101
EXHIBIT B-4 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 28
---------
[EXHIBIT OMITTED]
B-4
<PAGE> 102
EXHIBIT B-5 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 29
---------
[EXHIBIT OMITTED]
B-5
<PAGE> 103
EXHIBIT B-6 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 30
---------
[EXHIBIT OMITTED]
B-6
<PAGE> 104
EXHIBIT B-7 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 31
---------
[EXHIBIT OMITTED]
B-7
<PAGE> 105
EXHIBIT B-8 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 32
---------
[EXHIBIT OMITTED]
B-8
<PAGE> 106
EXHIBIT B-9 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 33
---------
[EXHIBIT OMITTED]
B-9
<PAGE> 107
EXHIBIT B-10 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 34
---------
[EXHIBIT OMITTED]
B-10
<PAGE> 108
EXHIBIT B-11 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 35
---------
[EXHIBIT OMITTED]
B-11
<PAGE> 109
EXHIBIT B-12 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FLOOR 36
---------
[EXHIBIT OMITTED]
B-12
<PAGE> 110
EXHIBIT B-13 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
FIRST FLOOR COMMON AREAS NOT
AVAILABLE FOR USE BY TENANT
---------------------------
[EXHIBIT OMITTED]
<PAGE> 111
EXHIBIT B-14 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
RENTABLE AREA
-------------
<TABLE>
<CAPTION>
Floor Rentable Square Feet
----- --------------------
<S> <C> <C>
36 22,095
35 22,114
34 22,114
33 22,114
32 22,114
31 22,114
30 22,114
29 22,114
28 22,114
27 22,114
26 20,637
25 21,118
24 13,660
23 13,036
22 21,584
21 21,600
20 21,600
19 21,600
18 21,584
17 21,600
16 21,338
15 21,071
14 21,090
Total Rentable
Square Feet
In Tower 482,639
Rentable Square Feet
On Floors 8 thru 13 266,312*
-------
Total Office
Rentable Square Feet
In Building 748,951
First Floor Retail 9,555
-----
Total Rentable
Square Feet
Including Retail 758,506
</TABLE>
* Includes 500 rentable square feet on the 37th floor and 576 rentable
square feet on the 15th floor rented by Illinois Bell as mechanical
space.
B-14
<PAGE> 112
EXHIBIT B-15 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
PARKING SPACES
--------------
[EXHIBIT OMITTED]
B-15
<PAGE> 113
EXHIBIT B-16 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
MEZZANINE STORAGE SPACE
-----------------------
[EXHIBIT OMITTED]
B-16
<PAGE> 114
EXHIBIT B-17 TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
PARTS 1, 2, AND 3
-----------------
Part 1 of the Lease consists of 200,000 square feet of Rentable Area with
199,007 square feet of Rentable Area on floors 28 through 36 and 993 square feet
of Rentable Area on floor 27, located as indicated on Exhibit B-3.
Part 2 of the Lease consists of 30,000 square feet of Rentable Area with 21,121
square feet of Rentable Area on floor 27, located as indicated on Exhibit B-3,
and 8,879 square feet of Rentable Area on floor 26, located as indicated on
Exhibit B-2.
Part 3 of the Lease consists of 32,876 square feet of Rentable Area with 11,758
square feet of Rentable Area on floor 26, located as indicated on Exhibit B-2,
and 21,118 square feet of Rentable Area on floor 25, located as indicated on
Exhibit B-1.
B-17
<PAGE> 115
EXHIBIT C TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
PLANS AND SPECIFICATIONS
------------------------
Plans and Specifications for 100 N. Riverside prepared by Perkins & Will.
<TABLE>
<CAPTION>
DRAWING
NUMBER DESCRIPTION DATE
- ------ ----------- ----
<S> <C> <C>
Cover Sheet 05-02-88
A1-1 Index of Drawings 05-02-88
C1-A Site Utilities Plan 05-02-88
A1-2 Symbols, General Notes 05-02-88
A1-3 Plat of Survey 05-02-88
A1-4 Site Grading & Layout Plan - North 05-02-88
A1-5 Site Grading & Layout Plan - South 05-02-88
A2-1 Park Wall Plan & Elevation - North 05-02-88
A2-2 Park Wall Plan & Elevation - South 05-02-88
A2-3 Plenum Plan - North 05-02-88
A2-4 Plenum Plan - South 05-02-88
A2-5 Partial Level 1 Floor Plan - North 05-02-88
A2-6 Partial Level 1 Floor Plan - South 05-02-88
A2-7 Partial Mezzanine Floor Plan - North 05-02-88
A2-8 Partial Mezzanine Floor Plan - South 05-02-88
A2-9 Partial Ramp Plan 05-02-88
A2-10 Partial Level 3 Floor Plan - North 05-02-88
A2-11 Partial Level 3 Floor Plan - South 05-02-88
A2-12 Partial Level 4 Floor Plan - North 05-02-88
A2-13 Partial Level 4 Floor Plan - South 05-02-88
A2-14 Partial Level 5 Floor Plan - North 05-02-88
A2-15 Partial Level 5 Floor Plan - South 05-02-88
A2-16 Partial Level 6 Floor Plan - North 05-02-88
A2-17 Partial Level 6 Floor Plan - South 05-02-88
A2-18 Partial Level 8 Floor Plan - North 05-02-88
A2-19 Partial Level 8 Floor Plan - South 05-02-88
A2-20 Partial Level 9 & 11 Floor Plan - North 05-02-88
A2-21 Partial Level 9 & 11 Floor Plan - South 05-02-88
A2-22 Partial Level 10 & 12 Floor Plan - North 05-02-88
A2-23 Partial Level 10 & 12 Floor Plan - South 05-02-88
A2-24 Partial Level 13 Floor Plan - North 05-02-88
A2-25 Partial Level 13 Floor Plan - South 05-02-88
A2-26 Level 14 & Roof Plan - North 05-02-88
A2-27 Level 14 & Roof Plan - South 05-02-88
A2-28 Level 15 Floor Plan 05-02-88
A2-29 Level 16 Floor Plan 05-02-88
A2-30 Level 17 -22 Floor Plan 05-02-88
A2-31 Level 23 Floor Plan 05-02-88
A2-32 Level 24 Floor Plan 05-02-88
A2-33 Level 25 Floor Plan 05-02-88
A2-34 Level 26 Floor Plan 05-02-88
A2-35 Level 27 - 35 Floor Plan 05-02-88
A2-36 Level 36 Floor Plan 05-02-88
A2-37 Level 37 and Roof Plan 05-02-88
A2-38 Elevator Machine Room Plan 05-02-88
A2-39 Roof Plans 05-02-88
A2-40 Level 1 Core Plans 05-02-88
A2-41 Mezzanine Core Plan 05-02-88
A2-42 Level 3 Core Plan 05-02-88
A2-43 Level 4 Core Plan 05-02-88
A2-44 Level 5 Core Plan 05-02-88
</TABLE>
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<TABLE>
<S> <C> <C>
A2-45 Level 6 Core Plan 05-02-88
A2-46 Level 8 Core Plan 05-02-88
A2-47 Level 9 & 11 Core Plan 05-02-88
A2-48 Level 10 & 12 Core Plan 05-02-88
A2-49 Level 13 Core Plan 05-02-88
A2-50 Level 14 Core Plan 05-02-88
A2-51 Level 15 Core Plan 05-02-88
A2-52 Level 16 Core Plan 05-02-88
A2-53 Level 17 - 22 Core Plan 05-02-88
A2-54 Level 23 Core Plan 05-02-88
A2-55 Level 24 Core Plan 05-02-88
A2-56 Level 25 Core Plan 05-02-88
A2-57 Level 26 Core Plan 05-02-88
A2-58 Level 27 - 35 Core Plan 05-02-88
A2-59 Level 36 Core Plan 05-02-88
A2-60 South Core Plan Level 1 thru 7 05-02-88
A2-61 South Core Plans Level 8 thru 13 05-02-88
A3-1 East Elevation 05-02-88
A3-2 North and South Elevation 05-02-88
A3-3 West Elevation 05-02-88
A3-4 Longitudinal Building Section 05-02-88
A3-5 Transverse Building Section 05-02-88
A3-6 Partial Longitudinal Building Section - East 05-02-88
A3-8 Partial Elevations 05-02-88
A3-9 Partial Elevations 05-02-88
A3-10 Partial Elevations 05-02-88
A3-11 Partial Elevations 05-02-88
A3-12 Partial Elevations 05-02-88
A3-13 Partial Elevations 05-02-88
A3-14 Partial Elevations 05-02-88
A3-15 Partial Elevations 05-02-88
A3-16 Partial Elevations 05-02-88
A3-17 Partial Elevations 05-02-88
A3-18 Partial Elevations 05-02-88
A3-19 Partial Elevations 05-02-88
A3-20 Partial Elevations 05-02-88
A3-22 Partial Section at Base 05-02-88
A3-23 Partial Section at Base 05-02-88
A3-24 Partial Section at Base 05-02-88
A3-25 Partial Section at Base 05-02-88
A3-26 Partial Section at Base 05-02-88
A3-27 Partial Section at Base 05-02-88
A3-28 Partial Section at Base 05-02-88
A3-29 Partial Section at Base 05-02-88
A3-30 Partial Section at Base 05-02-88
A3-31 Partial Section at Base 05-02-88
A3-32 Partial Section at Base 05-02-88
A3-33 Partial Section at Top Level 14 05-02-88
A3-34 Partial Section at Top Level 14 05-02-88
A3-35 Partial Section at Top 05-02-88
A3-36 Partial Section at Top 05-02-88
A3-37 Partial Section at Top 05-02-88
A3-38 Partial Core Section at Level 23 - 27 05-02-88
A3-39 Partial Section Mechanical Floor 05-02-88
A4-1 Exterior Wall Partial Plans 05-02-88
A4-2 Exterior Wall Partial Plans 05-02-88
A4-3 Exterior Wall Partial Plans 05-02-88
A4-4 Exterior Wall Partial Plans 05-02-88
A4-5 Exterior Wall Sections 05-02-88
A4-6 Exterior Wall Sections 05-02-88
A4-7 Wall Section at Upper Building 05-02-88
A4-9 Typical Curtain Wall Details 05-02-88
A4-10 Typical Curtain Wall Details 05-02-88
A4-11 Typical Storefront Details 05-02-88
</TABLE>
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<TABLE>
<S> <C> <C>
A4-12 Typical Storefront Details 05-02-88
A4-13 Typical Storefront Details 05-02-88
A4-14 Typical Storefront Details 05-02-88
A4-17 Platform Edge Details 05-02-88
A4-18 Misc. Ext. Details 05-02-88
A4-19 Truck Dock, Ramp and Garage Details 05-02-88
A4-20 Truck Dock, Ramp and Garage Details 05-02-88
A4-21 Plaza Details 05-02-88
A4-22 Plaza Details 05-02-88
A4-23 Roof Details 05-02-88
A4-24 Partial Plans at Clock Tower 05-02-88
A4-25 Cooling Tower Enclosure Details 05-02-88
A5-1 Stair No. 1 Section and Stair Details 05-02-88
A5-2 Stair No. 2 Section 05-02-88
A5-3 Stair No. 3/Elev. No. Section 05-02-88
A5-4 Misc. Stair Sections & Details 05-02-88
A5-5 Elevator Section 05-02-88
A5-6 Elevator Section 05-02-88
A5-7 Elevator Section 05-02-88
A5-8 Elevator Section 05-02-88
A5-9 Elevator Entrances Details 05-02-88
A5-10 Plenum Sections 05-02-88
A5-11 Plenum Sections 05-02-88
A5-13 Escalator Plan, Section & Details 05-02-88
A5-24 Typical Floor Core Wall Elevations 05-02-88
A5-26 Toilet Elevation & Tiling Details 05-02-88
A6-1 Partition Types 05-02-88
A6-2 Partition Details 05-02-88
A6-3 Partition Details 05-02-88
A6-4 Partition Details 05-02-88
A6-5 Door Schedule and Details 05-02-88
A6-6 Parking Layout and Signage Schedule 05-02-88
A7-1 Track Level Refl. Ceiling Plan 05-02-88
A7-2 Track Level Refl. Ceiling Plan 05-02-88
A7-8 Refl. Ceiling Plan, Toilet Rooms 8 - 36 05-02-88
A7-10 Plenum Ceiling Details 05-02-88
S2-1 Caisson Plan - North 05-02-88
S2-2 Caisson Plan - South 05-02-88
S2-3 Level 1 Framing Plan - North 05-02-88
S2-4 Level 1 Framing Plan - South 05-02-88
S2-5 Mezzanine Level Framing Plan - North 05-02-88
S2-6 Mezzanine Level Framing Plan - South 05-02-88
S2-7 Level 3 Framing Plan - North 05-02-88
S2-8 Level 3 Framing Plan - South 05-02-88
S2-9 Levels 4 - 5 Framing Plan - North 05-02-88
S2-10 Levels 4 - 5 Framing Plan - South 05-02-88
S2-11 Level 6 Framing Plan - North 05-02-88
S2-12 Level 6 Framing Plan - South 05-02-88
S2-13 Level 8 Framing Plan - North 05-02-88
S2-14 Level 8 Framing Plan - South 05-02-88
S2-15 Level 9 Framing Plan - North 05-02-88
S2-16 Level 9 Framing Plan - South 05-02-88
S2-17 Level 10 - 12 Framing Plan - North 05-02-88
S2-18 Level 10 - 12 Framing Plan - South 05-02-88
S2-19 Level 13 Framing Plan - North 05-02-88
S2-20 Level 13 Framing Plan - South 05-02-88
S2-21 Level 14 Framing Plan - North 05-02-88
S2-22 Level 14 Framing Plan - South 05-02-88
S2-22A Level 14 Roof Truss Framing Plan - South 05-02-88
S2-23 Level 15 - 23 Framing Plan 05-02-88
S2-24 Level 24 Framing Plan 05-02-88
S2-25 Level 25 Framing Plan 05-02-88
S2-26 Level 26 Framing Plan 05-02-88
S2-27 Level 27 - 34 Framing Plan 05-02-88
</TABLE>
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<TABLE>
<S> <C> <C>
S2-28 Level 35 Framing Plan 05-02-88
S2-29 Level 36 Framing Plan 05-02-88
S2-30 Level 37 Framing Plan 05-02-88
S2-31 Level 38 Framing Plan 05-02-88
S2-32 Clock Tower Framing Plans & Details 05-02-88
S3-1 Sections & Details 05-02-88
S3-2 Sections & Details 05-02-88
S3-3 Sections & Details 05-02-88
S3-4 Sections & Details 05-02-88
S3-5 Sections & Details 05-02-88
S3-6 Lowrise Truss Details 05-02-88
S3-7 Lowrise Truss Details 05-02-88
S3-8 Lowrise Truss Details 05-02-88
S3-9 Transfer Truss Details 05-02-88
S3-10 Transfer Trusts Details 05-02-88
S3-11 Moment Connection Details 05-02-88
S3-12 Sections and Details 05-02-88
S3-13 Transfer Girder Bracing Details 05-02-88
S3-14 Section and Details 05-02-88
S3-15 Elevations and Details 05-02-88
S3-16 Transfer Girder Details 05-02-88
S3-17 Sections & Details 05-02-88
S4-1 Beam Schedule and Details 05-02-88
S4-2 Column Schedule and Details 05-02-88
M1.0 Mechanical Symbols and Drawing List 05-02-88
M1.1 Mechanical Equipment Schedule 05-02-88
M1.3 Mechanical Air Riser Diagram 05-02-88
M1.4 Mechanical Water Flow Diagram 05-02-88
M1.5 Sections 05-02-88
M2.PL.1 Platform Plan - North 05-02-88
M2.PL.2 Platform Plan - South 05-02-88
M2.1.1 Partial Level 1 Floor Plan - North 05-02-88
M2.1.2 Partial Level 1 Floor Plan - South 05-02-88
M2.2.1 Partial Mezzanine Floor Plan - North 05-02-88
M2.2.2 Partial Mezzanine Floor Plan - South 05-02-88
M2.3.1 Partial Level 3rd Floor Plan - North 05-02-88
M2.3.2 Partial Level 3rd Floor Plan - South 05-02-88
M2.4.5.6.1 Partial Level 4, 5, & 6 Floor Plan - North 05-02-88
M2.4.5.6.2 Partial Level 4, 5, & 6 Floor Plan - South 05-02-88
M2.8.1 Partial Level 8th Fl. Plan - North 05-02-88
M2.9 & 11.1 Partial Level 9th & 11th Fl. Plan - North 05-02-88
M2.10 & 12.1 Partial Level 10th & 12th Fl. Plan - North 05-02-88
M2.8-12.2 Partial Level 8th Thru 12th Fl. Plan - South 05-02-88
M2.13.1 Partial Level 13th Floor - North 05-02-88
M2.13.2 Partial Level 13th Floor - South 05-02-88
M2.14 Partial Level 14th Floor Plan 05-02-88
M2.15 15th Floor Plan 05-02-88
M2.16 16th Floor Plan 05-02-88
M2.17-22 17th Thru 22nd Floor Plan 05-02-88
M2.23 23rd Floor Plan 05-02-88
M2.24 24th Floor Plan 05-02-88
M2.25 25th Floor Plan 05-02-88
M2.26 26th Floor Plan 05-02-88
M2.27-35 27th Thru 35th Floor Plan 05-02-88
M2.36 36th Floor Plan 05-02-88
M2.37 Penthouse Floor Plan 05-02-88
M3.1 Mechanical Details 05-02-88
PFP1.1 Riser Diagrams Plumbing 05-02-88
PFP1.2 Riser Diagrams 05-02-88
PFP1.3 Riser Diagrams 05-02-88
PFP1.4 Riser Diagrams 05-02-88
PFP1.5 Riser Diagrams 05-02-88
</TABLE>
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<TABLE>
<S> <C> <C>
PFP1.6 Riser Diagrams 05-02-88
PFP1.7 Riser Diagrams 05-02-88
PFP2.PL.1 Plenum Plan North 05-02-88
PFP2.PL.2 Plenum Plan South 05-02-88
PFP2.1.1 Partial Level 1 Floor Plan N 05-02-88
PFP2.1.2 Partial Level 1 Floor Plan S 05-02-88
PFP2.1.3 Partial Level 1 Floor Plan N 05-02-88
PFP2.1.4 Partial Level 1 Floor Plan S 05-02-88
PFP2.2.1 Partial Mezzanine Floor Plan N 05-02-88
PFP2.2.2 Partial Mezzanine Floor Plan S 05-02-88
PFP2.2.3 Partial Mezzanine Floor Plan 05-02-88
PFP2.2.4 Partial Mezzanine Floor Plan 05-02-88
PFP2.3.1 Partial Level 3 Floor Plan N 05-02-88
PFP2.3.2 Partial Level 3 Floor Plan S 05-02-88
PFP2.4.1 Partial Level 4 Floor Plan N 05-02-88
PFP2.4.2 Partial Level 4 Floor Plan S 05-02-88
PFP2.5.1 Partial Level 5 Floor Plan N 05-02-88
PFP2.5.2 Partial Level 5 Floor Plan S 05-02-88
PFP2.6.1 Partial Level 6 Floor Plan N 05-02-88
PFP2.6.2 Partial Level 6 Floor Plan N 05-02-88
PFP2.8-12.1 Partial Level 8 Floor Plan N 05-02-88
Typical For Levels 8 thru 12 05-02-88
PFP2.8-12.2 Partial Level 8 Floor Plan S 05-02-88
Typical For Levels 8 thru 12 05-02-88
PFP2.13.1 Partial Level 13 Floor Plan N 05-02-88
PFP2.13.2 Partial Level 13 Floor Plan S 05-02-88
PFP2.14.1 Partial Level 14 Floor Plan N 05-02-88
PFP2.14.2 Partial Level 14 Floor Plan S 05-02-88
PFP2.15 Level 15 Floor Plan 05-02-88
PFP2.16 Level 16 Floor Plan 05-02-88
PFP2.17-22 Level 17 Thru 22 Floor Plan 05-02-88
PFP2.23 Level 23 Floor Plan 05-02-88
PFP2.24 Level 24 Floor Plan 05-02-88
PFP2.25 Level 25 Floor Plan 05-02-88
PFP2.26 Level 26 Floor Plan 05-02-88
PFP2.27-35 Level 27-35 Floor Plan 05-02-88
PFP2.36 Level 36 Floor Plan 05-02-88
PFP2.37 Level 37 Floor Plan 05-02-88
PFP2.38 Roof Plans 05-02-88
PFP3.1 Symbols & Details 05-02-88
E1.0 Electrical Symbols and Drawing List 05-02-88
E1.1 Electrical Riser Diagram 05-02-88
E1.2 Switchboard Diagrams 05-02-88
E1.3 Panel Schedules 05-02-88
E1.4 Equipment Schedules 05-02-88
E1.5 Telephone & Fire Alarm Riser Diagram 05-02-88
E1.6 Lighting Fixture Schedule 05-02-88
E1.7 Misc. Details 05-02-88
E2.PL.1 Plenum Plan North 05-02-88
E2.PL.2 Plenum Plan South 05-02-88
E2.1.1 1st Floor Plan North 05-02-88
E2.1.2 1st Floor Plan South 05-02-88
E2.2.1 2nd Floor Plan North 05-02-88
E2.2.2 2nd Floor Plan South 05-02-88
E2.2.3 Partial Ramp Plan 05-02-88
E2.3.1 3rd Floor Plan North 05-02-88
E2.3.2 3rd Floor Plan South 05-02-88
E2.4-6.1 4th Thru 6th Floor Plan North 05-02-88
E2.4-6.2 4th Thru 6th Floor Plan South 05-02-88
E2.8-13.1 8th Thru 13th Floor Plan North 05-02-88
E2.8-13.2 8th Thru 13th Floor Plan South 05-02-88
E2.14-1 14th Thru 23rd Floor Plans North 05-02-88
E2.14-2 14th Thru 23rd Floor Plans South 05-02-88
</TABLE>
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<TABLE>
<S> <C> <C>
E2.15 15th Floor Plan 05-02-88
E2.16 16th Floor Plan 05-02-88
E2.17-22 17th Thru 22nd Floor Plan 05-02-88
E2.23 23rd Floor Plan 05-02-88
E2.24 24th Floor Plan 05-02-88
E2.25 25th Floor Plan 05-02-88
E2.26 26th Floor Plan 05-02-88
E2.27-35 27th Thru 35th Floor Plans 05-02-88
E2.36 36th Floor Plan 05-02-88
E2.37 Penthouse Floor Plan 05-02-88
E2.38 Roof Plan 05-02-88
</TABLE>
<TABLE>
<CAPTION>
SPECIFICATION
NUMBER DESCRIPTION DATE
- ------ ----------- ----
DIVISION 1 - GENERAL REQUIREMENTS
---------------------------------
<C> <C> <C>
01010 Summary of Work 03-18-88
01020 Allowances 03-18-88
01030 Field Engineering 03-18-88
01070 Cutting and Patching 03-18-88
01200 Project Meetings 03-18-88
01310 Construction Schedules 03-18-88
01340 Shop Drawings, Product Data and Samples 03-18-88
01380 Photographs 03-18-88
01410 Testing Laboratory Services 03-18-88
01500 Temporary Facilities and Controls 03-18-88
01510 Temporary Utilities 03-18-88
01640 Substitutions and Product Options 03-18-88
01700 Contract Closeout 03-18-88
01710 Cleaning 03-18-88
01720 Record Documents 03-18-88
01730 Operating and Maintenance Data 03-18-88
01740 Warranties and Bonds 03-18-88
DIVISION 2 - SITEWORK
---------------------
02070 Selective Demolition 03-18-88
02110 Site Clearing 03-18-88
DIVISION 3 - CONCRETE
---------------------
03310 Concrete Work 03-18-88
03450 Architectural Precast Concrete 03-18-88
DIVISION 4 - MASONRY
--------------------
04200 Unit Masonry 03-18-88
DIVISION 5 - METALS
-------------------
05120 Structural Steel 03-18-88
05300 Metal Decking 03-18-88
05500 Metal Fabrications 03-18-88
05700 Ornamental Metalwork 03-18-88
DIVISION 6 - WOOD AND PLASTICS
------------------------------
06100 Rough Carpentry 03-18-88
06400 Architectural Woodwork 03-18-88
</TABLE>
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<TABLE>
<CAPTION>
DIVISION 7 - THERMAL AND MOISTURE PROTECTION
-------------------------------------------
<S> <C> <C>
07120 Fluid Applied Waterproofing 03-18-88
07200 Insulation 03-18-88
07250 Sprayed-on Fireproofing 03-18-88
07410 Preformed Metal Siding 03-18-88
07530 Flexible Sheet Roofing System 03-18-88
07570 Traffic Topping 03-18-88
07600 Flashing and Sheet Metal 03-18-88
07800 Roof Accessories 03-18-88
07900 Joint Sealers 03-18-88
DIVISION 8 - DOORS AND WINDOWS AND GLASS
----------------------------------------
08114 Custom Hollow Metal Work 03-18-88
08210 Wood Doors 03-18-88
08305 Access Doors 03-18-88
08330 Overhead Coiling Doors 03-18-88
08410 Aluminum Entrances and Storefronts 03-18-88
08470 Revolving Doors 03-18-88
08700 Builders Hardware 03-18-88
08720 Door Operators 03-18-88
08800 Glass and Glazing 03-18-88
08900 Curtain Wall 03-18-88
DIVISION 9 - FINISHES
---------------------
09200 Lath and Plaster 03-18-88
09250 Gypsum Drywall 03-18-88
09270 Drywall Shaft Systems 03-18-88
09300 Tile 03-18-88
09510 Acoustical Ceilings 03-18-88
09600 Interior Stonework 03-18-88
09650 Resilient Flooring 03-18-88
09760 Fluid Applied Waterproofing Flooring 03-18-88
09900 Painting 03-18-88
DIVISION 10 - SPECIALTIES
-------------------------
10160 Toilet Partitions 03-18-88
10200 Louvers and Vents 03-18-88
10410 Directories and Lobby Specialties 03-18-88
10440 Specialty Signs 03-18-88
10550 Postal Specialties 03-18-88
10750 Telephone Enclosure 03-18-88
10800 Toilet and Bath Accessories 03-18-88
10830 Mirror Units 03-18-88
DIVISION 11 - EQUIPMENT
-----------------------
11070 Tower Clocks 03-18-88
11160 Loading Dock Equipment 03-18-88
DIVISION 12 - FURNISHINGS
-------------------------
12670 Entrance Mats 03-18-88
DIVISION 14 - CONVEYING SYSTEMS
-------------------------------
14200 Elevators and Escalators 03-18-88
Vertical Transportation Maintenance
Agreement 03-18-88
</TABLE>
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<TABLE>
<CAPTION>
DIVISION 15 - MECHANICAL
------------------------
<S> <C> <C>
15010 Basic Mechanical Requirements 03-18-88
15020 Shop Drawings, Product Data & Samples 03-18-88
15060 Pipe & Fittings 03-18-88
15100 Valves 03-18-88
15120 Piping Specialties 03-18-88
15140 Supports and Hangers 03-18-88
15160 Miscellaneous Equipment and Work 03-18-88
15170 Motors 03-18-88
15190 Mechanical Identification 03-18-88
15240 Mechanical Sound and Vibration Control 03-18-88
15250 Mechanical Insulation 03-18-88
15300 Fire Protection 03-18-88
15360 Carbon Dioxide Extinguishing System 03-18-88
15365 Halogen Agent Extinguishing System 03-18-88
15370 Dry Chemical Extinguishing Systems 03-18-88
15410 Plumbing Piping 03-18-88
15420 Plumbing - Outside Utilities 03-18-88
15430 Plumbing Specialties 03-18-88
15440 Plumbing Fixtures 03-18-88
15450 Plumbing Equipment 03-18-88
15480 Special Systems 03-18-88
15490 Medical Gas Systems 03-18-88
15510 Hydronic Piping 03-18-88
15520 Steam and Steam Condensate Piping 03-18-88
15540 HVAC Pumps 03-18-88
15550 Heat Generation 03-18-88
15670 Refrigeration - Condensing Units 03-18-88
15680 Refrigeration Water Chillers 03-18-88
15710 Cooling Towers 03-18-88
15750 Heat Transfer 03-18-88
15780 Packaged Air Conditioners 03-18-88
15850 Air Handling 03-18-88
15885 Air Filters 03-18-88
15890 Ductwork 03-18-88
15910 Ductwork Accessories 03-18-88
15930 Air Terminals 03-18-88
15950 Temperature Controls 03-18-88
15990 Testing, Balancing, and Adjusting 03-18-88
DIVISION 16 - ELECTRICAL
------------------------
16010 General Provisions 03-18-88
16100 Basic Materials and Methods 03-18-88
16400 Service and Distribution 03-18-88
16450 Grounding 03-18-88
16500 Lighting 03-18-88
16610 Lighting 03-18-88
16620 Special Systems - Emergency Power
Supply Sys. 03-18-88
16700 Communication Systems
16723 High Rise Fire Alarm and Life
Safety System 03-18-88
16729 Access Control/Monitor System 03-18-88
16740 Telephone System 03-18-88
16760 Intercom System 03-18-88
16780 Closed Circuit Television System 03-18-88
16850 Electric Heating 03-18-88
</TABLE>
The above specifications prepared by Perkins & Will Architects, Chicago,
Illinois.
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<PAGE> 123
EXHIBIT D TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
WORK LETTER
-----------
1. Definitions. Terms which are defined in the Lease shall have the same
meanings when used in this Work Letter. In addition, the following terms shall
have the following meanings:
(a) "ADDITIONAL PLANS" means all plans and specifications (other
than System Plans) necessary to construct and complete any item of Extra Work
that is not shown on the Tenant Improvement Plans.
(b) "EXTRA WORK" means all work pursuant to this Work Letter that
is other than and in addition to Landlord's Work and all work that results from
a change in the Tenant Improvement Plans.
(c) "LANDLORD'S CONTRACTOR" means the contractor(s) hired by
Landlord to perform the work to be performed by Landlord under this Work Letter.
(d) "LANDLORD'S ESTIMATE" means, with respect to any Extra Work,
a written proposal which shall set forth the cost of Extra Work to be performed.
(e) "LANDLORD'S WORK" means the work to be performed by Landlord
in the Premises in accordance with the Tenant Improvement Plans.
(f) "NON-STANDARD ITEMS" means items not described in the Plans
and Specifications listed on Schedule 1 attached hereto or not designated by
Landlord as being standard in the Building on the building standard
specification delivered to Tenant.
(g) "SPACE PLANS" means plans, drawings, and specifications
showing the intended design, character, and finishes of the Premises, including
partition and door locations and security systems.
(h) "SYSTEM PLANS" means working drawings and specifications
consistent with the Working Plans for the mechanical, sprinkler, heating, air
conditioning, electrical, life/safety, telephone conduit and pullboxes and
plumbing systems in the Premises.
(i) "TENANT DELAY" shall have the meaning specified in Paragraph
4 below.
(j) "TENANT IMPROVEMENT PLANS" means the System Plans and the
Working Plans.
(k) "WORKING PLANS" means the final working plans and
specifications (other than the System Plans) for the work to be performed in the
Premises so as to make the Premises ready for occupancy by Tenant, which Working
Plans shall be based upon and consistent with the Space Plans approved by
Landlord, and shall contain sufficient detail and shall be otherwise suitable in
all
D-1
<PAGE> 124
respects for submission to the Building Department of the City of Chicago to
obtain a building permit.
2. Preparation and Approval of Tenant Improvement Plans.
(a) Tenant has previously submitted to Landlord and Landlord has
approved the Space Plans identified on Schedule 1. Landlord has on the date
hereof provided Tenant with a written notice as to any materials indicated on
the Space Plans which Landlord reasonably believes should be ordered prior to
the date for delivery of the Working Plans ("SPECIAL MATERIALS") and Landlord's
anticipated order date for any such Special Materials. Between the date hereof
and sixty (60) days prior to the date on which Tenant is required to deliver the
Working Plans to Landlord as provided in Paragraph 2(b) below for such portion
of the Premises, Tenant may from time to time revise the Space Plans for such
portions of the Premises in a fashion consistent with the scope, nature and
quality of the Space Plans and shall deliver such revised Space Plans to
Landlord. Within thirty (30) days after Landlord has received such revised Space
Plans, Landlord shall notify Tenant of Landlord's approval or disapproval
thereof, and in the event of disapproval Landlord shall specify the reasons for
such disapproval, which disapproval shall be based only upon Landlord's
reasonable judgment that such revised Space Plans are inconsistent with the
scope, nature and quality of the Space Plans or involve in the aggregate
components, equipment or improvements which are not substantially comparable to
those specified in the original Space Plans. Failure of Landlord to respond
within such thirty (30) day period shall be deemed to constitute Landlord's
acceptance of such revised Space Plans. Landlord shall also identify any new
Special Materials that are first indicated on any revised Space Plans and shall
indicate the order date that Landlord anticipates will be required for such new
Special Materials and the extent of any reasonably anticipated Tenant Delay
which would result from the use of such new Special Materials. Landlord shall
also provide Tenant with Landlord's best estimate of the anticipated cost of
changing any Special Materials after they have been ordered and proceeding with
the revised Space Plans even though Landlord has properly disapproved them as
provided for above. Such estimates shall be considered Landlord's "SPACE PLAN
SUBMISSIONS." Tenant may within fifteen (15) days after Landlord properly
notifies Tenant of disapproval thereof elect to (1) cause such revised Space
Plans to be further revised and resubmitted to Landlord for Landlord's review
and approval, or (2) notify Landlord to proceed based upon the revised Space
Plans as submitted, in which case the revisions that Landlord has disapproved
shall after Tenant's acceptance of Landlord's Space Plan Submissions (or to the
extent determined by the decision of the arbitrator as hereinafter described)
constitute Extra Work. Landlord's Architect and Tenant's Space Planner shall
attempt to resolve any disputes that may arise regarding any requested revisions
to the Space Plans. If they are unable to resolve such dispute, within ten (10)
days of a written request from either party, either party may submit any
unresolved questions to arbitration pursuant to Paragraph 33 of the Lease.
If Tenant elects to change any Special Materials after the anticipated
order date and after Landlord has actually placed an order for such Special
Materials, Tenant shall bear any cancellation costs suffered by Landlord in
connection with any such change of Special Materials, or in the event Landlord
is unable to cancel such order after using all reasonable efforts, Tenant
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shall pay to Landlord the actual cost of such Special Materials, minus the
reasonable salvage value of such Special Materials.
(b) Tenant hereby agrees to cause to be prepared by Tenant's
Space Planner and will submit to Landlord for Landlord's review and approval,
the Working Plans on or before those dates listed on Schedule 2 for the areas of
the Premises listed.
(c) Within thirty (30) days after Landlord has received the
Working Plans, Landlord shall notify Tenant of Landlord's approval or
disapproval thereof, and in the event of disapproval Landlord shall specify the
reasons for such disapproval, which disapproval shall be based only upon factors
relating to the structural integrity of the Building, Building utility or
mechanical systems, unavailability of materials not shown in the Space Plans or
applicable laws or the fact that the Working Plans are not based upon or
consistent with the Space Plans or require Non-Standard Items. Failure of
Landlord to respond within such thirty (30) day period shall be deemed to
constitute Landlord's acceptance of such Working Plans. If Landlord has properly
refused to approve the Working Plans, Tenant may elect to (1) cause the Working
Plans to be revised and resubmitted to Landlord for Landlord's review and
approval, or (2) notify Landlord to proceed with Working Plans as submitted, in
which case the portions of the Working Plans that Landlord has disapproved shall
after Tenant's acceptance of Landlord's Extra Work Submissions (as defined in
Paragraph 3(c) below) constitute Extra Work.
(d) Landlord shall cause the System Plans to be prepared and
completed in a timely fashion in coordination with the Working Plans.
(e) Neither review nor approval by Landlord of the Working Plans,
or any Additional Plans shall constitute a representation or warranty by
Landlord that the portion of the Premises included in such plans are complete or
suitable for their intended purpose. Landlord shall exercise reasonable skill
and diligence in reviewing such plans and shall promptly notify Tenant of any
errors or inconsistencies in such plans that Landlord shall discover.
(f) Tenant shall be responsible to see that the Working Plans
comply with all applicable laws, ordinances, codes and regulations.
Notwithstanding the foregoing, Landlord shall be responsible to see that the
System Plans comply with all applicable laws, ordinances, codes and regulations.
Landlord shall secure at its expense all necessary building occupancy and other
permits, licenses, approvals and inspections for Landlord's Work. To the extent
reasonably required and as such assistance may relate to the Working Plans and
Additional Plans, Tenant's Space Planner shall assist Landlord in securing
necessary permits, licenses and approvals.
3. Performance of Landlord's Work.
(a) After approval of the Working Plans, Landlord shall cause
Landlord's Contractor to perform Landlord's Work and all Extra Work. All of
Landlord's Work shall be performed by Landlord's Contractor at Landlord's sole
cost and expense except as otherwise indicated on the Space Plans. All Extra
Work that Tenant requests Landlord to perform shall be performed by Landlord's
Contractor at Tenant's expense. Tenant shall not be required to pay any profit,
supervision, overhead, general conditions or other such fees to Landlord in
connection with
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Extra Work and Tenant shall be charged for Extra Work at Landlord's bona fide
out-of-pocket cost. Tenant shall be entitled to verify the costs of Extra Work
from Landlord's records and with the persons performing such Extra Work. All
work performed on the Premises by Landlord or Landlord's Contractor shall be
done in a first-class workmanlike manner using only specified grades of material
in accordance with the Tenant Improvement Plans, Additional Plans, and Extra
Work requests and in accordance with the requirements of this Work Letter.
Tenant and its consultants and agents including but not limited to Tenant's
Space Planner shall have the right to observe the construction and installation
of the Landlord's Work and any Extra Work from time to time as Tenant deems
appropriate, provided, however, that they shall not interfere with any such Work
and shall have only those rights regarding any such work as are specifically
provided herein.
(b) If Tenant requests the performance of Extra Work that is not
shown on the Tenant Improvement Plans and that requires the development of
Working Plans to enable it to be constructed, Tenant shall cause to be prepared
and delivered to Landlord for Landlord's review and approval Additional Plans
for such Extra Work. Tenant's notice to Landlord shall specify the period within
which Tenant desires Landlord to respond to such Additional Plans, which time
period shall be a reasonable time considering the scope of the Extra Work
proposed by such Additional Plans. If Landlord shall not object to such time
period or the plans submitted within such period, such Additional Plans shall be
deemed approved by Landlord. Landlord may not object to the time period if it
shall be thirty (30) days or more and shall specify in any objection to the time
period what date Landlord asserts is a reasonable date to respond to such plans.
In the event of disapproval of any such Additional Plans by Landlord, Landlord
shall specify the reasons for such disapproval, which disapproval shall be based
only upon factors relating to the structural integrity of the Building, Building
utility or mechanical systems, or applicable laws. Tenant shall cause such
Additional Plans, if objected to by Landlord, to be revised and resubmitted to
Landlord for Landlord's review and approval within fifteen (15) days after
Landlord properly notifies Tenant of disapproval thereof, with a notice that
such plans are deemed approved unless objected to within ten (10) days of
receipt by Landlord. In the event that Landlord fails to notify Tenant of
Landlord's approval or disapproval within said ten (10) day period, it shall be
deemed that Landlord has approved the Extra Work and that the Extra Work shall
not cause any Tenant Delay.
(c) If Landlord notifies Tenant that Landlord approves the Extra
Work and the Additional Plans for Extra Work (if any), or if it is deemed that
Landlord approves the Extra Work and the Additional Plans for Extra Work as set
forth above, Landlord shall deliver to Tenant within ten (10) days of such
approval (i) Landlord's Estimate, and (ii) a statement setting forth whether, in
Landlord's reasonable judgment, the performance of the requested Extra Work will
cause a Tenant Delay, and Landlord's opinion of the length of the Tenant Delay
(the foregoing items being together called "LANDLORD'S EXTRA WORK SUBMISSIONS").
Tenant shall have seven (7) days to give Landlord notice of Tenant's approval or
disapproval of Landlord's Extra Work Submissions. In the event Tenant disagrees
with Landlord's Extra Work Submissions within the above seven-day period, the
parties shall use all reasonable efforts to agree as to what is appropriate as
to Landlord's Estimate and as respects any anticipated delay. If agreement
cannot be reached within five (5) business days Tenant may (i) abandon such
Extra Work, (ii) agree to pro-
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ceed reserving the right to submit the issue of Tenant Delay to arbitration; or
(iii) proceed as set forth in the following paragraph.
Notwithstanding the foregoing, Tenant may, within the seven-day
period after the receipt of Landlord's Extra Work Submissions, give notice to
Landlord that Tenant elects to cause the Additional Plans to be revised so as to
reduce the cost of, or the Tenant Delay resulting from, the performance of the
Extra Work in question, in which event Tenant shall cause such revisions to be
made and Tenant shall cause the revised Additional Plans, if any, to be
submitted to Landlord for Landlord's approval in accordance with the provisions
of Paragraph 3(b) of this Work Letter.
(d) Landlord shall be responsible for preparing System Plans for
all Extra Work and for securing all permits, licenses, inspections and approvals
required in connection with any Extra Work. Tenant shall be responsible to see
that the Additional Plans (other than Systems Plans for Extra Work which shall
be Landlord's responsibility) comply with all applicable laws, ordinances, codes
and requirements. Landlord shall bill Tenant for Extra Work (including work
shown on the System Plans prepared for the Extra Work) at Landlord's cost, as
performed, not more often than monthly. All costs of Extra Work shall be paid
for by Tenant within thirty (30) days after receipt of Landlord's invoice
therefor. Tenant shall reimburse Landlord for the out-of-pocket costs of changes
to or new System Plans required as a result of Extra Work.
4. Tenant Delays. The number of days of delay in Substantial Completion
of the Premises arising, directly or indirectly, out of or on account of any of
the following events shall constitute "TENANT DELAYS":
(a) Tenant's failure to furnish Working Plans based upon or
consistent with the Space Plans on or before the applicable dates set forth in
Paragraph 2(a) hereof; or
(b) Tenant's failure to deliver, or revise and deliver, the
Working Plans or any of the Additional Plans required from Tenant after Landlord
has properly disapproved Working Plans or Additional Plans within the applicable
times specified in Paragraphs 2(b) or 3(b) (as applicable) hereof; or
(c) Any delay resulting from Tenant's revision of the Tenant
Improvement Plans or Additional Plans unless expressly provided to the contrary
herein or in any other agreement by Landlord; or
(d) The approval by Tenant of any estimate of Tenant Delay made
by Landlord under Paragraph 2(a) and 3(c) above but only to the extent such
Extra Work causes a delay up to the amount of the estimate; or
(e) Any delay resulting from the performance in a timely fashion
consistent with the construction schedule of any work by Tenant or any person,
firm, or corporation employed by Tenant, or designated by Tenant pursuant to any
right granted to Tenant hereunder; or
(f) Any delay caused by Tenant's failure to provide in a timely
fashion clarification of any errors, inconsistency or omission in the Working
Drawings or Additional Plans or informa-
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tion regarding any errors, inconsistency or omission in the Working Plans or
Additional Plans, requested by Landlord in writing and reasonably required for
completion of construction; or
(g) Any delay caused by Tenant's failure to provide in a timely
fashion, but in no event less than five (5) business days after written notice
from Landlord, substitutions for materials which Landlord and Tenant agree are
not available; or
(h) Any delay caused by Tenant's failure to provide on or before
the dates identified in the construction schedule, after the date of delivery of
the Working Plans, those items to be supplied by Tenant which must be interfaced
with Landlord's Work; or
(i) Any delay caused by Tenant's failure to provide in a timely
fashion but in no event less than five (5) business days after written notice
from Landlord, any information directly related to Landlord's Work required by
this Lease or to do any other act required by this Lease directly related to
Landlord's Work.
Landlord shall promptly provide Tenant with written notice of any matters that
it claims could give rise to Tenant Delays and absent such notice within thirty
(30) days after Landlord knows or with the exercise of reasonable care should
have known of any right to claim Tenant Delay for any such matter, such claim
shall be waived. In each and every case of Tenant Delay or claimed Tenant Delay,
Landlord shall be obligated to take reasonable measures to mitigate the extent
of delay caused by Tenant Delay or any costs associated with Tenant Delay. If
the parties cannot agree as to the extent of delay caused by Extra Work either
party may submit the issue of Tenant Delay to arbitration under Paragraph 33 of
the Lease.
5. Substitution. For purposes of this Work Letter, plans shall be
considered to be consistent with previously submitted plans if they shall
contain substantially comparable amounts or types of work of substantially
similar quality and design and with substantially similar components and
equipment. Reductions in overall quantities or quality of improvements,
components or equipment shall be permitted at the option of Tenant. As changes
to Landlord's Work shall be made which involve any such reductions Landlord and
Tenant shall agree upon the savings accomplished from such changes. To the
extent that Landlord's Work in the Premises as finally constructed shall on an
overall basis involve such reductions in costs with respect to any portion of
Landlord's Work which are not absorbed by increases in costs resulting from
Extra Work, Tenant shall be entitled to receive an increase in the Allowance
amount provided for under this Work Letter. Should Tenant and Landlord be unable
to agree upon the amount, if any, of such increased Allowance, the issue shall
be submitted to arbitration pursuant to Paragraph 33 of the Lease.
6. Tenant's Access to the Premises. Landlord shall permit Tenant and
Tenant's agents and contractors that have been approved by Landlord to enter the
respective floors of the Premises prior to Substantial Completion of such floors
in order that Tenant may do work other than Landlord's Work as may be required
by Tenant to make the Premises ready for Tenant's use and occupancy thereof,
provided that Tenant shall fully perform and comply with each of the following
covenants, conditions and requirements:
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(a) If Tenant makes such entry prior to the Substantial
Completion date for any floor of the Premises, then Tenant's continued right to
such access is conditioned upon Tenant and Tenant's agents, contractors,
workmen, mechanics, suppliers and invitees, working in harmony and not
interfering with Landlord and Landlord's agents in doing Landlord's Work in said
Premises or work for other tenants and occupants of the Building; and if at any
time such entry shall in the reasonable judgment of Landlord cause or threaten
to cause interference, Landlord shall have the right to prohibit such access
upon twenty-four (24) hours written notice, until the cause of the interference
has been corrected.
(b) Tenant agrees that any such entry into the Premises shall be
deemed to be under all of the terms, covenants, conditions, and provisions of
the Lease except as to the covenant to pay Base Rent and Additional Rent. Tenant
shall require all entities performing work on behalf of Tenant to provide
protection for existing improvements to an extent that is reasonably
satisfactory to Landlord and from and after such date as Tenant takes possession
of the Premises or any portion thereof, Tenant shall allow Landlord access to
the Premises or such portion thereof, for inspection purposes. In the event any
entity performing work on behalf of Tenant or Tenant causes any damage to the
property of others, Tenant shall cause such damage to be repaired at Tenant's
expense and if Tenant fails to cause such damage to be repaired promptly upon
demand therefor, Landlord may in addition to any other rights or remedies
available under this Lease or at law or equity cause such damage to be repaired,
in which event Tenant shall promptly upon demand pay to the other party the cost
of such repairs.
(c) All contractors and subcontractors shall use only those
service corridors and service entrances reasonably designated by Landlord for
ingress and egress of personnel; and the delivery and removal of equipment and
material through or across any other common areas shall only be with the written
approval of Landlord which shall not be unreasonably withheld or delayed and
during hours reasonably determined by Landlord. Landlord shall have the right to
order Tenant or any contractor or subcontractor who violates the above
requirements to cease work and to remove it, its equipment, and its employees
from the Building;
(d) During the performance of any Tenant's work pursuant to this
Paragraph 6, Landlord shall provide trash removal service for an additional fee
equal to Landlord's out-of-pocket costs to provide such service. Tenant and
Tenant's contractors shall accumulate their trash in containers supplied by
Landlord. Tenant shall cause each entity employed by it to perform work on the
Premises to abide by the provisions of this Work Letter as to the storage of
trash and shall require each such entity to use reasonable efforts to perform
its work in a way that dust or dirt is contained entirely within the Premises
and not within any other portion of the Building and shall cause Tenant's
general contractor to leave any affected part of the Premises broom clean at the
conclusion of the work; and
(e) Tenant agrees that all services and work performed on the
Premises by, on behalf of, or for the account of Tenant, other than Landlord's
Work and any other work performed by Landlord and Landlord's Contractor, shall
be done in accordance with the terms of the Lease including this Work Letter.
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7. Acceptance of Work. Landlord shall give Tenant or shall cause
Landlord's Architect to give Tenant ten (10) days prior written notice of the
date on which the work to be performed by Landlord hereunder on any full floor
portion of the Premises shall realize Substantial Completion, as provided in
Paragraph 3.B of the Lease. Tenant shall then have the obligation to conduct an
inspection of the Premises with Landlord or Landlord's representatives on the
date specified by Landlord or within two (2) business days thereafter and to
give Landlord, within seven (7) days from such inspection, a Punch List of all
items to be completed and/or corrected. If such inspection is not made by
Tenant, or as to any items not on such Punch List the Premises or portion
thereof in question shall be deemed accepted by Tenant, subject to latent
defects that shall remain as Landlord's obligation. Landlord shall promptly and
diligently correct any item on said Punch List within a reasonable period of
time after the Substantial Completion of the particular floor of the Premises in
question but not later than sixty (60) days after receipt of the Punch List for
the particular floor of the Premises in question, subject to Unavoidable Delay.
The agreed determination of Landlord and Tenant shall be final, conclusive, and
binding on the parties as to whether the Premises is Substantially Completed. If
they cannot reach agreement then such issue may be submitted to arbitration by
either party hereto, pursuant to Paragraph 33 of the Lease.
8. Miscellaneous.
(a) Landlord hereby appoints Michael McCullough and Tenant hereby
appoints R. Price Lindsay as their respective representatives in connection with
the matters set forth in this Work Letter and such persons shall have full
authority and responsibility to act on behalf of Landlord and Tenant, as the
case may be, as required herein. Each party shall inform the other in writing of
any change in its representative.
(b) Except as expressly set forth herein and in the Lease and
Collateral Agreement, Landlord has no other agreement with Tenant and has no
other obligation to do any other work or pay any amounts with respect to the
Premises. Any other work in the Premises that may be permitted by Landlord
pursuant to the terms and conditions of the Lease shall be done at Tenant's sole
cost and expense and in accordance with the terms and conditions of this Work
Letter and the Lease.
(c) Except to the extent Tenant exercises its option to rent Part
4 under the Lease, this Work Letter shall not be deemed applicable to any
additional space added to the original Premises at any time or from time to
time, whether by any options under the Lease or otherwise, or to any portion of
the original Premises or any additions thereto in the event of a renewal or
extension of the initial term of the Lease, whether by any options under the
Lease or otherwise, unless expressly so provided in the Lease or any amendment
or supplement thereto.
(d) Except for matters that are being arbitrated pursuant to the
Lease, the failure by Tenant to pay any monies due Landlord pursuant to this
Work Letter within fifteen (15) business days after written notice of the time
period herein stated shall be deemed a default under the terms of the Lease for
which Landlord shall be entitled to exercise all remedies available to Landlord
for nonpayment of Base Rent, Additional Rent and any other sum required to be
paid by Tenant under the Lease. All
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late payments (and all refund rights of Tenant) shall bear interest pursuant to
Paragraph 28.B. of the Lease.
(e) This Work Letter is expressly made a part of the Lease and is
subject to each and every term and condition thereof, including without
limitation, the limitations of liability set forth therein.
(f) Tenant shall be solely responsible to determine at the site
all dimensions of the Premises and the Building that affect any work to be
performed by Tenant hereunder.
(g) To the fullest extent permitted by law, Landlord shall defend
and indemnify and hold harmless Tenant, Tenant's Space Planner, and their agents
and employees from and against all claims, damages, losses and expenses,
including but not limited to attorneys' fees, arising out of or resulting from
the performance of Landlord's Work, Extra Work, and any other work performed by
Landlord under this Work Letter, provided that any such claim, damage, loss or
expense (1) is attributable to bodily injury, sickness, disease or death, or to
injury to or destruction of tangible property (other than any Work itself)
including the loss of use resulting therefrom, and (2) is caused by any
negligent act or omission of Landlord, Landlord's Contractor, any
sub-contractor, anyone directly or indirectly employed by any of them or anyone
for whose acts any of them may be liable. In any and all claims against Tenant,
Tenant's Space Planner, or their agents or employees by any employee of
Landlord, Landlord's Contractor, any sub-contractor, anyone directly or
indirectly employed by any of them or anyone for whose acts any of them may be
liable, the foregoing indemnification shall not be limited in any way by any
limitation on the amount or type of damages, compensation or benefits payable by
or for Landlord, Landlord's Contractor or any sub-contractor under workers' or
workman's compensation acts, disability benefits or other employee benefit acts.
(h) To the fullest extent permitted by Law, Tenant shall defend
and indemnify and hold harmless Landlord, Landlord's Architect, and their agents
and employees from and against all claims, damages, losses and expenses,
including but not limited to attorneys' fees, arising out of or resulting from
the performance of work by Tenant under Paragraph 6 of the Work Letter, provided
that any such claim, damage, loss or expense (1) is attributable to bodily
injury, sickness, disease or death, or to injury or to destruction of tangible
property (other than any Work itself) including the loss of use resulting
therefrom, and (2) is caused by any negligent act or omission of, Tenant,
Tenant's contractor, any sub-contractor, anyone directly or indirectly employed
by any of them or anyone for whose acts any of them may be liable. In any and
all claims against Landlord, Landlord's Architect, or their agents or employees
by any employee of Tenant, Tenant's contractor, any sub-contractor, anyone
directly or indirectly employed by any of them or anyone for whose acts any of
them may be liable, the foregoing indemnification shall not be limited in any
way by any limitation on the amount or type of damages, compensation or benefits
payable by or for Tenant, Tenant's contractor or any sub-contractor under
worker's or workman's compensation acts, disability benefits or other employee
benefit acts.
(i) Notwithstanding anything to the contrary provided herein or
in the Lease, Landlord, as soon as practicable shall furnish to Tenant and
Tenant's Space Planner in writing the
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names of the persons or entities, including Landlord's Contractor and any
subcontractors or suppliers proposed for the millwork for the executive floor,
included in Landlord's Work and for each of the principal portions of any Extra
Work, including any items of major equipment to be included in Extra Work.
Tenant may within ten (10) days after receipt of said writing (1) suggest
additional names of persons or entities proposed by Tenant for any principal
portion of any Extra Work and for the millwork included in Landlord's Work for
the executive floor or (2) reply to Landlord in writing whether or not Tenant or
Tenant's Space Planner, after due investigation, have reasonable objection to
any such proposed person or entity or supplier or equipment. Failure of Tenant
or Tenant's Space Planner to reply within such ten (10) day period shall
constitute notice of no reasonable objection. Landlord and Landlord's Contractor
shall not contract with any such proposed person or entity for the executive
floor millwork, any Extra Work or any equipment to whom Tenant or Tenant's Space
Planner have made reasonable objection. If Tenant or Tenant's Space Planner have
reasonable objection to any such proposed person, entity, supplier or equipment,
Landlord or Landlord's Contractor shall submit a substitute to whom Tenant or
Tenant's Space Planner have no reasonable objection. Each such proposed person
or entity for the millwork, any Extra Work or any equipment included in Extra
Work shall be originally selected by Landlord and Landlord's Contractor on the
basis of competitive pricing (unless waived by Tenant in writing after notice
from Landlord of a proposed price for such Extra Work), which competitive
pricing shall be furnished in writing to Tenant and subject to Tenant's
reasonable objection within ten (10) days from Tenant's receipt thereof;
provided, however, in the event that Tenant elects to waive competitive pricing
as the basis for final selection of the entity or person for the millwork for
the executive floor, Tenant shall pay the difference between the higher bid
chosen by Tenant and the most competitive bid on which Tenant has not delivered
notice of reasonable objection as provided above.
9. Allowance. At and after the date of the Lease, Landlord shall provide
Tenant with an allowance in the amount of Four Million One Hundred Ten Thousand
Dollars ($4,110,000) to be used by Tenant as Tenant shall in its discretion
determine in connection with its construction, fixturing, equipping and
occupancy of the Premises, limited to moving related expenses and fees and
expenses of Tenant's Space Planner as set forth in Paragraph 30.A. of the Lease
and the purchase and installation of those items described Schedule 3 to this
Work Letter (the "ALLOWANCE"). The Allowance shall be in addition to all of the
Landlord's Work to be performed by Landlord and all other sums due or
obligations of Landlord under the Lease or the Work Letter. At Tenant's sole
discretion (i) the Allowance shall be applied against the cost of any Extra
Work, upon delivery of invoices, contractor sworn statements and lien waivers or
(ii) the Allowance shall be paid out to Tenant from time to time within
forty-five (45) days of Tenant's notice requesting such payment; provided,
however, that upon written notice from Landlord to Tenant within ten (10) days
of Tenant's notice, Landlord may elect to defer payment of the Allowance to a
date not later than the anticipated date on which Landlord would be entitled to
payment of the Allowance from the Construction Loan for the Building. The
foregoing right to defer the payment of the allowance amount relating to the
telephone switch shall be on the condition that Landlord shall be responsible
for any price increases in such telephone switch unless prior to the expiration
of Tenant's forty-five day notice, Landlord shall deliver to Tenant an
unconditional irrevocable letter of credit, in an amount equal to the
cancellation charge which Tenant shall
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be required to pay to the vendor of the telephone switch if the order for such
telephone switch is cancelled by Tenant from a bank reasonably acceptable to
Tenant, and with an expiration date thirty (30) days after the anticipated
deferred payment date. Tenant shall be entitled to designate which items of such
equipment and installation shall be paid for with the Allowance in whole or in
part. To the extent that the Allowance is utilized along with funds provided by
Tenant to purchase equipment or items which are not leasehold improvements the
ownership rights to any such items shall be reasonably allocated between
Landlord and Tenant based on respective contributions; and the Landlord and
Tenant shall to the extent practicable attempt to avoid common ownership and
identify such specific items as being owned separately.
10. Conditions.
(a)(i) The Landlord in performing the Landlord's Work or any
Extra Work shall be subject to those Conditions set forth in Schedule 4 to this
Work Letter (the "Conditions"). Such Conditions shall govern and control
Landlord's obligation to Tenant notwithstanding any other existing agreements of
Landlord.
(ii) Notwithstanding any other provisions of the Work Letter or
of the Tenant Improvement Plans or Additional Plans to the contrary, Tenant's
Space Planner shall review all required submittals provided for with respect to
any Landlord's Work or Extra Work for conformance with the Space Plans and
design intent of such plans.
(iii) References in the Tenant Improvement Plans or Additional
Plans to General Conditions or Supplementary General Conditions shall be read to
refer to those Conditions set forth in Schedule 4.
(b) With respect to Extra Work Landlord covenants and agrees that
no General Contractor profit, supervision, hoisting, overhead or general
conditions fees or similar charges shall be incurred in connection with the
Extra Work without the prior written consent of Tenant, and any such fees or
charges shall not be in excess of such fees being charged by the Contractor in
question for any extra work being done by such Contractor for Landlord. With
respect to those items listed on Schedule 3 to this Work Letter, to the extent
that Tenant contracts for such items directly with the supplier or installer
there shall be no General Contractor profits, fees, supervision, overhead or
general conditions fees or similar charges. Any trash removal charges pursuant
to Paragraph 6(d) or hoisting costs relating to Extra Work or work being done
for Tenant by entities as permitted under Paragraph 6 of this Work Letter shall
be payable based upon the reasonable direct out-of-pocket costs of the General
Contractor. Hoisting charges for materials for work done by Tenant shall be due
on the same basis as all other subcontractors in the Building and Tenant shall
not be required to pay hoisting charges for personnel.
(c) Landlord and Tenant shall each, and shall each cause their
Contractors and their subcontractors, to cooperate reasonably with the other and
any separate contractors, suppliers, consultants, invitees, employees or other
persons on the Premises as a part of the construction, equipping, fixturing and
occupancy of the Premises.
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(d) The provisions of Paragraph 10 of the Lease regarding
Alterations shall not apply to any Landlord's Work or Extra Work performed
pursuant to this Work Letter but shall apply to any work done or caused to be
done by Tenant or any separate contractor or supplier in connection with the
initial construction, fixturing, equipping and occupancy of the Premises to the
extent that all such work shall be made free of liens, in a first-class,
workmanlike manner in conformity with applicable laws and the Working Plans and
Additional Plans, as the case may be.
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Schedule 1
TO EXHIBIT D TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
SPACE PLANS FOR THE PREMISES PREPARED
BY MEKUS-JOHNSON INC. DATED (ISSUED FOR PRICING) 7-1-88:
-------------------------------------------------------
<TABLE>
<S> <C>
A-0 Title Sheet
A-1.2 25th Floor Space Plan
A-1.3 26th Floor Space Plan
A-1.4 27th Floor Space Plan
A-1.5 28th Floor Space Plan
A-1.6 29th Floor Space Plan
A-1.7 30th Floor Space Plan
A-1.8 31st Floor Space Plan
A-1.9 32nd Floor Space Plan
A-1.10 33rd Floor Space Plan
A-1.11 34th Floor Space Plan
A-1.12 35th Floor Space Plan
A-1.13 36th Floor Space Plan
A-1.14 Partial Level 1 Floor Plan - South Space
Plan/Power Signal
A-1.15 Partial Mezzanine Floor Plan - South Space Plan
A-1.16 Partial Level 3 Floor Plan - North Space
Plan/Power Signal
A-2.1 26th Floor Partition Plan
A-2.2 34th Floor Partition Plan
A-2.3 36th Floor Partition Plan
A-3.1 26th Floor Reflected Ceiling Plan
A-3.2 34th Floor Reflected Ceiling Plan
A-3.3 36th Floor Reflected Ceiling Plan
A-4.2 25th Floor Power/Signal Plan
A-4.3 26th Floor Power/Signal Plan
A-4.4 27th Floor Power/Signal Plan
A-4.5 28th Floor Power/Signal Plan
A-4.6 29th Floor Power/Signal Plan
A-4.7 30th Floor Power/Signal Plan
A-4.8 31st Floor Power/Signal Plan
A-4.9 32nd Floor Power/Signal Plan
A-4.10 33rd Floor Power/Signal Plan
A-4.11 34th Floor Power/Signal Plan
A-4.12 35th Floor Power/Signal Plan
A-4.13 36th Floor Power/Signal Plan
A-4.14 Partial Mezzanine Floor Plan - South Power/Signal
Plan
A-5.1 Elevation
A-5.2 Elevation
A-6.1 Sections and Details
A-7.1 Room Finish Schedule
A-7.2 Door Schedule
Outline Specifications Dated 7-5-88
Outline Specifications Addendum #1 Dated 8-12-88
Outline Specifications Addendum #2 Dated 8-31-88 and Revised 9-1-88
PLANS PREPARED BY TOTAL ASSETS PROTECTION, INC.
DATED (ISSUED FOR PRICING) 7-1-88:
-----------------------------------------------
M.1. HVAC & Environmental Floor Plan
M.2. HVAC Details
FP.1. Fire Protection Floor Plan
FP.2. Fire Protection Details
Specifications dated 7-1-88
</TABLE>
D-13
<PAGE> 136
PLANS FOR THE PREMISES PREPARED BY SAKO & ASSOCIATES
DATED (ISSUED FOR PRICING) 7-1-88:
-----------------------------------------------------
<TABLE>
<S> <C>
SD1 Supplemental Smoke Detection System Drawing - 25th Floor
SD2 Supplemental Smoke Detection System Drawing - 25th Floor
SD2 Supplemental Smoke Detection System Drawing - 26th Floor
SD3 Supplemental Smoke Detection System Drawing - 27th Floor
SD4 Supplemental Smoke Detection System Drawing - 28th Floor
SD5 Supplemental Smoke Detection System Drawing - 29th Floor
SD6 Supplemental Smoke Detection System Drawing - 30th Floor
SD7 Supplemental Smoke Detection System Drawing - 31st Floor
SD8 Supplemental Smoke Detection System Drawing - 32nd Floor
SD9 Supplemental Smoke Detection System Drawing - 33rd Floor
SD10 Supplemental Smoke Detection System Drawing - 34th Floor
SD11 Supplemental Smoke Detection System Drawing - 35th Floor
SD12 Supplemental Smoke Detection System Drawing - 36th Floor
SS1 Security Device Location Drawings - Level 1 - South
SS2 Security Device Location Drawings - Level 1 - North
SS3 Security Device Location Drawings - Mezzanine Level - North
SS4 Security Device Location Drawings - Level 3 - North
SS5 Security Device Location Drawings - 25th Floor
SS6 Security Device Location Drawings - 26th Floor
SS7 Security Device Location Drawings - 27th Floor
SS8 Security Device Location Drawings - 28th Floor
SS9 Security Device Location Drawings - 29th Floor
SS10 Security Device Location Drawings - 30th Floor
SS11 Security Device Location Drawings - 31st Floor
SS12 Security Device Location Drawings - 32nd Floor
SS13 Security Device Location Drawings - 33rd Floor
SS14 Security Device Location Drawings - 34th Floor
SS15 Security Device Location Drawings - 35th Floor
SS16 Security Device Location Drawings - 36th Floor
Design Criteria Statement (issued for pricing) 7-1-88
</TABLE>
D-14
<PAGE> 137
Schedule 2
----------
TO EXHIBIT D TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
<TABLE>
<CAPTION>
Estimated Estimated
Construction Substantial
Working Plan Commencement Completion
Floor Delivery Date Date Date
----- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1. Telephone 11/1/89 12/1/89 11/30/90
2. Chemical 11/1/89 12/1/89 11/30/90
3. Salt 11/1/89 12/1/89 11/30/90
4. Corporate 11/1/89 12/1/89 11/30/90
</TABLE>
D-15
<PAGE> 138
Schedule 3
----------
TO EXHIBIT D TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
<TABLE>
<S> <C>
Telephone Switch $764,000
Telephone Cable $676,000
Computer Interface Wiring $245,000
Audio Visual $225,000
New Partitions/Dividers for stations $800,000
Refurbishing Partitions, furniture, etc. $300,000
</TABLE>
Tenant shall have the absolute right to designate the supplier and
installer for the above listed items, provided that any such suppliers and
installers who contract directly with Tenant comply with the provisions of
Paragraph 6 of this Work Letter.
D-16
<PAGE> 139
Schedule 4
----------
To Exhibit D to Office Lease
For Morton Thiokol Building
100 North Riverside
The following Conditions shall apply to all Landlord's Work and
Extra Work to govern the rights and obligations of Landlord (and to the extent
applicable, Landlord's Contractor) and Tenant with respect to such Work.
1. Definitions and Plans.
1.1 Definitions. The following terms shall have the following
meanings in the Space Plans, Working Plans and Additional
Plans:
1.1.1 "Tenant's Space Planner" shall mean Mekus-Johnson,
Inc, or such other space planner reasonably
acceptable to Landlord, engaged by Tenant to design
the Premises.
1.1.2 "Provide" shall mean "to furnish and install."
1.1.3 "Or Approved Equal," or "or equal" shall include
the phrase "as determined by Tenant." "As
selected," "as directed," or "as approved" shall
include the phrase "by Tenant."
1.1.4 "Project" shall mean the Work described in the
Plans.
1.1.5 "Plans" shall mean the Tenant Improvement Plans and
any Additional Plans and Specifications and any
addenda thereto.
1.1.6 "Work" shall mean the completed construction
required by the Plans and the Work Letter.
1.1.7 "Specifications" shall mean those specifications
listed on Schedule 1 to this Work Letter, as
revised in accordance with the Work Letter and
those included in any Additional Plans or Extra
Work request and any addenda thereto.
1.2 Ownership and Use of Documents. All Plans, Drawings,
Specifications and copies thereof furnished by Tenant's
Space Planner are and shall remain his property. They are
to be used only with respect to this Project and are not
to be used on any other project. Submission or
distribution to meet official regulatory requirements or
for other purposes in connection with the Project is not
to be construed as publication in derogation of Tenant's
Space Planner's common law copyright or other reserved
rights.
2. Tenant's Space Planner.
2.1 Tenant's Space Planner shall at all times have access to
the Work wherever it is in preparation and progress.
Landlord shall provide access to
DS-4-1
<PAGE> 140
any construction office type facilities in common with
Landlord's Contractor so Tenant's Space Planner may
perform his functions.
2.2 Landlord will consult with and keep Tenant's Space Planner
advised as to the progress of the Work on a regular basis
and as requested by Tenant's Space Planner, and Tenant's
Space Planner shall have the right to discuss the Work
with Landlord's Contractors and any subcontractors;
provided, however, that Tenant's Space Planner shall not
direct, supervise or control Landlord's Contractors and
any subcontractors. Landlord shall confer with Tenant's
Space Planner regarding clarifications of and resolution
of any ambiguities in the Plans and Tenant's Space Planner
shall promptly respond to inquiries and requests regarding
the same.
2.3 In case of a conflict between the Drawings included in
Tenant Improvement Plans or Additional Plans and the
Specifications, the Specifications shall control.
2.4 Tenant's Space Planner shall not have the authority to
take actions regarding the Work on behalf of Tenant.
3. Review of Contract Documents.
3.1 Landlord shall cause Landlord's Contractor to carefully
study and compare the Plans and shall at once report to
Tenant's Space Planner any error, inconsistency or
omission it may discover. Landlord shall not be liable to
Tenant or Tenant's Space Planner for any damage resulting
from any such errors, inconsistencies or omissions in the
Plans. Unless Tenant has not responded in an appropriate
time period, Landlord's performance of any portion of the
Work at any time without Plans or, where appropriate,
approved Shop Drawings, Product Data or Samples for such
portion of the Work, shall be at Landlord's sole risk.
4. Warranty.
4.1 Landlord warrants to Tenant and Tenant's Space Planner
that all materials and equipment furnished under this Work
Letter will be new unless otherwise specified, and that
all Work will be of good quality, free from faults and
defects and in conformance with the Plans. Landlord shall
assign to Tenant all warranties and guarantees with
respect to the Work and shall cooperate with Tenant in
enforcing such obligations. All Work not conforming to
these requirements, including substitutions not properly
approved and authorized, may be considered defective. If
required by Tenant's Space Planner, Landlord shall furnish
evidence as to the kind and quality of materials and
equipment. It is not the responsibility of Landlord to
make certain that the Plans or the Work are in accordance
with applicable laws, statutes, building codes and
regulations; provided, however, that it is the
responsibility of Landlord to make certain
DS-4-2
<PAGE> 141
that the Work is in conformance with the Plans. If either
Landlord or Landlord's Contractor observes that any of the
Plans are at variance therewith in any respect, they shall
promptly notify Tenant's Space Planner in writing. If
Landlord performs any Work knowing it to be contrary to
such laws, ordinances, rules and regulations, and without
such notice to Tenant's Space Planner, it shall assume
full responsibility therefor and shall bear all costs
attributable thereto.
4.2 Landlord shall employ Landlord's representative as
provided in Paragraph 8(a) of the Work Letter and any
necessary assistants who shall be available to Tenant and
Tenant's Space Planner during the progress of the Work.
Landlord's representative shall represent Landlord and all
communications given to Landlord's representative shall be
as binding as if given to Landlord. Important
communications shall be confirmed in writing. Other
communications shall be so confirmed on written request in
each case.
5. Documents and Samples at the Site.
5.1 Landlord shall maintain at the site for Tenant and
Tenant's Space Planner one record copy of all Plans,
Drawings, Specifications, addenda, change orders and other
modifications, in good order and marked currently to
record all changes made during construction, and approved
Shop Drawings, Product Data and Samples. These shall be
available to Tenant's Space Planner and upon completion of
the project, all record drawings shall be delivered to
Tenant and upon Tenant's request transferred to mylar at
Tenant's expense.
6. Shop Drawings, Product Data and Samples.
6.1 "Shop Drawings" are drawings, diagrams, schedules and
other data specially prepared for the Work by Landlord,
Landlord's Contractor or any subcontractor, manufacturer,
supplier or distributor to illustrate some portion of the
Work.
6.2 Product Data are illustrations, standard schedules,
performance charts, instructions, brochures, diagrams and
other information furnished by Landlord or Landlord's
Contractor to illustrate a material, product or system for
some portion of the Work.
6.3 Samples are physical examples that illustrate materials,
equipment or workmanship and establish standards by which
the Work will be judged.
6.4 Landlord shall cause Landlord's Contractor to review,
approve for compliance with the Tenant Improvement Plans
and submit to Tenant's Space Planner, with reasonable
promptness and in such sequence as to cause no delay in
the Work or in the work of any separate contractor, all
Shop Drawings, Product Data and Samples required by the
Plans or Work Letter.
DS-4-3
<PAGE> 142
6.5 Landlord and Landlord's Contractor shall not be relieved
of responsibility for any deviation from the requirements
of the Plans by Tenant's Space Planner's review of Shop
Drawings, Product Data or Samples unless Landlord has
specifically informed Tenant's Space Planner in writing of
such deviation at the time of submission and Tenant's
Space Planner has given written approval to the specific
deviation. Failure of Tenant or Tenant's Space Planner to
object to Landlord's notice of deviation within five (5)
business days from receipt of such notice shall be deemed
to constitute Tenant's approval thereof. Landlord shall
not be relieved from responsibility for errors or
omissions in the Shop Drawings, Product Data or Samples by
Tenant's Space Planner's review thereof.
6.6 Landlord or Landlord's Contractor shall direct specific
attention, in writing or on resubmitted Shop Drawings,
Product Data or Samples, to revisions other than those
requested by Tenant's Space Planner on previous
submittals.
6.7 Unless Tenant has not responded in an appropriate time
period, Landlord's performance of any portion of the Work
requiring submission of a Shop Drawing, Product Data or
Sample shall be at Landlord's sole risk. All such portions
of the Work shall be in accordance with approved
submittals.
6.8 The Shop Drawings referred to in Subparagraph 6.1 shall be
mylar with positive side down and with matte finish up and
shall be provided by and paid for by Landlord.
6.9 The Shop Drawings and records referred to in Subparagraph
6.1 shall all be maintained at the Premises in a secured
location separate from and in addition to the drawings and
records of the Landlord's Contractor and shall be for the
exclusive use of Landlord, Tenant and Tenant's Space
Planner.
6.10 All costs involved for preparation and maintaining the
Shop Drawings and records referred to in Subparagraph 6.1
shall be the expense of Landlord.
6.11 Except for deviations from the Plans which have been
approved by Tenant or Tenant's Space Planner. any
corrections or comments made on the Shop Drawings during
this review do not relieve Landlord from compliance with
requirements of the Plans and Specifications. Tenant's
Space Planner's check is only for review of general
conformance with the design concept of the Project and
general compliance with the information given in the
Plans. Landlord is responsible for: confirming and
correlating all quantities and dimensions for Shop
Drawings, selecting fabrication processes and techniques
of construction, coordinating the Work with that of all
other trades, and performing the Work in a safe and
satisfactory manner in conformance with the Plans and
Specifications.
DS-4-4
<PAGE> 143
7. Progress Schedule.
7.1 At the earliest possible date after the date hereof,
Landlord shall present a "Progress & Operations Schedule"
setting up sequence of operations and timetable for each
principal item of Work and for each area in the Premises
wherein Work is shown or required. This schedule will be
reviewed in conference by Landlord, Tenant's Space
Planner, Landlord's Contractor and principal
subcontractors, to determine best procedures to permit
expeditious prosecution of the Project. The Progress and
Operations Schedule as accepted by all concerned, shall be
furnished as a guide to all parties engaged on the Project
and shall be binding on them in their respective Work.
Landlord may, upon ten (10) business days prior written
notice to Tenant and Tenant's Space Planner, revise the
Progress and Operations Schedule, provided that Tenant may
object to any such revision within said ten (10) business
day period if such revision shall adversely affect Tenant.
Failure of Tenant to object within such ten business day
period shall be deemed to constitute Tenant's acceptance
of such revision.
8. Cleaning Up.
8.1 To the extent required to permit Tenants' access to the
Premises pursuant to Paragraph 6 of the Work Letter,
Landlord at all times shall keep the Premises free from
accumulation of waste materials or rubbish caused by his
operations. At the completion of the Work, it shall remove
all waste materials and rubbish from and about the Project
as well as all tools, construction equipment, machinery
and surplus materials. Upon ten (10) business days prior
written notice from Tenant, if Landlord fails to clean up
at the completion of the Work, Tenant may do so and the
cost thereof shall be charged to Landlord.
8.2 Rubbish containers shall be furnished to subcontractors
for a reasonable and non-discriminatory charge and removed
from the Project site by Landlord's Contractor.
8.3 Just prior to the occupancy date for each portion of the
Premises, Landlord shall:
a. Vacuum all carpeted areas.
b. Dust surfaces other than floors with clean rags.
c. Employ services of professional window washers to
thoroughly clean, wash and polish all glass.
Cleaning materials and methods shall be as
recommended by manufacturer in order to avoid
scratching or scoring the special surfaces.
d. Remove marks, stains, fingerprints, other soil and
dirt from painted, decorated and/or stained work.
DS-4-5
<PAGE> 144
e. Clean and polish hardware for all trades. This
shall include removal of stains, dust, dirt, paint
and the like.
f. Remove spots, soil, paint from tile work and wash
same.
g. Clean fixtures and equipment and remove stains,
paint, dirt and dust.
h. Remove temporary floor protection for finished
floor and clean and polish such floors.
i. Clean interior metal surfaces, including doors and
windows, required to have polished finishes, of oil
stains, dust, dirt, paint and the like. Polish and
leave without fingermarks or other blemishes.
j. Where resilient flooring is supplied, clean, wax
and polish all resilient floor surfaces in
accordance with specifications delivered to
Landlord by Tenant's Space Planner.
8.4 Landlord's Contractor and each subcontractor shall remove
and dispose of all tools, equipment, surplus materials and
rubbish pertaining to his work.
9. Royalties and Patents.
9.1 Landlord shall pay all royalties and license fees in
connection with the construction process. He shall defend
all suits or claims for infringement of any patent rights
and shall save Tenant harmless from loss on account
thereof, except that Tenant shall be responsible for all
such loss when a particular design, process or the product
or a particular manufacturer or manufacturers is
specified, but if Landlord has reason to believe that the
design, process or product specified is an infringement of
a patent, he shall be responsible for such loss unless he
promptly gives such information to Tenant's Space Planner.
10. Tests.
10.1 If the Plans, laws, ordinances, rules, regulations or
orders of any public authority having jurisdiction require
any portion of the Work to be inspected, tested or
approved, Landlord shall give Tenant's Space Planner
timely notice of its readiness so Tenant's Space Planner
may observe such inspection, testing or approval. Landlord
shall bear all costs of such inspections, tests or
approvals conducted by public authorities. Unless
otherwise provided, Landlord shall bear all costs of other
inspections, tests or approvals.
10.2 If Tenant's Space Planner determines that any Work
requires special inspection, testing or approval which
subparagraph 10.1 does not include, he will instruct
Landlord to order such special inspection, testing or
approval, and Landlord shall give notice as provided in
subparagraph 10.1 If such
DS-4-6
<PAGE> 145
special inspection or testing reveals a failure of the
Work to comply with the requirements of the Plans,
Landlord shall bear all costs thereof, including
compensation for Tenant's Space Planner's additional
services made necessary by such failure; otherwise Tenant
shall bear such costs, and an appropriate Change Order
shall be issued.
10.3 Required certificates of inspection, testing or approval
shall be secured by Landlord and promptly delivered by him
to Tenant's Space Planner.
10.4 If Tenant's Space Planner is to observe the inspections,
tests or approvals required by the Plans, he will do so
promptly and, where practicable, at the source of supply.
11. Correction of Work.
11.1 Landlord shall promptly correct all Work failing to
conform to the Plans whether observed before or after
Substantial Completion and whether or not fabricated,
installed or completed. Landlord shall bear all costs of
correcting such defective Work, including compensation for
Tenant's Space Planner's additional services made
necessary thereby.
11.2 If, within one year after the Date of Substantial
Completion of the Work or designated portion thereof or
within one year after acceptance by Tenant of designated
equipment or within such longer period of time as may be
prescribed by law to the extent agreed to by Landlord's
Contractor or by the terms of any applicable special
warranty required by the Plans, any of the Work is found
to be defective or not in accordance with the Plans,
Landlord shall correct it promptly after receipt of a
written notice from Tenant to do so, unless Tenant has
previously accepted such condition pursuant to the Punch
List (as provided in Paragraph 7 of the Work Letter) or
unless such condition is a latent defect which could not
reasonably have been discovered by due care at the time of
the inspection of the Premises pursuant to Paragraph 7 of
the Work Letter. Tenant shall give such notice promptly
after discovery of the condition.
11.3 Landlord shall remove from the site all portions of the
Work which are defective or nonconforming and which have
not been corrected, unless removal is waived by Tenant.
11.4 If Landlord fails to correct defective or nonconforming
Work that is Landlord's responsibility, Tenant may correct
it at Landlord's cost.
11.5 Landlord shall bear the cost of making good all work of
Tenant or separate contractors destroyed or damaged by
such correction or removal.
11.6 Landlord's guarantee set forth in this Paragraph 11 will
commence upon the respective occupancy dates for each
floor of the Premises.
DS-4-7
<PAGE> 146
11.7 Correction of defective or nonconforming Work shall
include all damage done to the Project, building contents,
or to work of others as a result of corrective action.
11.8 Corrective Work shall be covered by an additional 360 day
guarantee, dated from final acceptance of such corrective
Work.
11.9 All Guarantees, whether they be for structural, mechanical
components or electrical components, shall commence from
the respective possession date of each floor of the
Premises, not from the date of shipment or installation of
an item.
12. Operating and Maintenance Instructions.
12.1 Landlord's Contractor, all mechanical subcontractors and
all electrical subcontractors (including security
subcontractors) shall submit to Tenant's Space Planner for
approval, two complete sets of an Operation and
Maintenance Manual for each mechanical, plumbing,
life/safety, electrical and security system.
12.2 Each Operation and Maintenance Manual shall cover all
equipment, devices or apparatus forming a part of the
particular system and shall be properly identified to show
interrelation with their systems. Each manual shall
consist of manufacturer's data and other literature,
operation and maintenance instructions, wiring diagrams
characteristics, shop drawings, parts lists, lubrication
instructions, and other pertinent information so as to
enable Tenant's personnel to properly operate and maintain
the system. Each manual shall be bound between covers,
indexed, and each system component identified by the
names, numbers and other identifying symbols as set forth
in the Plans. In the case of manufacturer's catalogs and
other literature that contains information on a number of
products, the model number, rating, performance
characteristic and other data pertaining to the products
incorporated into the Work shall be clearly identified in
ink. There shall be supplemental specific written
instructions clearly defining the operation of each system
and piece of equipment.
12.3 Landlord or Landlord's Contractor shall have qualified
personnel instruct Tenant's operating personnel and
acquaint them with the operating characteristics,
procedures and maintenance of all equipment and systems
installed on the Project at the time Tenant assumes
operation of various equipment and services. The time of
instruction shall be arranged with Tenant's
Representative.
13. Mutual Responsibility.
13.1 Landlord shall afford Tenant and separate contractors the
same opportunity for the introduction and storage of their
materials and equipment and the execution of their work as
given to Landlord's
DS-4-8
<PAGE> 147
Contractor and subcontractor, and shall connect and
coordinate its Work with theirs as required by the Plans.
13.2 If any part of Landlord's Work depends for proper
execution or results upon the work of Tenant or any
separate contractor, Landlord shall upon discovery
promptly report to Tenant's Space Planner any apparent
discrepancies or defects in such other work that render it
unsuitable for such proper execution and results. Failure
of Landlord so to report shall constitute an acceptance of
Tenant's or separate contractors' work as fit and proper
to receive Landlord's Work, except as to defects which may
subsequently become apparent in such work by others.
13.3 Any costs caused by defective or ill-timed work shall be
borne by the party responsible therefor.
13.4 Should Landlord or Tenant wrongfully cause damage to the
work or property of the other party, or to other work on
the site, the party causing such damage shall promptly
remedy such damage.
13.5 Should Landlord or Tenant wrongfully cause damage to the
work or property of any separate contractor, the party
causing such damage shall upon due notice promptly attempt
to settle with such other contractor by agreement, or
otherwise to resolve the dispute. If such separate
contractor sues or initiates an arbitration proceeding
against the other party on account of any such damage the
other party shall notify the party causing such damage who
shall at the other party's request defend such proceedings
at the expense of the party causing such damage, and if
any judgment or award against the other party arises
therefrom, the party causing such damage shall pay or
satisfy it and shall reimburse the other party for all
attorneys' fees and court or arbitration costs that the
other party has incurred.
14. Arbitration.
14.1 Any claim, dispute or other matter in question between
Landlord or Landlord's Contractor and Tenant shall be
subject to arbitration upon the written demand of either
party pursuant to Paragraph 33 of the Lease.
14.2 Unless otherwise agreed in writing, Landlord and
Landlord's Contractor shall carry on the Work and maintain
its progress during any arbitration proceedings, and
Tenant shall continue to make payments to Landlord in
accordance with the Work Letter.
15. Minor Changes in the Work and Site Conditions.
15.1 Tenant's Space Planner will have authority to order minor
changes in the Work and not inconsistent with the intent
of the Plans. Such changes shall be effected by written
order, and shall be binding on Landlord and Tenant. Tenant
DS-4-9
<PAGE> 148
shall have no right to contest or otherwise appeal the
decision or authority of Tenant's Space Planner to
determine that such change is a minor change. Landlord
shall carry out such written orders promptly.
15.2 Failure to examine the Premises and determine existing
conditions or nature of new construction, or nature and
extent of work to be performed by other trades, will not
be considered a basis for granting of additional
compensation.
DS-4-10
<PAGE> 149
EXHIBIT E TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
HVAC Standards
Heating, ventilation and air conditioning is designed to be capable of
maintaining within tolerances in first class office buildings an inside space
condition of 78 degrees F dry bulb when outside conditions are 95 degrees F dry
bulb and 75 degrees F wet bulb, and 72 degrees F inside when outside
temperatures are -2 degrees F., and 65 degrees F inside when outside
temperatures are -10 degrees F. The above conditions will be available in the
Building and will be available to be delivered to the Premises provided that in
any room or area the occupancy does not exceed one (1) person for each 100
square feet and total electrical load including lighting and power does not
exceed five (5) watts per square foot.
E-1
<PAGE> 150
EXHIBIT F TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
JANITORIAL SERVICES
-------------------
NIGHTLY (between the hours of 5:00 P.M. and 6:00 A.M., Monday through Friday,
Holidays (as defined in the Lease) excepted).
Dust and wipe elevator doors, walls, metal work, saddles in elevator cab,
furniture, file cabinets, book cases, fixtures, window sills, and trim, etc.
(not to disturb papers on desks), and dust and rub down mail chutes, mail
depository, etc. All dusting and sweeping shall be done with an approved
chemically treated cloth.
Empty and clean all waste receptacles, ashtrays and sand urns.
Wash, clean and disinfect all water fountains and water coolers.
Remove all rubbish and trash to a designated area.
Sweep all vinyl, asphalt, rubber and similar type floorings and remove all gum
and similar substances.
Wash floors for spills, smears and foot tracks using clear water or, as
necessary, a very light detergent solution.
Vacuum all rugs and carpeted areas, moving only light furniture, as necessary.
Sweep all private and public stairways and vacuum if carpeted.
Sweep or dust mop all uncarpeted areas, including stairwell landings and heads
using treated mops and damp mop as necessary to remove any stains and spills.
Remove gum, tar, etc. adhering to flooring.
Damp mop floors and entrance foyers, public corridors, and other heavily
trafficked areas, including, without limitation, cloak rack areas.
Clean all glass furniture tops.
Wet sponge wipe table tops in employee lounge, including cleaning of any spills,
if applicable.
Keep locker, storage and slop sink rooms in a clean and orderly condition.
Wood, metal (including all chrome, aluminum, and brass), glass, light switches,
door frames, door push handles, or plastic laminated surfaces to be wiped clean
of dust, dirt, and smudges nightly and polished as needed; to include counters
and railings.
Maintain front elevator lobbies, cabs and vacuum elevator door tracks.
Elevator, stairway, office and utility doors on all floors to be checked for
general cleanliness, removing finger marks.
F-1
<PAGE> 151
Dust library areas and library shelves; provided, however, that books are not to
be unshelved or moved.
Clean sinks, countertops, cabinet fronts, fronts and sides of vending machines,
coffee makers and other equipment in coffee stations, executive kitchen and
lunchrooms.
During nightly tour, extinguish lights, lock doors, and report any malfunctions.
LAVATORIES - (NIGHTLY) (INCLUDES PRIVATE WASHROOMS)
a. All cleaning will be performed with approved germicidal
detergents at disinfectant strengths.
b. All toilets and urinals will be cleaned on all surfaces nightly;
acid bowel cleaner to be used in the interior. Wash both sides of
all toilet seats.
c. Wash all basins, shelves, dispensers and other washroom fixtures.
d. Wash and polish all mirrors, powder shelves, bright work, etc.,
cleaning flushometers, piping and toilet seat hinges.
e. Damp wipe and spot clean all partitions, tile walls, dispensers
and receptacles. Remove all graffiti.
f. Empty and clean wastepaper and sanitary disposal receptacles.
g. All lavatory floors to be swept and mopped with a germicidal
detergent solution nightly.
h. All lavatory floors will be machine scrubbed as needed, but not
less than quarterly.
i. Washroom supplies will be replenished nightly.
j. Washroom supplies in common area washrooms to be furnished by
Landlord.
k. Dust and wipe clean all lockers.
WEEKLY
Damp mop all uncarpeted areas and/or spray buff for heavy scuffs.
Spot clean carpet.
Remove all finger marks and smudges from doors, partitions, woodwork, window
ledges and window mullions.
Wash all directory board, display, entry door and side light glass, as
necessary.
Damp wipe tops of desks and file cabinets.
Dust and wipe clean all interior metal work, chair rails, louvers, pictures and
charts within arms reach.
Clean glass entrance doors and side lights.
F-2
<PAGE> 152
Buff wood flooring using buffing pad.
MONTHLY
Clean all elevator carpeting.
Clean all clerestory glass.
Clean inside of refrigerators and dispose of any contents thereof.
Vacuum upholstered furniture.
All tile floor areas to be stripped, scrubbed, waxed (using buffable and
non-slip type floor finish) and buffed in accordance with manufacturer's
specifications, as needed, but not less than quarterly.
a. Machine scrub flooring using appropriate stripping type detergent
solution and stripping pad to completely clean flooring, removing
all old floor finish and other foreign matter.
b. Completely rinse flooring and allow to dry.
c. Apply two (2) coats of non-staining, non-slip, high solid,
buffable floor finish (three (3) coats in high traffic areas,
e.g., center portion of corridors, entryways, etc.).
LAVATORIES - PERIODIC CLEANING
Thoroughly wash all partitions, tile walls and enamel surfaces once a month,
using proper disinfectant.
Dust all lighting fixtures (exterior only) once a month, wash as necessary.
Do all high dusting in lavatories once a month.
QUARTERLY
HIGH DUSTING - OFFICE AREAS
a. Dust in place all pictures, frames, charts, graphs, and similar
wall hangings.
b. Dust clean all vertical surfaces, such as walls, partitions,
doors, books and other surfaces not reached in nightly cleaning.
c. Dust all lighting fixtures (exterior only). Clean air grills.
Dust all baseboards.
d. Dust venetian blinds and window frames.
ANNUALLY
Light fixtures within the Premises shall be cleaned inside, including bulbs,
once per year.
AS REQUIRED
Remove snow and ice from sidewalks serving the Building.
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<PAGE> 153
Wash windows inside and out at least once per season (not less than four (4)
times per year).
Dust vinyl base.
MISCELLANEOUS
All cleaning operations shall be scheduled so that a minimum of lights are left
on at all times. Upon completion of cleaning, all lights are to be turned off.
All entrance doors are to be kept locked during cleaning and any malfunctions of
door locking mechanisms are to be reported immediately.
Access to the Premises by janitorial personnel shall be subject to security
procedures established from time to time by Tenant.
At Tenant's election, Tenant's trash and waste paper from all or any portion of
the Premises shall be left on each floor of the Premises or moved to a central
location on the floor each night to a mutually agreeable location so that
consistent with Tenant's security requirements such materials may be shredded or
otherwise handled so as to protect any confidential information. Tenant shall be
entitled to use its own employees to handle and deal with its participation in
any such trash removal procedures.
CAFETERIA -- DINING AREA: Landlord may cause the following cleaning
specification to be included in any operating agreement or lease of the
Cafeteria, provided that Landlord shall remain obligated to maintain the
Cafeteria under this Lease:
a. Conduct all periodic cleaning specified in janitorial services,
as applicable.
b. Clean undersides of tables and chairs, including without
limitation, legs and pedestals once per month.
c. Clean tops of tables and seats nightly.
d. Spray-buff tile flooring one (1) time per week.
e. Spot clean carpeting nightly.
F-4
<PAGE> 154
EXHIBIT G-1 TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
TENANT ESTOPPEL CERTIFICATE
---------------------------
____________, 19___
- ------------------------
- ------------------------
- ------------------------
- ------------------------
Re: Lease dated as of August 31, 1988 ("Lease") Between Chicago Title
and Trust Company as Trustee u/t/a dated April 16, 1985, known as
Trust No. 1086781 ("Landlord"), and Morton Thiokol, Inc.
("Tenant"), for a portion of the property located at 100 North
Riverside, Chicago, Illinois ("Building"), which space is
described in the Lease ("Premises")
Gentlemen:
The undersigned, Tenant, hereby confirms:
1. Tenant accepted possession of the entire Premises demised by
the Lease, on _____________, 19__.
2. The improvements and space required to be furnished by
Landlord with respect to the Premises and the Building of which the Premises is
a part have been completed in all respects required by the Lease.
3. Landlord has fulfilled all its obligations under the Lease
through the date hereof and while the Lease by its terms provides for certain
offset rights and abatements, Tenant as of the date hereof has no defense,
charge, lien or claim for offsets or credits (other than abatements provided in
the Lease) against rentals or for any other monetary claim against the Landlord
under the Lease.
4. No rentals have been prepaid more than one (1) month in
advance of its due date. Except as set forth in the Lease, Tenant has made no
agreements with Landlord, its agents or employees with respect to the Lease
concerning free rent, partial rent, rebate of rent payments, credit, offset,
deduction in rent or any other type of rental concession, including, without
limitation, lease support payments or lease buyouts.
5. The Term of the Lease commenced as of ____________, 19__ and
terminates on ___________, ____. Rental and other charges at the rate(s)
provided by the Lease are payable in accordance with its terms. Rent and all
other charges payable under the Lease have been paid through _____________.
There is no security deposit.
G-1/1
<PAGE> 155
6. Tenant has no notice of a prior assignment, hypothecation, or
pledge of rents or the Lease, except as follows:
_______________________________________.
7. Tenant has no option to extend or renew the terms of the Lease
for any period of time except as expressly provided in the Lease.
8. The Lease contains, and Tenant has, no option to purchase or
right of first offer or refusal with respect to the purchase of the Premises or
the Building or any portion thereof, other than options to lease as set forth in
the Lease.
9. The Lease (i) has not been modified, altered, or amended,
except as follows: ___________; (ii) is in full force and effect; and (iii)
constitutes the entire agreement between Tenant and Landlord with respect to the
Premises, except as follows: ___________. Other than the Lease, there are no
other agreements, formal or informal, in writing or oral, between Landlord and
Tenant that purport to settle or reserve rights with respect to any dispute
under the Lease or otherwise with respect to the Premises;
10. To the best of Tenant's knowledge neither party to the Lease
is in default in the performance of any covenant, agreement, or conditions
contained in the Lease;
11. Tenant is not the subject of any bankruptcy, insolvency or
similar proceeding in any Federal, state or other court or jurisdiction;
12. Tenant is in occupancy of the Premises and Tenant has (i)
caused to be completed all construction and other work to be completed by Tenant
in the Premises; (ii) paid all sums payable in connection with such work by
Tenant; and (iii) has delivered to Landlord waivers of lien and claims thereof
for all such work executed by all contractors, subcontractors, and material
providers relating to such work. Tenant has not sublet the Premises to any
sublessee and has not assigned or encumbered any of its rights under the Lease.
No one except Tenant occupies the Premises.
Tenant understands that terms which are defined in the Lease have
the same meanings when used in this letter.
[Reference to party(s) who will rely on letter or to transaction
in which letter will be relied upon.]
MORTON THIOKOL, INC., a Delaware
corporation
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
(The foregoing form of Estoppel Certificate is subject to revisions and changes
to accurately reflect the facts existent when it is issued.)
G-1/2
<PAGE> 156
EXHIBIT G-2 TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
LANDLORD ESTOPPEL CERTIFICATE
-----------------------------
____________, 19__
- ------------------------
- ------------------------
- ------------------------
- ------------------------
Re: Lease dated as of August 31, 1988 ("Lease") Between Chicago Title
and Trust Company as Trustee u/t/a dated April 16, 1985, known as
Trust No. 1086781 ("Landlord"), and Morton Thiokol, Inc.
("Tenant"), for a portion of the property located at 100 North
Riverside, Chicago, Illinois ("Building"), which space is
described in the Lease ("Premises")
Gentlemen:
The undersigned, Landlord, hereby confirms:
1. Landlord has delivered possession of the entire Premises
demised by the Lease, and the Tenant is in occupancy thereof.
2. The improvements and space required to be furnished by
Landlord with respect to the Premises and the Building of which the Premises is
a part have been completed in all respects required by the Lease.
3. Tenant has fulfilled all its obligations under the Lease
through the date hereof and Landlord has no defense, lien or claim for past due
rentals or for any other monetary claim against Tenant under the Lease.
4. The Term of the Lease commenced as of ______________ and the
Expiration Date of the Lease is ______________, _____. Rental and other charges
at the rate(s) provided by the Lease are payable in accordance with its terms.
Rent and all other charges payable under the Lease have been paid through
_____________. There is no security deposit.
5. Landlord has no notice of a prior assignment, sublease,
hypothecation, or pledge of the Lease, except as follows:
_________________________________.
6. The Lease (i) has not been modified, altered, or amended
except as follows:________________; (ii) is in full force and effect; and (iii)
constitutes the entire agreement between Landlord and Tenant with respect to the
Premises.
7. To Landlord's knowledge neither party to the Lease is in
default in the performance of any covenant, agreement, or conditions contained
in the Lease;
G-2/1
<PAGE> 157
8. Landlord is not the subject of any bankruptcy, insolvency or
similar proceeding in any Federal, state or other court or jurisdiction;
Landlord understands that terms which are defined in the Lease
have the same meanings when used in this letter.
[Reference to party(s) who will rely on letter or to transaction
in which letter will be relied upon.]
Very truly yours,
----------------------------------------
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
(The foregoing form of Estoppel Certificate is subject to revisions and changes
to accurately reflect the facts existent when it is issued.)
G-2/2
<PAGE> 158
EXHIBIT H TO OFFICE LEASE
FOR MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
dated as of August 31, 1988
by and between
SWISS BANK CORPORATION,
NEW YORK BRANCH
and
MORTON THIOKOL, INC.
This document prepared by:
Record and return to: Street Address of Property:
WHITE & CASE All of vacated West Water
1155 Avenue of the Americas Street south of Randolph
New York, New York 10036 Street and north of Washington
Attn: Thomas P. Higgins, Esq. Street, Chicago, Illinois
Tax Parcel I.D. No. _____________
H-1
<PAGE> 159
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
------------------------------
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT, made as of
the 31st day of August, 1988 (this "Agreement") by and between SWISS BANK
CORPORATION, NEW YORK BRANCH, a branch of a banking corporation organized under
the laws of Switzerland, having an address at 4 World Trade Center, Box 395,
Church Street Station, New York, New York 10008 (Attention: William W. Evans,
III, Vice President) ("Holder") and MORTON THIOKOL, INC., a Delaware corporation
("Tenant").
WITNESSETH:
WHEREAS, pursuant to the terms of a Building Loan Agreement, dated as of
April 29, 1988 (the "Building Loan Agreement"), Holder has agreed to make a loan
(the "Loan") in the principal amount of up to $141,000,000 to Chicago Title and
Trust Company, not personally but solely as Trustee under Trust Agreement dated
April 16, 1985 and known as Trust No. 1086781 ("Landlord"); and
WHEREAS, Landlord is the owner of a thirty-six (36) story office
building located or to be located at 100 North Riverside, Chicago, Illinois and
all rights and easements appurtenant thereto (the "Property"); and
WHEREAS, Tenant has entered into a certain lease, dated as of August 31,
1988 initially covering approximately 264,000 square feet of Rentable Area (as
defined in the Lease), as more fully described in Exhibit A hereto (the "Initial
Space"); the Initial
Space, together with all other space within the Property which Tenant may lease
from time to time pursuant to the Lease, is referred to herein as the "Demised
Premises" (as such Lease and all exhibits incorporated therein may hereafter be
amended, modified or supplemented from time to time, the "Lease"); and
WHEREAS, the Loan will be secured, inter alia, by a first mortgage,
assignment of rents and leases and security agreement encumbering the Property
(said mortgage, as it may be amended, increased, renewed, modified,
consolidated, replaced, combined, substituted, severed, split, spread or
extended, being herein referred to as the "Mortgage") and a first assignment of
the rents due under the Lease, in each case in favor of Holder.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Tenant covenants and certifies that:
(a) The Lease, "Collateral Agreement" (as defined in the Lease)
and Memorandum of the Lease ("Memorandum") (i) collectively, constitute
the entire agreement between Tenant and Landlord with respect to the
Demised Premises, (ii) have not been modified, changed, altered or
amended in any respect and (iii) are the only agreements between Tenant
and Landlord affecting the Demised Premises. Other than as set forth or
provided in the Lease, Collateral Agreement and Memorandum, there are no
agreements,
H-2
<PAGE> 160
formal or informal, in writing or oral, between Tenant and Landlord,
which purport to settle or reserve rights with respect to any dispute
under the Lease or otherwise with respect to the Demised Premises.
(b) Except as set forth in the Lease and Collateral Agreement,
Tenant is not entitled to, and has made no agreement(s) with Landlord or
its agents or employees concerning free rent, partial rent, rebate of
rent payments, credit or offset or deduction in rent or any other type
of rental concession, including without limitation, lease support
payments or lease buy-outs.
(c) The Lease contains, and Tenant has, no options or rights of
first refusal to purchase the Property, the Demised Premises or any part
thereof, other than options to lease as set forth in the Lease.
(d) Tenant has not sublet the Demised Premises to any sublessee
and has not assigned or encumbered any of its rights under the Lease.
After the "Commencement Date" (as defined in the Lease), no one except
Tenant and its affiliates will occupy the Demised Premises, except in
accordance with the Lease.
(e) To the best of Tenants' knowledge, any work and improvements
in the Demised Premises required by the terms of the Lease to be made or
done by Landlord as of the date hereof have not yet been commenced.
(f) (i) To the best of Tenant's knowledge, no defaults of any
kind exist under the Lease, nor to the best of Tenant's knowledge has
there occurred any event or state of facts which by the giving of notice
or the lapse of time, or both, would constitute a default under the
Lease, (ii) except for the free rent period set forth in the Lease, no
rent payable under the Lease has been paid more than one (1) month in
advance of its due date, (iii) to the best of Tenant's knowledge, and
except as set forth in the Lease, Tenant has no present defense, charge,
lien, claim, offset against rents or other charges due or to become due
under the Lease or on account of any prepayment of rent or otherwise.
(g) On the date of the Lease, there are no actions, whether
voluntary or otherwise, pending against Tenant under the bankruptcy,
reorganization, arrangement, moratorium or other debtor relief laws of
the United States or any state thereof.
2. Tenant covenants and agrees that the Lease now is and shall at all
times continue to be subject and subordinate in each and every respect to the
Mortgage and to all renewals, modifications, consolidations, replacements and
extensions thereof, to the full extent of the principal, interest and other sums
secured thereby, subject to and so long as the non-disturbance covenants herein
are binding and effective on Holder. Tenant, upon request, shall execute and
deliver any certificate or other reasonable instrument whether or not in
recordable form which Holder reasonably may request to confirm said
subordination; provided that such certificate or instrument shall be in form and
substance reasonably acceptable to Tenant.
H-3
<PAGE> 161
3. As long as Tenant is not in default beyond the applicable grace and
cure period in the performance of its obligations under the Lease, Holder shall
not name Tenant as a party defendant to any action for foreclosure or other
enforcement of the Mortgage (unless required by law), nor shall the Lease be
terminated by Holder or any Successor (as hereinafter defined) in connection
with, or by reason of, foreclosure or other proceedings for the enforcement of
the Mortgage, or by reason of a transfer of the Landlord's interest under the
Lease pursuant to the taking of a deed or assignment in lieu of foreclosure (or
similar device), nor shall Tenant's use or possession of the Demised Premises be
interfered with by Holder; and Tenant shall be entitled to remain in possession
of the Demised Premises pursuant to the terms of the Lease and shall retain all
rights, options and privileges granted to it under the Lease. Furthermore,
Holder acknowledges and agrees that the rights to the insurance required to be
carried pursuant to Paragraph 12.B. of the Lease shall be solely and exclusively
governed by the Lease. The person acquiring, or succeeding to, the interests of
the Landlord as a result of any such action or proceeding and such person's
successors and assigns (any of the foregoing being hereinafter referred to as
the "Successor"), shall assume and be bound by all of the obligations of
Landlord under the Lease, including without limitation, any obligations of a
continuing nature, which by way of example and not by limitation, include
general maintenance, upkeep of the Property and tenant improvements, if any,
required by the Lease that have not been performed by the prior Landlord as of
the date such Successor acquired or succeeded to the interests of the prior
Landlord, provided such Successor shall not be:
(a) Subject to any credits, offsets, defenses or claims which
Tenant might have against any prior Landlord, except for set-off rights
granted to Tenant in and to the full extent permitted by the Lease and
any rent paid not more than one (1) month in advance of its due date; or
(b) Bound by any prepayment of more than one (1) month's rent,
except for the free rent periods granted to Tenant in the Lease; or
(c) Liable for any act or omission of any prior Landlord, except
for set-off rights granted to Tenant in and to the full extent permitted
by the Lease; or
(d) Bound by any amendment or modification of the Lease made
without the consent of a Holder or Successor, except to the extent such
amendment or modification is specifically provided for in the Lease, or
implements a right specifically provided for in the Lease, or may be
made pursuant to the Building Loan Agreement without the Holder's
consent; or
(e) Required to account for any security deposit other than any
security deposit (if any) actually delivered to the Successor; or
(f) Liable for any payment to Tenant of any sums, or the granting
to Tenant of any credit, in the nature of a contribution towards the
costs of preparing, furnishing or moving into the Demised Premises or
any portion thereof, except as expressly required pursuant to the Lease.
H-4
<PAGE> 162
4. If the interest of Landlord under the Lease shall be transferred by
reason of foreclosure or other proceedings for enforcement of the Mortgage or
the obligations which it secures or pursuant to a taking of a deed or assignment
in lieu of foreclosure (or similar device), Tenant shall be bound to the
Successor and, except as provided in Paragraphs 3 and 7 of this Agreement, the
Successor shall be bound to Tenant under all of the terms, covenants and
conditions of the Lease for the unexpired balance of the term thereof remaining
(and any extensions, if exercised), with the same force and effect as if the
Successor were Landlord. Tenant does hereby (i) agree to attorn to the
Successor, including Holder if it be the Successor, as Landlord, and (ii) agree
to make payments of all sums due under the Lease to the Successor, said
attornment and agreement to be effective and self-operative without the
execution of any further instruments, upon the Successor succeeding to the
interest of Landlord under the Lease.
5. Tenant shall not change the terms, covenants, conditions and
agreements of the Lease without the express written consent of Holder in each
instance, except to the extent such change is specifically provided for in the
Lease, or implements a right specifically provided for in the Lease, or may be
made pursuant to the Building Loan Agreement without the Holder's consent. Any
breach of this covenant shall not constitute a default under the Lease or give
rise to any right on the part of Holder to assert that the non-disturbance
provisions of Paragraph 5 hereof are not or will not remain in effect.
6. Tenant will provide Holder with a copy of any notice of default
served upon Landlord under the Lease, which notice shall be delivered in
accordance with the provisions of Paragraph 12 hereof. No notice of termination
of the Lease by Tenant pursuant to Paragraph 25.D. thereof shall be effective
unless Holder has failed to cure the default within thirty (30) days after the
lapse of such time as under the Lease was provided to Landlord to remedy the
default, if any. Nothing herein contained, nor the undertaking by Holder to cure
any default of Landlord under the Lease nor the actual curing of a Landlord
default by Holder, shall in any way limit any rights to which Tenant is entitled
under the Collateral Agreement. Notwithstanding the foregoing, Holder recognizes
that under the terms of the Lease, Tenant is entitled to free rent for a sixteen
(16) month period beginning on the Commencement Date (as defined in the Lease)
of the Lease.
7. In the event that a Successor shall succeed to the interests of
Landlord under the Lease, the Successor shall have no obligation, nor incur any
liability, beyond its then interest, if any, in the Property and Tenant shall
look exclusively to such interest of the Successor, if any, in the Property for
the payment and discharge of any obligations imposed upon the Successor
hereunder or under the Lease and the Successor is hereby released or relieved of
any other liability hereunder and under the Lease. Tenant agrees that with
respect to any judgment which may be obtained or secured by Tenant against the
Successor, Tenant shall look solely to the estate or interest owned by the
Successor in
H-5
<PAGE> 163
the Property and Tenant will not collect or attempt to collect any such judgment
out of any other assets of the Successor.
8. In the event that Holder notifies Tenant of an Event of Default under
the Mortgage and demands that Tenant pay rent and all other sums due under the
Lease to Holder, Tenant agrees that (waiving any proof of the occurrence of such
event of default other than receipt of Holder's notice) it shall, subject to its
set-off rights and other rights under the Lease, pay rent and all other sums due
under the Lease directly to Holder, provided that Holder covenants and agrees to
indemnify and hold harmless Tenant from any costs, expenses, claims, demands,
causes of action, damages, or liabilities suffered by Tenant arising from the
demand from Holder that Tenant pay rents or other sums due under the Lease to
Holder.
9. This Agreement may not be modified except by an agreement in writing
signed by the parties or their respective successors in interest. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, their
respective successors and assigns.
10. Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Mortgage except as specifically set forth herein.
11. Tenant agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
with respect to the Mortgage.
12. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement shall be made in accordance with Paragraph 29 of the
Lease, to the party under this Agreement to whom the notice, demand or request
is being made, which in the case of Holder shall be at the address noted above.
Any party hereto may change the place that notices and demands are to be sent by
written notice delivered in accordance with this Agreement.
13. This Agreement shall be governed by the laws of the State of
Illinois. If any of the terms of this Agreement or the application thereof to
any person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of any such terms to any person
or circumstances other than those as to which it is invalid or unenforceable
shall not be affected thereby, and each term of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
H-6
<PAGE> 164
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
SWISS BANK CORPORATION,
NEW YORK BRANCH
By:
------------------------------
Name:
------------------------
Title:
-----------------------
Attest:
--------------------------
Name:
------------------------
Title:
-----------------------
MORTON THIOKOL, INC.
By:
------------------------------
Name:
------------------------
Title:
-----------------------
Attest:
--------------------------
Name:
------------------------
Title:
-----------------------
H-7
<PAGE> 165
Acknowledgement and Consent of Landlord
---------------------------------------
Landlord acknowledges and consents to the terms and conditions of the
foregoing Subordination, Non-Disturbance and Attornment Agreement and agrees
that Tenant, upon receipt from Holder of notice that Landlord has defaulted
under the Mortgage and has failed to cure the default within any applicable
grace period set forth in the Mortgage, shall, subject to Tenant's rights under
the Lease, pay to Holder directly all rent and other sums due and to become due
under the Lease regardless of whether such notice is consented to by Landlord;
and Landlord hereby waives any right to demand from Tenant payment to Landlord
of such rent and other sums after Holder has sent any such notice to Tenant.
This document is executed by Chicago Title and Trust Company, not
personally but as Trustee as aforesaid in the exercise of the power and
authority conferred upon and vested in it as such Trustee, and under the express
direction of the beneficiaries of a certain Trust Agreement dated April 16,
1985, known as Trust No. 1086781 at Chicago, Illinois, to all provisions of
which Trust Agreement it is expressly made subject. It is expressly understood
and agreed that nothing in this document contained shall be construed as
creating any liability whatsoever against the Trustee, and in particular without
limiting the generality of the foregoing, there shall be no personal liability
to pay any indebtedness accruing hereunder or to perform any covenant, either
express or implied herein contained, to keep preserve or sequester any property
of said Trust and that all personal liability of said Trustee is hereby
expressly waived, and so far as the parties hereto are concerned they shall look
solely to the Trust Estate from time to time subject to the provisions of said
Trust Agreement for the payment thereof.
LANDLORD:
CHICAGO TITLE AND TRUST
COMPANY, an Illinois
corporation, as Trustee
as aforesaid
By:
------------------------------
Name:
------------------------
Title:
-----------------------
Attest:
--------------------------
Name:
------------------------
Title:
-----------------------
H-8
<PAGE> 166
STATE OF ILLINOIS: )
) SS.
COUNTY OF COOK )
On the ____ day of __________, 1988, before me personally came
_______________, to me known, who, being duly sworn by me did depose and say he
resides at _________________, that he is the _________________ of MORTON
THIOKOL, INC., a Delaware corporation, the corporation mentioned in, and which
executed the foregoing instrument and that he signed his name thereto by order
of Board of Directors of said Corporation.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
STATE OF ILLINOIS: )
) SS.
COUNTY OF COOK )
On the ____ day of __________, 1988, before me personally came
________________, to me known, who, being duly sworn by me did depose and say he
resides at ____________________, that he is the _______________ of MORTON
THIOKOL, INC., a Delaware corporation, the corporation mentioned in, and which
executed the foregoing instrument and that he signed his name thereto by order
of Board of Directors of said Corporation.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
H-9
<PAGE> 167
STATE OF ILLINOIS: )
) ss.
COUNTY OF COOK )
On the ___ day of _________, 1988, before me personally came
_________________, to me known, who, being duly sworn by me did depose and say
he resides at _________________, that he is the ____________________ of SWISS
BANK CORPORATION, a branch of a banking corporation organized under the laws of
Switzerland, the corporation mentioned in, and which executed the foregoing
instrument and that he signed his name thereto by order of Board of Directors of
said Corporation.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
STATE OF ILLINOIS: )
) ss.
COUNTY OF COOK )
On the ___ day of __________, 1988, before me personally came
_______________, to me known, who, being duly sworn by me did depose and say he
resides at ____________________, that he is the _______________ of SWISS BANK
CORPORATION, a branch of a banking corporation organized under the laws of
Switzerland, the corporation mentioned in, and which executed the foregoing
instrument and that he signed his name thereto by order of Board of Directors of
said Corporation.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
H-10
<PAGE> 168
STATE OF ILLINOIS: )
) ss.
COUNTY OF COOK )
On the ___ day of _________, 1988, before me personally came
________________, to me known, who, being duly sworn by me did depose and say he
resides at _________________, that he is the __________________ of CHICAGO TITLE
AND TRUST COMPANY, an Illinois corporation, the corporation mentioned in, and
which executed the foregoing instrument and that he signed his name thereto by
order of Board of Directors of said Corporation.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
STATE OF ILLINOIS: )
) ss.
COUNTY OF COOK )
On the ___ day of ________, 1988, before me personally came
_____________, to me known, who, being duly sworn by me did depose and say he
resides at ____________________, that he is the __________________ of CHICAGO
TITLE AND TRUST COMPANY, an Illinois corporation, the corporation mentioned in,
and which executed the foregoing instrument and that he signed his name thereto
by order of Board of Directors of said Corporation.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
H-11
<PAGE> 169
EXHIBIT A TO SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
LEGAL DESCRIPTION OF LAND
-------------------------
PARCEL 1 (THE FEE PARCEL):
ALL OF WEST WATER STREET LYING SOUTH OF THE SOUTH LINE OF RANDOLPH STREET, LYING
NORTH OF THE NORTH LINE OF WASHINGTON STREET, LYING WEST OF AND ADJOINING
WHARFING LOTS 1 TO 5, BOTH INCLUSIVE, IN BLOCK "0" IN ORIGINAL TOWN OF CHICAGO
IN THE SOUTH PART OF SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD
PRINCIPAL MERIDIAN, AND LYING EAST OF A DIRECT LINE DRAWN FROM A POINT ON THE
SOUTH LINE OF LOT 9 IN BLOCK 44 IN ORIGINAL TOWN OF CHICAGO, 41.87 FEET EAST OF
THE SOUTH WEST CORNER OF SAID LOT 9, TO A POINT ON THE NORTH LINE OF LOT 1 IN
SAID BLOCK 44, 85.70 FEET EAST OF THE NORTH WEST CORNER OF SAID LOT 1, AS SHOWN
AND LOCATED ON THE PLAT RECORDED AUGUST 18, 1855, AS DOCUMENT NUMBER 62008 IN
COOK COUNTY, ILLINOIS.
PARCEL 2 (THE GROUND LEASE PARCEL):
THAT PART OF LOTS 1, 4, 5, 8 AND 9 LYING WEST OF A DIRECT LINE DRAWN FROM THE
POINT OF INTERSECTION OF THE WEST LINE OF WEST WATER STREET AND THE SOUTH LINE
OF SAID LOT 9, BEING A POINT ON THE SOUTH LINE OF LOT 9 APPROXIMATELY 41.87 FEET
EAST OF THE SOUTH WEST CORNER OF LOT 9, TO THE POINT OF INTERSECTION OF THE WEST
LINE OF WEST WATER STREET AND THE NORTH LINE OF LOT 1, BEING APPROXIMATELY 85.70
FEET EAST OF THE NORTH WEST CORNER OF LOT 1 IN BLOCK 44 IN ORIGINAL TOWN OF
CHICAGO IN SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, ACCORDING TO THE MAP OF THE TOWN OF CHICAGO BY JAMES THOMPSON DATED
AUGUST 4, 1830 AND FILED FOR RECORD MAY 29, 1837 AND RECORDED JULY 6, 1837 IN
BOOK H OF MAPS, PAGE 298 AS DOCUMENT 5060 IN COOK COUNTY, ILLINOIS.
H-12
<PAGE> 170
EXHIBIT I TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
RULES AND REGULATIONS
---------------------
1. The sidewalks, halls, passages, and stairways shall not be obstructed
by Tenant and Landlord shall retain the right of reasonable control and prevent
access thereto of all persons whose presence in the reasonable judgment of
Landlord shall be prejudicial to the safety, character, reputation and interest
of the Building and its tenants. Nothing herein contained shall be construed to
prevent such access to persons with whom Tenant normally deals in the ordinary
course of its business unless such persons are engaged in illegal activities.
The Landlord shall from time to time establish reasonable security controls and
regulations for the purpose of regulating access to the Building. Tenant shall
cooperate and participate in all reasonable security programs affecting the
Building.
2. The sashes, sash doors, windows, glass lights and any lights or
skylights that reflect or admit light into multi-tenant halls or other common
areas of the Building shall not be covered or obstructed without Landlord's
consent. The toilet rooms, water and wash closets and other water apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substances of any kind whatsoever shall be thrown
therein.
3. Tenant shall not install any curtain, blind, shade or screen in
connection with any window or door of the Premises without Landlord's prior
consent, which shall not be unreasonably withheld or delayed, provided that such
curtain, blind, shade or screen does not affect the aesthetics of the exterior
of the Building and does not increase the cost of cleaning. No awning shall be
permitted on any part of the Premises.
4. No safes or other objects heavier than the lift capacity of the
freight elevators of the Building shall be brought into or installed on the
Premises. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which is allowed by law. The moving of safes
shall occur only between such hours as may be reasonably designated by, and only
upon previous notice to, Landlord. Freight, furniture and other bulky matter
shall be received into the Building and carried into the elevators during hours
and in a manner reasonably approved by Landlord.
5. Tenant shall not use or permit to be used any foul or noxious gas or
substance in the Premises or permit or suffer the Premises to be occupied or
used in a manner that is dangerous to other tenants and occupants of the
Building by reason of noise, odor and/or vibrations, nor shall any animals or
birds (except seeing eye dogs) be kept in or about the Building.
6. Except for printing and cleaning solvents used in Tenant's printing
and painting operations, which shall be used and stored in accordance with
governmental regulations and manufacturer's specifications, Tenant shall not use
or permit to be brought into or kept in the Premises or on the property any
inflammable oils or fluids, or any explosive or other articles deemed hazardous
to person or property; or do or permit to be
I-1
<PAGE> 171
done any act or thing which will invalidate or be in conflict with fire or other
insurance policies covering the property or its operation, or the Premises, or
part of either; or do or permit to be done anything in or upon the Premises
which shall not comply with all rules, orders, regulations or requirements of
the Illinois Inspection and Rating Bureau, the Fire Insurance Rating
Organization, the Board of Fire Underwriters, or any similar organization (and
Tenant shall at all times comply with all set rules, regulations or
requirements), or which shall increase the rate of insurance on the Building,
its appurtenances or contents. If by reason of the failure of Tenant to comply
with the provisions of this paragraph, any insurance payable by Landlord for all
or any part of the Building increased above normal insurance premiums for
insurance not covering the items aforesaid, Landlord shall have the right
specified in Paragraph 12 of the Lease.
7. Tenant, upon termination of the tenancy, shall deliver to Landlord
all keys of offices, rooms and toilet rooms which have been furnished Tenant or
which Tenant shall have made.
8. Except as permitted in the Lease and for normal decorating, Tenant
shall not install any floor covering in the Premises without the Landlord's
prior approval of the manner and method of applying such floor covering.
9. On Saturdays (except from 8:00 A.M. to 1:00 P.M.), Sundays and
Holidays (as defined in the Lease) and other days between the hours of 6:00 P.M.
and 7:00 A.M. the following day, access to the Building, halls, corridors,
elevators or stairways in the Building, may be restricted so that access may be
gained only by exhibiting an appropriate security pass or by otherwise complying
with the established building security regulations.
10. Except as provided in the Lease, Tenant assumes responsibility for
reasonably protecting the Premises from theft, robbery and pilferage which
includes keeping doors locked and windows and other means of entry to the
Premises closed.
11. Door keys or other entry devices for doors in the Premises will be
furnished at the commencement of the Lease by Landlord. Tenant shall have the
absolute right to affix additional locks or other entry devices on doors to and
throughout the Premises, provided Tenant furnishes Landlord with door keys for
such additional locks or access for other entry devices.
12. Tenant shall cooperate reasonably with Landlord to assure the most
effective operation of the Building's heating and air conditioning and Tenant
shall refrain from adjusting any controls of the Building's heating and
air-conditioning other than of thermostats in the Premises installed for
Tenant's use. Tenant shall keep public corridor doors closed and shall not open
any windows except that if the air circulation shall not be in operation,
windows which are openable may be opened.
13. Except as permitted in the Lease, Tenant shall not do any cooking in
the Premises.
14. Except as permitted in the Lease, Tenant shall not paint, display,
inscribe or affix any sign, trademark, picture, advertising, notice, lettering
or direction on any part of the outside or inside of the Building, or on the
Premises, except on the public hallway doors of the Premises.
I-2
<PAGE> 172
15. Tenant shall not advertise the business, profession or activities of
Tenant in any manner which violates the letter or spirit of any code of ethics
adopted by any recognized association or organization pertaining thereto. Other
than Tenant for so long as Tenant has the right to name the Building pursuant to
the terms of the Lease, no occupant or other tenant of the building (other than
Tenant) shall use the name of the Building for any purpose other than street
address, or use any picture or likeness of the Building, or any other name by
which the Building may from time to time be known on any letterhead, envelope,
circular, notice, advertisement, container or wrapping material without the
prior written consent of Landlord.
16. Except as provided in the Lease, Tenant shall not place any radio or
television antenna aerial wires or other equipment in any part of the inside or
outside of the Building other than the inside of the Premises; operate or permit
to be operated any musical or sound producing instrument or device inside or
outside the Premises which may be heard outside the Premises, operate any
electrical device which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere.
17. Tenant shall not place anything or allow anything to be placed near
the glass of any door, partition, or window which may be unsightly from outside
the Premises; take or permit to be taken in or out of other entrances of the
Building, or take or permit on other elevators, any item normally taken in or
out through the trucking concourse or service doors or in or on freight
elevators; or, whether temporarily, or otherwise, allow anything to remain in,
place or store anything in, or obstruct in any way, any passageway, exit,
stairway, elevator, shipping platform, or truck concourse. Tenant shall lend its
reasonable cooperation to keep such areas free from all obstructions and in a
clean and sightly condition and move all supplies, furniture and equipment
promptly after receipt directly to the Premises and move all such items and
waste, other than waste customarily removed by employees of the Building, being
taken from the Premise directly to the shipping platform at or about the time
arranged for removal therefrom.
18. Except as permitted under the Lease and for normal decorating,
Tenant shall not do any painting or decorating in the Premises, or mark, paint,
cut or drill into, drive nails or screws into, or in any way deface any part of
the Premises or the Building, outside or inside, without the prior written
consent of Landlord.
19. Bicycles shall not be permitted in the Building, except in
designated locations which are reasonably acceptable to Tenant and Landlord.
I-3
<PAGE> 173
EXHIBIT J TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
MEMORANDUM OF LEASE
-------------------
This Memorandum of Lease dated as of August 31, 1988 by and between
Chicago Title and Trust Company, not personally but solely as Trustee under
Trust Agreement dated April 16, 1985 and known as Trust No. 1086781 (hereinafter
referred to as "Landlord"), and Morton Thiokol, Inc., a Delaware corporation
(hereinafter called "Tenant").
WITNESSETH:
That by lease (hereinafter called "Lease") made as of August 31, 1988,
Landlord has demised and leased to Tenant, and Tenant has leased from Landlord
the Premises ("Premises") commonly known as the 25th through 36th floors in the
building (the "Building") constructed on the land legally described on Exhibit
"1" attached hereto and made an integral part hereof, and commonly known as 100
North Riverside in the City of Chicago, Cook County, Illinois, together with all
appurtenances thereto, commencing on the completion of certain improvements to
be installed in the Premises, for an initial term of sixty-five (65) years as to
a portion thereof.
This Memorandum of Lease is made and recorded to give notice of the
existence of the tenancy created by the Lease. The Lease grants to Tenant
certain rights to expand the Premises, and certain rights to extend the term of
the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of
Lease to be fully executed and sealed as of the day and year first above
written.
LANDLORD:
CHICAGO TITLE AND TRUST COMPANY,
not personally but as Trustee
aforesaid
ATTEST: By:
---------------------------- ------------------------------
Title: Title
-------------------- ------------------------
(CORPORATE SEAL)
TENANT:
MORTON THIOKOL, INC., a Delaware
corporation
ATTEST: By:
---------------------------- ------------------------------
Title: Title
-------------------- ------------------------
(CORPORATE SEAL)
This document was prepared by Street Address of Property:
[and when recorded return to]: All of vacated West Water
Keck, Mahin & Cate Street south of Randolph
8300 Sears Tower Street and north of
233 South Wacker Drive Drive Washington Street,
Chicago, Illinois 60606 Chicago, Illinois
(312) 876-3481 P.I.N.____________________
Attention: Dennis M. Wilson
J-1
<PAGE> 174
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this ______ day of
_________, by ____________________ and ___________________, the
__________________ and ____________________ respectively of Morton Thiokol, Inc.
-------------------------------
Notary Public
My Commission Expires:_______________
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this _____ day of
__________, by ________________________________ and
______________________________, the ____________________ and
_________________________ respectively of Chicago Title and Trust Company, as
Trustee aforesaid.
-------------------------------
Notary Public
My Commission Expires:__________
J-2
<PAGE> 175
EXHIBIT 1 TO MEMORANDUM OF LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
LEGAL DESCRIPTION OF LAND
-------------------------
PARCEL 1 (THE FEE PARCEL):
ALL OF WEST WATER STREET LYING SOUTH OF THE SOUTH LINE OF RANDOLPH STREET, LYING
NORTH OF THE NORTH LINE OF WASHINGTON STREET, LYING WEST OF AND ADJOINING
WHARFING LOTS 1 TO 5, BOTH INCLUSIVE, IN BLOCK "O" IN ORIGINAL TOWN OF CHICAGO
IN THE SOUTH PART OF SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD
PRINCIPAL MERIDIAN, AND LYING EAST OF A DIRECT LINE DRAWN FROM A POINT ON THE
SOUTH LINE OF LOT 9 IN BLOCK 44 IN ORIGINAL TOWN OF CHICAGO, 41.87 FEET EAST OF
THE SOUTH WEST CORNER OF SAID LOT 9, TO A POINT ON THE NORTH LINE OF LOT 1 IN
SAID BLOCK 44, 85.70 FEET EAST OF THE NORTH WEST CORNER OF SAID LOT 1, AS SHOWN
AND LOCATED ON THE PLAT RECORDED AUGUST 18, 1855, AS DOCUMENT NUMBER 62008 IN
COOK COUNTY, ILLINOIS.
PARCEL 2 (THE GROUND LEASE PARCEL):
THAT PART OF LOTS 1, 4, 5, 8 AND 9 LYING WEST OF A DIRECT LINE DRAWN FROM THE
POINT OF INTERSECTION OF THE WEST LINE OF WEST WATER STREET AND THE SOUTH LINE
OF SAID LOT 9, BEING A POINT ON THE SOUTH LINE OF LOT 9 APPROXIMATELY 41.87 FEET
EAST OF THE SOUTH WEST CORNER OF LOT 9, TO THE POINT OF INTERSECTION OF THE WEST
LINE OF WEST WATER STREET AND THE NORTH LINE OF LOT 1, BEING APPROXIMATELY 85.70
FEET EAST OF THE NORTH WEST CORNER OF LOT 1 IN BLOCK 44 IN ORIGINAL TOWN OF
CHICAGO IN SECTION 9, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, ACCORDING TO THE MAP OF THE TOWN OF CHICAGO BY JAMES THOMPSON DATED
AUGUST 4, 1830 AND FILED FOR RECORD MAY 29, 1837 AND RECORDED JULY 6, 1837 IN
BOOK H OF MAPS, PAGE 298 AS DOCUMENT 5060 IN COOK COUNTY, ILLINOIS.
J-3
<PAGE> 176
EXHIBIT K TO OFFICE LEASE FOR
MORTON THIOKOL BULIDING
100 NORTH RIVERSIDE
-------------------
ROOFTOP COMMUNICATIONS SPACE
----------------------------
[EXHIBIT OMITTED]
K-1
<PAGE> 177
EXHIBIT L TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
CAFETERIA LOCATION
------------------
[EXHIBIT OMITTED]
<PAGE> 178
EXHIBIT M TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
EXPANSION SPACE
---------------
If none or part of the 24th floor is leased by Tenant as Part 4, the initial
sequence of Expansion Space will be as shown in Column 1, below.
If the 24th floor or the 24th floor and part of the 23rd floor are leased by
Tenant as Part 4, the initial sequence of Expansion Space will be as shown in
Column 2, below.
If the 24th floor and the 23rd floor or the 24th floor, 23rd floor and part of
the 22nd floor are leased by Tenant as Part 4, the initial sequence of Expansion
Space will be as shown in Column 3, below.
If the 24th, 23rd, and 22nd floors are leased by Tenant as Part 4, the initial
sequence of Expansion Space will be as shown in Column 4.
In order to be deemed to have offered to Tenant Expansion Space which
constitutes the eastern half of a floor, Landlord must include in such Expansion
Space at least that area shaded on the plan on page M-2.
INITIAL SEQUENCE SHOWING YEARS IN WHICH HALF FLOORS
---------------------------------------------------
ARE TO BE AVAILABLE FOR EXPANSION
---------------------------------
<TABLE>
<CAPTION>
FLOOR COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4
----- -------- -------- -------- --------
<S> <C> <C> <C> <C>
24* 5th - - -
23* 10th 5th - -
22 (east half) 15th 10th 5th -
22 (west half) 20th 15th 10th 5th
21 (east half) 25th 20th 15th 10th
21 (west half) 30th 25th 20th 15th
20 (east half) 35th 30th 25th 20th
20 (west half) 40th 35th 30th 25th
19 (east half) 45th 40th 35th 30th
19 (west half) 50th 45th 40th 35th
18 (east half) 55th 50th 45th 40th
18 (west half) 60th 55th 50th 45th
17 (east half) - 60th 55th 50th
17 (west half) - - 60th 55th
16 (east half) - - - 60th
</TABLE>
* Since the 23rd and the 24th floors are partially used for mechanical
space, it is agreed that the portions of the floors which are not
mechanical space are equivalent to half floors.
M-1
<PAGE> 179
EXHIBIT M TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
EXPANSION SPACE
---------------
[EXHIBIT OMITTED]
M-2
<PAGE> 180
EXHIBIT N TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
CPI ADJUSTMENT LIMITS
---------------------
<TABLE>
<CAPTION>
FRACTION LIMITS
FRACTION FOR BALANCE OF
CPI YEAR LIMITS FOR PART 1 PREMISES
- -------- ----------------- ---------------
<S> <C> <C>
1 2/100 2/100
2 4.04/100 4/100
3 6.12/100 6/100
4 8.24/100 8/100
5 10.41/100 10/100
6 12.62/100 12/100
7 14.87/100 14/100
8 17.17/100 16/100
9 19.51/100 18/100
10 21.90/100
11 24.34/100
12 26.82/100
13 29.36/100
14 31.19/100
</TABLE>
N-1
<PAGE> 181
EXHIBIT O TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
ZONING LAWSUIT
--------------
American National Bank and Trust Company, as Trustee under Trust Number 49223,
Plaintiff, v. The City of Chicago, a municipal corporation, Defendant, and
Rubloff, Inc., a corporation, Intervenor-Defendant, No. 87 CH 9660, in the
Circuit Court of Cook County, Illinois, County Department, Chancery Division.
O-1
<PAGE> 182
EXHIBIT P TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
-------------------
IBT ENTRANCE SIGNAGE
--------------------
[EXHIBIT OMITTED]
P-1
<PAGE> 183
WXHIBIT Q TO OFFICE LEASE FOR
MORTON THIOKOL BUILDING
100 NORTH RIVERSIDE
------------------
OFFERED SPACE 19TH FLOOR
------------------------
[EXHIBIT OMITTED]
Q-1
<PAGE> 184
EXHIBIT C
The attached demolition and alterations are approved subject to any
necessary consents by Landlord under the Master Lease and provided that the
alterations are consistent in design with and of a quality comparable to the
existing improvements.
<PAGE> 1
Exhibit 10.10
OFFICE LEASE
------------
CARRIER CENTER DALLAS
DALLAS CARRIER ASSOCIATES, LTD.,
a Texas limited partnership
as Landlord,
and
UNIVERSAL ACCESS,
an Illinois corporation,
as Tenant
<PAGE> 2
CARRIER CENTER DALLAS
INDEX
ARTICLE SUBJECT MATTER PAGE
- ------- -------------- ----
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND
COMMON AREAS 1
ARTICLE 2 LEASE TERM; OPTION TERMS 2
ARTICLE 3 BASE RENT 3
ARTICLE 4 ADDITIONAL RENT 4
ARTICLE 5 USE OF PREMISES 10
ARTICLE 6 SERVICES AND UTILITIES 10
ARTICLE 7 REPAIRS 14
ARTICLE 8 ADDITIONS AND ALTERATIONS 15
ARTICLE 9 COVENANT AGAINST LIENS 16
ARTICLE 10 INSURANCE 17
ARTICLE 11 DAMAGE AND DESTRUCTION 19
ARTICLE 12 NONWAIVER 21
ARTICLE 13 CONDEMNATION 22
ARTICLE 14 ASSIGNMENT AND SUBLETTING 22
ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES 26
ARTICLE 16 HOLDING OVER 26
ARTICLE 17 ESTOPPEL CERTIFICATES 27
ARTICLE 18 SUBORDINATION 27
ARTICLE 19 DEFAULTS; REMEDIES 28
ARTICLE 20 COVENANT OF QUIET ENJOYMENT 30
ARTICLE 21 SECURITY DEPOSIT 30
ARTICLE 22 SUPPLEMENTAL EQUIPMENT 31
ARTICLE 23 SIGNS 33
ARTICLE 24 COMPLIANCE WITH LAW 34
ARTICLE 25 LATE CHARGES 34
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT 34
ARTICLE 27 ENTRY BY LANDLORD 35
ARTICLE 28 [Intentionally Deleted] 35
ARTICLE 29 MISCELLANEOUS PROVISIONS 35
EXHIBITS
A OUTLINE OF PREMISES
B TENANT WORK LETTER
C FORM OF NOTICE OF LEASE TERM DATES
D RULES AND REGULATIONS
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
F ANTENNA SPACE RIDER
(a)
<PAGE> 3
CARRIER CENTER DALLAS
INDEX OF MAJOR DEFINED TERMS
LOCATION OF
DEFINITION IN
DEFINED TERMS OFFICE LEASE
- ------------- -------------
Abatement Event 13
Additional Amp Access Fee 10
Additional Rent 4
Alterations 15
Antenna Exhibit H
Antenna Conduit Exhibit H
Antenna Conduit Space Exhibit H
Antenna Space Exhibit H
Antenna Space Effective Date Exhibit H
Auxiliary Space 31
Base Building 15
Base Rent 3
Base Year 4
Brokers 38
Building 1
Building Common Areas 1
Building Structure 14
Building Systems 14
Carrier Center Dallas 1
CDS 13
Claims 32
Common Areas 1
Connecting Equipment 31
Customer Subleases 25
Customers 25
Damage Termination Date 21
Damage Termination Notice 21
Direct Expenses 4
Effective Date 4
Eligibility Period 13
Emergency Generator 11
Estimate 9
Estimate Statement 9
Estimated Excess 9
Excess 8
Expense Year 4
Fair Rental Value 3
Fire-Suppression System 30
Force Majeure 37
Generator Access Fee 11
Generator Maintenance Fee 11
HVAC 10
Landlord i
Landlord Parties 17
Landlord Repair Notice 19
Lease i
Lease Commencement Date 2
Lease Expiration Date 2
Lease Term 2
Lease Year 2
(b)
<PAGE> 4
License 30
Lines 31
Mail 37
MDF 13
MPOE 13
Notices 37
Operating Expenses 4
Option Rent 3
Option Rent Notice 3
Original Tenant 2
Premises 1
Project 1
Project Common Areas 1
Renovations 39
Rent 4
Security Deposit 30
Statement 8
Subject Space 22
Summary i
Supplemental Equipment 31
Tax Expenses 7
Tenant i
Tenant Damage Event 20
Tenant Work Letter 1
Tenant's Conduit 31
Tenant's HVAC Equipment 30
Tenant's Share 8
Transfer Notice 22
Transfer Premium 24
Transferee 22
Transfers 22
(c)
<PAGE> 5
CARRIER CENTER DALLAS
OFFICE LEASE
This Office Lease (the "LEASE"), dated as of the date set forth in
Section 1 of the Summary of Basic Lease Information (the "Summary"), below, is
made by and between DALLAS CARRIER ASSOCIATES, Ltd., a Texas limited partnership
("LANDLORD"), and UNIVERSAL ACCESS, an Illinois corporation ("TENANT").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE DESCRIPTION
1. Date: May 20 1999 (the "EFFECTIVE DATE")
2. Premises
(Article 1).
2.1 Building: 400 South Akard St.
Dallas, Texas
2.2 Premises: Approximately 8,000 rentable square
feet of space located on the 6th
floor of the Building, and known as
Suite 605, as further set forth in
EXHIBIT A to the Office Lease.
3. Lease Term
(Article 2).
3.1 Length of Term: One hundred eighty (180) months.
3.2 Lease Commencement Date: The earlier to occur of (i) the
date upon which Tenant first
commences to conduct business in
the Premises, and (ii) the date
which is one hundred eighty (180)
days following the Effective Date
(as that term is defined in Section
1 of the Summary of Basic Lease
Information above). The Target
Lease Commencement Date is November
10, 1999
3.3 Lease Expiration Date: The date immediately preceding the
one hundred eighty (180) month
anniversary of the Lease
Commencement Date.
4. Base Rent (Article 3):
<TABLE>
<CAPTION>
Annual
Monthly Rental Rate
Months of Annual Installment per Rentable
Lease Term Base Rent of Base Rent Square Foot
---------- --------- ------------ -----------
<S> <C> <C> <C>
1-12 $152,000.00 $12,666.67 $19.000
13-24 $155,040.00 $12,920.00 $19.380
25-36 $158,140.80 $13,178.40 $19.768
37-48 $161,303.62 $13,441.97 $20.163
49-60 $164,529.69 $13,710.81 $20.566
61-72 $167,820.28 $13,985.02 $20.978
73-84 $171,176.69 $14,264.72 $21.397
85-96 $174,600.22 $14,550.02 $21.825
97-108 $178,092.23 $14,841.02 $22.262
</TABLE>
(i)
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
109-120 $181,654.07 $15,137.84 $22.707
121-132 $185,287.15 $15,440.60 $23.161
133-144 $188,992.89 $15,749.41 $23.624
145-156 $192,772.75 $16,064.40 $24.097
157-168 $196,628.21 $16,385.68 $24.579
169-180 $200,560.77 $16,713.40 $25.070
</TABLE>
5. Base Year Calendar year 1999. (Article 4):
6. Tenant's Share Approximately 3.81%.
(Article 4):
7. Permitted Use General office use and
(Article 5): telecommunications switching
consistent with a first-class
telecommunications building
8. Security Deposit $16,713.40
(Article 21):
9. Address of Tenant 100 N. Riverside Plaza
(Section 29.18): Suite 2200
Chicago, IL 60606
Attn: Peter Burns
(Prior to Lease Commencement Date)
400 South Akard St,
Suite 605
Dallas, TX
(After Lease Commencement Date)
10. Address of Landlord See Section 29.18 of the Lease.
(Section 29.18):
11. Broker(s) Landlord's Representative
(Section 29.24): Telecom Real Estate Services, Inc.
617 S. Olive Street, Suite 810
Los Angeles, CA 90071
Tenant's Representative
Dean Topping & Co.
801 W. Adams St., Suite 200
Chicago, IL 60607
(ii)
<PAGE> 7
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the premises set forth in Section 2.2 of the
Summary (the "Premises"). The outline of the Premises is set forth in EXHIBIT A
attached hereto. The parties hereto agree that the lease of the Premises is upon
and subject to the terms, covenants and conditions herein set forth, and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of such terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of EXHIBIT A
is to show the approximate location of the Premises in the "Building," as that
term is defined in Section 1.1.2, below, only, and such Exhibit is not meant to
constitute an agreement, representation or warranty as to the construction of
the Premises, the precise area thereof or the specific location of the "Common
Areas," as that term is defined in Section 1.1.3, below, or the elements thereof
or of the accessways to the Premises or the "Project," as that term is defined
in Section 1.1.2, below. Except as specifically set forth in this Lease and in
the work letter attached hereto as EXHIBIT B (the "TENANT WORK LETTER"),
Landlord shall not be obligated to provide or pay for any improvements, work or
services related to the improvement, remodeling or refurbishment of the
Premises, and Tenant shall accept the Premises in its "AS IS" condition on the
Commencement Date. Tenant also acknowledges that neither Landlord nor any agent
of Landlord has made any representation or warranty regarding the condition of
the Premises, the Building or the Project or with respect to the suitability of
any of the foregoing for the conduct of Tenant's business. The taking of
possession of the Premises by Tenant shall conclusively establish that the
Premises and the Building were at such time in good and sanitary order,
condition and repair subject to (i) the completion of the Base Premises Work and
(ii) any latent defects identified by Tenant in writing to Landlord within the
first ninety (90) days following the Effective Date.
1.1.2 THE BUILDING AND THE PROJECT. The Premises are part of
the building set forth in Section 2.1 of the Summary (the "BUILDING"). The
Building is part of an office project known as "Carrier Center Dallas." The term
"PROJECT," as used in this Lease, shall mean (i) the Building and the Common
Areas, (ii) the land (which is improved with landscaping, subterranean parking
facilities and other improvements) upon which the Building and the Common Areas
are located, and (iii) at Landlord's discretion, any additional real property,
areas, land, buildings or other improvements added thereto outside of the
Project; provided that if Landlord adds any areas to the Project pursuant to
item (iii) above, Tenant's Share shall be equitably adjusted.
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right
to use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project (such areas, together with such
other portions of the Project designated by Landlord, in its discretion,
including certain areas designated for the exclusive use of certain tenants, or
to be shared by Landlord and certain tenants, are collectively referred to
herein as the "COMMON AREAS"). The Common Areas shall consist of the "Project
Common Areas" and the "Building Common Areas." The term "PROJECT COMMON AREAS,"
as used in this Lease, shall mean the portion of the Project designated as such
by Landlord. The term "BUILDING COMMON AREAS," as used in this Lease, shall mean
the portions of the Common Areas located within the Building designated as such
by Landlord. The manner in which the Common Areas are maintained and operated
shall be at the sole discretion of Landlord and the use thereof shall be subject
to such rules, regulations and restrictions as Landlord may make from time to
time. Landlord reserves the right to close temporarily, make alterations or
additions to, or change the location of elements of the Project and the Common
Areas; provided that such alterations or additions do not materially interfere
with or unreasonably disturb Tenant's use and occupancy of the Premises.
<PAGE> 8
1.1.4 ACCESS. Landlord agrees that, subject to Landlord's
reasonable rules and regulations, and access control systems and procedures,
Tenant shall have access to the Premises 24 hours a day, 365 days a year during
the Lease Term. Landlord shall allow Tenant access to the Premises from and
after the Effective Date until the Commencement Date (the "EARLY OCCUPANCY
PERIOD") for the purpose of Tenant installing Tenant's equipment or fixtures
(including Tenant's data and switching equipment) in the Premises. Prior to
Tenant's entry into the Premises as permitted by the terms of this Section
1.1.4, Tenant shall submit a schedule to Landlord, for its approval, which
schedule shall detail the timing and purpose of Tenant's entry. Tenant shall
abide by all terms of this Lease (excepting the payment of Base Rent pursuant to
Section 3.1 unless Tenant commences business operations in the Premises) during
the Early Occupancy Period and shall hold Landlord harmless from and indemnify,
protect and defend Landlord against any loss or damage to the Building or
Premises and against injury to any persons caused by Tenant's actions pursuant
to any early occupancy of the Premises.
1.1.5 RENTABLE SQUARE FEET. The rentable square feet of the
Premises are approximately as set forth in Section 2.2 of the Summary, and the
rentable square feet of the Building is approximately as set forth in Section
2.1 of the Summary. For purposes hereof, the "rentable square feet" of the
Premises shall be calculated by Landlord pursuant to the Standard Method for
Measuring Floor Area in Office Buildings, ANSI Z65.1-1996 ("BOMA"), as
reasonably modified for the Project pursuant to Landlord's standard rentable
area measurements for the Project, to include, among other calculations, a
portion of the common areas and service areas of the Building and Project. The
rentable square feet of the Premises and the rentable square feet of the
Building and/or Project are not subject to adjustment or remeasurement by
Tenant, but are subject to verification from time to time by Landlord through
Landlord's planner/designer, and such verification shall be made in accordance
with the provisions of this Section 1.1.5. Landlord will confirm the rentable
square feet of the Premises following completion of the Base Premises work (as
defined in the Tenant Work Letter). The determination of Landlord's
planner/designer shall be conclusive and binding upon the parties. In the event
that Landlord's planner/designer determines that the rentable square footage
shall be different from those set forth in this Lease, all amounts, percentages
and figures appearing or referred to in this Lease based upon such incorrect
rentable square feet (including, without limitation, the amount of the Base Rent
and Tenant's Share) shall be modified in accordance with such determination. If
such determination is made, it will be confirmed in writing by Landlord to
Tenant.
ARTICLE 2
LEASE TERM; OPTION TERMS
2.1 LEASE TERM. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "LEASE
TERM") shall be as set forth in Section 3.1 of the Summary, shall commence on
the date set forth in Section 3.2 of the Summary (the "LEASE COMMENCEMENT
DATE"), and shall terminate on the date set forth in Section 3.3 of the Summary
(the "LEASE EXPIRATION DATE") unless this Lease is sooner terminated as
hereinafter provided. For purposes of this Lease, the term "Lease Year" shall
mean each consecutive twelve (12) month period during the Lease Term; provided,
however, that the last Lease Year shall end on the Lease Expiration Date. At any
time during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in EXHIBIT C, attached hereto, as a confirmation only of the
information set forth therein, which Tenant shall execute and return to Landlord
within ten (10) business days of receipt thereof.
2.2 OPTION TERM.
2.2.1 OPTION RIGHT. Landlord hereby grants the Tenant named in
the Summary and any permitted transferee pursuant to Section 14.7, below
(collectively, the "ORIGINAL TENANT"), two (2) options to extend the Lease Term
for a period of five (5) years each (the "OPTION TERM"), which options shall be
exercisable only by written notice delivered by Tenant to Landlord as provided
below, provided that, as of the date of delivery of any such notice, Tenant is
not in default under this Lease and Tenant has not previously been in default
under this Lease more than one (1) time during the last twenty four (24) months
of the Lease Term. Upon
2
<PAGE> 9
the proper exercise of any such option to extend, and provided that, as of the
end of the Lease Term, Tenant is not in default under this Lease and Tenant has
not previously been in default under this Lease more than one (1) time during
the last twenty four (24) months of the Lease Term, the Lease Term, as it
applies to the Premises, shall be extended for a period of five (5) years. The
rights contained in this Section 2.2 shall be personal to the Original Tenant
and may only be exercised by the Original Tenant (and not any assignee,
sublessee or other transferee of Tenant's interest in this Lease) if Original
Tenant occupies the entire Premises (except for the occupancy of any permitted
Customers [as defined in Section 14.6 below]).
2.2.2 OPTION RENT. The "Rent," as that term is defined in
Section 4.1, below, payable by Tenant during the applicable Option Term (the
"Option Rent") shall be equal to the greater of (i) the "Fair Rental Value" for
the Premises as of the commencement of the then applicable Option Term, and (ii)
the Rent payable by Tenant for the period immediately prior to the end of the
Lease Term or then applicable Option Term. The "FAIR RENTAL VALUE" shall mean
the rent (including the obligation to directly pay electrical and janitorial
expenses and including additional rent and considering any "base year" or
"expense stop" applicable thereto), including all escalations, at which tenants
using their premises predominantly for telecommunications oriented purposes as
of the commencement of the then applicable Option Term, are leasing
non-sublease, non-encumbered, non-equity space comparable in size, location and
quality to the Premises for a term of five (5) years, which comparable space is
located in the Building or in comparable buildings in the downtown Dallas office
market.
2.2.3 EXERCISE OF OPTION. The applicable option contained in
this Section 2.2 shall be exercised by Tenant, if at all, and only in the
following manner: (i) Tenant shall deliver written notice to Landlord not more
than twelve (12) months nor less than nine (9) months prior to the expiration of
the applicable Lease or Option Term, stating that Tenant may be interested in
exercising its option; (ii) Landlord, after receipt of Tenant's notice, shall
deliver notice (the "OPTION RENT NOTICE") to Tenant not less than six (6) months
prior to the expiration of the applicable Lease or Option Term, setting forth
Landlord's determination of the Option Rent; and (iii) if Tenant wishes to
exercise such option, Tenant shall, on or before the date (the "EXERCISE DATE")
which is the earlier of (A) the date occurring five (5) months prior to the
expiration of the applicable Lease or Option Term, and (B) the date occurring
thirty (30) days after Tenant's receipt of the Option Rent Notice, exercise the
option by delivering written notice thereof to Landlord ("TENANT'S EXERCISE
NOTICE"). Tenant's failure to deliver Tenant's Exercise Notice on or before the
Exercise Date, shall be deemed to constitute Tenant's waiver of its extension
rights hereunder.
2.2.4 Tenant shall have no right to object to the Option Rent
provided by Landlord, and if Tenant disagrees with Landlord's determination of
the Option Rent but Landlord and Tenant are unable to resolve such disagreement
as to the Option Rent prior to the Exercise Date, then either (i) Tenant shall
accept Landlord's determination of the Option Rent by exercising its option to
extend the applicable Lease or Option Term by delivering Tenant's Exercise
Notice to Landlord on or before the Exercise Date, or (ii) Tenant shall be
deemed to have relinquished its option to extend the applicable Lease or Option
Term, in which event Tenant's options to extend the applicable Lease or Option
Term shall be null and void as of the Exercise Date, and Landlord and Tenant
shall have no further liability to the other under this Section 2.2.
ARTICLE 3
BASE RENT
3.1 BASE RENT. Tenant shall pay, without prior notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or, at
Landlord's option, at such other place as Landlord may from time to time
designate in writing, by a check for currency which, at the time of payment, is
legal tender for private or public debts in the United States of America, base
rent for the Premises ("BASE RENT") as set forth in Section 4 of the Summary,
payable in equal monthly installments as set forth in Section 4 of the Summary
in advance on or before the first day of each and every calendar month during
the Lease Term, without any setoff or deduction whatsoever. The Base Rent for
the first full month of the Lease Term shall be paid at
3
<PAGE> 10
the time of Tenant's execution of this Lease. If any Rent payment date
(including the Lease Commencement Date) falls on a day of the month other than
the first day of such month or if any payment of Rent is for a period which is
shorter than one month, the Rent for any fractional month shall accrue on a
daily basis for the period from the date such payment is due to the end of such
calendar month or to the end of the Lease Term at a rate per day which is equal
to 1/365 of the applicable annual Rent. All other payments or adjustments
required to be made under the terms of this Lease that require proration on a
time basis shall be prorated on the same basis.
3.2 BASE RENT ABATEMENT. Notwithstanding anything to the contrary
contained in Section 3.1, Landlord hereby waives Tenant's obligation to pay Base
Rent for the first twelve (12) months after the Lease Commencement Date (the
"ABATEMENT PERIOD"). Landlord agrees to waive Tenant's obligation to pay Base
Rent for the period stated above; provided, however, that if at any time during
the Abatement Period Landlord issues a notice to Tenant respecting a default on
the part of Tenant which default is not cured within the applicable grace
period, if any, Landlord's agreement to waive payment of Base Rent shall be
immediately revoked without further notice to Tenant, and any previous waiver of
Base Rent, Landlord shall be null and void. In any such notice given by
Landlord, Landlord shall have the right to demand any and all Base Rent which
would have been due and payable in accordance with the Lease absent the waiver
contained in this Section 3.2. Notwithstanding anything to the contrary
contained in this Section 3.2, Tenant shall be required to make all payments of
Direct Expenses (including without limitation any Generator Maintenance Fee or
Condenser Water Charge) during the Abatement Period and throughout the Lease
Term.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual "Direct
Expenses," as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease,
respectively allocated to the tenants of the Building, to the extent such Direct
Expenses allocated to the tenants of the Building are in excess of Tenant's
share of Direct Expenses applicable to the "BASE YEAR," as that term is defined
in Section 4.2.1 of this Lease. Such payments by Tenant, together with any and
all other amounts payable by Tenant to Landlord pursuant to the terms of this
Lease (including without limitation the Conduit Rental described in Section 6.4
below), are hereinafter collectively referred to as the "ADDITIONAL RENT", and
the Base Rent and the Additional Rent are herein collectively referred to as
"RENT." All amounts due under this Article 4 as Additional Rent shall be payable
for the same periods and in the same manner as the Base Rent. Without limitation
on other obligations of Tenant which survive the expiration of the Lease Term,
the obligations of Tenant to pay the Additional Rent provided for in this
Article 4 that accrue during the Lease Term shall survive the expiration of the
Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 5
of the Summary.
4.2.2 "DIRECT EXPENSES" shall mean "Operating Expenses" and
"Tax Expenses."
4.2.3 "EXPENSE YEAR" shall mean each calendar year in which
any portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires, provided that Landlord, upon notice to Tenant, may
change the Expense Year from time to time to any other twelve (12) consecutive
month period, and, in the event of any such change, Tenant's Share of Direct
Expenses shall be equitably adjusted for any Expense Year involved in any such
change.
4.2.4 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts of every kind and nature which Landlord pays or accrues during any
Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement,
4
<PAGE> 11
restoration or operation of the Project, or any portion thereof. Without
limiting the generality of the foregoing, Operating Expenses shall specifically
include any and all of the following: (i) the cost of supplying all utilities
(except for utilities provided to the Premises or to the premises of other
tenants in the Building), the cost of operating, repairing, maintaining, and
renovating the utility, telephone, mechanical, sanitary, storm drainage, and
elevator systems, and the cost of maintenance and service contracts in
connection therewith; (ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting any governmental enactments which may
affect Operating Expenses, and the costs incurred in connection with any
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection with
the Project, and the amounts of insurance deductibles or self-insured losses to
the extent otherwise includable in Operating Expenses; (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials used in
the operation, repair and maintenance of the Project, or any portion thereof;
(v) costs incurred in connection with any parking areas servicing the Building;
(vi) fees and other costs, including management fees (such management fees to be
consistent with fees charged in other first class office building in the Dallas
Market), consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project (including city sidewalks); (vii) payments under any equipment
rental agreements and the fair rental value in the Building of any management
office space; (viii) wages, salaries and other compensation and benefits,
including taxes levied thereon, of all persons engaged in the operation,
maintenance and security of the Project; (ix) costs under any instrument
pertaining to the sharing of costs by the Project; (x) operation, repair,
maintenance and replacement of all systems and equipment and components thereof
of the Building except as specifically excluded in Item G below; (xi) the cost
of janitorial (except for janitorial services provided to the Premises or to the
premises of other tenants in the Building), alarm, security and other services,
replacement of wall and floor coverings, ceiling tiles and fixtures in the
Project and in common areas, maintenance and replacement of curbs and walkways,
repair to roofs and re-roofing; (xii) amortization (including interest on the
unamortized cost at a rate equal to the floating commercial loan rate announced
from time by Bank of America, a national banking association, or its successors,
as its prime rate, plus two percent (2%) per annum (the "Interest Rate)) of the
cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof; (xiii)
the cost of capital improvements or other costs incurred in connection with the
Project (A) which are intended to effect economies in the operation or
maintenance of the Project, or any portion thereof, (B) that are required to
comply with present or anticipated conservation programs, (C) which are
replacements or modifications of nonstructural items located in the Project
required to keep the Project in good order or condition, or (D) that are
required under any governmental law or regulation that come into effect
following the Lease Commencement Date; provided, however, that any capital
expenditure shall be amortized (including interest on the unamortized cost at
the Interest Rate in effect at the time such expenditure is placed in service)
over its useful life as Landlord shall reasonably determine, except as
specifically excluded in Item G below; (xiv) costs, fees, charges or assessments
imposed by, or resulting from any mandate imposed on Landlord by, any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute "Tax Expenses" as
that term is defined in Section 4.2.5, below; and (xv) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building. If Landlord is
not furnishing any particular work or service (the cost of which, if performed
by Landlord, would be included in Operating Expenses) to a tenant who has
undertaken to perform such work or service in lieu of the performance thereof by
Landlord, Operating Expenses shall be deemed to be increased by an amount equal
to the additional Operating Expenses which would reasonably have been incurred
during such period by Landlord if it had at its own expense furnished such work
or service to such tenant. If the Project is less than ninety-five percent (95%)
occupied during all or a portion of the Base Year or any Expense Year Landlord
shall make an appropriate adjustment to the components of Operating Expenses for
such year to determine the amount of Operating Expenses that would have been
incurred had the Building been ninety-five percent (95%) occupied; and the
amount so determined shall be deemed to have been the amount of Operating
Expenses for such year. Operating Expenses for the Base Year shall not include
market-wide labor-rate increases due to extraordinary circumstances, including,
but not limited to, boycotts and strikes, and utility rate increases due to
extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages. In no event
5
<PAGE> 12
shall the components of Direct Expenses for any Expense Year related to
electrical costs be less than the components of Direct Expenses related to
electrical costs in the Base Year.
Notwithstanding the foregoing, for purposes of this Lease,
Operating Expenses shall not, however, include:
(A) bad debt expenses and interest, principal payments,
attorneys' fees, points and fees on debts, including lender costs and closing
costs (except in connection with the financing of items which may be included in
Operating Expenses) or amortization on any ground lease, mortgage or mortgages
or any other debt instrument encumbering the Building or Project;
(B) marketing costs, including leasing commissions, incurred
in connection with lease, sublease and/or assignment transactions with present
or prospective tenants or other occupants of the Project;
(C) legal fees incurred in negotiating and enforcing tenant
leases;
(D) costs, including permit, license and inspection costs,
incurred with respect to the installation of other tenants' or occupants'
improvements made for tenants or other occupants in the Project or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants in the Project;
(E) the cost of providing any service directly to and paid
directly by any tenant;
(F) costs of any items (including, but not limited to, costs
incurred by Landlord for the repair of damage to the Project or for items which
are reimbursable under any contractor, manufacturer or supplier warranty), to
the extent Landlord receives reimbursement from insurance proceeds (or would
have received had Landlord maintained the insurance required under this Lease)
or from a contractor, manufacturer, supplier or any other third party (other
than reimbursement by tenants pursuant to the Operating Expenses pass-through
provisions of their leases); such proceeds shall be credited to Operating
Expenses in the year in which received, except that any deductible amount under
any insurance policy shall be included within Operating Expenses;
(G) costs of capital additions, capital alterations or
capital improvements (including any replacements) in excess of a total of
$15,000 for the Building per Expense Year, except those set forth in Section
4.2.4 (xiii) above;
(H) depreciation, amortization and interest payments, except
as specifically included in Operating Expenses pursuant to the terms of this
Lease and except on materials, tools, supplies and vendor-type equipment
purchased by Landlord to enable Landlord to supply services Landlord might
otherwise contract for with a third party, where such depreciation, amortization
and interest payments would otherwise have been included in the charge for such
third party's services, all as determined in accordance with standard accounting
practices and when depreciation or amortization is permitted or required, the
item shall be amortized over its reasonably anticipated useful life;
(I) Tax Expenses;
(J) expenses in connection with services, utilities or other
benefits which are not offered to Tenant or for which Tenant is charged for
directly but which are provided to another tenant or occupant of the Project
without charge, including, but not limited to, above-Building standard heating,
ventilation and air conditioning, janitorial services and exclusive use of
common areas;
(K) costs and the overhead and profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for goods and/or services
in the Project to the extent the same exceeds the costs of such by unaffiliated
third parties on a competitive basis;
(L) Landlord's general corporate overhead and general and
administrative expenses;
6
<PAGE> 13
(M) advertising and promotional expenditures, and costs of
signs in or on the Project identifying the owner of the Project or other
tenants' signs;
(N) tax penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments or file returns when
due;
(O) costs arising from Landlord's charitable or political
contributions;
(P) costs, penalties, fines, awards or interest necessitated
by or resulting from the gross negligence or willful misconduct of Landlord, or
any of its agents, employees or independent contractors;
(Q) rent and other payments under any ground or underlying
lease of the Building or Project;
(R) costs, including, but not limited to, attorneys' fees
associated with the operation of the business of the partnership or entity which
constitutes Landlord or other real property owned by Landlord as the same are
distinguished from the costs of the maintenance, repair and operation of the
Project, including partnership accounting and legal matters, costs of defending
any lawsuits with any mortgagee, and costs of any disputes between Landlord and
its employees, disputes of Landlord with Project management or personnel;
(S) the cost of correcting any latent defects in the initial
design or construction of the Building or the Project improvements other than
any cost arising out of Tenant's Work;
(T) costs of removing or remediating any asbestos or
asbestos containing materials in the Project;
(U) costs incurred to remove, remedy, contain, or treat
hazardous materials, which (i) were in existence in the Building or Project
prior to the Lease Commencement Date, or (ii) are brought into the Building or
Project prior to or after the Lease Commencement Date by Landlord or Landlord's
employees, agents, contractors or tenants and which are of such a nature, at the
time of such introduction, that a federal, state or municipal governmental
authority, if it had then had knowledge of such hazardous materials would have
then required the removal of such hazardous materials or other remedial or
containment action with respect thereto; and
(V) wages or salaries of employees or attendants in parking
garages, newsstands or other commercial concessions, if any, operated by
Landlord in the Building.
4.2.5 TAXES.
4.2.5.1 "TAX EXPENSES" shall mean all federal, state,
county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general and
special assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, unless required to be paid by Tenant, personal property taxes
imposed upon the fixtures, machinery, equipment, apparatus, systems and
equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), which shall be paid or
accrued during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in connection
with the ownership, leasing and operation of the Project, or any portion
thereof.
4.2.5.2 Tax Expenses shall include, without limitation:
(i) Any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) Any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, Tax
Expenses shall also include any governmental or private assessments or the
Project's contribution towards a governmental or private cost-sharing agreement
for the purpose of augmenting or improving the quality of services and amenities
normally provided by governmental agencies; (iii) Any assessment, tax, fee,
levy, or charge allocable to or measured by the area of the Premises or the
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Rent payable hereunder, including, without limitation, any business or gross
income tax or excise tax with respect to the receipt of such rent, or upon or
with respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any portion
thereof; and (iv) Any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or transferring
an interest or an estate in the Premises.
4.2.5.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Tax Expenses under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.8 (except as set forth in Section 4.2.5.1, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.5.4 The amount of Tax Expenses for the Base Year
attributable to the valuation of the Project, inclusive of tenant improvements,
shall be known as "Base Taxes." Subject to Section 4.4 below, Base Taxes shall
be adjusted to the amount of Tax Expenses that would be expected to be incurred
during the Base Year if the Project was 95% occupied and fully assessed for real
estate tax purposes.
4.2.6 "TENANT'S SHARE" shall mean the percentage set forth in
Section 6 of the Summary, and is based on the ratio of the rentable square
footage of the Premises to the total rentable square footage of the Building.
4.3 CALCULATION AND PAYMENT OF ADDITIONAL RENT. Tenant shall pay to
Landlord, in the manner set forth in Section 4.3.1 below, the Additional Rent as
follows:
4.3.1 CALCULATION OF EXCESS. If for any Expense Year ending or
commencing within the Lease Term, Tenant's Share of Direct Expenses for such
Expense Year exceeds Tenant's Share of the amount of Direct Expenses applicable
to the Base Year, then Tenant shall pay to Landlord, in the manner set forth in
Section 4.3.2, below, and as Additional Rent, an amount equal to such excess of
the Direct Expenses, as applicable (the "Excess").
4.3.2 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY
TENANT. Landlord shall endeavor to give to Tenant following the end of each
Expense Year, a statement (the "Statement") which shall state the Direct
Expenses incurred or accrued for such preceding Expense Year, and which shall
indicate the amount of the Excess. Upon receipt of the Statement for each
Expense Year commencing or ending during the Lease Term, if an Excess is
present, Tenant shall pay, with its next installment of Base Rent due, the full
amount of the Excess for such Expense Year, less the amounts, if any, paid
during such Expense Year as "Estimated Excess," as that term is defined in
Section 4.3.3, below provided that if the Statement shows that no Excess is
present, Landlord shall apply any Estimated Excess actually received by Landlord
from Tenant towards Tenant's next payment of Direct Expenses; provided further
that if the difference between the Statement and the Estimated Excess paid by
Tenant is greater than one twelfth (12th) of the Estimated Excess then Landlord
shall deliver such difference directly to Tenant rather than crediting Tenant's
next payment of Direct Expenses. The failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord or Tenant from
enforcing its rights under this Article 4. Even though the Lease Term has
expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Share of
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Direct Expenses for the Expense Year in which this Lease terminates, if an
Excess if present, Tenant shall immediately pay to Landlord such amount. The
provisions of this Section 4.3.2 shall survive the expiration or earlier
termination of the Lease Term.
4.3.3 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition,
Landlord shall endeavor to give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Direct Expenses for the then-current
Expense Year shall be and the estimated excess (the "ESTIMATED EXCESS") as
calculated by comparing the Direct Expenses for such Expense Year, which shall
be based upon the Estimate, to the amount of Direct Expenses for the Base Year.
The failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Estimated Excess under this Article 4, nor shall Landlord be prohibited from
revising any Estimate Statement or Estimated Excess theretofore delivered to the
extent necessary. Thereafter, Tenant shall pay, with its next installment of
Base Rent due, a fraction of the Estimated Excess for the then-current Expense
Year (reduced by any amounts paid pursuant to the next to last sentence of this
Section 4.3.3). Such fraction shall have as its numerator the number of months
which have elapsed in such current Expense Year, including the month of such
payment, and twelve (12) as its denominator. Until a new Estimate Statement is
furnished (which Landlord shall have the right to deliver to Tenant at any
time), Tenant shall pay monthly, with the monthly Base Rent installments, an
amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in
the previous Estimate Statement delivered by Landlord to Tenant.
4.4 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY
RESPONSIBLE.
4.4.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment (including without
limitation Tenant's switching and antenna equipment), furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.4.2 If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for real property
tax purposes by the tax assessor of the City of Dallas (or the equivalent taxing
authority) at a valuation higher than the valuation at which tenant improvements
conforming to Landlord's "building standard" in other space in the Building are
assessed, then the Tax Expenses levied against Landlord or the property by
reason of such excess assessed valuation shall be deemed to be taxes levied
against personal property of Tenant and shall be governed by the provisions of
Section 4.4.1, above.
4.4.3 Notwithstanding any contrary provision herein, Tenant
shall pay prior to delinquency any (i) rent tax or sales tax, service tax,
transfer tax or value added tax, or any other applicable tax on the rent or
services herein or otherwise respecting this Lease, (ii) taxes assessed upon or
with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facility; or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or
permit the Premises or the Project
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to be used for any other purpose or purposes whatsoever without the prior
written consent of Landlord, which may be withheld in Landlord's sole
discretion.
5.2 PROHIBITED USES. The uses prohibited under this Lease shall
include, without limitation, use of the Premises or a portion thereof for (i)
offices of any agency or bureau of the United States or any state or political
subdivision thereof; (ii) offices or agencies of any foreign governmental or
political subdivision thereof; (iii) offices of any health care professionals or
service organization; (iv) schools or other training facilities which are not
ancillary to corporate, executive or professional office use; (v) retail or
restaurant uses; or (vi) communications firms such as radio and/or television
stations. Tenant shall not allow occupancy density of use of the Premises which
is greater than the average density of the other tenants of the Building. Tenant
further covenants and agrees that Tenant shall not use, or suffer or permit any
person or persons to use, the Premises or any part thereof for any use or
purpose contrary to the provisions of the Rules and Regulations set forth in
EXHIBIT D, attached hereto, or in violation of the laws of the United States of
America, the State of Texas, or the ordinances, regulations or requirements of
the local municipal or county governing body or other lawful authorities having
jurisdiction over the Project) including, without limitation, any such laws,
ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter in
effect. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way materially damage the reputation of the Project
or obstruct or interfere with the rights of other tenants or occupants of the
Building, or injure or annoy them or use or allow the Premises to be used for
any improper, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days during the Lease Term, unless otherwise stated below.
6.1.1 Heating and air conditioning ("HVAC") service in the
Premises will be provided by Tenant, at Tenant's sole cost and expense, through
separate package units which shall be subject to the direct control of Tenant.
Subject to Landlord's prior written approval of Tenant's plans and
specifications, Tenant shall have the right to install in a location within the
Premises and/or Project designated in writing by Landlord "Tenant's HVAC
Equipment" pursuant to Article 22 below. The acquisition and operation of
Tenant's HVAC Equipment (including without limitation the purchase,
installation, and maintenance thereof) shall be at Tenant's sole cost and
expense, and the electrical consumption resulting from Tenant's usage of
Tenant's HVAC equipment shall be separately metered, billed to Tenant and paid
by Tenant pursuant to Section 6.1.2 below.
6.1.2 Landlord shall provide Tenant with access to up to 800
amps of power at 480 volts, three-phase wiring (there shall be no fee imposed by
Landlord for such initial amperage) provided that Tenant shall be responsible
for installing in the Premises, at Tenant's sole cost and expense and subject to
Landlord's prior approval of the plans and specifications therefor, a
transformer tying into the Building's bus duct system to obtain such electrical
supply for the Premises. Tenant may, subject to availability, purchase
additional amps for the Premises from Landlord, for a one time access fee (the
"Additional Amp Access Fee") of $250.00 per amp. The cost of such electrical
supply shall be separately metered to the Premises at Tenant's sole cost and
expense (including without limitation, the cost of any metering equipment or the
installation cost thereof). Tenant shall pay directly to Landlord within ten
(10) days after receipt of written demand and as additional rent under this
Lease (and not as part of Operating Expenses) the cost of all electricity, HVAC,
gas and water provided to and/or consumed in the Premises or by Tenant's
Equipment (including without limitation Tenant's HVAC equipment). In addition,
Tenant shall bear the cost of replacement of lamps, starters and ballasts for
lighting fixtures within the Premises. Notwithstanding anything in this Lease to
the contrary, Landlord shall have the right to meter and test Tenant's connected
amperage load used at the Premises, and in the event that over a thirty (30) day
period, Landlord's metering and testing procedures demonstrate that Tenant is
not utilizing on a daily average business day basis, all of the amps
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initially reserved by Tenant in this Section 6.1.2, Landlord may reclaim up to
seventy-five percent of any amperage Landlord reasonably determines through such
process is being unused by Tenant.
6.1.3 Landlord shall not provide janitorial services to the
Premises. Tenant shall be solely responsible, at Tenant's sole cost and expense,
for keeping all areas of the Project used by Tenant, in a neat, clean and safe
condition, and for performing all janitorial services and other cleaning of the
Premises appropriate to maintain the Premises in a manner consistent with a
first-class telecommunications building; provided that Tenant shall use
Landlord's designated Building janitorial company for all janitorial services
within the Project.
6.1.4 Landlord shall furnish unheated water from mains for
drinking, lavatory and toilet purposes drawn through fixtures installed by
Landlord, or by Tenant with Landlord's prior written consent, and heated water
for lavatory purposes from regular building supply in such quantities as
required in Landlord's judgment for the comfortable and normal use of the
Premises. Tenant shall pay Landlord, as Additional Rent, for any additional
water which is furnished for any other purpose. The amount that Tenant shall pay
Landlord for such additional water shall be the average price per gallon charged
to the Landlord for the Building by the entity providing water.
6.2 EMERGENCY GENERATOR. Landlord has installed for the benefit of
the tenants of the Building an emergency generator (the "EMERGENCY GENERATOR")
in the Building which is in service as of the execution of this Lease. Tenant
shall reserve 300 Kilowatts of emergency power from the Emergency Generator to
be used in the event of an interruption of normal electrical service to the
Premises during the Lease Term, provided that Tenant pays to Landlord on the
first business day immediately following the expiration of the Abatement Period
a one-time fee in an amount equal to $500.00 per kilowatt of emergency power so
reserved (the "GENERATOR ACCESS FEE") and a monthly maintenance fee for the
Emergency Generator in an amount equal to $1.20 per month per kilowatt of
reserved emergency power (the "GENERATOR MAINTENANCE FEE"). Tenant shall also
pay the costs to connect the Premises to the Emergency Generator as described in
Section 6.2.3 below.
6.2.1 Tenant may elect to terminate its rights and obligations
under this Section 6.2 and the use of the Emergency Generator granted hereunder,
upon giving written notice to Landlord at least sixty (60) days prior to the
effective date of such termination. In the event of any such termination, Tenant
shall not be entitled to any reimbursement for sums expended pursuant to
Sections 6.2 or 6.2.3.
6.2.2 Tenant's use of such emergency power shall be in
accordance with such rules and regulations as may be established by Landlord
from time to time.
6.2.3 Landlord shall repair and maintain the Emergency
Generator, provided that Tenant shall reimburse Landlord upon demand, as
Additional Rent hereunder, for the cost of any repairs or extraordinary
maintenance for the Emergency Generator necessitated by acts of Tenant or
Tenant's employees, contractors, assignees, sublessees, agents, licensees or
invitees. In addition, any installation of equipment, wiring or cabling in the
Premises, the Building or the Project for the purpose of enabling Tenant to
access the Emergency Generator shall be performed by Landlord in accordance with
plans and specifications approved by the parties in writing in advance, and
Tenant shall reimburse Landlord for the costs of such installation, including,
but not limited to, design fees and costs of demolition.
6.2.4 Tenant acknowledges and agrees that in order to ensure
that the cumulative electrical loads on the emergency generators servicing the
Project stay within the maximum capabilities of the emergency generators, Tenant
shall be required to automatically shed a portion of Tenant's total electrical
load to the Emergency Generator to ensure that Tenant's equipment does not use
more than the number of Kilowatts reserved by Tenant pursuant to Section 6.2
above. Tenant covenants that such load shed shall occur simultaneously whenever
transfer is made to the Emergency Generator, and Landlord shall have the right
to test Tenant's load shed compliance on reasonable advance notice. Tenant
shall, within ten (10) days of the Lease Commencement Date, deliver to Landlord,
for Landlord's review and approval, all plans,
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specifications and other engineering documentation (including without
limitation, single-line diagrams, load summaries and equipment specifications)
required by Landlord or Landlord's agents showing Tenant's procedure for load
shedding of electrical load in the Premises.
6.2.5 The provision of Emergency Generator service by Landlord
to Tenant shall be subject to the terms and provisions of this Lease.
6.3 CONDENSER WATER. Landlord shall install for the benefit of the
tenants of the Building a central condenser water plant (the "CONDENSER WATER
PLANT") to provide each floor of the Building with available condenser water.
Tenant shall further be responsible for all costs associated with connecting the
Leased Premises to the condenser water loop located on the same floor as the
Leased Premises (the "CONDENSER WATER LOOP"). Tenant hereby instructs Landlord
to reserve 120 tons of condenser water per year (the "Reserved Condenser Water")
for Tenant's use in the Premises, at the hourly rate then charged by Landlord
for the Reserved Condenser Water ("CONDENSER WATER CHARGE") (which as of the
date of this Lease is $0.075 per ton per hour). The Condenser Water Charge shall
be deemed as additional rent hereunder, and Tenant shall pay the Condenser Water
Charge to Landlord along with, and in the same manner as, Tenant's monthly
installment of Base Rent.
6.3.1 Tenant agrees to indemnify and hold Landlord harmless
from and against any and all loss, cost, claim and liability (including all
attorneys' fees) for injuries to all persons and for damage to or loss of all
property arising or alleged to arise from Tenant's use of or connection to the
Condenser Water Loop.
6.3.2 Notwithstanding any contrary provision contained herein,
Landlord shall have the right to relocate, at Landlord's sole expense, the
Condenser Water Loop to another location in the Building, as Landlord shall
elect; provided, however, that no such relocation may result in any additional
cost or expense to Tenant or have any material detrimental effect on Tenant's
use of the Condenser Water Loop.
6.3.3 Tenant shall have the option, within six (6) months
following the Commencement Date, to notify Landlord in writing that it desires
to give back all or a portion of the Reserved Condenser Water. In the event
Tenant relinquishes any Reserved Condenser Water pursuant to this Section 6.3.3,
Tenant shall not be entitled to any reimbursement for sums expended pursuant to
Section 6.3 above, and shall not be entitled to reclaim any such relinquished
Reserved Condenser Water during the Lease Term.
6.3.4 Tenant shall have the right to reserve additional
condenser water (the "Additional Reserved Condenser Water") from the Condenser
Water Loop, provided that (i) Tenant delivers to Landlord at least thirty (30)
days prior written notice of its election to reserve such Additional Reserved
Condenser Water; (ii) the Additional Reserved Condenser Water requested to be
reserved by Tenant is available from the Condenser Water Plant and Condenser
Water Loop then installed at the Project, and (iii) Landlord shall not be
obligated to install any additional condenser water plants or loops at the
Project to meet Tenant's Additional Reserved Condenser Water request. Tenant
shall be required to pay the Condenser Water Charge then charged by Landlord for
any Additional Reserved Condenser Water so reserved by Tenant.
6.4 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish or
delay in furnishing any service (including without limitation telephone,
telecommunication and emergency power services), or for any diminution or
interruption in the quality or quantity thereof, when such failure or delay or
diminution is occasioned, in whole or in part, by repairs, replacements, or
improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, or other fuel at the Building or Project after
commercially reasonable effort to do so, by any accident or casualty whatsoever,
by act or default of Tenant or other parties, or by any other cause beyond
Landlord's reasonable control; and such failures or delays or diminution shall
never be deemed to constitute an eviction or disturbance of Tenant's use and
possession of the Premises or relieve Tenant from paying Rent or performing any
of its obligations under this Lease. Furthermore, Landlord shall not be liable
under any circumstances for a loss of, or injury to, property or for injury to,
or interference with, Tenant's business, including, without limitation, loss of
profits, however
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occurring, through or in connection with or incidental to a failure to furnish
any of the services or utilities as set forth in this Article 6. Landlord may
comply with voluntary controls or guidelines promulgated by any governmental
entity relating to the use or conservation of energy, water, gas, light or
electricity or the reduction of automobile or other emissions without creating
any liability of Landlord to Tenant under this Lease, provided that the Premises
are not thereby rendered untenantable. As a material inducement to Landlord's
entry into this Lease, Tenant waives and releases any rights it may have to make
repairs at Landlord's expense.
6.5 CENTRAL CABLING DISTRIBUTION SYSTEM/BUILDING MEET ME ROOM.
Tenant recognizes that Landlord desires to provide access to both existing and
future telecommunications services and service providers for tenants of the
Building, and Landlord has deemed it desirable to achieve this objective by
providing a central telecommunications cabling distribution system ("CDS") in
the Project which Landlord so designates for use by tenants of the Project and
all competitive providers of telecommunications services. Accordingly, and
notwithstanding anything contained in this Agreement to the contrary, Landlord
reserves the right to designate a CDS, including a main demarcation frame
("MDF") for use by all tenants of the Project and all competitive service
providers in order to reach tenant demarcation points or cross-connect
facilities in the Building (including without limitation the which Landlord
anticipates will be located on floor B-1 of the Building ("defined below")). In
this event, the MDF shall serve as the minimum point of entry ("MPOE")
demarcation point for service providers. The MDF shall also service as the
origination point of the CDS. The Tenant demarcation point on each floor of the
Building will serve as the terminating point of the CDS on that floor. Landlord
reserves the right to charge Tenant, and Tenant agrees to pay, reasonable fees
as established by Landlord from time to time for the right to use the CDS.
6.5.1 Tenant shall use the CDS and its components for (i)
providing all service to tenants in the Project, (ii) for making all
cross-connections with tenants in the Project (including without limitation the
MMR). Tenant's use of the CDS shall be in accordance with the requirements of
this Lease and the Telecommunications Conduit Agreement to be executed by Tenant
in the form attached hereto as EXHIBIT F.
6.5.2 Landlord's sole responsibility in the event of
interruption or other effects caused by malfunction, damage or destruction of
the CDS shall be to repair or replace the CDS as necessary to eliminate the
cause of malfunction or interruption, the cost of which shall be borne by Tenant
if the problem was caused directly or indirectly by Tenant, its employees,
agents or licensees. Notwithstanding the foregoing, Landlord's obligation to
repair or replace the CDS shall apply only to the extent necessary to reach
premises in the Building that are then used by tenants after the malfunction,
damage or destruction or that, if damaged or destroyed, will be again used by
tenants of the Building upon completion of restoration or repair thereof. In no
event shall Tenant have any right to make any claim against Landlord whatsoever
for any damages, whether direct, indirect or consequential, in any such
circumstance, Tenant's remedy being limited to a claim for specific performance
of Landlord's obligation to repair or replace as specified above.
6.5.3 Tenant acknowledges that Landlord may elect to install a
meet me room on floor B-1 of the basement of the Building (the "MMR"), and in
the event such a MMR is installed and Tenant is not the lessee or operator of
such MMR, Landlord shall pay any incremental cost required to be paid by Tenant
for the use of one (1) 6' x 8' cage in the MMR over the following costs: (i)
1,000/per month for a 6' by 8' cage and (ii) no installation fee for such cage.
6.6 SPECIAL ABATEMENT OF RENT. Notwithstanding the provisions of
Section 6.3 above to the contrary, in the event that during the Lease Term
Tenant is prevented from effectively conducting its business, and does not
conduct its business in the Premises or any portion thereof as a direct result
of (i) any failure by Landlord to provide any of the essential utilities and
services to the Premises required to be provided by Landlord under Section 6.1
of this Lease, (ii) any failure by Landlord to provide access to the Premises,
or (iii) Landlord's failure to promptly, timely and diligently perform any
repairs, maintenance or alterations required by this Lease to be performed by
Landlord, after the Lease Commencement Date, which substantially interferes with
Tenant's ability to conduct its business in the Premises or (iv) the
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material interference with or unreasonable disturbance of Tenant's ability to
conduct business operations in the Premises pursuant to the provisions of
Sections 1.1.3, 29.30, 29.32 and Article 27 herein, (any such set of
circumstances as set forth in items (i) through (iv), above, to be known as an
"ABATEMENT EVENT"), then Tenant shall give Landlord notice of such Abatement
Event. If such Abatement Event continues for three (3) consecutive business days
after Landlord's receipt of any such notice from Tenant ("ELIGIBILITY PERIOD"),
then the Rent for the Premises shall be abated or reduced, as the case may be,
during such time after the Eligibility Period that Tenant continues to be so
prevented from conducting its business in, and does not conduct its business in,
the Premises or a portion thereof, in the proportion that the rentable area of
the portion of the Premises that Tenant is prevented from using, and does not
use, bears to the total rentable area of the Premises; provided, however, in the
event that Tenant is prevented from using, and does not use, a portion of the
Premises for a period of time in excess of the Eligibility Period, and the
remaining portion of the Premises is not reasonably sufficient to allow Tenant
to effectively conduct its business therein, and if Tenant does not effectively
conduct its business from such remaining portion, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from
effectively conducting its business therein, the Rent shall be abated for such
time as Tenant continues to be so prevented from conducting business operations
therein, and does not conduct business operations therein. If, however, Tenant
re-occupies any portion of the Premises during such period, the Rent allocable
to such re-occupied portion, based on the proportion that the rentable square
feet of such re-occupied portion of the Premises bears to the total rentable
square feet of the Premises, shall be payable by Tenant from the date Tenant
re-occupies such portion of the Premises. The mere presence of nonoperational
equipment shall not be deemed as Tenant conducting business in the portion of
the Premises so occupied by the nonoperational equipment. For purposes of this
Section 6.6, Tenant shall not be deemed to be occupying or using the Premises
merely by having Tenant's furniture or personal property remaining in the
Premises. Such right to abate Rent shall be Tenant's sole and exclusive remedy
at law or in equity for an Abatement Event.
ARTICLE 7
REPAIRS
7.1 LANDLORD'S REPAIRS. Landlord shall maintain and repair (i) the
structural portions of the Building (the, "BUILDING STRUCTURE"), (ii) the
Building's mechanical, electrical, life safety, plumbing, sprinkler and HVAC
systems located outside the Premises (collectively, the "BUILDING SYSTEMS"), and
(iii) the Common Areas. Notwithstanding anything in this Lease to the contrary,
Tenant shall be required to pay for the cost of repairs to the Building
Structure, the Building Systems and/or the Common Areas to the extent required
because of (i) Tenant's use of the Premises for other than normal and customary
telecommunications operations, and/or (ii) Tenant's Alterations (as defined in
Section 8.1 below).
7.2 TENANT'S REPAIRS. Subject to Landlord's repair obligations set
forth in Section 7.1 above, Tenant shall, at Tenant's own expense, pursuant to
the terms of this Lease, including without limitation Article 8 hereof, keep the
Premises, including all improvements, fixtures, equipment (including without
limitation the Supplemental Equipment) and furnishings therein, and the floor or
floors of the Building on which the Premises are located, in good order, repair
and condition at all times during the Lease Term. In addition, Tenant shall, at
Tenant's own expense, but under the supervision and subject to the prior
approval of Landlord, and within any reasonable period of time specified by
Landlord, pursuant to the terms of this Lease, including without limitation
Article 8 hereof, promptly and adequately repair all damage to the Premises and
replace or repair all damaged, broken, or worn fixtures and appurtenances,
except for damage caused by ordinary wear and tear or beyond the reasonable
control of Tenant; provided however, that, at Landlord's option, or if Tenant
fails to make such repairs, Landlord may, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof (to be uniformly established for the Building
and/or the Project) sufficient to reimburse Landlord for all overhead, general
conditions, fees and other costs or expenses arising from Landlord's involvement
with such repairs and replacements forthwith upon being billed for same.
Landlord may, but shall not be required to, enter the Premises at all reasonable
times to make such repairs, alterations, improvements or additions to the
Premises or to the Project or to any equipment located in the Project as
Landlord shall desire
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or deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree, provided that Landlord
shall use commercially reasonable efforts to ensure that any such repairs,
alterations or improvements do not materially interfere with or unreasonably
disrupt Tenant's use and occupancy of the Premises.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the Premises
(collectively, the "ALTERATIONS") without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than thirty (30) days prior to the commencement thereof, and
which consent shall not be unreasonably withheld by Landlord, provided it shall
be deemed reasonable for Landlord to withhold its consent to any Alteration
which adversely affects the structural portions or the systems or equipment of
the Building or is visible from the exterior of the Building. The construction
of the initial improvements to the Premises shall be governed by the terms of
the Tenant Work Letter and not the terms of this Article 8.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of
its consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its reasonable discretion may deem
desirable, including, but not limited to, the requirement that Tenant utilize
for such purposes only contractors, subcontractors, materials, mechanics and
materialmen selected by Tenant from a list approved by Landlord, the requirement
that upon Landlord's request, Tenant shall, at Tenant's expense, remove such
Alterations upon the expiration or any early termination of the Lease Term if
Landlord gave Tenant written notice that such removal would be required at the
time Landlord consented to such Alteration. If such Alterations will involve the
use of or disturb hazardous materials or substances existing in the Premises,
Tenant shall comply with Landlord's rules and regulations concerning such
hazardous materials or substances. Tenant shall construct such Alterations and
perform such repairs in a good and workmanlike manner, in conformance with any
and all applicable federal, state, county or municipal laws, rules and
regulations an pursuant to a valid building permit, issued by the City of
Dallas, all in conformance with Landlord's construction rules and regulations.
In the event Tenant performs any Alterations in the Premises which require or
give rise to governmentally required changes to the "Base Building," as that
term is defined below, then Landlord shall, at Tenant's expense, make such
changes to the Base Building. The "BASE BUILDING" shall include the structural
portions of the Building, and the public restrooms and the systems and equipment
located in the internal core of the Building on the floor or floors on which the
Premises are located. In performing the work of any such Alterations, Tenant
shall have the work performed in such manner so as not to obstruct access to the
Project or any portion thereof, by any other tenant of the Project, and so as
not to obstruct the business of Landlord or other tenants in the Project. Tenant
shall not use (and upon notice from Landlord shall cease using) contractors,
services, workmen, labor, materials or equipment that, in Landlord's reasonable
judgment, would disturb labor harmony with the workforce or trades engaged in
performing other work, labor or services in or about the Building or the Common
Areas. In addition to Tenant's obligations under Article 9 of this Lease, upon
completion of any Alterations, Tenant agrees to deliver to the Project
management office a reproducible copy of the "as built" drawings of the
Alterations as well as all permits, approvals and other documents issued by any
governmental agency in connection with the Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. If payment is made directly to
contractors, Tenant shall comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors. Whether or not Tenant orders any work directly from Landlord,
Tenant shall reimburse Landlord for any and all reasonable costs and expenses
incurred by Landlord arising from Landlord's involvement with such work.
8.4 CONSTRUCTION INSURANCE. In addition to the requirements of
Article 10 of this Lease, in the event that Tenant makes any Alterations, prior
to the commencement of such Alterations, Tenant shall provide Landlord with
evidence that Tenant carries "Builder's All Risk"
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insurance in an amount approved by Landlord covering the construction of such
Alterations, and such other insurance as Landlord may reasonably require, it
being understood and agreed that all of such Alterations shall be insured by
Tenant pursuant to Article 10 of this Lease immediately upon completion thereof.
In addition, Landlord may, in its discretion, require Tenant to obtain a form of
security reasonably satisfactory to Landlord in an amount sufficient to ensure
the lien-free completion of such Alterations and naming Landlord as a
co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures,
conduit, equipment (excepting Tenant's telecommunications equipment) and/or
appurtenances which may be installed or placed in or about the Premises, from
time to time, including any non-general office use improvements made at the time
of Tenant's initial occupancy of the Premises, shall be at the sole cost of
Tenant and shall be and become the property of Landlord, and shall be and remain
part of the Premises and shall not be removed by Tenant at the end of the term
of this Lease, unless Landlord agreed to its removal at the time Landlord
consented to such Alteration. Such fixtures, alterations, additions, repairs,
improvements and/or appurtenances shall include, without limitation, the Base
Premises Work (as defined in the Tenant Work Letter) and improvements, built-in
utilities such as heating, ventilating and air conditioning units, floor
coverings, drapes, paneling, molding, doors, kitchen and dishwashing fixtures
and equipment, plumbing systems, electrical systems, lighting systems, silencing
equipment, switching conduit and cabling, all fixtures and outlets for the
systems mentioned above and for all telephone, radio, telegraph and television
purposes, and any special flooring or ceiling installations. Notwithstanding the
foregoing, Landlord may, by written notice to Tenant at the time Tenant requests
Landlord's consent to any Alteration pursuant to Section 8.1 or Section 22,, or
given following any earlier termination of this Lease, require Tenant, at
Tenant's expense, to remove any Alterations, improvements, fixtures, conduit,
equipment, and/or appurtenances in the Premises and Project, and to repair any
damage to the Premises and Building caused by such removal and return the
affected portion of the Premises and Project to a building standard tenant
improved condition as determined by Landlord. If Tenant fails to complete such
removal and/or to repair any damage caused by the removal of any Alterations,
improvements, fixtures, conduit, equipment, and/or appurtenances in the Premises
and Project, and returns the affected portion of the Premises and Project to a
building standard tenant improved condition as determined by Landlord, Landlord
may do so and may charge the cost thereof to Tenant. Tenant hereby protects,
defends, indemnifies and holds Landlord harmless from any liability, cost,
obligation, expense or claim of lien in any manner relating to the installation,
placement, removal or financing of any such Alterations, improvements, fixtures,
conduit, equipment, and/or appurtenances in, on or about the Premises and
Project, which obligations of Tenant shall survive the expiration or earlier
termination of this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least twenty (20) days prior to the commencement of any such
work on the Premises (or such additional time as may be necessary under
applicable laws) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within twenty (20) days after notice by
Landlord, and if Tenant shall fail to do so, Landlord may pay the amount
necessary to remove such lien or encumbrance, without being responsible for
investigating the validity thereof. The amount so paid shall be deemed
Additional Rent under this Lease payable upon demand, without limitation as to
other remedies available to Landlord under this Lease. Nothing contained in this
Lease shall authorize Tenant to do any act which shall subject Landlord's title
to the Building or Premises to any liens or encumbrances whether claimed by
operation of law or express or implied contract. Any claim to a lien or
encumbrance upon the Building or Premises arising in connection with any such
work or respecting the Premises not performed by or at the request of Landlord
shall be null and void, or at Landlord's option shall attach only against
Tenant's interest
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in the Premises and shall in all respects be subordinate to Landlord's title to
the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever and agrees that Landlord, its partners, subpartners and their
respective officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, and are hereby
released from any responsibility for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant. TENANT SHALL INDEMNIFY, DEFEND,
PROTECT, AND HOLD HARMLESS THE LANDLORD PARTIES FROM ANY AND ALL LOSS, COST,
DAMAGE, EXPENSE AND LIABILITY (INCLUDING WITHOUT LIMITATION COURT COSTS AND
REASONABLE ATTORNEYS' FEES) INCURRED IN CONNECTION WITH OR ARISING FROM ANY
CAUSE IN, ON OR ABOUT THE PREMISES, ANY ACTS, OMISSIONS OR NEGLIGENCE OF TENANT
OR OF ANY PERSON CLAIMING BY, THROUGH OR UNDER TENANT, OR OF ANY OF TENANT'S
CUSTOMERS, THE CONTRACTORS, AGENTS, SERVANTS, EMPLOYEES, INVITEES, GUESTS OR
LICENSEES OF TENANT OR ANY SUCH PERSON, IN, ON OR ABOUT THE PROJECT OR ANY
BREACH OF THE TERMS OF THIS LEASE, EITHER PRIOR TO, DURING, OR AFTER THE
EXPIRATION OF THE LEASE TERM, PROVIDED THAT THE TERMS OF THE FOREGOING INDEMNITY
SHALL NOT APPLY TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD.
SHOULD LANDLORD BE NAMED AS A DEFENDANT IN ANY SUIT BROUGHT AGAINST TENANT IN
CONNECTION WITH OR ARISING OUT OF TENANT'S OCCUPANCY OF THE PREMISES, TENANT
SHALL PAY TO LANDLORD ITS COSTS AND EXPENSES INCURRED IN SUCH SUIT, INCLUDING
WITHOUT LIMITATION, ITS REASONABLE PROFESSIONAL FEES SUCH AS APPRAISERS',
ACCOUNTANTS' AND ATTORNEYS' FEES. FURTHER, TENANT'S AGREEMENT TO INDEMNIFY
LANDLORD PURSUANT TO THIS SECTION 10.1 IS NOT INTENDED AND SHALL NOT RELIEVE ANY
INSURANCE CARRIER OF ITS OBLIGATIONS UNDER POLICIES REQUIRED TO BE CARRIED BY
TENANT PURSUANT TO THE PROVISIONS OF THIS LEASE, TO THE EXTENT SUCH POLICIES
COVER THE MATTERS SUBJECT TO TENANT'S INDEMNIFICATION OBLIGATIONS; NOR SHALL
THEY SUPERSEDE ANY INCONSISTENT AGREEMENT OF THE PARTIES SET FORTH IN ANY OTHER
PROVISION OF THIS LEASE. THE PROVISIONS OF THIS SECTION 10.1 SHALL SURVIVE THE
EXPIRATION OR SOONER TERMINATION OF THIS LEASE WITH RESPECT TO ANY CLAIMS OR
LIABILITY ARISING IN CONNECTION WITH ANY EVENT OCCURRING PRIOR TO SUCH
EXPIRATION OR TERMINATION.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following
coverages in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof) arising out of Tenant's operations (and the
operations of any Customers [defined in Section 14.6 below] of Tenant), and
contractual liabilities (covering the performance by Tenant of its indemnity
agreements) including a Broad Form endorsement covering the insuring provisions
of
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this Lease and the performance by Tenant of the indemnity agreements set forth
in Section 10.1 of this Lease, for limits of liability not less than:
Bodily Injury and $3,000,000 each occurrence
Property Damage Liability $3,000,000 annual aggregate
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate
0% Insured's participation
10.3.2 Physical Damage Insurance covering (i) all office
furniture, business and trade fixtures, office equipment, free-standing cabinet
work, movable partitions, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the
Supplemental Equipment, and (iii) "Tenant's Work," as that term is defined in
the Tenant Work Letter attached hereto as EXHIBIT B and incorporated herein by
this reference, and all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value (subject to reasonable
deductible amounts) new without deduction for depreciation of the covered items
and in amounts that meet any co-insurance clauses of the policies of insurance
and shall include coverage for damage or other loss caused by fire or other
peril including, but not limited to, vandalism and malicious mischief, theft,
water damage of any type, including sprinkler leakage, bursting or stoppage of
pipes, and explosion, and providing business interruption coverage for a period
of one year.
10.3.3 Worker's Compensation and Employer's Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.3.4 Tenant's Blanket Policy. Tenant shall have the right to
maintain the required liability insurance in the form of a blanket policy
covering other locations of Tenant in addition to the Premises; provided,
however, such insurance maintained under a blanket policy shall (i) provide
Tenant coverage on a per location basis, (ii) not diminish or otherwise
adversely affect the amount and coverage required to be provided by Tenant
pursuant to this Section 10.3, and (iii) specifically name the location of the
Premises as an insured location and naming Landlord as an additional insured
pursuant to the requirements of this Section 10.3. In the event Tenant elects to
meet its insurance obligations under this Section 10.3 with a blanket insurance
policy, Tenant shall immediately provide Landlord with a certificate of
insurance evidencing compliance with the requirements of this Section 10.3.4 and
the other requirements of this Section 10.3.
10.4 LANDLORD'S PROPERTY AND LIABILITY INSURANCE. Landlord shall
procure and maintain during the term of this Lease, physical damage insurance
covering the base Building and common areas (excluding at Landlord's option, any
items Tenant is required to insure pursuant to Section 10.3) and general
liability insurance. Such coverages shall be in such amounts, from such
companies, and on such other terms and conditions as Landlord may from time to
time reasonably determine; provided, however, the amounts of insurance carried
by Landlord in connection with the Building shall at a minimum be comparable to
the coverage and amounts of insurance that are carried by reasonably prudent
institutional owners of comparable buildings located in the vicinity of the
Building and Workers' Compensation coverage as required by applicable law
(except that Landlord shall have the right, but not the obligation, to carry
flood insurance).
10.5 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, and any other
party the Landlord so specifies, as an additional insured, including Landlord's
managing agent, if any; (ii) specifically cover the liability assumed by Tenant
under this Lease, including, but not limited to, Tenant's obligations under
Section 10.1 of this Lease; (iii) be issued by an insurance company having a
rating of not less than A-X in Best's Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of Texas; (iv)
be primary insurance as to all claims thereunder and provide that any insurance
carried by Landlord is excess and is non-contributing with any insurance
requirement.
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of Tenant; (v) be in form and content reasonably acceptable to Landlord; and
(vi) provide that said insurance shall not be canceled or coverage changed
unless thirty (30) days' prior written notice shall have been given to Landlord
and any mortgagee of Landlord. Tenant shall deliver said policy or policies or
certificates thereof to Landlord on or before the Lease Commencement Date and at
least thirty (30) days before the expiration dates thereof. In the event Tenant
shall fail to procure such insurance, or to deliver such policies or
certificate, Landlord may, at its option, after five (5) days written notice to
Tenant, procure such policies for the account of Tenant, and the cost thereof
shall be paid to Landlord within five (5) days after delivery to Tenant of bills
therefor.
10.6 SUBROGATION. Landlord and Tenant intend that their respective
property loss risks shall be borne by reasonable insurance carriers to the
extent above provided, and Landlord and Tenant hereby agree to look solely to,
and seek recovery only from, their respective insurance carriers in the event of
a property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and
maintain during the entire Lease Term, at Tenant's sole cost and expense,
increased amounts of the insurance required to be carried by Tenant pursuant to
this Article 10 and such other reasonable types of insurance coverage and in
such reasonable amounts covering the Premises and Tenant's operations therein,
as may be reasonably requested by Landlord.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord, provided that access to the Premises and any common
restrooms serving the Premises shall not be materially impaired. Upon the
occurrence of any damage to the Premises, upon notice (the "LANDLORD REPAIR
NOTICE") to Tenant from Landlord, Tenant shall assign to Landlord (or to any
party designated by Landlord) all insurance proceeds payable to Tenant under
Tenant's insurance required under Section 10.3.2(iii) of this Lease, and
Landlord shall repair any injury or damage to tenant improvements (but not any
Supplemental Equipment or any of Tenant's personal property which shall be
promptly and with due diligence repaired and restored by Tenant at Tenant's sole
cost and expenses, unless and to the extent Landlord elects in its sole
discretion to restore all or a part of the Supplemental Equipment) installed in
the Premises and shall return any such tenant improvements (and any Supplemental
Equipment Landlord elects to repair in its sole discretion) to their original
condition; provided that if the cost of such repair by Landlord exceeds the
amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant
to Landlord prior to Landlord's commencement of repair of the damage. In the
event that Landlord does not deliver the Landlord Repair Notice within sixty
(60) days following the date the casualty becomes known to Landlord, Tenant
shall, at its sole cost and expense, repair any injury or damage to the Tenant's
Work and the Base Premises Work installed in the Premises and shall return such
Tenant's Work and Base Premises Work to their original condition provided that
if more than just the Premises are damaged by any casualty event (which casualty
is not caused by Tenant, its agents or
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employees), Tenant shall be obligated to repair the Premises pursuant to this
sentence only if Landlord is requiring other tenants with damaged premises in
the Building to repair (or is conducting such repair itself) such damaged
Premises. Whether or not Landlord delivers a Landlord Repair Notice, prior to
the commencement of construction, Tenant shall submit to Landlord, for
Landlord's review and approval, all plans, specifications and working drawings
relating thereto, and Landlord shall select the contractors to perform such
improvement work. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Premises or Common Areas necessary
to Tenant's occupancy, Landlord shall allow Tenant a proportionate abatement of
Base Rent to the extent Landlord is reimbursed from the proceeds of rental
interruption insurance purchased by Landlord as part of Operating Expenses,
during the time and to the extent the Premises are unfit for occupancy for the
purposes permitted under this Lease, and not occupied by Tenant as a result
thereof; provided, further, however, that if the damage or destruction is due to
the negligence or willful misconduct of Tenant or any of its agents, employees,
contractors, invitees or guests, Tenant shall be responsible for any reasonable,
applicable insurance deductible (which shall be payable to Landlord upon demand)
and there shall be no rent abatement. In the event that Landlord shall not
deliver the Landlord Repair Notice, Tenant's right to rent abatement pursuant to
the preceding sentence shall terminate as of the date which is reasonably
determined by Landlord to be the date Tenant should have completed repairs to
the Premises assuming Tenant used reasonable due diligence in connection
therewith.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of damage, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises, but Landlord may so elect only if the Building
or Project shall be damaged by fire, earthquake or other casualty or cause,
whether or not the Premises are affected, and one or more of the following
conditions is present: (i) in Landlord's reasonable judgment, repairs cannot
reasonably be completed within one hundred eighty (180) days after the date of
discovery of the damage (when such repairs are made without the payment of
overtime or other premiums); (ii) the holder of any mortgage on the Building or
Project or ground lessor with respect to the Building or Project shall require
that the insurance proceeds or any portion thereof be used to retire the
mortgage debt, or shall terminate the ground lease, as the case may be; (iii)
the damage is not fully covered by Landlord's insurance policies; or (iv) the
damage occurs during the last twelve (12) months of the Lease Term; or (v) any
owner of any other portion of the Project, other than Landlord, does not intend
to repair the damage to such portion of the Project, provided, however, if such
damage or destruction does not affect the Premises or access to the Premises,
then Landlord may only terminate this Lease pursuant to clauses (i), (iii),
(iv), and (v) hereinabove if Landlord also terminates leases of all other
tenants in the Building which contain similar termination rights in their
leases; provided further, however, that (A) if Landlord does not elect to
terminate this Lease pursuant to Landlord's termination right as provided above,
(B) the damage constitutes a "Tenant Damage Event" (as defined below), and (C)
repair of such damage cannot, in the reasonable judgment of an architect or
contractor selected by Landlord, be substantially completed within one hundred
eighty (180) days after the date of the damage, then Tenant may elect, not later
than ninety (90) days after nor earlier then thirty (30) days after the date
Tenant receives notice from the architect or contractor that the repairs cannot
be completed within such one hundred eighty (180) day period, to terminate this
Lease by written notice to Landlord effective as of the date specified in the
notice, which date shall not be less than thirty (30) days nor more than sixty
(60) days after the date such notice is given by Tenant. As used herein, a
"Tenant Damage Event" shall mean damage by fire or other casualty, to all or any
part of the Premises, the Building or of the Common Areas providing access to
the Premises, which damage is not the result of the negligence or willful
misconduct of Tenant or any of Tenant's employees, agents, contractors,
licensees or invitees, and which damage substantially interferes with Tenant's
use of or access to the Premises and would entitle Tenant to an abatement of
Base Rent pursuant to Section 11.1 above. Furthermore, if neither Landlord nor
Tenant has terminated this Lease, and the repairs of a Tenant Damage Event are
not actually completed within the later of the Estimated Repair Period or 180
days after the date of the damage, Tenant shall have the right (but only on the
initial occasion of Tenant sending the Damage Termination Notice) to terminate
this Lease within five (5) business days of the end of such period and
thereafter during
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the first five (5) business days of each calendar month following the end of
such period until such time as the repairs are substantially complete, by notice
to Landlord (the "Damage Termination Notice"), effective as of a date set forth
in the Damage Termination Notice (the "Damage Termination Date"), which Damage
Termination Date shall not be less than five (5) business days following the end
of such period or each such month, as the case may be, and not later than ninety
(90) days after the end of such period or each such month, as the case may be.
Notwithstanding the foregoing, if Tenant delivers a Damage Termination Notice to
Landlord, then Landlord shall have the right to suspend the occurrence of the
Damage Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord's receipt of the Damage
Termination Notice, a certificate of Landlord's contractor responsible for the
repair of the damage certifying that it is such contractor's good faith judgment
that the repairs shall be substantially completed within thirty (30) days after
the Damage Termination Date. If repairs shall be substantially completed prior
to the expiration of such thirty-day period, then the Damage Termination Notice
shall be of no force or effect, but if the repairs shall not be substantially
completed within such thirty-day period, then this Lease shall terminate upon
the expiration of such thirty-day period.
11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of Texas, with respect to any rights or obligations concerning damage
or destruction in the absence of an express agreement between the parties, and
any other statute or regulation, now or hereafter in effect, shall have no
application to this Lease or any damage or destruction to all or any part of the
Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
If forty percent (40%) or more of the Premises, Building or Project
shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if any adjacent
property or street shall be so taken or condemned, or reconfigured or vacated by
such authority in such manner as to require the use, reconstruction or
remodeling of any part of the Premises, Building or Project, or if Landlord
shall grant a deed or other instrument in lieu of such taking by eminent domain
or condemnation, Landlord shall have
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the option to terminate this Lease effective as of the date possession is
required to be surrendered to the authority. If more than twenty-five percent
(25%) of the rentable square feet of the Premises is taken, or if access to the
Premises is substantially impaired, in each case for a period in excess of one
hundred eighty (180) days, Tenant shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. Tenant shall not because of such taking assert any claim against
Landlord or the authority for any compensation because of such taking and
Landlord shall be entitled to the entire award or payment in connection
therewith, except that Tenant shall have the right to file any separate claim
available to Tenant for any taking of Tenant's personal property and fixtures
belonging to Tenant and removable by Tenant upon expiration of the Lease Term
pursuant to the terms of this Lease, and for moving expenses, so long as such
claims do not diminish the award available to Landlord, its ground lessor with
respect to the Building or Project or its mortgagee, and such claim is payable
separately to Tenant. All Base Rent shall be apportioned as of the date Tenant
is physically dispossessed of the Premises. If any part of the Premises shall be
taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Notwithstanding anything to the contrary contained in this Article 13,
in the event of a temporary taking of all or any portion of the Premises for a
period of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Except as otherwise provided herein, Tenant shall
not, without the prior written consent of Landlord, assign, mortgage, pledge,
hypothecate, encumber, or permit any lien to attach to, or otherwise transfer,
this Lease or any interest hereunder, permit any assignment, or other transfer
of this Lease or any interest hereunder by operation of law, sublet the Premises
or any part thereof, or enter into any license, "co-location" or concession
agreements or otherwise permit the occupancy or use of the Premises or any part
thereof by any persons other than Tenant and its employees and contractors (all
of the foregoing are hereinafter sometimes referred to collectively as
"TRANSFERS" and any person to whom any Transfer is made or sought to be made is
hereinafter sometimes referred to as a "TRANSFEREE"). If Tenant desires
Landlord's consent to any Transfer, Tenant shall notify Landlord in writing,
which notice (the "TRANSFER NOTICE") shall include (i) the proposed effective
date of the Transfer, which shall not be less than fifteen (15) days nor more
than one hundred eighty (180) days after the date of delivery of the Transfer
Notice, (ii) a description of the portion of the Premises to be transferred (the
"SUBJECT SPACE"), (iii) all of the terms of the proposed Transfer and the
consideration therefor, including calculation of the "Transfer Premium", as that
term is defined in Section 14.3 below, in connection with such Transfer, the
name and address of the proposed Transferee, and a copy of all existing executed
and/or proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, provided that Landlord shall
have the right to require Tenant to utilize Landlord's standard Transfer
documents in connection with the documentation of such Transfer, (iv) current
financial statements of the proposed Transferee certified by an officer, partner
or owner thereof, business credit and personal references and history of the
proposed Transferee and any other information reasonably required by Landlord
which will enable Landlord to determine the financial responsibility, character,
and reputation of the proposed Transferee, nature of such Transferee's business
and proposed use of the Subject Space, and (v) an executed estoppel certificate
from Tenant in the form attached hereto as EXHIBIT E. Any Transfer made without
Landlord's prior written consent shall, at Landlord's option, be null, void and
of no effect, and shall, at Landlord's option, constitute a default by Tenant
under this Lease. Whether or not Landlord consents to any proposed Transfer,
Tenant shall pay Landlord's reasonable review and processing fees, as well as
any reasonable professional fees (including, without limitation, attorneys',
accountants', architects', engineers' and consultants' fees) incurred by
Landlord, within thirty (30) days after written request by Landlord.
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14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality of the Building
or the Project;
14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;
14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease;
14.2.6 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right);
14.2.7 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Project at the
time of the request for consent, or (ii) is negotiating or has negotiated with
Landlord to lease space in the Project;
14.2.8 The Transferee does not intend to occupy the entire
Premises and conduct its business therefrom for a substantial portion of the
term of the Transfer; or
14.2.9 The Transfer Premium, if any, to be paid by any
Transferee pursuant to such Transfer is to be paid by the Transferee in a manner
other than on a prorata monthly basis.
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any changes in the terms and conditions from those specified in the Transfer
Notice (i) such that Landlord would initially have been entitled to refuse its
consent to such Transfer under this Section 14.2, or (ii) which would cause the
proposed Transfer to be more favorable to the Transferee than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought without any monetary damages, and Tenant
hereby waives all other remedies, including, without limitation, any right at
law or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable laws, on behalf of the proposed Transferee.
Tenant shall indemnify, defend and hold harmless Landlord from any and all
liability, losses, claims, damages, costs, expenses, causes of action and
proceedings involving any third party or parties (including without limitation
Tenant's proposed subtenant or assignee) who claim they were damaged by
Landlord's wrongful withholding or conditioning of Landlord's consent.
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14.3 TRANSFER PREMIUM. Except with respect to Customer Subleases (as
defined in Section 14.6 below) if Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord, when received by Tenant, fifty percent (50%) of any "Transfer
Premium," as that term is defined in this Section 14.3, received by Tenant from
such Transferee. "TRANSFER PREMIUM" shall mean all rent, additional rent or
other consideration payable by such Transferee in connection with the Transfer
in excess of the Rent and Additional Rent payable by Tenant under this Lease
during the term of the Transfer on a per rentable square foot basis if less than
all of the Premises is transferred, after deducting the reasonable expenses
incurred by Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any free base rent reasonably
provided to the Transferee, and (iii) any brokerage commissions in connection
with the Transfer. "Transfer Premium" shall also include, but not be limited to,
key money, bonus money or other cash consideration paid by Transferee to Tenant
in connection with such Transfer, and any payment in excess of fair market value
for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer. In the calculations of the Rent (as it relates to
the Transfer Premium calculated under this Section 14.3), and the Transferee's
Rent under Section 14.2 of this Lease, the Rent paid during each annual period
for the Subject Space, and the Transferee's Rent, shall be computed after
adjusting such rent to the actual effective rent to be paid, taking into
consideration any and all leasehold concessions granted in connection therewith,
including, but not limited to, any rent credit and tenant improvement allowance.
For purposes of calculating any such effective rent all such concessions shall
be amortized on a straight-line basis over the relevant term.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything
to the contrary contained in this Article 14, and except with respect to
"Customer Subleases" and "Non-Transfers," as those terms are defined in Section
14.6 and 14.7, below, Landlord shall have the option, by giving written notice
to Tenant within thirty (30) days after receipt of any Transfer Notice, to
recapture the Subject Space. Such recapture notice shall cancel and terminate
this Lease with respect to the Subject Space as of the date stated in the
Transfer Notice as the effective date of the proposed Transfer until the last
day of the term of the Transfer as set forth in the Transfer Notice (or at
Landlord's option, shall cause the Transfer to be made to Landlord or its agent,
in which case the parties shall execute the Transfer documentation promptly
thereafter). In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than the entire Premises, the Rent reserved herein
shall be prorated on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the
Premises, and this Lease as so amended shall continue thereafter in full force
and effect, and upon request of either party, the parties shall execute written
confirmation of the same. If Landlord declines, or fails to elect in a timely
manner to recapture the Subject Space under this Section 14.4, then, provided
Landlord has consented to the proposed Transfer, Tenant shall be entitled to
proceed to transfer the Subject Space to the proposed Transferee, subject to
provisions of this Article 14.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than five percent (5%), Tenant shall pay
Landlord's costs of such audit.
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14.6 CUSTOMER SUBLEASES. Landlord acknowledges that Tenant's business
to be conducted on the Premises requires the installation on the Premises of
certain communications equipment by telecommunications customers of Tenant
("Customers") in order for such Customers to interconnect with Tenant's terminal
facilities or to permit Tenant to manage or operate their equipment. Tenant
represents to Landlord that such arrangements will require access by each
Customer to the Premises only on an infrequent basis, and only when accompanied
by a representative of Tenant. Notwithstanding anything contained elsewhere in
this Article 14, Landlord hereby consents in advance to any sublease, license
agreement, "Co-Location Agreement" or like agreement (collectively, "CUSTOMER
SUBLEASES") between Tenant and such a Customer for the limited purpose of
permitting such an arrangement as is described in this Section 14.6,. The
effectiveness of such advance consent as to a particular Customer Sublease is
conditioned on (a) Tenant providing Landlord with a copy of the co-location
agreement between Tenant and its Customer within twenty (20) days after any such
transaction; (b) such Customer Sublease being in writing and consistent with the
provisions of this Lease; and (c) Tenant providing Landlord with same-day
advance facsimile notice of all Customers authorized to enter the Premises and
Project during Business Hours, and same-day advance verbal authorization to and
approval by the Project manager for any authorized entry of the Premises and
Project during hours other than the Business Hours. Tenant shall be liable to
Landlord for any violation by its Customers of any provisions of this Lease.
14.7 NON-TRANSFERS. Notwithstanding anything to the contrary
contained in this Article 14, the term "Transfer" shall not include, and the
Transfer Premium shall not apply in the event of (i) a transfer of the Lease to
an entity which is the parent of Tenant, subsidiary of Tenant, affiliate of
Tenant, or shall directly or indirectly control, be controlled by, or be under
common control with, Tenant; (ii) a transaction in which Tenant becomes an
entity whose shares of stock or other ownership interests are, directly or
indirectly, sold on a national stock exchange or an inter-dealer quotation
system; (iii) in the event the transaction described in clause (ii) above shall
have occurred, any subsequent sale of ownership interest or issuance of new
ownership interests, directly or indirectly, in Tenant; and (iv) a transaction
in which any entity succeeds to all or substantially all of the assets of Tenant
whether by merger, consolidation, sale or otherwise provided such successor
entity assumes in full the obligations of Tenant under this Lease; provided,
however, that (A) Tenant shall remain liable for the performance of all
covenants, duties and obligations under the Lease, irrespective of any such
assignment, (B) the use of the Leased Premises by the assignee may not violate
any other agreements affecting the Leased Premises, the Building, Landlord or
other tenants, and (C) the use of the Leased Premises by the assignee shall
conform with the uses permitted by this Lease. Tenant shall notify Landlord, in
writing, of any such assignment or sublease within ninety (90) days of its
occurrence and shall provide Landlord with all such reasonable information as
Landlord may request regarding the identity and status of such assignee.
14.8 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be
subordinate and subject to the provisions of this Lease, and if this Lease shall
be terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as canceled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee may rely on any representation by Landlord that Tenant is in default
hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord's right to
enforce any term of this Lease against Tenant or any other person. If Tenant's
obligations hereunder have been guaranteed, Landlord's consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.
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ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in writing by Landlord. The delivery of keys
to the Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord, and notwithstanding
such delivery Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this Lease shall have been properly
terminated. The voluntary or other surrender of this Lease by Tenant, whether
accepted by Landlord or not, or a mutual termination hereof, shall not work a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of all subleases or subtenancies affecting the Premises or terminate any or all
such sublessees or subtenancies.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear, casualty and condemnation which are Landlord's responsibility
herein excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, business and trade
fixtures, free-standing cabinet work, movable partitions and other articles of
personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises, and such similar articles of any other persons claiming
under Tenant, as Landlord may, in its sole discretion, require to be removed,
and Tenant shall repair at its own expense all damage to the Premises and
Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to one hundred fifty percent (150%) (the
"PERCENTAGE RATE") of the Base Rent applicable during the last rental period of
the applicable Lease or Option Term for the first ninety (90) days of any such
holdover; provided that the Percentage Rate shall be increased to two hundred
percent (200%) for any holdover in excess of ninety (90) days. Such
month-to-month tenancy shall be subject to every other applicable term, covenant
and agreement contained herein. Nothing contained in this Article 16 shall be
construed as consent by Landlord to any holding over by Tenant, and Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises to Landlord as provided in this Lease upon the expiration or other
termination of this Lease. The provisions of this Article 16 shall not be deemed
to limit or constitute a waiver of any other rights or remedies of Landlord
provided herein or at law. If Tenant fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any other liabilities to
Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold
Landlord harmless from all loss, costs (including reasonable attorneys' fees)
and liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding tenant founded
upon such failure to surrender and any lost profits to Landlord resulting
therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business days following a request in writing by
Landlord, Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of EXHIBIT E, attached hereto (or such other form as
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may be reasonably required by any prospective mortgagee or purchaser of the
Project, or any portion thereof), indicating therein any exceptions thereto that
may exist at that time, and shall also contain any other information reasonably
requested by Landlord or Landlord's mortgagee or prospective mortgagee. Any such
certificate may be relied upon by any prospective mortgagee or purchaser of all
or any portion of the Project. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. At any time during the
Lease Term, Landlord may require Tenant to provide Landlord with a current
financial statement and financial statements of the two (2) years prior to the
current year provided that Landlord shall not request Tenant's financial
statements more than two (2) times in any calendar year. Such statements shall
be prepared in accordance with generally accepted accounting principles and, if
such is the normal practice of Tenant, shall be audited by an independent
certified public accountant. Failure of Tenant to timely execute, acknowledge
and deliver such estoppel certificate or other instruments shall constitute an
acceptance of the Premises and an acknowledgment by Tenant that statements
included in the estoppel certificate are true and correct, without exception.
ARTICLE 18
SUBORDINATION
18.1 Subordination. This Lease is subject and subordinate to all
present and future ground or underlying leases of the Building or Project and to
the lien of any mortgage, trust deed or other encumbrances now or hereafter in
force against the Building or Project or any part thereof, if any, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds, unless the holders of such mortgages, trust deeds or
other encumbrances, or the lessors under such ground lease or underlying leases,
require in writing that this Lease be superior thereto. Notwithstanding the
foregoing to the contrary, Landlord agrees to provide Tenant with commercially
reasonable non-disturbance agreement(s) in favor of Tenant from any ground
lessors, mortgage holders or deed of trust beneficiaries under any ground lease,
mortgage or deed of trust affecting the Project which comes into existence at
any time after the date of execution of this Lease but prior to the expiration
of the Lease Term ("Future Mortgage") in consideration of, and as a condition
precedent to, Tenant's agreement to be bound by the terms of this Article 18
with respect to such Future Mortgage. Tenant covenants and agrees in the event
any proceedings are brought for the foreclosure of any such mortgage or deed in
lieu thereof (or if any ground lease is terminated), to attorn, without any
deductions or set-offs whatsoever, to the lienholder or purchaser or any
successors thereto upon any such foreclosure sale or deed in lieu thereof (or to
the ground lessor), if so requested to do so by such purchaser or lienholder or
ground lessor, and to recognize such purchaser or lienholder or ground lessor as
the lessor under this Lease, provided such lienholder or purchaser or ground
lessor shall agree to accept this Lease and not disturb Tenant's occupancy, so
long as Tenant timely pays the rent and observes and performs the terms,
covenants and conditions of this Lease to be observed and performed by Tenant.
Landlord's interest herein may be assigned as security at any time to any
lienholder. Tenant shall, within ten (10) business days of request by Landlord,
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying leases, provided
Tenant has received or will receive a commercially reasonable nondisturbance
agreement in favor of Tenant from any such party requesting such further
instruments or assurances. Tenant hereby irrevocably authorizes Landlord to
execute and deliver in the name of Tenant any such instrument or instruments if
Tenant fails to do so, provided that such authorization shall in no way relieve
Tenant from the obligation of executing such instruments of subordination or
superiority. Tenant waives the provisions of any current or future statute, rule
or law which may give or purport to give Tenant any right or election to
terminate or otherwise adversely affect this Lease and the obligations of Tenant
hereunder in the event of any foreclosure proceeding or sale.
18.2 Non-Disturbance Agreement From Existing Lender. In the event
that as of the date of execution of this Lease, there exists any deed of trust
or ground lease encumbering the Project which is not terminated, released or
reconveyed within sixty (60) days thereafter, then Landlord shall obtain and
deliver to Tenant, on or before the date which is one hundred twenty (120) days
following the date of execution of this Lease, a commercially reasonable non-
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disturbance agreement from the beneficiary under such deed of trust. Tenant
shall execute and return such non-disturbance agreement to Landlord within
thirty (30) days after Tenant's receipt thereof.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other
charge required to be paid under this Lease, or any part thereof, when due
unless such failure is cured within three (3) business days after receipt of
written notice by Tenant; or
19.1.2 Except where a specific time period is otherwise set
forth for Tenant's performance in this Lease, in which event the failure to
perform by Tenant within such time period shall be a default by Tenant under
this Section 19.1.2, any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided that if the nature of such default is
such that the same cannot reasonably be cured within a thirty (30) day period,
Tenant shall not be deemed to be in default if it diligently commences such cure
within such period and thereafter diligently proceeds to rectify and cure such
default; or
19.1.3 To the extent permitted by law, a general assignment by
Tenant for the benefit of creditors, or the taking of any corporate action in
furtherance of bankruptcy or dissolution whether or not there exists any
proceeding under an insolvency or bankruptcy law, or the filing by or against
Tenant of any proceeding under an insolvency or bankruptcy law, unless in the
case of a proceeding filed against Tenant the same is dismissed within ninety
(90) days, or the appointment of a trustee or receiver to take possession of all
or substantially all of the assets of Tenant, unless possession is restored to
Tenant within ninety (90) days, or any execution or other judicially authorized
seizure of all or substantially all of Tenant's assets located upon the Premises
or of Tenant's interest in this Lease, unless such seizure is discharged within
ninety (90) days; or
19.1.4 Abandonment or vacation of all or a substantial portion
of the Premises by Tenant; or
19.1.5 The failure by Tenant to observe or perform according to
the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than five (5) business days after notice from Landlord.
The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of
default by Tenant, Landlord shall have, in addition to any other remedies
available to Landlord at law or in equity (all of which remedies shall be
distinct, separate and cumulative), the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of any unpaid rent which
has been earned at the time of such termination; plus
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(ii) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Lease Term after the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iv) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom, specifically including
but not limited to, brokerage commissions and advertising expenses
incurred, expenses of remodeling the Premises or any portion thereof for
a new tenant, whether for the same or a different use, and any special
concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to
time by applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to
be and to mean all sums of every nature required to be paid by Tenant pursuant
to the terms of this Lease, whether to Landlord or to others. As used in
Paragraphs 19.2.1(i) and (ii), above, the "worth at the time of award" shall be
computed by allowing interest at the rate set forth in Article 25 of this Lease,
but in no case greater than the maximum amount of such interest permitted by
law. As used in Paragraph 19.2.1(iii) above, the "worth at the time of award"
shall be computed by discounting such amount at the Interest Rate.
19.2.2 Landlord may elect to continue the lease in effect after
Tenant's breach and abandonment and recover rent as it becomes due. Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.
19.2.3 Landlord may enter upon and take possession of the
Premises and expel or remove Tenant and any other occupants therefrom, with or
without having terminated the Lease.
19.2.4 Landlord may alter locks and other security devices at
the Premises.
19.2.5 Landlord shall at all times have the rights and remedies
(which shall be cumulative with each other and cumulative and in addition to
those rights and remedies available under Sections 19.2.1 and 19.2.4, above, or
any law or other provision of this Lease), without prior demand or notice except
as required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.
19.3 SUBLEASES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, enter
into new subleases, licenses, concessions or arrangements with Tenant's
Customers or subtenants.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of two
(2) or more events of default in any twelve (12) month period by Tenant,
Landlord shall have the right to require that any or all subsequent amounts paid
by Tenant to Landlord hereunder, whether to cure the default in question or
otherwise, be paid in the form of cash, money order, cashier's or certified
check drawn on an institution acceptable to Landlord, or by other means approved
by Landlord, notwithstanding any prior practice of accepting payments in any
different form.
19.5 EFFORTS TO RELET. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord's interests
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hereunder, or any other action or omission by Landlord shall be construed as an
election by Landlord to terminate this Lease or Tenant's right to possession, or
to accept a surrender of the Premises, nor shall same operate to release Tenant
in whole or in part from any of Tenant's obligations hereunder, unless express
written notice of such intention is sent by Landlord to Tenant. Tenant hereby
irrevocably waives any right otherwise available under any law to redeem or
reinstate this Lease.
19.6 LIEN RIGHTS. Landlord hereby waives any lien rights, whether
provided herein or by statutory or common law, now in existence or hereafter
created, to a landlord's lien on any furnishings, equipment, trade fixtures,
inventory or other personal property of any kind belonging to Tenant located on
the Premises or elsewhere.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
Concurrent with Tenant's execution of this Lease, Tenant shall deposit
with Landlord a security deposit (the "SECURITY DEPOSIT") in the amount set
forth in Section 8 of the Summary, as security for the faithful performance by
Tenant of all of its obligations under this Lease. If Tenant defaults with
respect to any provisions of this Lease, including, but not limited to, the
provisions relating to the payment of Rent, the removal of property and the
repair of resultant damage, Landlord may, without notice to Tenant, but shall
not be required to apply all or any part of the Security Deposit for the payment
of any Rent or any other sum in default and Tenant shall, upon demand therefor,
restore the Security Deposit to its original amount. Any unapplied portion of
the Security Deposit shall be returned to Tenant, or, at Landlord's option, to
the last assignee of Tenant's interest hereunder, within forty-five (45) days
following the expiration of the Lease Term. Tenant shall not be entitled to any
interest on the Security Deposit.
ARTICLE 22
SUPPLEMENTAL EQUIPMENT
22.1 SUPPLEMENTAL EQUIPMENT. Landlord hereby grants to Tenant and
Tenant hereby accepts from Landlord, on the terms and conditions set forth
herein, a license (the "LICENSE") granting Tenant the right (but with respect to
Tenant's HVAC Equipment and Electrical Equipment in the Premises, Tenant shall
have the obligation), to install, at Tenant's sole cost and expense and subject
to the provisions of this Article 22, the following:
22.1.1 In the event Tenant has elected not to take any Reserved
Condensor Water from the Condensor Water Plant, Tenant may install a heating,
ventilating and air conditioning system and related connections to the Premises
providing up to 80 tons of cooling capacity in a designated area of the roof of
the Building not to exceed two hundred fifty (250) square feet (the "TENANT'S
HVAC EQUIPMENT");
22.1.2 A dry-pipe or FM 200 fire suppression system (the
"FIRE-SUPPRESSION SYSTEM") in the Premises in a location designated in writing
by Landlord. In connection with Tenant's installation of the Fire Suppression
System, Tenant shall have the right to disconnect
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and cap, if necessary, in compliance with applicable law, and in accordance with
the terms of Section 22.3 below, any existing fire-suppression system in the
Premises.;
22.1.3 The Electrical Equipment described in Section 6.1.2
above;
22.1.4 Subject to available capacity of the Building, such
connection equipment, such as conduits, cables, risers, feeders and materials
(collectively, the "CONNECTING EQUIPMENT") in the shafts, ducts, conduits,
chases, utility closets and other facilities of the Building as is reasonably
necessary to connect Tenant's HVAC Equipment, the Electrical Equipment and the
Fire-Suppression System to Tenant's other machinery and equipment in the
Premises, subject however, to the provisions of Section 22.3 below and subject
to the availability of vertical riser and feeder excess capacity;
22.1.5 Three (3) four inch (4.0") aluminum conduits running
from the Premises to the roof and basement of the Building, in each of the
northerly and southerly main telecommunications risers of the Building in
locations designated or approved in writing by Landlord, and in the basement
from the main southerly telecommunication riser to the MPOE (as defined in
Section 6.5 above) out of the Building to connect with the fiberoptic network of
Tenant's chosen fiber optic service provider (collectively "TENANT'S CONDUIT");
Tenant may use Tenant's Conduit running in the northerly telecommunications
riser of the Building for making direct cross-connections with other tenants in
the Project (including without limitation the MMR), provided that the total
cumulative horizontal diameter of Tenant's conduit break-out on all floors of
the Building shall not exceed twelve (12) inches;
22.1.6 Subject to the requirements of Section 6.5, new
telecommunications lines and related equipment (collectively the "LINES") in the
CDS and Tenant's Conduit described in Sections 6.5 and 22.1.5 above. Tenant
shall install its Lines in the Building and Project in a "backbone"
configuration with horizontal Lines on applicable floors of the Building being
connected to a single Line in a vertical riser. Once the backbone configuration
is constructed, any and all new Lines installed by Tenant pursuant to the terms
of this Section 22 shall be attached to such backbone configuration; and
22.1.7 A card key security access system and the necessary
paneling ("CARD KEY SYSTEM") therefor for the Premises, provided that Tenant
shall provide Landlord with the security code, access card or other means
necessary to utilize the Card Key System.
Tenant's HVAC Equipment, the Fire Suppression System, the Electrical
Equipment, the Connecting Equipment, Tenant's Conduit, the Lines and the Card
Key System are sometimes collectively referred to as the "SUPPLEMENTAL
EQUIPMENT."
22.2 LICENSE AREAS. The areas within the Building and Project which
are outside the Premises and are occupied by the Supplemental Equipment
(including without limitation, Tenant's non-exclusive use, in common with one or
more other tenants of the Project and Landlord, the vertical shafts and
horizontal raceways of the Building to the extent Tenant's use of such areas are
approved in writing by Landlord) are referred to herein collectively as the
"LICENSE AREAS". The precise amount and location of the License Areas shall be
designated by Landlord. It is expressly understood that Landlord retains the
right to use the License Areas for any purpose whatsoever provided that Tenant
shall have reasonable access to, and Landlord shall not unduly interfere with
the use of, the Supplemental Equipment therein.
22.3 INSTALLATION. The installation of the Supplemental Equipment
shall constitute Alterations and shall be performed in accordance with and
subject to the provisions of Article 8 of this Lease, and the Supplemental
Equipment shall be treated for all purposes of this Lease as if the same were
Tenant's property.
22.4 TENANT'S OBLIGATIONS. For the purposes of determining Tenant's
obligations with respect to the License Areas, the License Areas shall be deemed
to be a portion of the Premises;
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consequently, unless otherwise provided in this Article 22, all of the
provisions of this Lease with respect to Tenant's obligations hereunder shall
apply to the installation, use and maintenance of the License Areas and the
Supplemental Equipment, including without limitation, provisions relating to
compliance with requirements as to insurance, indemnity, janitorial services,
repairs, maintenance and compliance with law, except that unless otherwise
provided herein Tenant shall have no obligation to pay Base Rent or Direct
Expenses for the License Areas, and the square footage of the License Areas
shall not be included in the calculation of Tenant's Share. Landlord shall have
no obligation with regard to the License Areas except as provided in this
Article 22.
22.5 INDEMNITY. Tenant shall install, use, maintain and repair the
Supplemental Equipment, and use the License Areas, so as not to damage or
interfere with the operation of the Building, the Building systems or with the
occupancy or activities of any other tenant of the Building; and Tenant hereby
agrees to indemnify and hold harmless the Landlord Parties from and against any
and all claims (including but not limited to claims for bodily injury or
property damage), actions, mechanic's liens, losses, liabilities, and expenses
(including reasonable attorney fees and costs of defense by Landlord's legal
counsel) (collectively, "CLAIMS"), which may arise from the installation,
operation, use, maintenance or removal of the Supplemental Equipment and use of
the License Areas. Similarly, Tenant shall pay upon demand by Landlord the costs
to repair any physical damage to the Building and the License Areas caused by
such installation, operation, use, maintenance or removal. Tenant hereby waives
and releases the Landlord Parties from any Claims Tenant may have at any time
(including but not limited to Claims relating to interruptions in services)
arising out of or relating in any way to the installation, operation, use,
maintenance, and/or removal of the Supplemental Equipment and/or use of the
License Areas. Such waiver and release shall not apply to Claims to the extent
caused by Landlord's gross negligence or willful misconduct and not insured or
required to be insured by Tenant under this Lease. However, in no event shall
Landlord or any member of the Landlord Parties be liable to Tenant for lost
profits or consequential or incidental damages of any kind.
22.6 TENANT WAIVER. Landlord shall not have any obligations with
respect to the Supplemental Equipment or License Areas or compliance with any
requirements relating thereto, nor shall Landlord be responsible for any damage
that may be caused ?? the Supplemental Equipment or License Areas except to the
extent caused by the gross negligence or willful misconduct of Landlord and not
insured or required to be insured by Tenant under this Lease. Landlord makes no
representation that the Supplemental Equipment or License Areas will be able to
operate without interference or disturbance and Tenant agrees that Landlord
shall not be liable to Tenant therefor.
22.7 PROTECTIVE INSTALLATIONS. Tenant, at Tenant's sole cost and
expense, shall install such fencing and other protective equipment on or about
the Supplemental Equipment and License Areas as Landlord may reasonably
determine.
22.8 DAMAGE TO SUPPLEMENTAL EQUIPMENT/TAXES ON SUPPLEMENTAL
EQUIPMENT. Notwithstanding anything in Article 11 to the contrary, Tenant shall
(i) be solely responsible for any damage caused as a result of and/or to the
Supplemental Equipment, (ii) promptly pay any tax, license or permit fees
charged pursuant to any requirements in connection with the installation,
maintenance or use of the Supplemental Equipment and comply with all precautions
and safeguards recommended by all governmental authorities, and (iii) make
necessary repairs, replacements or to maintenance of the Supplemental Equipment
and License Areas (unless and to the extent Landlord has elected in Section 11.1
to repair the Supplemental Equipment) or License Areas.
22.9 LANDLORD'S RIGHTS. This license shall be coupled with Tenant's
leasehold interest hereunder, and shall be terminated if (i) any of the
conditions set forth in this Article 22 are not complied with by Tenant, (ii)
Tenant's use of the Supplemental Equipment is interfering with the activity or
occupancy of any other tenant in the Building, or (iii) Tenant is in default of
its obligations under this Lease beyond any applicable notice and cure period.
In the event of the occurrence of any of items (i)-(iii) of this Section 22.9
above, then without limiting Landlord's
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rights and remedies it may otherwise have under this Lease, Tenant shall, upon
written notice from Landlord, have the option either to (i) immediately
discontinue its use of the Supplemental Equipment and License Areas, remove the
same, and make such repairs and restoration as required under Section 22.10
below, (ii) reposition any Supplemental Equipment to a location designated by
Landlord if Landlord elects to permit such repositioning, and make such repairs
and restorations as required under Section 22.10 below, or (iii) correct such
noncompliance within thirty (30) days after receipt of notice. If Tenant fails
to correct noncompliance within thirty (30) days after receipt of notice, then,
subject to Section 22.10 below, Tenant shall immediately discontinue its use of
the applicable Supplemental Equipment and remove the same and discontinue use of
the related License Areas. Tenant acknowledges and agrees that any exercise by
Landlord of its rights under this Section 22.9 shall not relieve Tenant of any
of its obligations under the Lease.
22.10 REMOVAL OF SUPPLEMENTAL EQUIPMENT. Notwithstanding anything in
this Lease to the contrary (including without limitation Article 15), upon the
expiration of the Lease Term or upon any earlier termination of this Lease,
Landlord shall have the option of requiring that Tenant, subject to the control
of and direction from Landlord, remove all or any portion of the Supplemental
Equipment, repair any damage caused thereby, and restore the License Areas and
other facilities of the Building and Project to their condition existing prior
to the installation of the Supplemental Equipment.
ARTICLE 23
SIGNS
23.1 FULL FLOORS. Subject to Landlord's prior written approval, in
its sole discretion, and provided all signs are in keeping with the quality,
design and style of the Building and Project, Tenant, if the Premises comprise
an entire floor of the Building, at its sole cost and expense, may install
identification signage anywhere in the Premises including in the elevator lobby
of the Premises, provided that such signs must not be visible from the exterior
of the Building.
23.2 MULTI-TENANT FLOORS. If other tenants occupy space on the floor
on which the Premises is located, Tenant's identifying signage shall be provided
by Landlord, at Tenant's cost, and such signage shall be comparable to that used
by Landlord for other similar floors in the Building and shall comply with
Landlord's Building standard signage program.
23.3 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Tenant may not install any signs on the exterior or roof
of the Project or the Common Areas. Any signs, window coverings, or blinds (even
if the same are located behind the Landlord-approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building,
shall be subject to the prior approval of Landlord, in its sole discretion.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises or the Project which will in any way conflict with any law,
statute, ordinance or other governmental rule, regulation or requirement now in
force or which may hereafter be enacted or promulgated. At its sole cost and
expense, Tenant shall promptly comply with all such governmental measures.
Should any standard or regulation now or hereafter be imposed on the Project (or
on Landlord as owner of the Project) to the extent such responsibility is not
expressly made the responsibility of Landlord hereunder, or Tenant by a state,
federal or local governmental body charged with the establishment, regulation
and enforcement of occupational, health or safety standards for employers,
employees, landlords or tenants, then Tenant agrees, at its sole cost and
expense, to comply promptly with such standards or regulations. Tenant shall be
responsible, at its sole cost and expense, to make all alterations to the
Premises as are required to comply with the
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governmental rules, regulations, requirements or standards described in this
Article 24. The judgment of any court of competent jurisdiction or the admission
of Tenant in any judicial action, regardless of whether Landlord is a party
thereto, that Tenant has violated any of said governmental measures, shall be
conclusive of that fact as between Landlord and Tenant.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount plus any reasonable attorneys' fees incurred
by Landlord by reason of Tenant's failure to pay Rent and/or other charges when
due hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after the date they are due shall bear interest from the
date when due until paid at a rate per annum equal to the lesser of (i) the
Interest Rate, and (ii) the highest rate permitted by applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided
to the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor: (i) sums equal to expenditures
reasonably made and obligations incurred by Landlord in connection with the
remedying by Landlord of Tenant's defaults pursuant to the provisions of Section
26.1; (ii) sums equal to all losses, costs, liabilities, damages and expenses
referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all reasonable legal fees and other amounts so expended. Tenant's
obligations under this Section 26.2 shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises
accompanied by a representative of Tenant made reasonably available by Tenant,
to (i) inspect them; (ii) show the Premises to prospective purchasers,
mortgagees or tenants, or to current or prospective mortgagees, ground or
underlying lessors or insurers; (iii) post notices of nonresponsibility; or (iv)
alter, improve or repair the Premises or the Building, or for structural
alterations, repairs or improvements to the Building or the Building's systems
and equipment, provided that Landlord shall use commercially reasonable efforts
to ensure that such entry does not materially interfere with or disturb Tenant's
use and occupancy of the Premises. Notwithstanding anything to the contrary
contained in this Article 27, Landlord may enter the Premises at any time to (A)
perform services required of Landlord; (B) take possession due to any breach of
this Lease in the manner provided herein; and (C) perform any covenants of
Tenant which Tenant fails to perform. Landlord may
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make any such entries without the abatement of Rent and may take such reasonable
steps as required to accomplish the stated purposes. Tenant hereby waives any
claims for damages or for any injuries or inconvenience to or interference with
Tenant's business, lost profits, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby. For each of the above purposes,
Landlord shall at all times have a key with which to unlock all the doors in the
Premises, excluding Tenant's vaults, safes and special security areas designated
in advance by Tenant. In an emergency, Landlord shall have the right to use any
means that Landlord may deem proper to open the doors in and to the Premises.
Any entry into the Premises by Landlord in the manner hereinbefore described
shall not be deemed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an actual or constructive eviction of Tenant from any portion
of the Premises. No provision of this Lease shall be construed as obligating
Landlord to perform any repairs, alterations or decorations except as otherwise
expressly agreed to be performed by Landlord herein.
ARTICLE 28
SUBSTITUTION OF OTHER PREMISES
At any time prior to Tenant's commencement of construction in the
Premises under the Tenant Work Letter, Landlord shall have the right to move
Tenant to other comparable space located on the seventh (7th) floor of the
Project, and all terms hereof shall apply to the new space with equal force. In
such event, Landlord shall give Tenant prior notice, shall provide Tenant, at
Landlord's sole cost and expense, with tenant improvements at least equal in
quality to those in the Premises and shall move Tenant's effects to the new
space at Landlord's sole cost and expense at such time and in such manner as to
inconvenience Tenant as little as reasonably practicable. In addition, Landlord
shall reimburse Tenant for the reasonable costs and expenses incurred by Tenant
in connection with such relocation, within thirty (30) days of Landlord's
receipt of an invoice therefor. Simultaneously with such relocation of the
Premises, the parties shall immediately execute an amendment to this Lease
stating the relocation of the Premises.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 TERMS; CAPTIONS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. The necessary
grammatical changes required to make the provisions hereof apply either to
corporations or partnerships or individuals, men or women, as the case may
require, shall in all cases be assumed as though in each case fully expressed.
The captions of Articles and Sections are for convenience only and shall not be
deemed to limit, construe, affect or alter the meaning of such Articles and
Sections.
29.2 BINDING EFFECT. Subject to all other provisions of this Lease,
each of the covenants, conditions and provisions of this Lease shall extend to
and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
29.3 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.4 MODIFICATION OF LEASE. Should any current or prospective
mortgagee or ground lessor for the Building or Project require a modification of
this Lease, which modification will not cause an increased cost or expense to
Tenant or in any other way materially and adversely change the rights and
obligations of Tenant hereunder, then and in such event, Tenant agrees that this
Lease may be so modified and agrees to execute whatever documents are reasonably
required therefor and to deliver the same to Landlord within ten (10) business
days following a request therefor. At the request of Landlord or any mortgagee
or ground lessor, Tenant agrees to
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execute a short form of Lease and deliver the same to Landlord within ten (10)
business days following the request therefor.
29.5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that
Landlord has the right to transfer all or any portion of its interest in the
Project or Building and in this Lease, and Tenant agrees that in the event of
any such transfer, Landlord shall automatically be released from all liability
under this Lease for acts or omissions arising on or subsequent to such transfer
and Tenant agrees to look solely to such transferee for the performance of
Landlord's obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security Deposit,
and Tenant shall attorn to such transferee. Tenant further acknowledges that
Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.
29.6 PROHIBITION AGAINST RECORDING. Except as provided in Section
29.4 of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant.
29.7 LANDLORD'S TITLE. Landlord's title is and always shall be
paramount to the title of Tenant. Nothing herein contained shall empower Tenant
to do any act which can, shall or may encumber the title of Landlord.
29.8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall
be deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
29.9 APPLICATION OF PAYMENTS. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.
29.10 TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
29.11 PARTIAL INVALIDITY. If any term, provision or condition
contained in this Lease shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term, provision or condition
to persons or circumstances other than those with respect to which it is invalid
or unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.12 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
29.13 LANDLORD EXCULPATION. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the lesser of (a) the interest of Landlord in the Building or (b) the equity
interest Landlord would have in the Building if the Building were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Building (as such value is determined by Landlord), provided that in no event
shall such liability extend to any sales or insurance proceeds received by
Landlord or the Landlord Parties in connection with the Project, Building or
Premises. Neither Landlord, nor any of the Landlord Parties shall have any
personal liability therefor, and Tenant hereby expressly waives and releases
such personal liability on behalf of itself and all persons claiming by, through
or under Tenant. The limitations of liability contained
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in this Section 29.13 shall inure to the benefit of Landlord's and the Landlord
Parties' present and future partners, beneficiaries, officers, directors,
trustees, shareholders, agents and employees, and their respective partners,
heirs, successors and assigns. Under no circumstances shall any present or
future partner of Landlord (if Landlord is a partnership), or trustee or
beneficiary (if Landlord or any partner of Landlord is a trust), have any
liability for the performance of Landlord's obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with, Tenant's business, including but not limited to, loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of
goodwill or loss of use, in each case, however occurring.
29.14 ENTIRE AGREEMENT. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease and the Exhibits hereto, constitute the parties' entire agreement with
respect to the leasing of the Premises and supersedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and understandings,
if any, between the parties hereto or displayed by Landlord to Tenant with
respect to the subject matter thereof, and none thereof shall be used to
interpret or construe this Lease. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto.
29.15 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building
or Project. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
29.16 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease and except as to Tenant's obligations under Articles 5 of
this Lease (collectively, a "FORCE MAJEURE"), notwithstanding anything to the
contrary contained in this Lease, shall excuse the performance of such party for
a period equal to any such prevention, delay or stoppage and, therefore, if this
Lease specifies a time period for performance of an obligation of either party,
that time period shall be extended by the period of any delay in such party's
performance caused by a Force Majeure.
29.17 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.
29.18 NOTICES. All notices, demands, statements, designations,
approvals or other communications (collectively, "NOTICES") given or required to
be given by either party to the other hereunder or by law shall be in writing,
shall be (A) sent by United States certified or registered mail, postage
prepaid, return receipt requested ("Mail"), (B) transmitted by telecopy, if such
telecopy is promptly followed by a Notice sent by Mail, (C) delivered by a
nationally recognized overnight courier, or (D) delivered personally. Any Notice
shall be sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the telecopy is transmitted, (iii) the date the overnight courier delivery
is made or attempted to be made, or (iv) the date personal delivery is made or
attempted to be made. If Tenant is notified of the identity and address of
Landlord's mortgagee or ground or underlying lessor, Tenant shall give to such
mortgagee or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or certified mail, and such
mortgagee or ground or underlying lessor shall be given a reasonable opportunity
to cure such default (provided that such
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opportunity to cure shall not exceed 90 days unless the nature of the default is
such that the same cannot reasonably be cured within a ninety (90) day period,
in which event such mortgagee or ground or underlying lessor shall diligently
commence such cure within such period and thereafter diligently proceeds to
rectify and cure such default)prior to Tenant's exercising any remedy available
to Tenant. As of the date of this Lease, any Notices to Landlord must be sent,
transmitted, or delivered, as the case may be, to the following addresses:
Dallas Center Associates, Ltd.
c/o Telecom Real Estate Services, Inc.
617 S. Olive Street, Suite 810
Los Angeles, CA 90014
Attn: Kevin Keating
With copy to:
Allen, Matkins, Leck, Gamble & Mallory LLP
333 Bush Street, 17th Floor
San Francisco, California 94104-2806
Attention: Todd A. Chapman, Esq.
Fax: (415) 837-1516
Phone: (415) 837-1515
29.19 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.20 AUTHORITY. If Tenant is a corporation, trust or partnership,
each individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in Texas and that Tenant has full right and authority to execute and
deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in Texas.
29.21 ATTORNEYS' FEES. In the event that either Landlord or Tenant
should bring suit for the possession of the Premises, for the recovery of any
sum due under this Lease, or because of the breach of any provision of this
Lease or for any other relief against the other, then all costs and expenses,
including reasonable attorneys' fees, incurred by the prevailing party therein
shall be paid by the other party, which obligation on the part of the other
party shall be deemed to have accrued on the date of the commencement of such
action and shall be enforceable whether or not the action is prosecuted to
judgment.
29.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of Texas. IN ANY
ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I)
THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF TEXAS, (II) SERVICE
OF PROCESS BY ANY MEANS AUTHORIZED BY TEXAS LAW, AND (III) IN THE INTEREST OF
SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR
SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANTS USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY
REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR
NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE
MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN
INDEPENDENT ACTION AT LAW.
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29.23 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of, option
for or option to lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
29.24 BROKERS. Landlord shall be responsible for the initial Brokerage
commission to be paid to Broker (defined below) in connection with this Lease.
Landlord and Tenant hereby warrant to each other that they have had no dealings
with any real estate broker or agent in connection with the negotiation of this
Lease, excepting only the real estate brokers or agents specified in Section 12
of the Summary (the "BROKERS"), and that they know of no other real estate
broker or agent who is entitled to a commission in connection with this Lease.
Each party agrees to indemnify and defend the other party against and hold the
other party harmless from any and all claims, demands, losses, liabilities,
lawsuits, judgments, costs and expenses (including without limitation reasonable
attorneys' fees) with respect to any leasing commission or equivalent
compensation alleged to be owing on account of any dealings with any real estate
broker or agent, other than the Brokers, occurring by, through, or under the
indemnifying party.
29.25 INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense or to any setoff of the Rent or other amounts
owing hereunder against Landlord.
29.26 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord shall have the
right at any time to change the name of the Project or Building and to install,
affix and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord's sole discretion, desire.
Tenant shall not use the name of the Project or Building or use pictures or
illustrations of the Project or Building in advertising or other publicity or
for any purpose other than as the address of the business to be conducted by
Tenant in the Premises, without the prior written consent of Landlord.
29.27 COUNTERPARTS. This Lease may be executed in counterparts with
the same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.28 CONFIDENTIALITY. Landlord and Tenant acknowledges that the
content of this Lease and any related documents are confidential information.
Landlord and Tenant shall keep such confidential information strictly
confidential and shall not disclose such confidential information to any person
or entity other than such party's financial, legal, space planning consultants
and prospective sublessees, transferees or assignees of and except as otherwise
required by law.
29.29 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or traffic
in and around the Building, and in connection therewith, Tenant shall take
responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.
29.30 BUILDING RENOVATIONS. It is specifically understood and agreed
that Landlord has made no representation or warranty to Tenant and has no
obligation and has made no promises to alter, remodel, improve, renovate, repair
or decorate the Premises, Building, the Project or any part thereof and that no
representations respecting the condition of the Premises, the Building, the
Project or any part thereof have been made by Landlord to Tenant except as
specifically set forth herein or in the Tenant Work Letter. However, Tenant
hereby acknowledges that Landlord is currently renovating or may during the
Lease Term renovate, improve, alter, or modify (collectively, the "RENOVATIONS")
the Project, the Building and/or the Premises including without limitation the
parking structure, common areas, systems and equipment, roof, and structural
portions of the same, which Renovations may include, without limitation, (i)
installing sprinklers in the Building common areas and tenant spaces, (ii)
modifying the common areas and tenant spaces to comply with applicable laws and
regulations, including regulations relating to the physically disabled, seismic
conditions, and building safety and security, and (iii) installing new
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floor covering, lighting, and wall coverings in the Building common areas, and
in connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the common areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building; provided that Landlord shall use commercially reasonable
efforts to ensure that such Renovations do not materially interfere with or
unreasonably disturb Tenant's use and occupancy of the Premises. Tenant hereby
agrees that such Renovations and Landlord's actions in connection with such
Renovations shall in no way constitute a constructive eviction of Tenant nor
entitle Tenant to any abatement of Rent. Landlord shall have no responsibility
or for any reason be liable to Tenant for any direct or indirect injury to or
interference with Tenant's business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or the License Areas or of Tenant's
personal property or improvements (including the Supplemental Equipment)
resulting from the Renovations or Landlord's actions in connection with such
Renovations, or for any inconvenience or annoyance occasioned by such
Renovations or Landlord's actions.
29.31 NO VIOLATION. Tenant hereby warrants and represents that neither
its execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.
29.32 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project may be under construction following
Tenant's occupancy of the Premises, and that such construction may result in
levels of noise, dust, obstruction of access, etc. which are in excess of that
present in a fully constructed project. Tenant hereby waives any and all rent
offsets or claims of constructive eviction which may arise in connection with
such construction; provided that Landlord shall use commercially reasonable
efforts to ensure that such construction do not materially interfere with or
unreasonably disturb Tenant's use and occupancy of the Premises.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"Landlord":
DALLAS CARRIER ASSOCIATES, Ltd., a Texas
limited partnership
By: Dallas Center, Inc., a Texas corporation;
Its: Sole Managing Partner
By: /s/ Signature Illegible
Kevin Keating, Vice President
"Tenant":
UNIVERSAL ACCESS,
an Illinois corporation
By: /s/ Signature Illegible
Name: Robert J. Pommer
------------------------------------
Title: Chief Operating Officer
-----------------------------------
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EXHIBIT A
CARRIER CENTER DALLAS
OUTLINE OF PREMISES
[TO BE PROVIDED]
EXHIBIT A
Page 1
<PAGE> 49
EXHIBIT B
CARRIER CENTER DALLAS
TENANT WORK LETTER
This Work Letter for Tenant Improvements, including any schedules and
exhibits attached hereto (the "Tenant Work Letter"), is attached to and forms a
part of that certain Lease of even date herewith, by and between DALLAS CARRIER
ASSOCIATES, LTD., a Texas limited partnership, as Landlord, and UNIVERSAL
ACCESS, an Illinois corporation, as Tenant (the "Lease"). Unless otherwise
specified, "Article" and "Section" references herein are to Articles and
Sections of the body of the Lease and "Paragraph" references are to paragraphs
of this Tenant Work Letter.
1. DEFINITIONS. All capitalized terms used herein and not defined
shall have the meanings set forth in the body of the Lease. As used in the body
of the Lease and in this Tenant Work Letter:
1.1 Code. The term "code" means all applicable electrical, building,
architectural barrier, zoning, health, safety, seismic, fire, energy and other
codes, ordinances, regulations, rulings, interpretations, requirements and
relevant provisions of law issued or adopted by the City of Dallas, County of
Dallas, State of Texas, the United States Government or any other governmental
authority.
1.2 Allowance. "ALLOWANCE" means the total sum of $200,000 (i.e.
$25.00 per rentable square foot of the Premises).
2. BASE PREMISES WORK.
2.1 Base Building Items. Landlord has previously constructed the
Building Structure and those portions of the Building Systems located in the
internal core of the Building. Landlord has previously constructed, or will
construct, at Landlord's sole cost and expense, certain base components of the
Premises and the floor on which the Premises are located (the "BASE PREMISES
WORK"). Tenant shall, except as otherwise set forth in this Lease or in this
Tenant Work Letter, accept the Building Structure, Building Systems, the
Premises, and the Base Premises Work in their "as-is" condition as of the date
of this Lease (or the date such incomplete items of the Building Premises Work,
if any, are completed by Landlord, as the case may be), subject to the terms of
this Tenant Work Letter and this Paragraph 2. The Base Premises Work shall
include only the following items: (i) Building standard core doors for
stairwells, electrical, mechanical and janitorial and telephone rooms and
washrooms all installed; such doors shall be complete with frame, trim and
hardware, locking devices, electrical door releases and/or magnetic hold-open
devices where applicable and closers; (ii) completed telephone, electrical,
janitorial and mechanical rooms to the extent located on the floor on which the
Premises are located; (iii) a completed unisex washroom on each floor in
compliance with all applicable laws, including, without limitation, the ADA;
(iv) telephone lines stubbed to a central distribution panel; (v) stud framing
for all demising walls separating the Premises from the common corridors, with
drywall on the exterior (corridor) sides of all such demising walls; (vi)
Building standard elevator lobby and corridors; (vii) sheet rock on columns, and
interior columns taped and spackled ready for painting; (viii) Building Standard
HVAC in its "AS-IS" condition; (ix) Building standard vinyl flooring on all
primary floors of the Premises; (x) the abatement of all friable and assessable
asbestos in the Premises; and (xi) an existing automatic sprinkler system grid
in the Building common areas in its "as is" condition on an unoccupied basis.
2.2 Substantial Completion. For purposes of this Lease, Landlord's
obligations under this Paragraph 2 shall be satisfied upon (i) the substantial
completion of construction of items (i) through (xi) listed in Paragraph 2.1 of
this Tenant Work Letter, with the exception of (x) any minor or decorative punch
list items or Code compliance items which do not or will not materially
interfere with Tenant's commencement of construction of the Tenant Improvements
EXHIBIT B
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(which punch list and Code items shall be completed by Landlord in a diligent
manner), and (y) any Base Premises Work which Tenant has agreed to complete as
part of Tenant's Work.
2.3 Notwithstanding the foregoing, Landlord shall complete items
(v), (vi), (vii), (ix) and (x) of the Base Premises Work described in Section
2.1 of this Tenant Work Letter within thirty (30) days of the Effective Date,
subject to any delays caused by Tenant; provided that if Landlord has not
substantially completed items (v), (vi), (vii), and (x) of the Base Premises
Work within such thirty (30) day period, the Lease Commencement Date shall be
extended one (1) day for every one (1) day after the expiration of such thirty
(30) day period Landlord requires to substantially complete such items.
2.4 Notwithstanding anything in this Lease to the contrary, if
Landlord has not substantial completed removal of any asbestos containing floor
tiles on or before the date which is ninety (90) days following the Effective
Date (the "OUTSIDE DATE"), as such Outside Date shall be extended for each day
substantial completion of such removal is delayed by any Tenant Delays and any
force majeure described in Section 29.16, and the Commencement Date has not
already occurred, then Tenant shall have the right to terminate this Lease by
delivering written notice thereof to Landlord within ten (10) days after the
Outside Date.
3. TENANT'S WORK.
3.1 Definition. Except for the Base Premises Work provided by
Landlord, all tenant improvements in the Premises, to prepare the Premises for
occupancy by Tenant, will be performed by Tenant at Tenant's sole expense,
subject to Tenant's Allowance. The improvements to be constructed by Tenant are
referred to in this Tenant Work Letter as "Tenant's Work
3.2 Requirements. All Tenant's Work is subject to the reasonable
approval of Landlord and must meet the Building construction standards. Tenant
shall be responsible for the design, function and maintenance of all Tenant's
Work. Tenant shall not specify uses or materials that are subject to an
insurance hazard rate different from the rate assigned to the Building as a
whole.
3.3 Heating, Ventilation and Air-Conditioning. Tenant shall be
required to furnish and install as Tenant's Work all HVAC and related apparatus
not included as part of the Base Premises Work, including all additional duct,
pipe, electrical and mechanical work.
3.4 Sprinkler System. Subject to Tenant's right to install and/or
convert to a "pre-action" design as permitted in Section 22.1.2 of this Lease,
Tenant shall install as part of Tenant's Work all portions of the sprinkler
system for the Premises not included as part of the Base Premises Work,
including, any raising, lowering, moving or adding of sprinkler heads.
3.5 Life-Safety System. All emergency lighting, exit signs, branch
wiring, alarms, smoke detectors, speakers and other devices required by code or
desired by Tenant for the life-safety system in the Premises but not included as
part of the Base Premises Work, shall be installed as Tenant's Work.
3.6 Window, Wall and Floor Coverings. All window, wall and floor
coverings shall be installed as Tenant's Work. Tenant may utilize any existing
window coverings, if any, which are in place in all perimeter windows of
Tenant's Premises in "AS IS" condition, and will not install any other types of
window coverings without Landlord's prior consent, which shall not be
unreasonably withheld, conditioned, or delayed.
3.7 Floor Loading. Specific sections of the Premises may require
loading to a maximum of 200 lbs. per square foot. If Tenant wishes to design and
install structural and/or non-structural modifications to the Premises to
accommodate floor loads greater than the existing capacity of 100 pounds per
square foot, all of such work shall be considered to be an Alteration
EXHIBIT B
Page 2
<PAGE> 51
which, consistent with the terms of Article 8, shall be, subject to Landlord's
approval and subject to all applicable code and engineering design standards. If
reinforcing is required, Tenant, at Tenant's sole cost and expense, shall
reinforce the floors in the areas as specified and designed by Tenant's
structural engineer and approved by Landlord. Tenant shall be granted, with
reasonable notice, floor access to the space below the Premises for
reinforcement of Tenant's Premises during construction of Tenant's Work, if
required. All charges for additional security and other services needed to
accommodate such entry shall be at the sole cost and expense of Tenant.
4. TENANT'S PLANS.
4.1 Description. Tenant shall have an architect licensed by the
State of Texas ("TENANT'S ARCHITECT") and pre-approved by Landlord prepare
architectural plans and specifications for the layout and improvements of the
Premises and Tenant's Work ("Tenant's Plans"), all in such form and detail as
reasonably required by Landlord. Tenant's Plans shall be in form and content
sufficient to secure all required governmental approvals for Tenant's Work.
Tenant shall pay all of the fees and charges of Tenant's Architect for all of
the work required by this Tenant Work Letter. Tenant's Architect shall
coordinate with the architect of Landlord if Tenant does not use Landlord's
designated architect for the Building for all stages of construction of Tenant's
Work ("LANDLORD'S ARCHITECT") and Landlord's engineers to assure the consistency
of Tenant's Plans with the plans and specifications for the Base Premises Work.
Tenant's Plans shall include the following:
(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, doors, furniture and equipment line ups. Before
submission to Landlord, the Space Plan shall have been reviewed and approved by
the Dallas Building and Fire Departments, and shall be on file with the Building
Department, registered with a preliminary plan check number:
(b) Final Plans: The "FINAL PLANS" shall consist of all
plans and specifications necessary to construct Tenant's Work, including
mechanical and electrical working drawings.
4.2 Mechanical and Electrical. Tenant's Plans shall contain all
mechanical and electrical working drawings. Mechanical and electrical working
drawings shall be prepared at Tenant's expense by engineers reasonably approved
by Landlord. Tenant's Architect shall be responsible for coordination of all
engineering work with Tenant's Plans.
4.3 Approval by Landlord. Tenant's Plans shall be subject to
Landlord's reasonable approval. Landlord shall have ten (10) business days
following receipt of Tenant's Plans to approve or disapprove the submissions by
Tenant. If Landlord reasonably disapproves of any of Tenant's Plans, Landlord
shall advise Tenant of the required revisions concurrently with such
disapproval. After being so advised by Landlord, Tenant shall promptly submit a
redesign, addressing the revisions required by Landlord, for Landlord's
reasonable approval. Landlord shall then have five (5) business days to approve
or disapprove any re-submittal of Tenant's plans, and failure to respond within
such 5-business day period shall be deemed Landlord's approval of such
re-submitted plans and specifications. If Tenant's Plans have not been approved
within sixty (60) days from the date of this Lease, the parties agree to
promptly meet in good faith to attempt to reach agreement regarding Tenant's
Plans. Approval by Landlord shall not be deemed to be a representation or
warranty by Landlord with respect to the safety, adequacy, correctness,
efficiency or compliance with law of Tenant's Plans.
4.4 Permits. Tenant's Architect shall be responsible for submission
of Tenant's Plans for plan check by the City of Dallas. Any changes required by
the City of Dallas shall be submitted to Landlord for Landlord's review and
reasonable approval. Tenant's contractor shall apply for the building permit for
Tenant's Work and Tenant shall be responsible for and shall pay all fees and
expenses for securing the building permit and all other permits necessary for
construction of the tenant improvements.
EXHIBIT B
Page 3
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4.5 "As-Built" Plans. A set of "as-built" plans of the Premises, in
such form and detail as reasonably required by Landlord, shall be delivered to
Landlord within sixty (60) days after Tenant's occupancy.
5. CONSTRUCTION OF TENANT'S WORK.
5.1 Tenant's Contractor. Tenant will enter into a construction
contract with a contractor selected from a list preapproved by Landlord for
construction of Tenant's Work ("TENANT'S CONTRACTOR"). Except as otherwise
provided in the Lease, during the construction of Tenant's Work prior to the
Commencement Date, Tenant shall not be charged for normal building services
provided to the tenants of the Building during Business Hours.
5.2 Performance. Tenant shall perform, through Tenant's Contractor,
all work shown on the approved Tenant's Plans, in strict accordance with such
plans, and in a professional and workmanlike manner and in strict accordance
with code. Tenant shall comply, and will cause its agents, contractors and
employees to comply, with all construction rules and regulations of the Building
as set forth in Schedule 1 attached hereto (which rules shall be subject to
change from time to time upon reasonable advance notice to Tenant and its
contractors). Tenant represents and warrants to Landlord that it shall not cause
or permit Tenant's Contractor to do any work in the Project that is not in
strict accordance with the approved Tenant's Plans, without first obtaining
Landlord's prior written consent.
5.3 Deliveries. Tenant's Contractor shall coordinate the scheduling
of deliveries of materials with Landlord, and the timing of such deliveries
shall be subject to Landlord's reasonable approval. Landlord may require that
delivery of construction materials be made at a time other than during Building
Hours.
5.4 Insurance. Throughout the performance of Tenant's Work, Tenant,
at its expense, shall carry, or cause to be carried, workers' compensation
insurance as required by law and general liability insurance, with completed
operations endorsements, for any occurrence in or about the Building, in such
coverage limits and with insurers in each case meeting the requirements of
Article 10 of the Lease. The Landlord Parties shall be designated as additional
insured parties on the insurance policies. Tenant shall furnish Landlord with
evidence satisfactory to Landlord that such insurance is in effect before the
commencement of Tenant's Work, and, on request of Landlord during construction,
Tenant shall provide evidence satisfactory to Landlord that the insurance
remains in effect.
5.5 Liens and Violations. Tenant, at its expense, and with diligence
and dispatch, shall procure the cancellation or discharge of all notices of
violation arising from or otherwise connected with Tenant's Work, or any other
work, labor, services or materials done for or supplied to Tenant, or any person
claiming through or under Tenant, which shall be issued by the Building and
Safety Department of the City of Dallas or any other public authority. Tenant
shall not utilize materials in Tenant's Work (except with respect to Tenant's
Property) that are subject to security interests or liens. Tenant shall defend,
indemnify and hold Landlord harmless from and against any and all mechanics'
liens, stop notices and other liens and encumbrances or claims of liens or
encumbrances filed in connection with Tenant's Work, Alterations, or any other
work, labor, services or materials done for or supplied to Tenant, or any person
claiming through or under Tenant, including, without limitation, security
interests in any materials, fixtures or articles installed in the Premises; and
against all costs, expenses and liabilities incurred in connection with any such
lien or encumbrance, or claim of lien or encumbrance, its removal or any related
action or proceeding. Tenant, at its expense, shall satisfy or discharge of
record each stop notice, lien or encumbrance within 30 days after it is filed.
If Tenant fails to do so, Landlord shall have the right to satisfy or discharge
the stop notice, lien or encumbrance by payment to the claimant on whose behalf
it was filed, by the posting of a bond, or by other action. Tenant shall
reimburse Landlord on demand for the costs and expenses so incurred by Landlord,
as Additional Charges, and without regard for any defense or offset that Tenant
may have had against the claimant, but neither Landlord's curative action nor
the reimbursement of Landlord by Tenant shall cure Tenant's default in failing
to satisfy or discharge the lien or encumbrance.
EXHIBIT B
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<PAGE> 53
5.6 Indemnity. Tenant will be directly responsible to Landlord for
the performance of Tenant's Contractor, and will indemnify, defend and hold
harmless Landlord, Landlord's Affiliates and Landlord's managing agent from any
cost, expense, claim, lien, loss, damage or liability in connection with (i) the
construction contract with Tenant's Contractor, (ii) with the performance of
Tenant's Work, and (iii) any defects in the Tenant Improvements, Base Building,
or Building systems and equipment which Landlord elects in its reasonable
discretion to repair that arise as a result of Tenant's Work.
5.7 Inspection by Landlord. Landlord shall have the right to inspect
Tenant's Work at any reasonable time, and may reasonably reject work that does
not conform with applicable laws or Tenant's Plans.
5.8 Code Requirements. Tenant shall bear all costs and expenses of
constructing Tenant's Work in compliance with code and shall be responsible, at
its expense, for obtaining, and, if requested by Landlord, furnishing copies to
Landlord of, all governmental permits, certificates, and approvals necessary for
the commencement and prosecution of Tenant's Work and for final approval thereof
upon completion.
5.9 Construction Supervision Fee. Landlord may, at its option,
retain a construction supervisor to oversee the construction and performance of
Tenant's Work and Tenant agrees to reimburse Landlord for Landlord's actual
costs incurred as a result of Landlord's review and involvement with Tenant's
Work.
5.10 Contractor's Warranties and Guaranties. Tenant hereby assigns to
Tenant all warranties and guaranties by Tenant's Contractor relating to the
Tenant's Work, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Tenant's Work. Such warranties and
guaranties of Tenant's Contractor shall guarantee that Tenant's Work shall be
free from any defects in workmanship and materials for a period of not less than
one (1) year from the date of completion thereof, and Tenant's Contractor shall
be responsible for the replacement or repair, without additional charge, of the
Tenant Improvements that shall become defective within one (1) year after
completion of Tenant's Work. The correction of such work shall include, without
additional charge, all additional expenses and damages in connection with such
removal or replacement of all or any part of the Tenant's Work.
6. TENANT'S ALLOWANCE.
6.1 Amount. Tenant shall receive an Allowance in the amount
specified in Paragraph 1.2 above. The Allowance shall be used for the costs of
construction of Tenant's Work, including hard and soft costs; provided that in
no event shall the Allowance be used by Tenant for any portion of the cost of
Tenant's property and equipment to be installed within the Premises or License
Areas.
6.2 Payment of Allowance. The Allowance shall be paid in one lump
sum payment following completion of Tenant's Work and satisfaction of each of
the following terms and conditions. Following completion of Tenant's Work,
Tenant shall submit each of the following: (i) invoices for the Tenant's Work,
with sufficient back-up billings from subcontractors, suppliers and providers of
services to give Landlord a complete financial accounting regarding each invoice
to be reimbursed by Landlord, (ii) a certificate signed by Tenant's Architect
and an authorized representative of Tenant certifying that the Tenant's Work
represented by the aforesaid invoices has been satisfactorily completed in
accordance with Tenant's Plans and confirming that all of Tenant's Work is
complete, (iii) lien waivers by Tenant's contractors, subcontractors and
materialmen for all such work, (iv) a general release from the contractor,
subcontractors and materialmen regarding Tenant's Work along with final
governmental approvals of Tenant's Work and (v) a certificate signed by Tenant
and Tenant's Architect certifying that no portion of the Allowance was applied
to the costs of Tenant's property or equipment. Landlord shall pay to Tenant the
amounts specified in such invoices, not to exceed the Allowance, within 30 days
after receipt of all of the information and documentation specified above.
Landlord shall have the right to inspect the Premises to confirm the completion
of the
EXHIBIT B
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<PAGE> 54
work covered by such invoices. Appropriate procedures shall be followed by
Tenant to assure satisfaction or waiver of any potential mechanics' lien claims.
Landlord shall have no obligation to disburse the Allowance to Tenant upon the
occurrence and during the continuance of a breach or default by Tenant under the
terms of this Tenant Work Letter or the Lease.
EXHIBIT B
Page 6
<PAGE> 55
SCHEDULE 1 TO EXHIBIT B
BUILDING CONSTRUCTION RULES
The following are general rules and regulations governing all work in
the Building, including Tenant's Work and any Alterations (collectively,
"TENANT'S WORK"). The manager for the Building ("BUILDING MANAGER") will be
Landlord's representative in coordinating and supervising Tenant's work. Nothing
contained in these Construction Rules shall (i) create any contractual
obligations for Landlord or Building Manager in connection with Tenant's work or
(ii) in any way affect, modify or supersede any of the terms set forth in this
Lease. The Construction Rules may be modified and supplemented from time to time
as Landlord may reasonably require for the proper monitoring and control of
construction at the Building.
1. Neither Building Manager nor Landlord will be responsible for
any material, equipment, tools or other property belonging to Tenant's general
contractor for Tenant's work, or any subcontractors, employees, agents or others
associated in any way with Tenant's work.
2. The Building is equipped with a freight elevator serving all
floors. The contractor and all construction personnel must use only the freight
elevator for transportation of workers, materials and equipment. No contractor
or any construction personnel, nor any materials or equipment, are permitted in,
nor shall any of the foregoing be transported in, the passenger elevators. If
the contractor or any construction personnel are found in the passenger
elevators, the contractor or subcontractor may be removed from the job and the
elevators will be immediately inspected for damage. All damage resulting from
such use shall be corrected by Building Manager at Tenant's expense.
3. The contractor shall furnish Building Manager with a list of
subcontractors prior to commencement of Tenant's work. This list will include
phone numbers and contacts for the contractor and each subcontractor, including
home and emergency telephone numbers. Any persons not on the approved contractor
list will be denied access to the Premises. NO EXCEPTIONS. Access badges,
authorizing access to the Premises, will be issued by Building Manager to all
personnel designated by the contractor on such list. The contractor and all
construction personnel working over the weekend and after the normal hours shall
provide Building Manager with a list of workers 24 hours prior to the worker
being on site or they will be denied access. The list should also include an
estimated time the contractor and all construction personnel will be working,
the location of the work to be done, the number of employees and the working
supervisor who will be present in the Building during the performance of the
work. Any deviation will require Building Manager's approval.
4. Unless Building Manager requires otherwise, all contractors and
other construction personnel shall enter and exit through the loading dock or
main lobby at all times. Additionally, all contractors and subcontractors shall
sign in and sign out at the security desk. Building security personnel have the
right to inspect all tool boxes of any and all construction personnel upon
departure from the Building. Loading dock and freight elevator procedures and
hours will be provided by Building Manager.
5. When working on a tenant-occupied floor, all deliveries are to
be accepted, moved and delivered to the contracted suite by 7:30 a.m. All
equipment and material deliveries shall be made at the loading dock or service
entry between the hours of 6:00 p.m. and 6:00 a.m. Monday through Friday or all
day Saturday and Sunday via a freight reservation. If deliveries are to be made
at other times, prior approval must be obtained from Building Manager. At no
other time will material be transported through the Building lobby or public
areas unless specifically authorized in writing. When making deliveries,
reinforced, non-staining masonite board acceptable to Building Manager must be
installed by the contractor (in a manner approved by Building Manager) to
protect all wall and floor finishes, including the freight elevator. The
contractor and subcontractors shall consult with Building Manager for complete
rules and procedures relating to corridor, elevator and public area protection.
All contractors and other construction personnel shall leave the Building lobby
and other public areas in a neat and clean
SCHEDULE 1 TO EXHIBIT B
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condition consistent with other Comparable Buildings (including, without
limitation, sweeping and mopping the lobby floors, dusting all furniture in the
lobby and otherwise removing all debris and dust) and otherwise in a condition
satisfactory to Building Manager and Landlord. Tenant shall be responsible for
all costs incurred by Building Manager if this clean-up work is not performed
satisfactorily.
6. The contractor must notify Building Manager prior to conducting
any of Tenant's work that will require ceiling access, specifying the areas that
will be worked on and the length of time needed to complete or perform work in
the space.
7. No drilling, hammering, loud noise, vibrations or disturbances
of any nature will be allowed during the business day (i.e., from 8:00 a.m. to
7:00 p.m., Monday through Friday, and from 9:00 a.m. to 2:00 p.m. on Saturday).
8. The contractor shall keep all spaces affected by Tenant's work
clean at all times, including all public areas such as corridors, restrooms,
janitor's closets, etc. The contractor shall erect and maintain dust barriers at
all exit areas of construction and proper dust covers (including walk-off mats)
on the floors at exit areas of construction and at the doors to the freight
elevator. The contractor is responsible for taking all extra precautions to
safeguard the floors, walls and/or elevators from damage which may be caused by
the movement of materials, equipment or debris.
9. Sprinkler shut down and construction procedures:
a. The contractor or the subcontractor requiring
the shutdown and draining of the fire sprinkler system on any floor must follow
the Building's procedures for this process.
b. All work performed on fire sprinklers and/or
fire standpipes must be scheduled with The Building Chief Engineer at least 24
hours in advance.
c. Isolation and draining of the sprinkler system
must be done by the Building Engineering Department.
d. Prior to start of work, the contractor must
report to Building Manager on the loading dock, and the contractor will be given
instructions and assistance. Building supplied shut-off tags are to be placed on
all closed valves.
10. Construction personnel shall at all times maintain the highest
level of project cleanliness. All construction waste and debris shall be removed
via the freight elevator or stairs to the loading dock on a daily basis and
shall not be allowed to accumulate or produce a fire hazard. No construction
waste or debris may be placed in the Building dumpster/compactor. The contractor
and all construction personnel shall provide for removal of waste and debris
from the Building at their own expense, and shall dispose of all waste and
debris in an environmentally safe manner and in full compliance with all laws
and ordinances. If a dumpster is required (space allowing), the location must be
approved by Building Manager. If the contractor fails or refuses to keep such
spaces free of accumulated waste, debris, dust, etc., Building Manager reserves
the right to enter such spaces (including the Premises) and to clean and remove
the debris, dust, etc. at Tenant's expense. In addition, all public areas, i.e.,
corridors, restrooms, janitor's closets, etc. shall be maintained and kept free
of construction debris, dust, etc.
11. Removal of combustible objects such as cardboard, empty paint
cans, paint rags and other combustible materials shall occur on a daily basis;
such objects shall be disposed of in an approved receptacle and in an
environmentally safe manner in full compliance with all laws and ordinances. The
storage of all flammable liquids (paint, lacquer thinners, paint thinners, etc.)
shall be in UL approved fire rated (for flammable liquids) storage cabinets or
the liquids are to be removed from the Building daily. If such liquids are to be
stored in the proper storage cabinets, Building Manager shall be notified of
their existence, location and quantity. Upon completion of Tenant's work, all
remaining flammable liquids shall be removed from the Building and disposed
SCHEDULE 1 TO EXHIBIT B
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of in an environmentally safe manner in full compliance with all laws and
ordinances. Any flammable or hazardous materials (i.e. paint) may only be stored
on the Premises with permission of Building Manager who shall designate an area
for such storage. No gasoline operated devices (e.g., concrete saws, coring
machines, welding machines, etc.) shall be permitted within the Building. All
work requiring such devices shall be performed by means of electrically operated
substitutes. All approved gas and oxygen canisters shall be properly chained and
supported to eliminate all potential hazards. At the completion of use, said
containers shall be promptly removed from the Building.
12. All electrical and telephone rooms on construction floors are to
be kept clean and orderly at all times and must be locked at the end of each
workday. These rooms cannot be used as storage for tools or supplies. At the end
of each day, all garbage and wire remnants are to be removed and a clear pathway
maintained to all panels. Initial access to electrical and telephone equipment
rooms must be arranged through Building Manager. Keys will be issued by Building
security. Doors to electrical and telephone equipment rooms may not be propped
or blocked open in any way. Tenant equipment may not be installed in electrical
rooms. All panels are to be replaced and properly labeled upon completion of
work. All penetrations through floors, walls and ceilings shall be properly fire
rated upon completion.
13. Upon completion and termination of all electrical circuits, and
before energizing, the contractor must notify the Building's engineer so that a
neutral to ground bonding test can be performed.
14. Specific restrooms will be designated for use by construction
personnel. The contractor is responsible for maintenance while using such
designated restrooms. Upon completion of Tenant's work, the contractor will be
responsible for restoring all designated restrooms to their original state.
Anyone found using restrooms other than those specified, or anyone using the
janitorial closets, will be subject to dismissal. No one is permitted to use the
janitorial closets without Building Manager permission. Janitors' slop sinks
cannot be used for disposal of flammable material, hazardous waste or drywall.
15. Any use of telephone room chase way must be approved in advance
by the Building's engineer.
16. Construction personnel are not permitted to block open stairway
doors and electrical room doors. These doors provide the fire protection
required by code. Continued violation of this provision shall be subject to a
$300 fire. Janitorial doors shall be kept closed at all times on occupied tenant
floors. During construction of Tenant's work, stairwells and fire doors leading
to stairwells may not be blocked with materials, equipment, trash or debris of
any kind. Fire doors may not be propped or blocked open in any fashion or in any
way. Keys will be issued by Building security. Stairwells may not be used for
the storage of any equipment, materials, trash or debris of any kind and are to
be kept clear at all times. During construction of Tenant's work, air
conditioning smoke dampers may not be propped open.
17. All smoke detectors in the construction areas are to be
protected during construction, demolition, sweeping, clean-up or other
operations that may cause considerable dust or smoke. At the end of each work
day, after the dust has settled, each smoke detector that has been protected
during the day is to be uncovered to ensure proper operation.
18. Each contractor and all construction personnel are to take
adequate precautions to prevent the accidental tripping of the fire alarm
system. False alarms shall be fined at $400 per offense. All management and
other costs connected with resetting false alarms initiated by the contractor or
any construction personnel will be charged to the Tenant's account. At
completion of every work day, the fire-life-safety system shall be left trouble
and alarm free. The contractor must notify the Building's engineer of said
status before leaving the job site.
19. The contractor must provide and keep available at least four
currently certified 10 pound ABC fire extinguishers on each floor during
construction. They are to be placed inside
SCHEDULE 1 TO EXHIBIT B
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the controlled area, and all workers are to be informed as to their location and
proper use. In addition, construction personnel shall be informed by their
supervisors of the means of egress from the floor in case of an emergency,
location of fire pull stations and locations of wet stand pipes.
20. All "J" boxes and fire-life-safety conduits that are installed
during the construction of Tenant's work must be marked with red spray paint.
All fire-life-safety wiring must be done strictly in accordance with Building
specifications (contact the Building's engineer for such wire specifications).
Failure to adhere to the required color code may result in costly,
time-consuming rewiring. Only life-safety contractors designated or approved by
Building Manager will be allowed to install and/or connect life-safety devices
(i.e., speakers, pull stations and smoke detectors).
21. Prior to core drilling, the contractor must inform Building
Manager of the locations of the core drill for the review and approval of the
Building's engineer. All core drills are to be located from the underside to
prevent damage to any of the exposed fire-life-safety conduits on the underside
of the decking. If cores are to be wet-drilled, slurry run-off shall be
contained and must not be allowed to reach tenant areas below the construction.
Any slurry that does migrate to the floor below shall be cleaned by the
contractor at its expense. Coring hours will be 8:00 p.m. to 7:00 a.m. Any
penetrations made in steel structural beams are to be approved in advance by the
Building's engineer and permitted by government authorities, if applicable.
22. Any damage sustained during construction of Tenant's work to
electrical rooms, telephone rooms, storage closets, janitor closets, restrooms,
or freight lobbies is the responsibility of the Tenant. A list of pre-existing
damage to these areas should be submitted to Building Manager, and should be
acknowledged by Building Manager, prior to commencement of Tenant's work.
23. The contractor must notify Building Manager at least 24 hours
prior to commencing any painting or varnishing. Any spray painting with solvent
based paints must be preapproved by the Dallas Fire Department. Painting of
elevator doors is to be supervised by the elevator maintenance company
appropriate to the Building.
24. Building Manager shall at all time have access to the areas in
which Tenant's work is ongoing regardless of its state, preparation and
progress. Building Manager reserves the right to inspect work, stop work and/or
have a worker removed from the job at any time during Tenant's work if these
Rules and Regulations are not being followed.
25. The Building shall provide electrical service consisting of 120V
outlets with 15A/20A capacity. Any power requirements in excess of that listed
per the Lease shall be the responsibility of the contractor. The contractor
shall provide temporary electrical devices within the Premises for its
subcontractors' use. The contractor will not be permitted to run extension cords
through public space. The contractor shall use reasonable measures to minimize
energy consumption in the construction area when possible. The Building shall
pay for normal electrical consumption during the construction process. All
lights and equipment must be turned off at the end of the contractor's business
day. If the contractor or any construction personnel leave lights or equipment
on during off hours, Building Manager reserves the right to receive from Tenant
just compensation for excessive electrical consumption.
26. The contractor and each subcontractor shall implement and
maintain an accident prevention program and an employee safety training program.
All persons on the job, regardless of whose direct payroll they are on, are
required to respond to safety instructions from the contractor's supervisor.
Persons who do not respond shall be removed from the job.
27. The contractor shall cover all return air transfers when working
next to a tenant-occupied space to control the transmission of dust and dirt.
Covering must be removed at the completion of daily construction. The contractor
shall keep all tenant entrance and exit doors
SCHEDULE 1 TO EXHIBIT B
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closed to restrict the movement of dust or dirt and shall close-off temporary
openings with polyurethane approved by the Dallas Fire Department. Due to local
fire codes, no openings may be made on a tenant-occupied floor to the corridor
unless materials are being delivered. All HVAC filters in fan rooms shall also
be delivered in operable condition at time of completion (thus temporary filter
should be added to the existing filter). Pre-filters should be installed over
all return air openings until finished floors are installed. If Building filters
or equipment require replacement or cleaning due to construction dust, the
contractor will be charged. The contractor shall verify with the Building's
engineer prior to installation of pre-filters.
28. Upon completion of Tenant's work, the contractor shall submit
complete sets of marked-up as-built drawings and record documents to the
architect (or space planner) for approval. Upon approval, these shall be
forwarded to Building Manager. In addition, Building Manager shall be allowed to
obtain, at no cost to Tenant or the contractor, copies of manuals for each item
of equipment and apparatus furnished in connection with the Tenant's work.
29. At the completion of Tenant's work, the contractor and each
subcontractor, along with Building Manager's Building maintenance personnel,
shall direct the checkout of utilities, operation systems and equipment for
readiness, shall assist in their initial start-up and testing by subcontractors
and shall provide general familiarization training for Building Manager
personnel during the checkout and startup period.
30. No tobacco smoking or chewing will be permitted in occupied or
public areas. Smoking is allowed only in designated areas approved by Building
Manager. It is understood that Building Manager, in its sole discretion, may
choose not to designate any approved areas in the Building for smoking.
31. No radios or other non-functional sound producing equipment will
be permitted on any floor (unless required by code).
32. Respect must be shown to the Building tenants at all times. Rude
and obscene behavior, including foul and abusive language, will be not be
tolerated. Offenders will be asked to remove themselves from the Premises and
shall not be permitted to return.
33. All work performed within the Building's conduits, risers and
pathways (including, without limitation, cabling or wiring to the rooftop of the
Building), work on the rooftop and work which affects or may reasonably be
expected to affect Building systems (such as plumbing, electrical, HVAC,
fire-life-safety, emergency power or the like) must be performed by bonded
contractors or subcontractors specifically approved in advance by Landlord. Upon
request, the Building Manager will provide Tenant with a list of approved
contractors or subcontractors for certain types of projects. Access to the
rooftop shall be scheduled in advance with the Building Manager. A Building
engineer shall accompany all persons performing work or inspecting equipment on
the rooftop, including in the case of emergency, except as otherwise agreed in
Tenant's Lease. If rooftop access is required during other than Building Hours,
Tenant shall pay the cost of the Building's engineer for the time spent
accompanying Tenant's contractor or other agent to the rooftop.
34. No one shall be allowed to endanger the Building, its premises
or its occupants in any manner whatsoever. If such a situation occurs, the
contractor, any subcontractor, supplier, etc., shall immediately take steps to
correct and eliminate the hazardous condition. In the event that the
contractor's personnel fail to perform in a satisfactory manner, the Building
Manager reserves the right to immediately take steps to remedy the hazard at the
contractor's expense.
35. All corrective work or work performed in occupied spaces at any
time must be scheduled and approved by Building Manager and must be immediately
cleaned up by the workmen prior to their leaving the job or at the end of the
business day if the project is on-going. The contractor shall be responsible for
all costs incurred by Building Manager if this clean-up work is not performed
satisfactorily.
SCHEDULE 1 TO EXHIBIT B
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36. All traffic control, flagmen, barricades, etc., as may be
necessary or required by any agency having jurisdiction shall be the sole
responsibility of and at the expense of the contractor.
37. Tenant shall contact the Building Manager to schedule work on
the following Building systems: (Any disruption of services will be scheduled at
Building Manager's discretion.)
A. Domestic water.
B. Fire alarm or speaker.
C. Electrical tie-ins to Base Building or the
addition of equipment to any suite other than the Tenant suite except subpanels
located within the Tenant premises.
D. Sprinkler system.
E. Any work that will take place outside the
demised Premises.
F. Any tie-ins that may affect other Tenant spaces.
If a Building alarm is turned off for the contractor's work, the
contractor must notify Building Manager upon completion so the system can be
tuned back on as soon as possible.
38. No graffiti or vandalism will be tolerated. Any individual
caught in the act shall be immediately removed from the Premises and will not be
allowed to return. In addition, all repairs will be at the contractor's expense.
39. Wet paint signs must be posted in all public areas when
appropriate.
40. The contractor/subcontractors may park in designated spaces
only. Any vehicles found in unauthorized spaces will be subject to towing.
41. No contractor shall be allowed to start any work in the Building
without having a current certificate of insurance on file with Building Manager.
The contractor must keep current insurance certificates on all subcontractors.
Any contractor or subcontractor performing work found not to have current
insurance will be immediately ordered off the Premises.
General contractors shall list the following as additionally insured:
Dallas Carrier Associates, Ltd.
Dallas Carrier, Inc.
42. The contractor/subcontractors shall obtain and pay for a City of
Dallas business license.
43. The contractor/subcontractors shall obtain at their expense, all
permits and licenses necessary to perform the work and shall obtain at their
expense, all permits and licenses necessary to perform the work and shall comply
will all laws, ordinances, State and Federal government regulations, and all
rules or regulations of any board or commission or other duly qualified body.
44. All work shall be performed in accordance with all applicable
laws and the rules and regulations of all City, State and Federal agencies
having jurisdiction over the work.
45. No work is to be performed, nor materials stored in public
areas. No staging of trucks or materials will be allowed in areas which may
affect traffic flow to the surrounding properties or ingress and egress to
Building entrances, fire lanes, reserved parking areas, etc.
SCHEDULE 1 TO EXHIBIT B
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46. Rubber wheels are required on all vehicles transporting
materials in the Building.
47. All equipment and material will be designed and attached for
seismic loading in accordance with governmental agencies having jurisdiction
over the work.
48. Material storage shall be limited to the Premises.
49. The contractor, or its agent, shall provide safety barricades or
cables at floor penetrations.
50. Tenant shall take such action as is necessary to confirm that
all contractors, subcontractors and other construction personnel are aware of
these construction rules, including, if necessary, requiring each to sign a copy
hereof.
SCHEDULE 1 TO EXHIBIT B
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EXHIBIT C
CARRIER CENTER DALLAS
NOTICE OF LEASE TERM DATES
To: _________________________________
_________________________________
_________________________________
_________________________________
Re: Office Lease dated _____________, 19___ between Dallas Carrier
Associates, Ltd., a Texas limited partnership ("Landlord"), and
_____________________, a __________________________ ("Tenant")
concerning Suite ___________ on floor(s) _______________ of the
office building located at 400 Akard Street, Dallas, Texas.
Gentlemen:
In accordance with the Office Lease (the "Lease"), we wish to advise you
and/or confirm as follows:
1. The Lease Term shall commence on or has commenced on
________________ for a term of _____________________ ending on _______________.
2. Rent commenced to accrue on ________________, in the amount of
___________________.
3. If the Lease Commencement Date is other than the first day of
the month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to ______________ at
____________________.
5. The exact number of rentable square feet within the Premises is
____________ square feet.
6. Tenant's Share as adjusted based upon the exact number of
rentable square feet within the Premises is ________%.
"Landlord":
DALLAS CARRIER ASSOCIATES, LTD.,
a Texas limited partnership
By: Dallas Carrier, Inc., a Texas corporation;
Its: Sole Managing Partner
By: _____________________________________
Its: ________________________________
Agreed to and Accepted
as of ________________, 19___.
"Tenant":
By: _____________________________
Its: ________________________
EXHIBIT C
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EXHIBIT D
CARRIER CENTER DALLAS
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Premises without obtaining
Landlord's prior written consent. Tenant shall bear the cost of any lock changes
or repairs required by Tenant. Two keys will be furnished by Landlord for the
Premises, and any additional keys required by Tenant must be obtained from
Landlord at a reasonable cost to be established by Landlord. Upon the
termination of this Lease, Tenant shall restore to Landlord all keys of stores,
offices, and toilet rooms, either furnished to, or otherwise procured by, Tenant
and in the event of the loss of keys so furnished, Tenant shall pay to Landlord
the cost of replacing same or of changing the lock or locks opened by such lost
key if Landlord shall deem it necessary to make such changes.
2. All doors opening to public corridors shall be kept closed at
all times except for normal ingress and egress to the Premises.
3. Landlord reserves the right to close and keep locked all
entrance and exit doors of the Building during such hours as are customary for
comparable buildings in the vicinity of the Building. Tenant, its employees and
agents must be sure that the doors to the Building are securely closed and
locked when leaving the Premises if it is after the normal hours of business for
the Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. Tenant shall be responsible for all
persons for whom Tenant requests passes and shall be liable to Landlord for all
acts of such persons. The Landlord and his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
or the Project during the continuance thereof by any means it deems appropriate
for the safety and protection of life and property.
4. No furniture, freight or equipment of any kind shall be brought
into the Building without prior notice to Landlord. All moving activity into or
out of the Building shall be scheduled with Landlord and done only at such time
and in such manner as Landlord designates. Landlord shall have the right to
prescribe the weight, size and position of all safes and other heavy property
brought into the Building and also the times and manner of moving the same in
and out of the Building. Safes and other heavy objects shall, if considered
necessary by Landlord, stand on supports of such thickness as is necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property in any case. Any damage to any part of the
Building, its contents, occupants or visitors by moving or maintaining any such
safe or other property shall be the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will
be received in the Building or carried up or down in the elevators, except
between such hours, in such specific elevator and by such personnel as shall be
designated by Landlord.
6. The requirements of Tenant will be attended to only upon
application at the management office for the Project or at such office location
designated by Landlord. Employees
EXHIBIT D
Page 1
<PAGE> 64
of Landlord shall not perform any work or do anything outside their regular
duties unless under special instructions from Landlord.
7. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.
8. The toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The expense
of any breakage, stoppage or damage resulting from the violation of this rule
shall be borne by the tenant who, or whose servants, employees, agents, visitors
or licensees shall have caused same.
9. Tenant shall not overload the floor of the Premises, nor mark,
drive nails or screws, or drill into the partitions, woodwork or drywall or in
any way deface the Premises or any part thereof without Landlord's prior written
consent.
10. Except for vending machines intended for the sole use of
Tenant's employees and invitees, no vending machine or machines other than
fractional horsepower office machines shall be installed, maintained or operated
upon the Premises without the written consent of Landlord.
11. Tenant shall not use or keep in or on the Premises, the
Building, or the Project any kerosene, gasoline, explosive material, corrosive
material, material capable of emitting toxic fumes, or other inflammable or
combustible fluid chemical, substitute or material (other than the dry cell
batteries used in connection with Tenant's switching equipment). Tenant shall
provide material safety data sheets for any Hazardous Material used or kept on
the Premises.
12. Tenant shall not use, keep or permit to be used or kept, any
foul or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere with other tenants or those having business therein,
whether by the use of any musical instrument, radio, phonograph, or in any other
way. Tenant shall not throw anything out of doors, windows or skylights or down
passageways.
13. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals, birds, aquariums, or, except in areas
designated by Landlord, bicycles or other vehicles.
14. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.
15. The Premises shall not be used for manufacturing or for the
storage of merchandise except as such storage may be incidental to the use of
the Premises provided for in the Summary. Tenant shall not occupy or permit any
portion of the Premises to be occupied as an office for a messenger-type
operation or dispatch office, public stenographer or typist, or for the
manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a barber or manicure shop, or as an employment bureau
without the express prior written consent of Landlord. Tenant shall not engage
or pay any employees on the Premises except those actually working for such
tenant on the Premises nor advertise for laborers giving an address at the
Premises.
16. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of these Rules and Regulations.
EXHIBIT D
Page 2
<PAGE> 65
17. Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, sidewalks, lobbies, courts, halls, stairways, elevators,
vestibules or any Common Areas for the purpose of smoking tobacco products or
for any other purpose, nor in any way obstruct such areas, and shall use them
only as a means of ingress and egress for the Premises.
18. Tenant shall use reasonable best efforts to participate in
recycling programs undertaken by Landlord.
19. Tenant shall store all its trash and garbage within the interior
of the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage in
Dallas, Texas without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.
If the Premises is or becomes infested with vermin as a result of the use or any
misuse or neglect of the Premises by Tenant, its agents, servants, employees,
contractors, visitors or licensees, Tenant shall forthwith, at Tenant's expense,
cause the Premises to be exterminated from time to time to the satisfaction of
Landlord and shall employ such licensed exterminators as shall be approved in
writing in advance by Landlord.
20. Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any
governmental agency.
21. Any persons employed by Tenant to do janitorial work shall be
subject to the prior written approval of Landlord, and while in the Building and
outside of the Premises, shall be subject to and under the control and direction
of the Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.
22. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord, and no
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises other than Landlord standard
drapes. All electrical ceiling fixtures hung in the Premises or spaces along the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and a warm white bulb color approved in advance in writing by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall be
responsible for any damage to the window film on the exterior windows of the
Premises and shall promptly repair any such damage at Tenant's sole cost and
expense. Tenant shall keep its window coverings closed during any period of the
day when the sun is shining directly on the windows of the Premises. Prior to
leaving the Premises for the day, Tenant shall draw or lower window coverings
and extinguish all lights. Tenant shall abide by Landlord's regulations
concerning the opening and closing of window coverings which are attached to the
windows in the Premises, if any, which have a view of any interior portion of
the Building or Building Common Areas.
23. The sashes, sash doors, skylights, windows, and doors that
reflect or admit light and air into the halls, passageways or other public
places in the Building shall not be covered or obstructed by Tenant, nor shall
any bottles, parcels or other articles be placed on the windowsills.
24. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.
25. Intentionally Deleted.
26. Tenant hereby acknowledges that Landlord shall have no
obligation to provide guard service or other security measures for the benefit
of the Premises, the Building or the Project. Tenant hereby assumes all
responsibility for the protection of Tenant and its agents, employees,
contractors, invitees and guests, and the property thereof, from acts of third
parties, including keeping doors locked and other means of entry to the Premises
closed, whether or not Landlord, at its option, elects to provide security
protection for the Project or any portion thereof. Tenant further assumes the
risk that any safety and security devices, services and programs
EXHIBIT D
Page 3
<PAGE> 66
which Landlord elects, in its sole discretion, to provide may not be effective,
or may malfunction or be circumvented by an unauthorized third party, and Tenant
shall, in addition to its other insurance obligations under this Lease, obtain
its own insurance coverage to the extent Tenant desires protection against
losses related to such occurrences. Tenant shall cooperate in any reasonable
safety or security program developed by Landlord or required by law.
27. All office equipment of any electrical or mechanical nature
shall be placed by Tenant in the Premises in settings approved by Landlord, to
absorb or prevent any vibration, noise and annoyance.
28. Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.
29. No auction, liquidation, fire sale, going-out-of-business or
bankruptcy sale shall be conducted in the Premises without the prior written
consent of Landlord.
30. No tenant shall use or permit the use of any portion of the
Premises for living quarters, sleeping apartments or lodging rooms.
31. Tenant shall not purchase spring water, towels, janitorial or
maintenance or other similar services from any company or persons not approved
by Landlord. Landlord shall approve a sufficient number of sources of such
services to provide Tenant with a reasonable selection, but only in such
instances and to such extent as Landlord in its judgment shall consider
consistent with the security and proper operation of the Building.
32. Tenant shall install and maintain, at Tenant's sole cost and
expense, an adequate, visibly marked and properly operational fire extinguisher
next to any duplicating or photocopying machines or similar heat producing
equipment, which may or may not contain combustible material, in the Premises.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
Building, the Common Areas and the Project, and for the preservation of good
order therein, as well as for the convenience of other occupants and tenants
therein. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenants, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of any other
tenant, nor prevent Landlord from thereafter enforcing any such Rules or
Regulations against any or all tenants of the Project. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as a
condition of its occupancy of the Premises.
EXHIBIT D
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EXHIBIT E
CARRIER CENTER DALLAS
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of ________, 199__ by and between Dallas Carrier
Associates, Ltd., a Texas limited partnership as Landlord, and the undersigned
as Tenant, for Premises on the ________________ floor(s) of the office building
located at _________________, Dallas, Texas _____________, certifies as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained in
EXHIBIT A represent the entire agreement between the parties as to the Premises
and the project of which the Premises are a part.
2. The undersigned currently occupies the Premises described in the
Lease, the Lease Term commenced on ___________, and the Lease Term expires on
___________, and the undersigned has no option to terminate or cancel the Lease
or to purchase all or any part of the Premises, the Building and/or the Project.
3. Base Rent became payable on ____________.
4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
5. Tenant has not transferred, assigned, or sublet any portion of
the Premises nor entered into any license or concession agreements with respect
thereto except as follows:
6. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of Landlord's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and
all monthly installments of estimated Additional Rent have been paid when due
through _________. The current monthly installment of Base Rent is
$____________________.
8. To Tenant's knowledge, all conditions of the Lease to be
performed by Landlord necessary to the enforceability of the Lease have been
satisfied and Landlord is not in default thereunder. In addition, the
undersigned has not delivered any notice to Landlord regarding a default by
Landlord thereunder.
9. No rental has been paid more than thirty (30) days in advance
and no security has been deposited with Landlord except as provided in the
Lease.
10. As of the date hereof, there are no existing defenses or
offsets, to the undersigned's knowledge, claims or any basis for a claim, that
the undersigned has against Landlord.
11. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in Texas and that Tenant has full right and authority to execute and
deliver this Estoppel Certificate and that each person signing on behalf of
Tenant is authorized to do so.
12. There are no actions pending against the undersigned or any
guarantor of the Lease under the bankruptcy or similar laws of the United States
or any state.
13. Other than in compliance with all applicable laws and incidental
to the ordinary course of the use of the Premises, the undersigned has not used
or stored any hazardous substances in the Premises.
EXHIBIT E
Page 1
<PAGE> 68
14. To the undersigned's knowledge, all tenant improvement work to
be performed by Landlord under the Lease has been completed in accordance with
the Lease and has been accepted by the undersigned and all reimbursements and
allowances due to the undersigned under the Lease in connection with any tenant
improvement work have been paid in full.
The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.
Executed at _______________ on the _____ day of __________, 19__.
"Tenant"
___________________________, a
___________________________
By: /s/ Signature Illegible
Name: Robert J. Pommer
----------------------------------
Title: Chief Operating Officer
---------------------------------
EXHIBIT E
Page 2
<PAGE> 69
EXHIBIT F
CARRIER CENTER DALLAS
ANTENNA SPACE RIDER
1. Lease of Antenna Space. Tenant shall have a license to install
on the top roof of the Building (a) one telecommunications microwave line of
sight antenna as more particularly described below in this section (the
Antenna); and (b) one 2-inch conduit to connect such Antenna to the Premises
(the "Antenna Conduit"). The Antenna to be installed by Tenant under this Rider
shall be in the following sizes and quantities indicated:
x less than or equal to 2' diameter antennas
_____ 2' to 5' diameter antennas
The space to be occupied by the Antenna and its exact location on the
top roof of the Building shall be designated by Landlord in its sole, reasonable
discretion and is hereby referred to as the "Antenna Space." The exact location
of the Antenna Conduit and its precise route running from the Antenna Space to
the Premises shall be designated by Landlord in its sole, reasonable discretion.
The space within the Antenna Conduit is hereby referred to as the "Antenna
Conduit Space." Effective as of the date Landlord tenders possession of the
Antenna Space and the Antenna Conduit Space to Tenant (the "Antenna Space
Effective Date"), the Premises shall be expanded to include the Antenna Space
and the Antenna Conduit Space.
2. Use of Antenna Space and Antenna Conduit Space. The Antenna
Space shall be used by Tenant only for the installation and operation of the
Antenna. The Antenna Conduit Space shall be used by Tenant only for installing
the Antenna Conduit and running cable or connecting lines through the Antenna
Conduit to connect the Antenna to the Premises.
The installation of the Antenna, the Antenna Conduit, and cable and
connecting lines through the Antenna Conduit shall be performed by contractors
approved by Landlord in advance in writing, as described in more detail below.
Tenant shall pay all costs for such installation, including the cost of the
equipment and materials.
Landlord may elect to let the contract for such work itself, in which
event Tenant shall, within 15 days after written demand from Landlord, pay to
Landlord all amounts expended by Landlord for the installation of the Antenna
and the Antenna Conduit. Landlord may bill and collect such amounts, as
estimated by Landlord in good faith, from Tenant in advance as a condition to
proceeding with the work. In such event, Tenant shall pay Landlord such amounts
within 15 days after Tenant's receipt of Landlord's good faith estimate of the
cost of such work. If the actual cost of the work is different from Landlord's
good faith estimate, Tenant shall pay Landlord any additional cost, or Landlord
shall refund to Tenant the amount of any excess payment, as the case may be,
promptly following completion of the work and Landlord's receipt of all invoices
for the work.
All ongoing operation and maintenance of the Antenna and the Antenna
Conduit shall be at the sole cost and expense of Tenant (including, but not
limited to, costs of any electrical supply, which, if Landlord so elects, shall
be metered separately to Tenant at Tenant's expense). Such ongoing operation and
maintenance of the Antenna and the Antenna Conduit shall be conducted by Tenant
in accordance with the Lease, all applicable laws (including but not limited to
any requirements for obtaining conditional use permits) and all Landlord's
building rules in effect from time to time. Without limiting the foregoing, any
installation activities by Tenant regarding the Antenna or the Antenna Conduit,
and Tenant's ongoing use of the Antenna and the Antenna Conduit, shall require
Landlord's prior written approval of (i) the plans and specifications for any
installation work; (ii) a description of the areas of the Building to which
Tenant will require access both for the initial work and for ongoing maintenance
of the improvements or installations; (iii) the names and credentials of all
contractors and
<PAGE> 70
subcontractors who will perform such work as selected from Landlord's list of
contractors and subcontractors currently approved by Landlord for work in the
Building; (iv) copies of all liability, casualty and worker's compensation
insurance applicable, to the construction, maintenance and ongoing operation of
the improvements and installations; and (v) copies of all governmental permits
(including conditional use permits) required for the work. Landlord's approval
shall not be unreasonably withheld or delayed.
To avoid interference with frequencies used by other tenants of the
Building or those in nearby buildings, Tenant and the respective Customer shall
deliver to Landlord prior to the installation of any equipment or the use
thereof in the Building, a copy of the FCC (or other agency) grant that awards
frequencies to Tenant or to its respective Customer plus a list of its
Customers' frequencies. Neither Tenant nor any of its Customers may change its
or their respective frequencies without Landlord's prior written consent, which
consent shall not be unreasonably withheld, provided, however, that withholding
consent because of the use of another tenant of a frequency that may be
interfered with by a change in frequency by Tenant or its respective Customers
shall not be deemed unreasonable. Given that Landlord does not have any
expertise in the determination of frequency interference, Landlord will use only
its reasonable efforts to prevent frequency interference by existing or future
tenants of the Building and has no obligation to perform any investigations of
any such interference. Landlord agrees to give Tenant, prior to the Lease
Commencement Date, a written list of the frequencies used by those parties using
the roof of the Building for telecommunications purposes as of such date,
provided, however, that Landlord specifically disclaims any warranty or
representation of the accuracy or completeness of any such list. Tenant and/or
its Customers shall perform any investigations of possible frequency
interference required hereunder at Tenant's and its Customers sole cost and
expense. Tenant represents and warrants to Landlord on behalf of Tenant and all
of its Customers that Tenant's or its Customers' use of the Tenant's or its
Customers' current frequencies shall not interfere with the frequencies of any
such existing tenant. Landlord agrees to allocate to the extent it may lawfully
do so, all future frequency wave bands using the Building's roof, on a first
come, first served basis.
In the event that the Antenna does interfere with such operation,
transmissions or reception, then (without limiting any other remedy of Landlord)
Tenant shall, promptly after written notice from Landlord, use commercially
reasonable efforts to curtail such interference.
3. Removal of Antenna, Cable and Connecting Lines. Tenant agrees
that, upon the expiration or termination of the Lease, Tenant (or, at Landlord's
election, the contractor designated by Landlord) shall promptly remove, at
Tenant's sole cost and expense, the Antenna and all cable, connecting lines, and
other installations installed under this Rider (excepting the Antenna Conduit
itself, which shall remain the property of Landlord), and restore those portions
of the Building damaged by such removal to their condition immediately prior to
the installation of such items. If Tenant fails to promptly remove all such
items pursuant to this Section 3, or if Landlord elects to have such work
performed by Landlord's contractor, Landlord may remove such items installed
hereunder, and restore those portions of the Building damaged by such removal to
their condition immediately prior to the installation, in which case Tenant
agrees promptly to pay Landlord's reasonable costs of removal and restoration,
including Landlord's administrative fee.
4. Miscellaneous. This Rider supersedes all prior or
contemporaneous understandings, negotiations or agreements between the parties,
whether written or oral, with respect to its subject matter. This Rider is part
of and shall be attached as an addendum to the Lease. All terms of the Lease
which have not been expressly altered by this Rider shall remain in full force
and effect.
<PAGE> 71
IN WITNESS WHEREOF, Landlord and Tenant have caused this Rider to be
executed of even date with the Lease to which this Rider is attached as Exhibit
F.
"Landlord": "Tenant"
DALLAS CARRIER ASSOCIATES, Ltd., UNIVERSAL ACCESS, an Illinois
a Texas limited partnership corporation
By: Dallas Center, Inc., a Texas By: /s/ Signature Illegible
corporation;
Its: Sole Managing Partner Name: Robert J. Pommer
----------------------------
Title: Chief Operating Officer
---------------------------
By: /s/ Signature Illegible
Kevin Keating, Vice President
<PAGE> 1
EXHIBIT 10.11
OFFICE LEASE
TELECOM CENTER
TELECOM CENTER LA, LLC,
a Delaware limited liability company,
as Landlord,
and
UNIVERSAL ACCESS,
an Illinois corporation,
as Tenant
<PAGE> 2
TELECOM CENTER LA
INDEX
ARTICLE SUBJECT MATTER PAGE
- ------- -------------- ----
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND
COMMON AREAS....................................... 1
ARTICLE 2 LEASE TERM; OPTION TERMS........................... 2
ARTICLE 3 BASE RENT.......................................... 3
ARTICLE 4 ADDITIONAL RENT.................................... 4
ARTICLE 5 USE OF PREMISES.................................... 10
ARTICLE 6 SERVICES AND UTILITIES............................. 10
ARTICLE 7 REPAIRS............................................ 14
ARTICLE 8 ADDITIONS AND ALTERATIONS.......................... 15
ARTICLE 9 COVENANT AGAINST LIENS............................. 17
ARTICLE 10 INSURANCE.......................................... 17
ARTICLE 11 DAMAGE AND DESTRUCTION............................. 19
ARTICLE 12 NONWAIVER.......................................... 21
ARTICLE 13 CONDEMNATION....................................... 22
ARTICLE 14 ASSIGNMENT AND SUBLETTING.......................... 22
ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES.......................... 26
ARTICLE 16 HOLDING OVER....................................... 27
ARTICLE 17 ESTOPPEL CERTIFICATES.............................. 27
ARTICLE 18 SUBORDINATION...................................... 27
ARTICLE 19 DEFAULTS; REMEDIES................................. 28
ARTICLE 20 COVENANT OF QUIET ENJOYMENT........................ 30
ARTICLE 21 SECURITY DEPOSIT................................... 30
ARTICLE 22 SUPPLEMENTAL EQUIPMENT............................. 31
ARTICLE 23 SIGNS.............................................. 33
ARTICLE 24 COMPLIANCE WITH LAW................................ 34
ARTICLE 25 LATE CHARGES....................................... 34
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT................................. 34
ARTICLE 27 ENTRY BY LANDLORD.................................. 35
ARTICLE 28 [Intentionally Deleted]............................ 35
ARTICLE 29 MISCELLANEOUS PROVISIONS........................... 35
A OUTLINE OF PREMISES
B TENANT WORK LETTER
C FORM OF NOTICE OF LEASE TERM DATES
D RULES AND REGULATIONS
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
F TELECOMMUNICATIONS CONDUIT AGREEMENT
G NOTICE AGREEMENT REGARDING LIMITED SCOPE SUBLEASE, LICENSE OR
CO-LOCATION AGREEMENT FOR TELECOMMUNICATIONS PURPOSES
iii
<PAGE> 3
TELECOM CENTER LA
INDEX OF MAJOR DEFINED TERMS
LOCATION OF
DEFINITION IN
DEFINED TERMS OFFICE LEASE
- ------------- ------------
Abatement Event .............................................................14
Additional Amp Access Fee ...................................................10
Additional Electrical Supply ................................................11
Additional Rent ..............................................................4
Alterations .................................................................15
Auxiliary Space .............................................................31
Base Building ...............................................................15
Base Rent ....................................................................3
Base Year ....................................................................4
Brokers .....................................................................38
Building .....................................................................1
Building Common Areas ........................................................1
Building Structure ..........................................................14
Building Systems ............................................................14
CDS .........................................................................13
Claims ......................................................................32
Common Areas .................................................................1
Connecting Equipment ........................................................31
Customer Subleases ..........................................................25
Customers ...................................................................25
Damage Termination Date .....................................................21
Damage Termination Notice ...................................................21
Direct Expenses ..............................................................4
Effective Date ..............................................................iv
Electrical Equipment ........................................................11
Eligibility Period ..........................................................14
Emergency Generator .........................................................11
Estimate .....................................................................9
Estimate Statement ...........................................................9
Estimated Excess .............................................................9
Excess .......................................................................8
Expense Year .................................................................4
Fair Market Rental Value .....................................................3
Fire-Suppression System .....................................................31
Force Majeure ...............................................................37
Generator Access Fee ........................................................11
Generator Maintenance Fee ...................................................11
HVAC ........................................................................10
Landlord ....................................................................iv
Landlord Parties ............................................................17
Landlord Repair Notice ......................................................19
Lease .......................................................................iv
Lease Commencement Date ......................................................2
Lease Expiration Date ........................................................2
Lease Term ...................................................................2
Lease Year ...................................................................2
License .....................................................................30
Lines .......................................................................31
Mail ........................................................................37
MDF .........................................................................13
<PAGE> 4
MPOE ........................................................................13
Notices .....................................................................37
One Wilshire Meet-Me Room ...................................................12
Operating Expenses ...........................................................4
Option Rent ..................................................................3
Option Rent Notice ...........................................................3
Original Tenant ..............................................................2
Premises .....................................................................1
Project ......................................................................1
Project Common Areas .........................................................1
Proposition 13 ...............................................................7
Renovations .................................................................39
Rent .........................................................................4
Security Deposit ............................................................30
Statement ....................................................................8
Subject Space ...............................................................22
Summary .....................................................................iv
Supplemental Equipment ......................................................31
Tax Expenses .................................................................7
Telecom Center LA ............................................................1
Tenant ......................................................................iv
Tenant's Conduit ............................................................31
Tenant's HVAC Equipment .....................................................30
Tenant Damage Event .........................................................20
Tenant Work Letter ...........................................................1
Tenant's Share ...............................................................8
Transfer Notice .............................................................22
Transfer Premium ............................................................24
Transferee ..................................................................22
Transfers ...................................................................22
Wilshire Connection Space ...................................................13
<PAGE> 5
TELECOM CENTER LA
OFFICE LEASE
This Office Lease (the "LEASE"), dated as of the date set forth in
Section 1 of the Summary of Basic Lease Information (the "SUMMARY"), below, is
made by and between TELECOM CENTER LA, LLC, a Delaware limited liability company
("LANDLORD"), and UNIVERSAL ACCESS, an Illinois corporation ("TENANT").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE DESCRIPTION
1. Date: March 31, 1999 (the "EFFECTIVE
DATE)
2. Premises
(Article 1).
2.1 Building: 530 West 6th Street
Los Angeles, California 90014
The Building consists of
approximately 168,509 rentable
square feet
2.2 Premises: Approximately 8,000 rentable square
feet of space located on the 10th
floor of the Building, and known as
Suite 1001, as further set forth in
EXHIBIT A to the Office Lease.
3. Lease Term
(Article 2).
3.1 Length of Term: One hundred twenty months (120)
months.
3.2 Lease Commencement Date: The earlier to occur of (i) the
date upon which Tenant first
commences to conduct business in
the Premises, and (ii) the date
which is one hundred twenty (120)
days following the Effective Date
(as that term is defined in Section
1 of the Summary of Basic Lease
Information above). The Target
Lease Commencement Date is June 15,
1999
3.3 Lease Expiration Date The day immediately preceding the
one hundred twenty (120) month
anniversary of the Lease
Commencement Date.
4. Base Rent (Article 3):
<TABLE>
<CAPTION>
Annual
Monthly Rental Rate
Months of Annual Installment per Rentable
Lease Term Base Rent of Base Rent Square Foot
---------- --------- ------------ ------------
<S> <C> <C> <C>
1-12 $168,000.00 $14,000.00 $21.000
13-24 $173,040.00 $14,420.00 $21.630
25-36 $178,231.20 $14,852.60 $22.279
37-48 $183,578.14 $15,298.18 $22.947
49-60 $189,085.48 $15,757.12 $23.636
61-72 $194,758.04 $16,229.84 $24.345
73-84 $200,600.79 $16,716.73 $25.075
85-96 $206,618.81 $17,218.23 $25.827
97-108 $212,817.37 $17,734.78 $26.602
109-120 $219,201.89 $18,266.82 $27.400
</TABLE>
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<PAGE> 6
5. Base Year Calendar year 1999.
(Article 4):
6. Tenant's Share Approximately 4.75%.
(Article 4):
7. Permitted Use General office use,
(Article 5): telecommunications switching and
co-location services consistent
with a first-class
telecommunications building
8. Security Deposit $18,266.82
(Article 21):
9. Address of Tenant 100 N. Riverside Plaza
(Section 29.18): Suite 2200
Chicago, IL 60606
Attention: Peter Burns
(Prior to Lease Commencement Date)
530 West 6th Street
Suite 1001
Los Angeles, CA 90014
(After Lease Commencement Date)
10. Address of Landlord See Section 29.18 of the Lease.
(Section 29.18):
11. Broker(s) Landlord's Representative
(Section 29.24): Telecom Real Estate Services, Inc.
617 South Olive Street, Suite 810
Los Angeles, CA 90014
Tenant's Representative
Dean Topping & Co.
12. Wilshire Connection Space Tenant has been provided certain
(Section 6.4): rights to make connections between
the Project and the One Wilshire
Meet Me Room located adjacent to
the Building at 624 So. Grand
Avenue, Los Angeles, California,
all as more particularly set forth
in Sections 6.4 and 6.5 of the
Lease.
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<PAGE> 7
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the premises set forth in Section 2.2 of the
Summary (the "Premises"). The outline of the Premises is set forth in EXHIBIT A
attached hereto. The parties hereto agree that the lease of the Premises is upon
and subject to the terms, covenants and conditions herein set forth, and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of such terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of EXHIBIT A
is to show the approximate location of the Premises in the "Building," as that
term is defined in Section 1.1.2, below, only, and such Exhibit is not meant to
constitute an agreement, representation or warranty as to the construction of
the Premises, the precise area thereof or the specific location of the "Common
Areas," as that term is defined in Section 1.1.3, below, or the elements thereof
or of the accessways to the Premises or the "Project," as that term is defined
in Section 1.1.2, below. Except as specifically set forth in this Lease and in
the work letter attached hereto as EXHIBIT B (the "TENANT WORK LETTER"),
Landlord shall not be obligated to provide or pay for any improvements, work or
services related to the improvement, remodeling or refurbishment of the
Premises, and Tenant shall accept the Premises in its "AS IS" condition on the
Commencement Date. Tenant also acknowledges that neither Landlord nor any agent
of Landlord has made any representation or warranty regarding the condition of
the Premises, the Building or the Project or with respect to the suitability of
any of the foregoing for the conduct of Tenant's business. The taking of
possession of the Premises by Tenant shall conclusively establish that the
Premises and the Building were at such time in good and sanitary order,
condition and repair subject to (i) the completion of the Base Premises Work and
(ii) any latent defects identified by Tenant in writing to Landlord within the
first ninety (90) days following the Effective Date.
1.1.2 THE BUILDING AND THE PROJECT. The Premises are a part of
the building set forth in Section 2.1 of the Summary (the "BUILDING"). The
Building is part of an office project known as "TELECOM CENTER LA." The term
"PROJECT," as used in this Lease, shall mean (i) the Building and the Common
Areas, (ii) the land (which is improved with landscaping, subterranean parking
facilities and other improvements) upon which the Building and the Common Areas
are located, and (iii) at Landlord's discretion, any additional real property,
areas, land, buildings or other improvements added thereto outside of the
Project; provided that if Landlord adds any areas to the Project pursuant to
item (iii) above, Tenant's Share shall be equitably adjusted.
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right
to use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project (such areas, together with such
other portions of the Project designated by Landlord, in its discretion,
including certain areas designated for the exclusive use of certain tenants, or
to be shared by Landlord and certain tenants, are collectively referred to
herein as the "COMMON AREAS"). The Common Areas shall consist of the "Project
Common Areas" and the "Building Common Areas." The term "PROJECT COMMON AREAS,"
as used in this Lease, shall mean the portion of the Project designated as such
by Landlord. The term "BUILDING COMMON AREAS," as used in this Lease, shall mean
the portions of the Common Areas located within the Building designated as such
by Landlord. The manner in which the Common Areas are maintained and operated
shall be at the sole discretion of Landlord and the use thereof shall be subject
to such rules, regulations and restrictions as Landlord may make from time to
time. Landlord reserves the right to close temporarily, make alterations or
additions to, or change the location of elements of the Project and the Common
Areas; provided that such alterations or additions do not materially interfere
with or unreasonably disturb Tenant's use and occupancy of the Premises.
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<PAGE> 8
1.1.4 ACCESS. Landlord agrees that, subject to Landlord's
reasonable rules and regulations, and access control systems and procedures,
Tenant shall have access to the Premises 24-hours a day, 365-days a year during
the Lease Term.
1.1.5 RENTABLE SQUARE FEET. The rentable square feet of the
Premises are approximately as set forth in Section 2.2 of the Summary , and the
rentable square feet of the Building is approximately as set forth in Section
2.1 of the Summary. For purposes hereof, the "rentable square feet" of the
Premises shall be calculated by Landlord pursuant to the Standard Method for
Measuring Floor Area in Office Buildings, ANSI Z65.1-1996 ("BOMA"), as
reasonably modified for the Project pursuant to Landlord's standard rentable
area measurements for the Project, to include, among other calculations, a
portion of the common areas and service areas of the Building and Project. The
rentable square feet of the Premises and the rentable square feet of the
Building and/or Project are not subject to adjustment or remeasurement by
Tenant, but are subject to verification from time to time by Landlord through
Landlord's planner/designer, and such verification shall be made in accordance
with the provisions of this Section 1.1.5. Landlord will confirm the rentable
square feet of the Premises following completion of the Base Premises work (as
defined in the Tenant Work Letter). The determination of Landlord's
planner/designer shall be conclusive and binding upon the parties. In the event
that Landlord's planner/designer determines that the rentable square footage
shall be different from those set forth in this Lease, all amounts, percentages
and figures appearing or referred to in this Lease based upon such incorrect
rentable square feet (including, without limitation, the amount of the Base Rent
and Tenant's Share) shall be modified in accordance with such determination. If
such determination is made, it will be confirmed in writing by Landlord to
Tenant.
ARTICLE 2
LEASE TERM; OPTION TERMS
2.1 LEASE TERM. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "LEASE
TERM") shall be as set forth in Section 3.1 of the Summary, shall commence on
the date set forth in Section 3.2 of the Summary (the "LEASE COMMENCEMENT
DATE"), and shall terminate on the date set forth in Section 3.3 of the Summary
(the "LEASE EXPIRATION DATE") unless this Lease is sooner terminated as
hereinafter provided. For purposes of this Lease, the term "LEASE YEAR" shall
mean each consecutive twelve (12) month period during the Lease Term; provided,
however, that the last Lease Year shall end on the Lease Expiration Date. At any
time during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in EXHIBIT C, attached hereto, as a confirmation only of the
information set forth therein, which Tenant shall execute and return to Landlord
within ten (10) business days of receipt thereof.
2.2 OPTION TERM.
2.2.1 OPTION RIGHT. Landlord hereby grants the Tenant named in
the Summary and any transferee permitted pursuant to Section 14.7, below
(collectively, the "ORIGINAL TENANT"), two (2) options to extend the Lease Term
for a period of five (5) years each (each, an "OPTION TERM"), each of which
options shall be exercisable only by written notice delivered by Tenant to
Landlord as provided below, provided that, as of the date of delivery of any
such notice, Tenant is not in default under this Lease and Tenant has not
previously been in default under this Lease more than one (1) times during the
last twenty-four (24) months of the Lease Term. Upon the proper exercise of any
such option to extend, and provided that, as of the end of the initial Lease
Term or initial Option Term, Tenant is not in default under this Lease and
Tenant has not previously been in default under this Lease more than one (1)
time during the last twenty-four (24) months of the Lease Term, the Lease Term,
as it applies to the Premises, shall be extended for a period of five (5) years.
The rights contained in this Section 2.2 shall be personal to the Original
Tenant and may only be exercised by the Original Tenant (and not any assignee,
sublessee or other transferee of Tenant's interest in this Lease) if Original
Tenant occupies the entire Premises (except for the occupancy of any permitted
Customers [as defined in Section 14.6 below]).
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<PAGE> 9
2.2.2 OPTION RENT. The "Rent," as that term is defined in
Section 4.1, below, payable by Tenant during the applicable Option Term (the
"Option Rent") shall be equal to the greater of (i) the "Fair Market Rental
Value" for the Premises as of the commencement of the then applicable Option
Term, and (ii) the Rent payable by Tenant for the period immediately prior to
the end of the Lease Term or then applicable Option Term. The "FAIR MARKET
RENTAL VALUE" shall mean the rent (including the obligation to directly pay
electrical and janitorial expenses and including additional rent and considering
any "base year" or "expense stop" applicable thereto), including all
escalations, at which tenants using their premises predominantly for
telecommunications oriented purposes (including without limitation the One
Wilshire and 611 Wilshire buildings located in Los Angeles, California), as of
the commencement of the applicable Option Term, are leasing non-sublease,
non-encumbered, non-equity space comparable in size, location and quality to the
Premises for a term of five (5) years, which comparable space is located in the
Building or in comparable buildings in the downtown Los Angeles office market.
2.2.3 EXERCISE OF OPTION. The applicable option contained in
this Section 2.2 shall be exercised by Tenant, if at all, and only in the
following manner: (i) Tenant shall deliver written notice to Landlord not more
than twelve (12) months nor less than nine (9) months prior to the expiration of
the applicable Lease or Option Term, stating that Tenant may be interested in
exercising its option; (ii) Landlord, after receipt of Tenant's notice, shall
deliver notice (the "OPTION RENT NOTICE") to Tenant not less than six (6) months
prior to the expiration of the applicable Lease or Option Term, setting forth
Landlord's determination of the Option Rent; and (iii) if Tenant wishes to
exercise such option, Tenant shall, on or before the date (the "Exercise Date")
which is the earlier of (A) the date occurring five (5) months prior to the
expiration of the applicable Lease or Option Term, and (B) the date occurring
thirty (30) days after Tenant's receipt of the Option Rent Notice, exercise the
option by delivering written notice thereof to Landlord ("Tenant's Exercise
Notice"). Tenant's failure to deliver Tenant's Exercise Notice on or before the
Exercise Date, shall be deemed to constitute Tenant's waiver of its extension
rights hereunder.
2.2.4 Tenant shall have no right to object to the Option Rent
provided by Landlord, and if Tenant disagrees with Landlord's determination of
the Option Rent but Landlord and Tenant are unable to resolve such disagreement
as to the Option Rent prior to the Exercise Date, then either (i) Tenant shall
accept Landlord's determination of the Option Rent by exercising its option to
extend the applicable Lease or Option Term by delivering Tenant's Exercise
Notice to Landlord on or before the Exercise Date, or (ii) Tenant shall be
deemed to have relinquished its option to extend the applicable Lease or Option
Term, in which event Tenant's options to extend the applicable Lease or Option
Term shall be null and void as of the Exercise Date, and Landlord and Tenant
shall have no further liability to the other under this Section 2.2.
ARTICLE 3
BASE RENT
3.1 BASE RENT. Tenant shall pay, without prior notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or, at
Landlord's option, at such other place as Landlord may from time to time
designate in writing, by a check for currency which, at the time of payment, is
legal tender for private or public debts in the United States of America, base
rent for the Premises ("BASE RENT") as set forth in Section 4 of the Summary,
payable in equal monthly installments as set forth in Section 4 of the Summary
in advance on or before the first day of each and every calendar month during
the Lease Term, without any setoff or deduction whatsoever. The Base Rent for
the first full month of the Lease Term shall be paid at the time of Tenant's
execution of this Lease. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any fractional month shall accrue on a daily basis for the period
from the date such payment is due to the end of such calendar month or to the
end of the Lease Term at a rate per day which is equal to 1/365 of the
applicable annual Rent. All other payments or adjustments required to be made
under the terms of this Lease that require proration on a time basis shall be
prorated on the same basis.
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<PAGE> 10
3.2 BASE RENT ABATEMENT. Notwithstanding anything to the contrary
contained in Section 3.1, Landlord hereby waives Tenant's obligation to pay Base
Rent for two thousand (2,000) rentable square feet (i.e. $3,500 per month) (the
"ABATED BASE RENT") for the first six (6) months after the Lease Commencement
Date (the "ABATEMENT PERIOD"). Landlord agrees to waive Tenant's obligation to
pay the Abated Base Rent for the period stated above; provided, however, that if
at any time during the Abatement Period Landlord issues a notice to Tenant
respecting a default on the part of Tenant which default is not cured within the
applicable grace period, if any, Landlord's agreement to waive payment of Base
Rent shall be immediately revoked without further notice to Tenant, and any
previous waiver of Base Rent, Landlord shall be null and void. In any such
notice given by Landlord, Landlord shall have the right to demand any and all
Base Rent which would have been due and payable in accordance with the Lease
absent the waiver contained in this Section 3.2. Notwithstanding anything to the
contrary contained in this Section 3.2, Tenant shall be required to make all
payments of Direct Expenses during the Abatement Period and throughout the Lease
Term.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual "Direct
Expenses," as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease,
respectively allocated to the tenants of the Building, to the extent such Direct
Expenses allocated to the tenants of the Building are in excess of Tenant's
share of Direct Expenses applicable to the "BASE YEAR," as that term is defined
in Section 4.2.1 of this Lease. Such payments by Tenant, together with any and
all other amounts payable by Tenant to Landlord pursuant to the terms of this
Lease (including without limitation the Conduit Rental described in Section 6.4
below), are hereinafter collectively referred to as the "ADDITIONAL RENT", and
the Base Rent and the Additional Rent are herein collectively referred to as
"RENT." All amounts due under this Article 4 as Additional Rent shall be payable
for the same periods and in the same manner as the Base Rent. Without limitation
on other obligations of Tenant which survive the expiration of the Lease Term,
the obligations of Tenant to pay the Additional Rent provided for in this
Article 4 that accrue during the Lease Term shall survive the expiration of the
Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 5
of the Summary.
4.2.2 "DIRECT EXPENSES" shall mean "Operating Expenses" and
"Tax Expenses."
4.2.3 "EXPENSE YEAR" shall mean each calendar year in which
any portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires, provided that Landlord, upon notice to Tenant, may
change the Expense Year from time to time to any other twelve (12) consecutive
month period, and, in the event of any such change, Tenant's Share of Direct
Expenses shall be equitably adjusted for any Expense Year involved in any such
change.
4.2.4 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts of every kind and nature which Landlord pays or accrues during any
Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement, restoration or operation of the
Project, or any portion thereof. Without limiting the generality of the
foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of supplying all utilities (except for utilities
provided to the Premises or to the premises of other tenants in the Building),
the cost of operating, repairing, maintaining, and renovating the utility,
telephone, mechanical, sanitary, storm drainage, and elevator systems, and the
cost of maintenance and service contracts in connection therewith; (ii) the cost
of licenses, certificates, permits and inspections and the cost of contesting
any governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with any governmentally mandated transportation system
management program or similar program; (iii) the cost of all
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<PAGE> 11
insurance carried by Landlord in connection with the Project, and the amounts of
insurance deductibles or self-insured losses to the extent otherwise includable
in Operating Expenses; (iv) the cost of landscaping, relamping, and all
supplies, tools, equipment and materials used in the operation, repair and
maintenance of the Project, or any portion thereof; (v) costs incurred in
connection with any parking areas servicing the Building; (vi) fees and other
costs, including management fees (such management fees to be consistent with
fees charged in other first class office building in the Los Angeles market),
consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project (including city sidewalks); (vii) payments under any equipment
rental agreements and the fair rental value in the Building of any management
office space; (viii) wages, salaries and other compensation and benefits,
including taxes levied thereon, of all persons engaged in the operation,
maintenance and security of the Project; (ix) costs under any instrument
pertaining to the sharing of costs by the Project; (x) operation, repair,
maintenance and replacement of all systems and equipment and components thereof
of the Building except as specifically excluded in Item G below; (xi) the cost
of janitorial (except for janitorial services provided to the Premises or to the
premises of other tenants in the Building), alarm, security and other services,
replacement of wall and floor coverings, ceiling tiles and fixtures in the
Project and in common areas, maintenance and replacement of curbs and walkways,
repair to roofs and re-roofing; (xii) amortization (including interest on the
unamortized cost at a rate equal to the floating commercial loan rate announced
from time by Bank of America, a national banking association, or its successors,
as its prime rate, plus two percent (2%) per annum (the "Interest Rate)) of the
cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof; (xiii)
the cost of capital improvements or other costs incurred in connection with the
Project (A) which are intended to effect economics in the operation or
maintenance of the Project, or any portion thereof, (B) that are required to
comply with present or anticipated conservation programs, (C) which are
replacements or modifications of nonstructural items located in the Project
required to keep the Project in good order or condition, or (D) that are
required under any governmental law or regulation that come into effect
following the Lease Commencement Date; provided, however, that any capital
expenditure shall be amortized (including interest on the unamortized cost at
the Interest Rate in effect at the time such expenditure is placed in service)
over its useful life as Landlord shall reasonably determine, except as
specifically excluded in Item G below; (xiv) costs, fees, charges or assessments
imposed by, or resulting from any mandate imposed on Landlord by, any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute "Tax Expenses" as
that term is defined in Section 4.2.5, below; and (xv) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building. If Landlord is
not furnishing any particular work or service (the cost of which, if performed
by Landlord, would be included in Operating Expenses) to a tenant who has
undertaken to perform such work or service in lieu of the performance thereof by
Landlord, Operating Expenses shall be deemed to be increased by an amount equal
to the additional Operating Expenses which would reasonably have been incurred
during such period by Landlord if it had at its own expense furnished such work
or service to such tenant. If the Project is less than ninety-five percent (95%)
occupied during all or a portion of any Expense Year, Landlord may elect to make
an appropriate adjustment to the components of Operating Expenses for such year
to determine the amount of Operating Expenses that would have been incurred had
the Building been ninety-five percent (95%) occupied; and the amount so
determined shall be deemed to have been the amount of Operating Expenses for
such year. Operating Expenses for the Base Year shall not include market-wide
labor-rate increases due to extraordinary circumstances, including, but not
limited to, boycotts and strikes, and utility rate increases due to
extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages. In no event shall the
components of Direct Expenses for any Expense Year related to electrical costs
be less than the components of Direct Expenses related to electrical costs in
the Base Year.
Notwithstanding the foregoing, for purposes of this Lease,
Operating Expenses shall not, however, include:
(A) bad debt expenses and interest, principal payments,
attorney's fees, points and fees on debts, including lender costs and closing
costs (except in connection with the financing of items which may be included in
Operating Expenses) or amortization on any ground
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<PAGE> 12
lease, mortgage or mortgages or any other debt instrument encumbering the
Building or Project;
(B) marketing costs, including leasing commissions, incurred
in connection with lease, sublease and/or assignment transactions with present
or prospective tenants or other occupants of the Project;
(C) legal fees incurred in negotiating and enforcing tenant
leases;
(D) costs, including permit, license and inspection costs,
incurred with respect to the installation of other tenants' or occupants'
improvements made for tenants or other occupants in the Project or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants in the Project;
(E) the cost of providing any service directly to and paid
directly by any tenant;
(F) costs of any items (including, but not limited to, costs
incurred by Landlord for the repair of damage to the Project or for items which
are reimbursable under any contractor, manufacturer or supplier warranty), to
the extent Landlord receives reimbursement from insurance proceeds (or would
have received had Landlord maintained the insurance required under this Lease)
or from a contractor, manufacturer, supplier or any other third party (other
than reimbursement by tenants pursuant to the Operating Expenses pass-through
provisions of their leases); such proceeds shall be credited to Operating
Expenses in the year in which received, except that any deductible amount under
any insurance policy shall be included within Operating Expenses;
(G) costs of capital renovations, capital additions, capital
alterations or capital improvements (including any replacements) in excess of a
total of $15,000 for the Building per Expense Year, except those set forth in
Section 4.2.4 (xiii) above;
(H) depreciation, amortization and interest payments, except
as specifically included in Operating Expenses pursuant to the terms of this
Lease and except on materials, tools, supplies and vendor-type equipment
purchased by Landlord to enable Landlord to supply services Landlord might
otherwise contract for with a third party, where such depreciation, amortization
and interest payments would otherwise have been included in the charge for such
third party's services, all as determined in accordance with standard accounting
practices and when depreciation or amortization is permitted or required, the
item shall be amortized over its reasonably anticipated useful life;
(I) Tax Expenses;
(J) expenses in connection with services, utilities or other
benefits which are not offered to Tenant or for which Tenant is charged for
directly but which are provided to another tenant or occupant of the Project
without charge, including, but not limited to, above-Building standard heating,
ventilation and air conditioning, janitorial services and exclusive use of
common areas;
(K) costs and the overhead and profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for goods and/or services
in the Project to the extent the same exceeds the costs of such by unaffiliated
third parties on a competitive basis;
(L) Landlord's general corporate overhead and general and
administrative expenses;
(M) advertising and promotional expenditures, and costs of
signs in or on the Project identifying the owner of the Project or other
tenants' signs;
(N) tax penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments or file returns when
due;
(O) costs arising from Landlord's charitable or political
contributions;
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(P) costs, penalties, fines, awards or interest necessitated
by or resulting from the gross negligence or willful misconduct of Landlord, or
any of its agents, employees or independent contractors;
(Q) rent and other payments under any ground or underlying
lease of the Building or Project;
(R) costs, including, but not limited to, attorneys' fees
associated with the operation of the business of the partnership or entity which
constitutes Landlord or other real property owned by Landlord as the same are
distinguished from the costs of the maintenance, repair and operation of the
Project, including partnership accounting and legal matters, costs of defending
any lawsuits with any mortgagee, and costs of any disputes between Landlord and
its employees, disputes of Landlord with Project management or personnel;
(S) the cost of correcting any latent defects in the initial
design or construction of the Building or the Project improvements other than
any cost arising out of Tenant's Work;
(T) costs of removing or remediating any asbestos or
asbestos containing materials in the Project; (i) were in existence in the
Building or Project prior to the Lease Commencement Date, or (ii)
(U) costs incurred to remove, remedy, contain, or treat
hazardous materials, which (i) were in existence in the Building or Project
prior to the Lease Commencement Date, or (ii) are brought into the Building or
Project after the Lease Commencement Date by Landlord or Landlord's employees,
agents, contractors or tenants and which are of such a nature, at the time of
such introduction, that a federal, state or municipal governmental authority, if
it had then had knowledge of such hazardous materials would have then required
the removal of such hazardous materials or other remedial or containment action
with respect thereto;
(W) wages or salaries of employees or attendants in parking
garages, newsstands or other commercial concessions, if any, operated by
Landlord in the Building.
4.2.5 TAXES.
4.2.5.1 "TAX EXPENSES" shall mean all federal, state,
county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general and
special assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, unless required to be paid by Tenant, personal property taxes
imposed upon the fixtures, machinery, equipment, apparatus, systems and
equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), which shall be paid or
accrued during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in connection
with the ownership, leasing and operation of the Project, or any portion
thereof.
4.2.5.2 Tax Expenses shall include, without limitation:
(i) Any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) Any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("PROPOSITION 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax
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Expenses shall also include any governmental or private assessments or the
Project's contribution towards a governmental or private cost-sharing agreement
for the purpose of augmenting or improving the quality of services and amenities
normally provided by governmental agencies; (iii) Any assessment, tax, fee,
levy, or charge allocable to or measured by the area of the Premises or the Rent
payable hereunder, including, without limitation, any business or gross income
tax or excise tax with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any portion
thereof; and (iv) Any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or transferring
an interest or an estate in the Premises.
4.2.5.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Tax Expenses under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.8 (except as set forth in Section 4.2.5.1, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.5.4 The amount of Tax Expenses for the Base Year
attributable to the valuation of the Project, inclusive of tenant improvements,
shall be known as "Base Taxes."
4.2.6 "TENANT'S SHARE" shall mean the percentage set forth in
Section 6 of the Summary, and is based on the ratio of the rentable square
footage of the Premises to the total rentable square footage of the Building.
4.3 Intentionally deleted.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. Tenant shall pay to
Landlord, in the manner set forth in Section 4.4.1 below, the Additional Rent as
follows:
4.4.1 CALCULATION OF EXCESS. If for any Expense Year ending or
commencing within the Lease Term, Tenant's Share of Direct Expenses for such
Expense Year exceeds Tenant's Share of the amount of Direct Expenses applicable
to the Base Year, then Tenant shall pay to Landlord, in the manner set forth in
Section 4.4.2, below, and as Additional Rent, an amount equal to such excess of
the Direct Expenses, as applicable (the "EXCESS").
4.4.2 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY
TENANT. Landlord shall endeavor to give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Direct
Expenses incurred or accrued for such preceding Expense Year, and which shall
indicate the amount of the Excess. Upon receipt of the Statement for each
Expense Year commencing or ending during the Lease Term, if an Excess is
present, Tenant shall pay, with its next installment of Base Rent due, the full
amount of the Excess for such Expense Year, less the amounts, if any, paid
during such Expense Year as "Estimated Excess," as that term is defined in
Section 4.4.3, below provided that if the Statement shows that no Excess is
present, Landlord shall apply any Estimated Excess actually received by Landlord
from Tenant towards Tenant's next payment of Direct Expenses; provided further
that if the difference between the Statement and the Estimated Excess paid by
Tenant is greater than one twelfth (12th) of the Estimated Excess then Landlord
shall deliver such difference directly to Tenant rather than crediting Tenant's
next payment of Direct Expenses. The failure of Landlord
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<PAGE> 15
to timely furnish the Statement for any Expense Year shall not prejudice
Landlord or Tenant from enforcing its rights under this Article 4. Even though
the Lease Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant's Share of Direct Expenses for the Expense Year
in which this Lease terminates, if an Excess if present, Tenant shall pay to
Landlord such amount within thirty (30) days of being invoiced. The provisions
of this Section 4.4.2 shall survive the expiration or earlier termination of the
Lease Term.
4.4.3 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition,
Landlord shall endeavor to give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Direct Expenses for the then-current
Expense Year shall be and the estimated excess (the "ESTIMATED EXCESS") as
calculated by comparing the Direct Expenses for such Expense Year, which shall
be based upon the Estimate, to the amount of Direct Expenses for the Base Year.
The failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Estimated Excess under this Article 4, nor shall Landlord be prohibited from
revising any Estimate Statement or Estimated Excess theretofore delivered to the
extent necessary. Thereafter, Tenant shall pay, with its next installment of
Base Rent due, a fraction of the Estimated Excess for the then-current Expense
Year (reduced by any amounts paid pursuant to the next to last sentence of this
Section 4.4.3). Such fraction shall have as its numerator the number of months
which have elapsed in such current Expense Year, including the month of such
payment, and twelve (12) as its denominator. Until a new Estimate Statement is
furnished (which Landlord shall have the right to deliver to Tenant at any
time), Tenant shall pay monthly, with the monthly Base Rent installments, an
amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in
the previous Estimate Statement delivered by Landlord to Tenant.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY
RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment (including without
limitation Tenant's switching and antenna equipment), furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for real property
tax purposes by the Los Angeles tax assessor's office at a valuation higher than
the valuation at which tenant improvements conforming to Landlord's "building
standard" in other space in the Building are assessed, then the Tax Expenses
levied against Landlord or the property by reason of such excess assessed
valuation shall be deemed to be taxes levied against personal property of Tenant
and shall be governed by the provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant
shall pay prior to delinquency any (i) rent tax or sales tax, service tax,
transfer tax or value added tax, or any other applicable tax on the rent or
services herein or otherwise respecting this Lease, (ii) taxes assessed upon or
with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facility; or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.
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ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which may be withheld
in Landlord's sole discretion.
5.2 PROHIBITED USES. The uses prohibited under this Lease shall
include, without limitation, use of the Premises or a portion thereof for (i)
offices of any agency or bureau of the United States or any state or political
subdivision thereof; (ii) offices or agencies of any foreign governmental or
political subdivision thereof; (iii) offices of any health care professionals or
service organization; (iv) schools or other training facilities which are not
ancillary to corporate, executive or professional office use; (v) retail or
restaurant uses; or (vi) communications firms such as radio and/or television
stations. Tenant shall not allow occupancy density of use of the Premises which
is greater than the average density of the other tenants of the Building. Tenant
further covenants and agrees that Tenant shall not use, or suffer or permit any
person or persons to use, the Premises or any part thereof for any use or
purpose contrary to the provisions of the Rules and Regulations set forth in
EXHIBIT D, attached hereto, or in violation of the laws of the United States of
America, the State of California, or the ordinances, regulations or requirements
of the local municipal or county governing body or other lawful authorities
having jurisdiction over the Project) including, without limitation, any such
laws, ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter in
effect. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way materially damage the reputation of the Project
or obstruct or interfere with the rights of other tenants or occupants of the
Building, or injure or annoy them or use or allow the Premises to be used for
any improper, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days during the Lease Term, unless otherwise stated below.
6.1.1 Heating and air conditioning ("HVAC") service in the
Premises will be provided by Tenant, at Tenant's sole cost and expense, through
separate package units which shall be subject to the direct control of Tenant.
Subject to Landlord's prior written approval of Tenant's plans and
specifications, Tenant shall have the right to install in a location within the
Premises and/or Project designated in writing by Landlord "Tenant's HVAC
Equipment" pursuant to Article 22 below. The acquisition and operation of
Tenant's HVAC Equipment (including without limitation the purchase,
installation, and maintenance thereof) shall be at Tenant's sole cost and
expense, and the electrical consumption resulting from Tenant's usage of
Tenant's HVAC equipment shall be separately metered, billed to Tenant and paid
by Tenant pursuant to Section 6.1.2 below.
6.1.2 Landlord shall provide Tenant with access to up to 800
amps of power at 480 volts, three-phase wiring (there shall be no fee imposed by
Landlord for such initial amperage) provided that Tenant shall be responsible
for installing in the Premises, at Tenant's sole cost and expense and subject to
Landlord's prior approval of the plans and specifications therefor, a
transformer tying into the Building's bus duct system to obtain such electrical
supply for the Premises.. Tenant may, subject to availability, purchase
additional amps for the Premises from Landlord, for a one time access fee (the
"ADDITIONAL AMP ACCESS FEE") of $250.00 per amp. The cost of such electrical
supply shall be separately metered to the Premises at Tenant's sole cost and
expense (including without limitation, the cost of any metering equipment or the
installation cost thereof). Tenant shall pay directly to Landlord within ten
(10) days after receipt of written demand and as additional rent under this
Lease (and not as part of Operating Expenses) the cost of all electricity, HVAC,
gas and water provided to and/or consumed in the
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Premises or by Tenant's Equipment (including without limitation Tenant's HVAC
equipment). In addition, Tenant shall bear the cost of replacement of lamps,
starters and ballasts for lighting fixtures within the Premises. In the event
Tenant desires electric power in excess of the level set forth in the first
sentence in this Section 6.1.2 or available from Landlord ("ADDITIONAL
ELECTRICAL SUPPLY"), Tenant may, at its own expense, elect to make direct
arrangements with the Los Angeles Department of Water and Power to obtain such
Additional Electric Supply directly from the Department of Water and Power, if
feasible. Landlord makes no representations or warranties regarding such
arrangements (including their feasibility), but agrees to cooperate with Tenant
and the Department of Water and Power reasonably and in good faith in this
regard. The plans and specifications for any new vault or transformer space
(including, but not limited to, the location of such space within the Building,
which shall be designated by Landlord in its discretion, provided that Landlord
is willing to make such space available) and for any transformer, related
equipment, facilities or connections to provide the Additional Electrical
Supply, shall be subject to Landlord's prior written approval. Tenant agrees to
pay all bills from the Department of Water and Power for such direct electrical
service when due and shall pay a reasonable rental as established by Landlord in
its good faith, but sole, discretion for any new vault or transformer space used
by Tenant to provide the Additional Electrical Supply. The initial transformer
to be installed by Tenant as described above, and any subsequent transformers
and other electrical equipment which Tenant elects to install to provide
Additional Electrical Supply to the Premises, shall sometimes be referred to
herein collectively as the "ELECTRICAL EQUIPMENT."
6.1.3 Landlord shall not provide janitorial services to the
Premises. Tenant shall be solely responsible, at Tenant's sole cost and expense,
for keeping all areas of the Project used by Tenant, including without
limitation the Wilshire Connection Space, in a neat, clean and safe condition,
and for performing all janitorial services and other cleaning of the Premises
appropriate to maintain the Premises in a manner consistent with a first-class
telecommunications building; provided that Tenant shall use Landlord's
designated Building janitorial company for all janitorial services within the
Project.
6.1.4 Landlord shall furnish unheated water from mains for
drinking, lavatory and toilet purposes drawn through fixtures installed by
Landlord, or by Tenant with Landlord's prior written consent, and heated water
for lavatory purposes from regular building supply in such quantities as
required in Landlord's judgment for the comfortable and normal use of the
Premises. Tenant shall pay Landlord, as Additional Rent, for any additional
water which is furnished for any other purpose. The amount that Tenant shall pay
Landlord for such additional water shall be the average price per gallon charged
to the Landlord for the Building by the entity providing water.
6.2 EMERGENCY GENERATOR. Landlord has installed for the benefit of
the tenants of the Building an emergency generator (the "EMERGENCY GENERATOR")
in the Building which is in service as of the execution of this Lease. Tenant
shall reserve 300 Kilowatts of emergency power from the Emergency Generator to
be used in the event of an interruption of normal electrical service to the
Premises during the Lease Term, provided that Tenant pays to Landlord on the
Effective Date a one-time fee in an amount equal to $475.00 per kilowatt of
emergency power so reserved (the "GENERATOR ACCESS FEE") and a monthly
maintenance fee for the Emergency Generator in an amount equal to $1.20 per
month per kilowatt of reserved emergency power (the "GENERATOR MAINTENANCE
FEE"). Tenant shall also pay the costs to connect the Premises to the Emergency
Generator as described in Section 6.2.3 below.
6.2.1 Tenant may elect to terminate its rights and obligations
under this Section 6.2 and the use of the Emergency Generator granted hereunder,
upon giving written notice to Landlord at least sixty (60) days prior to the
effective date of such termination. In the event of any such termination, Tenant
shall not be entitled to any reimbursement for sums expended pursuant to
Sections 6.2 or 6.2.3.
6.2.2 Tenant's use of such emergency power shall be in
accordance with such rules and regulations as may be established by Landlord
from time to time.
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6.2.3 Landlord shall repair and maintain the Emergency
Generator, provided that Tenant shall reimburse Landlord upon demand, as
Additional Rent hereunder, for the cost of any repairs or extraordinary
maintenance for the Emergency Generator necessitated by acts of Tenant or
Tenant's employees, contractors, assignees, sublessees, agents, licensees or
invitees. In addition, any installation of equipment, wiring or cabling in the
Premises, the Wilshire Connection Space, the Building or the Project for the
purpose of enabling Tenant to access the Emergency Generator shall be performed
by Landlord in accordance with plans and specifications approved by the parties
in writing in advance, and Tenant shall reimburse Landlord for the costs of such
installation, including, but not limited to, design fees and costs of
demolition.
6.2.4 Tenant acknowledges and agrees that in order to ensure
that the cumulative electrical loads on the emergency generators servicing the
Project stay within the maximum capabilities of the emergency generators, Tenant
shall be required to automatically shed a portion of Tenant's total electrical
load to the Emergency Generator to ensure that Tenant's equipment does not use
more than the number of Kilowatts reserved by Tenant pursuant to Section 6.2
above. Tenant covenants that such load shed shall occur simultaneously whenever
transfer is made to the Emergency Generator, and Landlord shall have the right
to test Tenant's load shed compliance on reasonable advance notice. Tenant
shall, within ten (10) days of the Lease Commencement Date, deliver to Landlord,
for Landlord's review and approval, all plans, specifications and other
engineering documentation (including without limitation, single-line diagrams,
load summaries and equipment specifications) required by Landlord or Landlord's
agents showing Tenant's procedure for load shedding of electrical load in the
Premises.
6.2.5 The provision of Emergency Generator service by Landlord
to Tenant shall be subject to the terms and provisions of this Lease.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish or
delay in furnishing any service (including without limitation telephone,
telecommunication and emergency power services), or for any diminution or
interruption in the quality or quantity thereof, when such failure or delay or
diminution is occasioned, in whole or in part, by repairs, replacements, or
improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, or other fuel at the Building or Project after
commercially reasonable effort to do so, by any accident or casualty whatsoever,
by act or default of Tenant or other parties, or by any other cause beyond
Landlord's reasonable control; and such failures or delays or diminution shall
never be deemed to constitute an eviction or disturbance of Tenant's use and
possession of the Premises or relieve Tenant from paying Rent or performing any
of its obligations under this Lease. Furthermore, Landlord shall not be liable
under any circumstances for a loss of, or injury to, property or for injury to,
or interference with, Tenant's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities as set forth in this Article
6. Landlord may comply with voluntary controls or guidelines promulgated by any
governmental entity relating to the use or conservation of energy, water, gas,
light or electricity or the reduction of automobile or other emissions without
creating any liability of Landlord to Tenant under this Lease, provided that the
Premises are not thereby rendered untenantable. As a material inducement to
Landlord's entry into this Lease, Tenant waives and releases any rights it may
have to make repairs at Landlord's expense under Sections 1941 and 1942 of the
California Civil Code.
6.4 CONNECTION TO ONE WILSHIRE MEET ME ROOM/WILSHIRE CONNECTION
SPACE.
6.4.1 One Wilshire "Meet Me" Room. Tenant acknowledges that
the "Meet Me" room located at the Building commonly known as One Wilshire and
located adjacent to the Project (collectively, the "ONE WILSHIRE MEET ME ROOM")
is owned by an entity other than Landlord. Landlord, at its option, may enter
into an agreement with the owner or owners of any or all of the One Wilshire
Meet Me Room to provide for reciprocal rights of access and/or use of the
Project. Nothing contained herein shall be deemed or construed to limit or
otherwise affect Landlord's right to convey all or any portion of the Project or
any other of Landlord's rights described in this Lease.
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6.4.2 Interconnection with One Wilshire Meet Me Room. Subject
to the terms of this Section 6.4, Section 6.5, and Article 22 below, Landlord
hereby grants Tenant the non-exclusive right solely for purposes of making line
connections and for no other purpose whatsoever, to use portions of the Project
designated by Landlord, in its sole discretion, to connect to, at Tenant's sole
expense, the One Wilshire Meet Me Room. Tenant hereby acknowledges that Tenant's
use of the One Wilshire Meet Me Room is not controlled by Landlord, and that
Tenant's use of and ability to interconnect with the One Wilshire Meet Me Room
shall be based on a separate agreement by and between Tenant and the owners of
the One Wilshire Meet Me Room. Landlord makes no representation or warranty
regarding the availability, maintenance or operation of any interconnections
with the One Wilshire Meet Me Room.
6.4.3 Wilshire Connection Space. The areas located on the
fourth floor of the Building used to connect the Project to the One Wilshire
Meet Me Room, as well as the conduits used by Tenant therefor, are referred to
herein as the "WILSHIRE CONNECTION SPACE." Subject to Section 6.5 below, the
precise amount and location of the Wilshire Connection Space used by Tenant
shall be designated by Landlord. The portion of the Wilshire Connection Space
used by Tenant, and the Tenant's equipment and conduit located therein, shall be
deemed to be a part of the Premises for purposes of the indemnification and
insurance provisions of this Lease.
6.5 CENTRAL CABLING DISTRIBUTION SYSTEM/BUILDING MEET ME ROOM.
Tenant recognizes that Landlord desires to provide access to both existing and
future telecommunications services and service providers for tenants of the
Building, and Landlord has deemed it desirable to achieve this objective by
providing a central telecommunications cabling distribution system ("CDS") in
the Project which Landlord so designates for use by tenants of the Project and
all competitive providers of telecommunications services. Accordingly, and
notwithstanding anything contained in this Agreement to the contrary, Landlord
reserves the right to designate a CDS, including a main demarcation frame
("MDF") for use by all tenants of the Project and all competitive service
providers in order to reach tenant demarcation points or cross-connect
facilities in the Building (including without limitation the meet me room
located on the fourth (4th) floor of the Building). In this event, the MDF shall
serve as the minimum point of entry ("MPOE") demarcation point for service
providers. The MDF shall also service as the origination point of the CDS. The
Tenant demarcation point on each floor of the Building will serve as the
terminating point of the CDS on that floor. Landlord reserves the right to
charge Tenant, and Tenant agrees to pay, reasonable fees as established by
Landlord from time to time for the right to use the CDS.
6.5.1 Tenant shall use the CDS and its components for (i)
providing all service to tenants in the Project, (ii) for making all
cross-connections with tenants in the Project (including without limitation the
meet me room located on the fourth (4th) floor of the Building). Tenant's use of
the CDS shall be in accordance with the requirements of this Lease and the
Telecommunications Conduit Agreement to be executed by Tenant in the form
attached hereto as EXHIBIT F.
6.5.2 Landlord's sole responsibility in the event of
interruption or other effects caused by malfunction, damage or destruction of
the CDS shall be to repair or replace the CDS as necessary to eliminate the
cause of malfunction or interruption, the cost of which shall be borne by Tenant
if the problem was caused directly or indirectly by Tenant, its employees,
agents or licensees. Notwithstanding the foregoing, Landlord's obligation to
repair or replace the CDS shall apply only to the extent necessary to reach
premises in the Building that are then used by tenants after the malfunction,
damage or destruction or that, if damaged or destroyed, will be again used by
tenants of the Building upon completion of restoration or repair thereof. In no
event shall Tenant have any right to make any claim against Landlord whatsoever
for any damages, whether direct, indirect or consequential, in any such
circumstance, Tenant's remedy being limited to a claim for specific performance
of Landlord's obligation to repair or replace as specified above.
6.6 SPECIAL ABATEMENT OF RENT. Notwithstanding the provisions of
Section 6.3 above to the contrary, in the event that during the Lease Term
Tenant is prevented from effectively conducting its business, and does not
conduct its business in the Premises or any
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portion thereof as a direct result of (i) any failure by Landlord to provide any
of the essential utilities and services to the Premises required to be provided
by Landlord under Section 6.1 of this Lease, (ii) any failure by Landlord to
provide access to the Premises, (iii) Landlord's failure to promptly, timely and
diligently perform any repairs, maintenance or alterations required by this
Lease to be performed by Landlord, after the Lease Commencement Date, which
substantially interferes with Tenant's ability to conduct its business in the
Premises, or (iv) the material interference with or unreasonable disturbance of
Tenant's ability to conduct business operations in the Premises pursuant to the
provisions of Sections 1.1.3, 29.30. 29.32 and Article 27 herein, (any such set
of circumstances as set forth in items (i) through (iv), above, to be known as
an "ABATEMENT EVENT"), then Tenant shall give Landlord notice of such Abatement
Event. If such Abatement Event continues for three (3) consecutive business days
after Landlord's receipt of any such notice from Tenant ("ELIGIBILITY PERIOD"),
then the Rent for the Premises shall be abated or reduced, as the case may be,
during such time after the Eligibility Period that Tenant continues to be so
prevented from conducting its business in, and does not conduct its business in,
the Premises or a portion thereof, in the proportion that the rentable area of
the portion of the Premises that Tenant is prevented from using, and does not
use, bears to the total rentable area of the Premises; provided, however, in the
event that Tenant is prevented from using, and does not use, a portion of the
Premises for a period of time in excess of the Eligibility Period, and the
remaining portion of the Premises is not reasonably sufficient to allow Tenant
to effectively conduct its business therein, and if Tenant does not effectively
conduct its business from such remaining portion, then for such time after
expiration of the Eligibility. Period during which Tenant is so prevented from
effectively conducting its business therein, the Rent shall be abated for such
time as Tenant continues to be so prevented from conducting business operations
therein, and does not conduct business operations therein. If, however, Tenant
re-occupies any portion of the Premises during such period, the Rent allocable
to such re-occupied portion, based on the proportion that the rentable square
feet of such re-occupied portion of the Premises bears to the total rentable
square feet of the Premises, shall be payable by Tenant from the date Tenant
re-occupies such portion of the Premises. The mere presence of nonoperational
equipment shall not be deemed as Tenant conducting business in the portion of
the Premises so occupied by the nonoperational equipment. For purposes of this
Section 6.6, Tenant shall not be deemed to be occupying or using the Premises
merely by having Tenant's furniture or personal property remaining in the
Premises. Such right to abate Rent shall be Tenant's sole and exclusive remedy
at law or in equity for an Abatement Event.
ARTICLE 7
REPAIRS
7.1 LANDLORD'S REPAIRS. Landlord shall maintain and repair (i) the
structural portions of the Building (the, "Building Structure"), (ii) the
Building's mechanical, electrical, life safety, plumbing, sprinkler and HVAC
systems located outside the Premises (collectively, the "Building Systems"), and
(iii) the Common Areas. Notwithstanding anything in this Lease to the contrary,
Tenant shall be required to pay for the cost of repairs to the Building
Structure, the Building Systems and/or the Common Areas to the extent required
because of (i) Tenant's use of the Premises for other than normal and customary
telecommunications operations, and/or (ii) Tenant's Alterations (as defined in
Section 8.1 below). Tenant hereby waives any and all rights under and benefits
of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California
Civil Code or under any similar law, statute, or ordinance now or hereafter in
effect.
7.2 TENANT'S REPAIRS. Subject to Landlord's repair obligations set
forth in Section 7.1 above, Tenant shall, at Tenant's own expense, pursuant to
the terms of this Lease, including without limitation Article 8 hereof, keep the
Premises, including all improvements, fixtures, equipment (including without
limitation the Supplemental Equipment) and furnishings therein, and the floor or
floors of the Building on which the Premises are located, in good order, repair
and condition at all times during the Lease Term. In addition, Tenant shall, at
Tenant's own expense, but under the supervision and subject to the prior
approval of Landlord, and within any reasonable period of time specified by
Landlord, pursuant to the terms of this Lease, including without limitation
Article 8 hereof, promptly and adequately repair all damage to the Premises and
replace or repair all damaged, broken, or worn fixtures and appurtenances,
except for damage caused by ordinary wear and tear or beyond the reasonable
control of Tenant;
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provided however, that, at Landlord's option, or if Tenant fails to make such
repairs, Landlord may, but need not, make such repairs and replacements, and
Tenant shall pay Landlord the cost thereof, including a percentage of the cost
thereof (to be uniformly established for the Building and/or the Project)
sufficient to reimburse Landlord for all overhead, general conditions, fees and
other costs or expenses arising from Landlord's involvement with such repairs
and replacements forthwith upon being billed for same. Landlord may, but shall
not be required to, enter the Premises at all reasonable times to make such
repairs, alterations, improvements or additions to the Premises or to the
Project or to any equipment located in the Project as Landlord shall desire or
deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree, provided that Landlord
shall use commercially reasonable efforts to ensure that any such repairs,
alterations or improvements do not materially interfere with or unreasonably
disrupt Tenant's use and occupancy of the Premises.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical plumbing or HVAC facilities or systems pertaining to the Premises
(collectively, the "Alterations") without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than thirty (30) days prior to the commencement thereof, and
which consent shall not be unreasonably withheld by Landlord, provided it shall
be deemed reasonable for Landlord to withhold its consent to any Alteration
which adversely affects the structural portions or the systems or equipment of
the Building or is visible from the exterior of the Building. The construction
of the initial improvements to the Premises shall be governed by the terms of
the Tenant Work Letter and not the terms of this Article 8.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of
its consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its reasonable discretion may deem
desirable, including, but not limited to, the requirement that Tenant utilize
for such purposes only contractors, subcontractors, materials, mechanics and
materialmen selected by Tenant from a list provided and approved by Landlord,
the requirement that upon Landlord's request, Tenant shall, at Tenant's expense,
remove such Alterations upon the expiration or any early termination of the
Lease Term if Landlord gave Tenant written notice that such removal would be
required at the time Landlord consented to such Alteration. If such Alterations
will involve the use of or disturb hazardous materials or substances existing in
the Premises, Tenant shall comply with Landlord's rules and regulations
concerning such hazardous materials or substances. Tenant shall construct such
Alterations and perform such repairs in a good and workmanlike manner, in
conformance with any and all applicable federal, state, county or municipal
laws, rules and regulations and pursuant to a valid building permit, issued by
the City of Los Angeles, all in conformance with Landlord's construction rules
and regulations. In the event Tenant performs any Alterations in the Premises
which require or give rise to governmentally required changes to the "Base
Building," as that term is defined below, then Landlord shall, at Tenant's
expense, make such changes to the Base Building. The "BASE BUILDING" shall
include the structural portions of the Building, and the public restrooms and
the systems and equipment located in the internal core of the Building on the
floor or floors on which the Premises are located. In performing the work of any
such Alterations, Tenant shall have the work performed in such manner so as not
to obstruct access to the Project or any portion thereof, by any other tenant of
the Project, and so as not to obstruct the business of Landlord or other tenants
in the Project. Tenant shall not use (and upon notice from Landlord shall cease
using) contractors, services, workmen, labor, materials or equipment that, in
Landlord's reasonable judgment, would disturb labor harmony with the workforce
or trades engaged in performing other work, labor or services in or about the
Building or the Common Areas. In addition to Tenant's obligations under Article
9 of this Lease, upon completion of any Alterations, Tenant agrees to cause a
Notice of Completion to be recorded in the office of the Recorder of the County
of Los Angeles in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and Tenant shall deliver to the Project
management office a reproducible copy of the "as built" drawings of the
Alterations as well as all permits,
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approvals and other documents issued by any governmental agency in connection
with the Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. If payment is made directly to
contractors, Tenant shall comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors. Whether or not Tenant orders any work directly from Landlord,
Tenant shall reimburse Landlord for any and all reasonable costs and expenses
incurred by Landlord arising from Landlord's involvement with such work.
8.4 CONSTRUCTION INSURANCE. In addition to the requirements of
Article 10 of this Lease, in the event that Tenant makes any Alterations, prior
to the commencement of such Alterations, Tenant shall provide Landlord with
evidence that Tenant carries "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may reasonably require, it being understood and
agreed that all of such Alterations shall be insured by Tenant pursuant to
Article 10 of this Lease immediately upon completion thereof. In addition,
Landlord may, in its discretion, require Tenant to obtain a lien and completion
bond or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien-free completion of such Alterations and naming
Landlord as a co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures,
conduit, equipment (excepting Tenant's telecommunications equipment) and/or
appurtenances which may be installed or placed in or about the Premises, from
time to time, including any non-general office use improvements made at the time
of Tenant's initial occupancy of the Premises, shall be at the sole cost of
Tenant and shall be and become the property of Landlord, and shall be and remain
part of the Premises and shall not be removed by Tenant at the end of the term
of this Lease, unless Landlord agreed to its removal at the time Landlord
consented to such Alteration. Such fixtures, alterations, additions, repairs,
improvements and/or appurtenances shall include, without limitation, the Base
Premises Work (as defined in the Tenant Work Letter) and improvements, built-in
utilities such as heating, ventilating and air conditioning units, floor
coverings, drapes, paneling, molding, doors, kitchen and dishwashing fixtures
and equipment, plumbing systems, electrical systems, lighting systems, silencing
equipment, switching conduit and cabling, all fixtures and outlets for the
systems mentioned above and for all telephone, radio, telegraph and television
purposes, and any special flooring or ceiling installations. Notwithstanding the
foregoing, Landlord may, by written notice to Tenant at the time Tenant requests
Landlord's consent to any Alteration pursuant to Section 8.1 or Section 22,, or
given following any earlier termination of this Lease, require Tenant, at
Tenant's expense, to remove any Alterations, improvements, fixtures, conduit,
equipment, and/or appurtenances in the Premises and Project, and to repair any
damage to the Premises and Building caused by such removal and return the
affected portion of the Premises and Project to a building standard tenant
improved condition as determined by Landlord. If Tenant fails to complete such
removal and/or to repair any damage caused by the removal of any Alterations,
improvements, fixtures, conduit, equipment, and/or appurtenances in the Premises
and Project, and returns the affected portion of the Premises and Project to a
building standard tenant improved condition as determined by Landlord, Landlord
may do so and may charge the cost thereof to Tenant. Tenant hereby protects,
defends, indemnifies and holds Landlord harmless from any liability, cost,
obligation, expense or claim of lien in any manner relating to the installation,
placement, removal or financing of any such Alterations, improvements, fixtures,
conduit, equipment, and/or appurtenances in, on or about the Premises and
Project, which obligations of Tenant shall survive the expiration or earlier
termination of this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least twenty
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(20) days prior to the commencement of any such work on the Premises (or such
additional time as may be necessary under applicable laws) to afford Landlord
the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or encumbrance by bond or
otherwise within twenty (20) days after notice by Landlord, and if Tenant shall
fail to do so, Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the validity thereof.
The amount so paid shall be deemed Additional Rent under this Lease payable upon
demand, without limitation as to other remedies available to Landlord under this
Lease. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord's title to the Building or Premises to any liens or
encumbrances whether claimed by operation of law or express or implied contract.
Any claim to a lien or encumbrance upon the Building or Premises arising in
connection with any such work or respecting the Premises not performed by or at
the request of Landlord shall be null and void, or at Landlord's option shall
attach only against Tenant's interest in the Premises and shall in all respects
be subordinate to Landlord's title to the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever and agrees that Landlord, its partners, subpartners and their
respective officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, and are hereby
released from any responsibility for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant. Tenant shall indemnify, defend,
protect, and hold harmless the Landlord Parties from any and all loss, cost,
damage, expense and liability (including without limitation court costs and
reasonable attorneys' fees) incurred in connection with or arising from any
cause in, on or about the Premises, any acts, omissions or negligence of Tenant
or of any person claiming by, through or under Tenant, or of any of Tenant's
Customers, the contractors, agents, servants, employees, invitees, guests or
licensees of Tenant or any such person, in, on or about the Project or any
breach of the terms of this Lease, either prior to, during, or after the
expiration of the Lease Term, provided that the terms of the foregoing indemnity
shall not apply to the gross negligence or willful misconduct of Landlord.
Should Landlord be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant's occupancy of the Premises, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation, its reasonable professional fees such as appraisers',
accountants' and attorneys' fees. Further, Tenant's agreement to indemnify
Landlord pursuant to this Section 10.1 is not intended and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Tenant pursuant to the provisions of this Lease, to the extent such policies
cover the matters subject to Tenant's indemnification obligations; nor shall
they supersede any inconsistent agreement of the parties set forth in any other
provision of this Lease. The provisions of this Section 10.1 shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability arising in connection with any event occurring prior to such
expiration or termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following
coverages in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof)
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arising out of Tenant's operations (and the operations of any Customers (defined
in Section 14.6 below) of Tenant), and contractual liabilities (covering the
performance by Tenant of its indemnity agreements) including a Broad Form
endorsement covering the insuring provisions of this Lease and the performance
by Tenant of the indemnity agreements set forth in Section 10.1 of this Lease,
for limits of liability not less than:
Bodily Injury and $3,000,000 each occurrence
Property Damage Liability $3,000,000 annual aggregate
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate
0% Insured's participation
10.3.2 Physical Damage Insurance covering (i) all office
furniture, business and trade fixtures, office equipment, free-standing cabinet
work, movable partitions, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the
Supplemental Equipment, and (iii) "Tenant's Work," as that term is defined in
the Tenant Work Letter attached hereto as EXHIBIT B and incorporated herein by
this reference, and all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value (subject to reasonable
deductible amounts) new without deduction for depreciation of the covered items
and in amounts that meet any co-insurance clauses of the policies of insurance
and shall include coverage for damage or other loss caused by fire or other
peril including, but not limited to, vandalism and malicious mischief, theft,
water damage of any type, including sprinkler leakage, bursting or stoppage of
pipes, and explosion, and providing business interruption coverage for a period
of one year.
10.3.3 Worker's Compensation and Employer's Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.3.4 Tenant's Blanket Policy. Tenant shall have the right to
maintain the required liability insurance in the form of a blanket policy
covering other locations of Tenant in addition to the Premises; provided,
however, such insurance maintained under a blanket policy shall (i) provide
Tenant coverage on a per location basis, (ii) not diminish or otherwise
adversely affect the amount and coverage required to be provided by Tenant
pursuant to this Section 10.3, and (iii) specifically name the location of the
Premises as an insured location and naming Landlord as an additional insured
pursuant to the requirements of this Section 10.3. In the event Tenant elects to
meet its insurance obligations under this Section 10.3 with a blanket insurance
policy, Tenant shall immediately provide Landlord with a certificate of
insurance evidencing compliance with the requirements of this Section 10.3.4 and
the other requirements of this Section 10.3.
10.4 LANDLORD'S PROPERTY AND LIABILITY INSURANCE. Landlord shall
procure and maintain during the term of this Lease, physical damage insurance
(including without limitation a DIC rider if such DIC rider is available to
Landlord at commercially reasonable rates) covering the base Building and common
areas (excluding at Landlord's option, any items Tenant is required to insure
pursuant to Section 10.3) and general liability insurance. Such coverages shall
be in such amounts, from such companies, and on such other terms and conditions
as Landlord may from time to time reasonably determine; provided, however, the
amounts of insurance carried by Landlord in connection with the Building shall
at a minimum be comparable to the coverage and amounts of insurance that are
carried by reasonably prudent institutional owners of comparable buildings
located in the vicinity of the Building and Workers' Compensation coverage as
required by applicable law (except that Landlord shall have the right, but not
the obligation, to carry earthquake and/or flood insurance).
10.5 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, and any other
party the Landlord so specifies, as an additional insured, including Landlord's
managing agent, if any; (ii) specifically cover the liability assumed by Tenant
under this Lease, including, but not limited to, Tenant's obligations under
Section 10.1 of this Lease; (iii) be issued by an insurance company having a
rating of not less than A-X in
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Best's Insurance Guide or which is otherwise acceptable to Landlord and licensed
to do business in the State of California; (iv) be primary insurance as to all
claims thereunder and provide that any insurance carried by Landlord is excess
and is non-contributing with any insurance requirement of Tenant; (v) be in form
and content reasonably acceptable to Landlord; and (vi) provide that said
insurance shall not be canceled or coverage changed unless thirty (30) days'
prior written notice shall have been given to Landlord and any mortgagee of
Landlord. Tenant shall deliver said policy or policies or certificates thereof
to Landlord on or before the Lease Commencement Date and at least thirty (30)
days before the expiration dates thereof. In the event Tenant shall fail to
procure such insurance, or to deliver such policies or certificate, Landlord
may, at its option, after five (5) days written notice to Tenant, procure such
policies for the account of Tenant, and the cost thereof shall be paid to
Landlord within five (5) days after delivery to Tenant of bills therefor.
10.6 SUBROGATION. Landlord and Tenant intend that their respective
property loss risks shall be borne by reasonable insurance carriers to the
extent above provided, and Landlord and Tenant hereby agree to look solely to,
and seek recovery only from, their respective insurance carriers in the event of
a property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and
maintain during the entire Lease Term, at Tenant's sole cost and expense,
increased amounts of the insurance required to be carried by Tenant pursuant to
this Article 10 and such other reasonable types of insurance coverage and in
such reasonable amounts covering the Premises and Tenant's operations therein,
as may be reasonably requested by Landlord.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord, provided that access to the Premises and any common
restrooms serving the Premises shall not be materially impaired. Upon the
occurrence of any damage to the Premises, upon notice (the "LANDLORD REPAIR
NOTICE") to Tenant from Landlord, Tenant shall assign to Landlord (or to any
party designated by Landlord) all insurance proceeds payable to Tenant under
Tenant's insurance required under Section 10.3.2 (iii) of this Lease, and
Landlord shall repair any injury or damage to tenant improvements (but not any
Supplemental Equipment or any of Tenant's personal property which shall be
promptly and with due diligence repaired and restored by Tenant at Tenant's sole
cost and expenses, unless and to the extent Landlord elects in its sole
discretion to restore all or a part of the Supplemental Equipment) installed in
the Premises and shall return any such tenant improvements (and any Supplemental
Equipment Landlord elects to repair in its sole discretion) to their original
condition; provided that if the cost of such repair by Landlord exceeds the
amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant
to Landlord prior to Landlord's commencement of repair of the damage. In the
event that Landlord does not deliver the Landlord Repair Notice within sixty
(60) days following the date the casualty becomes known to Landlord, Tenant
shall, at its sole cost and expense, repair any injury or damage to the Tenant's
Work and the Base Premises Work
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installed in the Premises and shall return such Tenant's Work and Base Premises
Work to their original condition provided that if more than just the Premises
are damaged by any casualty event (which casualty is not caused by Tenant, its
agents or employees), Tenant shall be obligated to repair the Premises pursuant
to this sentence only if Landlord is requiring other tenants with damaged
premises in the Building to repair (or is conducting such repair itself) such
damaged Premises. Whether or not Landlord delivers a Landlord Repair Notice,
prior to the commencement of construction, Tenant shall submit to Landlord, for
Landlord's review and approval, all plans, specifications and working drawings
relating thereto, and Landlord shall select the contractors to perform such
improvement work. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Premises or Common Areas necessary
to Tenant's occupancy, Landlord shall allow Tenant a proportionate abatement of
Base Rent to the extent Landlord is reimbursed from the proceeds of rental
interruption insurance purchased by Landlord as part of Operating Expenses,
during the time and to the extent the Premises are unfit for occupancy for the
purposes permitted under this Lease, and not occupied by Tenant as a result
thereof; provided, further, however, that if the damage or destruction is due to
the negligence or willful misconduct of Tenant or any of its agents, employees,
contractors, invitees or guests, Tenant shall be responsible for any reasonable,
applicable insurance deductible (which shall be payable to Landlord upon demand)
and there shall be no rent abatement. In the event that Landlord shall not
deliver the Landlord Repair Notice, Tenant's right to rent abatement pursuant to
the preceding sentence shall terminate as of the date which is reasonably
determined by Landlord to be the date Tenant should have completed repairs to
the Premises assuming Tenant used reasonable due diligence in connection
therewith.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of damage, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises, but Landlord may so elect only if the Building
or Project shall be damaged by fire, earthquake or other casualty or cause,
whether or not the Premises are affected, and one or more of the following
conditions is present: (i) in Landlord's reasonable judgment, repairs cannot
reasonably be completed within one hundred eighty (180) days after the date of
discovery of the damage (when such repairs are made without the payment of
overtime or other premiums); (ii) the holder of any mortgage on the Building or
Project or ground lessor with respect to the Building or Project shall require
that the insurance proceeds or any portion thereof be used to retire the
mortgage debt, or shall terminate the ground lease, as the case may be; (iii)
the damage is not fully covered by Landlord's insurance policies; or (iv) the
damage occurs during the last twelve (12) months of the Lease Term; or (v) any
owner of any other portion of the Project, other than Landlord, does not intend
to repair the damage to such portion of the Project provided, however, if such
damage or destruction does not affect the Premises or access to the Premises,
then Landlord may only terminate this Lease pursuant to clauses (i), (iii),
(iv), and (v) hereinabove if Landlord also terminates leases of all other
tenants in the Building which contain similar termination rights in their
leases; provided further, however, that (A) if Landlord does not elect to
terminate this Lease pursuant to Landlord's termination right as provided above,
(B) the damage constitutes a "Tenant Damage Event" (as defined below), and (C)
repair of such damage cannot, in the reasonable judgment of an architect or
contractor selected by Landlord, be substantially completed within one hundred
eighty (180) days after the date of the damage, then Tenant may elect, not later
than ninety (90) days after nor earlier then thirty (30) days after the date
Tenant receives notice from the architect or contractor that the repairs cannot
be completed within such one hundred eighty (180) day period, to terminate this
Lease by written notice to Landlord effective as of the date specified in the
notice, which date shall not be less than thirty (30) days nor more than sixty
(60) days after the date such notice is given by Tenant. As used herein, a
"Tenant Damage Event" shall mean damage by fire or other casualty, to all or any
part of the Premises, the Building or of the Common Areas providing access to
the Premises, which damage is not the result of the negligence or willful
misconduct of Tenant or any of Tenant's employees, agents, contractors,
licensees or invitees, and which damage substantially interferes with Tenant's
use of or access to the Premises and would entitle Tenant to an abatement of
Base Rent pursuant to Section 11.1 above. Furthermore, if neither Landlord nor
Tenant has terminated this Lease, and the repairs of a Tenant Damage Event are
not actually completed within the later
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of the Estimated Repair Period or 180 days after the date of the damage, Tenant
shall have the right (but only on the initial occasion of Tenant sending the
Damage Termination Notice) to terminate this Lease within five (5) business days
of the end of such period and thereafter during the first five (5) business days
of each calendar month following the end of such period until such time as the
repairs are substantially complete, by notice to Landlord (the "DAMAGE
TERMINATION NOTICE"), effective as of a date set forth in the Damage Termination
Notice (the "DAMAGE TERMINATION DATE"), which Damage Termination Date shall not
be less than five (5) business days following the end of such period or each
such month, as the case may be, and not later than ninety (90) days after the
end of such period or each such month, as the case may be. Notwithstanding the
foregoing, if Tenant delivers a Damage Termination Notice to Landlord, then
Landlord shall have the right to suspend the occurrence of the Damage
Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord's receipt of the Damage
Termination Notice, a certificate of Landlord's contractor responsible for the
repair of the damage certifying that it is such contractor's good faith judgment
that the repairs shall be substantially completed within thirty (30) days after
the Damage Termination Date. If repairs shall be substantially completed prior
to the expiration of such thirty-day period, then the Damage Termination Notice
shall be of no force or effect, but if the repairs shall not be substantially
completed within such thirty-day period, then this Lease shall terminate upon
the expiration of such thirty-day period.
11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
If forty percent (40%) or more of the Premises, Building or Project
shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-
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public use or purpose, or if any adjacent property or street shall be so taken
or condemned, or reconfigured or vacated by such authority in such manner as to
require the use, reconstruction or remodeling of any part of the Premises,
Building or Project, or if Landlord shall grant a deed or other instrument in
lieu of such taking by eminent domain or condemnation, Landlord shall have the
option to terminate this Lease effective as of the date possession is required
to be surrendered to the authority. If more than twenty-five percent (25%) of
the rentable square feet of the Premises is taken, or if access to the Premises
is substantially impaired, in each case for a period in excess of one hundred
eighty (180) days, Tenant shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. Tenant shall not because of such taking assert any claim against
Landlord or the authority for any compensation because of such taking and
Landlord shall be entitled to the entire award or payment in connection
therewith, except that Tenant shall have the right to file any separate claim
available to Tenant for any taking of Tenant's personal property and fixtures
belonging to Tenant and removable by Tenant upon expiration of the Lease Term
pursuant to the terms of this Lease, and for moving expenses, so long as such
claims do not diminish the award available to Landlord, its ground lessor with
respect to the Building or Project or its mortgagee, and such claim is payable
separately to Tenant. All Base Rent shall be apportioned as of the date Tenant
is physically dispossessed of the Premises. If any part of the Premises shall be
taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Tenant hereby waives any and all rights it might otherwise have
pursuant to Section 1265.130 of The California Code of Civil Procedure.
Notwithstanding anything to the contrary contained in this Article 13, in the
event of a temporary taking of all or any portion of the Premises for a period
of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Except as otherwise provided herein, Tenant shall
not, without the prior written consent of Landlord, assign, mortgage, pledge,
hypothecate, encumber, or permit any lien to attach to, or otherwise transfer,
this Lease or any interest hereunder, permit any assignment, or other transfer
of this Lease or any interest hereunder by operation of law, sublet the Premises
or any part thereof, or enter into any license, "co-location" or concession
agreements or otherwise permit the occupancy or use of the Premises or any part
thereof by any persons other than Tenant and its employees and contractors (all
of the foregoing are hereinafter sometimes referred to collectively as
"TRANSFERS" and any person to whom any Transfer is made or sought to be made is
hereinafter sometimes referred to as a "TRANSFEREE"). If Tenant desires
Landlord's consent to any Transfer, Tenant shall notify Landlord in writing,
which notice (the "TRANSFER NOTICE") shall include (i) the proposed effective
date of the Transfer, which shall not be less than fifteen (15) days nor more
than one hundred eighty (180) days after the date of delivery of the Transfer
Notice, (ii) a description of the portion of the Premises to be transferred (the
"SUBJECT SPACE"), (iii) all of the terms of the proposed Transfer and the
consideration therefor, including calculation of the "Transfer Premium", as that
term is defined in Section 14.3 below, in connection with such Transfer, the
name and address of the proposed Transferee, and a copy of all existing executed
and/or proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, provided that Landlord shall
have the right to require Tenant to utilize Landlord's standard Transfer
documents in connection with the documentation of such Transfer, (iv) current
financial statements of the proposed Transferee certified by an officer, partner
or owner thereof, business credit and personal references and history of the
proposed Transferee and any other information reasonably required by Landlord
which will enable Landlord to determine the financial responsibility, character,
and reputation of the proposed Transferee, nature of such Transferee's business
and proposed use of the Subject Space, and (v) an executed estoppel certificate
from Tenant in the form attached hereto as EXHIBIT E. Any Transfer made without
Landlord's prior written consent shall, at Landlord's
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option, be null, void and of no effect, and shall, at Landlord's option,
constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer, Tenant shall pay Landlord's reasonable review
and processing fees, as well as any reasonable professional fees (including,
without limitation, attorneys', accountants', architects', engineers' and
consultants' fees) incurred by Landlord, within thirty (30) days after written
request by Landlord.
14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality of the Building
or the Project;
14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;
14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease;
14.2.6 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right);
14.2.7 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Project at the
time of the request for consent, or (ii) is negotiating or has negotiated with
Landlord to lease space in the Project;
14.2.8 The Transferee does not intend to occupy the entire
Premises and conduct its business therefrom for a substantial portion of the
term of the Transfer; or
14.2.9 The Transfer Premium, if any, to be paid by any
Transferee pursuant to such Transfer is to be paid by the Transferee in a manner
other than on a prorata monthly basis.
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any changes in the terms and conditions from those specified in the Transfer
Notice (i) such that Landlord would initially have been entitled to refuse its
consent to such Transfer under this Section 14.2, or (ii) which would cause the
proposed Transfer to be more favorable to the Transferee than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought without any monetary damages, and Tenant
hereby waives all other remedies, including, without limitation, any right at
law or equity to terminate this Lease, on its own behalf and, to the
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extent permitted under all applicable laws, on behalf of the proposed
Transferee. Tenant shall indemnify, defend and hold harmless Landlord from any
and all liability, losses, claims, damages, costs, expenses, causes of action
and proceedings involving any third party or parties (including without
limitation Tenant's proposed subtenant or assignee) who claim they were damaged
by Landlord's wrongful withholding or conditioning of Landlord's consent.
14.3 TRANSFER PREMIUM. Except with respect to Customer Subleases (as
defined in Section 14.6 below) if Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord, when received by Tenant, fifty percent (50%) of any "Transfer
Premium," as that term is defined in this Section 14.3, received by Tenant from
such Transferee. "TRANSFER PREMIUM" shall mean all rent, additional rent or
other consideration payable by such Transferee in connection with the Transfer
in excess of the Rent and Additional Rent payable by Tenant under this Lease
during the term of the Transfer on a per rentable square foot basis if less than
all of the Premises is transferred, after deducting the reasonable expenses
incurred by Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any free base rent reasonably
provided to the Transferee, and (iii) any brokerage commissions in connection
with the Transfer. "Transfer Premium" shall also include, but not be limited to,
key money, bonus money or other cash consideration paid by Transferee to Tenant
in connection with such Transfer, and any payment in excess of fair market value
for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer. In the calculations of the Rent (as it relates to
the Transfer Premium calculated under this Section 14.3), and the Transferee's
Rent under Section 14.2 of this Lease, the Rent paid during each annual period
for the Subject Space, and the Transferee's Rent, shall be computed after
adjusting such rent to the actual effective rent to be paid, taking into
consideration any and all leasehold concessions granted in connection therewith,
including, but not limited to, any rent credit and tenant improvement allowance.
For purposes of calculating any such effective rent all such concessions shall
be amortized on a straight-line basis over the relevant term.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything
to the contrary contained in this Article 14, and except with respect to
"Customer Subleases" and "Non-Transfers," as those terms are defined in Sections
14.6 and 14.7, below, Landlord shall have the option, by giving written notice
to Tenant within thirty (30) days after receipt of any Transfer Notice, to
recapture the Subject Space. Such recapture notice shall cancel and terminate
this Lease with respect to the Subject Space as of the date stated in the
Transfer Notice as the effective date of the proposed Transfer until the last
day of the term of the Transfer as set forth in the Transfer Notice (or at
Landlord's option, shall cause the Transfer to be made to Landlord or its agent,
in which case the parties shall execute the Transfer documentation promptly
thereafter). In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than the entire Premises, the Rent reserved herein
shall be prorated on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the
Premises, and this Lease as so amended shall continue thereafter in full force
and effect, and upon request of either party, the parties shall execute written
confirmation of the same. If Landlord declines, or fails to elect in a timely
manner to recapture the Subject Space under this Section 14.4, then, provided
Landlord has consented to the proposed Transfer, Tenant shall be entitled to
proceed to transfer the Subject Space to the proposed Transferee, subject to
provisions of this Article 14.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
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records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than five percent (5%), Tenant shall pay
Landlord's costs of such audit.
14.6 CUSTOMER SUBLEASES. Landlord acknowledges that Tenant's business
to be conducted on the Premises requires the installation on the Premises of
certain communications equipment by telecommunications customers of Tenant
("Customers") in order for such Customers to interconnect with Tenant's terminal
facilities or to permit Tenant to manage or operate their equipment. Tenant
represents to Landlord that such arrangements will require access by each
Customer to the Premises only on an infrequent basis, and only when accompanied
by a representative of Tenant. Notwithstanding anything contained elsewhere in
this Article 14, Landlord hereby consents in advance to any sublease, license
agreement, "Co-Location Agreement" or like agreement (collectively, "CUSTOMER
SUBLEASES") between Tenant and such a Customer for the limited purpose of
permitting such an arrangement as is described in this Section 14.6, provided,
however that such Customer Sublease shall be in the form of EXHIBIT G, attached
hereto and incorporated by this reference. The effectiveness of such advance
consent as to a particular Customer Sublease is conditioned on (a) Tenant
providing Landlord with a copy of the co-location agreement between Tenant and
its Customer within twenty (20) days after any such transaction; (b) such
Customer Sublease being in writing and consistent with the provisions of this
Lease); and (c) Tenant providing Landlord with same-day advance facsimile notice
of all Customers authorized to enter the Premises and Project during Business
Hours, and same-day advance verbal authorization to and approval by the Project
manager for any authorized entry of the Premises and Project during hours other
than the Business Hours. Tenant shall be liable to Landlord for any violation by
its Customers of any provisions of this Lease. Tenant represents that as of the
date of execution of this Lease by Tenant, Tenant is not required to permit
co-location in the Premises pursuant to any applicable statutes, rules or
regulations.
14.7 NON-TRANSFERS. Notwithstanding anything to the contrary
contained in this Article 14, the term "Transfer" shall not include, and the
Transfer Premium shall not apply in the event of (i) a transfer of the Lease to
an entity which is the parent of Tenant, subsidiary of Tenant, affiliate of
Tenant, or shall directly or indirectly control, be controlled by, or be under
common control with, Tenant; (ii) a transaction in which Tenant becomes an
entity whose shares of stock or other ownership interests are, directly or
indirectly, sold on a national stock exchange or an inter-dealer quotation
system; (iii) in the event the transaction described in clause (ii) above shall
have occurred, any subsequent sale of ownership interest or issuance of new
ownership interests, directly or indirectly, in Tenant; and (iv) a transaction
in which any entity succeeds to all or substantially all of the assets of Tenant
whether by merger, consolidation, sale or otherwise provided such successor
entity assumes in full the obligations of Tenant under this Lease; provided,
however, that (A) Tenant shall remain liable for the performance of all
covenants, duties and obligations under the Lease, irrespective of any such
assignment, (B) the use of the Leased Premises by the assignee may not violate
any other agreements affecting the Leased Premises, the Building, Landlord or
other tenants, and (C) the use of the Leased Premises by the assignee shall
conform with the uses permitted by this Lease. Tenant shall notify Landlord, in
writing, of any such assignment or sublease within ninety (90) days of its
occurrence and shall provide Landlord with all such reasonable information as
Landlord may request regarding the identity and status of such assignee.
14.8 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be
subordinate and subject to the provisions of this Lease, and if this Lease shall
be terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as canceled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee may rely on any representation by Landlord that Tenant is in default
hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be
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performed or observed under this Lease. No collection or acceptance of rent by
Landlord from any Transferee shall be deemed a waiver of any provision of this
Article 14 or the approval of any Transferee or a release of Tenant from any
obligation under this Lease, whether theretofore or thereafter accruing. In no
event shall Landlord's enforcement of any provision of this Lease against any
Transferee be deemed a waiver of Landlord's right to enforce any term of this
Lease against Tenant or any other person. If Tenant's obligations hereunder have
been guaranteed, Landlord's consent to any Transfer shall not be effective
unless the guarantor also consents to such Transfer.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in writing by Landlord. The delivery of keys
to the Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord, and notwithstanding
such delivery Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this Lease shall have been properly
terminated. The voluntary or other surrender of this Lease by Tenant, whether
accepted by Landlord or not, or a mutual termination hereof, shall not work a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of all subleases or subtenancies affecting the Premises or terminate any or all
such sublessees or subtenancies.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear, casualty and condemnation which are Landlord's responsibility herein,
excepted. Upon such expiration or termination, Tenant shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, and such items of furniture, equipment, business and trade fixtures,
free-standing cabinet work, movable partitions and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises, and such similar articles of any other persons claiming under Tenant,
as Landlord may, in its sole discretion, require to be removed, and Tenant shall
repair at its own expense all damage to the Premises and Building resulting from
such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to one hundred fifty percent (150%) (the
"Percentage Rate") of the Base Rent applicable during the last rental period of
the applicable Lease or Option Term for the first ninety(90) days of any such
holdover; provided that the Percentage Rate shall be increased to two hundred
percent (200%) for any holdover in excess of ninety (90) days. Such
month-to-month tenancy shall be subject to every other applicable term, covenant
and agreement contained herein. Nothing contained in this Article 16 shall be
construed as consent by Landlord to any holding over by Tenant, and Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises to Landlord as provided in this Lease upon the expiration or other
termination of this Lease. The provisions of this Article 16 shall not be deemed
to limit or constitute a waiver of any other rights or remedies of Landlord
provided herein or at law. If Tenant fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any other liabilities to
Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold
Landlord harmless from all loss, costs (including reasonable attorneys' fees)
and liability resulting from such failure, including,
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without limiting the generality of the foregoing, any claims made by any
succeeding tenant founded upon such failure to surrender and any lost profits to
Landlord resulting therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business days following a request in writing by
Landlord, Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of EXHIBIT E, attached hereto (or such other form as may be reasonably required
by any prospective mortgagee or purchaser of the Project, or any portion
thereof), indicating therein any exceptions thereto that may exist at that time,
and shall also contain any other information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. At any time during the Lease Term,
Landlord may require Tenant to provide Landlord with a current financial
statement and financial statements of the two (2) years prior to the current
year provided that Landlord shall not request Tenant's financial statements more
than two (2) times in any calendar year. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant. Failure of Tenant to timely execute, acknowledge and deliver such
estoppel certificate or other instruments shall constitute an acceptance of the
Premises and an acknowledgment by Tenant that statements included in the
estoppel certificate are true and correct, without exception.
ARTICLE 18
SUBORDINATION
18.1 Subordination. This Lease is subject and subordinate to all
present and future ground or underlying leases of the Building or Project and to
the lien of any mortgage, trust deed or other encumbrances now or hereafter in
force against the Building or Project or any part thereof, if any, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds, unless the holders of such mortgages, trust deeds or
other encumbrances, or the lessors under such ground lease or underlying leases,
require in writing that this Lease be superior thereto. Notwithstanding the
foregoing to the contrary, Landlord agrees to provide Tenant with commercially
reasonable non-disturbance agreement(s) in favor of Tenant from any ground
lessors, mortgage holders or deed of trust beneficiaries under any ground lease,
mortgage or deed of trust affecting the Project which comes into existence at
any time after the date of execution of this Lease but prior to the expiration
of the Lease Term ("Future Mortgage") in consideration of, and as a condition
precedent to, Tenant's agreement to be bound by the terms of this Article 18
with respect to such Future Mortgage. Tenant covenants and agrees in the event
any proceedings are brought for the foreclosure of any such mortgage or deed in
lieu thereof (or if any ground lease is terminated), to attorn, without any
deductions or set-offs whatsoever, to the lienholder or purchaser or any
successors thereto upon any such foreclosure sale or deed in lieu thereof (or to
the ground lessor), if so requested to do so by such purchaser or lienholder or
ground lessor, and to recognize such purchaser or lienholder or ground lessor as
the lessor under this Lease, provided such lienholder or purchaser or ground
lessor shall agree to accept this Lease and not disturb Tenant's occupancy, so
long as Tenant timely pays the rent and observes and performs the terms,
covenants and conditions of this Lease to be observed and performed by Tenant.
Landlord's interest herein may be assigned as security at any time to any
lienholder. Tenant shall, within ten (10) business days of request by Landlord,
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying leases, provided
Tenant has received or will receive a commercially reasonable nondisturbance
agreement in favor of Tenant from any such party requesting such further
instruments or assurances. Tenant hereby irrevocably authorizes Landlord to
execute and deliver in the name of Tenant any such instrument or instruments if
Tenant fails to do so, provided that such authorization shall in no way relieve
Tenant from the obligation of executing such
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instruments of subordination or superiority. Tenant waives the provisions of any
current or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any foreclosure proceeding
or sale.
18.2 Non-Disturbance Agreement From Existing Lender. In the event
that as of the date of execution of this Lease, there exists any deed of trust
or ground lease encumbering the Project which is not terminated, released or
reconveyed within sixty (60) days thereafter, then Landlord shall obtain and
deliver to Tenant, on or before the date which is one hundred twenty (120) days
following the date of execution of this Lease, a commercially reasonable
non-disturbance agreement from the beneficiary under such deed of trust. Tenant
shall execute and return such non-disturbance agreement to Landlord within
thirty (30) days after Tenant's receipt thereof.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other
charge required to be paid under this Lease, or any part thereof, when due
unless such failure is cured within three (3) business days after receipt of
written notice by Tenant; provided, however, that any such notice shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure section 1161 or any similar successor law, or
19.1.2 Except where a specific time period is otherwise set
forth for Tenant's performance in this Lease, in which event the failure to
perform by Tenant within such time period shall be a default by Tenant under
this Section 19.1.2, any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided that if the nature of such default is
such that the same cannot reasonably be cured within a thirty (30) day period,
Tenant shall not be deemed to be in default if it diligently commences such cure
within such period and thereafter diligently proceeds to rectify and cure such
default; or
19.1.3 To the extent permitted by law, a general assignment by
Tenant for the benefit of creditors, or the taking of any corporate action in
furtherance of bankruptcy or dissolution whether or not there exists any
proceeding under an insolvency or bankruptcy law, or the filing by or against
Tenant of any proceeding under an insolvency or bankruptcy law, unless in the
case of a proceeding filed against Tenant the same is dismissed within ninety
(90) days, or the appointment of a trustee or receiver to take possession of all
or substantially all of the assets of Tenant, unless possession is restored to
Tenant within ninety (90) days, or any execution or other judicially authorized
seizure of all or substantially all of Tenant's assets located upon the Premises
or of Tenant's interest in this Lease, unless such seizure is discharged within
ninety (90) days; or
19.1.4 Abandonment or vacation of all or a substantial portion
of the Premises by Tenant; or
19.1.5 The failure by Tenant to observe or perform according to
the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than five (5) business days after notice from Landlord.
The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of
default by Tenant, Landlord shall have, in addition to any other remedies
available to Landlord at law or in equity (all of which remedies shall be
distinct, separate and cumulative), the option to pursue any one or
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more of the following remedies, each and all of which shall be cumulative and
nonexclusive, without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of any unpaid rent which
has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Lease Term after the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iv) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom, specifically including
but not limited to, brokerage commissions and advertising expenses
incurred, expenses of remodeling the Premises or any portion thereof for
a new tenant, whether for the same or a different use, and any special
concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to
time by applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Paragraph 19.2.1(iii) above, the "worth at the time of award" shall be
computed by discounting such amount at the Interest Rate.
19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has the
right to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies
(which shall be cumulative with each other and cumulative and in addition to
those rights and remedies available under Sections 19.2.1 and 19.2.2, above, or
any law or other provision of this Lease), without prior demand or notice except
as required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.
19.3 SUBLEASES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, enter
into new subleases, licenses, concessions or arrangements with Tenant's
Customers or subtenants.
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19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of two
(2) or more events of default in any twelve (12) month period by Tenant,
Landlord shall have the right to require that any or all subsequent amounts paid
by Tenant to Landlord hereunder, whether to cure the default in question or
otherwise, be paid in the form of cash, money order, cashier's or certified
check drawn on an institution acceptable to Landlord, or by other means approved
by Landlord, notwithstanding any prior practice of accepting payments in any
different form.
19.5 EFFORTS TO RELET. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord's interests hereunder, or any other action or
omission by Landlord shall be construed as an election by Landlord to terminate
this Lease or Tenant's right to possession, or to accept a surrender of the
Premises, nor shall same operate to release Tenant in whole or in part from any
of Tenant's obligations hereunder, unless express written notice of such
intention is sent by Landlord to Tenant. Tenant hereby irrevocably waives any
right otherwise available under any law to redeem or reinstate this Lease.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
Concurrent with Tenant's execution of this Lease, Tenant shall deposit
with Landlord a security deposit (the "SECURITY DEPOSIT") in the amount set
forth in Section 8 of the Summary, as security for the faithful performance by
Tenant of all of its obligations under this Lease. If Tenant defaults with
respect to any provisions of this Lease, including, but not limited to, the
provisions relating to the payment of Rent, the removal of property and the
repair of resultant damage, Landlord may, without notice to Tenant, but shall
not be required to apply all or any part of the Security Deposit for the payment
of any Rent or any other sum in default and Tenant shall, upon demand therefor,
restore the Security Deposit to its original amount. Any unapplied portion of
the Security Deposit shall be returned to Tenant, or, at Landlord's option, to
the last assignee of Tenant's interest hereunder, within forty-five (45) days
following the expiration of the Lease Term. Tenant shall not be entitled to any
interest on the Security Deposit. Tenant hereby waives the provisions of Section
1950.7 of the California Civil Code, or any successor statute.
ARTICLE 22
SUPPLEMENTAL EQUIPMENT
22.1 SUPPLEMENTAL EQUIPMENT. Landlord hereby grants to Tenant and
Tenant hereby accepts from Landlord, on the terms and conditions set forth
herein, a license (the "LICENSE") granting Tenant the right (but with respect to
Tenant's HVAC Equipment and Electrical Equipment in the Premises, Tenant shall
have the obligation), to install, at Tenant's sole cost and expense and subject
to the provisions of this Article 22, the following:
22.1.1 A heating, ventilating and air conditioning system and
related connections to the Premises providing up to 80 tons of cooling capacity
in a designated area of the roof of the Building not to exceed two hundred fifty
(250) square feet (the "TENANT'S HVAC EQUIPMENT");
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22.1.2 A dry-pipe or FM 200 fire suppression system (the
"FIRE-SUPPRESSION SYSTEM") in the Premises in a location designated in writing
by Landlord. In connection with Tenant's installation of the Fire Suppression
System, Tenant shall have the right to disconnect and cap, if necessary, in
compliance with applicable law, and in accordance with the terms of Section 22.3
below, any existing fire-suppression system in the Premises.;
22.1.3 The Electrical Equipment described in Section 6.1.2
above;
22.1.4 Subject to available capacity of the Building, such
connection equipment, such as conduits, cables, risers, feeders and materials
(collectively, the "CONNECTING EQUIPMENT") in the shafts, ducts, conduits,
chases, utility closets and other facilities of the Building as is reasonably
necessary to connect the Electrical Equipment and the Fire-Suppression System to
Tenant's other machinery and equipment in the Premises, subject however, to the
provisions of Section 22.3 below and subject to the availability of vertical
riser and feeder excess capacity provided that the connecting equipment for
Tenant's HVAC Equipment shall be located in the portion of the outside atrium of
the Building designated by Landlord in its sole discretion; and
22.1.5 Three (3) four inch (4.0") aluminum conduits running
from the Premises to the roof of the Building, in the main telecommunications
riser of the Building in locations designated or approved in writing by
Landlord, and three (3) four inch (4") aluminum conduits running from the
Premises to the basement of the Building (in the main telecommunication riser of
the Building in locations designated in writing by Landlord) and, in the
basement from the main telecommunication riser to the MPOE (as defined in
Section 6.5 above) or out of the west and north ends of the Building to connect
with the fiberoptic network of Tenant's chosen fiber optic service provider
(collectively "TENANT'S CONDUIT");
22.1.6 Subject to the requirements of Section 6.5, new
telecommunications lines and related equipment (collectively the "LINES") in the
CDS described in Section 6.5 above. Tenant shall install its Lines in the
Building and Project in a "backbone" configuration with horizontal Lines on
applicable floors of the Building being connected to a single Line in a vertical
riser. Once the backbone configuration is constructed, any and all new Lines
installed by Tenant pursuant to the terms of this Section 22 shall be attached
to such backbone configuration.
Tenant's HVAC Equipment, the Fire Suppression System, the Electrical
Equipment, the Connecting Equipment, Tenant's Conduit and the Lines are
sometimes collectively referred to as the "SUPPLEMENTAL EQUIPMENT."
22.2 LICENSE AREAS. The areas within the Building and Project which
are outside the Premises and are occupied by the Supplemental Equipment
(including without limitation, Tenant's non-exclusive use, in common with one or
more other tenants of the Project and Landlord, the vertical shafts and
horizontal raceways of the Building to the extent Tenant's use of such areas are
approved in writing by Landlord) are referred to herein collectively as the
"LICENSE AREAS". The precise amount and location of the License Areas shall be
designated by Landlord. It is expressly understood that Landlord retains the
right to use the License Areas for any purpose whatsoever provided that Tenant
shall have reasonable access to, and Landlord shall not unduly interfere with
the use of, the Supplemental Equipment therein.
22.3 INSTALLATION. The installation of the Supplemental Equipment
shall constitute Alterations and shall be performed in accordance with and
subject to the provisions of Article 8 of this Lease, and the Supplemental
Equipment shall be treated for all purposes of this Lease as if the same were
Tenant's property.
22.4 TENANT'S OBLIGATIONS. For the purposes of determining Tenant's
obligations with respect to the License Areas, the License Areas shall be deemed
to be a portion of the Premises; consequently, unless otherwise provided in this
Article 22, all of the provisions of this Lease with respect to Tenant's
obligations hereunder shall apply to the installation, use and maintenance of
the License Areas and the Supplemental Equipment, including without
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limitation, provisions relating to compliance with requirements as to insurance,
indemnity, janitorial services, repairs, maintenance and compliance with law,
except that unless otherwise provided herein Tenant shall have no obligation to
pay Base Rent or Direct Expenses for the License Areas, and the square footage
of the License Areas shall not be included in the calculation of Tenant's Share.
Landlord shall have no obligation with regard to the License Areas except as
provided in this Article 22.
22.5 INDEMNITY. Tenant shall install, use, maintain and repair the
Supplemental Equipment, and use the License Areas, so as not to damage or
interfere with the operation of the Building, the Building systems or with the
occupancy or activities of any other tenant of the Building; and Tenant hereby
agrees to indemnify and hold harmless the Landlord Parties from and against any
and all claims (including but not limited to claims for bodily injury or
property damage), actions, mechanic's liens, losses, liabilities, and expenses
(including reasonable attorney fees and costs of defense by Landlord's legal
counsel) (collectively, "CLAIMS"), which may arise from the installation,
operation, use, maintenance or removal of the Supplemental Equipment and use of
the License Areas. Similarly, Tenant shall pay upon demand by Landlord the costs
to repair any physical damage to the Building and the License Areas caused by
such installation, operation, use, maintenance or removal. Tenant hereby waives
and releases the Landlord Parties from any Claims Tenant may have at any time
(including but not limited to Claims relating to interruptions in services)
arising out of or relating in any way to the installation, operation, use,
maintenance, and/or removal of the Supplemental Equipment and/or use of the
License Areas. Such waiver and release shall not apply to Claims to the extent
caused by Landlord's gross negligence or willful misconduct and not insured or
required to be insured by Tenant under this Lease. However, in no event shall
Landlord or any member of the Landlord Parties be liable to Tenant for lost
profits or consequential or incidental damages of any kind.
22.6 TENANT WAIVER. Landlord shall not have any obligations with
respect to the Supplemental Equipment or License Areas or compliance with any
requirements relating thereto, nor shall Landlord be responsible for any damage
that may be caused to the Supplemental Equipment or License Areas except to the
extent caused by the gross negligence or willful misconduct of Landlord and not
insured or required to be insured by Tenant under this Lease. Landlord makes no
representation that the Supplemental Equipment or License Areas will be able to
operate without interference or disturbance and Tenant agrees that Landlord
shall not be liable to Tenant therefor.
22.7 PROTECTIVE INSTALLATIONS. Tenant, at Tenant's sole cost and
expense, shall install such fencing and other protective equipment on or about
the Supplemental Equipment and License Areas as Landlord may reasonably
determine.
22.8 DAMAGE TO SUPPLEMENTAL EQUIPMENT/TAXES ON SUPPLEMENTAL
EQUIPMENT. Notwithstanding anything in Article 11 to the contrary, Tenant shall
(i) be solely responsible for any damage caused as a result of and/or to the
Supplemental Equipment, (ii) promptly pay any tax, license or permit fees
charged pursuant to any requirements in connection with the installation,
maintenance or use of the Supplemental Equipment and comply with all precautions
and safeguards recommended by all governmental authorities, and (iii) make
necessary repairs, replacements or to maintenance of the Supplemental Equipment
and License Areas (unless and to the extent Landlord has elected in Section 11.1
to repair the Supplemental Equipment) or License Areas.
22.9 LANDLORD'S RIGHTS. This license shall be coupled with Tenant's
leasehold interest hereunder, and may be terminated if and only if (i) any of
the conditions set forth in this Article 22 are not complied with by Tenant,
(ii) Tenant's use of the Supplemental Equipment is interfering with the activity
or occupancy of any other tenant in the Building, or (iii) Tenant is in default
of its obligations under this Lease beyond any applicable notice and cure
period. In the event of the occurrence of any of items (i)-(iii) of this Section
22.9 above, then without limiting Landlord's rights and remedies it may
otherwise have under this Lease, Tenant shall, upon written notice from
Landlord, have the option either to (i) immediately discontinue its use of the
Supplemental Equipment and License Areas, remove the same, and make such repairs
and
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restoration as required under Section 22.10 below, (ii) reposition any
Supplemental Equipment to a location designated by Landlord if Landlord elects
to permit such repositioning, and make such repairs and restorations as required
under Section 22.10 below, or (iii) correct such noncompliance within thirty
(30) days after receipt of notice. If Tenant fails to correct noncompliance
within thirty (30) days after receipt of notice, then, subject to Section 22.10
below, Tenant shall immediately discontinue its use of the applicable
Supplemental Equipment and remove the same and discontinue use of the related
License Areas. Tenant acknowledges and agrees that any exercise by Landlord of
its rights under this Section 22.9 shall not relieve Tenant of any of its
obligations under the Lease.
22.10 REMOVAL OF SUPPLEMENTAL EQUIPMENT. Notwithstanding anything in
this Lease to the contrary (including without limitation Article 15), upon the
expiration of the Lease Term or upon any earlier termination of this Lease,
Landlord shall have the option of requiring that Tenant, subject to the control
of and direction from Landlord, remove all or any portion of the Supplemental
Equipment, repair any damage caused thereby, and restore the License Areas and
other facilities of the Building and Project to their condition existing prior
to the installation of the Supplemental Equipment.
ARTICLE 23
SIGNS
23.1 FULL FLOORS. Subject to Landlord's prior written approval, in
its sole discretion, and provided all signs are in keeping with the quality,
design and style of the Building and Project, Tenant, if the Premises comprise
an entire floor of the Building, at its sole cost and expense, may install
identification signage anywhere in the Premises including in the elevator lobby
of the Premises, provided that such signs must not be visible from the exterior
of the Building.
23.2 MULTI-TENANT FLOORS. If other tenants occupy space on the floor
on which the Premises is located, Tenant's identifying signage shall be provided
by Landlord, at Tenant's cost, and such signage shall be comparable to that used
by Landlord for other similar floors in the Building and shall comply with
Landlord's Building standard signage program.
23.3 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Tenant may not install any signs on the exterior or roof
of the Project or the Common Areas. Any signs, window coverings, or blinds (even
if the same are located behind the Landlord-approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building,
shall be subject to the prior approval of Landlord, in its sole discretion.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises or the Project which will in any way conflict with any law,
statute, ordinance or other governmental rule, regulation or requirement now in
force or which may hereafter be enacted or promulgated. At its sole cost and
expense, Tenant shall promptly comply with all such governmental measures.
Should any standard or regulation now or hereafter be imposed on the Project (or
on Landlord as owner of the Project) to the extent such responsibility is not
expressly made the responsibility of Landlord hereunder, or Tenant by a state,
federal or local governmental body charged with the establishment, regulation
and enforcement of occupational, health or safety standards for employers,
employees, landlords or tenants, then Tenant agrees, at its sole cost and
expense, to comply promptly with such standards or regulations. Tenant shall be
responsible, at its sole cost and expense, to make all alterations to the
Premises as are required to comply with the governmental rules, regulations,
requirements or standards described in this Article 24. The judgment of any
court of competent jurisdiction or the admission of Tenant in any judicial
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action, regardless of whether Landlord is a party thereto, that Tenant has
violated any of said governmental measures, shall be conclusive of that fact as
between Landlord and Tenant.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount plus any reasonable attorneys' fees incurred
by Landlord by reason of Tenant's failure to pay Rent and/or other charges when
due hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after the date they are due shall bear interest from the
date when due until paid at a rate per annum equal to the lesser of (i) the
Interest Rate, and (ii) the highest rate permitted by applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided
to the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor: (i) sums equal to expenditures
reasonably made and obligations incurred by Landlord in connection with the
remedying by Landlord of Tenant's defaults pursuant to the provisions of Section
26.1; (ii) sums equal to all losses, costs, liabilities, damages and expenses
referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all reasonable legal fees and other amounts so expended. Tenant's
obligations under this Section 26.2 shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises
accompanied by a representative of Tenant made reasonably available by Tenant,
to (i) inspect them; (ii) show the Premises to prospective purchasers,
mortgagees or tenants, or to current or prospective mortgagees, ground or
underlying lessors or insurers; (iii) post notices of nonresponsibility; or (iv)
alter, improve or repair the Premises or the Building, or for structural
alterations, repairs or improvements to the Building or the Building's systems
and equipment; provided that Landlord shall use commercially reasonable efforts
to ensure that such entry does not materially interfere with or disturb Tenant's
use and occupancy of the Premises. Notwithstanding anything to the contrary
contained in this Article 27, Landlord may enter the Premises at any time to (A)
perform services required of Landlord; (B) take possession due to any breach of
this Lease in the manner provided herein; and (C) perform any covenants of
Tenant which Tenant fails to perform. Landlord may make any such entries without
the abatement of Rent and may take such reasonable steps as required to
accomplish the stated purposes. Tenant hereby waives any claims for damages or
for
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any injuries or inconvenience to or interference with Tenant's business, lost
profits, any loss of occupancy or quiet enjoyment of the Premises, and any other
loss occasioned thereby. For each of the above purposes, Landlord shall at all
times have a key with which to unlock all the doors in the Premises, excluding
Tenant's vaults, safes and special security areas designated in advance by
Tenant. In an emergency, Landlord shall have the right to use any means that
Landlord may deem proper to open the doors in and to the Premises. Any entry
into the Premises by Landlord in the manner hereinbefore described shall not be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an actual or constructive eviction of Tenant from any portion of the
Premises. No provision of this Lease shall be construed as obligating Landlord
to perform any repairs, alterations or decorations except as otherwise expressly
agreed to be performed by Landlord herein.
ARTICLE 28
[INTENTIONALLY DELETED]
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 TERMS; CAPTIONS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. The necessary
grammatical changes required to make the provisions hereof apply either to
corporations or partnerships or individuals, men or women, as the case may
require, shall in all cases be assumed as though in each case fully expressed.
The captions of Articles and Sections are for convenience only and shall not be
deemed to limit, construe, affect or alter the meaning of such Articles and
Sections.
29.2 BINDING EFFECT. Subject to all other provisions of this Lease,
each of the covenants, conditions and provisions of this Lease shall extend to
and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
29.3 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.4 MODIFICATION OF LEASE. Should any current or prospective
mortgagee or ground lessor for the Building or Project require a modification of
this Lease, which modification will not cause an increased cost or expense to
Tenant or in any other way materially and adversely change the rights and
obligations of Tenant hereunder, then and in such event, Tenant agrees that this
Lease may be so modified and agrees to execute whatever documents are reasonably
required therefor and to deliver the same to Landlord within ten (10) business
days following a request therefor. At the request of Landlord or any mortgagee
or ground lessor, Tenant agrees to execute a short form of Lease and deliver the
same to Landlord within ten (10) business days following the request therefor.
29.5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that
Landlord has the right to transfer all or any portion of its interest in the
Project or Building and in this Lease, and Tenant agrees that in the event of
any such transfer, Landlord shall automatically be released from all liability
under this Lease for acts or omissions arising on or subsequent to such transfer
and Tenant agrees to look solely to such transferee for the performance of
Landlord's obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security Deposit,
and Tenant shall attorn to such transferee. Tenant further acknowledges that
Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.
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29.6 PROHIBITION AGAINST RECORDING. Except as provided in Section
29.4 of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant.
29.7 LANDLORD'S TITLE. Landlord's title is and always shall be
paramount to the title of Tenant. Nothing herein contained shall empower Tenant
to do any act which can, shall or may encumber the title of Landlord.
29.8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall
be deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
29.9 APPLICATION OF PAYMENTS. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.
29.10 TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
29.11 PARTIAL INVALIDITY. If any term, provision or condition
contained in this Lease shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term, provision or condition
to persons or circumstances other than those with respect to which it is invalid
or unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.12 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
29.13 LANDLORD EXCULPATION. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the lesser of (a) the interest of Landlord in the Building or (b) the equity
interest Landlord would have in the Building if the Building were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Building (as such value is determined by Landlord), provided that in no event
shall such liability extend to any sales or insurance proceeds received by
Landlord or the Landlord Parties in connection with the Project, Building or
Premises. Neither Landlord, nor any of the Landlord Parties shall have any
personal liability therefor, and Tenant hereby expressly waives and releases
such personal liability on behalf of itself and all persons claiming by, through
or under Tenant. The limitations of liability contained in this Section 29.13
shall inure to the benefit of Landlord's and the Landlord Parties' present and
future partners, beneficiaries, officers, directors, trustees, shareholders,
agents and employees, and their respective partners, heirs, successors and
assigns. Under no circumstances shall any present or future partner of Landlord
(if Landlord is a partnership), or trustee or beneficiary (if Landlord or any
partner of Landlord is a trust), have any liability for the performance of
Landlord's obligations under this Lease. Notwithstanding any contrary provision
herein, neither Landlord nor the Landlord Parties shall be liable under any
circumstances for injury or damage to, or interference with, Tenant's business,
including but not limited to, loss of profits, loss of rents or other revenues,
loss of business opportunity, loss of goodwill or loss of use, in each case,
however occurring.
29.14 ENTIRE AGREEMENT. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease and the Exhibits hereto, constitute the parties' entire agreement with
respect to the leasing of the Premises and supersedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and
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understandings, if any, between the parties hereto or displayed by Landlord to
Tenant with respect to the subject matter thereof, and none thereof shall be
used to interpret or construe this Lease. None of the terms, covenants,
conditions or provisions of this Lease can be modified, deleted or added to
except in writing signed by the parties hereto.
29.15 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building
or Project. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
29.16 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease and except as to Tenant's obligations under Articles 5 of
this Lease (collectively, a "FORCE MAJEURE"), notwithstanding anything to the
contrary contained in this Lease, shall excuse the performance of such party for
a period equal to any such prevention, delay or stoppage and, therefore, if this
Lease specifies a time period for performance of an obligation of either party,
that time period shall be extended by the period of any delay in such party's
performance caused by a Force Majeure.
29.17 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.
29.18 NOTICES. All notices, demands, statements, designations,
approvals or other communications (collectively, "NOTICES") given or required to
be given by either party to the other hereunder or by law shall be in writing,
shall be (A) sent by United States certified or registered mail, postage
prepaid, return receipt requested ("MAIL"), (B) transmitted by telecopy, if such
telecopy is promptly followed by a Notice sent by Mail, (C) delivered by a
nationally recognized overnight courier, or (D) delivered personally. Any Notice
shall be sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the telecopy is transmitted, (iii) the date the overnight courier delivery
is made or attempted to be made, or (iv) the date personal delivery is made or
attempted to be made. If Tenant is notified of the identity and address of
Landlord's mortgagee or ground or underlying lessor, Tenant shall give to such
mortgagee or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or certified mail, and such
mortgagee or ground or underlying lessor shall be given a reasonable opportunity
to cure such (provided that such opportunity to cure shall not exceed 90 days
unless the nature of the default is such that the same cannot reasonably be
cured within a ninety (90) day period, in which event such mortgagee or ground
or underlying lessor shall diligently commence such cure within such period and
thereafter diligently proceeds to rectify and cure such default) default prior
to Tenant's exercising any remedy available to Tenant. As of the date of this
Lease, any Notices to Landlord must be sent, transmitted, or delivered, as the
case may be, to the following addresses:
Telecom Center LA
c/o JMA Properties, Inc.
530 West 6th Street
Suite 710
Los Angeles, California 90014
Attention: Building Manager
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With copy to:
Allen, Matkins, Leck, Gamble & Mallory LLP
333 Bush Street, 17th Floor
San Francisco, California 94104-2806
Attention: Todd A. Chapman, Esq.
Fax: (415) 837-1516
Phone: (415) 837-1515
29.19 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.20 AUTHORITY. If Tenant is a corporation, trust or partnership,
each individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in California.
29.21 ATTORNEYS' FEES. In the event that either Landlord or Tenant
should bring suit for the possession of the Premises, for the recovery of any
sum due under this Lease, or because of the breach of any provision of this
Lease or for any other relief against the other, then all costs and expenses,
including reasonable attorneys' fees, incurred by the prevailing party therein
shall be paid by the other party, which obligation on the part of the other
party shall be deemed to have accrued on the date of the commencement of such
action and shall be enforceable whether or not the action is prosecuted to
judgment.
29.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT
TO (1) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN
THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S
USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH
COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE
RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of, option
for or option to lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
29.24 BROKERS. Landlord shall be responsible for the initial Brokerage
commission to be paid to Brokers (defined below) in connection with this Lease.
Landlord and Tenant hereby warrant to each other that they have had no dealings
with any real estate broker or agent in connection with the negotiation of this
Lease, excepting only the real estate brokers or agents specified in Section 12
of the Summary (the "BROKERS"), and that they know of no other real estate
broker or agent who is entitled to a commission in connection with this Lease.
Each party agrees to indemnify and defend the other party against and hold the
other party harmless from any and all claims, demands, losses, liabilities,
lawsuits, judgments, costs and expenses (including without limitation reasonable
attorneys' fees) with respect to any leasing commission
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or equivalent compensation alleged to be owing on account of any dealings with
any real estate broker or agent, other than the Brokers, occurring by, through,
or under the indemnifying party.
29.25 INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense or to any setoff of the Rent or other amounts
owing hereunder against Landlord.
29.26 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord shall have the
right at any time to change the name of the Project or Building and to install,
affix and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord's sole discretion, desire.
Tenant shall not use the name of the Project or Building or use pictures or
illustrations of the Project or Building in advertising or other publicity or
for any purpose other than as the address of the business to be conducted by
Tenant in the Premises, without the prior written consent of Landlord.
29.27 COUNTERPARTS. This Lease may be executed in counterparts with
the same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.28 CONFIDENTIALITY. Landlord and Tenant acknowledges that the
content of this Lease and any related documents are confidential information.
Landlord and Tenant shall keep such confidential information strictly
confidential and shall not disclose such confidential information to any person
or entity other than such party's financial, legal, space planning consultants
and prospective sublessees, transferees or assignees of and except as otherwise
required by law.
29.29 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or traffic
in and around the Building, and in connection therewith, Tenant shall take
responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.
29.30 BUILDING RENOVATIONS. It is specifically understood and agreed
that Landlord has made no representation or warranty to Tenant and has no
obligation and has made no promises to alter, remodel, improve, renovate, repair
or decorate the Premises, Building, the Project or any part thereof and that no
representations respecting the condition of the Premises, the Building, the
Project or any part thereof have been made by Landlord to Tenant except as
specifically set forth herein or in the Tenant Work Letter. However, Tenant
hereby acknowledges that Landlord is currently renovating or may during the
Lease Term renovate, improve, alter, or modify (collectively, the "RENOVATIONS")
the Project, the Building and/or the Premises including without limitation the
parking structure, common areas, systems and equipment, roof, and structural
portions of the same, which Renovations may include, without limitation, (i)
installing sprinklers in the Building common areas and tenant spaces, (ii)
modifying the common areas and tenant spaces to comply with applicable laws and
regulations, including regulations relating to the physically disabled, seismic
conditions, and building safety and security, and (iii) installing new floor
covering, lighting, and wall coverings in the Building common areas, and in
connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the common areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building; provided that Landlord shall use commercially reasonable
efforts to ensure that such Renovations do not materially interfere with or
unreasonably disturb Tenant's use and occupancy of the Premises. Tenant hereby
agrees that such Renovations and Landlord's actions in connection with such
Renovations shall in no way constitute a constructive eviction of Tenant nor
entitle Tenant to any abatement of Rent. Landlord shall have no responsibility
or for any reason be liable to Tenant for any direct or indirect injury to or
interference with Tenant's business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or the
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License Areas or of Tenant's personal property or improvements (including the
Supplemental Equipment) resulting from the Renovations or Landlord's actions in
connection with such Renovations, or for any inconvenience or annoyance
occasioned by such Renovations or Landlord's actions.
29.31 NO VIOLATION. Tenant hereby warrants and represents that neither
its execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.
29.32 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project may be under construction following
Tenant's occupancy of the Premises, and that such construction may result in
levels of noise, dust, obstruction of access, etc. which are in excess of that
present in a fully constructed project. Tenant hereby waives any and all rent
offsets or claims of constructive eviction which may arise in connection with
such construction; provided that Landlord shall use commercially reasonable
efforts to ensure that such construction does not materially interfere with or
unreasonably disturb Tenant's use and occupancy of the Premises.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"Landlord":
TELECOM CENTER LA, LLC, a Delaware limited
liability company
By: JMA Properties, Inc., a California
corporation
Its: Managing Member
By: /s/ ARTHUR K. CHAPMAN
------------------------------------
Arthur K. Chapman, President
"Tenant":
By: UNIVERSAL ACCESS,
an Illinois corporation
By: /s/ ROBERT J. POMMER 3/25/99
-----------------------------------------
Name: Robert Pommer
----------------------------------
Title: Chief Operating Officer
---------------------------------
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EXHIBIT A
TELECOM CENTER LA
OUTLINE OF PREMISES
[TO BE PROVIDED]
EXHIBIT A Page 1
<PAGE> 48
EXHIBIT B
TELECOM CENTER LA
TENANT WORK LETTER
This Work Letter for Tenant Improvements, including any schedules and
exhibits attached hereto (the "TENANT WORK LETTER"), is attached to and forms a
part of that certain Lease of even date herewith, by and between TELECOM CENTER
LA, LLC, a Delaware limited liability company, as Landlord, and UNIVERSAL
ACCESS, an Illinois corporation, as Tenant (the "Lease"). Unless otherwise
specified, "Article" and "Section" references herein are to Articles and
Sections of the body of the Lease and "Paragraph" references are to paragraphs
of this Tenant Work Letter.
1. DEFINITIONS. All capitalized terms used herein and not defined
shall have the meanings set forth in the body of the Lease. As used in the body
of the Lease and in this Tenant Work Letter:
1.1 Code. The term "code" means all applicable electrical, building,
architectural barrier, zoning, health, safety, seismic, fire, energy and other
codes, ordinances, regulations, rulings, interpretations, requirements and
relevant provisions of law issued or adopted by the City of Los Angeles, County
of Los Angeles, State of California, the United States Government or any other
governmental authority.
1.2 Allowance. "ALLOWANCE" means the total sum of $120,000.00 (which
is equal to $15.00 per rentable square foot of the Premises).
2. BASE PREMISES WORK.
2.1 Base Building Items. Landlord has previously constructed the
Building Structure and those portions of the Building Systems located in the
internal core of the Building. Landlord has previously constructed, or will
construct, at Landlord's sole cost and expense, certain base components of the
Premises and the floor on which the Premises are located (the "BASE PREMISES
WORK"). Tenant shall, except as otherwise set forth in this Lease or in this
Tenant Work Letter, accept the Building Structure, Building Systems, the
Premises, and the Base Premises Work in their "as-is" condition as of the date
of this Lease (or the date such incomplete items of the Building Premises Work,
if any, are completed by Landlord, as the case may be), subject to the terms of
this Tenant Work Letter and this Paragraph 2. The Base Premises Work shall
include only the following items: (i) Building standard core doors for
stairwells, electrical, mechanical and janitorial and telephone rooms and
washrooms all installed; such doors shall be complete with frame, trim and
hardware, locking devices, electrical door releases and/or magnetic hold-open
devices where applicable and closers; (ii) completed telephone, electrical,
janitorial and mechanical rooms to the extent located on the floor on which the
Premises are located; (iii) a completed unisex washroom on each floor in
compliance with all applicable laws, including, without limitation, the ADA;
(iv) telephone lines stubbed to a central distribution panel; (v) stud framing
for all demising walls separating the Premises from the common corridors, with
drywall on the exterior (corridor) sides of all such demising walls; (vi)
Building standard elevator lobby and corridors; (vii) sheet rock on columns, and
interior columns taped and spackled ready for painting; (viii) Building Standard
HVAC in its "AS-IS" condition; (ix) the abatement of all friable and assessable
asbestos in the Premises; and (x) an existing automatic sprinkler system grid in
the Building common areas in its "as is" condition on an unoccupied basis.
2.2 Substantial Completion. For purposes of this Lease, Landlord's
obligations under this Paragraph 2 shall be satisfied upon (i) the substantial
completion of construction of items (i) through (xi) listed in Paragraph 2.1 of
this Tenant Work Letter, with the exception of (x) any minor or decorative punch
list items or Code compliance items which do not or will not materially
interfere with Tenant's commencement of construction of the Tenant Improvements
(which punch list and Code items shall be completed by Landlord in a diligent
manner), and (y)
EXHIBIT B Page 1
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any Base Premises Work which Tenant has agreed to complete as part of Tenant's
Work.
2.3 Notwithstanding the foregoing, Landlord shall complete items
(v), (vi), (vii), (ix) and (x) of the Base Premises Work described in Section
2.1 of this Tenant Work Letter within thirty (30) days of the Effective Date,
subject to any delays caused by Tenant; provided that if Landlord has not
substantially completed items (v), (vi), (vii), and (x) of the Base Premises
Work within such thirty (30) day period, the Lease Commencement Date shall be
extended one (1) day for every one (1) day after the expiration of such thirty
(30) day period Landlord requires to substantially complete such items.
2.4 Notwithstanding anything in this Lease to the contrary, if
Landlord has not substantial completed removal of any asbestos containing floor
tiles on or before the date which is ninety (90) days following the Effective
Date (the "OUTSIDE DATE"), as such Outside Date shall be extended for each day
substantial completion of such removal is delayed by any Tenant Delays and any
force majeure described in Section 29.16, and the Commencement Date has not
already occurred, then Tenant shall have the right to terminate this Lease by
delivering written notice thereof to Landlord within ten (10) days after the
Outside Date.
3. TENANT'S WORK.
3.1 Definition. Except for the Base Premises Work provided by
Landlord, all tenant improvements in the Premises, to prepare the Premises for
occupancy by Tenant, will be performed by Tenant at Tenant's sole expense,
subject to Tenant's Allowance. The improvements to be constructed by Tenant are
referred to in this Tenant Work Letter as "TENANT'S WORK."
3.2 Requirements. All Tenant's Work is subject to the reasonable
approval of Landlord and must meet the Building construction standards. Tenant
shall be responsible for the design, function and maintenance of all Tenant's
Work. Tenant shall not specify uses or materials that are subject to an
insurance hazard rate different from the rate assigned to the Building as a
whole.
3.3 Heating, Ventilation and Air-Conditioning. Tenant shall be
required to furnish and install as Tenant's Work all HVAC and related apparatus
not included as part of the Base Premises Work, including all additional duct,
pipe, electrical and mechanical work.
3.4 Sprinkler System. Subject to Tenant's right to install and/or
convert to a "pre-action" design as permitted in Section 22.1.2 of this Lease,
Tenant shall install as part of Tenant's Work all portions of the sprinkler
system for the Premises not included as part of the Base Premises Work,
including, any raising, lowering, moving or adding of sprinkler heads.
3.5 Life-Safety System. All emergency lighting, exit signs, branch
wiring, alarms, smoke detectors, speakers and other devices required by code or
desired by Tenant for the life-safety system in the Premises but not included as
part of the Base Premises Work, shall be installed as Tenant's Work.
3.6 Window, Wall and Floor Coverings. All window, wall and floor
coverings shall be installed as Tenant's Work. Tenant may utilize any existing
window coverings, if any, which are in place in all perimeter windows of
Tenant's Premises in "AS IS" condition, and will not install any other types of
window coverings without Landlord's prior consent, which shall not be
unreasonably withheld, conditioned, or delayed.
3.7 Floor Loading. Specific sections of the Premises may require
loading to a maximum of 200 lbs. per square foot. If Tenant wishes to design and
install structural and/or non-structural modifications to the Premises to
accommodate floor loads greater than the existing capacity of 100 pounds per
square foot, all of such work shall be considered to be an Alteration which,
consistent with the terms of Article 8, shall be, subject to Landlord's approval
and subject
EXHIBIT B Page 2
<PAGE> 50
to all applicable code and engineering design standards. If reinforcing is
required, Tenant, at Tenant's sole cost and expense, shall reinforce the floors
in the areas as specified and designed by Tenant's structural engineer and
approved by Landlord. Tenant shall be granted, with reasonable notice, floor
access to the space below the Premises for reinforcement of Tenant's Premises
during construction of Tenant's Work, if required. All charges for additional
security and other services needed to accommodate such entry shall be at the
sole cost and expense of Tenant.
4. TENANT'S PLANS.
4.1 Description. Tenant shall have an architect licensed by the
State of California ("TENANT'S ARCHITECT") and pre-approved by Landlord prepare
architectural plans and specifications for the layout and improvements of the
Premises and Tenant's Work ("TENANT'S PLANS"), all in such form and detail as
reasonably required by Landlord. Tenant's Plans shall be in form and content
sufficient to secure all required governmental approvals for Tenant's Work.
Tenant shall pay all of the fees and charges of Tenant's Architect for all of
Tenant's Work Letter. Tenant's Architect shall coordinate with the architect of
Landlord if Tenant does not use Landlord's designated architect for the Building
for all stages of construction of Tenant's Work ("LANDLORD'S ARCHITECT") and
Landlord's engineers to assure the consistency of Tenant's Plans with the plans
and specifications for the Base Premises Work. Tenant's Plans shall include the
following:
(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, doors, furniture and equipment line ups. Before
submission to Landlord, the Space Plan shall have been reviewed and approved by
the Los Angeles Building and Fire Departments, and shall be on file with the
Building Department, registered with a preliminary plan check number.
(b) Final Plans: The "FINAL PLANS" shall consist of all
plans and specifications necessary to construct Tenant's Work, including
mechanical and electrical working drawings.
4.2 Mechanical and Electrical. Tenant's Plans shall contain all
mechanical and electrical working drawings. Mechanical and electrical working
drawings shall be prepared at Tenant's expense by engineers reasonably approved
by Landlord. Tenant's Architect shall be responsible for coordination of all
engineering work with Tenant's Plans.
4.3 Approval by Landlord. Tenant's Plans shall be subject to
Landlord's reasonable approval. Landlord shall have ten (10) business days
following receipt of Tenant's Plans to approve or disapprove the submissions by
Tenant. If Landlord reasonably disapproves of any of Tenant's Plans, Landlord
shall advise Tenant of the required revisions concurrently with such
disapproval. After being so advised by Landlord, Tenant shall promptly submit a
redesign, addressing the revisions required by Landlord, for Landlord's
reasonable approval. Landlord shall then have five (5) business days to approve
or disapprove any re-submittal of Tenant's plans, and failure to respond within
such 5-business day period shall be deemed Landlord's approval of such
re-submitted plans and specifications. If Tenant's Plans have not been approved
within thirty (30) days from the date of this Lease, the parties agree to
promptly meet in good faith to attempt to reach agreement regarding Tenant's
Plans. Approval by Landlord shall not be deemed to be a representation or
warranty by Landlord with respect to the safety, adequacy, correctness,
efficiency or compliance with law of Tenant's Plans.
4.4 Permits. Tenant's Architect shall be responsible for submission
of Tenant's Plans for plan check by the City of Los Angeles. Any changes
required by the City of Los Angeles shall be submitted to Landlord for
Landlord's review and reasonable approval. Tenant's contractor shall apply for
the building permit for Tenant's Work and Tenant shall be responsible for and
shall pay all fees and expenses for securing the building permit and all other
permits necessary for construction of the tenant improvements.
4.5 "As-Built" Plans. A set of "as-built" plans of the Premises, in
such form and
EXHIBIT B Page 3
<PAGE> 51
detail as reasonably required by Landlord, shall be delivered to Landlord within
sixty (60) days after Tenant's occupancy.
5. CONSTRUCTION OF TENANT'S WORK.
5.1 Tenant's Contractor. Tenant will enter into a construction
contract with a contractor selected from a list preapproved by Landlord for
construction of Tenant's Work ("Tenant's Contractor"). Except as otherwise
provided in the Lease, during the construction of Tenant's Work prior to the
Commencement Date, Tenant shall not be charged for normal building services
provided to the tenants of the Building during Business Hours.
5.2 Performance. Tenant shall perform, through Tenant's Contractor,
all work shown on the approved Tenant's Plans, in strict accordance with such
plans, and in a professional and workmanlike manner and in strict accordance
with code. Tenant shall comply, and will cause its agents, contractors and
employees to comply, with all construction rules and regulations of the Building
as set forth in Schedule 1 attached hereto (which rules shall be subject to
change from time to time upon reasonable advance notice to Tenant and its
contractors). Tenant represents and warrants to Landlord that it shall not cause
or permit Tenant's Contractor to do any work in the Project that is not in
strict accordance with the approved Tenant's Plans, without first obtaining
Landlord's prior written consent.
5.3 Deliveries. Tenant's Contractor shall coordinate the scheduling
of deliveries of materials with Landlord, and the timing of such deliveries
shall be subject to Landlord's reasonable approval. Landlord may require that
delivery of construction materials be made at a time other than during Building
Hours.
5.4 Insurance. Throughout the performance of Tenant's Work, Tenant,
at its expense, shall carry, or cause to be carried, workers' compensation
insurance as required by law and general liability insurance, with completed
operations endorsements, for any occurrence in or about the Building, in such
coverage limits and with insurers in each case meeting the requirements of
Article 10 of the Lease. The Landlord Parties shall be designated as additional
insured parties on the insurance policies. Tenant shall furnish Landlord with
evidence satisfactory to Landlord that such insurance is in effect before the
commencement of Tenant's Work, and, on request of Landlord during construction,
Tenant shall provide evidence satisfactory to Landlord that the insurance
remains in effect.
5.5 Liens and Violations. Tenant, at its expense, and with diligence
and dispatch, shall procure the cancellation or discharge of all notices of
violation arising from or otherwise connected with Tenant's Work, or any other
work, labor, services or materials done for or supplied to Tenant, or any person
claiming through or under Tenant, which shall be issued by the Building and
Safety Department of the City of Los Angeles or any other public authority.
Tenant shall not utilize materials in Tenant's Work (except with respect to
Tenant's Property) that are subject to security interests or liens. Tenant shall
defend, indemnify and hold Landlord harmless from and against any and all
mechanics' liens, stop notices and other liens and encumbrances or claims of
liens or encumbrances filed in connection with Tenant's Work, Alterations, or
any other work, labor, services or materials done for or supplied to Tenant, or
any person claiming through or under Tenant, including, without limitation,
security interests in any materials, fixtures or articles installed in the
Premises; and against all costs, expenses and liabilities incurred in connection
with any such lien or encumbrance, or claim of lien or encumbrance, its removal
or any related action or proceeding. Tenant, at its expense, shall satisfy or
discharge of record each stop notice, lien or encumbrance within thirty (30)
days after it is filed. If Tenant fails to do so, Landlord shall have the right
to satisfy or discharge the stop notice, lien or encumbrance by payment to the
claimant on whose behalf it was filed, by the posting of a bond, or by other
action. Tenant shall reimburse Landlord on demand for the costs and expenses so
incurred by Landlord, as Additional Charges, and without regard for any defense
or offset that Tenant may have had against the claimant, but neither Landlord's
curative action nor the reimbursement of Landlord by Tenant shall cure Tenant's
default in failing to satisfy or discharge the lien or encumbrance.
EXHIBIT B Page 4
<PAGE> 52
5.6 Indemnity. Tenant will be directly responsible to Landlord for
the performance of Tenant's Contractor, and will indemnify, defend and hold
harmless Landlord, Landlord's Affiliates and Landlord's managing agent from any
cost, expense, claim, lien, loss, damage or liability in connection with (i) the
construction contract with Tenant's Contractor, (ii) with the performance of
Tenant's Work, and (iii) any defects in the Tenant Improvements, Base Building.
or Building systems and equipment which Landlord elects in its reasonable
discretion to repair that arise as a result of Tenant's Work.
5.7 Inspection by Landlord. Landlord shall have the right to inspect
Tenant's Work at any reasonable time, and may reasonably reject work that does
not conform with applicable laws or Tenant's Plans.
5.8 Code Requirements. Tenant shall bear all costs and expenses of
constructing Tenant's Work in compliance with code and shall be responsible, at
its expense, for obtaining, and, if requested by Landlord, furnishing copies to
Landlord of, all governmental permits, certificates, and approvals necessary for
the commencement and prosecution of Tenant's Work and for final approval thereof
upon completion.
5.9 Construction Supervision Fee. Landlord may, at its option,
retain a construction supervisor to oversee the construction and performance of
Tenant's Work and Tenant agrees to reimburse Landlord for Landlord's actual
costs incurred as a result of Landlord's review and involvement with Tenant's
Work.
5.10 Contractor's Warranties and Guaranties. Tenant hereby assigns to
Tenant all warranties and guaranties by Tenant's Contractor relating to the
Tenant's Work, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Tenant's Work. Such warranties and
guaranties of Tenant's Contractor shall guarantee that Tenant's Work shall be
free from any defects in workmanship and materials for a period of not less than
one (1) year from the date of completion thereof, and Tenant's Contractor shall
be responsible for the replacement or repair, without additional charge, of the
Tenant Improvements that shall become defective within one (1) year after
completion of Tenant's Work. The correction of such work shall include, without
additional charge, all additional expenses and damages in connection with such
removal or replacement of all or any part of the Tenant's Work.
6. TENANT'S ALLOWANCE.
6.1 Amount. Tenant shall receive an Allowance in the amount
specified in Paragraph 1.2 above. The Allowance shall be used for the costs of
construction of Tenant's Work, including hard and soft costs; provided that in
no event shall the Allowance be used by Tenant for any portion of the cost of
Tenant's property and equipment to be installed within the Premises or License
Areas.
6.2 Payment of Allowance. The Allowance shall be paid in one lump
sum payment following completion of Tenant's Work and satisfaction of each of
the following terms and conditions. Following completion of Tenant's Work,
Tenant shall submit each of the following: (i) invoices for the Tenant's Work,
with sufficient back-up billings from subcontractors, suppliers and providers of
services to give Landlord a complete financial accounting regarding each invoice
to be reimbursed by Landlord, (ii) a certificate signed by Tenant's Architect
and an authorized representative of Tenant certifying that the Tenant's Work
represented by the aforesaid invoices has been satisfactorily completed in
accordance with Tenant's Plans and confirming that all of Tenant's Work is
complete, (iii) lien waivers by Tenant's contractors, subcontractors and
materialmen for all such work, (iv) a general release from the contractor,
subcontractors and materialmen regarding Tenant's Work along with final
governmental approvals of Tenant's Work and (v) a certificate signed by Tenant
and Tenant's Architect certifying that no portion of the Allowance was applied
to the costs of Tenant's property or equipment. Landlord shall pay to Tenant the
amounts specified in such invoices, not to exceed the Allowance, within 30 days
after receipt of all of the information and documentation specified above.
Landlord shall have the right to inspect the Premises to confirm the completion
of the
EXHIBIT B Page 5
<PAGE> 53
work covered by such invoices. Appropriate procedures shall be followed by
Tenant to assure satisfaction or waiver of any potential mechanics' lien claims.
Landlord shall have no obligation to disburse the Allowance to Tenant upon the
occurrence and during the continuance of a breach or default by Tenant under the
terms of this Tenant Work Letter or the Lease.
EXHIBIT B Page 6
<PAGE> 54
SCHEDULE 1 TO EXHIBIT B
BUILDING CONSTRUCTION RULES
The following are general rules and regulations governing all work in
the Building, including Tenant's Work and any Alterations (collectively,
"TENANT'S WORK"). The manager for the Building ("BUILDING MANAGER") will be
Landlord's representative in coordinating and supervising Tenant's work. Nothing
contained in these Construction Rules shall (i) create any contractual
obligations for Landlord or Building Manager in connection with Tenant's work or
(ii) in any way affect, modify or supersede any of the terms set forth in this
Lease. The Construction Rules may be modified and supplemented from time to time
as Landlord may reasonably require for the proper monitoring and control of
construction at the Building.
1. Neither Building Manager nor Landlord will be responsible for
any material, equipment, tools or other property belonging to Tenant's general
contractor for Tenant's work, or any subcontractors, employees, agents or others
associated in any way with Tenant's work.
2. The Building is equipped with a freight elevator serving all
floors. The contractor and all construction personnel must use only the freight
elevator for transportation of workers, materials and equipment. No contractor
or any construction personnel, nor any materials or equipment, are permitted in,
nor shall any of the foregoing be transported in, the passenger elevators. If
the contractor or any construction personnel are found in the passenger
elevators, the contractor or subcontractor may be removed from the job and the
elevators will be immediately inspected for damage. All damage resulting from
such use shall be corrected by Building Manager at Tenant's expense.
3. The contractor shall furnish Building Manager with a list of
subcontractors prior to commencement of Tenant's work. This list will include
phone numbers and contacts for the contractor and each subcontractor, including
home and emergency telephone numbers. Any persons not on the approved contractor
list will be denied access to the Premises. NO EXCEPTIONS. Access badges,
authorizing access to the Premises, will be issued by Building Manager to all
personnel designated by the contractor on such list. The contractor and all
construction personnel working over the weekend and after the normal hours shall
provide Building Manager with a list of workers 24 hours prior to the worker
being on site or they will be denied access. The list should also include an
estimated time the contractor and all construction personnel will be working,
the location of the work to be done, the number of employees and the working
supervisor who will be present in the Building during the performance of the
work. Any deviation will require Building Manager's approval.
4. Unless Building Manager requires otherwise, all contractors and
other construction personnel shall enter and exit through the loading dock or
main lobby at all times. Additionally, all contractors and subcontractors shall
sign in and sign out at the security desk. Building security personnel have the
right to inspect all tool boxes of any and all construction personnel upon
departure from the Building. Loading dock and freight elevator procedures and
hours will be provided by Building Manager.
5. When working on a tenant-occupied floor, all deliveries are to
be accepted, moved and delivered to the contracted suite by 7:30 a.m. All
equipment and material deliveries shall be made at the loading dock or service
entry between the hours of 6:00 p.m. and 6:00 a.m. Monday through Friday or all
day Saturday and Sunday via a freight reservation. If deliveries are to be made
at other times, prior approval must be obtained from Building Manager. At no
other time will material be transported through the Building lobby or public
areas unless specifically authorized in writing. When making deliveries,
reinforced, non-staining masonite board acceptable to Building Manager must be
installed by the contractor (in a manner approved by Building Manager) to
protect all wall and floor finishes, including the freight elevator. The
contractor and subcontractors shall consult with Building Manager for complete
rules and procedures relating to corridor, elevator and public area protection.
All contractors and other construction personnel shall leave the Building lobby
and other public areas in a neat and clean
SCHEDULE 1 TO EXHIBIT B Page 1
<PAGE> 55
condition consistent with other Comparable Buildings (including, without
limitation, sweeping and mopping the lobby floors, dusting all furniture in the
lobby and otherwise removing all debris and dust) and otherwise in a condition
satisfactory to Building Manager and Landlord. Tenant shall be responsible for
all costs incurred by Building Manager if this clean-up work is not performed
satisfactorily.
6. The contractor must notify Building Manager prior to conducting
any of Tenant's work that will require ceiling access, specifying the areas that
will be worked on and the length of time needed to complete or perform work in
the space.
7. No drilling, hammering, loud noise, vibrations or disturbances
of any nature will be allowed during the business day (i.e., from 8:00 a.m. to
7:00 p.m., Monday through Friday, and from 9:00 a.m. to 2:00 p.m. on Saturday).
8. The contractor shall keep all spaces affected by Tenant's work
clean at all times, including all public areas such as corridors, restrooms,
janitor's closets, etc. The contractor shall erect and maintain dust barriers at
all exit areas of construction and proper dust covers (including walk-off mats)
on the floors at exit areas of construction and at the doors to the freight
elevator. The contractor is responsible for taking all extra precautions to
safeguard the floors, walls and/or elevators from damage which may be caused by
the movement of materials, equipment or debris.
9. Sprinkler shut down and construction procedures:
a. The contractor or the subcontractor requiring
the shutdown and draining of the fire sprinkler system on any floor must follow
the Building's procedures for this process.
b. All work performed on fire sprinklers and/or
fire standpipes must be scheduled with The Building Chief Engineer at least 24
hours in advance.
c. Isolation and draining of the sprinkler system
must be done by the Building Engineering Department.
d. Prior to start of work, the contractor must
report to Building Manager on the loading dock, and the contractor will be given
instructions and assistance. Building supplied shut- off tags are to be placed
on all closed valves.
10. Construction personnel shall at all times maintain the highest
level of project cleanliness. All construction waste and debris shall be removed
via the freight elevator or stairs to the loading dock on a daily basis and
shall not be allowed to accumulate or produce a fire hazard. No construction
waste or debris may be placed in the Building dumpster/compactor. The contractor
and all construction personnel shall provide for removal of waste and debris
from the Building at their own expense, and shall dispose of all waste and
debris in an environmentally safe manner and in full compliance with all laws
and ordinances. If a dumpster is required (space allowing), the location must be
approved by Building Manager. If the contractor fails or refuses to keep such
spaces free of accumulated waste, debris, dust, etc., Building Manager reserves
the right to enter such spaces (including the Premises) and to clean and remove
the debris, dust, etc. at Tenant's expense. In addition, all public areas, i.e.,
corridors, restrooms, janitor's closets, etc. shall be maintained and kept free
of construction debris, dust, etc.
11. Removal of combustible objects such as cardboard, empty paint
cans, paint rags and other combustible materials shall occur on a daily basis;
such objects shall be disposed of in an approved receptacle and in an
environmentally safe manner in full compliance with all laws and ordinances. The
storage of all flammable liquids (paint, lacquer thinners, paint thinners, etc.)
shall be in UL approved fire rated (for flammable liquids) storage cabinets or
the liquids are to be removed from the Building daily. If such liquids are to be
stored in the proper storage cabinets, Building Manager shall be notified of
their existence, location and quantity. Upon completion of Tenant's work, all
remaining flammable liquids shall be removed from the Building and disposed
SCHEDULE 1 TO EXHIBIT B Page 2
<PAGE> 56
of in an environmentally safe manner in full compliance with all laws and
ordinances. Any flammable or hazardous materials (i.e. paint) may only be stored
on the Premises with permission of Building Manager who shall designate an area
for such storage. No gasoline operated devices (e.g., concrete saws, coring
machines, welding machines, etc.) shall be permitted within the Building. All
work requiring such devices shall be performed by means of electrically operated
substitutes. All approved gas and oxygen canisters shall be properly chained and
supported to eliminate all potential hazards. At the completion of use, said
containers shall be promptly removed from the Building.
12. All electrical and telephone rooms on construction floors are to
be kept clean and orderly at all times and must be locked at the end of each
workday. These rooms cannot be used as storage for tools or supplies. At the end
of each day, all garbage and wire remnants are to be removed and a clear pathway
maintained to all panels. Initial access to electrical and telephone equipment
rooms must be arranged through Building Manager. Keys will be issued by Building
security. Doors to electrical and telephone equipment rooms may not be propped
or blocked open in any way. Tenant equipment may not be installed in electrical
rooms. All panels are to be replaced and properly labeled upon completion of
work. All penetrations through floors, walls and ceilings shall be properly fire
rated upon completion.
13. Upon completion and termination of all electrical circuits, and
before energizing, the contractor must notify the Building's engineer so that a
neutral to ground bonding test can be performed.
14. Specific restrooms will be designated for use by construction
personnel. The contractor is responsible for maintenance while using such
designated restrooms. Upon completion of Tenant's work, the contractor will be
responsible for restoring all designated restrooms to their original state.
Anyone found using restrooms other than those specified, or anyone using the
janitorial closets, will be subject to dismissal. No one is permitted to use the
janitorial closets without Building Manager permission. Janitors' slop sinks
cannot be used for disposal of flammable material, hazardous waste or drywall.
15. Any use of telephone room chase way must be approved in advance
by the Building's engineer.
16. Construction personnel are not permitted to block open stairway
doors and electrical room doors. These doors provide the fire protection
required by code. Continued violation of this provision shall be subject to a
$300 fine. Janitorial doors shall be kept closed at all times on occupied tenant
floors. During construction of Tenant's work, stairwells and fire doors leading
to stairwells may not be blocked with materials, equipment, trash or debris of
any kind. Fire doors may not be propped or blocked open in any fashion or in any
way. Keys will be issued by Building security. Stairwells may not be used for
the storage of any equipment, materials, trash or debris of any kind and are to
be kept clear at all times. During construction of Tenant's work, air
conditioning smoke dampers may not be propped open.
17. All smoke detectors in the construction areas are to be
protected during construction, demolition, sweeping, clean-up or other
operations that may cause considerable dust or smoke. At the end of each work
day, after the dust has settled, each smoke detector that has been protected
during the day is to be uncovered to ensure proper operation.
18. Each contractor and all construction personnel are to take
adequate precautions to prevent the accidental tripping of the fire alarm
system. False alarms shall be fined at $400 per offense. All management and
other costs connected with resetting false alarms initiated by the contractor or
any construction personnel will be charged to the Tenant's account. At
completion of every work day, the fire-life-safety system shall be left trouble
and alarm free. The contractor must notify the Building's engineer of said
status before leaving the job site.
19. The contractor must provide and keep available at least four
currently certified 10 pound ABC fire extinguishers on each floor during
construction. They are to be placed inside
SCHEDULE 1 TO EXHIBIT B Page 3
<PAGE> 57
the controlled area, and all workers are to be informed as to their location and
proper use. In addition, construction personnel shall be informed by their
supervisors of the means of egress from the floor in case of an emergency,
location of fire pull stations and locations of wet stand pipes.
20. All "J" boxes and fire-life-safety conduits that are installed
during the construction of Tenant's work must be marked with red spray paint.
All fire-life-safety wiring must be done strictly in accordance with Building
specifications (contact the Building's engineer for such wire specifications).
Failure to adhere to the required color code may result in costly,
time-consuming rewiring. Only life-safety contractors designated or approved by
Building Manager will be allowed to install and/or connect life-safety devices
(i.e., speakers, pull stations and smoke detectors).
21. Prior to core drilling, the contractor must inform Building
Manager of the locations of the core drill for the review and approval of the
Building's engineer. All core drills are to be located from the underside to
prevent damage to any of the exposed fire-life-safety conduits on the underside
of the decking. If cores are to be wet-drilled, slurry run-off shall be
contained and must not be allowed to reach tenant areas below the construction.
Any slurry that does migrate to the floor below shall be cleaned by the
contractor at its expense. Coring hours will be 8:00 p.m. to 7:00 a.m. Any
penetrations made in steel structural beams are to be approved in advance by the
Building's engineer and permitted by government authorities, if applicable.
22. Any damage sustained during construction of Tenant's work to
electrical rooms, telephone rooms, storage closets, janitor closets, restrooms,
or freight lobbies is the responsibility of the Tenant. A list of pre-existing
damage to these areas should be submitted to Building Manager, and should be
acknowledged by Building Manager, prior to commencement of Tenant's work.
23. The contractor must notify Building Manager at least 24 hours prior
to commencing any painting or varnishing. Any spray painting with solvent based
paints must be preapproved by the Los Angeles Fire Department. Painting of
elevator doors is to be supervised by the elevator maintenance company
appropriate to the Building.
24. Building Manager shall at all time have access to the areas in
which Tenant's work is ongoing regardless of its state, preparation and
progress. Building Manager reserves the right to inspect work, stop work and/or
have a worker removed from the job at any time during Tenant's work if these
Rules and Regulations are not being followed.
25. The Building shall provide electrical service consisting of 120V
outlets with 15A/20A capacity. Any power requirements in excess of that listed
per the Lease shall be the responsibility of the contractor. The contractor
shall provide temporary electrical devices within the Premises for its
subcontractors' use. The contractor will not be permitted to run extension cords
through public space. The contractor shall use reasonable measures to minimize
energy consumption in the construction area when possible. The Building shall
pay for normal electrical consumption during the construction process. All
lights and equipment must be turned off at the end of the contractor's business
day. If the contractor or any construction personnel leave lights or equipment
on during off hours, Building Manager reserves the right to receive from Tenant
just compensation for excessive electrical consumption.
26. The contractor and each subcontractor shall implement and
maintain an accident prevention program and an employee safety training program.
Proof of compliance with CAL-OSHA Rule SB198 must be submitted to Building
Manager. All persons on the job, regardless of whose direct payroll they are on,
are required to respond to safety instructions from the contractor's supervisor.
Persons who do not respond shall be removed from the job.
27. The contractor shall cover all return air transfers when working
next to a tenant-occupied space to control the transmission of dust and dirt.
Covering must be removed at the
SCHEDULE 1 TO EXHIBIT B Page 4
<PAGE> 58
completion of daily construction. The contractor shall keep all tenant entrance
and exit doors closed to restrict the movement of dust or dirt and shall
close-off temporary openings with polyurethane approved by the Los Angeles Fire
Department. Due to local fire codes, no openings may be made on a
tenant-occupied floor to the corridor unless materials are being delivered. All
HVAC filters in fan rooms shall also be delivered in operable condition at time
of completion (thus temporary filter should be added to the existing filter).
Pre-filters should be installed over all return air openings until finished
floors are installed. If Building filters or equipment require replacement or
cleaning due to construction dust, the contractor will be charged. The
contractor shall verify with the Building's engineer prior to installation of
pre-filters.
28. Upon completion of Tenant's work, the contractor shall submit
complete sets of marked-up as-built drawings and record documents to the
architect (or space planner) for approval. Upon approval, these shall be
forwarded to Building Manager. In addition, Building Manager shall be allowed to
obtain, at no cost to Tenant or the contractor, copies of manuals for each item
of equipment and apparatus furnished in connection with the Tenant's work.
29. At the completion of Tenant's work, the contractor and each
subcontractor, along with Building Manager's Building maintenance personnel,
shall direct the checkout of utilities, operation systems and equipment for
readiness, shall assist in their initial start-up and testing by subcontractors
and shall provide general familiarization training for Building Manager
personnel during the checkout and startup period.
30. No tobacco smoking or chewing will be permitted in occupied or
public areas. Smoking is allowed only in designated areas approved by Building
Manager. It is understood that Building Manager, in its sole discretion, may
choose not to designate any approved areas in the Building for smoking.
31. No radios or other non-functional sound producing equipment will
be permitted on any floor (unless required by code).
32. Respect must be shown to the Building tenants at all times. Rude
and obscene behavior, including foul and abusive language, will be not be
tolerated. Offenders will be asked to remove themselves from the Premises and
shall not be permitted to return.
33. All work performed within the Building's conduits, risers and
pathways (including, without limitation, cabling or wiring to the rooftop of the
Building), work on the rooftop and work which affects or may reasonably be
expected to affect Building systems (such as plumbing, electrical, HVAC,
fire-life-safety, emergency power or the like) must be performed by bonded
contractors or subcontractors specifically approved in advance by Landlord. Upon
request, the Building Manager will provide Tenant with a list of approved
contractors or subcontractors for certain types of projects. Access to the
rooftop shall be scheduled in advance with the Building Manager. A Building
engineer shall accompany all persons performing work or inspecting equipment on
the rooftop, including in the case of emergency, except as otherwise agreed in
Tenant's Lease. If rooftop access is required during other than Building Hours,
Tenant shall pay the cost of the Building's engineer for the time spent
accompanying Tenant's contractor or other agent to the rooftop.
34. No one shall be allowed to endanger the Building, its premises
or its occupants in any manner whatsoever. If such a situation occurs, the
contractor, any subcontractor, supplier, etc., shall immediately take steps to
correct and eliminate the hazardous condition. In the event that the
contractor's personnel fail to perform in a satisfactory manner, the Building
Manager reserves the right to immediately take steps to remedy the hazard at the
contractor's expense.
35. All corrective work or work performed in occupied spaces at any
time must be scheduled and approved by Building Manager and must be immediately
cleaned up by the workmen prior to their leaving the job or at the end of the
business day if the project is on-going. The contractor shall be responsible for
all costs incurred by Building Manager if this clean-up
SCHEDULE 1 TO EXHIBIT B Page 5
<PAGE> 59
work is not performed satisfactorily.
36. All traffic control, flagmen, barricades, etc., as may be
necessary or required by any agency having jurisdiction shall be the sole
responsibility of and at the expense of the contractor.
37. Tenant shall contact the Building Manager to schedule work on
the following Building systems: (Any disruption of services will be scheduled at
Building Manager's discretion.)
A. Domestic water.
B. Fire alarm or speaker.
C. Electrical tie-ins to Base Building or the
addition of equipment to any suite other than the Tenant suite except subpanels
located within the Tenant premises.
D. Sprinkler system.
E. Any work that will take place outside the
demised Premises.
F. Any tie-ins that may affect other Tenant spaces.
If a Building alarm is turned off for the contractor's work, the
contractor must notify Building Manager upon completion so the system can be
tuned back on as soon as possible.
38. No graffiti or vandalism will be tolerated. Any individual
caught in the act shall be immediately removed from the Premises and will not be
allowed to return. In addition, all repairs will be at the contractor's expense.
39. Wet paint signs must be posted in all public areas when
appropriate.
40. The contractor/subcontractors may park in designated spaces
only. Any vehicles found in unauthorized spaces will be subject to towing.
41. No contractor shall be allowed to start any work in the Building
without having a current certificate of insurance on file with Building Manager.
The contractor must keep current insurance certificates on all subcontractors.
Any contractor or subcontractor performing work found not to have current
insurance will be immediately ordered off the Premises.
General contractors shall list the following as additionally insured:
Telecom Center LA, LLC
JMA Properties, Inc.
42. The contractor/subcontractors shall obtain and pay for a City of
Los Angeles business license.
43. The contractor/subcontractors shall obtain at their expense, all
permits and licenses necessary to perform the work and shall obtain at their
expense, all permits and licenses necessary to perform the work and shall comply
will all laws, ordinances, State and Federal government regulations, and all
rules or regulations of any board or commission or other duly qualified body.
44. All work shall be performed in accordance with all applicable
laws and the rules and regulations of all City, State and Federal agencies
having jurisdiction over the work.
45. No work is to be performed, nor materials stored in public
areas. No staging of trucks or materials will be allowed in areas which may
affect traffic flow to the surrounding
SCHEDULE 1 TO EXHIBIT B Page 6
<PAGE> 60
properties or ingress and egress to Building entrances, fire lanes, reserved
parking areas, etc.
46. Rubber wheels are required on all vehicles transporting
materials in the Building.
47. All equipment and material will be designed and attached for
seismic loading in accordance with governmental agencies having jurisdiction
over the work.
48. Material storage shall be limited to the Premises.
49. The contractor, or its agent, shall provide safety barricades or
cables at floor penetrations.
50. Tenant shall take such action as is necessary to confirm that
all contractors, subcontractors and other construction personnel are aware of
these construction rules, including, if necessary, requiring each to sign a copy
hereof.
SCHEDULE 1 TO EXHIBIT B Page 7
<PAGE> 61
EXHIBIT C
TELECOM CENTER LA
NOTICE OF LEASE TERM DATES
To: __________________________
__________________________
__________________________
__________________________
Re: Office Lease dated __________, 19__ between Telecom Center LA,
LLC, a Delaware limited liability company ("Landlord"), and
_________________, a ___________________________ ("Tenant")
concerning Suite ______ on floor(s) _________ of the office
building located at 530 W. 6th Street, Los Angeles, California.
Gentlemen:
In accordance with the Office Lease (the "Lease"), we wish to advise you
and/or confirm as follows:
1. The Lease Term shall commence on or has commenced on __________
for a term of _______________ ending on
2. Rent commenced to accrue on _______________, in the amount of
_______________.
3. If the Lease Commencement Date is other than the first day of
the month, the first billing will contain a pro rata adjustment.
Each billing thereafter, with the exception of the final
billing, shall be for the full amount of the monthly installment
as provided for in the Lease.
4. Your rent checks should be made payable to _______________ at
_______________.
5. The exact number of rentable square feet within the Premises is
__________ square feet.
6. Tenant's Share as adjusted based upon the exact number of
rentable square feet within the Premises is ______%.
"Landlord":
TELECOM CENTER L.A., LLC,
a Delaware limited liability company
By: _________________________
Its: ____________________
Agreed to and Accepted
as of __________, 19__.
"Tenant":
By: _________________________
Its: ____________________
EXHIBIT C Page 1
<PAGE> 62
EXHIBIT D
TELECOM CENTER LA
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Premises without obtaining
Landlord's prior written consent. Tenant shall bear the cost of any lock changes
or repairs required by Tenant. Two keys will be furnished by Landlord for the
Premises, and any additional keys required by Tenant must be obtained from
Landlord at a reasonable cost to be established by Landlord. Upon the
termination of this Lease, Tenant shall restore to Landlord all keys of stores,
offices, and toilet rooms, either furnished to, or otherwise procured by, Tenant
and in the event of the loss of keys so furnished, Tenant shall pay to Landlord
the cost of replacing same or of changing the lock or locks opened by such lost
key if Landlord shall deem it necessary to make such changes.
2. All doors opening to public corridors shall be kept closed at
all times except for normal ingress and egress to the Premises.
3. Landlord reserves the right to close and keep locked all
entrance and exit doors of the Building during such hours as are customary for
comparable buildings in the vicinity of the Building. Tenant, its employees and
agents must be sure that the doors to the Building are securely closed and
locked when leaving the Premises if it is after the normal hours of business for
the Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. Tenant shall be responsible for all
persons for whom Tenant requests passes and shall be liable to Landlord for all
acts of such persons. The Landlord and his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
or the Project during the continuance thereof by any means it deems appropriate
for the safety and protection of life and property.
4. No furniture, freight or equipment of any kind shall be brought
into the Building without prior notice to Landlord. All moving activity into or
out of the Building shall be scheduled with Landlord and done only at such time
and in such manner as Landlord designates. Landlord shall have the right to
prescribe the weight, size and position of all safes and other heavy property
brought into the Building and also the times and manner of moving the same in
and out of the Building. Safes and other heavy objects shall, if considered
necessary by Landlord, stand on supports of such thickness as is necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property in any case. Any damage to any part of the
Building, its contents, occupants or visitors by moving or maintaining any such
safe or other property shall be the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will
be received in the Building or carried up or down in the elevators, except
between such hours, in such specific elevator and by such personnel as shall be
designated by Landlord.
6. The requirements of Tenant will be attended to only upon
application at the management office for the Project or at such office location
designated by Landlord. Employees
EXHIBIT D Page 1
<PAGE> 63
of Landlord shall not perform any work or do anything outside their regular
duties unless under special instructions from Landlord.
7. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.
8. The toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The expense
of any breakage, stoppage or damage resulting from the violation of this rule
shall be borne by the tenant who, or whose servants, employees, agents, visitors
or licensees shall have caused same.
9. Tenant shall not overload the floor of the Premises, nor mark,
drive nails or screws, or drill into the partitions, woodwork or drywall or in
any way deface the Premises or any part thereof without Landlord's prior written
consent.
10. Except for vending machines intended for the sole use of
Tenant's employees and invitees, no vending machine or machines other than
fractional horsepower office machines shall be installed, maintained or operated
upon the Premises without the written consent of Landlord.
11. Tenant shall not use or keep in or on the Premises, the
Building, or the Project any kerosene, gasoline, explosive material, corrosive
material, material capable of emitting toxic fumes, or other inflammable or
combustible fluid chemical, substitute or material (other than the dry cell
batteries used in connection with Tenant's switching equipment). Tenant shall
provide material safety data sheets for any Hazardous Material used or kept on
the Premises.
12. Tenant shall not use, keep or permit to be used or kept, any
foul or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere with other tenants or those having business therein,
whether by the use of any musical instrument, radio, phonograph, or in any other
way. Tenant shall not throw anything out of doors, windows or skylights or down
passageways.
13. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals, birds, aquariums, or, except in areas
designated by Landlord, bicycles or other vehicles.
14. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.
15. The Premises shall not be used for manufacturing or for the
storage of merchandise except as such storage may be incidental to the use of
the Premises provided for in the Summary. Tenant shall not occupy or permit any
portion of the Premises to be occupied as an office for a messenger-type
operation or dispatch office, public stenographer or typist, or for the
manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a barber or manicure shop, or as an employment bureau
without the express prior written consent of Landlord. Tenant shall not engage
or pay any employees on the Premises except those actually working for such
tenant on the Premises nor advertise for laborers giving an address at the
Premises.
16. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of these Rules and Regulations.
EXHIBIT D Page 2
<PAGE> 64
17. Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, sidewalks, lobbies, courts, halls, stairways, elevators,
vestibules or any Common Areas for the purpose of smoking tobacco products or
for any other purpose, nor in any way obstruct such areas, and shall use them
only as a means of ingress and egress for the Premises.
18. Tenant shall use reasonable best efforts to participate in
recycling programs undertaken by Landlord.
19. Tenant shall store all its trash and garbage within the interior
of the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage in
Los Angeles, California without violation of any law or ordinance governing such
disposal. All trash, garbage and refuse disposal shall be made only through
entry-ways and elevators provided for such purposes at such times as Landlord
shall designate. If the Premises is or becomes infested with vermin as a result
of the use or any misuse or neglect of the Premises by Tenant, its agents,
servants, employees, contractors, visitors or licensees, Tenant shall forthwith,
at Tenant's expense, cause the Premises to be exterminated from time to time to
the satisfaction of Landlord and shall employ such licensed exterminators as
shall be approved in writing in advance by Landlord.
20. Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any
governmental agency.
21. Any persons employed by Tenant to do janitorial work shall be
subject to the prior written approval of Landlord, and while in the Building and
outside of the Premises, shall be subject to and under the control and direction
of the Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.
22. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord, and no
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises other than Landlord standard
drapes. All electrical ceiling fixtures hung in the Premises or spaces along the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and a warm white bulb color approved in advance in writing by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall be
responsible for any damage to the window film on the exterior windows of the
Premises and shall promptly repair any such damage at Tenant's sole cost and
expense. Tenant shall keep its window coverings closed during any period of the
day when the sun is shining directly on the windows of the Premises. Prior to
leaving the Premises for the day, Tenant shall draw or lower window coverings
and extinguish all lights. Tenant shall abide by Landlord's regulations
concerning the opening and closing of window coverings which are attached to the
windows in the Premises, if any, which have a view of any interior portion of
the Building or Building Common Areas.
23. The sashes, sash doors, skylights, windows, and doors that
reflect or admit light and air into the halls, passageways or other public
places in the Building shall not be covered or obstructed by Tenant, nor shall
any bottles, parcels or other articles be placed on the windowsills.
24. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.
25. Tenant must comply with the City of Los Angeles "NO-SMOKING"
Ordinance No. 159498. If Tenant is required under the ordinance to adopt a
written smoking policy, a copy of said policy shall be on file in the office of
the Building. Additionally, Tenant must provide at least one area within the
Premises in which its employees, invitees and visitors may smoke.
26. Tenant hereby acknowledges that Landlord shall have no
obligation to provide guard service or other security measures for the benefit
of the Premises, the Building or the Project. Tenant hereby assumes all
responsibility for the protection of Tenant and its agents, employees,
contractors, invitees and guests, and the property thereof, from acts of third
parties,
EXHIBIT D Page 3
<PAGE> 65
including keeping doors locked and other means of entry to the Premises closed,
whether or not Landlord, at its option, elects to provide security protection
for the Project or any portion thereof. Tenant further assumes the risk that any
safety and security devices, services and programs which Landlord elects, in its
sole discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.
27. All office equipment of any electrical or mechanical nature
shall be placed by Tenant in the Premises in settings approved by Landlord, to
absorb or prevent any vibration, noise and annoyance.
28. Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.
29. No auction, liquidation, fire sale, going-out-of-business or
bankruptcy sale shall be conducted in the Premises without the prior written
consent of Landlord.
30. No tenant shall use or permit the use of any portion of the
Premises for living quarters, sleeping apartments or lodging rooms.
31. Tenant shall not purchase spring water, towels, janitorial or
maintenance or other similar services from any company or persons not approved
by Landlord. Landlord shall approve a sufficient number of sources of such
services to provide Tenant with a reasonable selection, but only in such
instances and to such extent as Landlord in its judgment shall consider
consistent with the security and proper operation of the Building.
32. Tenant shall install and maintain, at Tenant's sole cost and
expense, an adequate, visibly marked and properly operational fire extinguisher
next to any duplicating or photocopying machines or similar heat producing
equipment, which may or may not contain combustible material, in the Premises.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
Building, the Common Areas and the Project, and for the preservation of good
order therein, as well as for the convenience of other occupants and tenants
therein. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenants, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of any other
tenant, nor prevent Landlord from thereafter enforcing any such Rules or
Regulations against any or all tenants of the Project. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as a
condition of its occupancy of the Premises.
EXHIBIT D Page 4
<PAGE> 66
EXHIBIT E
TELECOM CENTER LA
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of _______, 199_ by and between Telecom Center L.A.,
LLC, a Delaware limited liability company as Landlord, and the undersigned as
Tenant, for Premises on the _____________ floor(s) of the office building
located at ______________, Los Angeles, California _________, certifies as
follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained in
EXHIBIT A represent the entire agreement between the parties as to the Premises
and the project of which the Premises are a part.
2. The undersigned currently occupies the Premises described in the
Lease, the Lease Term commenced on __________, and the Lease Term expires on
_________, and the undersigned has no option to terminate or cancel the Lease or
to purchase all or any part of the Premises, the Building and/or the Project.
3. Base Rent became payable on _________.
4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
5. Tenant has not transferred, assigned, or sublet any portion of
the Premises nor entered into any license or concession agreements with respect
thereto except as follows:
6. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of Landlord's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and
all monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Base Rent is
$_______________.
8. To Tenant's knowledge, all conditions of the Lease to be
performed by Landlord necessary to the enforceability of the Lease have been
satisfied and Landlord is not in default thereunder. In addition, the
undersigned has not delivered any notice to Landlord regarding a default by
Landlord thereunder.
9. No rental has been paid more than thirty (30) days in advance
and no security has been deposited with Landlord except as provided in the
Lease.
10. As of the date hereof, there are no existing defenses or
offsets, to the undersigned's knowledge, claims or any basis for a claim, that
the undersigned has against Landlord.
11. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Estoppel Certificate and that each person signing on behalf of
Tenant is authorized to do so.
12. There are no actions pending against the undersigned or any
guarantor of the Lease under the bankruptcy or similar laws of the United States
or any state.
13. Other than in compliance with all applicable laws and incidental
to the ordinary course of the use of the Premises, the undersigned has not used
or stored any hazardous substances in the Premises.
EXHIBIT E Page 1
<PAGE> 67
14. To the undersigned's knowledge, all tenant improvement work to
be performed by Landlord under the Lease has been completed in accordance with
the Lease and has been accepted by the undersigned and all reimbursements and
allowances due to the undersigned under the Lease in connection with any tenant
improvement work have been paid in full.
The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.
Executed at ______________ on the _____ day of ________________, 19__.
"TENANT"
___________________________________, a
___________________________________
By: ________________________________
Name: __________________________
Title: _________________________
EXHIBIT E Page 2
<PAGE> 68
EXHIBIT F
TELECOM CENTER LA
TELECOMMUNICATIONS CONDUIT AGREEMENT
This TELECOMMUNICATIONS AND CONDUIT AGREEMENT (the "Agreement") is
entered into as of the ____ day of _______________ [OF EVEN DATE WITH THE LEASE]
by and between TELECOM CENTER LA, LLC, a Delaware limited liability company
("Landlord") and UNIVERSAL ACCESS, an Illinois corporation.
R E C I T A L S:
A. Landlord and Tenant entered into that certain Office Lease (the
"Lease") dated as of _______________ pursuant to which Landlord leased to Tenant
and Tenant leased from Landlord that certain space known as Suite _____________
of the building located at 530 W. 6th Street, Los Angeles, CA (the "Building").
B. As part of Tenant's operation in the Premises, Tenant now
desires to utilize portions of conduit contained in the Project CDS, to run its
Lines to other locations in the Project.
C. Unless otherwise expressly stated herein, all capitalized terms
shall have the same meaning given them in the Lease.
W I T N E S S E T H:
1. Lease and Use of Conduit. Landlord hereby leases to Tenant, as
part of the Premises for the balance of the Lease term, the conduit space
described below (the "Conduit Space"). Tenant shall use the Conduit Space solely
for telecommunications cable to connect the Premises to the premises of other
telecommunications companies that lease space on the floors of the Building
through which the Conduit Space passes. Any such connection shall require the
mutual written agreement of Tenant and the other affected telecommunications
company.
The Conduit Space is contained within one four-inch conduit running from
_____________ through floor _____________. The location of the Conduit Space is:
In the conduit closet located in the northwest corridor of the building
on each floor.
The Conduit Space runs through a conduit closet on each affected floor
of the Building. Access to the conduit closet on each floor shall, at Landlord's
election, be restricted so that no entry to the closet will be permitted unless
Landlord's designated contractor or other representative is present. Landlord
may require any installation of cable in the Conduit Space or any connection of
Tenant's cable to the Premises or cable of other tenants in the Building to be
performed by Landlord's approved contractor. All costs of such installations and
connections and the ongoing use and maintenance of such items shall be at
Tenant's sole expense. Tenant shall pay Landlord any costs actually incurred by
Landlord, together with Landlord's administrative fee, within thirty (30) days
after Tenant's receipt of a bill for such items. Tenant's use of the Conduit
Space and such cable connecting lines shall comply with all applicable laws, the
other provisions of the Lease, and such Building Rules as are adopted by
Landlord from time to time, and shall not interfere in any way with the
operation of the Building or with the use by any other tenant of the Building of
such tenant's premises or the common areas of the Building. All required cabling
and connecting lines shall be installed out of sight.
EXHIBIT F Page 1
<PAGE> 69
Prior to any installation of cable in the Conduit Space or connecting
lines to the Premises or the premises of other tenants. Tenant shall obtain
Landlord's written approval of (i) the plans and specifications for all such
work; (ii) a description of the areas to which Tenant or the contractor will
require access both for the initial work and for ongoing maintenance of the
installations; (iii) the names and credentials of all contractors who will
perform such work (subject to Landlord's right to require the use of Landlord's
approved contractor); (iv) copies of all liability, casualty and worker's
compensation insurance applicable to the construction, maintenance and ongoing
operation of the improvements and installations; (v) copies of all governmental
permits required for the work; and (vi) in the case of connecting lines to the
Premises or cable systems of another tenant, the written consent of such other
tenant to the work. Any such connection outside of the conduit closet shall be
subject to Landlord approval and shall be governed by a separate lease agreement
provided that Tenant's use of the One Wilshire Conduit shall be pre-approved by
Landlord.
2. Conduit Rent. Tenant agrees to pay Landlord additional rent for
the Conduit Space, which initially shall be a one-time payment of $________ due
and payable upon execution of this Agreement. (No portion of such payment shall
be refundable if the Lease is terminated due to Tenant's default prior to the
end of such period.) Thereafter, the additional rent for the Conduit Space shall
be $________ per month, subject to adjustment as provided below. Such additional
rent shall be due and payable to Landlord on the first day of each month or
portion of a calendar month throughout the balance of the Lease term, together
with Tenant's Base Rent and other monthly charges, with the first such
installment of additional rent due on __________. Thereafter, the amount of such
monthly conduit rent may be adjusted by Landlord from time to time in its sole
discretion upon prior written notice to Tenant.
3. Indemnity and Waiver. Tenant hereby agrees to indemnify and hold
harmless Landlord and its partners, its agent JMA Properties, Inc. and their
respective officers, directors, shareholders, agents and employees
(collectively, the "Landlord Group") from and against any and all claims
(including but not limited to claims for bodily injury or property damage),
actions, mechanic's liens, losses, liabilities, and expenses (including
reasonable attorney fees and costs of defense by Landlord's legal counsel)
(collectively, "Claims"), which may arise from the installation, operation, use,
maintenance or removal of the cable and connecting lines pursuant to this
Agreement. Similarly, Tenant shall pay upon demand by Landlord the costs to
repair any damage to the Building caused by such installation, operation, use,
maintenance or removal. Tenant hereby waives and releases the Landlord Group
from any Claims Tenant may have at any time (including but not limited to Claims
relating to interruptions in services) arising out of relating in any way to the
installation, operation, use, maintenance, or removal of the cable and
connecting lines described in this Agreement, whether or not caused by the
negligence of any member of the Landlord Group or Landlord's contractors.
4. Removal of Cable and Connecting Lines. Tenant agrees that, upon
the expiration or termination of the Lease, Tenant (or, at Landlord's election,
the contractor designated by Landlord) shall promptly remove, at Tenant's sole
and cost and expense, all cable, connecting lines, and other installations
installed under this Agreement (excepting the 4-inch conduit itself, which shall
remain the property of Landlord), and restore those portions of the Building
damaged by such removal to their condition immediately prior to the installation
of such items. If Tenant fails to promptly remove all such items pursuant to
this Section 4, or if Landlord elects to have such work performed by Landlord's
contractor, Landlord may remove such items installed hereunder, and restore
those portions of the Building damaged by such removal to their condition
immediately prior to the installation, in which case Tenant agrees promptly to
pay Landlord's reasonable costs of removal and restoration.
5. Applicability of Other Provisions. Except as explicitly provided
otherwise herein, Tenant's obligations under the Lease for the protection of the
Building, Landlord, the Landlord Group, and third parties, including but not
limited to Tenant's obligations regarding maintenance, repairs, mechanic's
liens, insurance, attorneys' fees and costs of suit, shall apply in the same
fashion with respect to Tenant's use of the Conduit Space and the cable and
connecting lines described in this Agreement as they do with respect to Tenant's
use of the Premises.
EXHIBIT F Page 2
<PAGE> 70
6. Miscellaneous. This Lease supersedes all prior or
contemporaneous understandings, negotiations, or agreements between the parties,
whether written or oral with respect to its subject matter. This Lease may be
further amended only in a writing signed by both Landlord and Tenant.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and at the place first written above.
LANDLORD TELECOM CENTER LA, LLC, a Delaware limited
liability company
By:
-------------------------------------
Its:
---------------------------------
By:
-------------------------------------
Its:
---------------------------------
TENANT UNIVERSAL ACCESS, an Illinois corporation
By: /s/ ROBERT J. POMMER
-------------------------------------
Its: Chief Operating Officer
--------------------------------
By:
-------------------------------------
Its:
---------------------------------
EXHIBIT F Page 3
<PAGE> 1
Exhibit 10.12
OFFICE LEASE
" 200 S.E. FIRST STREET BUILDING - 200 S.E. FIRST STREET
MIAMI, FLORIDA
LANDLORD:
EWE OFFICE INVESTMENTS II, LTD.
TENANT:
UNIVERSAL ACCESS, INC.
PREMISES:
SUITE NO. "C" ON FOURTH FLOOR
<PAGE> 2
BASIC TERM SHEET
OFFICE LEASE
"" - 200 S.E. First Street Building
The following provisions and terms are incorporated as Sections I.2 and 1.3 in
the Lease between Landlord and Tenant.
I.2.1 - LANDLORD: EWE OFFICE INVESTMENTS II, LTD.
I.2.2 - TENANT: UNIVERSAL ACCESS, INC.
I.2.3 - BUILDING: 200 S.E. First Street, Miami Florida
33131
which is currently known as 200 S.E. First
Street Building
I.2.4 - PREMISES: Suite "C" on Fourth Floor, having a gross rentable
area which Landlord and Tenant designate for purposes of this
Lease to be 5,368 square feet.
I.2.5 - USE OF PREMISES: Telecommunications Switching Equipment and
Co-Location Services provider and licensor, (it being
understood and agreed between the parties that no more than
20% of the area of the Premises may be licensed to any one
Co-Locator).
I.2.6 - TENANT'S TRADE NAME: N/A
I.2.7 - LEASE TERM: 10 year(s) and 5 month(s).
I.2.8 - LEASE COMMENCEMENT DATE (Section I.6): April 1, 1999 on which
date possession of the Premises shall be granted to Tenant.
Lease Expiration Date (Section I.6): August 31, 2009.
I.2.9 - RENT COMMENCEMENT DATE (Section I.7): September 1, 1999; the 5
month period between the Lease Commencement Date and the Rent
Commencement Date includes a two month period which Tenant may
use for construction of Tenant's Improvements and a three
month rent abatement period.
I.2.10 - FIXED MINIMUM RENT (Section II.1): $1,088,846.18, payable the
first of each month as follows, plus all applicable taxes:
<TABLE>
<CAPTION>
YEAR ANNUAL RENT MONTHLY RENT
<S> <C> <C>
1 $ 93,940.00 $ 7,828.33 For 7 Months
2 $ 96,758.20 $ 8,063.18
3 $ 99,660.95 $ 8,305.08
4 $102,650.78 $ 8,554.23
5 $105,730.30 $ 8,810.86
6 $108,902.21 $ 9,075.18
7 $112,169.28 $ 9,347.44
8 $115,534.36 $ 9,627.86
9 $119,000.39 $ 9,916.70
10 $122,570.40 $10,214.20 For 17 Months
</TABLE>
I.2.11 - FIXED MINIMUM RENT INCREASE(S) -N/A
BASIC STANDARD (BASE MONTH): N/A
I.2.12 - CONSTRUCTION PLANS SUBMISSION DATE: N/A
I.2.13 - LANDLORD'S CONTRIBUTION: $N/A
I.2.14 - SECURITY DEPOSIT (SECTION X.1): SEE SECTION I.2.18.
I.2.15 - TENANT'S PARTICIPATION IN OPERATING EXPENSES AND TAXES
(SECTION IV.1): PROPORTIONATE SHARE: 3.9%.
<PAGE> 3
BASE OPERATING YEAR: 1999 BASE TAX YEAR: 1999.
FIRST OPERATING EXPENSE ADJUSTMENT PAYMENT DATE: January 1,
2000.
FIRST TAX ADJUSTMENT PAYMENT DATE: January 1, 2000.
I.2.16 - ADDRESSES FOR NOTICES (Section XII.1):
TENANT: UNIVERSAL ACCESS, INC.
100 N. Riverside Plaza, Suite 2200
Chicago, IL 60606
Attn.: Robert J. Pommer
after the Commencement Date: the Premises
LANDLORD: EWE OFFICE INVESTMENTS II, LTD
1111 Lincoln Road Suite 800
Miami Beach, Florida 33139
Attn.: David Garfinkle
With a copy to: 200 SE FIRST STREET BUILDING
200 SE First Street, Management
Office; Attention: Building Manager
Miami, FL 33131
I.2.17 - GUARANTORS: N/A
I.2.18 - ADDITIONAL TERMS:
BASE YEAR: The values for use in the determination of Base
Operating Year and Base Tax Year in Article IV shall be based
upon a grossed up 95% occupancy level.
OPERATING EXPENSE DEFINITIONS: The definition of Operating
Expenses in Section IV.2 shall not include any janitorial
services for other tenants and shall not include charges for
the cost of utility charges, maintenance or repair of any HVAC
equipment to the extent such costs are for the use of other
tenants (which may be determined by a pro ration of the total
cost of utility charges by the percentage of the Building's
space taken up by Common Areas as against tenant areas.
LANDLORD'S IMPROVEMENTS: If Landlord's Improvements are not
completed within thirty (30) days (the "Landlord's Improvements
Completion Date") after the date this Lease is executed by the
last of the two parties to execute it, or Landlord is otherwise
unable to deliver possession of the Premises on the Landlord's
Improvements Completion Date for any reason, then Tenant shall
be entitled to a rent abatement commencing on the Rent
Commencement Date equal to one day of Rent for each day
Landlord's Improvements are not completed or possession is not
delivered past the Landlord's Improvements Completion Date;
provided further, however, that if Landlord's Improvements are
not Substantially Completed or possession is not delivered on
or before (sixty) 60 days after the Landlord's Improvements
Completion Date, Tenant may terminate this Lease and neither
party shall have any further obligations to the other under
this Lease. Landlord, at its sole cost and expense, shall make
the following improvements within the Premises in accordance
with Building Standard Materials, and in accordance with the
Building Code of the City of Miami, Florida and with all other
governmental entities which have jurisdiction over the work to
be done, which
<PAGE> 4
improvements shall be completed by Landlord and possession of
the Premises delivered to Tenant on or before May 1, 1999;
provided, however, that Landlord shall not be responsible for
this schedule unless (i) Tenant has executed this Lease and
delivered it to Landlord on or before March 31, 1999; (ii)
Tenant shall have responded in writing to each of Landlord's
written requests for Tenant's choices required under this
Section within three (3) business days of delivery of any such
request to Tenant; and (iii) any interruption or delay of
Landlord's performance hereunder which may be caused by an Act
of God or any other event of Force Majeure:
Demolition of all existing walls, acoustical ceilings, existing
lighting fixtures, electrical conduit, plumbing, flooring,
radiators, and the like within the Premises including, but not
limited to, washrooms and public corridors. Removal of all
asbestos flooring tile, pipe insulation, and lead paint.
Installation of demising partitions including reasonable sound
attenuation materials and decoration by painting with one
primer coat and two finish coats of Tenant's reasonable choice.
Installation of a solid core, stain grade wood door at the
entry into the Premises.
Installation of 400 amps of the Building's 480, 3 phase
electrical service to a location within the Premises as
reasonably determined by Tenant. Additional amps of such
electrical service may be available at the price of $125.00 per
Amp, in the manner provided for in Section 3 (a) of Exhibit A
to the Telecommunications Rider.
Provide openings (of such size and location as Tenant may
reasonably determine) on the south wall of the Premises for
such intake and exhaust louvers reasonably required for
Tenant's air cooled Liebert Air Conditioning units which Tenant
plans to install in the Premises, provided that Landlord shall
only be responsible for such contracted-for-work actually done
by or for it hereunder.
TENANT'S IMPROVEMENTS: Tenant may make improvements within the
Premises in accordance with the provisions of Articles V and VI
hereof. Tenant shall coordinate its work with Landlord's work
to avoid interference with each other and to permit Landlord to
complete its work in a timely and efficient manner. Tenant
shall be responsible for the payment of all electrical utility
charges for the Premises during the period from Landlord's
Improvements Completion Date through the Rent Commencement
Date.
ADDITIONAL TELECOMMUNICATIONS UNDERSTANDINGS: In addition to
the parties commitments under the Telecommunications Rider,
Landlord agrees to provide Tenant, free of charge, for the
duration of the Term of the Lease and the Renewal Option Terms,
with one pair of dark fiber connections between the Meet Me
Room in the Building and the Meet Me Room in the New World
Tower Office
<PAGE> 5
Building, 100 N. Biscayne Blvd., Miami, FL 33132 subject to the
written agreement thereto of the owner of the New World Tower
Office Building. Landlord represents to Tenant that Landlord
shall obtain such written agreement which shall include the
License to Tenant under the standard form of License Agreement
used therefor (which Tenant shall sign) of a 4' x 6' cage at
the license fee of $750 per month.
EARLY TERMINATION OPTION; Tenant shall have the right to
terminate the Lease at any time during the Term of the Lease on
the following terms and conditions: Such Option shall commence
at the end of the 48th month after the Lease Rent Commencement
Date; Tenant shall give Landlord not less than six months'
prior written notice of Tenant's exercise of such Option;
Tenant shall pay Landlord an early termination fee at the time
of Tenant's exercise of such Option, in the amount of twelve
(12) month's Base Rent at the rate in effect as of the Early
Lease Termination Date, provided, however, that such fee shall
be reduced for each month during the Term of the Lease after
such 48th month which additional month is not the subject of a
termination hereunder by 1/72nd of such rate; and, in addition
thereto, the payment by Tenant to Landlord of the unamortized
real estate broker commissions (computed without charges for
interest, imputed or otherwise) amortized over the term of the
Lease.
LEASE RENEWAL OPTION: Tenant is granted two (2) five (5) year
lease renewal options on all of the terms and conditions set
forth herein with the exception that there will be no further
lease renewal options, there shall be no Landlord's
Improvements or other matters specific to the initial leasing
of the Premises and the Fixed Minimum Rent shall be modified as
provided for herein, subject to the following provisions: (i)
Tenant shall exercise such Option, if at all, by written notice
to Landlord delivered not less than six (6) months prior and
not more than nine (9) months prior to the expiration date of
the Lease Term or the First Renewal Term, as the case may be
(failure to timely exercise such Option shall result in the
termination of all remaining option terms); (ii) the Lease
shall be in full force and effect and Tenant is not in default
under any of the Lease provisions as of the date of exercise of
the Option and the expiration date and no condition exists
which with notice of passage of time would constitute a default
by Tenant under this Lease; and (iii) The Option to Renew shall
be void if at any time during the last twenty four (24) months
of the then current Lease Term (including, but not limited to,
the period of time between the date of the exercise of the
Option and the date upon which the current Lease Term would
normally expire) the Landlord, in order to enforce its rights
under the Lease has in good faith and with reasonable basis
under
<PAGE> 6
this Lease and applicable law (a) brought an action to collect
Rent from Tenant, or (b) brought an action to recover
possession of the Premises from Tenant; or (c) brought an
action to dispossess Tenant (iv) the Base Rent for the first
year of each such Renewal Term shall be at the Fair Market
Rental Rate for similar space in the Downtown Miami Business
District as determined by Landlord within two (2) weeks after
receipt of Tenant's written notice of exercise of such renewal
option but not less than six (6) months less (1) week prior to
the expiration date of the Term; provided, however, that Tenant
may rescind such exercise of an Option by written notification
of such rescission to Landlord not more than five (5) business
days after receipt by Tenant of Landlord's determination.
RIGHT OF FIRST REFUSAL: Tenant shall have the right of first
refusal on any proposed lease to a third party of Suite B on
the Fourth Floor of the Building (located as set forth on
Exhibit B annexed hereto) for the Lease Term. For any exercise
of such right by Tenant during the first six (6) months of the
Lease Term the terms and conditions for Tenant's lease of Suite
B will be the same terms and conditions as contained herein for
the Premises. For any exercise of such right by Tenant after
the first six (6) months of the Lease Term, the terms and
conditions of that certain bona fide lease proposal from a
non-related third party that triggers Tenant's right shall
become the terms and conditions of the lease between Landlord
and Tenant for Suite B. Tenant shall exercise such Right, if at
all, by written notice of exercise delivered to Landlord no
later than five (5) business days after the receipt by Tenant
from Landlord of written notice of Landlord's receipt of such
bona fide lease proposal from such non-related third party
(including the terms and conditions of such third party offer).
SECURITY DEPOSIT: As and for the security deposit required to
be made by Tenant under Section X.1 Tenant shall deposit with
Landlord on April 1, 1999, an irrevocable standby letter of
credit (with terms and conditions reasonably satisfactory to
Landlord) in the sum of $200,000.00 written by a USA located
bank with assets of more than $2,000,000,000.00, which bank is
reasonably acceptable to Landlord, in favor of Landlord, which
may be drawn upon by Landlord at any time during the period
commencing April 1, 1999 and ending September 30, 2002, in the
event of any breach of the terms and conditions of the Lease in
the manner set forth in Section X.1 of the Lease. Any amount
drawn down by Landlord hereunder shall be replaced by Tenant
within one month after such draw down, without need for demand
or notice by Landlord. Commencing the Landlord's Improvements
Completion Date, the sum of the Letter of Credit shall be
reduced by 1/30th of the original sum
<PAGE> 7
($6,666.67) for each of the next 30 months, with the exception
of any month during which Landlord makes any draw down and for
one additional month thereafter and until such draw down has
been replaced in full by Tenant. As of September 1, 2002, or
such later date when Tenant has no further obligation under
this provision to maintain in effect any standby letter of
credit, Tenant shall deposit with Landlord $10,214.20 as the
Security Deposit under Section X.1.
PREPAID RENT: Upon the execution of this Lease, Tenant shall
prepay to Landlord the Rent due for the month of September,
1999.
I.3 - EXHIBIT A - Legal Description
EXHIBIT B - Site Plan
EXHIBIT C - Rules and Regulations
EXHIBIT D - Telecommunications Rider
EXHIBIT E - SNDA AGREEMENT
EXHIBIT F OPERATING EXPENSE EXCLUSIONS
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
LANDLORD COVENANTS; PRIMARY LEASE PROVISIONS;
EXHIBITS; PREMISES; USE OF PREMISES; TERM
Section 1.1 COVENANTS OF LANDLORD'S AUTHORITY AND
QUIET ENJOYMENT 1
Section 1.2 PRIMARY LEASE PROVISIONS 1
Section 1.3 EXHIBITS 1
Section 1.4 PREMISES LEASED BY TENANT 1
Section 1.5 USE OF PREMISES 2
Section 1.6 LEASE TERM 2
Section 1.7 RENT COMMENCEMENT DATE 2
Section 1.8 LEASE YEAR 2
Section 1.9 ACCEPTANCE OF PREMISES 2
ARTICLE II
RENT
Section 2.1 FIXED MINIMUM RENT 2
Section 2.2 FIXED MINIMUM RENT INCREASE 3
Section 2.3 LATE PAYMENT ADMINISTRATIVE FEE 4
Section 2.4 ADDITIONAL RENT - DEFINITION 4
Section 2.5 SALES TAX 5
ARTICLE III
SERVICES
Section 3.1 SERVICES OF LANDLORD 5
Section 3.2 SERVICES OF TENANT 6
Section 3.3 NO EVICTION 6
Section 3.4 SECURITY 7
Section 3.5 PARKING 7
ARTICLE IV
OPERATING EXPENSES AND TAXES
Section 4.1 TENANT'S PARTICIPATION IN OPERATING
EXPENSES AND TAXES 7
Section 4.2 DEFINITION OF OPERATING EXPENSES 8
Section 4.3 TENANT'S TAXES 8
Section 4.4 TAXES INCLUDED 8
Section 4.5 RECEIPT OF NOTICES 9
ARTICLE V
TENANT'S INITIAL IMPROVEMENTS
Section 5.1 CONSTRUCTION PLANS 9
Section 5.2 PLANS REVIEW 10
</TABLE>
(i)
<PAGE> 9
<TABLE>
<S> <C> <C>
Section 5.3 PAYMENT 11
Section 5.4 TENANT DELAY 11
Section 5.5 SUBSTANTIAL COMPLETION 12
Section 5.6 EARLY OCCUPANCY 13
Section 5.7 REVISIONS 13
Section 5.8 COMPLETION DUE DILIGENCE 13
</TABLE>
(ii)
<PAGE> 10
<TABLE>
<S> <C> <C>
ARTICLE VI
ADDITIONS, ALTERATIONS, REPLACEMENTS, AND TRADE FIXTURES
Section 6.1 BY LANDLORD 14
Section 6.2 BY TENANT 15
Section 6.3 CONSTRUCTION INSURANCE AND INDEMNITY 15
Section 6.4 MECHANIC'S LIENS AND ADDITIONAL
CONSTRUCTION 16
Section 6.5 TRADE FIXTURES 17
Section 6.6 RIGHT OF ENTRY 18
ARTICLE VII
INSURANCE AND INDEMNITY
Section 7.1 TENANT'S INSURANCE 18
Section 7.2 EXTRA HAZARD INSURANCE PREMIUMS 19
Section 7.3 INDEMNITY 20
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 8.1 DAMAGE OR DESTRUCTION BY FIRE OR
OTHER
CASUALTY 20
Section 8.2 CONDEMNATION 20
ARTICLE IX
DEFAULT, REMEDIES
Section 9.1 DEFAULT 22
Section 9.2 REMEDIES 23
Section 9.3 TERMINATION 23
Section 9.4 NO REINSTATEMENT AFTER TERMINATION 24
Section 9.5 RETENTION OF SUMS AFTER TERMINATION 24
Section 9.6 RE-ENTRY 24
Section 9.7 SUMS COLLECTED UPON RELETTING 25
Section 9.8 NO EFFECT ON SUIT 25
Section 9.9 WAIVER OF RIGHTS OF REDEMPTION 26
Section 9.10 USE OF WORD "RE-ENTRY" 26
Section 9.11 LANDLORD'S RIGHT TO CURE TENANT'S
DEFAULTS 26
Section 9.12 LANDLORD'S EXPENSES 26
ARTICLE X
SECURITY
Section 10.1 SECURITY DEPOSIT 27
Section 10.2 PERSONAL PROPERTY 28
ARTICLE XI
ADDITIONAL TENANT AGREEMENTS
</TABLE>
(iii)
<PAGE> 11
<TABLE>
<S> <C> <C>
Section 11.1 MORTGAGE FINANCING AND SUBORDINATION 28
Section 11.2 ASSIGNMENT OR SUBLETTING 29
Section 11.3 TENANT'S NOTICE TO LANDLORD OF
DEFAULT 30
Section 11.4 SHORT FORM LEASE 30
Section 11.5 SURRENDER OF PREMISES AND HOLDING
OVER 30
Section 11.6 ESTOPPEL CERTIFICATE 31
Section 11.7 DELAY OF POSSESSION 31
Section 11.8 COMPLIANCE WITH LAW 31
Section 11.9 RULES AND REGULATIONS 33
Section 11.10 ABANDONMENT 33
Section 11.11 LANDLORD'S LIEN 33
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 NOTICES 34
Section 12.2 ENTIRE AND BINDING AGREEMENT 35
Section 12.3 PROVISIONS SEVERABLE 35
Section 12.4 CAPTIONS 35
Section 12.5 RELATIONSHIP OF THE PARTIES 35
Section 12.6 ACCORD AND SATISFACTION 35
Section 12.7 BROKER'S COMMISSION 35
Section 12.9 MISCELLANEOUS 36
Section 12.10 FINANCIAL STATEMENTS 37
Section 12.11 RELOCATION 38
Section 12.12 NON-WAIVER PROVISIONS 38
Section 12.13 RADON GAS 38
Section 12.14 LIMITATION OF LIABILITY 38
</TABLE>
(iv)
<PAGE> 12
OFFICE LEASE
200 S.E. FIRST STREET BUILDING
THIS LEASE ("Lease") is made and entered into as of this 29th day of
March, 1999 by and between Landlord and Tenant:
Landlord demises and rents to Tenant, and Tenant leases from Landlord,
the Premises now existing in Landlord's Building, upon the terms, covenants and
conditions contained herein.
ARTICLE I
LANDLORD COVENANTS; PRIMARY LEASE PROVISIONS;
EXHIBITS; PREMISES; USE OF PREMISES; TERM
Section I.1 COVENANTS OF LANDLORD'S AUTHORITY AND QUIET ENJOYMENT.
Landlord represents and covenants that (a) prior to commencement of the
Lease Term, it will have either good title to or a valid leasehold interest in
the land and Building of which the Premises form a part, and (b) upon performing
all of its obligations under this Lease, Tenant shall peacefully and quietly
have, hold and enjoy the Premises for the Lease Term.
Section I.2 PRIMARY LEASE PROVISIONS
The provisions and terms of Sections I.2.1 through I.2.18 the Basic Term
Sheet are incorporated in this Lease as a part of this Section I.2, and are
subject to the additional provisions of this Lease.
Section I.3 EXHIBITS
The exhibits, riders and attachments described on the Basic Term Sheet
are incorporated in and made part of this Lease as part of this Section I.3.
Section I.4 PREMISES LEASED BY TENANT
I.4.1 The Premises are leased by Tenant from Landlord. The
approximate boundaries and location of the Premises are outlined on the Site
Plan diagram of the Building (Exhibit "B"), which sets forth the general layout
of the Building but which shall not be deemed to be a warranty, representation,
or agreement upon the part of the Landlord that the Building and layout will be
exactly as indicated on said diagram.
I.4.2 The Premises, for the purpose of this Lease, shall extend
to the exterior faces of all walls or to the building line where there is no
wall, or to the center line of those walls separating the Premises from other
premises in the Building, together with the appurtenances specifically granted
in this Lease, but reserving and excepting to Landlord the use
<PAGE> 13
of the exterior walls and the roof and the right to install, maintain, use,
repair and replace pipes, ducts, conduits, and wires leading through the
Premises in locations which will not materially interfere with Tenant's use
thereof or otherwise disrupt Tenant's business operations taking note of the
usual lack of occupancy of the Premises by humans.
Section I.5 USE OF PREMISES
The Premises shall be used and occupied only for the Use specified in
the Basic Term Sheet, under Tenant's Trade Name specified in the Basic Term
Sheet, and for no other purpose or purposes without Landlord's prior written
consent. Tenant shall, at its own risk and expense, obtain all governmental
licenses and permits necessary for such use.
Section I.6 LEASE TERM
The Lease Commencement Date, the Lease Term and the Lease Termination
Date shall be for the period specified in the Basic Term Sheet, unless sooner
terminated or extended as provided in this Lease.
Section I.7 RENT COMMENCEMENT DATE
Provided Landlord's Improvements are completed in accordance with the
"Landlord's Improvements" section of Section I.1.18 of this Lease, Tenant shall
commence payment of Rent the date specified in the Basic Term Sheet The Rent
Commencement Date shall be specified by both parties in writing no later than
five (5) days after Landlord's Improvements Completion Date , upon request of
either party. If the Rent Commencement Date falls on a day other than the first
day of a calendar month, the Fixed Minimum Rent for such month shall be prorated
on a per diem basis, calculated on the basis of a thirty (30) day month.
Section I.8 LEASE YEAR
For purpose of this Lease, the term "Lease Year" is defined to mean a
fiscal year (beginning on the anniversary of the Lease Commencement Date and
extending through the date prior to the next anniversary of the Lease
Commencement Date of any given year). Any portion of a year which is less than a
Lease Year, shall be defined as a Partial Lease Year.
Section I.9 ACCEPTANCE OF PREMISES
Tenant acknowledges that it has fully inspected and accepts the Premises
in their present condition and "as is", except for latent defects (for which
latent defects Landlord's liability, if any, shall terminate six (6) months
after the Landlord's Improvements Completion Date as indicated in Article V and
in the Basic Term Sheet if applicable, and that the same are suitable for the
use specified in the Basic Term Sheet.
-2-
<PAGE> 14
ARTICLE II
RENT
Section II.1 FIXED MINIMUM RENT
II.1.1 The total Fixed Minimum Rent for the Lease Term as
specified in the Basic Term Sheet shall be payable by Tenant as specified in the
Basic Term Sheet.
II.1.2 The phrase "Fixed Minimum Rent" shall be the Fixed
Minimum Rent specified above, payable monthly in advance on the first day of
each month, without prior demand therefore and without any deduction or setoff
whatsoever. In addition, Tenant covenants and agrees to pay Landlord all
applicable sales or other taxes as set forth in Section II.5, which may be
imposed on the above specified rents or payments hereinafter provided for to be
received by Landlord when each such payment is made.
Section II.2
THIS SECTION HAS BEEN INTENTIONALLY DELETED.
Section II.3 LATE PAYMENT ADMINISTRATIVE FEE.
If a Rent payment is not received within five (5) days after its due
date, administrative fees and late charges of $50.00, plus an ongoing charge of
15% ("Annual Rate"), which shall accrue on the unpaid Rent including Additional
Rent) shall become immediately due and payable from Tenant to Landlord, without
notice or demand. This provision for administrative fees and late charges is
not, and shall not be deemed, a grace period. In the event any check, bank draft
or negotiable instrument given for any payment under this Lease shall be
dishonored at any time for any reason whatsoever not attributable to Landlord,
Landlord shall be entitled, in addition to any other remedy that may be
available, to an administrative charge of Two Hundred Dollars ($200.00). Such
administrative fees and late charges are neither penalties nor interest charges,
but liquidated damages to defray administrative, collection, and related
expenses due to Tenant's invalid payment or to Tenant's failure to make such
Rent payment when due. An additional administrative fee and late charge shall
become immediately due and payable on the first day of each month for which all
or a portion of a Rent payment (together with any administrative fee and late
charge) remains unpaid. Landlord, at its option, may deduct any such charge from
any Security Deposit held by Landlord and, in such event, Tenant shall
immediately deposit a like amount with Landlord in accordance with the terms of
Section X.1. All sums which Tenant shall be obligated to pay to Landlord from
time to time pursuant to this Lease shall be deemed part of the Rent. In the
event of the nonpayment by Tenant of such sums, Landlord shall have the same
rights and remedies by reason of such nonpayment as if Tenant had failed to pay
any Rent.
-3-
<PAGE> 15
Section II.4 ADDITIONAL RENT - DEFINITION
In addition to the foregoing Fixed Minimum Rent, all payments to be
made under this Lease by Tenant to Landlord shall be deemed to be and shall
become Additional Rent hereunder and, together with Fixed Minimum Rent, shall be
included in the term "Rent" whenever such term is used in this Lease. Unless
another time is expressly provided for the payment thereof, any Additional Rent
shall be due and payable on demand or together with the next succeeding
installment of Fixed Minimum Rent, whichever shall first occur, together with
all applicable State taxes and interest thereon at the Annual Rate, and
Landlord shall have the same remedies for failure to pay the same as for
non-payment of Fixed Minimum Rent. Landlord, at its election, shall have the
right, after ten (10) days prior written notice to Tenant, to pay or do any act
which requires the expenditure of any sums of money by reason of the failure or
neglect of Tenant to perform any of the provisions of this Lease, and in the
event Landlord elects to pay such sums or do such acts requiring the expenditure
of monies, all such sums so paid by Landlord, together with interest thereon,
shall be deemed to be Additional Rent and payable as such by Tenant to Landlord
upon demand.
Section II.5 SALES TAX
Together with each payment of Rent or other sum on which such tax may be
due, Tenant shall pay to Landlord a sum equal to any applicable sales tax, tax
on rents, and any other charges, taxes, and/or impositions now in existence or
subsequently imposed based upon the privilege of renting the Premises or upon
the amount of rent collected, provided, however, there shall be excluded from
the foregoing, franchise taxes, federal and state income taxes, and other taxes
to the extent applicable to Landlord's general or net income, other than to the
extent any such tax replaces a tax currently levied on rents. Tenant's liability
for such taxes and/or impositions shall be payable whether assessed at the time
the Rent payment is made or retroactively, and shall survive the termination or
expiration of this Lease.
ARTICLE III
SERVICES
Section III.1 SERVICES OF LANDLORD
III.1.1 Landlord shall maintain the public and common areas of
the Building, including lobbies, stairs, elevators, corridors and restrooms, the
windows in the Building, the mechanical, plumbing and electrical equipment
serving the Building, and the structure itself in reasonably good order and
condition except for damage occasioned by the act of Tenant, which damage shall
be repaired by Landlord at Tenant's expense.
III.1.2 Landlord shall furnish the Premises with
-4-
<PAGE> 16
(a) elevator service, if applicable, (b) lighting replacement (for building
standard lights), (c) window washing with reasonable frequency. Landlord shall
not be in default hereunder or be liable for any damages directly or indirectly
resulting from, nor shall the rental herein reserved be abated by reason of (i)
the installation, use or interruption of use of any equipment in connection with
the furnishing of any of the foregoing services, (ii) failure to furnish or
delay in furnishing any such services when such failure or delay in caused by
accident or any condition beyond the reasonable control of Landlord or by the
making of necessary repairs or improvements to the Premises or to the Building,
or other cause other than Landlord's willful malfeasance, (iii) the limitation,
curtailment, rationing or restrictions on use of water, electricity, gas or any
other form of energy serving the Premises or the Building, necessary to furnish
any of the foregoing services, provided the failure of Landlord to provide such
services for a period of time in excess of forty eight (48) continuous hours
shall result in the abatement of Rent on the basis of one day's Rent for each
day such services are not provided and (iv) if Landlord and Tenant have entered
into an agreement whereby Tenant uses Landlord's Backup Generator, the failure
of such Backup Generator to perform as specified except due to the negligence or
willful misconduct of Landlord. Landlord shall use reasonable efforts diligently
to remedy any interruption in the furnishing of such services.
Section III.1.3 INTENTIONALLY DELETED
Section III.2 SERVICES OF TENANT.
Tenant shall, at Tenant's own expense, keep the Premises in good repair
and tenantable condition during the Term, except only for reasonable wear and
tear, fire or other casualty insured against by Tenant or required under this
Lease to be insured against by Landlord, and condemnation. Subject to Article
VII, Tenant shall, at Tenant's expense but under the direction of Landlord,
promptly repair (and make replacements where necessary) any injury or damage to
the Building and the property of which it is a part ("Property"), including, but
not limited to, any and all broken glass, caused by Tenant or Tenant's officers,
personnel, agents, employees, servants, licensees, invitees, guests, patrons, or
customers. Subject to the terms of the Telecommunications Rider, Tenant, at its
sole cost and expense, shall supply all of its electrical service, HVAC service
and janitorial services.
Section III.3 NO EVICTION.
The services described in this Article III shall be provided as long as
this Lease is in full force and effect, no Event of Default by Tenant exists,
subject to interruption caused by unavoidable delay, force majeure or acts of
God, and conditions and causes beyond the control of Landlord. Furthermore,
Landlord reserves the right to stop the service of the air-cooling, elevator,
electrical, backup electrical generator power, plumbing or other mechanical
systems or
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facilities in the Building when necessary, by reason of accident or emergency,
or for repairs until such repairs shall have been completed. Landlord shall
undertake to diligently commence and work toward completion of all necessary
repairs. All discretionary repairs shall be done in a manner and at times, so as
not to unnecessarily interfere with Tenant's Use or disrupt Tenant's business
operations. Landlord shall have no responsibility or liability for interruption,
curtailment or failure to supply cooled or outside air, heat, elevator,
plumbing, electricity or backup electrical generator power when prevented by
exercising its right to stop service or by unavoidable delay or by any cause
whatsoever beyond Landlord's control, or by failure of independent contractors
to perform, or by Legal Requirements, or by mandatory energy conservation, or if
Landlord elects voluntarily to cooperate in energy conservation at the request
of any Legal Authority. The exercise of such right or such failure by Landlord
shall not constitute an actual or constructive eviction, in whole or in part, or
entitle Tenant to any compensation or to any abatement or diminution of Base
Rent or Additional Rent (provided Rent shall be abated if such services are not
restored by Landlord within forty eight (48) hours, or relieve Tenant from any
of its obligations under this Lease, or impose any liability upon Landlord or
its agents by reason of inconvenience or annoyance to Tenant, or injury to or
interruption of Tenant's business, or otherwise.
Section III.4 SECURITY.
Tenant acknowledges that Landlord shall not and does not have any
responsibility for the security of Tenant's officers, personnel, agents,
employees, servants, licensees, invitees, guests, patrons, customers, and all
others who come on or about the Property related to Tenant or Tenant's Use.
Section III.5 PARKING.
If any parking is made available to Tenant by Landlord (but Landlord
does not represent that such parking shall ever be made available), Landlord
shall not be liable for any damage of any nature whatsoever to, or any theft of,
automobiles or other vehicles or the contents of them, while in or about such
parking areas.
ARTICLE IV
OPERATING EXPENSES AND TAXES
Section IV.1 TENANT'S PARTICIPATION IN OPERATING EXPENSES AND TAXES.
IV.1.1 Commencing on the First Adjustment Payment Date, Tenant
shall, on the first day of each month in advance pay to Landlord pro rata
monthly installments on account of the amount reasonably projected by Landlord
for Tenant's Share of increases in Operating Expenses and for Tenant's Share of
increases in Taxes over the Base Operating Year and over the
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Base Tax Year, respectively, based upon the most recent data available to
Landlord, from time to time, for Operating Expenses and for Taxes. Landlord
shall submit to Tenant statement(s) showing the actual amounts which should have
been paid by Tenant with respect to increases in Operating Expenses and with
respect to increases in Taxes for the past calendar year, the amount of those
expenses actually paid during that year by Tenant and the amount of the
resulting balance due on either or both of those expenses, or overpayment of
either of both of them, as the case may be. Landlord shall keep or cause to be
kept records showing the Taxes and Operating Expenses for each calendar year
during the Term. Tenant may object to such statements if, and only if, Tenant,
within one (1) year of receipt by Tenant of such statement, sends a written
notice to Landlord objecting to such statement and specifying the respects in
which such statement is claimed to be incorrect. If such notice is sent, the
parties recognize, as to the Operating Expenses, the unavailability of
Landlord's books and records because of the confidential nature thereof and
hence agree that either party may refer the decision of the issues raised to a
reputable independent firm of certified public accountants selected by Landlord
and reasonably acceptable to Tenant, (the decision of such accountants to be
conclusively binding upon the parties), who shall have the right to review
Landlord's books and records at Landlord's office and accompanying invoice and
payment statements supporting the same, limited to operating expenses of the
Building. The fees and expenses involved in such review shall be borne by Tenant
unless Landlord's charges are found to be in error by more than five percent
(5%), in which case Landlord shall pay such fees and expenses. Notwithstanding
anything to the contrary in this paragraph, if the amount in dispute is less
than $1000 for a calendar year, no third parties shall be utilized for this
purpose by Landlord or Tenant. Any balance shown to be due pursuant to said
statement shall be paid by Tenant to Landlord within thirty (30) days following
Tenant's receipt of the statement and any overpayment shall, at Tenant's option,
be immediately credited against Tenant's obligation to pay expected Additional
Rent in connection with anticipated increases in Operating Expenses or
anticipated increases in Taxes or shall be refunded to Tenant. Anything in this
Lease to the contrary notwithstanding, Tenant shall not delay or withhold
payment of any balance shown to be due pursuant to a statement rendered by
Landlord to Tenant, pursuant to the terms of this Lease, because of any
objection which Tenant may raise with respect to the statement. If at the time
of the resolution of said objection the Term has expired, Landlord shall
immediately refund to Tenant any overpayment found to be owing to Tenant.
IV.1.2 If this Lease expires during a Partial Lease Year, Tenant
shall be responsible for its estimated pro rata share of Operating Expenses and
of Taxes for the Partial Lease Year. Tenant shall remit full payment to Landlord
with the next month's Rent payment and, in any case, within thirty (30) days of
such bill. If Tenant fails to remit such full payment to Landlord, Landlord in
its sole discretion may deduct the amount due from Tenant's Security Deposit and
be
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entitled to all other rights and remedies under this Lease for Tenant's default.
Section IV.2 DEFINITION OF OPERATING EXPENSES
The term "Operating Expenses" shall mean (a) all costs of management,
operation and maintenance of the Building, including, without limitation, wages,
salaries and payroll burden of employees, janitorial, maintenance, guard and
other services, Building management office rent or rental value, power, fuel,
water, waste disposal, landscaping care, premiums for liability, fire, hazard
and other property related insurance, parking area care and management,
reasonable advertising and promotion, fees for energy saving programs,
administrative costs, including management fee, and (b) the cost (amortized over
such reasonable period as landlord shall determine) of any capital improvements
made to the Building by Landlord after the date of this Lease that are intended
to reduce the Operating Expenses or that are required under any governmental law
or regulation; provided, however, that Operating Expenses shall not include real
property taxes or assessments (which are included in "Taxes"), depreciation on
the Building, costs of tenant improvements, real estate brokers' commissions,
interest and capital items other than those referred to in clause (b) above.
Excluded from the definition of Operating Expenses are those items specifically
set forth on Exhibit E annexed hereto.
Section IV.3 TENANT'S TAXES
Tenant covenants and agrees to pay promptly when due all taxes imposed
upon its business operations and its personal property situated in the Premises.
Section IV.4 TAXES INCLUDED.
The term "Taxes" shall mean any tax, excise and/or assessment (other
than income or franchise tax) levied, assessed or imposed by any governmental
taxing authority, acting under any present or future law, ordinance, or
regulation, upon or against or in any way related to the land and buildings
comprising the Building, either by way of substitution or in addition to any
existing tax on land and building otherwise, Tenant shall be responsible for and
shall pay to Landlord its Proportionate Share of the increase in Taxes over the
amount of Taxes paid for the Base Tax Year. Taxes shall not include interest and
penalties for late payment except to the extent caused when Landlord, acting in
good faith, has appealed any tax or assessment in any administrative or judicial
proceeding. If assessments or other special taxes that are payable in
installments are levied against the Property, Landlord shall pay such
assessments or taxes in installments over the maximum periods of time permitted
by law, except if such actions are prohibited in any mortgage, mortgage note or
loan agreement pertaining to the Building to which Landlord is a party or any
Lease with a third party tenant of the Building.
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Section IV.5 RECEIPT OF NOTICES.
Failure of Landlord to furnish in a timely manner a statement of actual
increases in Operating Expenses or Taxes or to give notice of an adjustment to
rent under this Article IV shall not prejudice or act as a waiver of Landlord's
right to furnish such statement or to give such notice at a subsequent time or
to collect any adjustment to or recalculation of the Additional Rent for any
preceding period, provided, however, Landlord shall be estopped from recouping
any item of Additional Rent after the expiration of two (2) years from the date
Tenant is billed for such Additional Rent. Tenant recognizes that Landlord's
statements showing the estimate of increases in Operating Expenses and Taxes for
any calendar year may be rendered at the end of the previous calendar year or
the beginning of such calendar year, or later. If Landlord's statement is
rendered subsequent to the beginning of a calendar year, Tenant shall continue
to pay the increase in the Operating Expenses and in the Taxes for the prior
calendar year and, should a deficiency result by virtue of an increase in
Landlord's estimate of the Operating Expenses or Taxes for the current year,
Tenant shall pay the amount of such deficiency, if any, in full, with the next
monthly rent payment.
ARTICLE V
TENANT'S INITIAL IMPROVEMENTS
Section V.1 CONSTRUCTION PLANS.
Tenant shall complete or cause the completion of Tenant's Initial
Improvements as shown on the Final Plans and as more fully described in this
Section. At Tenant's sole cost and expense, Tenant shall submit to Landlord its
complete and detailed architectural, structural, mechanical and engineering
plans and specifications prepared by an architect or engineer, showing Tenant's
Initial Improvements ("Construction Plans") no later than thirty (30) days after
the Lease Commencement Date (time being of the essence) for Landlord's approval.
Wherever in this Article V Landlord's approval is required, Landlord's approval
shall not be unreasonably withheld, conditioned or delayed. If applicable,
Tenant's Construction Plans shall include all information necessary to reflect
Tenant's requirements for the installation of any supplemental air conditioning
system and ductwork, heating, electrical, plumbing and other mechanical systems
and all work necessary to connect any special or non-standard facilities to the
Building's base mechanical, electrical and structural systems. Tenant's
submission shall include not less than one (1) set of sepias and five (5) sets
of black and white prints. Tenant's Construction Plans shall include, but not be
limited to, indication or identification of the following:
V.1.1 locations and structural design of all floor area
requiring live load capacities in excess of 75 pounds per square foot;
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V.1.2 the density of occupancy in large work areas;
V.1.3 the location of any food service areas or vending
equipment rooms;
V.1.4 areas requiring 24-hour air conditioning;
V.1.5 any partitions that are to extend from floor to underside
of structural slab above;
V.1.6 location of rooms for telephone equipment;
V.1.7 locations and types of plumbing, if any, required for
toilets (other than core facilities), sinks, drinking fountains, etc.;
V.1.8 light switching of offices, conference rooms, etc.;
V.1.9 layouts for specially installed equipment, including
computers, size and capacity of mechanical and electrical services required and
heat projection of equipment;
V.1.10 dimensioned location of: (a) electrical receptacles (120
volts), including receptacles for wall clocks, and telephone outlets and their
respective locations (wall or floor), (b) electrical receptacles for use in the
operation of Tenant's business equipment which requires 208 volts or separate
electrical circuits, (c) electronic calculating and CRT systems, etc., (d)
special audio-visual requirements, and (e) other special electrical
requirements;
V.1.11 special fire protection equipment and raised flooring;
V.1.12 reflected ceiling plan;
V.1.13 information concerning air conditioning loads, including,
but not limited to, air volume amounts at all supply vents;
V.1.14 materials, colors and designs of wall coverings and
finishes;
V.1.15 painting and decorative treatment required to complete
all construction;
V.1.16 swing of each door, and schedule for doors (including
dimensions for undercutting to clean carpeting) and frames and hardware;
V.1.17 modifications of the front door and surrounding area, if
any, as may be required for handicapped use; and
V.1.18 all other information reasonably necessary to make the
work complete and in all respects ready for operation.
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Section V.2 PLANS REVIEW.
Landlord or Landlord's consultant shall respond to Tenant's request for
approval of Tenant's Construction Plans within ten (10) business days of their
submission, prepared in accordance with the terms of this Lease. In the event
Landlord or Landlord's Consultant shall disapprove of all or a portion of
Tenant's Construction Plans, it shall set forth its reasons therefor in
reasonable detail, in which event Tenant shall revise its Construction Plans and
resubmit same to Landlord within five (5) business days thereafter, time being
of the essence. Upon Landlord's written final approval (notice of such approval,
or of disapproval, shall be given by Landlord within five (5) business days of
receipt of the Construction Plans), Tenant shall submit such construction plans,
now to be known as the Final Plans to the Building Department of the City of
Miami, Florida (and to any other governmental entities which may have authority
over the Premises) for any and all building and other necessary permits and
Tenant shall pay for all fees for such permits and deliver at its sole cost and
expense all further information and instruments required to obtain such permits.
After receipt of such permits, and in accordance with any qualifications and
restrictions set forth therein, Tenant may proceed with Tenant's Initial
Improvements, which shall be performed in accordance with the provisions of
Articles V and VI. Change orders by Tenant shall be similarly subject to
Landlord's review and approval or disapproval, and notice of either shall be
given Tenant within five (5) business days of Landlord's receipt of them.
Neither the recommendation or designation of an architect, any general
contractor, any subcontractor or any materialman, as provided for in Section
V.3, nor the approval of the Construction Plans by Landlord shall be deemed to
create any liability on the part of Landlord with respect to the design,
functionality and/or specifications set forth in the Final Plans.
Section V.3 PAYMENT.
Tenant shall pay for the Construction Plans, Final Plans, and all work
depicted on them. Tenant shall be responsible for and pay all other construction
costs other than Landlord's Improvements. Promptly following Landlord's approval
of the Final Plans, Tenant shall cause the Tenant's Initial Improvements to be
constructed as per the Final Plans. Landlord may assist Tenant in obtaining bids
by giving Tenant a list of general contractors, subcontractors, architects and
materialmen, for Tenant to use in soliciting bids, which list need not be used
by Tenant. Tenant shall promptly thereafter execute written contracts with the
architect and general contractor, or if there is no general contractor, with
each contractor, subcontractor and materialman. Tenant agrees to pay the charges
rendered by its architect, general contractor, subcontractors and materialmen
strictly in the manner set forth in each such contract entered into between
Tenant and each such party and as provided by law.
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Section V.4 TENANT DELAY.
Landlord shall not be responsible or liable for Tenant Delay. Tenant
Delay includes without limitation any of the following:
V.4.1 Tenant's failure to furnish plans, drawings, and
specifications in accordance with and at the times required pursuant to this
Article V; or
V.4.2 any delays resulting from the disapproval by Landlord or
Landlord's consultant of all or a portion of Tenant's revised plans and
specifications as resubmitted after initial submission; or
V.4.3 Tenant's request for materials, finishes or installations
which are not readily; or
V.4.4 Tenant's changes in drawings, plans, specifications, or
construction submitted to Landlord including at any time subsequent to
Landlord's approval of the Final Plans, including any Revisions which Tenant
submits to Landlord; or
V.4.5 The performance of work by a person, firm or corporation
employed by Tenant and delays in the completion of the said work by said person,
firm or corporation; or
V.4.6 Tenant's failure to pay timely for the Cost of Tenant's
Improvements.
Section V.5 TENANT'S OBLIGATION FOR COST OF TENANT DELAYS.
Tenant shall pay for any additional cost in completing Tenant's Initial
Improvements resulting from any Tenant Delay. Any such sums shall be in addition
to any sums payable pursuant to Section V.3 and shall be paid by Tenant promptly
after Tenant's architect, general contractor, subcontractors or materialmen
submits an invoice to Tenant therefor. If such costs, or any of the costs of
Tenant' Improvements to be paid by Tenant under this Article V are not paid by
Tenant when due, Landlord shall have the right, but not the obligation, to pay
part or all of such costs, and in that event, such costs shall be collectible
from Tenant in the same manner as Additional Rent whether or not the Term shall
have commenced, and if Tenant defaults in the payment of such cost, such default
shall be deemed a default under Article IX of this Lease and Landlord shall have
all of the remedies therefor set forth in this Lease.
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Section V.6 EARLY OCCUPANCY.
Except as hereinafter provided, neither Tenant nor its agents,
employees, invitees or independent contractors shall enter the Premises during
the performance of Landlord's Improvements. Upon the granting of consent by
Landlord, which shall not be unreasonably withheld, Tenant or its agents may
enter the Premises prior to the Lease Commencement Date to perform such
pre-construction work as it may desire provided that such work in no way
interferes with the performance of Landlord's Improvements and such entry shall
be deemed under all the terms, covenants and conditions of this Lease, except
the covenant to pay Rent. In the event Landlord, in its sole discretion,
determines that the performance by Tenant or any of its agents of any such
Tenant pre-construction work is impeding or impairing in any way the performance
of Landlord's Improvements, then, upon notice to Tenant, Tenant shall cease or
cause the cessation of all such work until the receipt of notification from
Landlord that Tenant may once again enter the Premises in order to perform such
work. Tenant shall indemnify and save Landlord harmless from and against any and
all loss, liability, damage, cost and expense, including without limitation,
reasonable attorneys' fees and disbursements, claimed or actually arising from,
growing out of or related to (a) any act, neglect or failure to act of Tenant or
anyone entering the Premises or Building with Tenant's permission, (b) the
performance of such Tenant's pre-construction work, or (c) any other reason
whatsoever arising out of said entry upon the Premises or Building. The
provisions of this Section V.6 shall survive the termination of this Lease.
Section V.7 REVISIONS.
Tenant shall have the right to make revisions to the Final Plans
("Revisions"). All Revisions shall be subject to Landlord's prior written
approval, which shall not be unreasonably withheld provided the Revisions are
non-structural in nature. Landlord shall either approve or disapprove the
Revisions within five (5) business days after submission thereof by Tenant.
Without limiting the generality of the foregoing, no Revision will be approved
unless (a) all changes to and modifications from Tenant's Final Plans are
circled or highlighted as per standard industry practices and (b) said Revisions
conform with the requirements of Articles V and VI. Tenant shall notify Landlord
in writing of the Revisions, and any Tenant Delay that the performance of the
same may entail. The cost of any Revisions shall be borne solely by Tenant.
Section V.8 COMPLETION DUE DILIGENCE.
Tenant shall, subject to any other cause beyond Tenant's reasonable
control, use due diligence to complete Tenant's Initial Improvements as soon as
may be practicable. Tenant shall notify Landlord of the date of the substantial
completion of Tenant's Initial Improvements ("Substantial
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Completion Date") at least five (5) days prior thereto. The phrase "substantial
completion" shall mean that Tenant's Initial Improvements shall have been
completed in accordance with the Final Plans and all mechanical and electrical
systems serving or affecting the Premises shall then be in working order and
Tenant shall have delivered to Landlord a copy of the applicable Final
Inspection Report, Certificate of Occupancy or Completion, as the case may be
issued by the local governmental authority. Tenant shall have no right to enter
the Premises for the purposes of conducting its business therefrom until Tenant
has complied with the above requirements.
ARTICLE VI
ADDITIONS, ALTERATIONS, REPLACEMENTS, AND TRADE FIXTURES
Section VI.1 BY LANDLORD
So long as Tenant's operations are not unreasonably disturbed or
disrupted, Landlord reserves the right at any time to make alterations or
additions to the Building in which the Premises are contained. So long as
Tenant's operations are not unreasonably disturbed or disrupted, Landlord also
reserves the right to construct other improvements in the Building or Common
Areas from time to time and to make alterations thereof or additions thereto.
Section VI.2 BY TENANT
VI.2.1 Upon receipt of Landlord's prior written approval, Tenant
may from time to time, at its own expense, alter, renovate or improve the
interior of the Premises provided the same be performed in a good and
workmanlike manner, in accordance with accepted building practices and so as not
to weaken or impair the strength or lessen the value of the Building in which
the Premises are located. No changes, alterations or improvements affecting the
exterior of the Premises or the Building or the Building systems shall be made
by Tenant without the prior written approval of Landlord, which may be
unreasonably withheld. Any work done by Tenant under the provisions of this
Section shall not interfere with the use by the other tenants of their premises
in the Building. Tenant also agrees to pay 100% of any increase in the Real
Estate Taxes or Landlord's Personal Property Taxes resulting from such
improvements by or for Tenant.
VI.2.2 All alterations, decorations, additions and improvements
made by Tenant, or made by Landlord on Tenant's behalf as provided in this
Lease, shall remain the property of Tenant for the Lease Term or any extension
or renewal thereof, but they shall not be removed from the Premises without the
prior written consent of Landlord.
VI.2.3 Upon obtaining the prior written consent of Landlord,
Tenant shall remove such alterations, decorations, additions and improvements
and restore the
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Premises as provided in Section VI.5, and if Tenant fails to do so and moves
from the Premises, all such alterations, decorations, additions and improvements
shall become the property of Landlord, who may charge Tenant for storing or
disposing of any or all of such property. Landlord hereby agrees that if Tenant
requests in writing prior to the installation of any alterations, improvements
or additions that Landlord specify whether it will require the removal of the
alterations, improvements or additions upon termination or expiration of this
Lease. Landlord shall so specify within ten (10) days after Tenant's request. If
Landlord fails to respond to such a request, Landlord shall be deemed to have
not required the removal of the alterations, improvements or additions upon the
termination or expiration of this Lease.
Section VI.3 CONSTRUCTION INSURANCE AND INDEMNITY
VI.3.1 Tenant shall indemnify and hold Landlord harmless from
any and all claims for loss or damages or otherwise based upon or in any manner
growing out of any alterations or construction undertaken by Tenant under the
Lease Term, including all costs, damages, expenses, court costs and reasonable
attorneys' fees incurred in or resulting from claims made by any person or
persons, by other tenants of premises in the Building, their subtenants, agents,
employees, customers and invitees.
VI.3.2 Before undertaking any alterations or construction,
Tenant shall obtain and pay for a public liability policy insuring Landlord and
Tenant against any liability which may arise on account of such proposed
alterations and construction work in limits of not less than $1,000,000.00 for
any one person, $3,000,000.00 for more than one person in any one accident and
$1,000,000.00 for property damage; and a copy of such pre-paid policy or a
certificate from the insurer of such insurance on Form ACCORD 27 shall be
delivered to Landlord prior to the commencement of such proposed work. Tenant
shall also maintain at all times fire insurance with extended coverage in the
name of Landlord and Tenant as their interests may appear in an amount adequate
to cover the cost of replacement of all alterations, decorations, additions or
improvements in and to the Premises and all trade fixtures therein, in the event
of fire or extended coverage loss. Tenant shall deliver to Landlord copies of
such pre paid fire insurance policies or a certificate from the insurer of such
insurance on Form ACCORD 27 which shall contain a clause requiring the insurer
to give Landlord ten (10) days' notice of cancellation of such policies.
Section VI.4 MECHANIC'S LIENS AND ADDITIONAL CONSTRUCTION
VI.4.1 If by reason of any alteration, repair, labor performed
or materials furnished to the Premises for or on behalf of Tenant any mechanic's
or other lien shall be filed, claimed, perfected or otherwise established or as
provided by law against the Premises, Tenant shall discharge or remove the lien
by bonding or otherwise, within fifteen
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(15) days after Tenant receives notice of the filing of same. Notwithstanding
any provision of this Lease seemingly to the contrary, Tenant shall never, under
any circumstances, have the power to subject the interest of Landlord in the
Premises or the Building to any mechanics' or materialmen's liens or liens of
any kind, nor shall any provision contained in this Lease ever be construed as
empowering Tenant to encumber or cause Landlord to encumber the title or
interest of Landlord in the Premises.
VI.4.2 Tenant hereby expressly acknowledges and agrees that,
except for Landlord's Improvements as indicated under Article V, no alterations,
additions, repairs or improvements to the Premises of any kind are required or
contemplated to be performed as a prerequisite to the execution of this Lease
and the effectiveness thereof according to its terms or in order to place the
Premises in a condition necessary for use of the Premises for the purposes as
set forth in this Lease, that the Premises are presently complete and usable for
the purposes as set forth in this Lease and that this Lease is in no way
conditioned on Tenant making or being able to make alterations, additions,
repairs or improvements to the Premises, unless otherwise specified in this
Lease, notwithstanding the fact that alterations, repairs, additions or
improvements may be made by Tenant, for Tenant's convenience or for Tenant's
purposes, subject to Landlord's prior written consent, at Tenant's sole cost and
expense.
VI.4.3 Landlord and Tenant expressly acknowledge and agree that
neither Tenant nor any one claiming by, through or under Tenant, including
without limitation contractors, sub-contractors, materialmen, mechanics and
laborers, shall have any right to file or place any mechanics' or materialmen's
liens of any kind whatsoever upon the Premises nor upon any building or
improvement thereon; on the contrary, any such liens are specifically
prohibited. All parties with whom Tenant may deal are hereby put on notice that
Tenant has no power to subject Landlord's interest in the Premises to any claim
or lien of any kind or character and any persons dealing with Tenant must look
solely to the credit of Tenant for payment and not to Landlord's interest in the
Premises or otherwise. All Contracts of Tenant for the construction of any
alteration, addition or improvement including, but not limited to, the contracts
of subcontractors and materialmen, shall contain the agreement of the
contractor, subcontractor or materialman agreeing to look solely to the Tenant
and Tenant's interest in the property for payment and waiving any right to a
lien on Landlord's interest in the Building or the Premises. Such contracts
shall also contain a provision waiving any lien against Landlord's interest in
the Building or the Premises for extras or change orders. Such contracts shall
also require the contractor, subcontractor and materialman to provide in
recordable form, a waiver and release of lien upon final payment at the
completion of construction and a waiver and release of lien upon progress
payment during the construction thereof. Landlord shall be advised, in writing,
at least ten (10) days prior to the
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date that work by or for Tenant is to commence or the date of anticipated
commencement in order to allow Landlord to post notices of non-responsibility on
the Premises. Tenant agrees to allow such notices to remain posted in the
Premises throughout the construction period and to notify Landlord if such
notices are damaged or removed. The construction work shall be scheduled in such
a manner so as to create the minimum disturbance to other tenants. Any
construction causing or resulting in unreasonable noise, dust or other
disturbance of tenants shall be scheduled and performed during the hours of 7:00
p.m. and 7:00 a.m. No building or other materials, construction, tools and
equipment shall be stored in the Common Areas. All trash and construction debris
shall be promptly removed and deposited lawfully off the property, or, if a
dumpster has been approved for the deposit of trash and construction debris,
then said trash and construction debris shall be deposited into the approved
dumpster. No dumpster shall be brought on the Property unless the size and
location thereof has been approved by Landlord in writing.
VI.4.4 Any lien filed against the Premises in violation of this
Section VI.4 shall be null and void and of no force or effect. In addition,
Tenant shall cause any lien filed against the Premises in violation of this
paragraph to be canceled, released, discharged and extinguished within fifteen
(15) days after Tenant receives notice of filing of the same and shall indemnify
and hold Landlord harmless from and against any such lien and any costs,
damages, charges and expenses, including but not limited to, reasonable
attorney's fees, incurred in connection with or with respect to any such lien.
Section VI.5 TRADE FIXTURES
VI.5.1 All trade fixtures and equipment installed by Tenant in
the Premises shall be new or completely reconditioned and shall remain the
property of Tenant.
VI.5.2 Provided Tenant is not then in default under this Lease,
Tenant shall have the right, at any time , to remove any and all trade fixtures,
equipment and other items of personal property not constituting a part of the
Building which it may have stored or installed in the Premises including, but
not limited to, counters, shelving, showcases, chairs, and movable machinery
purchased or provided by Tenant and which are susceptible of being moved without
damage to the Building and the Premises, provided this right is exercised before
the Lease is terminated and provided that Tenant, at its own cost and expense,
shall repair any damage to the Premises or Building caused thereby. The right
granted Tenant in this Section VI.5 shall not include the right to remove any
plumbing or electrical fixtures or equipment, heating or air conditioning
equipment, floor coverings (including wall-to-wall carpeting) glued or fastened
to the floors or any paneling, tile or other materials fastened or attached to
the walls or ceilings, all of which shall be deemed to constitute a part of the
Building, and, as a matter of course, shall not
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include the right to remove any fixtures or machinery that were furnished or
paid for by Landlord. The Premises and the immediate areas in front, behind and
adjacent to it shall be left in a broom-clean condition. Should Tenant fail to
comply with this provision, Landlord may deduct the cost of clean-up from
Tenant's Security Deposit. If Tenant shall fail to remove its trade fixtures or
other property at the termination of this Lease, or upon cessation of Tenant's
business in the Premises or upon termination of Tenant's rights to possession of
the Premises, such fixtures and other property not removed by Tenant shall be
deemed abandoned by Tenant, and, at the option of Landlord, shall become the
property of Landlord; Landlord may store, sell, or otherwise dispose of such
property at Landlord's sole discretion but at Tenant's expense. Any such removal
shall be performed in a good and workmanlike manner, in accordance with accepted
building practices, in full compliance with all applicable building codes , with
Tenant procuring at its sole cost and expense all permits required for such
work. The parties agree that during the term of this Lease, Tenant's cabling,
conduits and other connection equipment (collectively, the "Connective
Equipment") and all of the telecommunications equipment installed by or on
behalf of Tenant in or on the Premises shall be deemed to be the property of the
Tenant, and not fixtures of the Building. Landlord hereby waives its right,
statutory or otherwise, to any lien on the telecommunications equipment and the
Connecting Equipment. At the end of the term of the Lease, Tenant may elect to
abandon in place all or part of the Connecting Equipment in which event Tenant
shall cut, disconnect and cap off all pipes, wires and other components of the
Connecting Equipment and seal them off in a safe and lawful manner, or remove
the Connecting Equipment.
VI.5.3 All of the foregoing Section VI.5 is subject to Section
VI.3.1 of this Lease.
Section VI.6 RIGHT OF ENTRY
Landlord or its representatives shall have the right, without liability,
to enter the Premises at reasonable hours during the Lease Term to (a) show the
Premises to prospective purchasers, lenders and tenants, or (b) ascertain if the
Premises are in proper repair and condition, and make repairs thereto or to the
Building in which the same are located, including the right to take the required
materials therefor into and upon the Premises without the same constituting an
eviction of Tenant in whole or part, so long as Tenant's business operations are
not unreasonably disturbed or disrupted and the Rent shall not abate while such
repairs, alterations, replacements or improvements are being made by reason of
loss or interruption of Tenant's business due to the performance of any such
work so long as Tenant's business operations are not unreasonably disturbed or
disrupted. If Tenant shall not be personally present to permit an entry into the
Premises when for any reason an entry therein shall be permissible, Landlord may
enter the Premises by a master key.
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ARTICLE VII
INSURANCE AND INDEMNITY
Section VII.I TENANT'S INSURANCE
Tenant shall maintain, at its own cost and expense, in reasonably
responsible Florida licensed insurance companies approved by Landlord, rated by
Best's Insurance Reports at least A plus 7 or higher, combined single limit
public liability insurance, insuring Landlord and Tenant, as their interests may
appear, against all claims, demands or actions for bodily injury, personal
injury or death of any one person in an amount of not less than $1,000,000.00;
and for bodily injury, personal injury or death of more than one person in any
one accident in an amount of not less than $3,000,000.00; and for damage to
property in an amount of not less than $1,000,000.00. Landlord shall have the
right to direct Tenant to increase such amounts whenever it considers them
inadequate (but not more frequently than once every three (3) years). Such
liability insurance shall also cover and include all exterior signs maintained
by Tenant. The policy of insurance may be in the form of a general coverage or
floater policy covering these and other premises, provided that Landlord is
specifically insured therein. Tenant shall carry like coverage against loss or
damage by boiler or compressor or internal explosion of boilers or compressors,
if there is a boiler or compressor in the Premises. Tenant shall maintain
insurance covering all glass forming a part of the Premises including plate
glass in the Premises and fire insurance against loss or damage by fire or
windstorms, with such endorsements for extended coverage, vandalism, malicious
mischief and special extended coverage as Landlord may require, covering 100% of
the replacement costs of any items of value, including but not limited to signs,
stock, inventory, fixtures, improvements, floor coverings and equipment. All of
said insurance shall be in form and in responsible companies licensed in the
State of Florida satisfactory to Landlord, and shall provide that it will not be
subject to cancellation, termination or change except after at least thirty (30)
days' prior written notice to Landlord. Any insurance procured by Tenant as
herein required shall contain an express waiver of any right of subrogation by
the insurance company against Landlord. The policies or a certificate from the
insurer on Form ACCORD 27, together with satisfactory evidence of the payment of
the premiums thereon, shall be deposited with Landlord on the day Tenant begins
operations. Thereafter, Tenant shall provide Landlord with a certificate from
the insurer on Form ACCORD 27 and evidence of proof of payment upon renewal of
such policy, not less than thirty (30) days prior to expiration of the term of
such coverage. In the event Tenant fails to timely obtain or maintain the
insurance required hereunder, Landlord may obtain same and any costs incurred by
Landlord in connection therewith shall be payable by Tenant upon demand.
Landlord shall carry public liability insurance covering the common areas of the
Building, including but not limited to the sidewalks, malls and parking lot.
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Section VII.2 EXTRA HAZARD INSURANCE PREMIUMS
Tenant shall not keep, use, sell or offer for sale in or upon the
Premises any article or permit any activity which may be prohibited by the
standard form of fire or public liability insurance policy. Tenant shall not
knowingly use or occupy the Premises or any part thereof, or suffer or permit
the same to be used or occupied for any business or purpose deemed extra
hazardous on account of fire or otherwise. In the event Tenant's use and/or
occupancy causes any increase of any insurance premium above the rate for the
least hazardous type of occupancy legally permitted in the Premises, Tenant
shall pay such additional premium on any policy, including but not limited to
fire, extended coverage, public liability or any insurance that may be carried
by Landlord for its protection against rent loss through fire. Bills for such
additional premiums shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due from and payable by Tenant when rendered in
writing, but such increases in the rate of insurance shall not be deemed a
breach of this covenant by Tenant. Failure to pay amounts due hereunder shall be
a breach of the Lease. In determining whether increased premiums are the result
of Tenant's use of the Premises, a schedule, issued by the organization making
the insurance rate on the Premises, showing various components of such rate,
shall be conclusive evidence of the several items and charges which make up the
fire and public liability insurance rate on the Premises.
Section VII.3 INDEMNITY
Tenant shall indemnify and save harmless Landlord from and against any
and all claims and demands whether for injuries to persons or loss of life, or
damage to property, occurring within the Premises and immediately adjoining the
Premises and arising out of the use and occupancy of the Premises or Building by
Tenant, or occasioned wholly or in part by any act or omission of Tenant, its
subtenants, agents, contractors, employees, servants, licensees or
concessionaires, excepting however such claims and demands, whether for injuries
to persons or loss of life, or damage to property, to the extent caused in whole
or in part by the negligence or willful misconduct of Landlord, its agents or
employees. If, however, any liability arises in the Common Areas because of the
negligence of Tenant, Tenant's subtenants, agents, employees, contractors,
invitees, customers or visitors, then in such event Tenant shall hold Landlord
harmless. In case Landlord shall, without fault on its part, be made a party to
any litigation commenced by or against Tenant, then Tenant shall protect and
hold Landlord harmless and shall pay all costs, expenses and reasonable
attorneys' fees incurred or paid by Landlord in connection with such litigation.
Tenant shall also pay all costs, expenses and reasonable attorneys' fees that
may be incurred or paid by Landlord in enforcing the covenants and agreements of
this Lease.
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Section VII.4 LANDLORD INSURANCE ON THE BUILDING.
Landlord agrees to maintain, throughout the term of the Lease, all-risk
property and casualty insurance in an amount at least equal to the full
replacement value of the Building covering the Building against those perils
normally insured against by a prudent owner of office buildings in the downtown
Miami business area.
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section VIII.1 DAMAGE OR DESTRUCTION BY FIRE OR OTHER CASUALTY.
VIII.1.1 Tenant shall give prompt notice to Landlord in case of
fire or other damage to the Premises or the Building. In the event the Premises
are damaged by fire, explosion, flood, tornado or by the elements, or through
any casualty, or otherwise, after the commencement of the Lease Term, the Lease
shall continue in full force and effect. If the extent of the damage is less
than fifty percent (50%) of the cost of replacement of the Premises, the damage
shall promptly be repaired by Landlord at Landlord's expense, provided that
Landlord shall not be obligated to so repair if such fire, explosion or other
casualty is caused directly by the negligence or malfeasance of Tenant, its
subtenants, permitted concessionaires, or its or their agents, servants or
employees, and provided further that Landlord shall not be obligated to expend
for such repair an amount in excess of the insurance proceeds recovered as a
result of such damage, as long as Landlord has complied with its obligations
under Section 7.4 above, and that in no event shall Landlord be required to
replace Tenant's stock in trade, fixtures, furniture, furnishings, floor
coverings and equipment. In the event of any such damage and (a) Landlord is not
required to repair as hereinabove provided, or (b) the Premises shall be damaged
to the extent of fifty percent (50%) or more of the cost of replacement, or (c)
the Building of which the Premises are a part is damaged to the extent of
twenty-five percent (25%) or more of the cost of replacement, Landlord may elect
either to repair or rebuild the Premises, or the Building, or to terminate this
Lease upon giving notice of such election to Tenant within ninety (90) days
after the occurrence of the event causing the damage. Notwithstanding the
foregoing, Tenant shall have the right to terminate this Lease effective as of
the date of the fire or other casualty if (i) the casualty is a Material
Casualty and Landlord reasonably estimates (which estimate shall be given by
Landlord to Tenant no later than thirty (30) days after the date of the
casualty) that the time required to substantially complete the repair or
restoration shall exceed six (6) months from the date of the fire or other
casualty; or (ii) repair or restoration of the Premises has not been
substantially completed within six (6) months from the date of the fire or other
casualty; (iii) where for the purposes of this Lease, "Material Casualty"
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means damage or destruction to the extent of fifty (50%) percent of more of the
rentable square feet of the Building being untenantable or renders the Premises
inaccessible, impossible to occupy or impossible from whence to conduct Tenant's
business operations.
VIII.1.2 If the casualty, repairing, or rebuilding shall render
the Premises untenantable, or impossible from whence for Tenant to conduct its
business operations, in whole or in part, and the damage shall not have been due
to the default or neglect of Tenant, a proportionate abatement of the Rent shall
be allowed from the date when the damage occurred until the date Landlord
completes the repairing or rebuilding, said proportion to be computed on an
equitable basis that corresponds to the diminution in usefulness of the Premises
to Tenant. If the parties cannot agree upon such basis for an abatement within
thirty (30) days after the casualty, either party may submit the matter to
binding arbitration in Miami, Florida administered by under the auspices of the
American Arbitration Association under its Rules for the Real Estate Industry
and judgment on the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. The arbitrator shall be either a Florida
licensed attorney specializing in Real Property Law with respect to Commercial
Office Buildings, or a Florida licensed Real Estate Broker specializing in the
rental of Commercial Office Buildings in Miami-Dade County, Florida, or a senior
level Real Estate operations executive with a minimum experience and training
level of either a masters degree in real estate management and 10 years
practical experience in the management, development and operation of Commercial
Office Buildings of which 5 years have been in the Miami-Dade commercial office
building market or no degree but 20 years practical experience in the
management, development and operation of Commercial Office Buildings of which 10
years have been in the Miami-Dade commercial office building market. The award
shall specify in detail the basis for the arbitrator(s)' decision. The
arbitrator shall grant attorneys' fees and costs (including all fees paid to the
American Arbitration Association) to the prevailing party, or to that party
whose position most nearly approximates the award. If Landlord is required or
elects to repair the Premises as herein provided, Tenant shall repair or replace
its stock in trade, fixtures, furniture, furnishings, floor coverings and
equipment, and if Tenant has closed for business, Tenant shall promptly reopen
for business upon the completion of such repairs.
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VIII.1.3 In the event the Premises or the Building shall be
damaged in whole or in substantial part within the last twelve (12) months of
the original term, or within the last twenty-four (24) months of the last
renewal term, if renewals are provided for in this Lease, Landlord shall have
the option, exercisable within Ninety (90) days following such damage, of
terminating this Lease, effective as of the date of Tenant's receipt of notice
from Landlord. If any such termination occurs during the initial Lease Term, any
options for renewal shall automatically be of no further force or effect.
VIII.1.4 No damage or destruction of the Premises or the
Building shall allow Tenant to surrender possession of the Premises nor affect
Tenant's liability for the payment of Rent or any other covenant contained
herein, except as may be specifically provided in this Lease. Notwithstanding
any of the provisions herein to the contrary, Landlord shall have no obligation
to rebuild the Premises or the Building and may at its own option cancel this
Lease unless the damage or destruction is a result of a casualty covered by
Landlord's insurance policy or which should have been covered by the insurance
policy which would be obtained by a commercially reasonable Landlord of a
commercial office building located in South Florida.
Section VIII.2 CONDEMNATION.
In the event the entire Premises shall be appropriated or taken under
the power of eminent domain by any public or quasi-public authority, this Lease
shall terminate and expire as of the date of title vesting in such proceeding,
and Landlord and Tenant shall thereupon be released from any further liability
hereunder. If any part of the Premises shall be taken as aforesaid, and such
partial taking shall render that portion not so taken unsuitable for the
business of Tenant, as determined by Landlord and Tenant, then this Lease and
the Lease Term herein shall cease and terminate as aforesaid (if the parties
cannot agree upon the portion which is unsuitable or reduction of Rent on an
equitable basis, the determination of such portion shall be submitted to binding
arbitration in accordance with the terms for arbitration set forth in Section
VIII.1.2 of this Lease. If such partial taking is not extensive enough to render
the Premises unsuitable for the business of Tenant, then this Lease shall
continue in effect, except that the Fixed Minimum Rent shall be reduced on an
equitable basis and Landlord shall, upon receipt of the award in condemnation,
make all necessary repairs or alterations to the Building in which the Premises
are located so as to constitute the portion of the Building not taken as a
complete architectural unit, but such work shall not exceed the scope of the
work to be done by Landlord in originally constructing said Building, nor shall
Landlord, in any event, be required to spend for such work an amount in excess
of the amount received by Landlord as damages for the part of the Premises so
taken. "Amount received by Landlord" shall mean that part of the award in
condemnation which is
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free and clear to Landlord of any collection by mortgagee for the value of the
diminished fee. If more than twenty percent (20%) of the floor area of the
Building in which the Premises are located shall be taken as aforesaid, Landlord
may, by written notice to Tenant, terminate this Lease, such termination to be
effective as aforesaid. If this Lease is terminated as provided in this
paragraph, the Rent shall be paid up to the date that possession is so taken by
public authority and Landlord shall make an equitable refund of any Rent paid by
Tenant in advance. Tenant shall not be entitled to and expressly waives all
claim to any condemnation award for any taking, whether whole or partial, and
whether for diminution in value of the leasehold or to the fee although Tenant
shall have the right, to the extent that the same shall not reduce Landlord's
award, to claim from the condemnor, but not from Landlord, such compensation as
may be recoverable by Tenant in its own right for damage to Tenant's business,
fixtures and improvements installed by Tenant at its expense.
ARTICLE IX
DEFAULT, REMEDIES
Section IX.1 DEFAULT.
The occurrence of any of the following during the Term shall constitute
an "Event of Default" by Tenant:
IX.1.1 Tenant shall fail to pay when due all or any portion of
any Rent after three (3) days written notice from Landlord;
IX.1.2 Tenant shall fail to pay when due any other sums, fees,
charges, costs, or expenses which are payable under this Lease after fifteen
(15) days written notice from Landlord;
IX.1.3 Tenant shall, other than in the manner permitted under
this Lease, make or permit or suffer to occur any assignment (including any
transfer of interest in Tenant which is deemed to be an assignment under this
Lease), sublease or occupancy arrangement, conveyance, transfer, conditional or
collateral assignment, pledge, hypothecation, or other encumbrance, whether by
operation of law or otherwise, of this Lease or any interest in this Lease;
IX.1.4 Tenant shall fail in any other way in the performance or
observance of any of the other non-monetary terms and conditions of this Lease
and within fifteen (15) days shall not have cured such default; provided,
however, if Tenant commences such cure within fifteen (15) days, and diligently
pursued such cure to completion, Tenant shall have such additional time as is
reasonably necessary to cure such default;
IX.1.5 There shall be filed by or against Tenant in any court or
other tribunal a petition in bankruptcy or
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insolvency proceedings or for reorganization or for the appointment of a
receiver or trustee of all or substantially all of Tenant's, unless such
petition shall be filed against Tenant and Tenant shall in good faith promptly
thereafter commence and diligently prosecute any and all proceedings appropriate
to secure the dismissal of such petition and shall secure such dismissal within
sixty (60) days of its filing;
IX.1.6 Tenant shall be adjudicated a bankrupt or an insolvent or
take the benefit of any federal reorganization or composition proceeding, make
an assignment for the benefit of creditors, or take the benefit of an insolvency
law;
IX.1.7 Tenant's interest under this Lease shall be sold under
any execution or process of law;
IX.1.8 7 Subject to the provisions of Section XII.12.3 hereof,
Tenant shall have failed to complete the Initial Tenant Improvements and open
for business within four (4) months after the execution of this Lease by both
parties to it; or
IX.1.9 Tenant shall fail to maintain current, duly issued
occupational licenses, or any other permit or license required by an applicable
Legal Authority for its operations at the Premises, or Tenant shall fail to meet
the insurance requirements of this Lease and provide certificates of insurance
(and binders and policies, if required) evidencing such compliance.
Section IX.2 REMEDIES.
In the event of the occurrence of an Event of Default by Tenant,
Landlord, at Landlord's option, may elect to do one or more of the following:
IX.2.1 accelerate all of the remaining Rent for the Lease Term,
in which event all Rent shall become immediately due and payable, subject to the
provisions of Section IX.6.3.3;
IX.2.2 terminate this Lease as provided by this section and
re-enter the Premises and remove all persons and property from the Premises,
either by summary proceedings or by any other suitable action or proceeding at
law, or otherwise; or
IX.2.3 without terminating this Lease, re-enter the Premises and
remove all persons and property from the Premises, either by summary proceedings
or by any other suitable action or proceeding at law, or otherwise, and relet
all or any part of the Premises.
Section IX.3 TERMINATION.
If Landlord elects to terminate this Lease as a result of an Event of
Default:
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IX.3.1 Landlord shall give notice of such termination, which
shall take effect ten (10) days after such notice is given, or such greater
number of days as is set forth in such notice, fully and completely as if the
effective date of such termination were the date originally set forth in this
Lease for the expiration of the Lease Term;
IX.3.2 Tenant shall quit and peacefully surrender the Premises
to Landlord, without any payment by Landlord for doing so, on or before the
effective date of termination; and
IX.3.3 All Rent, including accelerated Rent (subject to the
provisions of Section IX.6.3.3), shall become due and shall be paid up to the
effective date of termination, together with such expenses, including attorneys'
fees, as Landlord shall incur in connection with such termination.
Section IX.4 NO REINSTATEMENT AFTER TERMINATION.
No receipts of monies by Landlord from Tenant after termination of this
Lease shall reinstate, continue, or extend the Term, affect any Notice
previously given by Landlord to Tenant, or operate as a waiver of the right of
Landlord to enforce the payment of Rent.
Section IX.5 RETENTION OF SUMS AFTER TERMINATION.
If Landlord shall terminate this Lease, Landlord shall be entitled to
the right of set-off against all sums then held by Landlord pursuant to any of
the provisions of this Lease.
Section IX.6 RE-ENTRY.
In the event of any re-entry and/or dispossession by summary proceedings
or otherwise without termination of this Lease:
IX.6.1 all Rent shall become due and shall be paid up to the
time of such re-entry and/or dispossession, together with such expenses,
including reasonable attorneys' fees, as Landlord shall incur in connection with
such re-entry and/or dispossession by summary proceedings or otherwise; and
IX.6.2 all Rent for the remainder of the Lease Term may be
accelerated and due in full, the collection of such sums being subject to the
provisions of Section IX.6.3.3; and
IX.6.3 Landlord may relet all or any part of the Premises,
either in the name of Landlord or otherwise, for a term or terms which may, at
Landlord's option, be equal to, less than, or greater than the period which
would otherwise have constituted the balance of the Term. In connection with
such reletting:
IX.6.3.1 Tenant shall pay, as Additional Rent, to
Landlord, as they are incurred by Landlord, such reasonable
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expenses as Landlord may incur in connection with reletting, including, without
limitation, legal expenses, attorneys' fees, brokerage commissions, and expenses
incurred in altering, repairing, and putting the Premises in good order and
condition and in preparing the Premises for reletting;
IX.6.3.2 Tenant shall pay to Landlord, in monthly
installments on the due dates for Rent payments for each month of the balance of
the Term, the amount by which any Rent payment exceeds the net amount, if any,
of the rents for such period collected on account of the reletting of the
Premises; any suit brought to collect such amount for any month or months shall
not prejudice in any way the rights of Landlord to collect the deficiency for
any subsequent month or months by a similar action or proceeding;
IX.6.3.3 at Landlord's option exercised at any time,
Landlord shall be entitled to recover immediately from Tenant, in addition to
any other proper claims, but in lieu of and not in addition to any amount which
would thereafter become payable under the preceding subsection, a sum equal to
the amount by which the sum of the Rent for the balance of the Lease Term,
compound discounted at the Prime Rate then in effect of Citibank, N.A., to its
then-present worth, exceeds the net rental value of the Premises, compound
discounted at the same annual rate to its then-present worth, for the balance of
the Lease Term. In determining such net rental value of the Premises, the rent
realized by any reletting of the Premises, if such reletting is upon terms
(other than rental amounts) generally comparable to the terms of this Lease,
shall be deemed to be such net rental value; and
IX.6.3.4 at Landlord's option, Landlord may make such
alterations and/or decorations in or upon the Premises as Landlord, in
Landlord's sole judgment, considers advisable and necessary for the purpose of
reletting the Premises; the making of such alterations and/or decorations shall
not operate or be construed to release Tenant from liability under this Section;
the cost of all such alterations and/or decorations shall be paid by Tenant to
Landlord as Additional Rent.
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Section IX.7 SUMS COLLECTED UPON RELETTING.
Landlord shall have, receive, and enjoy as Landlord's sole and absolute
property, any and all sums collected by Landlord as rent or otherwise upon
reletting the Premises after Landlord shall resume possession of the Premises as
provided by this Lease, including, without limitation, any amounts by which the
sum or sums so collected shall exceed the continuing liability of Tenant under
this Lease. If Landlord shall have accelerated Rent payments and collected same
from Tenant, and subsequently shall have relet the Premises, then Landlord,
after deducting all costs related to reletting, including, but not limited to,
those described or anticipated in this Section IX.7 and in Section IX.11, and
any other sums due from Tenant to Landlord, shall pay to Tenant the amount
remaining which is collected as Rent for each month, to the extent Landlord
shall have previously received the Rent for such month from Tenant (but Landlord
may retain any such amount, for application to future amounts not yet paid but
which may become due).
Section IX.8 NO EFFECT ON SUIT.
Landlord and Tenant agree that after the commencement of suit for
possession of the Premises or after final order or judgment for the possession
of the Premises, Landlord may demand, receive, and collect any monies due or
coming due without in any manner affecting such suit, order, or judgment. All
such monies collected shall be deemed to be payments on account of the use and
occupation of the Premises, or, at the election of Landlord, on account of
Tenant's liability under this Lease.
Section IX.9 WAIVER OF RIGHTS OF REDEMPTION.
Tenant waives all rights of redemption which may otherwise be provided
by any Legal Requirement in the event that Landlord shall, because of the
occurrence of an Event of Default by Tenant, obtain possession of the Premises
under legal proceedings, or pursuant to present or future law or to the terms
and conditions of this Lease.
Section IX.10 USE OF WORD "RE-ENTRY".
The words "re-enter" and "re-entry", as used in this Section, are not
and shall not be restricted to their technical legal meaning, but are used in
the broadest sense.
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Section IX.11 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULTS.
Whenever and as often as Tenant shall fail or neglect to comply with the
terms and conditions of this Lease, Landlord, at Landlord's option and upon
twenty (20 ) days' Notice to Tenant (or upon shorter Notice, or with no Notice
at all, if reasonable to meet an emergency or a time limitation imposed by Legal
Authorities), may, in addition to all other remedies available to Landlord,
perform, or cause to be performed, such work, labor, services, acts, or things,
and take such other steps, including, but not limited to, entry onto the
Premises, as Landlord may deem advisable, to comply with and perform any such
term or condition. Tenant shall reimburse Landlord upon demand, and from time to
time, for all costs and expenses suffered or incurred by Landlord in so
complying with or performing such term or condition. The commencement of any
work or the taking of any other steps or performance of any other act by
Landlord pursuant to this Section shall not be deemed to obligate Landlord to
complete the curing of any term or condition which is in default.
Section IX.12 LANDLORD'S EXPENSES.
Tenant shall reimburse Landlord upon demand for all reasonable expenses,
including attorneys' fees and costs for negotiation, trial, or appellate work
(including fees for the services of paralegals and similar persons) incurred by
Landlord in connection with (a) any litigation or dispute in which Landlord
becomes a party or otherwise becomes involved related to the Premises or
Landlord's rights or obligations under this Lease (except to the extent Landlord
is found to be at fault); (b) all costs of reletting the Premises in the event
of Tenant's default, including brokers' charges, and the proportionate share of
the original broker's fees, if any, for which Tenant has not paid all Rent, (c)
the enforcement or collection of any judgments, settlements or court awards, and
(d) if the leasehold interest of Tenant under this Lease shall be held by more
than one person or entity, and if litigation shall arise by reason of a dispute
among such persons or entities, then Landlord's reasonable expenses incurred if
Landlord is made a party to, or incurred otherwise in connection with, such
litigation.
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ARTICLE X
SECURITY
Section X.1 SECURITY DEPOSIT
X.1.1 Tenant has deposited with Landlord the sum specified in
the Basic Term Sheet to be retained by Landlord without liability for interest,
as security for the payment of all Rent and other sums of money which shall or
may be payable for the full stated term of this Lease, and any extension or
renewal thereof, and for the faithful performance of all the terms of this Lease
to be observed and performed by Tenant.
X.1.2 The Security Deposit shall not be mortgaged, assigned,
transferred or encumbered by Tenant without the prior written consent of
Landlord and any such act on the part of Tenant shall be without force or effect
and shall not be binding upon Landlord. If any of the Rent herein reserved or
any other sum payable by Tenant to Landlord shall be overdue and unpaid or
should Landlord make payments on behalf of Tenant, or if Tenant shall fail to
perform any of the terms of this Lease, then Landlord may, at its option and
without prejudice to any other remedy which Landlord may have on account
thereof, appropriate and apply said entire deposit or so much thereof as may be
necessary to compensate Landlord toward the payment of Rent or Additional Rent
or loss or damage sustained by Landlord due to breach on the part of Tenant; and
Tenant shall promptly upon demand restore said security to the original sum
deposited. If Tenant should be overdue in the payment of monthly Rent or other
sums payable to Landlord on at least three (3) or more occasions during a year,
Landlord, at its option, may require Tenant to increase the amount of Security
Deposit now held by Landlord by an amount sufficient to cover at least one (1)
additional months' Rent or greater amount to be determined at the reasonable
discretion of Landlord. In this event, upon receipt of the additional security
sum, Landlord and Tenant shall evidence such receipt by a letter signed and
acknowledged by both Landlord and Tenant to be incorporated as part of this
Lease amending the Basic Term Sheet, stating the "New Total Amount" so held
without liability for any interest. Within thirty (30) days after the expiration
of the tenancy hereby created, whether by lapse of time or otherwise, provided
Tenant shall not be in default hereunder and shall have complied with all the
terms, covenants and conditions of this Lease, including the yielding up of
immediate possession to Landlord, Landlord shall, upon being furnished with
affidavits and other satisfactory evidence by Tenant that Tenant has paid all
bills incurred by it in connection with its performance of the terms, covenants
and conditions of this Lease, return to Tenant said sum on deposit or such
portion thereof then remaining on deposit with Landlord as set forth herein. In
the event Tenant has not complied with all the obligations provided for
hereunder, Landlord may appropriate a part or all of the Security Deposit to
replace Landlord's loss and/or the cost of curing Tenant's lack of compliance
with
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Tenant's obligations.
Section X.2 INTENTIONALLY DELETED
ARTICLE XI
ADDITIONAL TENANT AGREEMENTS
Section XI.1 MORTGAGE FINANCING AND SUBORDINATION
This Lease and all of Tenant's rights hereunder are and shall be
subordinate to the present and any future mortgage upon the Building, as well as
to any existing ground lease, however, Tenant shall, upon request of either
Landlord, the holder of any mortgage or Deed of Trust now or hereafter placed
upon the Landlord's interest in the Premises or future additions thereto, and to
any ground lease now or hereafter affecting the Premises, execute and deliver
upon demand, and such further instruments subordinating this Lease to the lien
of any such mortgage or mortgages, and such ground lease, provided such
subordination shall be upon the express condition that this Lease shall be
recognized by the mortgagees and ground lessors and that the rights of Tenant
shall remain in full force and effect during the Lease Term and any extension
thereof, notwithstanding any default by the mortgagors with respect to the
mortgages or any foreclosure thereof, or any default by the ground lessee, so
long as Tenant shall perform all of the covenants and conditions of this Lease.
Landlord agrees to obtain from any existing mortgagee and/or ground lessor an
SNDA agreement substantially in the form annexed hereto as Exhibit E which form
shall be deemed agreeable to and shall be signed by Tenant upon written request
therefor by Landlord. Tenant agrees to execute all agreements required by
Landlord's mortgagee or ground lessor or any purchaser at a foreclosure or sale
in lieu of foreclosure by which agreements Tenant will attorn to the mortgagee
or purchaser or successor or ground lessor.
Section XI.2 ASSIGNMENT OR SUBLETTING
XI.2.1 All assignments of this Lease or sublease or subleases of
the Premises by Tenant or occupancy of all or part of the Premises by anyone
other than Tenant shall be subject to and in accordance with all of the
provisions of this Section.
XI.2.2 Tenant may not assign this Lease or sublet the Premises,
in whole or in part, to a party other than a wholly-owned corporation or
controlled subsidiary of Tenant without first having obtained the written
consent of Landlord, such consent not to be unreasonably withheld, conditioned
or delayed.
XI.2.3 Any assignment or sublease by Tenant shall be only for
the permitted Use, and for no other purpose, and in no event shall any
assignment or sublease of the Premises release or relieve Tenant from any
obligations of this Lease.
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XI.2.4 In the event that Tenant shall seek Landlord's permission
to assign this Lease or sublet the Premises or allow additional occupants,
Tenant shall provide to Landlord the name, address, financial statement and
business experience resume for the immediately preceding three (3) years (if
available) of the proposed assignee or subtenant or occupant and such other
information concerning such proposed assignee or subtenant or occupant as
Landlord may reasonably require. This information shall be in writing and shall
be received by Landlord no less than thirty (30) days prior to the effective
date of the proposed assignment or sublease or occupancy. It shall be a
condition to any consent by Landlord to an assignment or sublease or occupancy
that Tenant shall pay to Landlord a processing fee in the amount of $250.00 as
reimbursement to Landlord for any and all legally-related expenses in connection
with the review and preparation of assignment or sublease or occupancy-related
documents which may be incurred by Landlord in connection therewith. Payment of
such fee shall be submitted along with Tenant's request for Landlord's consent.
Any consent by Landlord to any assignment or sublease or occupancy, or to the
operation of a concessionaire or licensee, shall not constitute a waiver or the
necessity for such consent to any subsequent assignment or sublease or
occupancy, or operation by a concessionaire or licensee.
XI.2.5 If Tenant is a corporation or partnership and any
transfer, sale, pledge or other disposition of fifty (50%) percent or more of
the common stock or partnership interests shall occur, or voting control or
power to vote the majority of the outstanding capital stock or partnership
interests be changed, such action shall be deemed an assignment under the terms
of this Lease and shall be subject to all the terms and conditions thereof. Any
breach of the assignment clause by Tenant will constitute a default under the
terms of this Lease and Landlord shall have all rights and remedies available to
it as set forth herein.
In the event Tenant shall sublease the Premises for rentals in excess
proportionately of those rentals payable hereunder, Tenant shall pay to
Landlord, as Additional Rent hereunder, 50% of such excess rentals after
subleasing commissions and other direct expenses of subleasing. 50% of any net
consideration for any assignment of this Lease shall be paid to Landlord.
Any proposed assignee or subtenant of Tenant shall assume Tenant's
obligations hereunder and deliver to Landlord an assumption agreement in form
satisfactory to Landlord no less than ten (10) days prior to the effective date
of the proposed assignment or sublease.
Notwithstanding any of the foregoing provisions, if Tenant is in default
under any of the terms of this Lease, Tenant may not assign or sublet the
Premises in whole or in part.
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Notwithstanding anything contained herein to the contrary, none of the
following, or any changes, assignments or transfers resulting from the
following, shall require Landlord's prior written consent, the payment by Tenant
of any fees or charges of any kind (including without limitation any portion of
the net consideration for any assignment or excess rentals pursuant to Section
XI.2.5), or give rise to any right of Landlord to cancel or recapture all or any
part of the Premises: (i) a transfer by Tenant of its interest in this Lease to
a person or entity controlling, controlled by or under common control with
Tenant; (ii) the merger, consolidation or amalgamation of Tenant with a third
party or the sale of all, or substantially all, of the assets used by Tenant in
the conduct of its business at the Premises if the third party has a net worth
as of the date of the proposed transaction which is equal to or greater than
that of Tenant as of the date of this Lease adjusted for inflation; (iii) a
transaction in which Tenant becomes a "reporting entity" whose shares of stock
or other ownership interests are, directly or indirectly, sold on a national
stock exchange or an inter-dealer quotation system; and in the event the
foregoing transaction has occurred, any subsequent sale of ownership interests
or issuance of new ownership interests, directly or indirectly, in Tenant; and
(iv) any license or co-location agreement of portions of the Premises to persons
or entities which inter-connect with Tenant's facilities in the Premises, as
long as such relationship shall not be used as a device to avoid such
transaction being deemed a sublease or assignment.
Notwithstanding anything herein contained to the contrary, Landlord acknowledges
that the business to be conducted by Tenant on the Premises requires the
installation of certain communications equipment owned by customers (and
co-locators) of Tenant in order for such customers (and co-locators) to
interconnect with Tenant's facilities. Landlord agrees that Tenant may license
the use of portions of the Premises to its customers (and co-locators) for such
purposes without Landlord's further consent. All use of the Premises by said
customers (and co-locators) shall comply with any and all governmental laws,
rules and regulations. Article XI.2 through Article XI.2.5, inclusive, shall not
apply to the foregoing licenses or co-location agreements with Tenant's
customers.
Landlord acknowledges that Tenant's business to be conducted on the
Premises requires the installation of certain communications equipment owned by
telecommunication customers and co-locators of Tenant ("Co-Locators") in the
Premises for the Co-Locators to interconnect with Tenant's terminal facilities.
Accordingly, Landlord agrees that Tenant may enter into co-location agreements
("Co-Location Agreements") with Co-Locators, All of Tenant's co-location
agreements and licenses with its customers and co-locators shall be subject to
the provisions of the following paragraph.
Tenant acknowledges that the Co-Location Agreements and Licenses shall be
subject and subordinate to this Lease and to any mortgages, deeds of trust, or
land sale contracts
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(collectively, "Encumbrances") now or in the future encumbering the Premises.
All Co-Location Agreements and Licenses shall contain provisions by Tenant's
customers or co-locators (a) unconditionally acknowledging and agreeing to such
subordination; (b) requiring the parties thereto to execute such documents as
may reasonably be requested by the Landlord or the holder of the Encumbrance to
evidence the subordination; (c) disclaiming any right or interest in the
Premises or the Lease, and acknowledging that such Co-Locators and customers are
only licensees of Tenant and not sublessees; (d) affirming that the rights of
any co-locators or customers to locate switches and other items in the Premises
shall terminate as and when the Lease expires or is sooner terminated; and (e)
requiring, notwithstanding any provision of the Permitted Agreement, that the
parties thereto comply with all obligations imposed on Tenant under this lease
to the extent relating to the portion of the Premises in question, including
without limitation, the rules and regulations from time to time in effect under
the Lease and the insurance requirements thereof. Tenant shall be liable to
Landlord for any violation by its Co-Locators of any provisions of this Lease;
provided, however that the failure of any co-locator to execute any such
document referred to in item (b) above, shall not be deemed an Event of Default
by Tenant if Tenant shall have used its best efforts to obtain such document,
and if Landlord is required by the holder of such Encumbrance to do so, Tenant
shall terminate the Co-location rights of such co-locator effective as of the
earliest date lawfully permitted.
Section XI.3 TENANT'S NOTICE TO LANDLORD OF DEFAULT
Should Landlord be in default under any of the terms of this Lease,
Tenant shall give Landlord prompt written notice thereof in the manner specified
in Section XII.1, and Tenant shall allow Landlord a reasonable length of time in
which to cure such default, which time shall not in any event be less than
thirty (30) days from the date of receipt of such notice.
Section XI.4 SHORT FORM LEASE
Tenant shall not record this Lease. Any breach of this provision by
Tenant shall be deemed a material breach of Tenant's obligations under the
Lease.
Section XI.5 SURRENDER OF PREMISES AND HOLDING OVER
At the expiration of the tenancy, Tenant shall surrender the Premises in
good condition, reasonable wear and tear excepted, and damage by condemnation or
unavoidable casualty and Tenant shall surrender all keys for the Premises to
Landlord at the place then fixed for the payment of Rent and shall inform
Landlord of all combinations on locks, safes and vaults, if any, in the
Premises. Tenant shall remove all its trade fixtures and any alterations or
improvements, subject to the provisions of Section VI.5, before surrendering the
Premises, and shall repair, at its own expense, any damage to the Premises
caused thereby. Tenant's obligations to observe
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or perform this covenant shall survive the expiration or other termination of
the Lease Term. In the event Tenant remains in possession of the Premises after
the expiration of the tenancy created hereunder, whether or not with the consent
or acquiescence of Landlord, and without the execution of a new lease, Tenant,
at the option of Landlord, shall be deemed to be occupying the Premises as a
tenant at will on a week-to-week tenancy and in no event on a month-to-month or
on a year-to-year tenancy. The rent during this week-to-week tenancy shall be
payable weekly at twice the Fixed Minimum Rent, and twice all other charges due
hereunder, and it shall be subject to all the other terms, conditions,
covenants, provisions and obligations of this Lease, and no extension or renewal
of this Lease shall be deemed to have occurred by such holding over. Tenant's
obligations to observe or perform this covenant shall survive the expiration or
other termination of the Lease Term.
Section XI.6 ESTOPPEL CERTIFICATE
Tenant shall provide at any time, within ten (10) business days of
Landlord's written request, a statement certifying that this Lease is unmodified
and in full force and effect or, if there have been modifications, that same are
in full force and effect as modified and stating the modifications, and the
dates to which the Fixed Minimum Rent and other charges have been paid in
advance, if any. It is intended that any such statement delivered pursuant to
this paragraph may be relied upon by any prospective purchaser or mortgagee of
the Premises.
Section XI.7 DELAY OF POSSESSION
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
or for any other reason, an abatement or diminution of the Rent to be paid
hereunder shall be allowed Tenant under such circumstances, but nothing herein
shall operate to extend the Lease Term beyond the agreed Lease Expiration Date.
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.
Section XI.8 COMPLIANCE WITH LAW
XI.8.1 At all times during the Lease Term, Tenant shall, at
Tenant's own cost and expense, fully perform and comply with any law, statute,
code, rule, regulation, ordinance, order, judgment, decree, writ, injunction,
franchise, permit, certificate, license (including any beer, wine or liquor
license), authorization, registration, or other direction or requirement of any
domestic or foreign federal, state, county, municipal, or other government or
governmental or quasi-governmental department, commission, board, bureau, court,
agency, or instrumentality having jurisdiction or authority over Landlord,
Tenant, and/or all or any part of the Premises ("Legal Authority"), which is now
or in the future applicable to the Premises, including those not within the
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present contemplation of the parties ("Legal Requirements"), and applicable
insurance underwriters' rules, regulations, decrees or requirements, whether or
not they shall necessitate ordinary or extraordinary structural changes,
improvements, replacements, or repairs to the Premises, or cause any
interference with the Use. Tenant acknowledges that the Building is not newly
constructed, and Tenant shall cooperate with Landlord, at Landlord's expense, in
asbestos removal or any other matter which may be necessary or advisable in
connection with Legal Requirements. Notwithstanding anything contained in this
Lease to the contrary, Tenant shall not be required to make any structural
repairs or alterations to the Premises which may be required by law (whether
presently existing or hereafter enacted), insurance regulations or otherwise,
except as may be required solely by the acts or omissions of Tenant, its agents
or employees, except for all structural repairs or alterations caused by
Tenant's construction work done or to be done pursuant to Tenant's Final Plans.
XI.8.2 At all times during the Term, Tenant shall not do,
permit, or suffer to be done any act, or cause, permit, or suffer to exist any
condition upon the Premises, which may (a) be dangerous, unless safeguarded as
provided for by Legal Requirements; (b) constitute a public or private nuisance;
(c) make any Insurance void or voidable or cause any increase in Insurance
premiums; or (d) involve invasive medical procedures including but not limited
to the use of syringes. Landlord may enforce this provision in different ways
from time to time, and the permitting by Landlord of certain activities on one
or more occasions shall not alter Landlord's rights to prohibit or modify such
activities at other times. Tenant acknowledges and agrees that Landlord shall
have the right to provide for the comfort of others in the Building and that
such right is a significant consideration and inducement to Landlord to enter
into this Lease.
XI.8.3 Tenant shall:
11.8.3.1 neither cause nor permit the Premises to be
used to generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce, or process Hazardous Materials, except in compliance with all
Legal Requirements;
11.8.3.2 neither cause nor permit a release or
threatened release of Hazardous Materials onto the Premises or any other
property as a result of any intentional or unintentional act or omission on the
part of Tenant;
11.8.3.3 comply with all applicable Legal Requirements
related to Hazardous Materials;
11.8.3.4 conduct and complete all investigations,
studies, sampling, and testing, and all remedial, removal, and other actions on,
from, or affecting the Premises in accordance with such applicable Legal
Requirements and to
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the satisfaction of Landlord;
11.8.3.5 allow access to the Premises by Landlord and
applicable regulatory authorities so that they may assure compliance with this
Section XI.8;
11.8.3.6 upon the expiration or termination of this
Lease, deliver the Premises to Landlord free of all Hazardous Materials (other
than those Hazardous Materials, if any, existing in the Premises on the
Commencement Date); and
11.8.3.7 defend, indemnify, and hold harmless Landlord
and Landlord's employees and other agents from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses of any
kind or nature, known or unknown, contingent or otherwise (including, without
limitation, reasonable fees of accountants' and reasonable attorneys' fees
(including fees for the services of paralegals and similar persons), consultant
fees, investigation and laboratory fees, court costs, and litigation expenses at
the trial and all appellate levels), arising out of, or in any way related to
(a) the presence, disposal, release, or threatened release, by or caused by
Tenant or its agents, of any Hazardous Materials which are on, from, or
affecting the soil, water, vegetation, buildings, personal property, persons,
animals, or otherwise; (b) any personal injury, including wrongful death, or
damage to property, real or personal, arising out of or related to Hazardous
Materials released by Tenant or its agents or employees; (c) any lawsuit
brought, threatened, or settled by Legal Authorities or other parties, or order
by Legal Authorities, related to Hazardous Materials released by Tenant or its
agents or employees; and/or (d) any violation of Legal Requirements related in
any way to Hazardous Materials released by Tenant or its agents or employees.
For the purposes of this Lease "Hazardous Materials" means any flammable
explosives, radioactive materials, oil or petroleum products and their by
products, asbestos, polychlorobiphenyls, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials as defined under or
regulated by any Legal Requirements, including, without limitation, the
following statutes and the regulations promulgated under their authority: (a)
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. sections 9601 et seq.); (b) the Hazardous Materials
Transportation Act, as amended (49 U.S.C. sections 1801 et seq.); and (c) the
Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. sections
6901 et seq.). The provisions of this Section XI.8 shall survive the expiration
or termination of this Lease.
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Landlord hereby represents and warrants to Tenant that, to the best of
Landlord's knowledge, no hazardous materials, hazardous wastes or asbestos
("Hazardous Materials") exist in or about the Property. Landlord agrees to hold
Tenant harmless from and against any costs or damages resulting from the
presence or release of Hazardous Materials in or about the Property caused by
Landlord or Landlord's employees or agents, with the exception of any
encapsulated Hazardous Materials, provided such release is not caused by Tenant,
or Tenant's employees or agents. Notwithstanding anything to the contrary
contained herein, Tenant shall have no obligation to indemnify, defend, or hold
Landlord harmless for claims originating from the presence of Hazardous
Materials which are not placed on the Premises or in the Building by the Tenant,
or by Tenant's employees or agents. Tenant's liability for Hazardous materials
is limited solely to releases caused by Tenant, or Tenant's employees or agents.
Landlord shall abate, encapsulate, or pay the additional costs Tenant incurs in
the course of construction due to the presence of Hazardous Materials, provided,
however, that in any situation where Tenant claims or may claim such additional
costs, Tenant shall first give Landlord early enough written notice of such
claim by Tenant so that Landlord may, prior to the commencement of any such work
by or for Tenant, at Landlord's option, determine whether to perform and/or have
a third party perform such work so as to minimize or eliminate any additional
cost to Landlord.
Section XI.9 RULES AND REGULATIONS
Tenant's use of the Premises shall be subject, at all times during the
Lease Term, to Landlord's right to adopt in writing, from time to time, modify
and/or rescind reasonable Rules and Regulations not in conflict with any of the
express provisions hereof governing the use of the parking areas, walks,
driveways, passageways, signs, exterior of Building, lighting and other matters
affecting other tenants in and the general management and appearance of the
Building of which the Premises are a part, but no such rule or regulation shall
discriminate against Tenant. The current Rules and Regulations are attached as
Exhibit "C".
Section XI.10 ABANDONMENT
Tenant shall not vacate or abandon the Premises at any time during the
Lease Term. If Tenant shall abandon, vacate or surrender the Premises, or be
dispossessed by process of law or otherwise, any personal property belonging to
Tenant left on the Premises shall, at the option of the Landlord, be deemed
abandoned, and Landlord may sell, store, or dispose of it at Tenant's expense.
Section XI.11 CLAIMS FOR TENANT'S PROPERTY.
Landlord shall have the right to relinquish possession of all or any
portion of Tenant's furniture, fixtures, equipment and other property of Tenant
to any person ("Claimant") claiming to be entitled to possession thereof who
presents to
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Landlord a copy of any instruments represented to Landlord by Claimant to have
been executed by Tenant (or any predecessor of Tenant) granting Claimant the
right under various circumstances to take possession of such furniture,
fixtures, equipment or other property, without the necessity on the part of
Landlord to inquire into the authenticity of said instrument's copy of Tenant's
or Tenant's predecessor's signature thereon and without the necessity of
Landlord making any nature of investigation or inquiry as to the validity of the
factual or legal basis upon which Claimant purports to act; and Tenant agrees to
indemnify and hold Landlord harmless from all cost, expense, loss, damage and
liability incident to Landlord's relinquishment of possession of all or any
portion of such furniture, fixtures, equipment or other property to Claimant.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section XII.1 NOTICES
Whenever notice shall or may be given to either of the parties by the
other, each such notice shall be either delivered in person or sent by
nationally recognized overnight delivery service, with return receipt requested.
Notices to Landlord shall be sent to the address specified in the Basic Term
Sheet. Notices to Tenant shall be sent to the address specified in the Basic
Term Sheet. Any notice under this Lease shall be deemed to have been given at
the time it is received or refused by the addressee.
Section XII.2 ENTIRE AND BINDING AGREEMENT
This Lease contains all of the agreements between the parties hereto,
and it may not be modified in any manner other than by agreement in writing
signed by all parties hereto or their successors in interest. Tenant shall pay
Landlord for any and all reasonable legally-related expenses which may be
incurred by Landlord in connection with the review or preparation of all
lease-related documents including, without limitation, consents, amendments,
modifications and assignments therewith. The terms, covenants and conditions
contained herein shall inure to the benefit of and be binding upon Landlord and
Tenant and their respective heirs, successors and assigns, except as may be
otherwise expressly provided in this Lease.
Section XII.3 PROVISIONS SEVERABLE
If any term or provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be illegal, invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those to which it is held
illegal, invalid or unenforceable shall not be affected hereby and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
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Section XII.4 CAPTIONS
The captions contained herein are for convenience and reference only and
shall not be deemed as part of this Lease or construed as in any manner limiting
or amplifying the terms and provisions of this Lease to which they relate.
Section XII.5 RELATIONSHIP OF THE PARTIES
Nothing herein contained shall be deemed or construed as creating the
relationship of principal and agent or of partnership or joint venture between
the parties hereto; it being understood and agreed that neither the method of
computing rent nor any other provision contained herein nor any acts of the
parties hereto shall be deemed to create any relationship between the parties
other than that of Landlord and Tenant.
Section XII.6 ACCORD AND SATISFACTION
No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent herein stipulated shall be deemed to be other than on account of the
earliest stipulated Rent 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 for in this Lease or available at law or in equity.
Section XII.7 BROKER'S COMMISSION
Each party warrants that it has not engaged any Real Estate Broker or
Realtor, except for Abood & Associates, Inc. (which represents and shall be paid
by Landlord) and Dan Topping, Inc. (which represents Tenant and shall be paid by
Abood & Associates, Inc.) in connection with its execution of this Lease and
agrees to indemnify and save the other party harmless from any liability that
may arise from such claim, including reasonable attorneys' fees by any broker,
realtor or finder.
Section XII.8 CORPORATE AND PARTNERSHIP STATUS
XII.8.1 If Tenant is a corporation or partnership, tenant's
corporate or partnership status shall continuously be in good standing and
active and current with the state of its incorporation and the state in which
the Building is located at the time of execution of the Lease and at all times
thereafter. Tenant shall keep its corporate status active and current throughout
the Lease Term or any extensions or renewals. In the event this Lease is signed
on behalf of Tenant by a person in a representative capacity, each of the person
or persons signing in such capacity represents and warrants to the Landlord and
its successors and assigns that:
XII.8.1.1 The execution and delivery of this lease has
been
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duly and validly authorized and all requisite actions have been taken to make it
valid and binding on the entity they represent.
XII.8.1.2 The entity they represent will, on the date of
the commencement of and at all times during the term of this Lease, be duly
organized, validly existing and in good standing in the state of its
organization and entitled to conduct its business in the state where the
Premises is located.
XII.8.1.3 The entity shall, at all times be in
possession of a fully paid, current and valid Occupational License from the City
and County where the Premises is located. Failure to comply with this
requirement shall be a material default under this Lease but shall not relieve
Tenant of all of its obligations hereunder, including, but not limited to, the
obligation to pay Rent.
Section XII.9 MISCELLANEOUS
XII.9.1 Landlord shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling materials, steam,
gas, electricity, water, rain or leaks from any part of the Premises or from the
pipes, appliances or plumbing works or from the roof, street or subsurface or
from any other place or by dampness or by any other cause of whatsoever nature.
All property of Tenant, including merchandise and furnishings, kept or stored on
the Premises shall be so kept or stored at the risk of Tenant only and Tenant
shall hold Landlord harmless from any and all claims arising out of damage to
same. If Landlord is required to make repairs by reason of any act, omission or
negligence of Tenant, any permitted subtenants, concessionaires or their
respective employees, agents, invitees, licensees or contractors, the cost of
such repairs shall be borne by Tenant and shall be due and payable immediately
upon receipt of Landlord's notification of the amount due.
XII.9.2 At Tenant's request, if Landlord provides any
miscellaneous services and/or supplies to Tenant or Tenant's Premises (including
by way of example, but not limited to: keys, directory strips, carpet cleaning,
non-standard light bulbs, repairs, locks, parking, overtime electricity usage)
all charges for these services imposed by Landlord shall be billed to Tenant and
payable by Tenant as Additional Rent. Landlord shall have the same remedies for
failure to pay the same as for non-payment of Fixed Minimum Rent. Tenant
covenants and agrees to pay Landlord all applicable sales tax or other taxes
which may be imposed on the above Additional Rent.
XII.9.3 It is specifically understood and agreed that there
shall be no personal liability on Landlord or its general or limited partners in
respect to any of the covenants, conditions or provisions of this Lease; in the
event of a breach or default by Landlord of any of its obligations under this
Lease, Tenant shall look solely to the equity of Landlord in the Premises for
the satisfaction of
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<PAGE> 53
Tenant's remedies. In the event of a sale or transfer of the Building or any
portion thereof which includes the Premises, or in the event of the making of
the lease of the Building or of any portion, or in the event of a sale or
transfer of the leasehold estate under any such underlying lease, the grantor,
transferor or Landlord, as the case may be, shall thereafter be entirely
relieved of all terms, covenants and obligations thereafter to be performed by
Landlord under this Lease to the extent of the interest or portion so sold,
transferred or leased, and it shall be deemed and construed, without further
agreement between the parties that the purchaser, transferee or Tenant, as the
case may be, has assumed and agreed to carry out any and all covenants of
Landlord hereunder.
XII.9.4 THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTER CLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER OR ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR CLAIM OF INJURY OR DAMAGE.
XII.9.5 In the event of a breach by Tenant of any of the
covenants or provision hereof, Landlord shall have, in addition to any other
remedies which it may have, the right to invoke any remedy allowed at law or in
equity, including injunctive relief, to enforce Landlord's rights or any of
them, as if re-entry and other remedies were not herein provided for.
XII.9.6 In the event of any litigation arising out of
enforcement of this Lease, the prevailing party in such litigation shall be
entitled to recovery of all costs, including reasonable attorneys' fees.
XII.9.7 Notwithstanding anything in this Lease to the contrary,
Landlord reserves all rights which any state or local laws, rules, regulations
or ordinances confer upon a Landlord against a Tenant in default. This article
shall apply to any renewals or extensions of this Lease.
XII.9.8 This agreement shall be deemed to have been made in Dade
County, Florida and shall be interpreted, and the rights and liabilities of the
parties here determined, in accordance with the laws of the State of Florida.
Section XII.10 FINANCIAL STATEMENTS.
Tenant shall furnish Landlord, within five (5) business days after
Landlord's request therefor, an updated, current financial statement of Tenant
and any guarantors of this Lease. Unless Landlord has a good faith bona fide
reason to believe there has been a material reduction in the financial worth of
any of such parties, such financial statement(s) shall not be required to be
furnished more than once each calendar year as to Tenant and each guarantor, if
any.
Section XII.11 INTENTIONALLY DELETED.
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<PAGE> 54
Section XII.12 NON-WAIVER PROVISIONS
XII.12.1 The failure of Landlord to insist upon a strict
performance of any of the terms, conditions and covenants herein shall not be
deemed to be a waiver of any rights or remedies that Landlord may have and shall
not be deemed a waiver of any subsequent breach or default in the terms,
conditions and covenants herein contained except as may be expressly waived in
writing.
XII.12.2 The maintenance of any action or proceeding to recover
possession of the Premises or any installment or installments of rent or any
other monies that may be due or become due from Tenant to Landlord shall not
preclude Landlord from thereafter instituting and maintaining subsequent actions
or proceedings for the recovery or possession of the Premises or of any other
monies that may be due or become due from Tenant including all expenses, court
costs and reasonable attorneys' fees and disbursements incurred by Landlord in
recovering possession of the Premises and all costs and charges for the care of
the Premises while vacant. Any entry or re-entry by Landlord shall not be deemed
to absolve or discharge Tenant from liability hereunder.
XII.12.3 If either party is delayed or prevented from performing
any of its obligations under this Lease by reason of strike, labor disputes, or
any cause whatsoever beyond such party's reasonable control, the period of such
delay or such prevention shall be deemed added to the time herein provided for
the performance of any such obligation.
XII.12.4 Whenever the consent or approval of Landlord is
required under the Lease, Landlord agrees not to unreasonably withhold, delay or
condition such consent or approval.
Section XII.13 RADON GAS.
Pursuant to F.S. 404.056(8), Tenant is hereby notified that 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. In no event shall
Landlord be liable for direct or indirect, consequential or incidental damages
arising from the existence or discovery of radon in the Premises.
Section XII.14 LIMITATIONS ON LIABILITY.
In no event shall Landlord be responsible to Tenant, or to any party claiming by
or through Tenant, whether under this Lease or otherwise, for any consequential,
special, indirect or punitive damages. This Lease contains all agreements and
understandings between Landlord and Tenant on the use and
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<PAGE> 55
occupancy of the Premises and the relationship of Landlord and Tenant as
landlord and tenant. Any agreement of any nature, oral or written, between
Landlord and Tenant, including, but not limited to, any one based on custom,
usage, acceptance or waiver, purportedly entered into prior to or subsequent to
the execution of this Lease is null and void and of no affect whatsoever, unless
such purported agreement is specifically set forth in writing in this Lease or
in a written instrument executed by both Landlord and Tenant.
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<PAGE> 56
IN WITNESS WHEREOF, Landlord and Tenant above duly executed this Lease
as of the day and year first above written, each acknowledging receipt of an
executed copy hereof.
WITNESSES: LANDLORD:
EWE OFFICE INVESTMENTS II,
LTD.
BY: 200 SE FIRST STREET INC.
Its general partner
/s/ L. MARTINCZ By: /s/ DAVID GARFINKLE
----------------------------
Print Name: David Garfinkle
As Vice President
Print Name: L. MARTINCZ [Corporate Seal]
WITNESSES: TENANT: UNIVERSAL ACCESS, INC.
By: /s/ ROBERT ROMMER
---------------------------
Print Name: _______________________ Name/Title: Robert Rommer/
Chief Operating Officer
Officer
Print Name: _______________________ [Corporate Seal]
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<PAGE> 57
EXHIBIT A
LEGAL DESCRIPTION
The North 102.50 feet of the West 135 feet of that portion of Block 127,
North CITY OF MIAMI, lying West of Southeast 3rd Avenue, according to the Plat
thereof, recorded in Plat Book 25, Page 75, of the Public Records of Dade
County, Florida
1
<PAGE> 58
EXHIBIT "C"
RULES AND REGULATIONS
1. At all times during the terms of this Lease, the Landlord shall have
the right by themselves, their agents, and employees, upon 24 hours prior notice
to Tenant (other than in an emergency situation), to enter into and upon the
Premises during reasonable business hours for the purpose of examining and
inspecting the same and determining whether the Tenant shall have complied with
his obligation under the Lease and the rules and regulations contained herein,
in respect to the care and maintenance of the Premises and the repair or
rebuilding of the improvements thereon, when necessary.
2. Tenant shall not use the name of the Building for any purpose other
than Tenant's business address and shall never use a picture or likeness of the
Building or Premises in any advertisement, notice or correspondence without
Landlord's advance written consent hereto.
3. Tenant shall not make or permit any noise or odor that is
objectionable to the public, to other occupants of the Building, or to Landlord
to emanate from the premises and shall not create or maintain a nuisance thereon
and shall not disturb, solicit or canvass any occupant and shall not do any act
tending to injure the reputation of the Building or Premises.
4. Tenant shall not place or permit any radio antenna, loud speakers,
sound amplifiers, or similar devices on the roof or outside of the Building, or
within the core area.
5. The sidewalks, entrances, passages, elevators, vestibules, stairways,
corridors and halls must not be obstructed or encumbered or used for any purpose
other than ingress and egress to and from the Premises.
6. With the exception of initially moving into or completely moving out
of the Tenant's Premises, supplies, goods, materials, packages, furniture and
all such items of every kind are to be delivered at the entrance point provided
therefore, through service elevators or dumbwaiters to the Tenant, or in such
manner as the Landlord may provide and the Landlord is not responsible for the
loss or the damage of any such property.
7. The Landlord may retain a pass key to the Premises. The Tenant shall
not alter any lock or install anew lock or a knocker on any door of the Premises
without written consent of the Landlord or the Landlord's agent, provided, in
case such consent is given, the Tenant shall make provisions that the lock is
compatible with the Landlord keying system pursuant to the Landlord's right of
access to the Premises.
8. Tenant shall, upon termination of the Lease or of Tenant's
possession, surrender all keys of the Premises to
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<PAGE> 59
landlord at the Building office and shall make known to Landlord the explanation
of all combination locks on safes, cabinets, and vaults in the Premises.
9. Tenant shall not install any concession or vending machines in the
Premises, and shall not sell from the Premises the following items: cigars,
cigarettes, tobacco, pipes, candies, newspapers, magazines, or greeting cards.
10. Landlord reserves the right to: (1) change the street address of the
Building; (2) install and maintain a sign or signs on the exterior or interior
of the Building; (3) designate all sources furnishing sign painting and
lettering and, and (4) take all measures as may be necessary or desirable for
the safety, protection or preservation of the Premises of the Building.
11. All persons entering or leaving the Building after normal Building
operating hours, 7:00 A.M. - 7:00 P.M.; Monday through Friday, or at any time
during Saturdays, Sundays and holidays, may be required to do so under such
regulations as Landlord may impose.
12. Draperies and other window coverings installed by Tenant will be of
either non-combustible material such as fiberglass, metal mesh, etc. or in lieu
thereof have fabric treated with a flame retardant material.
13. Drapery traverse mechanisms shall be so arranged as to permit the
full opening of draperies and to provide sufficient over-travel that the stacked
draperies in the full open position shall have at least a clearance of either
window jam.
14. The Tenant shall not penetrate the exterior walls for any reason.
All penetrations of interior walls for book shelves, pictures, or any other
reason must have the prior written consent of the Landlord.
15. The Landlord at all times shall have the right to reasonably amend,
modify or waive any of the foregoing rules and regulations and to make such
other and further rules and regulations as the landlord may adopt. Landlord
agrees to enforce these Rules and Regulations in a non-discriminatory manner.
16. No furniture, freight or equipment of any kind or nature shall be
brought into or removed from the Building or any demised premises without the
prior written consent of Landlord. All moving of the same by tenant into, within
or out of the Building, shall be done at such times and in such manner as
Landlord shall designate. Landlord shall have the right to prescribe the weight,
size and position of all safes and other heavy property brought into the
Building. As security for any damage done to the Building or the Premises, by
tenant or tenant's movers, contractors, vendors, lessors, or employees, in
connection with any move into, within or out of the Building, the terms and
conditions of Section 10.1 of the Lease regarding the Security Deposit shall
apply to this provision. Landlord may at its sole, but reasonable discretion
prevent any moving by any tenant or moving company of any furniture, freight or
equipment into, within or out of the
<PAGE> 60
Building, which has previously committed any damages to any part of the Building
in any moving situation. All damage done to the Building by such moving or
maintaining any safe or heavy property shall be repaired at the expense of the
tenant. In the event a tenant engages the services of a moving company, such
tenant shall provide Landlord with a certificate on Form ACORD 27 from such
tenant's and such mover's respective insurance carrier (which carrier(s) shall
be reasonably satisfactory to Landlord) naming Landlord as an additional insured
and stating that such insurance coverage shall not be terminated without at
least fifteen (15) days prior written notice having been given to Landlord at
Landlord's address for notice in the lease. The exercise of any of Landlord's
rights under the moving security deposit shall not diminish or be in lieu of
Landlord's other rights against tenant or others under this lease or at law or
at equity.
The failure of the Landlord to seek redress for violation of, or insist
upon the strict performance of, any covenant or conditions of this Lease or any
of the rules and regulations set forth above or hereafter adopted by Landlord,
shall not prevent a subsequent act, which would have originally constituted a
violation. The receipt by Landlord of Rent with knowledge of the breach of any
covenant of this Lease or breach of these rules and regulations shall not be
deemed a waiver of such breach. The failure of Landlord to enforce any of these
rules and regulations as set forth above or hereafter adopted against the Tenant
and/or any other tenant in the Building shall not be deemed a waiver of any such
rules and regulations.
Landlord shall not be liable to Tenant for violations of any said rules
and regulations or the breach of any covenant or condition in any Lease by any
other tenant i the Building.
No act or thing done or omitted to be done by Landlord or Landlord's
agents during the term of the Lease which is necessary to enforce these rules
and regulations shall constitute an eviction by Landlord. Except for the
Building Manager and the Assistant Building Manager, no employee of Landlord or
Landlord's agent shall have any power to accept the keys of said Premises prior
to the termination of the Lease. The delivery of keys to any employee of
Landlord or Landlord's agents shall not operate as a termination of the Lease or
a surrender of the Premises.
The rules and regulations shall be binding upon heirs, successors,
representatives and assigns of the Tenant.
<PAGE> 61
Exhibit D
TELECOMMUNICATIONS RIDER
TO OFFICE LEASE FOR 200 SE FIRST STREET BUILDING
EWE OFFICE INVESTMENTS II, LTD. LANDLORD
UNIVERSAL ACCESS, INC., TENANT
THE PROVISIONS OF THIS TELECOMMUNICATIONS RIDER SHALL PREVAIL OVER ANY
INCONSISTENT PROVISION IN THE MAIN BODY OF THE LEASE.
R.1. INTENTIONALLY DELETED.
R.2. INTENTIONALLY DELETED.
R.3. COMPLETE STATEMENT OF LANDLORD WORK.
3.01 Except as set forth in section I.2.18, Additional Terms of the Lease
Agreement, Tenant is taking the Premises in its "as-is" condition, existing as
of the execution of this Lease, which Tenant acknowledges that Tenant has
inspected and accepted. Other than as to that the standard electrical and
mechanical systems are in good working order to the mechanical room on the
fourth floor of the Building, as to which Landlord warrants and represents that
such systems are as represented, Landlord specifically disclaims all warranties
or representations as to the condition of the Premises, including the warranties
of merchantability and fitness for a particular purpose, which disclaimer is
acknowledged by Tenant as a material inducement to entry into this Lease on the
part of Landlord.
R.4. ELECTRICAL METERING.
4.01 Subject to installation of electrical service to the Premises as provided
for under the Landlord's Improvements section of Section I.1.18 of the Lease,
Tenant shall obtain and pay for at its sole expense Tenant's entire supply of
electric current to be supplied and submetered by FPL and billed directly by FPL
to Tenant.
R.5. ALTERATIONS.
5.01 The following provisions supplement but do not replace Articles V and VI of
this Lease related to alterations and repairs of the Premises by or for Tenant.
Where these provisions conflict with the other provisions of the Lease, however,
the following provisions shall control.
(a) Landlord shall have the right to approve the general contractor,
construction manager, subcontractor, architect and engineer which Tenant may
select; for all improvement work connecting to Landlord's core electrical
systems, however, Tenant shall utilize Landlord's contractor(s), provided their
pricing is reasonably competitive with other bids, such decision to be made by
Tenant within ten (10) days after submission of Tenant's receipt of bids. If
Landlord's contractors' such prices are not reasonably competitive with other
bids, then Tenant shall have the right to solicit independent bids from
improvement contractors reasonably satisfactory to Landlord.
<PAGE> 62
(b) Landlord's right to approve under this Section R.5 shall not be
unreasonably withheld, delayed or conditioned.
R.6. EQUIPMENT AND OPERATING RIGHTS; LICENSE FOR ACCESS.
6.01 So long as this Lease is in full force and effect and no Event of Default
has occurred, Tenant shall, subject to the provisions of this Lease and License
and to Landlord's reasonable rules and regulations therefor as promulgated from
time to time, have a nonexclusive license (the "License"), free of any charges,
(a) to install, operate, maintain, repair and replace telecommunications cable
within vertical and horizontal shafts of the Building; (b) have the right to
install at Tenant's sole cost and expense up to two (2) four-inch conduit risers
in the central core area of the Building, to run from the second floor of the
Building to the Premises for the purpose of installing the cable described in
(a); (c) install connections to Landlord's backup power generator; and (d)
install electrical system as set forth on Exhibit A. All of the shafts, risers
and other areas designated by Landlord for such License use are referred to in
this Section R6 as the "License Area" and are subject to and shall be installed,
operated, maintained, repaired, replaced and removed in accordance with the
terms and conditions of Exhibit A, Equipment and Operating Rider, annexed
hereto.
6.02 Subject to Tenant's receipt of all applicable governmental permits and
licenses required by law, prior to installation, and at Tenant's sole cost,
following notice to and approval by Landlord, Tenant shall have a right to
construct in the License Area, where necessary for such purposes, conduit
facilities for the provision of telecommunications services in the Building.
Such conduits shall be limited in size and location so as not to interfere with
the Building systems and to allow other uses deemed reasonable or necessary by
Landlord in the vertical shafts and all other areas of the Building.
Telecommunications equipment of Tenant and its clients shall be located within
the Premises, subject to all other provisions of the Lease.
6.03 The license granted in this Rider is not exclusive. Landlord reserves the
right to grant, renew or extend similar licenses, and unrelated licenses and
agreements for use, to others. Nothing contained in this Rider shall be
construed as granting to Tenant any property or ownership rights in the Building
or to create a partnership or joint venture between Landlord or Tenant. Tenant's
rights as to all areas of the Building other than the Premises are granted as a
license only, and Tenant (notwithstanding the fact that the term "Tenant" is
used in reference to it) is a licensee only with no additional rights as might
accrue to a tenant under landlord/tenant or any other law. Notwithstanding
anything herein to the contrary, the License granted to Tenant hereunder is
coupled with an interest in the Lease and cannot be (i) modified or altered
without the prior written consent of Tenant or (ii) revoked or terminated for
any reason other than in connection with the termination of the Lease.
6.04 Tenant shall use the License Area and Tenant's facilities within it only
for the provision of
<PAGE> 63
telecommunications services and for no other purpose. If any electrical panels
or meters for such facilities are required, they shall be installed only with
Landlord's prior consent, which shall not be unreasonably withheld, delayed or
conditioned, in accordance with all terms and provisions of this Lease and
License, and at Tenant's sole cost and expense, for initial installation,
maintenance, ongoing costs, and (unless Landlord requires that such facilities
not be removed) removal.
6.05 Prior to the commencement of any work in the License Area, Tenant shall, at
its sole cost and expense, prepare and deliver to Landlord working drawings,
plans and specifications (the "Plans"), detailing the location, size and type of
any facilities and improvements to be constructed or installed in the License
Area. Landlord shall approve all such Plans in writing, and no construction or
installation shall occur without such approval. All construction and
installation shall be done in a safe manner consistent with the highest
generally accepted construction standards; shall be done in a manner which will
prevent interference with the operation of the Building; shall not begin until
all applicable federal, state, and local permits, licenses and approvals have
been obtained and all applicable insurance coverage, including, but not limited
to workers' compensation for all workers, has been obtained and paid for; and
shall be in accord with all provisions and terms of the Lease.
6.06 Tenant shall promptly and satisfactorily repair all damage to the Building
and its contents caused by or related to or growing out of Tenant's use of this
License. Tenant shall comply with all federal, state, and local laws, orders,
rules and regulations applicable to the facilities and the License Area and
Tenant's use of them. Tenant shall not disrupt, adversely affect, or interfere
with other providers of services in the Building or with any of the Building's
occupants' use and enjoyment of its premises or of the common areas of the
Building. Notwithstanding that the License Area is subject to Tenant's use under
a license agreement, Tenant's use thereof is subject to all provisions of the
Lease as anticipated or described for the Premises and, accordingly, all
references in the Lease to the Premises (except for the provisions which provide
that the Premises are leased to Tenant) shall be deemed to include the License
Area to the extent that Tenant utilizes such area in any way. By way of
illustration, but not of limitation, all insurance required of Tenant as to the
Premises shall also include the License Area.
6.07 In the event of a default under the Lease, including this Rider, Landlord
may, but shall not be obligated to, exercise any or any combination of rights
which it has, as to the License Area, the Premises, or both, as licensor and/or
as landlord, in law, in equity and/or under this Lease. Such rights include
those applicable to Non-Residential Tenancies under FS 83 Part One.
6.08 All of the above equipment installed by Tenant shall, if not removed by
Tenant in accordance with the Lease , become the property of Landlord and be
surrendered with the Premises upon the termination of this License or Tenant's
right to possession under it. Notwithstanding anything to the contrary
<PAGE> 64
in this Lease, a termination of the Lease shall be a termination of this
License, and a termination of Tenant's right of possession under the Lease shall
be a termination of Tenant's right of possession under this License.
6.09 In the ordinary course of Tenant's business, Landlord shall have the right
of access to Tenant's Premises provided Landlord is accompanied by an employee
of Tenant. However, in an emergency situation, Landlord or any party acting
through or under Landlord shall have immediate access to the Premises without
the requirement of being accompanied by an employee of Tenant.
6.10 Tenant, at its sole cost and expense, and subject to the prior written
approval by Landlord (which shall not be unreasonably withheld, delayed or
conditioned) of its construction plans therefor and compliance with articles V
and VI of the Lease, shall have the right to install its own security system in
the Premises provided that Tenant provides Landlord with the information
necessary to allow Landlord (and emergency personnel) access to the Premises in
the event of an emergency.
<PAGE> 65
EXHIBIT "A"
EQUIPMENT AND OPERATING RIGHTS
The following are the terms and conditions for use in the installation and
operation of equipment on the Premises and the obligations of the Landlord and
Tenant with respect thereto.
1. COMMUNICATIONS CONDUIT/RISER/MEET ME ROOM
-----------------------------------------
a. Tenant shall have the right to access the Meet Me Room to its Premises
through 2 four (4") inch conduit which shall be installed by Tenant in
accordance with the terms of the Lease, including, but not limited to,
Articles V and VI thereof, and shall generally be installed pursuant to
local zoning, building and fire safety codes, shall comply with all
applicable Federal Communications Commission ("FCC") rules and
regulations, and shall comply with all Fire Underwriters' and Insurance
Underwriters' requirements. In the event any planned breach in the
Chases would compromise the fire safety of the Building, in the opinion
of the Legal Authorities or the Fire Underwriters or Insurance
Underwriters, Tenant, at its sole cost and expense, shall promptly take
those reasonable steps necessary to cure any such problems provided that
such cure is effected to the satisfaction of the Legal Authorities, the
Fire Underwriters and the Insurance Underwriters; is commenced within
ten (10) business days after receipt by Tenant of the notice referred to
above; and is completed by Tenant within thirty (30) days thereafter. If
such conditions are not complied with by Tenant, Landlord may, in its
sole discretion, determine whether to permit the installation of any
communication conduit, and, if any feeder conduit is permitted by
Landlord, what restrictions must be placed upon such installation,
maintenance and operation thereof. No such approval, determination or
restrictions set by Landlord shall operate to render Landlord liable for
any injury or damage done by any such feeder conduit or opening in the
Chases; and Tenant shall remain fully liable for the installation,
maintenance and operation of such feeder conduit and openings in the
Chases.
b. Subject to the terms and conditions of this section and of the Lease and
the Telecommunications Rider, Tenant shall also have the right to use
the Meet Me Room only for the purpose of facilitating interconnections
between Tenant's telecommunications systems and the telecommunications
systems of such other tenants and licensees of Landlord. Tenant agrees
not to keep any equipment of any nature in the Meet Me Room for any
other purpose. Tenant agrees not to cause nor to permit its employees,
contractors or invitees to cause any interference with or damage to any
of the property or equipment of Landlord or of any other tenant or
licensee in the Meet Me Room. All installations by Tenant in the Meet Me
Room shall be made by Tenant at its sole cost and expense in accordance
with the provisions of this Lease for Tenant Improvements. Landlord
shall have the right, in its reasonable discretion, to enforce such
security measures for the Meet Me Room as it deems appropriate,
provided, however, that Landlord shall have no liability to Tenant for
any damage or interference caused
<PAGE> 66
by any other party to Tenant's equipment or other property installed or
located in the Meet Me Room. Tenant shall not have to pay Landlord a
monthly license fee (the "Monthly License Fee") for use of the Meet Me
Room, which shall be free of charge for the two 4" telecommunications
conduit (such Fee for additional installations of four (4) inch
telecommunications conduit shall be $350.00 per month per four (4) inch
conduit); Tenant shall not have to pay Landlord a monthly fee for either
a 4' x 6' cage in the Meet Me Room which shall be free of charge (the
monthly fee for such cages shall be $750.00 per cage and the monthly fee
for smaller cabinets in the Meet Me Room shall be $500.00 per cabinet)
all such monthly charges being subject to an annual 3 % increase after
the first year of the Lease and in any extension terms beyond the
initial lease term in the manner set forth in Section I.2.10 of the
Lease.
c. Subject to providing reasonable prior written notice thereof to Landlord
at least two business days in advance of any such entry, Tenant is
granted the limited right to enter onto Landlord's property for the
purpose of carrying out all of Tenant's rights hereunder, subject to the
terms of the Lease and generally to be effected without any danger or
inconvenience to the Landlord, any other tenants in the Building, or any
property in or of the Building, nor to adversely affect the use or value
of any conduit and cable currently installed in the Building by any
other tenant.
d. In the event any of the conduit and cable and all the other equipment
referred to in this Rider installed by Tenant has not been removed by
Tenant upon the expiration or termination of this License as provided
for herein and/or the Lease, Landlord may at its option (i) remove the
same at the cost and expense of Tenant or (ii) the same shall become the
property of Landlord and shall be surrendered with the Premises upon
expiration or termination of the License as provided for herein and/or
in the Lease.
2. HVAC SYSTEMS
------------
a. Subject to the terms and conditions of the Lease, Tenant shall have the
right to install up to 60 tons of HVAC for the Premises. All electrical
power for the HVAC equipment shall be provided at Tenant's sole cost and
expense in accordance with the terms of the Telecommunications Rider.
b. Tenant shall have the right to install drains for its HVAC equipment to
be tied in to the Building's waste sewer system, or as designated by
Landlord's Chief Building Engineer, in a manner approved in writing by
the Landlord.
c. Landlord's approval of this or any other specification or material to be
used in the construction of Tenant Improvements under this Rider and the
Lease shall not be deemed as a guaranty of the fitness for use or a
particular purpose or as a warranty of any of such specifications or
material by Landlord. All work done under this Rider shall be done in
compliance with all applicable local building, safety and zoning Codes,
all applicable Fire Underwriters' and Insurance Underwriters'
requirements and all rules and regulations of OSHA and the Americans
with Disabilities Act.
<PAGE> 67
3. ELECTRICAL SYSTEMS
------------------
a. Tenant will be provided the right and access to 400 Amps (3 Phase) of
primary electrical power from the Building, which service Tenant agrees
to take, with additional amps available at a charge of $125.00 per Amp
payable 50% upon ordering such additional amps and 50% upon delivery of
such service to Tenant. Tenant hereby agrees that it shall be
responsible for all costs and expenses to bring such electrical service
to its Premises from the second floor main electrical distribution
panels and for the use of such electrical service, subject to the
requirements; of the National Electric Code, any Legal Authority, FPL or
any other supplier of electricity. Tenant shall be given access for
installation of such number of conduits as determined by Landlord in its
reasonable discretion, the installation of which shall be at Tenant's
sole cost and expense, to run Tenant's primary electrical power from the
main primary power distribution panel located on the second floor of the
Building to the Tenant's Premises. Tenant's use of such access shall be
subject to the terms of the Lease and generally shall be effected
without any danger or inconvenience to the Landlord or to any other
tenants in the Building, and shall not adversely affect the use or value
of any conduit and cable currently or hereafter installed in the
Building by the Landlord or by any other tenant. Tenant shall supply, at
its sole cost and expense, any additional equipment, labor and
installation that may be necessary, such as, but not limited to, a main
distribution panel circuit breaker of appropriate size, design and
manufacturer for the Building main primary power switch gear and
automatic transfer switches, that may be necessary for a complete
electrical distribution system.
b. Tenant shall install, at Tenant's sole cost and expense, connections to
Landlord's 2500 KW diesel Backup Generator power system which Landlord
is currently installing and will be installed in operating condition no
later than July 15, 1999 if Tenant is fully operational by that time. If
Tenant is not fully operational by July 15, 1999, the Backup Generator
power system must be installed in operating condition no later than
August 15, 1999, or in any event no later than thirty (30) days after
Tenant is fully operational (the "Generator Installation Deadline"). To
the extent the Backup Generator power system has not been installed in
operating condition on or before Generator Installation Deadline,
Landlord agrees to have in place, at Landlord's sole cost and expense, a
"lifeline agreement" with a reliable third party to deliver Backup Power
to the Building in the event of a power outage either by an on-call
service or by a roll-away generator. Landlord shall give Tenant a credit
of 25% of the Fixed Minimum Rent then payable on a per diem basis for
each day after the Generator Installation Deadline and the Backup
Generator power system has not yet been installed in operating
condition. Tenant shall be given access for installation of two
additional four inch conduits, the installation of which shall be at
Tenant's sole cost and expense, to run Tenant's backup electrical power
from the main backup power distribution panel located on the third floor
of the Building to the Tenant's Premises. Tenant's use of such access
shall be subject to the terms of the Lease and generally shall be
effected without any danger or
<PAGE> 68
inconvenience to the Landlord or to any other tenants in the Building,
and shall not adversely affect the use or value of any conduit and cable
currently or hereafter installed in the Building by the Landlord or by
any other tenant. The terms and conditions of use of the Backup
Generator are as follows: (1) Tenant is granted the right to use 250
kilowatts of backup power from such Backup Generator, which service
Tenant agrees to take, commencing on the date such Backup Generator is
fully operational (such date to be determined by Landlord in its sole
discretion) in the event of an interruption of normal electrical service
to the Premises during the Lease Term, provided that: (a) Tenant pays
Landlord a one time fee in an amount equal to $500.00 per kilowatt of
backup power so reserved, payable one half upon execution of this Lease
and the balance upon the date such Backup Generator is fully operational
and prior to connection of Tenant to such Backup Generator; and (b)
Tenant pays Landlord as Additional Rent under the Lease a monthly sum in
an amount to be reasonably determined by Landlord in good faith based
upon the amount of backup power reserved by Tenant, and Landlord's costs
of operation, use, maintenance, fuel, oil, governmental permits,
licenses and fees, insurance, Landlord's profit and administration and
other expenses relating to the Backup Generator. The monthly amount of
the Additional Rent described in item (b) initially shall be $1.20 per
kilowatt reserved per month. In the event backup power is required for
extended periods of time (in excess of one 24 hour continuous outage per
year) there will be additional charges for the cost of fuel that will be
allocated on a pro rated basis. (2) Each such payment described in
subparagraph 3. b(1) (b) above shall be due on the first day of each
month with Tenant's other Rent payments, with the first such payment due
on the Rent Commencement Date. Such monthly amount may be adjusted
annually, in Landlord's discretion, during the term of the Lease and any
extensions thereof. (3) Tenant's use of such backup power shall be in
accordance with such reasonable rules and regulations as may be
established by Landlord from time to time. (4) Landlord shall repair and
maintain the Backup Generator in accordance with the manufacturer's
recommendations and industry standards, provided that Tenant shall
reimburse Landlord upon demand, as Additional Rent hereunder, for the
cost of any repairs or extraordinary maintenance for the Backup
Generator necessitated by acts of Tenant or Tenant's employees,
contractors, agents, licensees, invitees, assignees or sublessees. (5)
The provision of Backup Generator service by Landlord to Tenant shall be
subject to the provisions of Article III of the Lease. The Backup
Generator may only be used in connection with functional power outages
in the primary FPL service. Any other use is not permitted and shall be
deemed an act of default under the Lease. In the event of such
unpermitted use, Landlord, upon 3 days written notice to Tenant, may
take immediate action to terminate the ability of Tenant to use such
backup power.
c. Tenant shall have the right to install a connection to Landlord's
telecommunications electrical ground to be accessible on the floor on
which Tenant's Premises is located, within the Building's pipe chase, in
accordance with equipment specifications and requirements reasonably
<PAGE> 69
satisfactory to Landlord, and all applicable laws.
4. STRUCTURAL
----------
a. Landlord makes no warranties or representations regarding the load
bearing capacity of the floors in the Premises and the Building
generally or the suitability of the Premises for Tenant's use. Tenant
has inspected the Premises and accepts it "As-Is" "Where-Is". Tenant is
responsible for not exceeding the load limits of the Building.
b. Tenant's floor load bearing capacity needs shall not be in excess of
those amounts as set forth in Tenant's Construction Plans, including,
but not limited to, a written certification by Tenant's Florida licensed
and insured structural engineer, that the floor loading of Tenant's
equipment does not exceed the safe floor loading limits of the
Building's structure, subject to Landlord's right of approval.
5. OTHER
-----
a. Tenant shall have the right if it is then not in default under the Lease
to remove any or all of its equipment, including switches, HVAC,
batteries, electrical systems, and the like, from the Premises at any
time during the term of the Lease. At the expiration or termination of
the Lease, Tenant shall (i) leave the Premises in the same condition as
it was on the date prior to any Tenant Improvements being commenced in
the Premises, ordinary wear and tear excepted or (ii) leave the Premises
with all of the alterations and additions and equipment installed
therein, at the sole discretion of Landlord. Tenant shall notify
Landlord of its decision under the preceding sentences in writing within
six (6) months prior to the date upon which Tenant intends to quit the
Premises.
b. All batteries and any other equipment installed by Tenant that has or
possesses corrosive properties shall comply fully with all local, state
of Florida and federal codes, statutes, orders, rules and regulations
with respect to the storage, ventilation, leakage, operation and use and
maintenance of such batteries and other equipment, including, but not
limited to, containment devices and safety equipment. Because of the
danger to person and property of the corrosive nature of such batteries
and equipment, Tenant shall be responsible for any and all damages to
person or property arising out of or relating to the use or location of
such batteries and equipment in the Premises.
<PAGE> 70
EXHIBIT A-1
ROOF PREMISES
Commencing on the Lease Commencement Date, and expiring one year thereafter if
not exercised by Tenant during said year, such exercise to be in writing
addressed to Landlord, Tenant shall have an Option to license from the Landlord
that certain space on the Building's Roof described below, for the Option Fee of
$60.00 per month payable on the first day of each month during the Option Period
until such Option is exercised by Tenant or lapses by reason of expiration or
otherwise. Upon exercise of such Option, the terms of the said License shall be
as follows:
1. The exterior space (the "Roof Premises") licensed to Tenant consists of
approximately ___ square feet (as more specifically set forth on Exhibit
A-1A annexed hereto), to be used solely for the installation and
operation of an antenna and such other telecommunications equipment of
Tenant and its co-location customers (herein referred to as "Customers")
as set forth on Exhibit A-1B annexed hereto. The License shall be
granted to Tenant for a fee of $600.00 per month payable at the time and
in the manner provided for payment of Fixed Minimum Rent and shall be
deemed as Additional Rent. The monthly license fee shall be increased
each year during the Term of the Lease by 3% of the monthly fee in
effect during the preceding year of the Lease. Notwithstanding anything
herein to the contrary, the License granted to Tenant hereunder is
coupled with an interest in the Lease and cannot be (i) modified or
altered without the prior written consent of Tenant or (ii) revoked or
terminated for any reason other than in connection with the termination
of the Lease.
2. Only the Tenant and its customers may use the Roof Premises and transmit
and receive its signals from the antenna; no other party may use the
Roof Premises nor may any other party transmit or receive signals from
the Antenna. Tenant may not license, sublease, sublicense, assign,
mortgage or otherwise encumber the Roof Premises except as a part of the
Premises and on the same terms and conditions therefor as set forth in
Paragraph XI.2 of the Lease.
3. Prior to any installation or use in any manner of the Roof Premises,
Tenant or its respective Customer shall specify to Landlord in writing
all of the equipment to be installed (including, without limitation,
antenna, cabling and wiring). Any change in equipment by Tenant or its
respective Customer shall require the prior written consent of Landlord
which consent shall not be unreasonably withheld, delayed or
conditioned.
4. Tenant (or its Customers, provided Tenant has in each such case reviewed
and approved any such installations and the plans therefor prior to work
thereon being commenced) may, at its or their sole expense, make such
installations on the Roof Premises as are shown on Exhibit A-1-A annexed
hereto and from time to time hereafter on amendments to Exhibit A-1-A.
However, prior to making any such installations on the Roof Premises, in
order to prevent damage to the roof or the voiding or other problems
with the enforcement of the warranty of the roof, Tenant or its
Customer, at the sole expense of
<PAGE> 71
Tenant or its respective Customer, as the case may be, agrees to (A)
provide Landlord and Landlord's roofing contractor and/or any other
designee with Tenant's or its Customer's plans and specifications for
any such installation and (B) obtain Landlord's prior written consent to
such installation; and if Landlord requires, Tenant or its respective
Customer shall, at Tenant's or its respective Customer's sole cost and
expense, have such roofing contractor and/or designee perform any work
that affects the roof and/or roof warranty or have such roofing
contractor and/or designee present during all such installations. Once
such installation has been made, neither Tenant nor any of its Customers
shall make any material alterations to the same without the prior
written consent of Landlord. Landlord shall have the right to disapprove
any installations or alterations that may void or adversely affect the
roof warranty, or, in the opinion of Landlord's roofing contractor
and/or designee, may materially adversely affect the roof. In making
such determinations or giving any consent called for hereunder, Landlord
shall not unreasonably withhold its consent or approval.
5. Tenant or its respective Customer shall install or cause to be installed
all equipment at the sole cost and expense of Tenant or its respective
Customer, and shall do so in a good and workmanlike manner and in
compliance with all federal, state and local building, zoning, safety,
electric, and telecommunications codes, standards, regulations, laws,
and requirements, including without limitation, those of the Federal
Communications Commission, and the Federal Aviation Administration.
Tenant, or its respective Customer at Tenant's or its respective
Customer's sole cost and expense, shall obtain all permits, licenses,
variances, or other approvals required with respect to the installation
or operation of the equipment to be installed by Tenant or its
respective Customer or in the alterations to be performed by Tenant or
its respective Customer. Tenant or its respective Customer shall deliver
true and complete copies thereof to Landlord prior to commencing any
installations or alterations. Tenant and its Customers shall also
comply, at Tenant's and its Customers' sole cost and expense, with all
applicable laws relating to the Building, to the extent that compliance
with the same arises out of Tenant's or its Customers' use of the Roof
Premises, including without limitation, Tenant's or its Customers'
installation and operation of the equipment thereon.
6. To avoid interference with frequencies used by other tenants of the
Building or those in nearby buildings, Tenant and its respective
Customer shall deliver to Landlord prior to the installation of any
equipment or the use thereof in the Building, a copy of the FCC (or
other agency) grant that awards frequencies to Tenant or to its
respective Customer plus a list of Tenant's and its Customers'
frequencies. Neither Tenant nor any of its Customers may change its or
their respective frequencies without Landlord's prior written consent,
which consent shall not be unreasonably withheld, provided, however,
that withholding consent because of the use by another tenant of a
frequency that may be interfered with by a change in frequency by Tenant
or its respective Customers
<PAGE> 72
shall not be deemed unreasonable. Given that Landlord does not have any
expertise in the determination of frequency interference, Landlord will
use only its reasonable efforts to prevent frequency interference by
existing or future tenants of the Building and has no obligation to
perform any investigations of any such interference. Landlord agrees to
give Tenant, prior to the Lease Commencement Date, a written list of the
frequencies used by those parties using the Roof of the Building for
telecommunications purposes as of such date, provided, however, that
Landlord specifically disclaims any warranty or representation of the
accuracy or completeness of any such list. Tenant and/or its Customers
shall perform any investigations of possible frequency interference
required hereunder at Tenant's and its Customers' sole cost and expense.
Tenant represents and warrants to Landlord on behalf of Tenant and all
of its Customers that Tenant's or its Customers' use of the Tenant's or
its Customers' current frequencies shall not interfere with the
frequencies of any existing tenants, and Tenant shall be solely
responsible for all costs of correcting any interference that may occur
with the frequencies of any such existing tenant. Landlord agrees to
allocate, to the extent it may lawfully do so, all future frequency wave
bands using the Building's Roof, on a first come, first served basis.
7. Landlord shall have the right to enter the Roof Premises at any time in
the event of any emergency and at all times upon reasonable notice (in
the manner set forth in Paragraph VI.6 of the Lease), for the purpose of
(A) inspecting the same; (B) making any repairs to the Roof Premises and
performing any work therein as may be necessary in Landlord's reasonable
judgment; or (C) exhibiting the Roof Premises for the purposes of sale,
lease or financing of the Building or any part thereof. Notwithstanding
anything contained herein to the contrary, if, during the term of the
Lease, Landlord is advised by any Legal Authority having jurisdiction
over the Building, that Tenant's or any of its Customers' use of the
Roof Premises poses a human health or environmental hazard that cannot
be remedied by Tenant or has not been remedied by Tenant within a
reasonable time period established by such Legal Authority after Tenant
has had proper notice thereof, and if Tenant has not obtained (i) an
Order from a Court having jurisdiction over the matter, enjoining such
Legal Authority from taking action against Tenant, any of its Customers
or Landlord in the matter, and Tenant having posted any bond, if any,
required by such Court in connection with such injunction; or (ii) a
judgment denying the right of such Legal Authority to take such action
against Landlord or Tenant or any of Tenant's Customers in the matter,
then (A) Tenant shall immediately cease and shall cause its Customers to
cease all operations on the Roof Premises; (B) the License for the Roof
Premises may be terminated immediately by Landlord in its discretion as
provided in any order from such Legal Authority or if no time period has
been set forth in such order, within thirty (30) days from the date of
Landlord's written notice to Tenant; and (C) Tenant shall remove all
equipment on the Roof Premises installed by Tenant or its
<PAGE> 73
Customers within thirty (30) days from the date of such notice.
<PAGE> 74
EXHIBIT E"
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
------------------------------------------------------
This Subordination, Nondisturbance and Attornment Agreement ("Agreement") is
made as of the ______ day of __________, 19____, between ______________.
("Tenant") and _______ Bank, a _________ banking corporation ("Lender").
RECITALS:
A. Lender is the owner and holder of a mortgage recorded in Official
Records Book _____ at Page ____ of the Public Records of Miami-Dade
County, Florida, encumbering property (the "Property") more particularly
described in Exhibit "A" hereto (the mortgage and all increases,
renewals, recastings, modifications, consolidations, participations,
replacements and / or extensions thereof are hereinafter collectively
called the "Mortgage")
B. The owner of the Property, EWE Office Investments II, Ltd. ("Landlord"),
and Tenant entered into a lease dated as of ________, covering premises
of approximately _____ rentable square feet in suites ________ (the
"Premises") within the Property.
C. The Lease is subject and subordinate to the Mortgage, and Tenant wishes
to obtain from Lender assurances that Tenant's possession of the
Premises will not be disturbed in certain circumstances, and Lender is
willing to provided such assurances to Tenant, upon and subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, FOR $10.00 and other valuable consideration exchanged between
Lender and Tenant, the receipt and sufficiency of such consideration being
hereby acknowledged, Lender and Tenant agree as follows:
1. SUBORDINATION. The Lease is and will remain subject and subordinate in
all respects to the Mortgage and all voluntary and involuntary advances
made thereunder, in accordance with the terms and conditions hereof.
2. NONDISTURBANCE AGREEMENT. As long as Tenant is not in default beyond any
applicable grace period in the payment of rent, additional rent or other
charges or in the performance of any of the other terms or conditions of
the Lease, Tenant's rights under the Lease and its possession of the
Premises will not be interfered with or disturbed by Lender during the
term of the Lease (including any renewal or extension term) following
acquisition of title to the Property (a) by Lender or the purchaser at a
foreclosure sale pursuant to any action or proceeding to foreclose the
Mortgage, or (b) by Lender pursuant to acceptance of a deed in lieu of
foreclosure (in either case, a "Transfer of Ownership").
<PAGE> 75
3. ATTORNMENT AGREEMENT. If a Transfer of Ownership occurs, Lender and
Tenant will be bound to each other, as landlord and tenant,
respectively, under all of the terms and conditions of the Lease for the
balance of the term thereof (including any renewal or extension term),
and Tenant hereby attorns to Lender as its landlord, such attornment to
be effective and self-operative, without the execution of any other
instruments on the part of either party hereto, immediately upon a
Transfer of Ownership. As used in this Article and in the subsequent
provisions hereof, whenever the context allows the term "Lender" will
also include a purchaser of the Property at a foreclosure sale.
4. LENDER'S LIABILITY. Notwithstanding any other provision of this
Agreement, Lender will not in any way be: (a) liable for acts or
omissions of any prior landlord (including Landlord); (b) subject to
offsets or defenses that Tenant might have had against any prior
landlord (including Landlord); (c) bound by rent, additional rent or
other charges that Tenant might have paid for more than 30 days in
advance to any prior landlord (including Landlord); (d) bound by any
amendment or modification of the Lease made without Lender's prior
written consent (except to the extent that the Lease may specifically
contemplate any amendment or modification thereof); (e) responsible for
money or other security delivered to Landlord pursuant to the Lease but
not subsequently received by Lender; or (f) obligated to pay Tenant the
"Construction Allowance" referred to in the Lease, such payment
obligation being personal to Landlord.
5. CONDEMNATION AWARDS AND INSURANCE PROCEEDS. Without limiting any other
provision of this Agreement, until a Transfer of Ownership occurs the
provisions of the Mortgage regarding Lender's rights in and to insurance
proceeds and awards or other compensation made for the taking by eminent
domain (or conveyance in lieu thereof) will be superior to, and will
govern and control over, any contrary provision of the Lease.
Notwithstanding anything contained in the Lease that may require
Landlord to repair or restore damage to the Premises caused by fire or
other casualty or by exercise of eminent domain, if a Transfer of
Ownership occurs Lender will have no Obligation for such repair or
restoration except as the same can reasonably be accomplished with the
net proceeds or net award or other compensation actually received by
Lender with respect to the Premises.
6. NO LEASE MODIFICATION OR CLAIMS. Tenant hereby confirms that the Lease
has not been modified or amended and is in full force and effect without
any claims of default, offset or deduction by Tenant.
7. RECOGNITION OF MORTGAGE AND COLLATERAL ASSIGNMENT. To the extent that
the Lease entitles Tenant to notice of any mortgage affecting the
Premises, this Agreement constitutes such notice with respect to the
Mortgage, and Tenant also acknowledges Landlord's collateral
<PAGE> 76
assignment of the Lease to Lender.
8. NOTICES. To be effective, any notice or other communication given
pursuant to this Agreement must be in writing and sent postpaid by
United States registered or certified mail with return receipt
requested. Rejection or other refusal to accept, or inability to deliver
because of changed address of which no notice has been given, will
constitute receipt of the notice or other communication. For purposes
hereof, Lender's address is __________________________ and Tenant's
address is ____________________________. At any time(s), each party may
change its address for the purposes hereof by giving the other party a
change of address notice in the manner stated above.
9. ENTIRE AGREEMENT, ETC. This Agreement (a) is to be construed and
enforced in accordance with the laws of the State of Florida (b)
contains the entire understanding of Lender and Tenant regarding matters
dealt with therein (any prior written or oral agreements between them as
to such matters being superseded hereby), (c) can be modified or waived
in whole or in part only by a written instrument signed on behalf of the
party against whom enforcement of the modification or waiver is sought,
and (d) will bind and inure to the benefit of the parties hereto and
their respective successors and assigns.
IN WITNESS WHEREOF, this Agreement has been duly signed as of the date first
above written.
WITNESSES: LENDER: BANK
------------------
BY:
- --------------------------------- ---------------------------------
Print Name: Print Name:
---------------------- -------------------------
Print Office:
- --------------------------------- ----------------------
Print Name:
----------------------
WITNESSES: TENANT:
/s/ STUART W. McDOWELL BY: /s/ ROBERT POMMER
- ----------------------- ---------------------------------
Print Name: Stuart W. McDowell Print Name: Robert Pommer
------------------ ------------
Cathryn M. Zygadlo Print Office: Chief Operating Officer
- ------------------ -----------------------
Print Name: Cathryn M. Zygadlo
------------------
STATE OF ______________________:
COUNTY OF _____________________:
The foregoing instrument was acknowledged before me this ___ day of _________,
199_, by ____________________ as ______________ of _______________, on behalf of
the ___________________. He/She has produced _____________________ as
identification.
-------------------------------------
NOTARY PUBLIC, STATE OF ___________
My Commission expires:
<PAGE> 77
STATE OF FLORIDA:
COUNTY OF MIAMI-DADE:
The foregoing instrument was acknowledged before me this ___ day of ________,
199_, by _______________ as _________ of _________ Bank, a ______ banking
corporation, on behalf of the corporation. He/She has produced _________________
as identification.
-------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
My Commission expires:
<PAGE> 78
EXHIBIT "F"
Operating Expense Exclusions
The following defined items shall be specifically excluded from the definition
of Operating Expenses in Article IV.2 of the Lease. To the extent of any
inconsistency between the terms of the Lease and the terms of this Exhibit, this
Exhibit shall control.
Specifically excluded from Operating Expenses (to the extent provided below)
shall be the following:
1. Taxes.
2. Costs of initial improvements to any tenant's premises, or any
architectural, engineering or legal fees, relocation expense or any
permit or similar fees or charges associated with such improvements.
3. Principal or interest payments on loans, including loans secured by
mortgages or trust deeds on the Property and ground lease payments, if
any.
4. Costs of capital improvements, except that Operating Expenses shall
include (i) the cost during the Term, as reasonably amortized by
Landlord pursuant to sound management and accounting principles
consistently applied, with interest on the unamortized amount, at the
Prime Rate of Citibank, N.A. then in effect of any capital improvements
which are intended to reduce any component cost included within
Operating Expenses (and which, as such time, a prudent owner of an
office building in downtown Miami, Florida would reasonably determine
would be likely to so reduce) and (ii) the cost of any capital
improvements which are intended to keep the Property in compliance with
any and all laws (excluding capital improvements necessary to bring the
Property into compliance with such laws as of the date hereof).
5. Depreciation or amortization of any improvements, except as specifically
set forth in this Lease.
6. Costs of repairs, alterations or replacements caused by casualty losses
for which Landlord is compensated through proceeds of insurance or for
which Landlord would have been compensated had Landlord maintained the
insurance required by this Lease.
7. Costs or repairs, alterations or replacements caused by the exercise of
the right of eminent domain.
8. Costs and expenses incurred in connection with leasing space in the
Building, such as legal fees for preparation of leases, tenant
allowances, space planner fees, real estate brokers' leasing commissions
and advertising expenses.
9. Tenant's proportionate share (which shall not exceed an aggregate of
$500.00 during any year of the Lease) of Court costs and legal fees
incurred with regard to enforcing the obligations of tenants under other
leases.
10. Leasing commissions, costs and disbursements and other expenses incurred
in connection with negotiations or disputes with tenants, occupants or
prospective tenants or occupants of the Building.
11. Costs incurred due to violation by Landlord of any lease for space in
the Building or any indemnity payments made by Landlord pursuant to any
such lease because of a violation by Landlord under such lease.
<PAGE> 79
12. Any payments made to subsidiaries of Landlord or entities under common
control with Landlord except if such payments are for services or goods
on, to or for the Building or the Property, and only to the extent that
the cost of such services and goods are at market rates being paid for
such services or goods by owners of other office buildings in downtown
Miami, Florida from time to time.
13. Any expense to the extent for which Landlord is actually compensated by
proceeds of insurance.
14. Any expense for services or items for which any tenant of the Building
(including Tenant) directly reimburses Landlord (other than as a
component of Operating Expenses).
15. Any lender's fees.
16. With the exception of those services being provided to the Common Areas
of the Building, variable expenses relating to any services which are
not being furnished to Tenant, including, without limitation, janitorial
services and Building HVAC system.
17. Costs of asbestos abatement and/or removal and/or any other measures
needed to comply with environmental requirements.
18. Repairs or replacements to the Building necessitated on account of
design or construction defects other than those resulting from Tenant's
Improvements.
19. Any costs, fines or penalties incurred as a result of Landlord's
negligence in operations of the Building and violations of law caused by
such negligence.
20. Management fees in excess of five percent (5%) of gross rents for the
Building.
21. Wages, salaries and other compensation paid to clerks or attendants in
newsstands or other commercial concessions, if any, operated by
Landlord. Any expenses or costs for wages, salaries or other benefits or
compensation paid to any person above the level of building manager
except to the extent such expenses or costs are for the equitable
portion of the expenses or costs of persons, at all levels, shared with
other of Landlord's affiliated entities, as allocated to the Building.
22. Costs related to relocating existing tenants in the Building.
23. Expenses arising as a result of Landlord's gross negligence or willful
misconduct or the gross negligence or willful misconduct of Landlord's
agents or employees.
<PAGE> 80
ADDENDUM TO LEASE AGREEMENT
THIS ADDENDUM TO LEASE AGREEMENT is made as of this 20th day of July,
1999, by and between EWE Office Investments II, Ltd. ("Landlord") and Universal
Access, Inc. ("Tenant").
WITNESSETH:
WHEREAS, Tenant and Landlord have entered into a lease dated March, 29,
1999, pursuant to which Landlord leased certain space, Suite C on the Fourth
Floor of the Building, to Tenant in Landlord's building commonly known as 200
S.E. First Street, Miami, FL 33131 (the "Building") and the parties wish to make
certain modifications to the Lease.
NOW THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, Landlord and Tenant agree that the Lease is hereby amended but
only as follows:
1. All defined terms in this Agreement, unless otherwise defined
herein, shall have the meanings ascribed to them in the Lease.
2. Effective the date hereof, the location of the Premises as
set forth in Section I.2.4 of the Lease shall be changed from Suite "C" on the
Fourth Floor of the Building to Suite "C" on the Third Floor of the Building and
all references in the Lease to Premises shall be deemed to be to the latter
location.
3. All references to the louvers to be installed by Landlord in
the Premises as set forth on line 20 from the top of the third page of the Basic
Term Sheet shall be deleted.
4. Annexed hereto as Exhibit "A-2" to the Lease is an agreement
between Landlord and Tenant permitting Tenant to install certain air
conditioning equipment on the Building's roof and in other places in the
Building. Tenant, at Tenant's sole cost and expense, shall install in the
Building Chase space designated for such purpose by Landlord in its reasonable
discretion, the piping to connect Tenant's air conditioning equipment on the
Roof to Tenant's air conditioning equipment in the Premises, subject to Tenant's
compliance with the provisions of Articles V and VI of the Lease. Wherever there
is not existing Building Chase space for the piping, Landlord shall construct
the same for Tenant at Tenant's sole cost and expense, substantially in the
manner provided in Sections V.3, V.4, V.5 and VI.1 of the Lease. Commencing on
the completion of the installation of Tenant's air conditioning equipment, which
Tenant agrees to proceed with due diligence to install, Tenant shall pay
Landlord the sum of $1,000.00 per month as Additional Rent for the Roof Premises
and the Chase space.
<PAGE> 81
Such Additional Rent shall be paid monthly on the first day of each month in the
manner set forth in Article II of the Lease.
5. The date for performance of all of Landlord's performance
obligations under the Landlord's Improvements portion of Section I.2.18 of the
Basic Term Sheet of the Lease shall be extended to July 22, 1999 and Tenant may
enter the Premises on or after July 8, 1999 to work along side Landlord pursuant
to Section V.6 of the Lease.
6. All terms, conditions and provisions of the Lease not
expressly amended hereby shall remain in full force and effect, and the Lease as
amended is hereby specifically approved, ratified and confirmed.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Addendum to Lease this 20 day of July, 1999.
WITNESSES: LANDLORD: EWE OFFICE
INVESTMENTS II,
/s/ SUANNY MORALES LTD., BY 200 SE FIRST STREET, INC.
- ------------------------------- AS GENERAL PARTNER
(Print Name) Suanny Morales ---------------
/s/ Signature Illegible By: /s/ DAVID GARFINKLE
------------------------------------
(Print Name) Paul L. F?? David Garfinkle, as its Vice President
-----------
WITNESSES: TENANT: UNIVERSAL ACCESS, INC.
/s/ THOMAS HADDEN
- ------------------------------- By: /s/ ROBERT J. POMMER
(Print Name) Thomas Hadden -----------------------------------
-------------
/s/ JAMES M. YATES Robert J. Pommer Coo
- ------------------------------- --------------------
(Print Name) James M. Yates (Print Name and Office)
--------------
<PAGE> 82
EXHIBIT A-2
ROOF PREMISES
1. The exterior space (the "Roof Premises") licensed to Tenant consists
of approximately 300 square feet in an area specifically designated by the
Landlord (as more specifically set forth on Exhibit A-2A annexed hereto), to be
used solely for the installation and operation of air conditioning equipment of
Tenant as set forth in Exhibit A-1A annexed hereto.
2. Only the Tenant may use the Roof Premises for such equipment. Tenant
may not license, sublease, sublicense, assign, mortgage or otherwise encumber
the Roof Premises except as a part of the Premises and on the same terms and
conditions therefor as set forth in Paragraph XI.2 of the Lease.
3. Prior to any installation or use in any manner of the Roof Premises,
Tenant shall specify to landlord in writing all of the equipment to be installed
(including, without limitation, air conditioning equipment, supports for said
equipment, piping, etc.) Any change in equipment by Tenant shall require the
prior written consent of Landlord which consent shall not be unreasonably
withheld, delayed or conditioned.
4. Tenant may, at its sole expense, make such installations on the Roof
Premises as are shown on Exhibit A-2-A annexed hereto. However, prior to making
any such installations on the roof Premises, in order to prevent damage to the
roof or the voiding or other problems with the enforcement of the warranty of
the roof, Tenant, at Tenant's sole expense, agrees to (A) provide Landlord and
Landlord's roofing contractor, structural engineer consulting engineer and/or
any other designee with Tenant's plans and specifications for any such
installation and (B) obtain Landlord's prior written consent to such
installation; and if Landlord requires, Tenant shall, at Tenant's sole cost and
expense, have such roofing contractor, and/or any other designee present during
all such installations. Once such installation has been made, Tenant shall not
make any material alterations to the same without the prior written consent of
Landlord. Landlord shall have the right to disapprove any installations or
alterations that may void or adversely affect the roof warranty, or, in the
opinion of the Landlord's roofing contractor, structural engineer, consulting
engineer an/or designee, may materially adversely affect the roof. In making
such determinations or giving any consent called for hereunder, Landlord shall
not unreasonably withhold its consent or approval.
5. Tenant shall install or cause to be installed all equipment at the
sole cost and expense of Tenant, and shall do so in a good and workmanlike
manner and in compliance with all federal, state and local building, zoning,
safety, electric codes, standards, regulations, laws, and requirements,
including without limitation, those of the Federal Communications Commission,
and the Federal Aviation Administration.
<PAGE> 83
Tenant, at Tenant's sole cost and expense, shall obtain all permits, licenses,
variances, or other approvals required with respect to the installation or
operation of the equipment to be installed by Tenant or in the alterations to be
performed by Tenant. Tenant shall deliver true and complete copies thereof to
Landlord prior to commencing any installations or alterations. Tenant shall also
comply, at Tenant's sole cost and expense, with all applicable laws relating to
the Building, to the extent that compliance with the same arises out of Tenant's
use of the Roof Premises, including without limitation, Tenant's installation
and operation of the equipment thereon.
6. The Tenant specifically acknowledges that the Landlord has not
liability for the safety, security, maintenance, or operation of said equipment
at any time whatsoever. Additionally, if said equipment becomes dislodged for
whatever reason and does any damage whatsoever the roof or Building, then, in
that event, the Tenant shall be fully liable for any said damage and or any
damage resulting therefrom and Tenant will indemnify and hold Landlord harmless
from any such damages.
7. Landlord shall have the right to enter the Roof Premise without
notice at any time in the event of any emergency and at all other times upon
reasonable notice (in the manner set forth in Paragraph VI.6 of the Lease), for
the purpose of (a) inspecting the same; (B) making any repairs to the Roof
Premises and performing any work therein as may be necessary in Landlord's
reasonable judgment; or (C) exhibiting the Roof Premises for the purposes of
sale lease or financing of the Building or any part thereof.
8. Notwithstanding anything contained herein to the contrary, if, during
the term of the lease, Landlord is advised by any Legal Authority having
jurisdiction over the Building, that Tenant's use of the Roof Premises poses a
human health or environmental hazard that cannot be remedied by Tenant or has
not been remedied by Tenant within a reasonable time period established by such
Legal Authority after Tenant has had proper notice thereof, and if Tenant has
not obtained (i) an Order from a Court having jurisdiction over the matter,
enjoining such Legal Authority from taking action against Tenant or Landlord in
the matter, and tenant having posted any bond, if any, required by such Court in
connection with such injunction; or (ii) a judgment denying the right of such
legal Authority to take such action against Landlord or Tenant in the matter,
then (A) Tenant shall immediately cease all operations on the Roof Premises; (B)
the License for the Roof Premises may be terminated immediately by Landlord in
its discretion as provided in any order from such Legal Authority or if not time
period has been set forth in such order, within thirty (30) days from the date
of Landlord's written notice to Tenant; and (C) Tenant shall remove all
equipment on the Roof Premises installed by Tenant within thirty (30) days from
the date of such notice.
9. Notwithstanding anything herein to the contrary, the License granted
to Tenant hereunder is coupled with an interest in the Lease and cannot be (i)
modified or altered without the prior written consent of the Tenant or (ii)
revoked or terminated
<PAGE> 84
for any reason other than in connection with the termination of the Lease or as
provided in Section 8 hereof.
<PAGE> 1
EXHIBIT 10.13
LEASE
DATED APRIL 1, 1999
BY AND BETWEEN
LAFAYETTE BUSINESS PARK, LLC
as Landlord
and
UNIVERSAL ACCESS, INC.
as Tenant
AFFECTING PREMISES COMMONLY KNOWN AS
1900 Lafayette Street
Santa Clara, California 95050
<PAGE> 2
SUMMARY OF BASIC LEASE TERMS
<TABLE>
<CAPTION>
SECTION
(LEASE REFERENCE) TERMS
<S> <C>
A.
(Introduction) LEASE REFERENCE DATE: April 1, 1999
B. LANDLORD: LAFAYETTE BUSINESS PARK, LLC,
(Introduction) a California limited liability company
C. TENANT: UNIVERSAL ACCESS, INC.,
(Introduction) an Illinois corporation
D. PREMISES: That area consisting of 15,600 square feet
(Section 1.15) of rentable area the address of which is 1900 Lafayette
Street, Units 100-209, Santa Clara, California, within
the Building approximately as shown on EXHIBIT A.
E. PROJECT: The land and improvements shown on EXHIBIT A
(Section 1.16) consisting of Four buildings the aggregate rentable
area of which is 65,400 square feet.
F. BUILDING: The building in which the Premises are
(Section 1.16) located known as 1900 Lafayette Street containing
15,600 square feet of rentable area.
G. TENANT'S SHARE: 100.00% of Building Common Operating
(Section 1.21) Expenses,
24.00% of Project Common Operating
Expenses
H.
(Section 4.4) TENANT'S ALLOCATED PARKING STALLS: Thirty-five (35)
stalls.
I. SCHEDULED COMMENCEMENT DATE: April 1, 1999
(Section 2.2)
J. LEASE TERM: Twelve (12) YEARS (plus the partial month
(Section 1.13) following the Commencement Date if such date is not the
first day of a month) with two (2), five (5) year
options to extend as set forth in EXHIBIT F.
K. INITIAL BASE MONTHLY RENT: $30,000.00
(Section 3.1/ Thereafter, annual CPI increases as described in the
Section 8.1) Lease Rider.
INITIAL MONTHLY COE ESTIMATE: $625.00
INITIAL MONTHLY RENT AND COE: $30,625.00
L. PREPAID RENT: $30,625.00 to be applied to first month's
(Section 3.3) rent.
M. SECURITY DEPOSIT: See Lease Rider.
(Section 3.6)
N. PERMITTED USE: Telecommunication business, including
(Section 4.1) general office use, the installation and maintenance of
its telecommunication systems and equipment and the
collocation of telephone systems belonging to Tenant's
customers.
O. TENANT'S LIABILITY INSURANCE MINIMUM: $1,000,000.00
(Section 9.1)
P. LANDLORD'S ADDRESS: 1733 Dell Avenue
(Section 1.2) Campbell, California 95008
Q. TENANT'S ADDRESS: 1900 Lafayette Street
(Section 1.2) Santa Clara, California 95050
R. LEASE: This lease includes the Summary of Basic Lease
(Section 1.12) Terms, the Lease, and the following exhibits and
addenda: Lease Rider, Exhibit A (site plan of the
Project indicating location of the Premises), Exhibit B
(Landlord's Improvements), Exhibit C (Sign Criteria),
Exhibit D (Surrender Condition), Exhibit E (Unit 206,
208 Lease), and Exhibit F (Option to Extend).
</TABLE>
The foregoing Summary is hereby incorporated into and made a part of this
Lease. Each reference in this Lease to any form of the Summary shall mean the
respective information set forth above and shall be construed to incorporate
all of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease,
the Summary shall control.
LANDLORD: TENANT:
LAFAYETTE BUSINESS PARK, LLC UNIVERSAL ACCESS, INC.,
a California limited liability an Illinois corporation
company
By: /s/ ROB MOORE By: /s/ ROBERT J. POMMER
--------------------------------- ---------------------------------
Its: Manager Its: Chief Operating Officer
-------------------------------- --------------------------------
Dated: 3/31/99 Dated: 3/31/99
------------------------------ ------------------------------
<PAGE> 3
LEASE
ARTICLE I
DEFINITIONS
1.1 ADDITIONAL RENT: The term "Additional Rent" is defined in Section 3.2.
1.2 ADDRESS FOR NOTICES: The term "Address for Notices" shall mean the
addresses set forth in Sections P and Q of the Summary; provided, however, that
after the Commencement Date, Tenant's Address for Notices shall be the address
of the Premises.
1.3 AGENTS: The term "Agents" shall mean the following: (i) with respect
to Landlord or Tenant, the agents, employees, contractors, and invitees of such
party; and (ii) in addition with respect to Tenant, Tenant's subtenants and
their respective agents, employees, contractors, and invitees.
1.4 AGREED INTEREST RATE: The term "Agreed Interest Rate" shall mean the
lesser of (i) ten percent (10%) or (ii) the maximum interest rate permitted by
Law.
1.5 BASE MONTHLY RENT: The term "Base Monthly Rent" shall mean the fixed
monthly rent payable by Tenant pursuant to Paragraph 3.1 which is specified in
Section K of the Summary.
1.6 BUILDING: The term "Building" shall mean the building in which the
Premises are located which Building is identified in Section F of the Summary,
the rentable area of which is referred to herein as the "Building Rentable
Area."
1.7 COMMON AREA: The term "Common Area" shall mean all areas and
facilities within the Project that are not designated by Landlord for the
exclusive use of Tenant or any other lessee or other occupant of the Project,
including the parking areas, access and perimeter roads, pedestrian sidewalks,
landscaped areas, trash enclosures, recreation areas and the like.
1.8 COMMON OPERATING EXPENSES: The term "Common Operating Expenses" is
defined in Paragraph 8.2.
1.9 EFFECTIVE DATE: The term "Effective Date" shall mean the date the
last signatory to this Lease whose execution is required to make it binding on
the parties hereto shall have executed this Lease.
1.10 LANDLORD'S INSURANCE: The term "Landlord's Insurance" is defined in
Paragraph 9.2.
1.11 LAW: The term "Law" shall mean any judicial decision, statute,
resolution, regulation, rule, administrative court order, or other requirement
of any municipal, county, state, federal or other government agency or
authority having jurisdiction over the parties to this Lease or the Premises,
or both, in effect either at the Effective Date or any time during the Lease
Term.
1.12 LEASE: The term "Lease" shall mean the Summary and all elements of
this Lease identified in Section R of the Summary, all of which are attached
hereto and incorporated herein by this reference.
1.13 LEASE TERM: The term "Lease Term" shall mean the term of this Lease
which shall commence on the Commencement Date and continue for the period
specified in Section J of the Summary.
1.14 LENDER: The term "Lender" shall mean any beneficiary, mortgagee,
secured party, lessor, or other holder of any Security Instrument.
1.15 PREMISES: The term "Premises" shall mean the rentable area within
the Building described in Section D of the Summary located approximately as
shown on Exhibit A.
1.16 PROJECT: The term "Project" shall mean that real property and the
improvements thereon which are specified in Section E of the Summary, the
rentable area of which is referred to herein as the "Project Rentable Area."
1.17 REAL PROPERTY TAXES: The term "Real Property Taxes" is defined in
Paragraph 8.4.
1.18 SECURITY INSTRUMENT: The term "Security Instrument" shall mean any
underlying lease, mortgage or deed of trust which now or hereafter affects any
portion of the Project.
1.19 SUMMARY: The term "Summary" shall mean the Summary of Basic Lease
Terms executed by Landlord and Tenant that is part of this Lease.
1.20 TENANT'S ALTERATIONS: The term "Tenant's Alterations" shall mean all
improvements, additions, alterations, and fixtures installed in the Premises by
Tenant at its expense.
1.21 TENANT'S SHARE: The term "Tenant's Share" shall mean the percentage
obtained by dividing Tenant's rentable area by the Building Rentable Area,
which as of the Effective Date is the percentage identified in Section O of the
Summary.
ARTICLE 2
DEMISE, CONSTRUCTION, AND
ACCEPTANCE
2.1 DEMISE OF PREMISES: Landlord hereby leases to Tenant, and Tenant
leases from Landlord, the Premises for the Lease Term upon the terms and
conditions hereof.
2.2 COMMENCEMENT DATE: The Lease Term shall begin on the first to occur
of the following, which shall be the "Commencement Date": (i) the date
specified in Section J of the Summary (the "Scheduled Commencement Date") if
Landlord is not required to construct improvements under Exhibit B; or (ii) the
date Landlord offers to deliver possession of the Premises to Tenant following
substantial completion of all improvements to be constructed by Landlord under
Exhibit B, except for punchlist items which do not prevent Tenant from using
the Premises; or (iii) the date Tenant enters into occupancy of the Premises.
1
<PAGE> 4
2.3 DELIVERY AND ACCEPTANCE OF POSSESSION: If Landlord is unable to
deliver possession of the Premises to Tenant on or before the Scheduled
Commencement Date for any reason whatsoever, this Lease shall not be void or
voidable, and Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom; provided that, the Lease Term shall not commence until
Landlord delivers possession of the Premises to Tenant. At the time Landlord
delivers possession of the Premises to Tenant, Tenant agrees to accept
possession of the Premises in its then existing condition, "as-is", including
all patent and latent defects, subject only to any defects in the Premises
existing at the time Tenant takes possession and of which Tenant notifies
Landlord in writing within one hundred eighty (180) days of the Commencement
Date.
ARTICLE 3
RENT
3.1 BASE MONTHLY RENT: Throughout the Lease Term, Tenant shall pay to
Landlord the Base Monthly Rent set forth in Section K of the Summary (the "Base
Monthly Rent").
3.2 ADDITIONAL RENT: All charges due from Tenant under this Lease shall
be deemed additional rent (the "Additional Rent").
3.3 PAYMENT OF RENT: Concurrently with the execution of this Lease,
Tenant shall pay to Landlord the amount set forth in Section L of the Summary
as prepayment of rent for credit against the first installment(s) of Base
Monthly Rent. All rent required to be paid in monthly installments shall be
paid in advance on the first day of each calendar month during the Lease Term
to Landlord at the address set forth in Section P of the Summary or to such
other address as Landlord may from time to time indicate. All rent shall be
paid in lawful money of the United States, without any abatement (except as set
forth herein) deduction or offset whatsoever, and without any prior demand
therefor.
3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: If any Base Monthly
Rent or Additional Rent is not received by Landlord from Tenant when due, then
Tenant shall immediately pay to Landlord a late charge equal to the greater of
(i) ten percent (10%) of such delinquent rent or (ii) One Hundred Dollars
($100.00), as liquidated damages for Tenant's failure to make timely payment.
If any rent remains delinquent for a period in excess of thirty (30) days then,
in addition to such late charge, Tenant shall pay to Landlord interest on any
rent that is not paid when due at the Agreed Interest Rate following the date
such amount became due until paid. This paragraph shall not be deemed to grant
Tenant an extension of time within which to pay rent or prevent Landlord from
exercising any other right or remedy.
3.5 RETURNED CHECK FEE: A Twenty Five Dollar ($25.00) charge will be
paid by Tenant as Additional Rent to Landlord for each check returned unpaid by
the bank and Tenant shall replace the payment with a Cashier's Check or
Certified Check. If Tenant has two (2) or more checks returned for insufficient
funds at any time during its tenancy, Landlord, at its option, may request all
payments, current and future, be made by Cashier's Check or Certified Check.
3.6 SECURITY DEPOSIT: On the Effective Date, Tenant shall deposit with
Landlord the amount set forth in Section M of the Summary as security for the
performance by Tenant of its obligations under this Lease, and not as
prepayment of rent (the "Security Deposit"). Landlord may from time to time
apply all or any portion of the Security Deposit to remedy any default by
Tenant to the extent permitted by Law. If any part of the Security Deposit is
so used, Tenant agrees to pay promptly upon demand an amount in cash sufficient
to restore the Security Deposit to the full original amount. Landlord shall not
be deemed a trustee of the Security Deposit, may use the Security Deposit in
business, and shall not be required to segregate it from its general accounts.
Tenant shall not be entitled to any interest on the Security Deposit.
ARTICLE 4
USE OF PREMISES
4.1 LIMITATION ON USE: Tenant shall use the Premises solely for the use
specified in Section N of the Summary (the "Permitted Use"). Tenant shall not
do anything in or about the Premises which will cause any damage or structural
injury to the Building or Common Area or operate any equipment within the
Premises which will overload, damage or impair electrical systems, HVAC,
sprinkler systems, sanitary sewer systems or other mechanical equipment
servicing the Building or the Project. Tenant shall not attach, hang or suspend
anything from the ceiling, roof, walls or columns of the Building or set any
load on the floor in excess of the load limits for which such items are
designed nor operate hard wheel forklifts within the Premises. Tenant shall not
change the exterior of the Building or install any equipment or antennas on or
make any penetrations of the exterior or roof of the Building. Tenant shall not
commit or permit any waste or nuisance in or about the Premises. Tenant shall
not conduct on any portion of the Premises or the Project any sale of any kind.
No articles of any kind shall be stored upon or permitted to remain outside of
the Premises.
4.2 COMPLIANCE WITH LAW: Tenant shall comply with, and shall not use
the Premises in any manner which violates any Laws now or hereafter affecting
the Project. Tenant shall not use the Premises in any manner which will cause a
cancellation of any insurance policy covering the Building or which poses an
unreasonable risk of damage or injury to the Premises. Tenant shall comply with
all reasonable requirements of any insurance company, insurance underwriter, or
Board of Fire Underwriters which are necessary to maintain the insurance
coverage carried by either Landlord or Tenant pursuant to this Lease.
Notwithstanding anything contained in this Lease to the contrary. Tenant shall
not be required to make any structural repairs or alterations to the Premises
which may be required by Law (whether presently existing or hereafter enacted),
insurance regulations or otherwise, except to the extent as may be required by
the acts or omissions of Tenant or its Agent or required as a result of
Tenant's or its Agent's specific use of the Premises.
4.3 SIGNS: Tenant shall not place on any portion of the Premises any
signage or communicative material which is visible from the exterior of the
Building without the prior written approval of Landlord. All such approved
signs shall strictly conform to all Laws, restrictive covenants and Landlord's
sign criteria attached as Exhibit C, and shall be installed and maintained in
good condition at the expense of Tenant throughout the Lease Term.
4.4 PARKING: Tenant shall be entitled to the non-exclusive use of
unreserved and unassigned parking spaces equal to the number of Tenant's
Allocated Parking Stalls contained within the Project described in Section H
of the Summary for its use and the use of Tenant's Agents, the location of
which may be designated from time to time by Landlord. Tenant and Tenant's
Agents shall park vehicles no larger than full size passenger automobiles or
pick-up trucks at the Project and any oversized vehicles (i.e., larger than
full size passenger automobiles or pick-up trucks) may be parked at the Project
only on a temporary basis for pick-up and delivery purposes. Tenant shall not
at any time park or permit the parking of Tenant's vehicles or trucks, or the
vehicles or trucks of its employees, invitees or others, in any portion of the
Common Area not designated by Landlord for such use by Tenant. Tenant shall not
abandon any inoperative vehicles or equipment on any portion of the Common
Area, nor shall Tenant, its employees, invitees, suppliers or others park or
store any vehicle on any portion of the Common Area, including designated
parking areas, unattended for any period longer than twenty-four (24)
2
<PAGE> 5
hours. Landlord reserves the right, after having given Tenant reasonable
notice, to have any vehicles owned by Tenant or Tenant's Agents utilizing
parking spaces in excess of the parking spaces allowed for Tenant's use or
parked in unauthorized areas to be towed away at Tenant's cost.
4.5 RULES AND REGULATIONS: Landlord may promulgate reasonable rules and
regulations applicable to the occupants of the Project. Such rules and
regulations shall be binding upon Tenant upon delivery of a copy to Tenant, and
Tenant agrees to abide by such rules and regulations. Landlord shall enforce
rules and regulations in a non-discriminatory manner.
ARTICLE 5
TRADE FIXTURES AND ALTERATIONS
5.1 TRADE FIXTURES: Throughout the Lease Term, Tenant may provide and
install, and shall maintain in good condition, any trade fixtures required in
the conduct of its business in the Premises. All trade fixtures shall remain
Tenant's property.
5.2 TENANT'S ALTERATIONS: Tenant shall not construct any Tenant's
Alterations or otherwise alter the Premises without Landlord's prior written
approval. At the expiration or sooner termination of the Lease Term, all
Tenant's Alterations shall be surrendered to Landlord as part of the realty and
shall then become Landlord's property, and Landlord shall have no obligation to
reimburse Tenant for all or any portion of the value or cost thereof; provided,
however, that if Landlord requires Tenant to remove any Tenant's Alterations,
Tenant shall so remove such Tenant's Alterations prior to the expiration or
sooner termination of the Lease Term. All Tenant's Alterations shall be
constructed by a licensed contractor in accordance with all Law, using new
materials of good quality. Landlord agrees that if Tenant requests in writing
prior to the installation of any Tenant Alterations that Landlord specify
whether it will require the removal of such Tenant's Alterations upon
termination or expiration of this Lease. Landlord shall so specify within ten
(10) days after Tenant's request. If Landlord fails to respond to such a
request, Landlord shall be deemed to have required the removal of such Tenant's
Alterations upon the termination or expiration of this Lease.
5.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make any alteration,
addition or change of any sort to the Premises that is required by any Law
because of (i) Tenant's particular use or change of use of the Premises, (ii)
Tenant's application for any permit or governmental approval, or (iii) Tenant's
construction or installation of any Tenant's Alterations or trade fixtures.
5.4 MECHANIC'S LIENS: Tenant shall keep the Project free from any liens
and shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant or Tenant's Agents. If any claim
of lien is recorded, Tenant shall bond against or discharge the same within 30
days after the same has been recorded against the Project.
5.5 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any
and all taxes, assessments, license fees and public charges imposed against
Tenant or Tenant's estate in this Lease or the property of Tenant.
ARTICLE 6
REPAIR AND MAINTENANCE
6.1 TENANT'S OBLIGATION TO MAINTAIN: Except as set forth in Section 6.2
below, Tenant shall, at its sole cost and expense, clean and maintain in good
order, condition, and repair and replace when necessary the Premises and every
part thereof regardless of whether the damaged portion of the Premises or the
means of repairing the same are accessible to Tenant, including but not limited
to, floors, ceilings, windows, doors, skylights, interior walls, and the
interior surfaces of the exterior walls, plumbing, all wall mounted HVAC
equipment serving only the Premises, telecommunications equipment and
intrabuilding network cabling, electrical and lighting facilities and equipment
including circuit breakers, and exterior lighting attached to the Premises. All
glass, both interior and exterior, is at the sole risk of Tenant and any broken
glass shall promptly be replaced by Tenant at Tenant's expense with glass of
the same kind, size and quality according to the current local code. In the
event Tenant fails to perform Tenant's obligations under this Paragraph 6.1,
Landlord shall give Tenant notice to do such acts as are reasonably required to
so maintain the Premises. If Tenant, within ten (10) days after notice from
Landlord, fails to commence to do the work and diligently prosecute it to
completion, then Landlord shall have the right (but not the obligation) to do
such acts and expend such funds at the expense of Tenant as are reasonably
required to perform such work. Any amount so expended by Landlord shall be paid
by Tenant promptly after demand with interest at the Agreed Interest Rate from
the date of such work until paid. Landlord shall have no liability to Tenant
for any damages, inconvenience or interference with the use of the Premises by
Tenant as a result of performing any such work. All repairs and replacements
required of Tenant shall be promptly made with new materials of like kind and
quality. If the work affects the structural parts of the Building or if the
estimated cost of any item of repair or replacement is in excess of One
Thousand Dollars ($1,000.00), then Tenant shall first obtain Landlord's written
approval of the same in accordance with Paragraph 5.2 hereof.
6.2 LANDLORD'S OBLIGATION TO MAINTAIN: Landlord shall, at its sole cost
and expense (subject to reimbursement as set forth in this Lease), repair,
maintain and operate the Common Area and repair and maintain the exterior roof,
all roof mounted HVAC equipment, the exterior and structural parts of the
Building so that the same are kept in good order and repair and if there is
building service equipment and/or utility facilities serving portions of the
Common Area and/or both the Premises and other parts of the Building, Landlord
shall maintain and operate (and replace when necessary) such equipment.
Landlord shall not be responsible for repairs required for damage caused to any
part of the Project by any act or omission of Tenant or Tenant's Agents and
Tenant shall be solely responsible for such repairs.
6.3 CONTROL OF COMMON AREA: Landlord shall at all times have exclusive
control of the Common Area. Subject to Paragraph 15.1, Landlord shall have the
right, without the same constituting an actual or constructive eviction and
without entitling Tenant to any abatement of rent, to close any part of the
Common Area for any reason, eliminate from or add to the Project any land or
improvement, make changes to the Common Area, remove unauthorized persons from
the Project, and/or change the name or address of the Building or Project.
Landlord shall have no obligation to provide guard services or other security
measures for the benefit of the Project and Tenant assumes all responsibility
for the protection of Tenant and Tenant's Agents from acts of third parties.
ARTICLE 7
WASTE DISPOSAL AND UTILITIES
7.1 WASTE DISPOSAL: Tenant shall cause all of its waste to be stored only
in designated areas and regularly removed from the Premises at Tenant's sole
cost; provided that, Landlord may elect to provide for waste disposal at the
Premises and/or Project and the cost thereof shall be considered a Common
Operating Expense. Tenant shall keep all fire corridors and mechanical
equipment rooms in the Premises free and clear of all obstructions.
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7.2 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Project:
A. Any handling, transportation, storage, treatment, disposal or use
of Hazardous Materials by Tenant and Tenant's Agents in or about the Project
shall strictly comply with all applicable Hazardous Materials Laws. Tenant
shall indemnify, defend upon demand with counsel reasonably acceptable to
Landlord, and hold harmless Landlord from and against any and all liabilities,
losses, claims, damages, interest, penalties, fines, monetary sanctions,
reasonable attorneys' fees, expenses' fees, court costs, remediation costs,
investigation costs, and other expenses which result from or arise in any
manner whatsoever out of the use, storage, treatment, transportation, releases,
or disposal of Hazardous Materials on or about the Project by Tenant or
Tenant's Agents.
B. If the presence of Hazardous Materials on or about the Project
caused or permitted by Tenant or Tenant's Agents results in contamination of
water or soil, then Tenant shall promptly take any and all action necessary to
investigate and remediate such contamination as required by Law or as a
condition to the issuance or continuing effectiveness of any governmental
approval which relates to the use of the Project or any part thereof. Tenant
shall further be solely responsible for, and shall defend, indemnify and hold
Landlord and its agents harmless from and against all claims, costs and
liabilities, including attorneys' fees and costs, arising out of or in
connection with any investigation and remediation to return the Project to its
condition existing prior to the appearance of such Hazardous Materials.
C. Tenant shall give written notice to Landlord as soon as reasonably
practicable of (i) any communication received from any governmental authority
concerning Hazardous Materials which relates to the Project, and (ii) any
contamination of the Project by Hazardous Materials which constitutes a
violation of any Hazardous Materials Law. Tenant may use such Hazardous
Materials as are necessary to the operation of Tenant's business of which
Landlord receives notice prior to such Hazardous Materials being brought onto
the Premises and to which Landlord consents in writing. At any time during the
Lease Term, Tenant shall, within five days after written request therefor
received from Landlord, disclose in writing all Hazardous Materials that are
being used by Tenant on the Project, the nature and quantity of such use, and
the manner of storage and disposal. Landlord acknowledges that Tenant's use
requires batteries which may contain Hazardous Materials and Landlord consents
to Tenant's use of such batteries provided Tenant is in compliance with all
other terms of this Article 7.
D. Landlord may cause testing wells to be installed on the Project,
and may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes. The cost of such tests and of the installation, maintenance, repair
and replacement of such wells shall be paid by Tenant if such tests disclose
the existence of facts which give rise to liability of Tenant pursuant to its
indemnity given in Paragraph 7.2A and or Paragraph 7.2B.
E. As used herein, the term "Hazardous Material" means any hazardous
or toxic substance, material or waste which is or becomes regulated by any
local governmental authority the State of California or the United States
Government. As used herein, the term "Hazardous Material Law" shall mean any
Law which regulates the use, storage, release or disposal of any Hazardous
Material.
F. The obligations of Landlord and Tenant under this Paragraph 7.2
shall survive the expiration or earlier termination of the Lease Term. The
rights and obligations of Landlord and Tenant with respect to issues relating
to Hazardous Materials are exclusively established by this Paragraph 7.2. In the
event of any inconsistency between any other part of this Lease and this
Paragraph 7.2, the terms of this Paragraph 7.2 shall control.
G. Landlord hereby represents and warrants to Tenant that, to the best
of its knowledge, no Hazardous Materials exist in or about the Project in
violation of Law. Landlord agrees to hold Tenant harmless from and against any
costs, liabilities, losses, claims, or damages resulting from the presence or
release of Hazardous Materials in or about the Project caused by Landlord, or
its Agents. Notwithstanding anything to the contrary contained in the Lease,
Tenant shall have no obligation to indemnify, defend, or hold Landlord harmless
for claims originating from the presence of Hazardous Materials which are not
placed on or in the Premises or the Project by the Tenant or its Agents.
Landlord and Tenant agree to comply with all relevant statues, ordinances and
regulations involving Hazardous Materials.
7.3 UTILITIES: Tenant shall promptly pay, as the same become due, all
charges for water, gas, electricity, telephone, sewer service, waste pick-up and
any other utilities, materials or services furnished to or used by Tenant on or
about the Premises during the Lease Term, including, without limitation,
meter, use and/or connection fees, book-up fees, or standby fees, and penalties
for discontinued or interrupted service. Landlord may, at Landlord's option,
require Tenant to place any utility service serving only the Premises in
Tenant's name. If any utility service is not separately metered to the
Premises, then Tenant shall pay its pro rata share of the cost of such utility
service with all others served by the service not separately metered. However,
if Landlord determines that Tenant is using a disproportionate amount of any
utility service not separately metered, then Landlord at its election may (i)
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
reasonable estimate of the cost of Tenant's excess use of such utility service,
or (ii) install a separate meter (as Tenant's expense) to measure the utility
service supplied to the Premises.
ARTICLE 8
COMMON OPERATING EXPENSES
8.1 TENANT'S OBLIGATION TO REIMBURSE COMMON OPERATING EXPENSES: As
Additional Rent, Tenant shall pay Tenant's Share (specified in Section G of the
Summary) of all Common Operating Expenses; provided, however, that if the
Project contains more than one building, then Tenant shall pay Tenant's Share
of all Common Operating Expenses fairly allocable to the Building, and provided
further, that Tenant shall pay all Common Operating Expenses fairly allocable
to the Premises. Tenant shall pay such share of the actual Common Operating
Expenses incurred or paid by Landlord but not theretofore billed to Tenant
within thirty (30) days after receipt of a written bill therefor from Landlord,
on such periodic basis as Landlord shall designate, but in no event more
frequently than once a month. Alternatively, Landlord may from time to time
require that Tenant pay Tenant's Share of Common Operating Expenses in advance
in estimated monthly or, at Landlord's option, quarterly installments, in
accordance with the following: (i) Landlord shall deliver to Tenant Landlord's
reasonable estimate of the Common Operating Expenses it anticipates will be paid
or incurred for the Landlord's fiscal year in question, (ii) during such
Landlord's fiscal year, Tenant shall pay Tenant's Share of the estimated Common
Operating Expenses in advance in equal monthly installments due with each
installment of Base Monthly Rent, and (iii) within ninety (90) days after the
end of such Landlord's fiscal year, Landlord shall furnish to Tenant a
statement in reasonable detail of the actual Common Operating Expenses paid or
incurred by Landlord in accordance with this paragraph during the just ended
Landlord's fiscal year, and thereupon there shall be an adjustment between
Landlord and Tenant, with payment to or repayment by Landlord, as the case may
require, within 30 days after delivery by Landlord to Tenant of such statement,
so that Landlord shall receive the entire amount of Tenant's Share of all
Common Operating Expenses for such Landlord's fiscal year and no more. Tenant
shall have the right, at its expense, exercisable upon reasonable written notice
to Landlord, to audit Landlord's books and records for Common Operating
Expenses provided such audit is conducted during normal business hours and
within twelve (12) months following the Lease year subject to audit. Landlord
shall pay the reasonable cost of such audit if it is determined that Tenant has
been overcharged for Common Operating Expenses by more than five percent (5%)
and shall promptly refund the amount of such overpayment to Tenant.
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8.2 COMMON OPERATING EXPENSES DEFINED: The term "Common Operating
Expenses" shall mean all costs and expenses incurred by Landlord with respect to
the operation, protection, improvement, maintenance, repair and replacement of
the Project, including, without limitation, the following: (i) the operation,
repair, maintenance and replacement of the roof (excluding replacement of the
roof structure and/or membrane), the exterior surfaces and interior
improvements of all buildings located on the Project, the roof mounted HVAC
equipment, utility facilities and other building service equipment, and the
Common Areas; (ii) reserves set aside for Common Operating Expenses or for
maintenance, repair and/or replacement of the Common Area; (iii) the amounts of
any "deductible" and "coinsurance" paid by Landlord with respect to damage
caused by an "Insured Peril" (as hereinafter defined) or amounts incurred in
connection with an "Uninsured Peril" (a hereinafter defined) up to a maximum
amount in any twelve (12) month period equal to two percent (2%) of the
replacement cost of the buildings or other improvements damaged; and (v)
reasonable management fees. Specifically excluded from Operating Expenses (to
the extent provided below) shall be the following:
(1) Costs of initial improvements to any tenant's premises, or any
architectural, engineering or legal fees, relocation expenses or any permit
or similar fees or charges associated with such improvements;
(2) Principal or interest payments on loans, including loans secured by
mortgages or trust deeds on the Project and ground lease payments, if any;
(3) Costs of capital improvements, except that Operating Expenses shall
include the cost during the Term, as reasonably amortized by Landlord pursuant
to sound management and accounting principles consistently applied, with
interest on the unamortized amount at ten percent (10%) per annum of any
capital improvements which are intended to reduce any component cost included
within Operating Expenses (and which, at such time, prudent owners of office
buildings in Santa Clara, California would reasonably determine to be
necessary);
(4) Depreciation or amortization of any improvements, except as
specifically set forth in this Lease;
(5) Costs of repairs, alterations or replacements caused by casualty
losses for which Landlord is compensated through proceeds of insurance or for
which Landlord would have been compensated had Landlord maintained the
insurance required by this Lease;
(6) Costs of repairs, alterations or replacements caused by the exercise
of the rights of eminent domain;
(7) Costs and expenses incurred in connection with leasing space in the
Project, such as legal fees for the preparation of leases, tenant allowances,
space planner fees, real estate brokers' leasing commissions and advertising
and promotional expenses, expenses of any leasing office incurred with regard
to leasing the Project or portions thereof;
(8) Court costs and legal fees incurred with regard to enforcing the
obligations of tenants under other leases;
(9) Leasing commissions, attorney's fees, costs and disbursements and
other expenses incurred in connection with negotiations or disputes with
tenants, occupants or prospective tenants or occupants of the Project;
(10) Costs incurred due to violation by Landlord of any lease for space in
the Project or any indemnity payments made by Landlord pursuant to any such
lease because of a violation by Landlord under such lease;
(11) Any payments made to subsidiaries of Landlord or entities under
common control with Landlord except if such payments are for services or goods
on, to or for the Building, and only to the extent that the cost of such
services and goods are at market rates being paid for such services or goods by
owners of other office buildings in Santa Clara, California from time to time;
(12) Any expense for which Landlord is compensated by proceeds of
insurance;
(13) Any expense for services or items for which any tenant of the
Building (including Tenant) directly reimburses Landlord (other than as a
component of Operating Expenses);
(14) Accounting fees (including those for the preparation of Landlord's
income taxes), except reasonable accounting fees incurred in connection with
the operation and management of the Project;
(15) Any lender's fees;
(16) Variable expenses that are not being furnished to Tenant, including,
without limitation, janitorial services and Buildings HVAC system;
(17) Costs of asbestos abatement and/or removal and/or any other measures
needed to comply with environmental requirements or to investigate or remediate
environmental contamination from Hazardous Materials except a set forth in
Article 7;
(18) Any costs, fines or penalties incurred due to violations by Landlord
of any governmental rule or authority;
(19) Management fees in excess of four percent (4%) of gross rents;
(20) Wages, salaries and other compensation paid to clerks or attendants
in newsstands or other commercial concessions, if any, operated by Landlord and
any expense or costs for wages, salaries or other benefits or compensation paid
to any person above the level of building manager;
(21) Costs relating to relocating existing tenants in the Project;
(22) Expenses arising as a result of Landlord's gross negligence or
willful misconduct or the negligence or willful misconduct of Landlord's agents
or employees;
(23) Real Property Taxes (reimbursement of Real Property Taxes is dealt
with exclusively in Article 8.4); and
(24) Repairs necessary to bring the Project or any part thereof into
compliance with Laws in effect as of the Commencement Date.
8.3 TENANTS OBLIGATION TO REIMBURSE REAL PROPERTY TAXES AND LANDLORD'S
INSURANCE: As Additional Rent, Tenant shall pay Tenant's Share (specified in
Section G of the Summary) of the amount (if any) by which Real Property Taxes
and/or Landlord's Insurance costs paid or incurred in any Landlord's fiscal
year during the Lease Term exceed the Real
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Property Taxes and/or Landlord's Insurance costs, respectively, paid or incurred
during the fiscal year in which the Commencement Date occurs (which excess is
referred to herein as the "Excess Expenses") for any annual period or portion
thereof. If the Project contains more than one building, then Tenant shall pay
Tenant's share of the Excess Expenses for the Landlord's fiscal year in question
based upon the Real Property Taxes under Landlord's Insurance costs fairly
allocable to the Building. Tenant shall pay such share of the Excess Expenses on
the same payment terms as are contained in 98.1 hereof regarding payment of
Common Operating Expenses.
8.4 REAL PROPERTY TAXES DEFINED. The term "Real Property Taxes" shall
mean all taxes, assessments, levies, and other charges of any kind or nature
whatsoever, general and special, foreseen and unforeseen, now or hereafter by
any governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied against,
or with respect to the value, occupancy or use of, all or any portion of the
Project or the rents derived therefrom (except federal and state net income
taxes). Notwithstanding anything contained in the Lease to the contrary, during
the first five (5) years of the Lease Term only (after such time this exclusion
shall no longer apply) there shall be excluded from the tax bill for the
purposes of computing Real Property Taxes, any increase in real estate taxes
caused by a "change in ownership" as defined in the law under which reassessment
or tax increase results from a transfer of all or a portion of Landlord's
interest in the Project. Real Property Taxes shall also not include interest and
penalties for the payment. If assessment or other special taxes that are payable
in installments are levied against all or any portion of the Project, Landlord
shall pay such assessments or taxes in installments over the maximum period of
time permitted by law, and all interest payments thereon shall be considered
part of the assessment for purposes of this provision. Landlord represents that
the Project is assessed as a single tax parcel for Real Property Tax purposes
separate and apart from any other land.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with
all of the following:
A. Tenant shall procure, pay for and keep in full force and effect:
(i) commercial general liability insurance, including property damage, against
liability for personal injury, bodily injury, death and damage to property
occurring in or about, or resulting from on occurrence in or about the Premises
with combined single limit coverage of not less than the amount specified in
Section O of the Summary, which insurance shall contain a "contractual
liability" enforcement insuring performance of Tenant's obligation to indemnify
Landlord contained in Section 10.3; (ii) fire and property damage insurance in
so-called "all risk" from insuring Tenant's Alterations for their full actual
replacement costs; and (iii) such other insurance and amounts of insurance as
are either (1) reasonably required by any Lender, or (2) reasonably required by
Landlord required by Landlord and customarily carried by tenants of similar
property in similar businesses.
B. Where applicable and required by Landlord, each policy of
insurance required to be carried by Tenant pursuant to this paragraph 9.1: (i)
shall name Landlord and such other parties in interest as Landlord reasonably
designates as additional insured; (ii) shall be primary and not secondary or
contributing; (iii) shall be in a form and carried with companies reasonably
acceptable to Landlord; (iv) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty (30) days
prior written notice to Landlord; (v) shall not have a "deductible" in excess
of such amounts as are approved by Landlord; and (vi) shall contain a cross
liability endorsement and a "severability" clause.
C. A copy of each paid-up evidencing the insurance required to be
carried by Tenant pursuant to this paragraph 9.1 (appropriately authenticated
by the insurer) shall be delivered to Landlord prior to the time Tenant or any
of its Agents enters the Premises and upon renewal of such policies, but not
less than five (5) days prior to the expiration of the term of such coverage.
D. Tenant shall have the right to maintain the required liability
insurance in the form of a blanket policy covering other business locations of
Tenant in addition to the Premises; provided, however, that Tenant shall
provide Landlord with a certificate of insurance specifically naming the
location of the Premises and naming Landlord as required in this Section, the
limits of which coverage applicable to the Premises are to be in the amounts
set forth in this Section.
9.2 LANDLORD'S INSURANCE: Landlord shall maintain a policy or policies of
fire and property damage insurance in so-called "all risk" form insuring
Landlord (and such others as Landlord may designate) from physical damage to
the Project with coverage of not less than the full replacement cost thereof,
and if Landlord elects, a commercial general liability policy ("Landlord's
Insurance"). Such insurance may be endorsed to cover loss caused by such
additional perils against which Landlord may elect to insure (including
earthquake and/or flood), and to provide such additional coverage as Landlord
reasonably requires, and shall contain reasonable "deductibles" which, in the
case of earthquake and flood insurance, may be up to such amount as is then
available at commercially reasonable rates. Landlord shall not be required to
cause such insurance to cover any of Tenant's Alterations or trade fixtures.
9.3 RELEASE AND WAIVER OF SUBROGATION: The parties hereto release each
other, and their respective agents and employees, from any liability for injury
to any person or damage to property that is caused by or results from any risk
insured against under any valid and collectible insurance policy carried by
either of the parties which contains a waiver of subrogation by the insurer and
is in force at the time of such injury or damage, subject to the following
limitations: (i) the foregoing provision shall not apply to the commercial
general liability insurance described by subparagraph 9.1A; and (ii) Tenant
shall not be released from any such liability to the extent any damages
resulting from such injury or damage are not covered by the recovery obtained
by Landlord from such insurance, but only if the insurance in questions permits
such partial release in connection with obtaining a waiver of subrogation from
the insurer. Each party shall use reasonable efforts to cause each insurance
policy obtained by it to provide that the insurer waives all right of recovery
by way of subrogation against the other party and its agents and employees.
ARTICLE 10
LIMITATION ON LANDLORD'S LIABILITY
AND INDEMNITY
10.1 LIMITATION ON LANDLORD'S LIABILITY: Landlord shall not be liable to
Tenant, nor shall Tenant be entitled to terminate this Lease or to any
abatement of rent, for any injury to Tenant or Tenant's Agents, damage to the
property of Tenant or Tenant's Agents, or loss to Tenant's business resulting
from any cause whatsoever unless same is proximately caused by Landlord's
willful misconduct or gross negligence of which Landlord has actual notice and
a reasonable opportunity to cure but which it fails to so cure.
10.2 LIMITATION ON TENANT'S RECOURSE: Tenant shall have recourse only to
the interest of Landlord in the Project for the satisfaction of the obligations
of Landlord and shall not have recourse to any other assets of Landlord or to
the assets of any officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives of
Landlord for the satisfaction of such obligations.
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10.3 INDEMNIFICATION OF LANDLORD: Tenant shall hold harmless, indemnify
and defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord, from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising from or relating to (i) any cause or causes whatsoever (other than the
willful misconduct or gross negligence of Landlord of which Landlord has had
notice and a reasonable time to cure, but which Landlord has failed to cure)
occurring in or about or resulting from an occurrence in or about the Premises
during the Lease Term, (ii) the negligence or willful misconduct of Tenant or
Tenant's Agent, wherever the same may occur, or (iii) an Event of Tenant's
Default. The provisions of this p10.3 shall survive the expiration or sooner
termination of this Lease. Notwithstanding anything herein to the contrary,
Landlord shall not be indemnified from any liability for damage or injury to
persons or property caused by or resulting from the gross negligence or wanton
misconduct of Landlord or its Agents.
ARTICLE 11
DAMAGES TO PREMISES
11.1 LANDLORD'S DUTY TO RESTORE: If the Premises are damaged by any
peril, Landlord shall restore the Premises unless the Lease is terminated by
Landlord pursuant to p11.2. All insurance proceeds available from the fire and
property damage insurance carried by Landlord pursuant to p9.2 shall be paid to
and become the property of Landlord. Landlord's obligation to restore shall be
limited to the Premises and Interior Improvements constructed by Landlord as
they existed as of the Commencement Date, excluding any Tenant's Alterations,
trade fixtures and/or personal property. Tenant shall forthwith replace or
fully repair all Tenant's Alterations and trade fixtures existing at the time
of the damage.
11.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the right to
terminate this Lease in the event any of the following occurs: (i) either the
Project or the Building is damaged by an Insured Peril to such an extent that
the estimated cost to restore exceeds thirty three (33%) of the then actual
replacement cost thereof; (ii) either the Project or the Building is damaged by
an Uninsured Peril to such an extent that the estimated cost to restore exceeds
two percent (2%) of the then actual replacement cost thereof; or (iii) the
Premises are damaged by any peril within twelve (12) months of the last day of
the Lease Term. As used herein, "Insured Peril" shall mean a peril actually
insured against for which the insurance proceeds actually received by Landlord
are sufficient (except for any "deductible" amount specified by such insurance)
to restore the Project under then-existing building codes to the condition
existing immediately prior to the damage; and "Uninsured Peril" shall mean any
peril which is not an Insured Peril. Notwithstanding the foregoing, if the
"deductible" for earthquake or flood insurance exceeds two percent (2%) of the
replacement cost of the Improvements Insured, such peril shall be deemed an
"Uninsured Peril."
11.3 ABATEMENT OF RENT: In the event of damage to the Premises which does
not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Premises is impaired by
such damage. Tenant shall be entitled to any compensation or damage from
Landlord for loss of Tenant's business or property caused by such damage or
restoration. Tenant hereby waives the provisions of California Civil Code
Sections 1932(2) and 1933(4) and the provisions of any similar law hereinafter
enacted.
11.4 TENANT'S RIGHT TO TERMINATE: If the Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled
to terminate this Lease pursuant to this Article, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be complete. Tenant shall have the opinion to
terminate this Lease in the event any of the following occurs, which option may
be exercised in the case of A or B below only by delivery to Landlord of a
written notice of election to terminate within ten (10) business days after
Tenant receives from Landlord the estimate of the time needed to complete such
restoration:
A. If the time estimated to substantially complete the restoration
exceeds nine months from and after the date of such damage; or
B. If the damage occurred within nine months of the last day of the
Term and the time estimated to substantially complete the restoration exceeds
ninety days from and after the date such restoration is commenced; or
C. Landlord does not complete the restoration within nine months
from the date of the damage.
ARTICLE 12
CONDEMNATION
12.1 LANDLORD'S TERMINATION RIGHT: Landlord shall have the right to
terminate this Lease if, as a result of a condemnation, more than 40% of the
Premises or 20% of the Project is so taken; provided that if Landlord elects to
terminate due to 20% of the Project being taken, Landlord terminates the Leases
of substantially all other Tenants at the Project.
12.2 TENANT'S TERMINATION RIGHT: Tenant shall have the right to terminate
this Lease if, as a result of any condemnation, ten percent (10%) or more of
the Premises is taken and the remaining part of the Premises cannot be restored
within a reasonable period of time and thereby made reasonably suitable for the
continued operation of the Tenant's business.
12.3 ABATEMENT OF RENT: If any part of the Premises is taken by
condemnation and this Lease is not terminated, Base Monthly Rent shall be
reduced in the same proportion that the floor area of that part of the Premises
so taken (less any addition thereto by reason of any recommendation) bears to
the original floor area of the Premises.
12.4 DIVISION OF CONDEMNATION AWARD: Any award made as a result of any
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award.
ARTICLE 13
DEFAULT AND REMEDIES
13.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following event occurs (an "Event of
Tenant's Default").
A. Tenant shall have failed to pay Base Monthly Rent or Additional
Rent when due, and such failure is not cured within 3 days after delivery of
written notice from Landlord specifying such failure to pay; or
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B. Tenant shall have failed to perform any term, covenant, or
condition of this Lease other than those requiring the payment of Base Monthly
Rent or Additional Rent, and Tenant shall have failed to cure such breach within
thirty (30) days after written notice from Landlord specifying the nature of
such breach where such breach could reasonably be cured within said thirty (30)
day period, or if such breach could not reasonably be cured within said thirty
(30) day period, Tenant shall have failed to commence such cure within said
thirty (30) day period and thereafter continue with due diligence to prosecute
such cure to completion within such time period as is reasonably needed; or
C. Tenant shall have sublet the Premises or assigned its
interest in the Lease in violation of the provisions contained in Article 14; or
D. (i) The making by Tenant of any general arrangements or
assignments for the benefit of creditors; (ii) Tenant becomes a "debtor" as
defined in 11 USC [PARAGRAPH]101 or any successor statute thereto (unless, in
the case of a petition filed against Tenant, the same is dismissed within ninety
(90) days; (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within sixty
(60) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within sixty (60)
days; provided, however, in the event that any provision of this
[PARAGRAPH]13.1D is contrary to any applicable Law, such provision shall be of
no force or effect; or
E. Tenant shall have failed to deliver documents required of it
pursuant to [PARAGRAPH]15.4 or [PARAGRAPH]15.6 within the time periods specified
therein.
13.2 LANDLORD'S REMEDIES: If an Event of Tenant's Default occurs,
Landlord shall have the following rights and remedies in addition to all other
rights and remedies provided by Law or otherwise provided in this Lease, to
which Landlord may resort cumulatively or in the alternative:
A. This Lease shall not terminate unless Landlord gives Tenant
written notice of its election to terminate and no act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach shall
constitute a termination of Tenant's right to possession unless Landlord gives
Tenant written notice of termination. Should Landlord not terminate this Lease
by giving Tenant written notice, Landlord may enforce all of its rights and
remedies under this Lease or available at law or in equity, including (i) the
right to perform Tenant's obligations and be reimbursed by Tenant for the cost
thereof together with interest at the Agreed Interest Rate from the date any sum
is paid by Landlord until Landlord is reimbursed by Tenant, and (ii) the remedy
described in California Civil Code Section 1951.4 (Landlord may continue Lease
in effect after Tenant's breach and abandonment and recover rent as it becomes
due, if Tenant has right to sublet or assign, subject only to reasonable
limitations).
B. Landlord may terminate this lease, in which event Landlord
shall be entitled, at Landlord's election, to damages in an amount as set forth
in California Civil Code Section 1951.2. For purposes of computing damages
pursuant to California Civil Code Section 1951.2: (i) an interest rate equal to
the Agreed Interest Rate shall be used where permitted; and (ii) the term "rent"
includes Base Monthly Rent and Additional Rent. Such damages shall include: (i)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided, computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus one percent (1%); and (ii) any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure to
perform Tenant's obligations under this Lease, or which in the ordinary course
of things would be likely to result therefrom.
C. The remedies set forth herein are not intended to be
exclusive and shall be in addition to the rights and remedies granted to
Landlord by Law or in equity. Nothing in this [PARAGRAPH]13.2 shall limit
Landlord's right to indemnification from Tenant as provided in [PARAGRAPH]7.2
and [PARAGRAPH]10.3. Any notice given by Landlord in order to satisfy the
requirements of [PARAGRAPH]13.1A or [PARAGRAPH]13.1B above shall also satisfy
the notice requirements of California Code of Civil Procedure Section 1161
regarding unlawful detainer proceedings.
13.3 WAIVER: Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent similar act by
Tenant. The receipt by Landlord of any rent or payment with or without knowledge
of the breach of any provision hereof shall not be deemed a waiver of or consent
to any such breach unless such waiver is in writing and signed by Landlord. No
delay or omission in the exercise of any right or remedy accruing to Landlord
upon any breach by Tenant shall impair such right or remedy or be construed as a
waiver of any such breach theretofore or thereafter occurring. The waiver by
either party of any breach of any provision of this Lease shall not be deemed to
be a waiver of any subsequent breach of the same or of any other provisions
herein contained.
13.4 WAIVER BY TENANT OF CERTAIN REMEDIES: Tenant waives the
provisions of Sections 1932(1), 1941 and 1942 of the California Civil Code and
any similar or successor law regarding Tenant's right to terminate this Lease or
to make repairs and deduct the expenses of such repairs from the rent due under
this Lease. Tenant hereby waives any right of redemption or relief from
forfeiture under the laws of the State of California, or under any other present
or future law, including the provisions of Sections 1174 and 1179 of the
California Code of Civil Procedure.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFER BY TENANT: The following provisions shall apply to any
assignment, subletting or other transfer by Tenant or any subtenant or assignee
or other successor in interest of the original Tenant (collectively referred to
in this [PARAGRAPH]14.1 as "Tenant"):
A. Tenant shall not do any of the following (collectively
referred to herein as a "Transfer"), whether voluntarily, involuntarily or by
operation of law, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed; (i) sublet all or any part of
the Premises or allow it to be sublet, occupied or used by any person or entity
other than Tenant or assign its interest in this Lease; (ii) mortgage or
encumber the Lease (or otherwise use the Lease as a security device) in any
manner; or (iii) amend or modify an assignment, sublease or other transfer that
has been previously approved by Landlord. The dissolution, merger, or other
reorganization of Tenant or the sale, transfer, withdrawal, or substitution of
twenty five percent (25%) or more of the ownership interest in Tenant shall be
deemed a Transfer. Any attempted Transfer without Landlord's consent shall
constitute an Event of Default and shall be voidable at Landlord's option. No
Transfer, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant hereunder. Tenant shall reimburse Landlord
for all reasonable costs and attorneys' fees in connection with the processing
and/or documentation of a requested Transfer, whether or not Landlord's consent
is given. In the event Landlord consents to any proposed Transfer, Tenant agrees
to pay to Landlord, as Additional Rent, fifty percent (50%) of any and all rents
or other consideration (including key money) received by Tenant from the
transferee by reason of such Transfer in excess of the rent payable by Tenant to
Landlord under this Lease (less any brokerage commissions, attorneys' fees and
advertising expenses incurred by Tenant in connection with the Transfer).
8
<PAGE> 11
B. At least thirty (30) days before a proposed Transfer is to
become effective, Tenant shall give Landlord written notice of the proposed
terms of such Transfer and request Landlord's approval, which notice shall
include the name and legal composition of the proposed transferee, a current
financial statement and financial statements of the transferee covering the
preceding three years if the same exist all of which statements prepared in
accordance with generally accepted accounting principles, the nature of the
proposed transferee's business to be carried on in the Premises, and the form of
Transfer agreement to be used. Tenant shall provide to Landlord such other
information as may be reasonably requested by Landlord, and Tenant shall
immediately notify Landlord of any material modification to the proposed terms
of such Transfer.
C. In the event that Tenant seeks to make any Transfer, Landlord
shall have the right to terminate this Lease or, in the case of a sublease of
less than all of the Premises, terminate this Lease as to that part of the
Premises proposed to be so sublet. Upon such termination, Tenant shall be
released from any further obligation under this Lease if it is terminated in its
entirety, or shall be released from any further obligation under the Lease with
respect to the space proposed to be sublet in the case of a proposed partial
sublease. In the case of a partial termination of the Lease, the Base Monthly
Rent and Tenant's Share shall be reduced to an amount which bears the same
relationship to the original amount thereof as the area of that part of the
Premises which remains subject to the Lease bears to the original area of the
Premises. Landlord and Tenant shall execute a cancellation and release with
respect to the Lease to effect such termination.
D. Notwithstanding anything contained herein to the contrary,
none of the following, or any changes, assignments or transfers resulting from
the following, shall be deemed a "Transfer" or require Landlord's prior written
consent, the payment by Tenant of any fees or charges of any kind, or give rise
to any right of Landlord to cancel or recapture all or any part of the Premises;
provided, however, Tenant shall provide at least twenty (20) days prior written
notice of each transfer below (except subparagraph v) and shall provide Landlord
with all information regarding such transfer as is reasonably requested by
Landlord:
(i) a transfer by Tenant of its interest in this Lease to a
person or entity controlling, controlled by or under common control with Tenant;
(ii) a transfer of or change in the ownership interest of
Tenant as long as the new ownership interest continues to operate the business
of the Tenant in the same manner; provided such new ownership interest has an
equal to or greater net worth than existing ownership at the time of transfer;
(iii) a transaction in which Tenant becomes an entity whose
shares of stock or other ownership interests are, directly or indirectly, sold
on a national stock exchange or an inter-dealer quotation system; and in the
event the foregoing transaction has occurred, any subsequent sale of ownership
interests or issuance of new ownership interest, directly or indirectly, in
Tenant;
(iv) the merger, consolidation or amalgamation of Tenant
with a third party or the sale of all, or substantially all, of the assets used
by Tenant in the conduct of its business at the Premises; provided such new
ownership interest has an equal to or greater net worth than existing ownership
at the time of Transfer; and
(v) any license or co-location agreement of portions of the
Premises to persons or entities which inter-connect with Tenant's equipment in
the Premises.
E. Landlord acknowledges that Tenant's Permitted Use requires
the installation in the Premises of certain telecommunications equipment owned
by customers, licensees and co-locators of Tenant ("Tenant Customers") in order
for such Tenant Customers to Interconnect with Tenant's equipment or to permit
Tenant to manage or operate such Tenant Customers' equipment. Notwithstanding
anything to the contrary provided herein, Landlord approves such use of portions
of the Premises by Tenant Customers for such purposes without Landlord's further
consent. All use or occupancy of the Premises by said Tenant Customers shall
comply with the terms of the Lease and any and all applicable governmental laws,
rules, or regulations, and shall be in the form of a license agreement which
shall terminate upon any termination of the Lease.
14.2 TRANSFER BY LANDLORD: Landlord and its successors in interest
shall have the right to transfer their interest in this Lease and the Project
at any time. In the event of any such transfer, the Landlord originally named
herein (and, in the case of any subsequent transfer, the transferor) shall
automatically be relieved, from the date of such transfer and without any
further act by any person or entity, of all liability for the performance of the
obligations of the Landlord hereunder which may accrue after the date of such
transfer.
ARTICLE 15
GENERAL PROVISIONS
15.1 LANDLORD'S RIGHT TO ENTER: Landlord and its agents may enter
the Premises at any reasonable time after giving at least twenty four (24)
hours' prior notice to Tenant (and immediately in the case of emergency) for
any reasonable purpose including, without limitation, showing the Premises to
prospective purchasers, mortgagees or tenants and posting upon the Premises
ordinary "for lease" signs or "for sale" signs. Landlord shall have the right
to use any and all means Landlord may deem necessary and proper to enter the
Premises in an emergency. Any entry into the Premises obtained by Landlord in
accordance with this Paragraph 15.1 shall not be a forcible or unlawful entry
into, or a detainer of, the Premises, or an actual or constructive eviction of
Tenant from the Premises. No entry or repairs by Landlord or rights reserved to
Landlord to alter, modify or otherwise improve all or any part of the Project
shall be deemed or construed to be a disturbance of Tenant's quiet or peaceful
possession of the Premises so long as the aforesaid work or actions do not
disturb or disrupt Tenant's business operations. Tenant shall have the right
to install its own security in the Building provided that Tenant provides
Landlord with the information necessary to allow Landlord (and emergency
personnel) access to the Building in the event of an emergency.
15.2 SURRENDER OF THE PREMISES: Upon the expiration or sooner
termination of this Lease, Tenant shall vacate and surrender the Premises to
Landlord in the same condition as existed at the Commencement Date, broom clean,
ordinary wear and tear, fire, other casualty and condemnations excepted. Tenant,
at its sole cost and expense, agrees to repair any damage to the Premises caused
by Tenant or caused by or in connection with the removal of any articles of
personal property, business or trade fixtures, machinery, equipment, or
furniture, including without limitation thereto, repairing the floor and
patching and painting the walls where required by Landlord to Landlord's
reasonable satisfaction. Tenant shall indemnify Landlord against any loss or
liability resulting from delay by Tenant in so surrendering the Premises,
including without limitation, any claims made by any succeeding tenant founded
on such delay. If the Premises are not so surrendered at the termination of this
Lease, Tenant shall be liable to Landlord for all costs incurred by Landlord in
returning the Premises to the required condition, plus interest on all costs
incurred at the Agreed Interest Rate. Tenant shall indemnify Landlord against
loss or liability resulting from delay by Tenant in so surrendering the
Premises.
15.3 HOLDING OVER: This Lease shall terminate without further notice
at the expiration of the Lease Term. Any holding over by Tenant after
expiration of the Lease Term shall not constitute a renewal or extension of the
Lease or give Tenant any
9
<PAGE> 12
rights in or to the Premises except as expressly provided in this Lease. Any
holding over after such expiration with the written consent of Landlord shall
be construed to be a tenancy from month to month on the same terms and
conditions herein specified insofar as applicable except that Base Monthly Rent
shall be increased to an amount equal to one hundred and fifty percent (150%)
of the Base Monthly Rent payable during the last full calendar month of the
Lease Term.
15.4 SUBORDINATION: This Lease is subject and subordinate to all Security
Instruments now or hereafter encumbering the Premises. However, if any Lender
so requires, this Lease shall become prior and superior to any such Security
Instrument. Tenant shall upon request execute any document or instrument
reasonably required by any Lender to make this Lease either superior or
subordinate to a Security Instrument, which may include such other matters as
the Lender reasonably requires in connection with such agreements; provided,
such Lender agrees to recognize Tenant's rights under this Lease and agrees not
to disturb Tenant's quiet possession of the Premises so long as there is no
Event of Tenant's Default. Landlord, if requested by Tenant, shall use
reasonable efforts to obtain a recognition and non-disturbance agreement from
any existing Lender. Tenant's failure to execute any such document or
instrument within ten (10) days after written demand therefor shall constitute
an Event of Tenant's Default.
15.5 ATTORNMENT: Tenant shall attorn to any purchaser of the Premises at
any foreclosure sale or private sale conducted pursuant to any Security
Instrument encumbering the Premises, or to any grantee or transferee designated
in any deed given in lieu of foreclosure.
15.6 ESTOPPEL CERTIFICATES: At all times during the Lease Term, Tenant
agrees to execute and deliver to Landlord within 10 business days following
delivery of Landlord's request an estoppel certificate certifying such factual
information about the Lease and such financial information of Tenant as may be
reasonably required by Landlord.
15.7 NOTICES: Any notice required or desired to be given regarding this
Lease shall be in writing and may be given by personal delivery, by facsimile
telecopy, or by mail. A notice shall be deemed to have been given (i) on the
third business day after mailing if such notice was deposited in the United
States mail, certified or registered, postage prepaid, addressed to the party
to be served at its Address for Notice, (ii) when delivered if given by
personal delivery, and (iii) in all other cases when actually received at the
party's Address for Notices. Either party may change its address by giving
notice of the same in accordance with this Paragraph 15.7.
15.8 ATTORNEYS' FEES: If either Landlord or Tenant shall bring any action
or legal proceeding for an alleged breach of any provision of this Lease, to
recover rent, to terminate this Lease or otherwise to enforce, protect or
establish any term or covenant of this Lease, the prevailing party shall be
entitled to recover as a part of such action or proceeding, or in a separate
action brought for that purpose, reasonable attorneys' fees, court costs, and
experts' fees as may be fixed by the court.
15.9 CORPORATE AUTHORITY: If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf
of such corporation or partnership and that this Lease is binding upon such
corporation or partnership in accordance with its terms.
15.10 MISCELLANEOUS: Time is of the essence of this Lease. This Lease
shall, subject to the provisions regarding assignment, apply to and bind the
respective heirs, successors, executors, administrators and assigns of Landlord
and Tenant. If Tenant consists of more than one person or entity, then all
members of Tenant shall be jointly and severally liable hereunder. The
language in all parts of this Lease shall in all cases be construed as a whole
according to its fair meaning, and not strictly for or against either Landlord
or Tenant. Landlord and Tenant agree that (i) the rentable area of the Premises
is measured from the exterior faces of exterior walls to the centerline or
interior partitions and includes any atriums, depressed loading docks, covered
entrances or egresses, and covered loading areas, and (ii) all measurements of
area contained in this Lease are conclusively agreed to be correct and binding
upon the parties for all purposes hereunder, even if a subsequent measurement
of any one of these areas determines that it is more or less than the amount of
area reflected in this Lease. Any prevention, delay or stoppage due to
inclement weather, inability to obtain labor or materials, governmental
restrictions, fire or other acts of God, and other causes beyond the reasonable
control of the party obligated to perform (except financial inability) shall
excuse the performance, for a period equal to the period of any said
prevention, delay or stoppage, of any obligation hereunder except the
obligation of Tenant to pay rent or any other sums due hereunder.
15.11 ENTIRE AGREEMENT: This lease constitutes the entire agreement
between the parties, and there are no agreements or representations between the
parties except as expressed herein. This Lease supersedes and cancels any and
all previous negotiations, arrangements, brochures and understandings, if any,
between Landlord and Tenant. No modification to this Lease shall be effective
unless in writing signed by the parties. This Lease shall not be legally
binding until fully executed by Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease to be
effective as of the Effective Date.
LANDLORD: TENANT:
LAFAYETTE BUSINESS PARK, LLC UNIVERSAL ACCESS, INC.
a California limited liability company an Illinois corporation
By: /s/ ROB MOORE By: /s/ ROBERT J. POMMER
- ---------------------------------- ----------------------------------
Its: Manager Its: Chief Operating Officer
- ---------------------------------- ----------------------------------
Date: 3/31/99 Date: 3/31/99
- ---------------------------------- ----------------------------------
<PAGE> 13
EXHIBIT "A"
SITE PLAN
LAFAYETTE BUSINESS PARK
1900 LAFAYETTE 15,600 SQ. FT.
1902 LAFAYETTE 16,560 SQ. FT.
1920 LAFAYETTE 19,200 SQ. FT.
1940 LAFAYETTE 14,040 SQ. FT.
PROJECT TOTAL 65,400 SQ. FT.
[GRAPHIC]
<PAGE> 14
EXHIBIT D
LANDLORD'S IMPROVEMENTS
Tenant to accept the Premises in its "as-is" condition.
<PAGE> 15
EXHIBIT C
SIGN CRITERIA
All signage at the Premises shall be at Tenant's cost and subject to Landlord's
prior approval and shall be consistent with the existing signage at the Project.
<PAGE> 16
EXHIBIT D
SURRENDER CONDITION
[FLOORPLAN]
<PAGE> 17
LEASE RIDER
1. BASE MONTHLY RENT INCREASES. Base Monthly Rent shall be subject to
increases as follows:
A. Base Monthly Rent shall be subject to adjustment on the anniversary
of each Lease Year ("the Adjustment Date") as follows: the base for computing
the adjustment is the Consumer Price Index for All Urban Consumers (base year
1982-84-100) for San Francisco-Oakland-San Jose All Items published by the
United States Department of Labor, Bureau of Labor Statistics ("Index"), which
is most recently published prior to the Commencement Date ("Beginning Index").
If the Index most recently published prior to the Adjustment Date ("Extension
Index") has increased over the Beginning Index, the Base Monthly Rent for the
following year shall be set by multiplying the Initial Base Monthly Rent by a
fraction, the numerator of which is the Extension Index, and the denominator of
which is the Beginning Index. In no case shall the Base Monthly Rent Increase
less than three percent (3%) or more than eight percent (8%) on each Adjustment
Date. The term "Lease Year" shall mean the twelve month period beginning with
the first day of the month in which the Commencement Date occurs and each
successive twelve month period thereafter during the Lease Term.
B. If the Index is changed so that the base year differs from that used
for the Beginning Index, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of
Labor Statistics. If the Index is discontinued or revised during the term, such
other government index or computation with which it is replaced shall be used
in order to obtain substantially the same result as would be obtained if the
Index had not been discontinued or revised. Rent adjustments made hereunder
shall be final and binding on Landlord and Tenant.
2. SURRENDER CONDITION. At the expiration or earlier termination of the
Lease, Landlord shall have the option of requiring Tenant to return the
Premises to its original configuration and improvements, substantially as the
Premises existed prior to Tenant's occupancy. If Landlord requests, Tenants
obligations shall include, without limitation, the following:
i) Floor plan shall be as shown on Exhibit D;
ii) All areas of the Premises to be served by roof mounted HVAC as existed
prior to Tenant's occupancy;
iii) All offices to have standard electrical outlets and lighting serviced
only to that space from the house panel as existed prior to Tenant's occupancy;
and
iv) All areas to be carpeted with standard office grade carpeting as
existed prior to Tenant's occupancy. Exhibit D shows in more detail what exists
at the Premises as of the Commencement Date.
3. SECURITY DEPOSIT. Tenant shall provide Landlord with a Security Deposit
equal to the sum of $100,000.00 and the Return Cost. As used herein, the term
"Return Cost" shall mean the cost of restoring the Premises as a result of
Tenant's Alterations in excess of $50,000.00. The Return Cost shall be
established by an estimate provided by a contractor selected by Landlord and
reasonably approved by Tenant. If at anytime the Return Cost increases for any
reason, including without limitation, Tenants future improvements in the
Premises the Security Deposit shall be increased. Tenant may provide the
Security Deposit by posting a letter of credit in the amount of the Security
Deposit in favor of Landlord. Such letter of credit shall be in a form
reasonably acceptable to Landlord and shall include, without limitation, the
following: i) payable on demand by Landlord; ii) not terminable without at
least 30 days prior written notice to Landlord, and iii) Landlord may demand
payment of the letter of credit if it is not renewed at least 30 days prior to
expiration.
4. UNITS 206, 208. Attached hereto as Exhibit E is the existing lease for
Units 206 and 208 which are part of the Premises ("206, 208 Lease"). Tenant
acknowledges that the 206, 208 Lease is currently in effect and Tenant accepts
the Premises subject to such Lease. Tenant shall allow the tenant under the 206,
208 Lease to continue to utilize its premises as set forth in the 206, 208
Lease. Landlord shall use reasonable efforts to obtain possession of the
Premises affected by the 206, 208 Lease as quickly as possible. Landlord agrees
not to extent or renew the 206, 208 Lease beyond its present expiration date.
Tenant's Base Monthly Rent and Common Operating Expenses and Real Property
Taxes shall abate as to the portion of the Premises affected by the 206, 208
Lease until such time as Landlord delivers that portion of the Premises
affected by the 206, 208 Lease to Tenant.
5. CROSS-DEFAULT. A default by Tenant under any lease at Lafayette Business
Park between Landlord and Tenant shall be considered a default under this Lease
and Landlord shall have all rights and remedies provided in the Lease for
Tenant's default.
6. ROOF RIGHTS, CONDUIT. Landlord maintain ownership of the following at the
Project: i) the roof and ability to lease space on the roof of the Premises and
ii) all conduit located outside the Premises. Notwithstanding the above, Tenant
shall have the right to utilize existing conduit at the Project to bring
fiberoptic cable to the Premises without change for the Lease Term, including
any extension or renewal thereof. Tenant shall have the right at its sole cost
and expense, to install and maintain to and from the Premises through horizontal
and vertical shafts, chases, floors and other areas within the Building.
Tenant's cabling, conduits and other connecting equipment (collectively
"Connecting Equipment"), to the extent such Connecting Equipment does not
unreasonably interfere with the operation of the Building. Landlord agrees to
provide Tenant with reasonable advance written notice prior to any construction
occurring in space immediately adjacent to the Premises. Landlord shall have
the right to review and approve the location of all said Connecting Equipment,
which approval will not be unreasonably withheld, conditioned or delayed.
Tenant shall be entitled to such access without charge for the term of this
Lease including any extensions and renewals thereof. In addition, Landlord
shall permit Tenant to receive such telephone and other data communications
services direct from any telecommunications service provider serving the area
at Tenant's cost and shall permit Tenant access to the Building telephone riser
cable and all other telephone or communications cables or wiring, junction
boxes, wire conduits and associated facilities and equipment serving the
Premises, to the point of connection to Tenant's communication equipment and
all telephone and communications closets in the Building without charge for the
term of this Lease, including any extensions and renewals thereof.
7. FUTURE DEVELOPMENT. Tenant acknowledges that Landlord may convert all or a
portion of the Project to telecommunications use. Landlord shall have the right
to connect into and through the Premises to accommodate future development so
long as such actions do not disturb or disrupt Tenant's business operations.
Landlord and Tenant shall act reasonable and in good faith to allow Landlord,
if they so elect, to develop the Project for telecommunications use.
8. CASH CONSIDERATION. As Additional Rent (in addition to all other amounts
due under the Lease), Tenant shall pay Landlord $400,000.00 in eight (8) equal
payments of $50,000.00 payable in the same manner as Base Monthly Rent
commencing April 1, 1999 and monthly thereafter until all eight (8) payments
are made.
9. EQUIPMENT. Landlord shall transfer title and ownership of the following
equipment ("Tenant's Equipment") to Tenant on the Commencement Date:
<PAGE> 18
i) 15 ton Liebert AC unit Located in Room 106;
ii) 15 ton Liebert AC unit Located in Room 107;
iii) 5 ton Liebert AC unit Located in Room 103;
iv) 5 ton Liebert AC unit Located in Room 105;
v) Liebert 225k VA UPS located in Room 105;
vi) Two Liebert UPS Battery Backups located in Room 105;
vii) 250k VA backup generator located behind the Premises;
viii) NOC Console and all equipment and software currently in place located in
Room 202; and
ix) all currently existing cabling infrastructure and cross connect panels.
All other fixtures and equipment in the premises as of the Commencement Date
shall remain the property of Landlord. Notwithstanding the above, the following
shall apply to Tenant's Equipment: (i) if the Lease is terminated due to an
Event of Tenant's Default, Landlord may purchase Tenant's Equipment for the
lesser of fair market value or $100,000; (ii) at the expiration of the Lease
Term, Landlord may purchase Tenant's Equipment for $1; (iii) Landlord shall
have first priority lien rights in Tenant's Equipment; and (iv) Tenant shall
not remove Tenant's Equipment from the Premises without Landlord's consent
which Landlord may withhold in its sole discretion.
10. CONSENT APPROVAL. Wherever the consent or approval of Landlord is required
under the Lease, Landlord agrees not to unreasonably withhold, delay or
condition such approval.
11. QUIET ENJOYMENT. Upon payment by Tenant of the rent for the Premises and
the performance of all the covenants, conditions and provisions on Tenant's
part to be performed under this Lease. Tenant shall have and enjoy quiet
possession of the Premises and all other rights granted to Tenant under the
Lease for the entire Lease Term (including any extensions or renewals) subject
to all of the provisions of this Lease.
<PAGE> 19
EXHIBIT E
206, 208 LEASE
<PAGE> 20
FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is entered into as of August 21,
1997, between Lafayette Business Park, LLC ("Lessor") and Net Images, Inc. a
California corporation ("Lessee") to amend that certain Lease ("Lease") between
Lessor and Lessee dated February 24, 1999, for premises commonly known as 1900
Lafayette Street, Suite 208, Santa Clara, California.
WHEREAS, the parties hereto desire to amend the Lease to, among other things,
add Suite 206 to the Premises, extend the Term of the Lease, and increase the
Base Rent, all commencing as of November 15, 1997.
NOW THEREFORE, the parties hereto agree to amend the Lease as follows:
1. PREMISES: Effective as of November 15, 1997, Paragraph 1.2 of the Lease
shall be deleted and replaced with the following:
"1.2 Premises: Suite Numbers 206 and 208 consisting of approximately 1,222
rentable square feet, more or less, as defined in Paragraph 2 and as shown
on Exhibit "A" hereto (the "Premises")."
2. TERM: Effective as of November 15, 1997, Paragraph 1.5 of the Lease shall
be deleted and replaced with the following:
"1.5 Term: 36.5 months commencing November 15, 1997 ("Commencement Date")
and ending November 30, 2000, as defined in paragraph 3."
3. BASE RENT: Effective as of November 15, 1997, Paragraph 1.6 of the Lease
shall be deleted and replaced with the following:
"1.6 BASE RENT: $1,960.00 per month, payable on the first day of each
month, per Paragraph 4.1, increasing to $2,060.00 per month on December 1,
1998 through November 30, 1999; and $2,160.00 per month on December 1,
1999 through November 30, 2000."
4. SECURITY DEPOSIT: Effective as of November 15, 1997, the Security Deposit
in Paragraph 1.9 shall be changed to $2,160.00.
5. LESSEE'S SHARE: Effective as of November 15, 1997, Lessee's Share of
Operating Expense Increase in Paragraph 1.10 shall be changed to 8.26%.
6. VEHICLE PARKING: Effective as of November 15, 1997, Lessee shall be
entitled to the use of a total of five (5) non-exclusive parking spaces in
the Office Building Project as set forth in Paragraph 2.2.
1
<PAGE> 21
7. IMPROVEMENTS: Prior to November 15, 1997, Landlord shall perform the
following improvements at its cost, provided that if the cost of such
improvements exceeds $2,500.00 Tenant shall be responsible for any amount
in excess of $2,500.00;
a) Remove the wall dividing Suites 206 and 208 as shown on Exhibit II
hereto; and
b) Install new carpet in Suite 206 as shown on Exhibit B hereto.
Except as set forth above, Tenant agrees to accept the Premises in its
"as-is" condition.
This Amendment entered into as of the date written above.
LANDLORD TENANT
LAFAYETTE BUSINESS PARK, LLC NET IMAGES, INC.
By: /s/ ROB MOORE By: /s/ DAVID Q. LE
------------------------------- ------------------------------------
Rob Moore David Q. Le
- ----------------------------------- ----------------------------------------
Printed Name Printed Name
Title: Manager Title: President
---------------------------- ---------------------------------
Date: 9/26/97 Date: 9/22/97
----------------------------- ----------------------------------
2
<PAGE> 22
STANDARD OFFICE LEASE
FLOOR PLAN
[FLOOR PLAN]
1900 LAFAYETTE STREET
SECOND FLOOR
EXHIBIT A
<PAGE> 23
STANDARD OFFICE LEASE
FLOOR PLAN
[FLOOR PLAN]
1900 LAFAYETTE STREET
SECOND FLOOR
EXHIBIT B
<PAGE> 24
STANDARD OFFICE LEASE--GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. BASIC LEASE PROVISIONS ("BASIC LEASE PROVISIONS")
1.1 PARTIES: This Lease dated for reference purposes only February 24, 1997,
is made by and between Lafayette Business Park, L.L.C., (herein called "Lessor")
and Net Images, Inc., a California corporation, doing business under the name of
Net Images, Inc., a California corporation, (herein called "Lessee").
1.2 PREMISES: Suite Number(s) 208 floors, consisting of approximately 795
feet, more or less as defined in paragraph 2 and as shown on Exhibit "A" hereto
(the "Premises").
1.3 BUILDING: Commonly described as being located at 1900 Lafayette Street,
in the City of Santa Clara, County of Santa Clara, State of California, as more
particularly described in Exhibit A hereto and as defined in paragraph 2.
1.4 USE: General Office, subject to paragraph 8.
1.5 TERM: 36.5 months commencing March 15, 1997 ("Commencement Date") and
ending March 31, 2000 as defined in paragraph 3.
1.6 BASE RENT: $1,169.00 per month, payable on the 1st day of each month,
per paragraph 4.1.
1.7 BASE RENT INCREASE: On April 1, 1998 the monthly Base Rent payable under
paragraph 1.6 above shall be adjusted as provided in paragraph 50 below.
1.8 RENT PAID UPON EXECUTION: $1,169.00 for March 15 -- April 14, 1997.
1.9 SECURITY DEPOSIT: $1,240.00.
1.10 LESSER'S SHARE OF OPERATING EXPENSE INCREASE: 5.37% as defined in
paragraph 4.2.
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES: The Premises are a portion of a building herein sometimes
referred to as the "Building" identified in paragraph 1.3 of the Basic Lease
Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and improvements
thereon or thereunder are herein collectively referred to as the "Office
Building Project." Lessor hereby leases to Lessee and Lessee and Lessee leases
from Lessor for the term, at the rental, and upon all of the conditions set
forth herein, the real property referred to in the Basic Lease Provisions
paragraph 1.2, as the "Premises," including rights to the Common Areas as
hereinafter specified.
2.2 VEHICLE PARKING: So long as Lessee is not in default, and subject to the
rules and regulations attached hereto, and as established by Lessor from time
to time, Lessee shall be entitled to rent and use 3 parking spaces in the
Office Building Project at the monthly rate applicable from time to time for
monthly parking as set by Lessor and/or its licenses.
2.2.1 If Lessee commits, permits or allows any of the prohibited
activities described in the Lease or the rules then in effect, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon demand
by Lessor.
2.2.2 The monthly parking rate per parking space will be $-0- per
month at the commencement of the term of this Lease, and is subject to change
upon five (5) days prior written notice to Lessee. Monthly parking fees shall
be payable one month in advance prior to the first day of each calendar month.
2.3 COMMON AREAS--DEFINITION. The term "Common Area" is defined as all areas
and facilities outside the Premises and within the exterior boundary line of the
Office Building Project that are provided and designated by the Lessor from time
to time for the general non-exclusive use of Lessor, Lessee and of other lessees
of the Office Building Project and their respective employees, suppliers,
shippers, customers and invitees, including but not limited to common entrances,
lobbies, corridors, stairways and stairwells, public restrooms, elevators,
escalators, parking areas to the extent not otherwise prohibited by this Lease,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, ramps, driveways, landscaped areas and decorative walks.
2.4 COMMON AREAS--RULES AND REGULATIONS. Lessee agrees to abide by and
conform to the rules and regulations attached hereto as Exhibit B with respect
to the Office Building Project and Common Areas and to cause its employees,
suppliers, shippers, customers, and invitees to so abide and conform. Lessor or
such other person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
modify, amend and enforce said rules and regulations. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessee, their agents, employees and invitees of the Office Building
Project.
2.5 COMMON AREAS--CHANGES. Lessor shall have the right in Lessor's sole
discretion, from time to time:
(a) To make changes to the Building interior and exterior and Common
Areas, including, without limitation, changes in the location, size, shape,
number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land and improvements outside the boundaries of
the Office Building Project to be a part of the Common Areas, provided that such
other land and improvements have a reasonable and functional relationship to the
Office Building Project;
(d) To add additional buildings and improvements to the Common Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion thereof;
(f) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Office Building Project as Lessor may
in the exercise of sound business judgement deem to be appropriate.
3. TERM.
3.1 TERM. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions.
3.2 DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for any
reason Lessor cannot deliver possession of the Premises to Lessee on said date
and subject to paragraph 3.2.2, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligation of Lessee hereunder or extend the term hereof; but, in such case,
Lessee shall not be obligated to pay rent or perform any other obligation of
Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease, until possession of the Premises is tendered to Lessee, as
hereinafter defined; provided, however, that if Lessor shall not have delivered
possession of the Premises with sixty (60) days following said Commencement
Date, as the same may be extended under the terms of a Work Letter executed by
Lessor and Lessee, Lessee ??? Lessee's
FULL SERVICE--GROSS
PAGE 1 OF 10 PAGES
<PAGE> 25
option by notice in writing to Lessor within ten (10) days thereafter, cancel
this Lease, in which event the parties shall be discharged from all obligations
hereunder; provided, however, that as to Lessee's obligations, Lessee first
reimburses Lessor for all costs incurred for Non-Standard Improvements and, as
to Lessor's obligations, Lessor shall return any money previously deposited by
Lessee (less any offsets due Lessor for Non-Standard Improvements); and provided
further, that if such written notice by Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease hereunder shall
terminate and be of no further force or effect.
3.2.1 POSSESSION TENDERED - DEFINED. Possession of the Premises shall
be deemed tendered to Lessee ("Tender of Possession") when (1) the improvements
to be provided by Lessor under this Lease are substantially completed, (2) the
Building utilities are ready for use in the Premises, (3) Lessee has reasonable
access to the Premises, and (4) ten (10) days shall have expired following
advance written notice to Lessee of the occurrence of the matters described in
(1), (2) and (3) above of this paragraph 3.2.1.
3.2.2 DELAYS CAUSED BY LESSEE. There shall be no abatement of rent,
and the sixty (60) day period following the Commencement Date before which
Lessee's right to cancel this Lease accrues under paragraph 3.2, shall be
deemed extended to the extent of any delays caused by acts or omissions of
Lessee, Lessee's agents, employees and contractors.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.
3.4 UNCERTAIN COMMENCEMENT. In the event commencement of the Lease
term is defined as the completion of the improvements, Lessee and Lessor shall
execute an amendment to this Lease establishing the date of Tender of
Possession (as defined in paragraph 3.2.1) or the actual taking of possession
by Lessee, whichever first occurs, as the Commencement Date.
4. RENT.
4.1 BASE RENT. Subject to adjustment as hereinafter provided in
paragraph 4.3, and except as may be otherwise expressly provided in this Lease,
Lessee shall pay to Lessor the Base Rent for the Premises set forth in paragraph
1.6 of the Basic Lease Provisions, without offset or deduction. Lessee shall
pay Lessor upon execution hereof the advance Base Rent described in paragraph
1.6 of the Basic Lease Provisions. Rent for any period during the term hereof
which is for less than one month shall be prorated based upon the actual number
of days of the calendar month involved. Rent shall be payable in lawful money
of the United States to Lessor at the address stated herein or to such other
persons or at such other places as Lessor may designate in writing.
4.2 OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of the amount by which all Operating Expenses, as hereinafter defined,
for each Comparison Year exceeds the amount of all Operating Expenses for the
Base Year, such excess being hereinafter referred to as the "Operating Expense
Increase." In accordance with the following provisions:
(a) "Lessee's Share" is defined, for purposes of this Lease, as
the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of
the Premises by the total approximate square footage of the rentable space
contained in the Office Building Project. It is understood and agreed that the
square footage figures set forth in the Basic Lease Provisions are
approximations which Lessor and Lessee agree are reasonable and shall not be
subject to revision except in connection with an actual change in the size of
the Premises or a change in the space available for lease in the Office
Building Project.
(b) "Base Year" is defined as 1998.
(c) "Comparison Year" is defined as each calendar year during
the term of this Lease subsequent to the Base Year; provided, however, Lessee
shall have no obligation to pay a share of the Operating Expense Increase
applicable to the first twelve (12) months of the Lease Term (other than such as
are mandated by a governmental authority, as to which government mandated
expenses Lessee shall pay Lessee's Share, notwithstanding they occur during the
first twelve (12) months). Lessee's Share of the Operating Expense Increase for
the first and last Comparison Years of the Lease Term shall be prorated
according to that portion of such Comparison Year as to which Lessee is
responsible for a share of such Increase.
(d) "Operating Expenses" is defined, for purposes of this
Lease, to include all costs, if any, incurred by Lessor in the exercise of its
reasonable discretion for:
(1) The operation, repair, maintenance, and replacement, in
neat, clean, safe, good order and condition, of the Office Building Project,
including but not limited to, the following:
(aa) The Common Areas, including their surfaces, coverings,
decorative items, carpets, drapes and window coverings, and including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigation
systems, Common Area lighting facilities, building exteriors and roofs, fences
and gates;
(bb) All heating, air conditioning, plumbing, electrical
systems, life safety equipment, telecommunication and other equipment used in
common by, or for the benefit of lessees or occupants of the Office Building
Project, including elevators and escalators, tenant directories, fire detection
systems including sprinkler system maintenance and repair.
(ii) Trash disposal, janitorial and security services;
(iii) Any other service to be provided by Lessor that is
elsewhere in this Lease stated to be an "Operating Expense";
(iv) The cost of the premiums for the liability and property
insurance policies to be maintained by Lessor under paragraph 5 hereof;
(v) The amount of the real property taxes to be paid by Lessor
under paragraph 10.1 hereof;
(vi) The cost of water, sewer, gas, electricity, and other
publicly mandated services to the Office Building Project;
(vii) Labor, salaries and applicable fringe benefits and costs,
materials, supplies and tools used in maintaining and/or cleaning the Office
Building Project and accounting and a management fee attributable to the
operation of the Office Building Project;
(viii) Replacing and/or adding improvements mandated by any
governmental agency and any repairs or removals necessitated thereby amortized
over its useful life according to Federal Income tax regulation or guidelines
for depreciation thereof (including interest on the unamortized balance as is
then reasonable in the judgment of Lessor's accountants);
(ix) Replacements of equipment or improvements that have a
useful life for depreciation purposes according to Federal Income tax
guidelines of five (5) years or less, as amortized over such life.
(e) Operating Expenses shall not include the costs of replacements
of equipment or improvements that have a useful life for Federal Income tax
purposes in excess of five (5) years unless it is of the type described in
paragraph 4.2(d)(viii), in which case their cost shall be included as above
provided.
(f) Operating Expenses shall not include any expenses paid by any
lessee directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other tenant, or by insurance proceeds.
(g) Lessee's Share of Operating Expenses increase shall be payable by
Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time in advance of Lessee's Share
of the Operating Expenses Increase for any Comparison Year, and the same shall
be payable monthly or quarterly, as Lessor shall designate, during each
Comparison Year of the Lease term, on the same day as the Base Rent is due
hereunder. In the event that Lessee pays Lessor's estimate of Lessee's Share of
Operating Expense Increase as aforesaid, Lessor shall deliver to Lessee within
sixty (60) days after the expiration of each Comparison Year a reasonably
detailed statement showing Lessee's Share of the actual Operating Expense
Increase incurred during such year. If Lessee's payments under this paragraph
4.2(g) during said Comparison Year exceed Lessee's Share as indicated on said
statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessee's Share of Operating Expense Increase next falling due. If
Lessee's payments under this paragraph during said Comparison Year were less
than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement. Lessor and Lessee shall forthwith adjust between them
by cash payment any balance determined to exist with respect to that portion of
the last Comparison Year for which Lessee is responsible as to Operating Expense
Increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.
4.3 RENT INCREASE.
4.3.1 At the times set forth in paragraph 1.7 of the Basic Lease
Provisions, the monthly Base Rent payable under paragraph 4.1 of this Lease
shall be adjusted by the increase, if any, in the Consumer Price Index of the
Bureau of Labor Statistics of the Department of Labor for All Urban Consumers,
(1967-100). "All items," for the city nearest the location of the Building,
herein referred to as "C.P.I." since the date of this Lease.
4.3.2 The monthly Base Rent payable pursuant to paragraph 4.3.1
shall be calculated as follows: the Base Rent payable for the first month of
the term of this Lease, as set forth in paragraph 4.1 of this Lease, shall be
multiplied by a fraction the numerator of which shall be the C,P.I. of the
calendar month during which the adjustment is to take effect, and the
denominator of which shall be the C.P.I. for the calendar month in which the
original Lease term commences. The sum so calculated shall constitute the new
monthly Base Rent hereunder, but, in no event, shall such new monthly Base Rent
be less than the Base Rent payable for the month immediately preceding the date
for the rent adjustment.
4.3.3 In the event the compilation and/or publication of the
C.P.I. shall be transferred to any other governmental department or bureau or
FULL SERVICE - GROSS
PAGE 2 OF 10 PAGES
<PAGE> 26
agency or shall be discontinued, then the index most nearly the same as the
C.P.I. shall be used to make such calculations. In the event that Lessor and
Lessee cannot agree on such alternative index, then the matter shall be
submitted for decision to the American Arbitration Association in the County in
which the Premises are located, in accordance with the then rules of said
association and the decision of the arbitrators shall be binding upon the
parties, notwithstanding one party failing to appear after due notice of the
proceeding. The cost of said Arbitrators shall be paid equally by Lessor and
Lessee.
4.3.4. Lessee shall continue to pay the rent at the rate previously in
effect until the increase, if any, is determined. Within five (5) days
following the date on which the increase is determined, Lessee shall make such
payment to Lessor as will bring the increased rental current, commencing with
the effective date of such increase through the date of any rental instalments
then due. Thereafter the rental shall be paid at the increased rate.
4.3.5 At such time as the amount of any change in rental required by this
Lease is known or determined, Lessor and Lessee shall execute an amendment to
this Lease setting forth such change.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the security deposit set forth in paragraph 1.9 of the Basic Lease Provisions
as security for Lessee's faithful performance of Lessee's obligations hereunder.
If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may use, apply or
retain all or any portion of said deposit for the payment of any rent or other
charge in default for the payment of any other sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss
or damage which Lessor may suffer thereby. If Lessor so uses or applies all or
any portion of said deposit, Lessee shall within ten (10) days after written
demand therefor deposit cash with Lessor in an amount sufficient to restore
said deposit to the full amount then required of Lessee. If the monthly Base
Rent shall, from time to time, increase during the term of this Lease, Lessee
shall, at the time of such increase, deposit with Lessor additional money as
security deposit so that the total amount of the security deposit held by
Lessor shall at all times bear the same proportion to the then current Base
Rent as the initial security deposit bears to the Initial Base Rent set forth
in paragraph 1.6 of the Basic Lease Provisions. Lessor shall not be required to
keep said security deposit separate from its general accounts. If Lessee
performs all of Lessee's obligations hereunder, said deposit, or so much
thereof as has not heretofore been applied by Lessor, shall be returned,
without payment of interest or other increment for its use, to Lessee (or, at
Lessor's option, to the last assignee, if any, of Lessee's interest hereunder)
at the expiration of the term hereof and after Lessee has vacated the Premises.
No trust relationship is created herein between Lessor and Lessee with respect
to said Security Deposit.
6. USE
6.1 USE. The Premises shall be used and occupied only for the purpose set
forth in paragraph 1.4 of the Basic Lease Provisions or any other use which is
reasonably comparable to that use and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of record,
or any applicable building code, regulation or ordinance in effect on such
Lease Term Commencement Date. In the event it is determined that this warranty
has been violated, then it shall be the obligation of the Lessor, after written
notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any
such violation.
(b) Except as provided in paragraph 6.2(a) Lessee shall, at Lessee's
expense, promptly comply with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements of
any fire insurance underwriters or rating bureaus, now in effect or which may
hereafter come into effect, whether or not they reflect a change in policy from
that now existing, during the term or any part of the term hereof, relating in
any manner to the Premises and the occupation and use by Lessee of the Premises.
Lessee shall conduct its business in a lawful manner and shall not use or
permit the use of the Premises or the Common Areas in any manner that will tend
to create waste or a nuisance or shall tend to disturb other occupants of the
Office Building Project.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee in a clean condition
on the Lease Commencement Date (unless Lessee is already in possession) and
Lessor warrants to Lessee that the plumbing, lighting, air conditioning, and
heating system in the Premises shall be in good operating condition. In the
event that it is determined that this warranty has been violated, then it shall
be the obligation of Lessor, after receipt of written notice from Lessee
setting forth with specificity the nature of the violation, to promptly, at
Lessor's sole cost, rectify such violation.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts
the Premises and the Office Building Project in their condition existing as of
the Lease Commencement Date or the date that Lessee takes possession of the
Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants or restrictions of record, and
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto. Lessor acknowledges that it has satisfied itself
by its own independent investigation that the Premises are suitable for its
intended use, and that neither Lessor nor Lessor's agent or agents has made any
representation or warranty as to the present or future suitability of the
Premises, Common Areas, or Office Building Project for the conduct of Lessee's
business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LESSOR'S OBLIGATIONS. Lessor shall keep the Office Building Project,
including the Premises, interior and exterior walls, roof, and common areas,
and the equipment whether used exclusively for the Premises or in common with
other premises, in good condition and repair; provided, however, Lessor shall
not be obligated to paint, repair or replace wall coverings, or to repair or
replace any improvements that are not ordinarily a part of the Building or are
above then Building standards. Except as provided in paragraph ???, there shall
be no abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Office Building Project or any
part thereof. Lessee expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
7.2 LESSEE'S OBLIGATIONS.
(a) Notwithstanding Lessor's obligation to keep the Premises in good
condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located)
that serves only Lessee or the Premises, to the extent such cost is
attributable to causes beyond normal wear and tear. Lessee shall be responsible
for the cost of painting, repairing or replacing wall coverings, and to repair
or replace any Premises improvements that are not ordinarily a part of the
Building or that are above then Building standards. Lessor may, at its option,
upon reasonable notice, elect to have Lessee perform any particular such
maintenance or repairs the cost of which is otherwise Lessee's responsibility
hereunder.
(b) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as
received, ordinary wear and tear excepted, clean and free of debris. Any damage
or deterioration of the Premises shall not be deemed ordinary wear and tear if
the same could have been prevented by good maintenance practices by Lessee.
Lessee shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, alterations, furnishings and equipment.
Except as otherwise stated in this Lease, Lessee shall leave the air lines,
power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall panelling,
ceilings and plumbing on the Premises and in good operating condition.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, Utility Installations or repairs in, on or
about the Premises, or the Office Building Project. As used in this paragraph
7.3 the term "Utility Installation" shall mean carpeting, window and wall
coverings, power panels, electrical distribution systems, lighting fixtures, air
conditioning, plumbing, and telephone and telecommunication wiring and
equipment. At the expiration of the term, Lessor may require the removal of any
or all of said alterations, improvements, additions or Utility Installations,
and the restoration of the Premises and the Office Building Project to their
prior condition, at Lessee's expense. Should Lessor permit Lessee to make its
own alterations, improvements, additions or Utility Installations, Lessee shall
use only such contractor as has been expressly approved by Lessor, and Lessor
may require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien
and completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liability for mechanic's
and materialmen's liens and to insure completion of the work. Should Lessee make
any alterations, improvements, additions or Utility Installations without the
prior approval of Lessor, or use a contractor not expressly approved by Lessor,
Lessor may, at any time during the term of this Lease, require that Lessee
remove any part or all of the same.
(b) Any alterations, improvements, additions or Utility Installations
in or about the Premises or the Office Building Project that Lessee shall
desire to make shall be presented to Lessor in written form, with proposed
detailed plans. If Lessor shall give its consent to Lessee's making such
alteration, improvement, addition or Utility Installation, the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from the applicable
governmental agencies, furnishing a copy thereto to Lessor prior to the
commencement of the work, and compliance by Lessee with all conditions of said
permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.
(D) Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises by Lessee, and Lessor
shall have the right to post notice of non-responsibility in or on the Premises
or the Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy
FULL SERVICE - GROSS
PAGE 3 OF 10 PAGES
<PAGE> 27
any such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises, the Building or the Office Building
Project, upon the condition that if Lessor shall require, Lessee shall furnish
to Lessor a surety bond satisfactory to Lessor in an amount equal to such
contested lien claim or demand indemnifying Lessor against liability for the
same and holding the Premises, the Building and the Office Building Project free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's reasonable attorneys' fees and costs in participating in such
action if Lessor shall decide it is to Lessor's best interest so to do.
(e) All alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures of Lessee),
which may be made to the Premises by Lessee, including but not limited to, floor
coverings, panelings, doors, drapes, built-ins, moldings, sound ??,
and lighting and telephone or communication systems, conduit, wiring and
outlets, shall be made and done in a good and workmanlike manner and of good and
sufficient quality and materials and shall be the property of Lessor and remain
upon and be surrendered with the Premises at the expiration of the Lease term,
unless Lessor requires their removal pursuant to paragraph 7.3(e). Provided
Lessee is not in default, notwithstanding the provisions of this paragraph
7.3(e). Lessee's personal property and equipment, other than that which is
affixed to the Premises so that it cannot be removed without material damage to
the Premises or the Building, and other than Utility Installations, shall remain
the property of Lessee and may be removed by Lessee subject to the provisions of
paragraph 7.2.
(f) Lessee shall provide Lessor with as-built plans and specifications
for any alterations, improvements, additions or Utility Installations.
7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other leases of the Office Building Project,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, communication system, and fire protection and detection systems, so
long as such installations do not unreasonably interfere with Lessee's use of
the Premises.
8. INSURANCE; INDEMNITY.
8.1 LIABILITY INSURANCE -- LESSEE. Lessee shall at Lessee's expense, obtain
and keep in force during the term of this Lease a policy of Comprehensive
General Liability Insurance utilizing an Insurance Services Office standard form
with Broad Form General Liability Endorsement (GL0404), or equivalent, in an
amount of not less than $1,000,000 per occurrence of bodily injury and property
damage combined or in a greater amount as reasonably determined by Lessor and
shall insure Lessee with Lessor as an additional insured against liability
arising out of the use, occupancy or maintenance of the Premises. Compliance
with the above requirement shall not, however, limit the liability of Lessee
hereunder.
8.2 LIABILITY INSURANCE -- LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other risks
Lessor deems advisable from time to time, insuring Lessor, but not Lessee,
against liability arising out of the ownership, use, occupancy or maintenance of
the Office Building Project in an amount not less than $5,000,000.00 per
occurrence.
8.3 PROPERTY INSURANCE -- LESSEE. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease for the benefit of Lessee,
replacement cost fire and extended coverage insurance, with vandalism and
malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures, equipment and tenant improvements.
8.4 PROPERTY INSURANCE -- LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement cost thereof, as the same may exist from time to time, utilizing
Insurance Services Office standard form, or equivalent, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, plate glass, and such other perils as
Lessor deems advisable or may be required by a lender having a lien on the
Office Building Project. In addition, Lessor shall obtain and keep in force
during the term of this Lease, a policy of rental value insurance covering a
period of one year, with loss payable to Lessor, which Insurance shall also
cover all Operating Expenses for said period. Lessee will not be named in any
such policies carried by Lessor and shall have no right to any proceeds
therefrom. The policies required by these paragraphs 8.2 and 8.4 shall contain
such deductibles as Lessor or the aforesaid lender may determine. In the event
that the Premises shall suffer an insured loss as defined in paragraph 8.1(f)
hereof, the deductible amounts under the applicable insurance policies shall be
deemed an Operating Expense. Lessee shall not do or permit to be done anything
which shall invalidate the insurance policies carried by Lessor. Lessee shall
pay the entirety of any increase in the property insurance premium for the
Office Building Project over what it was immediately prior to the commencement
of the term of this Lease if the increase is specified by Lessor's insurance
carrier as being caused by the nature of Lessee's occupancy or any act or
omission of Lessee.
8.5 INSURANCE POLICIES. Lessee shall deliver to Lessor copies of liability
insurance policies required under paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance within seven (7) days after the
Commencement Date of this Lease. No such policy shall be cancellable or subject
to reduction of coverage or other modification except after thirty (30) days
prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to
the expiration of such policies, furnish Lessor with renewals thereof.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential loss or damage arising out of or incident to the
perils covered by property insurance carried by such party, whether due to the
negligence of Lessor or Lessee of their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this Lease
shall be endorsed to so provide.
8.7 INDEMNITY. Lessee shall indemnify and hold harmless Lessor and its
agents. Lessor's master or ground lessor, partners and lenders, from and against
any and all claims for damage to the person or property of anyone or any entity
arising from Lessee's use of the Office Building Project, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in or about the Premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all claims, costs
and expenses arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, employees, or invitees, and from and against all costs, attorney's
fees, expenses and liabilities incurred by Lessor as the result of any such use,
conduct, activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or proceeding involved
therein; and in case any action or proceeding be brought against Lessor by
reason of any such matter, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property of Lessee
or injury to persons, in, upon or about the Office Building Project arising from
any cause and Lessee hereby waives all claims in respect thereof against Lessor.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the Office Building Project, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from theft,
fire, seam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, or from any other cause, whether said
damage or injury results from conditions arising upon the Premises or upon other
portions of the Office Building Project, or from other sources or places, or
from new construction or the repair, alteration or improvement of any part of
the Office Building Project, or of the equipment, fixtures or appurtenances
applicable thereto, and regardless of whether the cause of such damage or injury
or the means of repairing the same is inaccessible, Lessor shall not be liable
for any damages arising from any act or neglect of any other lessee, occupant or
user of the Office Building Project, nor from the failure of Lessor to enforce
the provisions of any other lease of any other lessee of the Office Building
Project.
8.9 NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no representation
that the limits or forms of coverage of insurance specified in this paragraph 8
are adequate to cover Lessee's property or obligations under this Lease.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.
(b) "Premises Building Partial Damage" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of the then Replacement Cost of
the building.
(c) "Premises Building Total Destruction" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is fifty percent (50%) or more of the then Replacement Cost of
the Building.
(d) "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.
(e) "Office Building Project Buildings Total Destruction" shall mean if
the Office Building Project Buildings are damaged or destroyed to the extent
that the cost of repair is fifty percent (50%) or more of the then Replacement
Cost of the Office Building Project Buildings.
(f) "Insured Loss" shall mean damage or destruction which was caused by
an event required to be covered by the insurance described in paragraph 8. The
fact that an insured Loss has a deductible amount shall not make the loss an
uninsured loss.
(g) "Replacement Cost" shall mean the amount of money necessary to be
spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, excluding all improvements
made by lessees, other than those installed by Lessor at Lessee's expenses.
PAGE 4 OF 10 PAGES
<PAGE> 28
9.2 PREMISES DAMAGE: PREMISES BUILDING PARTIAL DAMAGE.
(a) Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Lessor shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Lessor's expense, repair such
damage (but not Lessee's fixtures, equipment or tenant improvements originally
paid for by Lessee) to its condition existing at the time of the damage, and
this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is not
an insured Loss and which falls within the classification of Premises Damage or
Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
which damage prevents Lessee from making any substantial use of the Premises,
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.
9.3 PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL
DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time
during the term of this Lease there is damage, whether or not it is an insured
Loss, which falls into the classifications of either (i) Premises Building
Total Destruction, or (ii) Office Building Project Total Destruction, then
Lessor may at Lessor's option either (i) repair such damage or destruction as
soon as reasonably possible at Lessor's expense (to the extent the required
materials are readily available through usual commercial channels) to its
condition existing at the time of the damage, but not Lessee's fixtures,
equipment or tenant improvements, and this Lease shall continue in full force
and effect, or (ii) give written notice to Lessee within thirty (30) days after
the date of occurrence of such damage of Lessor's intention to cancel and
terminate this Lease, in which case this Lease shall terminate as of the date
of the occurrence of such damage.
9.4 DAMAGE NEAR END OF TERM.
(a) Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to the
Premises, Lessor may at Lessor's option cancel and terminate this Lease as of
the date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within 30 days after the date of occurrence of such
damage.
(b) Notwithstanding paragraph 9.4(a), in the event that Lessee has an
option to extend or renew this Lease, and the time within which said option may
be exercised has not yet expired, Lessee shall exercise such option, if it is to
be exercised at all, no later than twenty (20) days after the occurrence of an
insured Loss falling within the classification of Premises Damage during the
last twelve (12) months of the term of this Lease. If Lessee duly exercises
such option during said twenty (20) day period, Lessor shall at Lessor's
expense, repair such damage, but not Lessee's fixtures, equipment or tenant
improvements, as soon as reasonably possible and this Lease shall continue in
full force and effect. If Lessee fails to exercise such option during said
twenty (20) day period, then Lessor may at Lessor's option terminate and cancel
this Lease as of the expiration of said twenty (20) day period by giving
written notice to Lessee of Lessor's election to do so within ten (10) days
after the expiration of said twenty (20) day period, notwithstanding any term
or provision in the grant of option to the contrary.
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event Lessor repairs or restores the Building or Premises
pursuant to the provisions of this paragraph 9, and any part of the Premises
are not usable (including loss of use due to loss of access or essential
services), the rent payable hereunder (including Lessee's Share of Operating
Expense Increases) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of the Lessee, and (2) such abatement shall only be to
the extent the operation and profitability of Lessee's business as operated
from the Premises is adversely affected. Except for said abatement of rent, if
any, Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
or the Building under the provisions of this Paragraph 9 and shall not commence
such repair or restoration within ninety (90) days after such occurrence, or if
Lessor shall not complete the restoration and repair within six (6) months
after such occurrence, Lessee may at Lessee's option cancel and terminate this
Lease by giving Lessor written notice of Lessee's election to do so at any time
prior to the commencement or completion, respectively, of such repair or
restoration. In such event this Lease shall terminate as of the date of such
notice.
(c) Lessee agrees to cooperate with Lessor in connection with any
such restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.
9.6. TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 WAIVER. Lessor and Lessee waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as defined
in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for paying
any increase in real property tax specified in the tax assessor's records and
work sheets as being caused by additional improvements placed upon the Office
Building Project by other lessees or by Lessor for the exclusive enjoyment of
any other lessee. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Office Building Project or any portion thereof
by any authority having the direct or indirect power to tax, including any city,
county, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereof, as against any
legal or equitable interest of Lessor in the Office Building Project or in any
portion thereof, as against Lessor's right to rent or other income therefrom,
and as against Lessor's business of leasing the Office Building Project. The
term "real property tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a change
in ownership, as defined by applicable local statutes for property tax purposes,
of the Office Building Project or which is added to a tax or charge herein
before included within the definition of real property tax by reason of such
change of ownership, or (v) which is imposed by reason of this transaction, any
modification or changes hereto, or any transfers hereof.
10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall be equitably determined
by Lessor from the respective valuations assigned in the assessor's worksheets
or such other information (which may include the cost of construction) as may
be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay to Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. UTILITIES.
11.1 SERVICES PROVIDED BY LESSOR. Lessor shall provide heating,
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts of electricity for normal lighting and office machines, water
for reasonable and normal drinking and lavatory use, and replacement light bulbs
and/or fluorescent tubes and ballasts for standard overhead fixtures.
11.2 SERVICE EXCLUSIVE TO LESSEE. Lessee shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or
a reasonable proportion to be determined by Lessor of all charges jointly
metered with other premises in the Building.
11.3 HOURS OF SERVICE. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours
as may hereafter be set forth. Utilities and services required at other times
shall be subject to advance request and reimbursement by Lessee to Lessor of the
cost thereof.
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<PAGE> 29
(d) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee
other than those referenced in subparagraphs (b) and (c), above, where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Lessor to Lessee; provided, however, that the nature of Lessee's
noncompliance is such that more than thirty (30) days are reasonably required
for its cure, then Lessee shall not be deemed to be in default if Lessee
commenced such cure within said thirty (30) day period and thereafter diligently
pursues such cure to completion. To the extent permitted by law, such thirty
(30) day notice shall constitute the sole and exclusive notice required to be
given to Lessee under applicable Unlawful Detainer statutes.
(e)(i) The making by Lessee of any general arrangement or general
assignment for the benefit of creditors; (ii) Lessee becoming a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days; (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or at Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. In the event that any provision of this paragraph 13.1(c) is contrary to
any applicable law, such provision shall be of no force or effect.
(f) The discovery by Lessor that any financial statement given to Lessor
by Lessee, or its successor in interest or by any guarantor of Lessee's
obligation hereunder, was materially false.
13.2 REMEDIES. In the event of any material default or breach of this Lease
by Lessee, Lessor may at any time thereafter, with or without notice or demand
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease and the term hereof shall terminate and Lessee
shall immediately surrender possession of the Premises to Lessor in such event
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premisses; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and any real estate commission actually paid; the worth of the time of award by
the court having jurisdiction hereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided;
that portion of the leasing commission paid by Lessor pursuant to paragraph 16
applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have vacated or abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.
Unpaid installments of rent and other unpaid monetary obligations of Lessee
under the terms of this Lease shall bear interest from the date due at the
maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor and
to the holder of any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days are required for performance than Lessor shall not be in default if
Lessor commences performance within such 30 day period and thereafter diligently
pursues the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee to
Lessor of Base Rent, Lessee's Share of Operating Expense increases or other sums
due hereunder will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Lessor by the terms of any mortgage or trust
deed covering the Office Building Project. Accordingly, if any installment of
Base Rent, Operating Expense Increase, or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
14. CONDEMNATION. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs; provided that if so
much of the Premises or the Office Building Project are taken by such
condemnation as would substantially and adversely affect the operation and
profitability of Lessee's business conducted from the Premises, Lessee shall
have the option, to be exercised only in writing within thirty (30) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within thirty (30) days after the condemning authority shall
have taken possession), to terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the rent and Lessee's
Share of Operating Expense Increase shall be reduced in the proportion that the
floor area of the Premises taken bears to the total floor area of the Premises.
Common Areas taken shall be excluded from the Common Areas usable by Lessee and
no reduction of rent shall occur with respect thereto or by reason thereof.
Lessor shall have the option in its sole discretion to terminate this Lease as
of the taking of possession by the condemning authority, by giving written
notice to Lessee of such election within thirty (30) days after receipt of
notice of a taking by condemnation of any part of the Premises or the Office
Building Project. Any award for the taking of all or any part of the Premises or
the Office Building Project under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any separate award for loss of or
damage to Lessee's trade fixtures, removable personal property and unamortized
tenant improvements that have been paid for by Lessee. For that purpose the cost
of such improvements shall be amortized over the original term of this Lease
excluding any options. In the event that this Lease is not terminated by reason
of such condemnation, Lessor shall to the extent of severance damages received
by Lessor in connection with such condemnation, repair any damage to the
Premises caused by such condemnation except to the extent that Lessee has been
reimbursed therefor by the condemning authority Lessee shall pay any amount in
excess of such severance damages required to complete such repair.
15. BROKER'S FEE.
(a) The brokers involved in this transaction are ___________________________
as "listing broker" and ____________________________________________ as
"cooperating broker," licensed real estate broker(s). A "cooperating broker" is
defined as any broker other than the listing broker entitled to a share of any
commission arising under this Lease. Upon execution of this Lease by both
parties, Lessor shall pay to said brokers jointly, or in such separate shares as
they may mutually designate in writing, a fee as set forth in a separate
agreement between Lessor and said broker(s), or in the event there is no
separate agreement between Lessor and said broker(s), the sum of
$______________, for brokerage services rendered by said broker(s) to Lessor in
this transaction.
(b) Lessor further agrees that (i) if Lessee exercises any Option, as
defined in paragraph 39.1 of this Lease, which is granted to Lessee under this
Lease, or any subsequently granted option which is substantially similar to an
Option granted to Lessee under this Lease, or (ii) if Lessee acquires any rights
to the Premises or other premises described in this Lease which are
substantially similar to what Lessee would have acquired had an Option herein
granted to Lessee been exercised, or (iii) if Lessee remains in possession of
the Premises after the expiration of the term of this Lease after having failed
to exercise an Option, or (iv) if said broker(s) are the procuring cause of any
other lease or sale entered into between the parties pertaining to the Premises
and/or any adjacent property in which Lessor has an interest, or (v) if the Base
Rent is increased, whether by agreement or operation of an escalation clause
contained herein, then as to any of said transactions or rent increases, Lessor
shall pay said broker(s) a fee in accordance with the schedule of said broker(s)
in effect at the time of execution of this Lease. Said fee shall be paid at the
time such increased rental is determined.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but also on
behalf of any person, corporation, association, or other entity having an
ownership interest in said real property or any part thereof, when such fee is
due hereunder. Any transferee of Lessor's interest in this Lease, whether such
transfer is by agreement or by operation of law, shall be deemed to have assumed
Lessor's obligation under this paragraph 15. Each listing and cooperating broker
shall be a third party beneficiary of the provisions of this paragraph 15 to the
extent of their interest in any commission arising under this Lease and may
enforce that right directly against Lessor; provided however, that all brokers
having a right to any part of such total commission shall be a necessary party
to any suit with respect thereto.
(d) Lessee and Lessor each represent and warrant to the other that neither
has had any dealings with any person, firm, broker or finder (other that the
person(s), if any, whose names are set forth in paragraph 15(e), above) in
connection with the negotiation of this Lease and/or consummation of the
transaction contemplated hereby, and no other broker or other person, firm or
entity is entitled to any commission or finder's fee in connection with said
transaction and Lessee and Lessor do each hereby indemnify and hold the other
harmless from and against any costs, expenses, attorneys' fees or liability for
compensation or charges which may be claimed by any such unnamed broker, finder
or other similar party by reason of any dealings or actions of the indemnifying
party.
16. ESTOPPEL CERTIFICATE
(a) Each party (as "responding party") shall at any time upon not less than
ten (10) days' prior written notice from the other party ("requesting party")
execute, acknowledge and deliver to the requesting party a statement in writing
(i) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the date
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<PAGE> 30
to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Office Building Project or
of the business of Lessee.
(b) At the requesting party's option, the failure to deliver such statement
within such time shall be a material default of this Lease by the party who is
to respond, without any further notice to such party, or it shall be conclusive
upon such party that (i) this Lease is in full force and effect, without
modification except as may be represented by the requesting party, (ii) there
are no uncured defaults in the requesting party's performance, and (iii) if
Lessor is the requesting party, not more than one month's rent has been paid in
advance.
(c) If Lessor desires to finance, refinance, or sell the Office Building
Project, or any part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall include
the past three (3) years' financial statements of Lessee. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners, of the time in question, of the fee title or a lessee's
interest in a ground lease of the Office Building Project, and except as a
expressly provided in paragraph 15, in the event of any transfer of such title
or interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall, subject
as aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as determined
by a court of competent jurisdiction shall in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law or judgments from the date due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provided,
however, that interest shall not be payable on late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.
20. TIME OF ESSENCE. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense increase and any other expenses payable by Lessee hereunder shall be
deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be affective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither the real estate broker
noted in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Lessor or any employee or agents of any of the said persons has made any
oral or written warranties or representations to Lessee relative to the
condition or use by Lessee of the Premises or the Office Building Project and
Lessee acknowledges that Lessee assumes all responsibility regarding the
Occupational Safety Health Act, the legal use and adaptability of the Premises
and the compliance thereof with all applicable laws and regulations in affect
during the term of this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given it delivered or addressed to Lessee
or to Lessor at the address noted below or adjacent to the signature of the
respective parties, as the case may be. Mailed notices shall be deemed given
upon actual receipt at the address required, or forty-eight hours following
deposit in the mail, postage prepaid, whichever first occurs. Either party may
by notice to the other specify a different address for notice purposes except
that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the terms hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, except that the rent payable
shall be two hundred percent (200%) of the rent payable immediately preceding
the termination date of this Lease, and all Options, if any, granted under the
terms of this Lease shall be deemed terminated and be of no further effect
during said month to month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
of law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall be initiated in the county in which the
Office Building Project is located.
30. SUBORDINATION.
(a) This Lease, and any Option or right of first refusal granted hereby, at
Lessor's option, shall be subordinate to any ground lease, mortgage, deed of
trust, or any other hypothecation or security now or hereafter placed upon the
Office Building Project and to any and all advances made on the security hereof
and to all renewals, modifications, consolidations, replacements and extensions
thereof. Notwithstanding such subordination, Lessee's right to quiet possession
of the Premises shall not be disturbed if Lessee is not in default and so long
as Lessee shall pay the rent and observe and perform all of the provisions of
this Lease, unless this Lease is otherwise terminated pursuant to its terms. If
any mortgagee, trustee or ground lessor shall elect to have this lease and any
Options granted hereby prior to the lien of its mortgage, deed of trust or
ground lease, and shall give written notice thereof to Lessee, (this Lease and
such Options shall be deemed prior to such mortgage, deed of trust or ground
lease, whether this Lease or such Options are dated prior or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage deed of trust or ground lease, as the case may
be. Lessee's failure to execute such documents within ten (10) days after
written demand shall constitute a material default by Lessee thereunder without
further notice to Lessee or, at Lessor's option, Lessor shall execute such
documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby
make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and
in Lessee's name, place and stead, to execute such documents in accordance with
this paragraph 30(b).
31.1 ATTORNEY'S FEES.
31.1 If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court in the same
or a separate suit, and whether or not such action is pursued to decision or
judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31.2 The attorneys' fee award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all attorneys'
fees reasonably incurred in good faith.
31.3 Lessor shall be entitled to reasonable attorneys' fees, and all
other costs and expenses incurred in the preparation and service of notice of
default and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.
32. LESSOR'S ACCESS.
32.1 Lessor and Lessor's agent shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, performing
any services required of Lessor, showing the same to prospective purchasers,
lenders, or lessee, taking such safety measures, erecting such scaffolding or
other necessary structure, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Lessor may
reasonably deem necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. Lessor may at any time place on or about the Premises or the Building
any ordinary "For Sale" signs and Lessor may at any time during the last 120
days of the term hereof place on or about the Premises any ordinary "For
Lease" signs.
32.2 All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for
the same.
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PAGE 6 of 10 PAGES
<PAGE> 31
32.3 Lessor shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to files, vaults and safes,
and in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forceable or unlawful entry or
detainer of the Premises or an eviction. Lessee waives any charges for damages
or injuries or interference with Lessee's property or business in connection
therewith.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent. The holding of any auction on the Premises or Common Areas in
violation of this paragraph shall constitute a material default of this Lease.
34. SIGNS. Lessee shall not place any sign upon the Premises of the Office
Building Project without Lessor's prior written consent. Under no circumstances
shall Lessee place a sign on any roof of the Office Building Project.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. CONSENTS. Except For Paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Office Building Project.
39. OPTIONS.
39.1 DEFINITION. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the first refusal
to lease other space within the Office Building Project or other property of
Lessor or the right of first offer to lease other space within the Office
Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right of first
refusal to purchase the Premises or the Office Building Project or the right of
first offer to purchase the Premises of the Office Building Project, or the
right or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 OPTIONS PERSONAL. Each Option granted to Lessee in this Lease is
personal to the original Lessee and may be exercised only by the original
Lessee while occupying the Premises who does so without the intent of
thereafter assigning this Lease or subletting the Premises or any portion
thereof, and may not be exercised or be assigned, voluntarily or involuntarily
by or to any person or entity other than Lessee; provided, however, that an
Option may be exercised by or assigned to any Lessee ????? as defined in
paragraph 12.2 of this Lease. The Options, if any, herein granted to Lessee are
not assignable separate and apart from this Lease, nor may any Option be
separated from this Lease in any manner, either by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple options to
extend or renew this Lease a later option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary, (i) during the time
commencing from the date Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance alleged in
said notice of default is cured, or (ii) during the period of time commencing
on the day after a monetary obligation to Lessor is due from Lessee and unpaid
(without any necessity for notice thereof to Lessee) and continuing until the
obligation is paid, or (iii) in the event that Lessor has given to Lessee three
or more notices of default under paragraph 13.1(c), or paragraph 13.1(d),
whether or not the defaults are cured, during the 12 month period of time
immediately prior to the time that Lessee attempts to exercise the subject
Option, (iv) if Lessee has committed any non-curable breach, including without
limitation those described in paragraph 13.1(b), or is otherwise in default of
any of the terms, covenants or conditions of this Lease.
(b) The period of time within which an Option may be exercised shall not
be extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option. If, after such exercise and during the term
of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (3) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to
commence to cure a default specified in paragraph 13.1(d) within thirty (30)
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessor gives to Lessee three or more notices of default under paragraph
13.1(c), or paragraph 13.1(d), whether or not the defaults are cured, or (iv) if
Lessee has committed any non-curable breach, including without limitation those
described in paragraph 13.1(b), or is otherwise in default of any of the terms,
covenants and conditions of this Lease.
40. SECURITY MEASURES--LESSOR'S RESERVATIONS.
40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the projection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole
option, from providing security protection for the Office Building Project or
any part thereof, in which event the cost thereof shall be included within the
definition of Operating Expenses, as set forth in paragraph 4.2(b).
40.2 Lessor shall have the following rights:
(a) To change the name, address or title of the Office Building in
which the Premises are located upon not less than 90 days prior written notice;
(b) To, at Lessee's expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate;
(c) To permit any lessee the exclusive right to conduct any business
as long as such exclusive does not conflict with any rights expressly given
herein;
(d) To place such signs, notices or displays as Lessor reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Office Building Project or on pole signs in the Common Areas;
40.3. Lessee shall not:
(a) Use a representation (photographic or otherwise) of the Building
or the Office Building Project or their name(s) in connection with Lessee's
business;
(b) Suffer or permit anyone, except in emergency, to go upon the roof
of the Building.
41. EASEMENTS.
41.1 Lessor reserves to itself the right, from time to time, to grant such
easements, rights and dedications that Lessor deems necessary or desirable, and
to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
41.2 The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.
42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
FULL SERVICE--GROSS
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<PAGE> 32
43. AUTHORITY. If Lessee is a corporation, [ILLEGIBLE LINE] entity represent and
warrant that such individual is duly authorized to execute and deliver this
Lease on behalf of said [ILLEGIBLE] trust or partnership, Lessee shall, within
thirty (30) days after execution of this Lease, deliver to Lessor evidence of
such authority satisfactory to Lessor.
44. CONFLICT. Any conflict between the printed provisions, [ILLEGIBLE] or
Addenda of this Lease and the typewritten or handwritten provisions, if any,
shall be controlled by the typewritten or handwritten provisions.
45. NO OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.
46. LENDER MODIFICATION. Lessee agrees to make such reasonable modifications to
this Lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
Building Project.
47. MULTIPLE PARTIES. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein, the
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee, respectively.
48. WORK LETTER. This Lease is supplemented by that certain Work Letter of even
date executed by Lessor and Lessee, attached hereto as Exhibit C, and
incorporated herein by this reference.
49. ATTACHMENTS. Attached hereto are the following documents which constitute a
part of this Lease:
50. RENT: The monthly rental rate shall be as follows:
March 15, 1997 - March 31, 1998 rent shall be $1,169.00 per month
April 1, 1998 - March 31, 1999 rent shall be $1,200.00 per month
April 1, 1999 - March 31, 2000 rent shall be $1,240.00 per month
51. ELECTRICAL, HVAC: Tenant acknowledges that under the terms of the Lease,
Landlord is only to provide to the Premises HVAC five (5) days a week from 8
a.m. to 6 p.m., and electrical power necessary for typical office use. Tenant
agrees to pay all reasonable costs of electricity and/or HVAC in excess of
typical office use, including without limitation, the reasonable cost of: (i)
additional electrical distribution, (ii) depreciation on equipment, (iii)
additional utility charges, and (iv) if necessary, Tenant's share of bringing
additional electrical power to the Office Building.
52. IMPROVEMENTS: Landlord shall complete the work set forth on Exhibit A in
addition to painting, carpeting, and installing ceiling tiles in the suite.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR
SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE
OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY
SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE
LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
<TABLE>
<CAPTION>
<S> <C>
LESSOR LESSEE
Lafayette Business Park, L.L.C. Nat Images, Inc.
- ------------------------------- -------------------------------------------
By /s/ ROB MOORE By /s/ DAVID Q. LE
---------------------------- ----------------------------------------
Its Manager Its President
---------------------- ----------------------------------
By By
---------------------------- ----------------------------------------
Its Its
---------------------- ----------------------------------
Executed at Executed at 11:00 am 1900 Lafayette Street
------------------- -------------------------------
on on 2/27/97
---------------------------- ----------------------------------------
Address Address 1900 Lafayette Street
----------------------- -----------------------------------
</TABLE>
FULL SERVICE - GROSS
PAGE 10 OF 10 PAGES
<PAGE> 33
STANDARD OFFICE LEASE
FLOOR PLAN
[FLOOR PLAN]
SECOND FLOOR
EXHIBIT A
FULL SERVICE - GROSS
<PAGE> 34
RULES AND REGULATIONS FOR
STANDARD OFFICE LEASE
[LOGO]
Dated: February 24, 1997
By and Between Lafayette Business Park, L.L.C., and Net Images, Inc.
GENERAL RULES
1. Lease shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in good
faith judges to be a threat to the safety, reputation or property of the Office
Building Project and its occupants.
3. Lessee shall not make or permit any noise or odors that annoy or
interfere with other lessees or persons having business within the Office
Building Project.
4. Lessee shall not keep animals or birds within the Office Building Project
and shall not bring bicycles, motorcycles or other vehicles into areas not
designated as authorized for same.
5. Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.
6. Lessee shall not alter any lock or install new or additional locks or
bolts.
7. Lessee shall be responsible for the inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.
8. Lessee shall not deface the walls, partitions or other surfaces of the
premises or Office Building Project.
9. Lessee shall not suffer or permit anything in or around the Premises or
Building that causes excessive vibration or floor loading in any part of the
Office Building Project.
10. Furniture, significant freight and equipment shall be moved into or out of
the building only with the Lessor's knowledge and consent, and subject to such
reasonable limitations, techniques and timing, as may be designated by Lessor.
Lessee shall be responsible for any damage to the Office Building Project
arising from any such activity.
11. Lessee shall not employ any service or contractor for services or work to
be performed in the Building, except as approved by Lessor.
12. Lessor reserves the right to close and lock the Building on Saturdays,
Sundays and legal holidays, and on other days between the hours of ____P.M and
____A.M. of the following day. If Lessee uses the Premises during such periods,
Lessee shall be responsible for securely locking any doors it may have opened
for entry.
13. Lessee shall return all keys at the termination of its tenancy and shall
be responsible for the cost of replacing any keys that are lost.
14. No window coverings, shades or awnings shall be installed or used by
Lessee.
15. No Lessee, employee or invitee shall go upon the roof of the Building.
16. Lessee shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as non-smoking areas.
17. Lessee shall not use any method of heating or air conditioning other than
as provided by Lessor.
18. Lessee shall not install, maintain or operate any vending machines upon
the Premises without Lessor's written consent.
19. The Premises shall not be used for lodging or manufacturing, cooking or
food preparation.
20. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
21. Lessor reserves the right to waive any one of these rules or regulations,
and/or as to any particular Lessee and any such waiver shall not constitute a
waiver of any other rule or regulation or any subsequent application thereof to
such Lessee.
22. Lessee assumes all risks from theft or vandalism and agrees to keep its
Premises locked as may be required.
23. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.
PARKING RULES
1. Parking areas shall be used only for parking by vehicles no longer than
full size, passenger automobiles herein called "Permitted Size Vehicles."
2. Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.
3. Parking stickers or identification devices shall be the property of
Lessor and be returned to Lessor by the holder thereof upon termination of the
holder's parking privileges. Lessee will pay such replacement charge as is
reasonably established by Lessor for the loss of such devices.
4. Lessor reserves the right to refuse the sale of monthly identification
devices to any person or entity that willfully refuses to comply with the
applicable rules, regulations, laws and/or agreements.
5. Lessor reserves the right to relocate all or a part of parking spaces
from floor to floor, within one floor, and/or to reasonably adjacent offsite
location(s), and to reasonably allocate them between compact and standard size
spaces as long as the same complies with applicable laws, ordinances and
regulations.
6. Users of the parking area will obey all posted signs and park only into
the areas designated for vehicle parking.
7. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible for
any damage to vehicles, injury to persons or loss of property all of which
risks are assumed by the party using the parking area.
8. Validation, if established, will be permissible only by such method or
methods as Lessor and/or its licenses may establish at rates generally
applicable to visitor parking.
9. The maintenance, washing, waxing or cleaning of vehicles in the parking
structure of Common Areas is prohibited.
10. Lessee shall be responsible for seeing that all of its employes, agents
and invitees comply with the applicable parking rules, regulations, laws and
agreements.
11. Lessor reserves the right to modify these rules and/or adopt such other
reasonable and non-discriminatory rules and regulations as it may deem
necessary for the proper operation of the parking area.
12. Such parking use as is herein provided is intended merely as a license
only and no bailment is intended or shall be created hereby.
FULL SERVICE--GROSS
EXHIBIT B
PAGE 1 OF 1 PAGES
<PAGE> 35
EXHIBIT F
OPTION TO EXTEND:
Provided that there has been no Event of Tenant's Default, Landlord hereby
grants to Tenant two (2) options to extend the Lease Term for a period of five
(5) years each (each an "Option Period") upon all of the same terms and
conditions as are contained in the Lease, except that Base Monthly Rent during
an Option Period shall be the greater of (i) Base Monthly Rent payable in the
last month of the Lease Term or initial Option Term or (ii) the then fair
Market Rent for the Premises (as hereinafter defined). In order to exercise the
option granted herein Tenant must give written notice of its election to
exercise the option no later than one hundred eighty (180) days prior to the
expiration of the Lease Term or initial Option Term.
The "then Fair Market Rent for the Premises" shall mean the fair market rental
value of the Premises as of the commencement of the Option Period including,
without limitation, rent increases over the extended term which are customary
at the commencement of the Option Period. If the parties are unable to agree on
the Base Monthly Rent for the Option Period prior to ninety (90) days before
the expiration of the initial Lease Term, or initial Option Term, then Tenant
may withdraw its exercise of the option on the following terms:
i) Tenant must notify Landlord in writing of its election to withdraw
its exercise of the option; and
ii) If less than 180 days remain in the Lease Term or Initial Option
Period, whichever is applicable, on the date Tenant withdraws its exercise of
the option, the Lease Term or Initial Option Period shall be extended on all
terms and conditions of the Lease then in effect, the number of days necessary
to make the remaining term 180 days.
<PAGE> 1
Exhibit 10.14
200 PAUL AVENUE
SAN FRANCISCO, CALIFORNIA
LEASE
UNIVERSAL ACCESS, INC.
1. Basic Provisions ("Basic Provisions").
1.1 Parties. This Lease ("Lease"), dated as of March 19, 1999, is
made by and between The Cambay Group Inc., a California corporation ("Lessor")
and Universal Access, Inc., an Illinois corporation ("Lessee"), (collectively
the "Parties," or individually a "Party").
1.2(a) Premises. "Premises" means that certain portion of the third
floor of Building F, as outlined on Exhibit A attached hereto, consisting of
approximately 9,945 rentable square feet (the "Third Floor Premises"), including
all improvements therein or to be provided by Lessor under the terms of this
Lease, plus the useable area of the Support Space, as defined below. The
Building is commonly known by the street address of 200 Paul Avenue, located in
the City of San Francisco, San Francisco, California, 94124.
"Support Space" means individually and collectively, the HVAC Roof Area,
if any, as defined in Addendum 6, Paragraph B, the Electrical Room Area, as
defined in Addendum 6, Paragraph C and the Building F Generator Area, as defined
in Addendum 6, Paragraph F. The useable area of the Support Space shall be
determined by reference to Lessee's Plans Approved by Lessor in accordance with
Addendum 5, and confirmed in a writing between Lessor and Lessee within thirty
(30) days after the Commencement Date, which writing shall be attached to this
Lease.
The "Building" is that certain Building F consisting of approximately
328,500 sq. ft. and containing the Premises. Building F is a portion of the Paul
Avenue Industrial Center, consisting of 6 buildings (A-F) with a total building
area of 452,500 sq. ft.
The Premises, Building F, the Common Areas as defined in Paragraph 2.7,
the land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the "Industrial
Center." (Also see Paragraph 2.)
In addition to Lessee's rights to use and occupy the Premises, Lessee
shall have a non-exclusive right to use the Common Areas (as defined in
Paragraph 2.7) as hereinafter specified, provided that Lessee's rights to use
the roof, exterior walls and Common Area Conduit Installation Areas, as defined
in Addendum 6, Paragraph A(iii), of the Building or any other buildings in the
Industrial Center are limited to those expressly provided in Addendum 6.
1.2(b) Parking. Two (2) reserved vehicle parking spaces ("Reserved
Parking Spaces"). (Also see Paragraph 2.6).
1.3 Term. Ten (10) years and zero (0) months ("Original Term")
commencing on the Delivery Date, as defined below (which shall be the
"Commencement Date") and ending on the tenth (10th) anniversary of the Delivery
Date ("Expiration Date"). (Also see Paragraph 3.) As used in this Lease,
"Delivery Date" means the date that Lessor delivers possession of the Premises
to Lessee together with Lessor's architect's or engineer's Certificate of
Substantial Completion for Lessor's Work, as defined in Addendum 1, which shall
be on or before the one hundred twentieth (120th) day after the date of this
Lease.
1.4 Early Possession. Concurrently with the execution of this Lease
("Early Possession Date"). (Also see Paragraphs 3.2 and 3.3.)
1.5 Base Rent. [$2.50 per rentable square foot per month of the
Third Floor Premises] + [$1.25 per useable square foot per month of the Support
Space exclusive of the Antennae Roof Area] per month ("Base Rent"), payable on
the first day of each month commencing on the later to occur of June 1, 1999 or
the date that is ninety (90) days after the Early Possession Date Provided,
however, not withstanding anything to the contrary, payment of Base Rent (except
as set forth in Paragraph 1.6(a)) shall not commence until the Delivery Date has
occurred. (Also see Paragraph 4.) Base Rent is subject to adjustment in
accordance with Addendum 2.
1.6(a) Base Rent Paid Upon Execution. The first month's Base Rent shall
be paid upon execution of the Lease.
1.6(b) Lessee's Share of Common Area Operating Expenses.
Lessee's Share of the Industrial Center Common Area Operating Expenses,
as defined in Paragraph 4.2(a), is 2.20% (total rentable area of the Third Floor
Premises/452,500).
Lessee's Share of Building F Common Area Operating Expenses, as defined
in Paragraph 4.2(a), is 3.03% ([total rentable square feet of the Third Floor
Premises]/328,500)
Lessee's Share of Telecommunications Facilities Area Common Area
Operating Expenses, as defined in Paragraph 4.2(a), is 4.54% ([total rentable
square feet of the Third Floor Premises]/219,200). Lessee's Share of
Telecommunications Facilities Area Common Area Operating Expenses is subject to
recalculation as and when Lessor designates other areas of the Industrial Center
Common Area as Telecommunications Facilities Area by notice to Lessee in
accordance with Paragraph 4.2(a), provided, however, that Lessee's share shall
not be increased without the prior written consent of Lessee.
1.6(c) Cabinet and Conduit Charges: In addition to Base Rent and
Lessee's Shares of Common Area Operating Expenses, Lessee shall pay to Lessor,
on the first day of each month the "Cabinet and Conduit Charges" then
applicable. As used in this Lease, "Cabinet and Conduit Charges" means the
monthly charge specified by Lessor from time to time for the use of conduit and
or installation of cabinets in locations and for purposes approved by Lessor
("Cabinet and Conduit Usage"). Cabinet and Conduit Usage is subject to
relocation as Lessor may require, provided that such relocation shall not
materially interfere with Lessee's Cabinet and Conduit Usage, and Lessor shall
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pay all costs of such relocation. Cabinet and Conduit Charges are subject to
adjustment in accordance with Addendum 2. As of the date of this Lease, Lessor
has approved the following Cabinet and Conduit Usage for the following Cabinet
and Conduit Charges:
(i) Two (2), four (4) inch, conduits from the Third Floor Premises
to the Building F premises occupied by Pacific Bell for any period during which
Pacific Bell occupies such area (the "Pacific Bell Conduits") at no charge. One
additional Pacific Bell Conduit may be installed in a manner Approved by Lessor,
in accordance with Addendum 5, at an initial Cabinet and Conduit Charge of $125
per month.
(ii) One cabinet in a two (2) foot x two (2) foot space in the
Building F telecommunications room located on the Third Floor, at an initial
Cabinet and Conduit Charge of $350 per month.
(iii) One, four (4) inch, conduit from the Third Floor Premises to the
Building F telecommunications room located on the Third Floor, at an initial
Cabinet and Conduit Charge of $125 per month.
(iv) One cage in a four foot by six foot (4x6 foot) space in the
Building F telecommunications room located on the Third Floor, at an initial
Cabinet and Conduit Charge of $1250 per month.
(v) Up to six (6), four (4) inch, conduits from the Third Floor
Premises, through the slab, to the Building F premises occupied by Williams
Communications for any period during which Williams Communications occupies such
area (the "Williams Communications Conduits") at an initial Cabinet and Conduit
Charge of $125 per installed Williams Communications conduit, per month.
(vi) Up to four (4), four (4) inch, conduits from the Third Floor
Premises through the Third Floor Premises sidewall to the Building F premises
occupied by GTE Global Networks Incorporated for any period during which GTE
Global Networks Incorporated occupies such area (the "GTE Conduits") at an
initial Cabinet and Conduit Charge of $125 per installed GTE Conduits per month.
(vii) Up to two (2), four (4) inch, conduits from the Third Floor
Premises across the corridor in a manner Approved by Lessor, to the Building F
premises occupied by an RCN Corporation subsidiary for any period during which
RCN Corporation or its subsidiary occupies such area (the "RCN Conduits") at an
initial Cabinet and Conduit Charge of $125 per installed Universal Conduits per
month.
1.7 Security Deposit. $30,000 payable concurrently with the
execution of this Lease. (Also see Paragraph 5.)
1.8 Permitted Use. The use as an operations center, including, but
not limited to, any of the following: communications uses, telephone switch
system, telecommunications hub, telecommunications line wholesaling, co-location
facilities provider and licensor, and ancillary office use ("Permitted Use")
(Also see Paragraph 6).
1.9 Insuring Party. Lessor is the "Insuring Party." (Also see
Paragraph 8.)
1.10(a) Real Estate Brokers. The following real estate broker(s)
(collectively the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties. Cushman & Wakefield represents
Lessor exclusively ("Lessor's Broker"). Dean Topping & Company represents Lessee
exclusively ("Lessee's Broker"). (Also see Paragraph 15.)
1.10(b)Payment to Brokers. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and Lessor's Broker.
1.11 Guarantor: [Intentionally Deleted]
1.12 Exhibits. Attached hereto are Addenda 1-6, Exhibits A (Premises
Diagram), B [Intentionally Deleted], C (Lessor's Reports), D (Form of Tenant
Estoppel), and E (Form of Subordination, Attornment and Non-Disturbance
Agreement), all of which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
2.1 Letting. Lessor hereby Leases to Lessee, and Lessee hereby
Leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and except as provided in Paragraph 1.6(b) of the Basic Provisions,
Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
ninety (90) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code.
Lessor warrants that any improvements (other than those constructed by Lessee or
at Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all Applicable Requirements, as defined in Paragraph 6.3 in effect
as of the date of this Lease. Lessor further warrants to Lessee that Lessor has
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<PAGE> 3
no knowledge of any claim having been made by any governmental agency that a
violation or violations of Applicable Requirements with regard to the Premises
as of the date of this Lease. Said warranties shall not apply to any Alterations
or Utility Installations (defined in Paragraph 7.3(a)) made or to be made by
Lessee. If the Premises do not comply with said warranties as of the date of
this Lease, Lessor shall, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee given within six (6) months
following the Commencement Date and setting forth with specificity the nature
and extent of such non-compliance, take such action, at Lessors' expense, as may
be reasonable or appropriate to rectify the non-compliance. Lessor makes no
warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Requirements (as defined in Paragraph 6.3).
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it
has been advised by Lessor and the Broker(s) to satisfy itself with respect to
the condition of the Premises (including but not limited to the electrical and
fire sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Applicable Requirements, as defined in
Paragraph 6.3, and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefor as the same relate to Lessee's occupancy
of the Premises and/or the terms of this Lease; and (c) that neither Lessor, nor
any of Lessor's agents, has made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.
2.5 Lessee as Prior Owner/Occupant. [Intentionally Deleted.]
2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the
Common Areas designated from time to time by Lessor for reserved parking. Lessee
shall not use more parking spaces than those specified above. Said parking
spaces shall be used for parking by vehicles no larger than full-size passenger
automobiles, pick-up trucks, or delivery vans, herein called "Permitted Size
Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 39) issued by Lessor. (Also see Paragraph 2.9.)
(a) Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right,
without notice, in addition to such other rights and remedies that it may have;
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
2.7 Common Areas--Definition. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Industrial Center, and Common Area Conduit Installation Areas, that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including entrances, stairwells, parking areas, loading and unloading
areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and
landscaped areas.
2.8 Common Areas--Lessee's Rights. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, including, without limitation, the loading docks in the
Common Area, and entrance lobbies, subject to any rights, powers, and privileges
reserved by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage (other than such overnight parking) shall be
permitted only by the prior written consent of Lessor or Lessor's designated
agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor. Lessee shall have non-exclusive and
unreserved access to the freight elevator serving the Premises 24 hours per day,
seven days per week.
2.9 Common Areas--Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce, in a non-discriminatory manner, reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 39. Lessee agrees
to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Industrial Center.
2.10 Common Areas--Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time, to make the following changes, provided that
such changes do not materially interfere with Lessee's use and occupancy of and
access to the Premises:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and Common Area Conduit
Installation Areas;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas, provided that such
designation does not materially increase the Common Area Operating Expenses;
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(d) To add additional buildings and improvements to the
Common Areas;
(e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial Center, or any
portion thereof; and
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Industrial Center as
Lessor may, in the exercise of sound business judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3, and the period of any extension
of the term of this Lease is as specified pursuant to Addendum 2.
3.2 Early Possession. Lessor shall deliver the Premises to Lessee on
the Early Possession Date, broom clean to permit Lessee to install Lessee's
Initial Improvements and Utility Installations, in accordance with Addenda 5 and
6, respectively. If Lessee totally or partially occupies the Premises after the
Early Possession Date but prior to the Commencement Date, the obligation to pay
Rent shall be abated for the period of such early occupancy. All other terms of
this Lease, however, (excepting the obligation to pay Lessee's Share of Common
Area Operating Expenses but including the obligation to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.
3.3 Delay. If for any reason Lessor cannot deliver the Premises by
the Delivery Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
the Premises to Lessee with Lessor's Work substantially completed in accordance
with Addendum 1. If possession of the Premises with Lessor's Work substantially
completed in accordance with Addendum 1 is not delivered to Lessee within sixty
(60) days after the Delivery Date, Lessee may, at its option, by notice in
writing to Lessor within ten (10) days after the end of said sixty (60) day
period, cancel this Lease, in which event the parties shall be discharged from
all obligations hereunder; provided further, however, that if such written
notice of Lessee is not received by Lessor within said ten (10) day period,
Lessee's right to cancel this Lease hereunder shall terminate and be of no
further force or effect. Except as may be otherwise provided, and regardless of
when the Original Term actually commences, if the Delivery Date has not occurred
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Rent, if any, that Lessee would otherwise have enjoyed shall
run from the Delivery Date and continue for a period equal to the period during
which the Lessee would have otherwise enjoyed under the terms hereof, but minus
any days of delay caused by the acts, changes or omissions of Lessee.
3.4 Lessee's Right to Cancel. Lessee shall have the right to cancel
this Lease by notice to Lessor given on or before the date that is thirty (30)
days after the date of this Lease stating that Lessee desires to cancel this
Lease and pay to Lessor an amount equal to the sums paid by Lessor to third
parties for leasing commissions and Lessor's Work (the "Reimbursements"). Upon
receipt of Lessee's notice of cancellation within the required period, the
parties shall be discharged from all obligations hereunder except Lessee's
obligation to pay to Lessor the Reimbursements; provided further, however, that
if such written notice of Lessee is not received by Lessor within such period,
Lessee's right to cancel this Lease pursuant to this Paragraph 3.4 shall
terminate and be of no further force or effect. Lessee shall pay the
Reimbursements to Lessor within thirty (30) days after receipt of Lessor's
invoice therefor together with reasonable supporting documentation.
4. Rent.
4.1 Base Rent. Lessee shall pay Base Rent and other rent or charges,
as the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it is
due under the terms of this Lease. Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.
4.2 Common Area Operating Expenses. Lessee shall pay to Lessor
during the term hereof, in addition to the Base Rent, Lessee's Shares (as
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as defined
in this Paragraph 4.2(a).
(a) As used in this Lease, "Common Area Operating Expenses"
means collectively, the Industrial Center Common Area Operating Expenses, as
defined below, the Building F Common Area Operating Expenses, as defined below,
and the "Telecommunications Facilities Area Common Area Operating Expenses", as
defined below:
"Industrial Center Common Area Operating Expenses" means the
reasonable costs incurred by Lessor relating to the operation of the Industrial
Center as determined from time to time by Lessor, including, but not limited to
those set forth in clauses (i) through and including clause (ix) below.
"Building F Common Area Operating Expenses" means the reasonable
costs incurred by Lessor relating to the operation of the Building F as
determined from time to time by Lessor, including, but not limited to those set
forth in clauses (i) through and including clause (ix) below.
"Telecommunications Facilities Area Common Area Expenses" means
the reasonable costs incurred by Lessor relating to the operation of the
Telecommunications Facilities Area, as determined from time to time by Lessor,
including, but not limited to those set forth in clauses (i) through and
including clause (ix) below. As of the date of this Lease, "Telecommunications
Facilities Area" means Floors 2, 3 and 4 of Building F. Subject to Paragraph
2.10, Lessor may change, reduce and/or supplement the Telecommunications
Facilities Area of the Industrial Center
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from time to time by notice to Lessee; provided that in such event, Lessee's
Share of Telecommunications Facilities Area Common Area Expenses will not
increase.
(b) Lessor's costs relating to the operation of the
Industrial Center, Building F and The Telecommunications Facilities Area include
but are not limited to:
(i) The operation, repair and maintenance, in neat, clean,
good order and condition, of the following:
(aa) The Common Areas, including parking areas,
loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area lighting
facilities, fences and gates, elevators, roof,
roof HVAC Unit support grids and catwalks, and
Conduit trapeze systems.
(bb) Exterior signs and any tenant directories.
(cc) Fire detection and sprinkler systems.
(ii) The cost of water, gas, electricity and telephone to
service the Common Areas.
(iii) Trash disposal, property management (not to exceed four
percent (4%) of gross revenues) and security services and the costs of any
environmental inspections.
(iv) Reserves set aside for maintenance and repair of Common
Areas, which reserves shall not exceed, on an annual basis, one percent (1%) of
the assessed value of the Industrial Center.
(v) Any increase above the Base Real Property Taxes (as
defined in Paragraph 10.2(b)) for the Building and the Common Areas.
(vi) Any "Insurance Cost Increase" (as defined in Paragraph
8.1).
(vii) The cost of insurance carried by Lessor with respect to
the Common Areas.
(viii) Any deductible portion of an insured loss concerning the
Building or the Common Areas.
(ix) Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.
Notwithstanding anything to the contrary in the definition of
Common Area Operating Expenses, the Common Area Operating Expenses shall not
include the items specified on Addendum 4.
In no event shall the total of Common Area Operating Expenses collected
from all lessees in the Building exceed 100% of the amount expended by Lessor
for Common Area Operating Expenses for the year.
Any capital improvements permitted as operating expenses shall be
amortized over their useful life on a straight-line basis together with interest
on the unamortized balance at 10% per annum.
(c) Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Building or to any other
building in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other building.
However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the
operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Industrial Center.
(d) The inclusion of the improvements, facilities and
services set forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities or to
provide those services unless the Industrial Center already has the same, Lessor
already provides the services, or Lessor has agreed elsewhere in this Lease to
provide the same or some of them.
(e) Lessee's Share of Common Area Operating Expenses shall
be payable by Lessee within thirty (30) days after a reasonably detailed
statement of actual expenses is presented to Lessee by Lessor. At Lessor's
option, however, an amount may be estimated by Lessor from time to time of
Lessee's Share of annual Common Area Operating Expenses and the same shall be
payable monthly or quarterly, as Lessor shall designate, during each 12-month
period of the Lease term, on the same day as the Base Rent is due hereunder.
Lessor shall deliver to Lessee within sixty (60) days after the expiration of
each calendar year a reasonably detailed statement showing Lessee's Share of the
actual Common Area Operating Expenses incurred during the preceding year. If
Lessee's payments under this Paragraph 4.2(e) during said preceding year exceed
Lessee's Share as indicated on said statement, Lessee shall be credited the
amount of such over-payment against Lessee's Share of Common Area Operating
Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(e)
during said preceding year were less than Lessee's Share as indicated on said
statement, Lessee shall pay to Lessor the amount of the deficiency within thirty
(30) days after delivery by Lessor to Lessee of said statement.
(f) Audit Right. In the event any dispute arises between
Lessor and Lessee as to Common Area Operating Expenses, Lessee shall have the
right, upon reasonable notice and at Lessor's offices, to inspect and photocopy,
if desired, Lessor's records concerning the Common Area Operating Expenses of
the Building. If, after such inspection, Lessee continues to dispute Common Area
Operating Expenses, Lessee shall be entitled to retain an independent accountant
or accountancy firm that has a specialty in auditing operating expenses to
conduct an audit; provided that in no event shall Lessee conduct an audit more
than one time in any twelve (12) month period. If any specific issue with
respect to Common Area Operating Expenses is raised by Lessee and the same issue
has been raised by any other lessee and a change with respect to such issue has
been granted to such other lessee or if
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Lessee's audit reveals that Lessor has overcharged Lessee, after Lessor has been
afforded an opportunity to explain any contrary position on the matter to
Lessee's accounting firm (with any disputes being resolved in good faith by the
parties), then Lessee shall receive a credit against the next month's Rent in
the amount of such overcharge. If the audit reveals that Lessee was
undercharged, then, within thirty (30) days after the results of such audit are
made available to Lessee, Lessee shall reimburse Lessor for the amount of such
undercharge, Lessee shall pay the cost of any audits requested by Lessee, unless
any audit reveals that Lessor's determination of the Common Area Operating
Expenses was in error by more than five percent (5%), in which case Lessor shall
pay the cost of such audit. Lessor shall be required to maintain records of the
Common Area Operating Expenses for the three-year period following each Common
Area Operating Expense statement. Except in the event of fraud by Lessor,
failure on the part of Lessee to object to the Common Area Operating Expense
statement within one (1) year after its receipt thereof shall be conclusively
deemed Lessee's approval of such Common Area Operating Expense statement.
5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security for
Lessee's faithful performance of Lessee's obligations under this Lease. If
Lessee fails to pay Base Rent or other rent or charges due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may
use, apply or retain all or any portion of said Security Deposit for the payment
of any amount due Lessor or to reimburse or compensate Lessor for any liability,
cost, expense, loss or damage (including attorneys' fees) which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefore deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Any time the Base Rent
increases during the term of this Lease, Lessee shall, upon written request from
Lessor, deposit additional monies with Lessor as an addition to the Security
Deposit so that the total amount of the Security Deposit shall at all times bear
the same proportion to the then current Base Rent as the initial Security
Deposit bears to the initial Base Rent set forth in Paragraph 1.5. Lessor shall
not be required to keep all or any part of the Security Deposit separate from
its general accounts. Lessor shall, at the expiration or earlier termination of
the term hereof and after Lessee has vacated the Premises, return to Lessee (or,
at Lessor's option, to the last assignee, if any, of Lessee's interest herein),
that portion of the Security Deposit not used or applied by Lessor. Unless
otherwise expressly agreed in writing by Lessor, no part of the Security Deposit
shall be considered to be held in trust, to bear interest or other increment for
its use, or to be prepayment for any monies to be paid by Lessee under this
Lease.
6. Use.
6.1 Permitted Use.
(a) Lessee's Use. Lessee shall use and occupy the Premises
in accordance with all Applicable Requirements only for the Permitted Use set
forth in Paragraph 1.8, or any other legal use which is reasonably comparable
thereto, and for no other purpose. Anything to the contrary contained in this
Lease notwithstanding, in no event shall Lessee's Permitted Use of the Premises
include any activity that could be characterized by the City and County of San
Francisco as an "H Occupancy" as that term, or variations thereon, are used in
the Building and Planning Codes of the City and County of San Francisco.
(b) Modifications to Permitted Use. Lessor hereby agrees to
not unreasonably withhold or delay its consent to any written request by Lessee,
Lessee's assignees or subtenants, and by prospective assignees and subtenants of
Lessee, its assignees and subtenants, for a modification of said Permitted Use,
so long as the same will not impair the structural integrity of the improvements
on the Premises or in the Building or the mechanical or electrical systems
therein, does not conflict with uses by other lessees, is not significantly more
burdensome to the Premises or the Building and the Improvements thereon, and is
otherwise permissible pursuant to this Paragraph 6. If Lessor elects to withhold
such consent, Lessor shall within five (5) business days after such request give
a written notification of same, which notice shall include an explanation of
Lessor's reasonable objections to the change in use.
(c) Offsite Customers. Lessor acknowledges that Lessee's
Permitted Use requires the installation in the Building of certain
communications equipment by certain licensees and customers of Lessee that do
not occupy space in the Industrial Center (collectively, "Offsite Customers") in
order for such Offsite Customers to interconnect with Lessee's Equipment or to
permit Lessee to manage or operate such Offsite Customers' equipment, all in
compliance with Applicable Requirements. Notwithstanding anything to the
contrary contained in this Lease, Lessor approves such use for the limited
purpose of permitting such arrangements as described above; provided that Lessee
shall obtain from any Offsite Customer written acknowledgement that the Offsite
Customer's right to co-locate equipment is subject to this Lease and terminates
on the termination of this Lease for any reason whether pursuant to its terms or
as a matter of law. A copy of the Offsite Customer's acknowledgement shall be
delivered to Lessor, provided that the other terms of any agreement between
Lessee and Lessee's Offsite Customer may be redacted. Lessee's right to
co-locate the equipment of Offsite Customers is a right to site the Offsite
Customer's equipment within the Third Floor Premises and does not include the
right to install equipment, wiring or cable in the Common Area, including,
without limitation, the Common Area Conduit Installation Areas. If Lessor, in
Lessor's sole discretion, approves the use of any Common Area or Common Area
Conduit Installation Area by any Offsite Customer, Lessor may impose on such
Customers such fees or additional charges as Lessor shall determine in Lessor's
sole discretion.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Requirements (as
defined
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in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of
any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and
(iii) the presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable Requirements require that a notice be given to
persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but
upon notice to Lessor and in compliance with all Applicable Requirements, use
any ordinary and customary materials reasonably required to be used by Lessee in
the normal course of the Permitted Use, including, without limitation, lead acid
batteries containing 19 gallons or less of acid per battery, so long as such use
is not a Reportable Use and does not expose the Premises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. In addition, Lessor may (but without any obligation to
do so) condition its consent to any Reportable Use of any Hazardous Substance by
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefor, including but not limited to the installation (and, at
Lessor's option, removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has
reasonable cause to believe, that a Hazardous Substance has come to be located
in, on, under or about the Premises or the Building, other than as previously
consented to by Lessor, Lessee shall immediately give Lessor written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous Substance
including but not limited to all such documents as may be involved in any
Reportable Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary sewer
system).
(c) Indemnification. Lessee shall indemnify, protect, defend
and hold Lessor, its agents, employees, lenders and ground Lessor, if any, and
the Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under Lessee's
control. Lessee's obligations under this Paragraph 6.2(c) shall include, but not
be limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation
(including reasonable consultants' and attorneys' fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement.
6.3 Lessee's Compliance with Requirements. Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner, comply with all
Applicable Requirements, as defined below; except that Lessee shall not be
required to make any Alterations of or improvements to the Premises to so comply
if such Alterations or improvements shall be necessitated by an Applicable
Requirement that is generally applicable to the Industrial Center and is not
triggered by Alterations or improvements that Lessee otherwise desires to make
to the Premises. "Applicable Requirements" means all laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record,
permits, the requirements of any applicable fire insurance underwriter or rating
bureau, Lessor's Utility Infrastructure Plan ("UIP") for the Building and
Industrial Center, and the reasonable recommendations of Lessor's engineers
and/or consultants (to the extent made prior to Lessor's Approval of any Plans,
in accordance with Addendum 5), relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions created by Lessee, and (iii) Lessee's use, generation,
manufacture, production, installation, maintenance, removal, transportation,
storage, spill, or release of any Hazardous Substance), now in effect or which
may hereafter come into effect. Lessee shall, within five (5) days after receipt
of Lessor's written request, provide Lessor with copies of all documents and
information, including but not limited to permits, registrations, manifests,
applications, reports and certificates, evidencing Lessee's compliance with any
Applicable Requirements specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Lessee or the Premises to comply with any
Applicable Requirements. Lessor's UIP is subject to change from time to time;
provided that any Utility Installations that complied with the UIP in effect as
of the date of the Utility Installations shall be deemed a "Conforming Utility
Installation" and Lessee shall not be obligated to remove or modify any
Conforming Utility Installations. Lessee's obligation to comply with Applicable
Requirements shall include the obligation to pay Lessee's proportionate share of
any costs incurred by Lessor to comply with Applicable Requirements affecting
the Industrial Center or the Building caused by or resulting from any conditions
relating to or in connection with Lessee's Permitted Use, based on the ratio of
the square footage of the Premises to the square footage of the premises of all
other lessees of the Industrial Center with a comparable Permitted Use causing
Lessor to have to comply with such Applicable Requirement.
6.4 Inspection; Compliance with Law. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lenders") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee's activities, including but not limited to
Lessee's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises. Lessor shall use its best
efforts to minimize any material interference with Lessee's use, occupancy and
operations at the Premises as a result of such entry and inspections. Lessee
shall be entitled to require that a representative of Lessee accompany any
person performing such entry or inspection in any secured area within the
Premises. The costs and expenses of any such inspections shall be paid by the
party requesting same, unless a Default of this Lease by Lessee or a violation
of Applicable Requirements or a contamination, caused or materially contributed
to by Lessee, is found to exist or to be imminent, or unless the inspection is
requested or ordered by a governmental authority as the result of any such
existing or imminent violation or contamination. In such case,
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Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case may
be, for the costs and expenses of such inspections.
6.5 Lessor Disclosures. Lessor has delivered to Lessee the
environmental assessment reports listed on Exhibit C ("Lessor's Reports").
Except as disclosed in Lessor's Reports, Lessor has no actual knowledge of the
presence of any Hazardous Substance in, under or about the Industrial Center.
Neither Lessee nor Lessor shall cause any Hazardous Material to be brought, kept
or used in or about the Industrial Center by it in violation of any local, state
or federal law.
7. Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Condition),
2.3 (Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically and exclusively
serving the Premises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, boilers, fired or unfired pressure vessels,
fire hose connections if within the Premises, fixtures, interior walls, interior
surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and
skylights, but excluding any items which are the responsibility of Lessor
pursuant to Paragraph 7.2 below. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair.
(b) [Intentionally Deleted.]
(c) If Lessee fails to perform Lessee's obligations under
this Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days'
prior written notice to Lessee (except in the case of an emergency, in which
case no notice shall be required), perform such obligations on Lessee's behalf,
and put the Premises in good order, condition and repair, in accordance with
Paragraph 13.2 below.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject
to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, roof HVAC Unit support grids and catwalks, and Conduit trapeze
systems, exterior roof, fire sprinkler and/or standpipe and hose (if located in
the Common Areas) or other automatic fire extinguishing system including fire
alarm and/or smoke detection systems and equipment, fire hydrants, parking lots,
walkways, parkways, driveways, landscaping, fences, signs and utility systems
serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect which would otherwise
afford Lessee the right to make repairs at Lessor's expense or to terminate this
Lease because of Lessor's failure to keep the Building, Industrial Center or
Common Areas in good order, condition and repair.
7.3 Utility Installations, Trade Fixtures, Alterations.
(a) Definitions; Consent Required.
(i) The term "Utility Installations" is used in this
Lease to refer to all of Lessee's Equipment, as defined in below, that is not
Trade Fixtures, as defined below, including, without limitation, air lines,
power panels, electrical distribution, security, fire protection and suppression
systems, lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises.
(ii) The term "Trade Fixtures" shall mean Lessee's
Equipment that is not attached to the Premises, and, whether or not attached,
Lessee's wiring, cabling, equipment racks, machinery, equipment,
telecommunications systems, and office equipment.
(iii) The term "Lessee's Equipment" means equipment
used exclusively by Lessee for Lessee's Permitted Use, including, without
limitation, Conduit, as defined in Addendum 6, Condensers, as defined in
Addendum 6, batteries, uninterruptible power supply, heating, ventilation and
air conditioning units (individually and collectively, "Lessee's HVAC Unit"), an
ATS, as defined in Addendum 6, and all necessary telecommunications equipment,
including electronic, transmitting, and receiving equipment and supporting
structures, such as fan coils, and one or more DC Systems.
(iv) The term "Alterations" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures.
(v) "Lessee-Owned Alterations and/or Utility
Installations" are defined as Alterations and/or Utility Installations made by
Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make nor cause to be made any
Alterations or Utility Installations in, on, under or about the Premises without
Lessor's prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) that do not
affect the Building systems without Lessor's consent but upon notice to Lessor,
so long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire
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sprinkler or fire detection systems. Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor
shall be presented to Lessor in written form with detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities; (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon; and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and be in compliance with all
Applicable Requirements. Lessee shall promptly upon completion thereof furnish
Lessor with as-built plans and specifications therefor.
(c) Lien Protection. Lessee shall pay when due all claims
for labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount
equal to one and one-half times the amount of such contested lien claim or
demand, Indemnifying Lessor against liability for the same, as required by law
for the holding of the Premises free from the effect of such lien or claim. In
addition, Lessor may require Lessee to pay Lessor's reasonable attorneys' fees
and costs in participating in such action if Lessor shall decide it is to its
best interest to do so.
7.4 Ownership, Removal, Surrender, and Restoration.
(a) Ownership. Subject to Lessor's right to require their
removal and to cause Lessee to become the owner thereof as hereinafter provided
in this Paragraph 7.4, all Alterations and Utility Installations made to the
Premises by Lessee shall be the property of and owned by Lessee, but considered
a part of the Premises.
(b) Removal. Except for Lessee's Conduit, vertical riser
upgrades, chase upgrades, fire suppression systems and ATS, as defined in
Addendum 6 and electrical upgrades (collectively, "Lessee's Must-Stay
Equipment"), and unless otherwise provided in Addendum 5, or otherwise agreed in
writing, Lessor may require that any or all Lessee-Owned Alterations or Utility
Installations be removed by the expiration or earlier termination of this Lease,
notwithstanding that their installation may have been Approved by Lessor. At the
expiration or earlier termination of this Lease, Lessee shall remove Lessee's
Trade Fixtures, Lessee's non-structural Alterations that are not Must-Stay
Equipment, Lessee's HVAC Unit (as defined in Addendum 6), Lessee's Condensers
(as defined in Addendum 6), and any batteries used by Lessee (collectively,
Lessee's "Must-Remove Equipment"). Lessor may require the removal at any time of
all or any part of any Alterations, Lessee's Equipment or Utility Installations
made without obtaining the required consent of Lessor. At the expiration or
earlier termination of this Lease, except for Lessee's Trade Fixtures and
Lessee's Must-Remove Equipment, Lessee shall not remove Lessee's Equipment or
Utility Installations unless Lessor requests such removal in accordance with
this Paragraph 7.4; provided that Lessor shall not request the removal of
Lessee's Must-Stay Equipment.
(c) Surrender/Restoration. Lessee shall surrender the
Premises by the end of the last day of the Lease term or any earlier termination
date, clean and free of debris and in good operating order, condition and state
of repair, ordinary wear and tear, condemnation and casualty damage excepted.
Ordinary wear and tear shall not include any damage or deterioration that would
have been prevented by good maintenance practice or by Lessee performing all of
its obligations under this Lease. Except as otherwise agreed or specified
herein, the Premises, as surrendered, shall include the Alterations and Utility
Installations. The obligation of Lessee shall include the repair of any damage
occasioned by the installation, maintenance or removal of Lessee's Trade
Fixtures, Lessor's Equipment, and Lessee-Owned Alterations and Utility
Installations, as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
ground water contaminated by Lessee, all as may then be required by Applicable
Requirements. Lessee's Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT OF PREMIUM INCREASES.
(a) As used herein, the term "Insurance Cost Increase" is
defined as any increase in the actual cost of the insurance applicable to the
Building and required to be carried by Lessor pursuant to Paragraphs 8.2(b),
8.3(a) and 8.3(b), ("Required Insurance"), over and above the Base Premium, as
hereinafter defined, calculated on an annual basis. "Insurance Cost Increase"
shall include, but not be limited to, requirements of the holder of a mortgage
or deed of trust covering the Premises, increased valuation of the Premises,
and/or a general premium rate increase. The term "Insurance Cost Increase" shall
not, however, include any premium increases resulting from the nature of the
occupancy of any other lessee of the Building. The "Base Premium" shall be
insurance costs incurred or allocable to calendar year 1999.
(b) Lessee shall pay any Insurance Cost Increase to Lessor
pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit
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coverage in an amount not less than $1,000,000 per occurrence with an
"Additional Insured-Managers or Lessors of Premises" endorsement and contain the
"Amendment of the Pollution Exclusion" endorsement for damage caused by heat,
smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "insured contract"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.
(b) Carried by Lessor. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be named
as an additional insured therein.
8.3 Property Insurance-Building, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep
in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to any Lender(s), insuring against loss
or damage to the Premises. Such insurance shall be for full replacement cost, as
the same shall exist from time to time, or the amount required by any Lender(s),
but in no event more than the commercially reasonable and available insurable
value thereof if, by reason of the unique nature or age of the improvements
involved, such latter amount is less than full replacement cost. Lessee-Owned
Alterations and Utility Installations, Trade Fixtures and Lessee's personal
property shall be insured by Lessee pursuant to Paragraph 8.4. If the coverage
is available and commercially appropriate, in Lessor's sole judgment, Lessor's
policy or policies shall insure against all risks of direct physical loss or
damage (including the perils of flood and/or earthquake), including coverage for
any additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Building required
to be demolished or removed by reason of the enforcement of any building,
zoning, safety or land use laws as the result of a covered loss, but not
including plate glass insurance. Said policy or policies shall also contain an
agreed valuation provision in lieu of any co-insurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located.
(b) Rental Value. Lessor shall also obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and any Lender(s), insuring the loss of the full rental
and other charges payable by all Lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
Real Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating Expenses
shall include any deductible amount in the event of such loss.
(c) Adjacent Premises. Lessee shall pay for any increase in
the premiums for the property insurance of the Building and for the Common Areas
or other buildings in the Industrial Center if said increase is caused by
Lessee's acts, omissions, use or occupancy of the Premises.
(d) Lessee's Improvements. Since Lessor is the Insuring
Party, Lessor shall not be required to insure Lessee-Owned Alterations and
Utility Installations unless the item in question has become the property of
Lessor under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures and Lessee-Owned
Alterations and Utility Installations in, on, or about the Premises similar in
coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a).
Such insurance shall be full replacement cost coverage with a deductible not to
exceed $25,000 per occurrence. The proceeds from any such insurance shall be
used by Lessee for the replacement of personal property and the restoration of
Trade Fixtures and Lessee-Owned Alterations and Utility Installations. Upon
request from Lessor, Lessee shall provide Lessor with written evidence that such
insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other rating as may be reasonably required by a
Lender, as set forth in the most current issue of "Best's Insurance Guide."
Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in this Paragraph 8. Lessee shall cause to be
delivered to Lessor, within seven (7) days after the earlier of the Early
Possession Date or the Commencement Date, certified copies of, or certificates
evidencing the existence and amounts of, the insurance required under Paragraphs
8.2(a) and 8.4. Policies shall not be cancelled or non-renewed except after
thirty (30) days' prior written notice to Lessor. Lessee shall at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence
of renewals or "insurance binders" evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages (whether in contract or in tort) against
the other, for loss or damage to their property arising out of or incident to
the perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.
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8.7(A) Indemnity. Except for Lessor's negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
Lessor and its agents, Lessor's master or ground Lessor, partners and Lenders,
from and against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, reasonable attorneys' and consultants'
fees, expenses and/or liabilities arising out of, involving, or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or negligence of Lessee, its agents, contractors, employees or
invitees, and out of any Default by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment. In
case any action or proceeding be brought against Lessor by reason of any of the
foregoing matters, Lessee upon notice from Lessor shall defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor need not have first paid any such
claim in order to be so indemnified.
8.7(B) Except for Lessee's negligence and/or breach of express
warranties, Lessor shall indemnify, protect, defend and hold harmless, Lessee
and its agents, partners, shareholders, officers, directors or members, from and
against any and all claims, damages, costs, liens, judgments, penalties, loss of
permits, reasonable attorneys' and consultants' fees, expenses and/or
liabilities arising solely out of any material act, omission or neglect of
Lessor, its agents, contractors, or employees under this Lease. The foregoing
shall include, but not be limited to, the defense or pursuit of any claim or any
action or proceeding involved therein, and whether or not litigated and/or
reduced to judgment. In case any action or proceeding be brought against Lessee
by reason of any of the foregoing matters, Lessor upon notice from Lessee shall
defend the same at Lessor's expense by counsel reasonably satisfactory to Lessee
and Lessee shall cooperate with Lessor in such defense. Lessee need not have
first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not, unless
the same results from the gross negligence or willful misconduct of Lessor, its
employees, contractors, or agents. Lessor shall not be liable for any damages
arising from any act or neglect of any other lessee of Lessor nor from the
failure by Lessor to enforce the provisions of any other Lease in the Industrial
Center. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(A) "Premises Partial Damage" shall mean damage or
destruction to the Premises, other than Lessee-Owned Alterations and Utility
Installations, the uninsured repair cost of which damage or destruction,
including deductibles is $2,000,000 or less, or the insured repair cost of which
damage or destruction is less than fifty percent (50%) of the then Replacement
Cost (as defined in Paragraph 9.1(d)) of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction.
(B) "Premises Total Destruction" shall mean damage or
destruction to the Premises, other than Lessee-Owned Alterations and Utility
Installations, the uninsured repair cost of which damage or destruction,
including deductibles is more than $2,000,000, or the insured repair cost of
which damage or destruction is fifty percent (50%) or more of the then
Replacement Cost of the Premises (excluding Lessee-Owned Alterations and Utility
Installations and Trade Fixtures), immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building, the uninsured repair cost of which damage or destruction, including
deductibles is more than $2,000,000, or the insured repair cost of which damage
or destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building) of the Building shall, at the option of Lessor, be
deemed to be Premises Total Destruction.
(C) "Insured Loss" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a) irrespective of any deductible amounts
or coverage limits involved, other than damage due to an earthquake, whether or
not Lessor has then acquired earthquake coverage, in which event only the amount
of damage for which proceeds are actually available shall be deemed an insured
loss.
(D) "Replacement Cost" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(E) "Hazardous Substance Condition" shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on,
or under the Premises.
9.2 Premises Partial Damage--Insured Loss. If Premises Partial
Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations
and Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. Lessor shall, to the extent necessary to
complete such repair, apply the proceeds of any insurance to the costs thereof.
In the event, however, that there is a shortage of insurance proceeds and such
shortage is due to the fact that, by reason of the unique nature of the
improvements in the Premises, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the
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funds to cover same, or adequate assurance thereof, within thirty (30) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said thirty (30)
day period, Lessor shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect. If Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within thirty (30) days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within such thirty (30) day
period, and if Lessor does not so elect to restore and repair, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.
9.3 Partial Damage--Uninsured Loss. If Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within thirty (30) days after
the receipt of such notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage totally at Lessee's expense and
without reimbursement from Lessor. Lessee shall provide Lessor with the required
funds or satisfactory assurance thereof within thirty (30) days following such
commitment from Lessee. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the funds or assurance thereof within the times specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.
9.4 Total Destruction. Notwithstanding any other provision hereof,
if Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6 and Paragraph 9.9.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease, then Lessee may preserve this Lease by (a) exercising such
option, and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier
of (i) the date which is thirty (30) days after Lessee's receipt of Lessor's
written notice purporting to terminate this Lease, or (ii) the day prior to the
date upon which such option expires. If Lessee duly exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor's expense
repair such damage as soon as reasonably possible and this Lease shall continue
in full force and effect. If Lessee fails to exercise such option and provide
such funds or assurance during such period, then this Lease shall terminate as
of the date set forth in the first sentence of this Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(A) In the event of (i) Premises Partial Damage or (ii)
Hazardous Substance Condition for which Lessee is not legally responsible, the
Base Rent, Common Area Operating Expenses and other charges, if any, payable by
Lessee hereunder for the period during which such damage or condition, its
repair, remediation or restoration continues, shall be abated in proportion to
the degree to which Lessee's use of the Premises is impaired, but not in excess
of proceeds from insurance required to be carried under Paragraph 8.3(b). Except
for abatement of Base Rent, Common Area Operating Expenses and other charges, if
any, as aforesaid, all other obligations of Lessee hereunder shall be performed
by Lessee, and Lessee shall have no claim against Lessor for any damage suffered
by reason of any such damage, destruction, repair, remediation or restoration.
(B) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, or such repair and
restoration is not substantially complete within two hundred seventy (270) days
after the date such obligation shall accrue. Lessee may, at any time prior to
the commencement of such repair or restoration, or at any time after the lapse
of such 270th day if Lessor begins such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to Lessor
and such Lenders and such repair or restoration is not commenced within thirty
(30) days after receipt of such notice, this Lease shall terminate as of the
date specified in said notice. If Lessor or a Lender commences the repair or
restoration of the Premises within thirty (30) days after the receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as used
in this Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever occurs first.
9.7 Hazardous Substance Conditions. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by
Applicable Requirements and this Lease shall continue in full force and effect,
but subject to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor
may at Lessor's option either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) if the estimated cost to investigate and remediate such condition exceeds
twenty-four (24) times the then monthly Base Rent or $500,000 whichever is
greater, give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such notice; provided that Lessor shall not terminate this Lease in
a discriminatory manner.
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In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twenty-four (24) times the ten monthly Base Rent or
$500,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.
9.8 Termination--Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 Waiver of Statutes. Lessor and Lessee agree that the terms of
this Lease shall govern the effect of any damage to or destruction of the
Premises and the Building with respect to the termination of this Lease and
hereby waive the provisions of any present or future statute to the extent it is
inconsistent herewith.
10. Real Property Taxes
10.1 Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Industrial Center, and except as
otherwise provided in Paragraph 10.3, any increases in such amounts over the
Base Real Property Taxes shall be included in the calculation of Common Area
Operating Expenses in accordance with the provisions of Paragraph 4.2.
10.2 Real Property Tax Definitions.
(A) As used herein, the term "Real Property Taxes" shall
include any form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed upon the Industrial Center by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage, or other improvement
district thereof, levied against any legal or equitable interest of Lessor in
the Industrial Center any portion thereof, Lessor's right to rent or other
income therefrom, and/or Lessor's business of leasing the Premises. The term
"Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring, or
changes in Applicable Requirements taking effect, during the term of this Lease,
including but not limited to a change in the ownership of the Industrial Center
or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties. provided that the increases, if any, in Real Property Taxes due to
a change in ownership shall not be included in the Common Area Operating
Expenses during the first years of the Term.
(B) As used herein, the term "Base Real Property Taxes"
shall be the amount of Real Property Taxes, which are assessed against the
Premises, Building or Common Areas in the calendar year 1999. In calculating
Real Property Taxes for any calendar year, the Real Property Taxes for any real
estate tax year shall be included in the calculation of Real Property Taxes for
such calendar year based upon the number of days which such calendar year and
tax year have in common. Real Property Taxes applicable to the Industrial Center
that are not specifically allocated shall be prorated among Building A-F based
on the ratio of the gross revenue of a building to the total gross revenue of
all buildings in the Industrial Center.
10.3 Additional Improvements. Common Area Operating Expenses shall
not include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.
10.4 Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor's reasonable determination
thereof, in good faith, shall be conclusive.
10.5 Lessee's Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, Lessee's Equipment and all personal
property of Lessee contained in the Premises or stored within the Industrial
Center. When possible, Lessee shall cause its Lessee-Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, Lessee's Equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor. If any of Lessee's said property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee's property within ten (10) days after receipt of a written statement
setting forth the taxes applicable to Lessee's property.
10.6 Real Estate Tax Reduction. If the Real Property Taxes for any
tax year shall be reduced, whether as a result of a reduction in the tax rate or
an appeal by Lessor of the Real Property Tax assessment, Lessor shall credit to
Lessee, Lessee's proportionate share of such reduction (but not to reduce
Lessee's proportionate share of Base Real Property Taxes) minus the
proportionate costs of such appeal to Lessor, against Lessee's excess Real
Property Taxes. If any reduction shall occur after the expiration of the Lease
Term but shall apply to periods prior to such expiration, Lessee's proportionate
share of such reduction shall be promptly refunded to Lessee.
11. Utilities. Lessee shall pay directly for all utilities and services
supplied to the Premises including, but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon.
Lessee's electrical service shall be separately metered. If any such utilities
or services are not separately metered to the Premises or separately billed to
the Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined
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by Lessor of all such charges jointly metered or billed with other premises in
the Building in the manner and within the time periods set forth in Paragraph
4.2(e). Anything to the contrary contained in this Lease notwithstanding, but
subject to Lessor's right to supply electricity under Paragraph 51, Lessee shall
be solely responsible for obtaining directly from the supplier therefor any and
all utility services necessary or desirable for Lessee's Permitted Use.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(A) Subject to Paragraph 12.4, Lessee shall not voluntarily
or by operation of law assign, transfer, mortgage or otherwise transfer or
encumber (collectively, "assign") or sublet all or any part of Lessee's interest
in this Lease or in the Premises without Lessor's prior written consent given
under and subject to the terms of Paragraph 36. Lessee's co-location agreements
permitted pursuant to Paragraph 6.1(c) do not constitute subleases.
(B) In lieu of approving Lessee's request to assign or
sublet the Premises, Lessor shall have the right by notice to Lessee given
within ten (10) business days after Lessee's request, elect to sublet or take an
assignment of the portion of the Premises Lessee proposes to assign or sublet,
or to terminate this Lease as to such portion of the Premises, with a
proportionate reduction in Base Rent and Lessee's Shares. If Lessor does not
elect either of the foregoing, then Lessee shall be entitled to enter into the
previously proposed assignment or sublease subject to Lessor's right to approve
the transferee; provided that, in accordance with Paragraph 12.5. Lessee shall
pay to Lessor fifty percent (50%) of any other consideration received by Lessee
in excess of the Base Rent and Common Area Operating Expenses payable hereunder,
after deduction from such consideration of the costs of tenant improvements made
by Lessee in connection with such sublease, amortized over the useful life of
such improvements, and any other reasonable inducements to the sublessee, out of
pocket attorneys' fees, and a reasonable brokerage commission incurred by
Lessee.
(C) [Intentionally Deleted.]
(D) An assignment or subletting of Lessee's interest in this
Lease without Lessor's required specific prior written consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1, or a
non-curable Default without the necessity of any notice and grace period. If
Lessor elects to treat such unconsented to assignment or subletting as a
non-curable Default, Lessor shall have the right to terminate this Lease.
(E) Lessee's remedy for any breach of this Paragraph 12.1 by
Lessor shall be limited to compensatory damage and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(A) Regardless of Lessor's consent, any assignment or
subletting shall not (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(B) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default by Lessee of
any of the terms, covenants or conditions of this Lease.
(C) The consent of Lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by the
assignee or sublessee. However, Lessor may consent to subsequent subletting and
assignments of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable under this Lease or the sublease and
without obtaining their consent, and such action shall not relieve such persons
from liability under this Lease or the sublease.
(D) In the event of any Default of Lessee's obligation under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of the Lessee's obligations under this
Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.
(E) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a non-refundable deposit of $1,000 as reasonable consideration for
Lessor's considering and processing the request for consent. Lessee agrees to
provide Lessor with such other or additional information and/or documentation as
may be reasonably requested by Lessor.
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(F) Any assignee of, or sublessee under, this Lease shall,
by reason of accepting such assignment or entering into such sublease, be
deemed, for the benefit of Lessor, to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be
observed or performed by Lessee during the term of said assignment or sublease,
other than such obligations as are contrary to or inconsistent with provisions
of an assignment or sublease to which Lessor has specifically consented in
writing.
(G)
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(A) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may
collect such rent and income and apply same toward Lessee's obligations under
this Lease; provided, however, that until a Default (as defined in Paragraph
13.1) shall occur in the performance of Lessee's obligations under this Lease,
Lessee may, except as otherwise provided in this Lease, receive, collect and
enjoy the rents accruing under such sublease. Lessor shall not, by reason of the
foregoing provision or any other assignment of such sublease to Lessor, nor by
reason of the collection of the rents from a sublessee, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee under such sublease. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Default exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor the rents and other charges due and to become
due under the sublease. Sublessee shall rely upon any such statement and request
from Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Default has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.
(B) In the event of a Default by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligations to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents or
security deposit paid by such sublessee to such sublessor or for any other prior
defaults or breaches of such sublessor under such sublease.
(C) Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein, if
Lessor's consent would be required to permit Lessee to do such matter or thing
under the Lease.
(D) No sublessee under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without Lessor's prior
written consent.
(E) Lessor shall deliver a copy of any notice of Default by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
12.4 Assignment; Subletting to Affiliates. Lessee shall have the
right, without first obtaining the consent of Lessor and without payment of fees
or charges of any kind, to assign this Lease or sublease the Premises to (a) any
entity resulting from a merger or consolidation of Lessee or Lessee's parent
company with any organization; (b) any entity purchasing substantially all of
the stock or assets of Lessee or Lessee's parent company; (c) any entity
succeeding to the business and assets of Lessee or Lessee's parent company; or
(d) any Affiliate (as hereinafter defined) of Lessee (and any such Affiliate
shall have the same rights as Lessee under this Paragraph 12). So long as
Lessee's stock is publicly traded or in the event of an initial public offering
of stock on a national stock exchange, no change of stock ownership or control
of Lessee shall constitute an assignment hereunder. For purposes of this Lease
"Affiliate" shall mean, with respect to a Person (as hereinafter defined), any
other Person that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with such Person. The
term "control" shall mean the direct or indirect beneficial ownership of at
least fifty percent (50%) of the voting stock or interest in the income of such
Person, or such other relationship as, in fact, constitutes actual control. The
term "Person" shall mean an individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
In connection with any sublease or assignment to an Affiliate, Lessee
shall deliver to Lessor fifteen (15) days written notice containing the name of
the Affiliate and the manner in which it is affiliated with Lessee and the
commencement and termination dates of the Sublease.
12.5 Bonus Value. In the case of any assignment other than to an
Affiliate, after deduction of the costs of tenant improvement and any other
reasonable inducements to the assignee, out of pocket attorneys' fees, and a
reasonable brokerage commission incurred by Lessee, Lessee shall pay to Lessor,
as and when received, fifty percent (50%) of any transfer or assignment fee,
purchase price or other consideration received by Lessee in connection with the
assignment attributable to the value of this Lease, in excess of the Rent
otherwise payable under this Lease.
13. Default; Remedies.
13.1 Default. A "Default" by Lessee is defined as a failure by Lessee
to observe, comply with or perform any of the terms, covenants, conditions or
rules applicable to Lessee under this Lease and the failure by Lessee to cure
such Default prior to the expiration of the applicable grace period, and shall
entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:
(A) The abandonment of the Premises, combined with
nonpayment of Rent.
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(B) The failure by Lessee (i) to make any payment of Base
Rent, Lessee's Share of Common Area Operating Expenses when due, (ii) to make
any other monetary payment required to be made by Lessee hereunder within five
(5) business days following written notice thereof, (iii) to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of ten (10) days following
written notice thereof by or on behalf of Lessor to Lessee.
(C) Except as expressly otherwise provided in this Lease,
the failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (ii) [Intentionally Deleted],
(iii) the rescission of an unauthorized assignment or subletting per Paragraph
12.1, (iv) a Tenancy Statement per Paragraphs 16 or 30, (v) the subordination or
non-subordination of this Lease per Paragraph 30, (vi) [Intentionally Deleted],
(vii) the execution of any document requested under Paragraph 41 (easements), or
(viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice by or on behalf
of Lessor to Lessee.
(D) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
39 hereof that are to be observed, complied with or performed by Lessee, other
than those described in Subparagraphs 13.1(a), (b) or (c), above including,
without limitation, the failure to comply with Applicable Requirements per
Paragraph 6.3, where such Default continues for a period of thirty (30) days
after written notice thereof by or on behalf of Lessor to Lessee; provided,
however, that if the nature of Lessee's Default is such that more than thirty
(30) days are reasonably required for its cure, then it shall not be deemed to
be a Default of this Lease by Lessee if Lessee commences such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
(E) The occurrence of any of the following events: (i) the
making by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within ninety (90) days; (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within ninety (90) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's Interest in this Lease, where such
seizure is not discharged within sixty (60) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
Applicable Requirement, such provision shall be of no force or effect, and shall
not affect the validity of the remaining provisions.
(F) The discovery by Lessor that any financial statement of
Lessee, given to Lessor by Lessee, was materially false.
(G)
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within the period specified herein for
the cure thereof, or if not specified, then within thirty (30) days after
written notice to Lessee (or in case of an emergency, without notice), Lessor
may at its option (but without obligation to do so), perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check. In the event of a Default
under this Lease by Lessee (as defined in Paragraph 13.1), with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Default, Lessor may:
(A) Terminate Lessee's right to possession of the Premises
by any lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the Premises to
Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the
worth at the time of the award of the unpaid rent which had been earned at the
time of termination; (ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default of this Lease
shall not waive Lessor's right to recover damages under this Paragraph 13.2. If
termination of this Lease is obtained through the provisional remedy of unlawful
detainer, Lessor shall have the right to recover in such proceeding the unpaid
rent and damages as are recoverable therein, or Lessor may reserve the right to
recover all or any part thereof in a separate suit for such rent and/or damages.
If a notice and grace period required under Subparagraph 13.1(b), (c) or (d) was
not previously given, a notice to pay rent or quit, or to perform or quit, as
the case may be, given to Lessee under any statute authorizing the forfeiture of
Leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by Subparagraph 13.1(b), (c) or (d). In such
case, the applicable grace period under the unlawful detainer statute shall run
concurrently after the one such statutory notice, and the failure of Lessee to
cure the Default within the greater of the two (2) such grace periods shall
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constitute both an unlawful detainer and a Default under this Lease entitling
Lessor to the remedies provided for in this Lease and/or by said statute.
(B) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Default and recover the rent as it become due, provided Lessee has the right to
sublet or assign, subject only to reasonable limitations. Lessor and Lessee
agree that the limitations on assignment and subletting in this Lease are
reasonable. Acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver to protect the Lessor's interest under this
Lease, shall not constitute a termination of the Lessee's right to possession.
(C) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
(D) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Inducement Recapture in Event of Default. Any agreement by
Lessor for free or abated rent or other charges applicable to the Premises, or
for the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Default (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and the unamortized portion of any rent, other
charge, bonus, inducement or consideration theretofore abated, given or paid by
Lessor under such an Inducement Provision shall be immediately due and payable
by Lessee to Lessor, and recoverable by Lessor, as additional rent due under
this Lease, unless said Default is cured by Lessee within the time period
required by the Lease. The acceptance by Lessor of rent or the cure of the
Default which initiated the operation of this Paragraph 13.3 shall not be deemed
a waiver by Lessor of the provisions of this Paragraph 13.3 unless specifically
so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground Lease, mortgage or deed of trust covering the
Premises. Accordingly, if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to four percent (4%) of such
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee's Default with respect to such overdue amount, nor prevent
Lessor from exercising any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding
Paragraph 4.1 or any other provision of this Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for parking, is taken by condemnation, Lessee may,
at Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or, in the absence of
such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced in
the same proportion as the rentable floor area of the Premises taken bears to
the total rentable floor area of the Premises. If such taking renders all or a
material portion of the Premises unusable, even if not part of the Premises,
Base Rent shall be abated in proportion to the degree to which Lessee's use of
the Premises is impaired. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution of value of the Leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation, separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above Lessee's Share of
the legal and other expenses incurred by Lessor in the condemnation matter,
repair any damage to the Premises caused by such condemnation authority. Lessee
shall be responsible for the payment of any amount in excess of such net
severance damages required to complete such repair.
15. Brokers' Fees.
15.1 Procuring Cause. The Broker(s) named in Paragraph 1.10 is/are
the procuring cause of this Lease, and shall be paid a commission by Lessor in
accordance with Lessor's separate written agreement with Lessor's Broker.
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15.2 Representations and Warranties. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder's or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.
16. Tenancy and Financial Statements.
16.1 Tenancy Statement. Each party (as "Responding Party") shall
within ten (10) business days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party a
statement in writing in a form similar to the form of Tenant Estoppel attached
hereto as Exhibit D, plus such additional information, confirmation and/or
factual statements as may be reasonably requested by the Requesting Party, or
may be required to render such information, confirmation or factual statements
true.
16.2 Financial Statement. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors who are not publicly traded companies shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon
the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be "Rent".
22. No Prior or Other Agreements. This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective. Lessor and Lessee
each represents and warrants to the other that it has made, and is relying
solely upon, its own investigation as to the nature, quality, character and
financial responsibility of the other Party to this Lease and as to the nature,
quality and character of the Premises.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by certified or registered mail or
U.S. Postal Service Express Mail or other overnight courier that guarantees next
day delivery, with postage prepaid, or by facsimile transmission during normal
business hours, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notice purposes. Either Party may be written notice to the other specify a
different address for notice purposes, except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
the purpose of mailing or delivering notices to Lessee. A copy of all notices
required or permitted to be given to Lessor hereunder shall be concurrently
transmitted to such party or parties at such addresses as Lessor may from time
to time hereafter designate by written notice to Lessee.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card. Notices delivered by the United States Express Mail or
overnight courier that guarantees next day delivery shall be deemed given on the
next business day after delivery of the same to the United States Postal Service
or courier. If any notice is transmitted by facsimile transmission or similar
means, the same shall be deemed served or delivered upon telephone or facsimile
confirmation of receipt of the transmission thereof, if given during normal
business hours, or on the next business day thereafter, if given outside of
normal business hours, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday or a Sunday or a legal holiday, it shall be
deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant
or condition hereof, or of any subsequent Default by Lessee of the same or any
other term, covenant or condition hereof. Lessor's consent to, or approval of,
any such act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of
this Lease requiring such consent. Regardless of Lessor's knowledge of a Default
at the time of accepting rent, the acceptance of rent by
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Lessor shall not be a waiver of any Default by Lessee of any provision hereof.
Any payment given Lessor by Lessee may be accepted by Lessor on account of
moneys or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground Lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not: (i)
be liable for any act or omission or any prior Lessor or with respect to events
occurring prior to acquisition of ownership, (ii) be subject to any offsets or
defenses which Lessee might have against any prior Lessor, or (iii) be bound by
prepayment of more than one month's rent, unless such Lender agreed to such
prepayment.
30.3 Non-Disturbance. Concurrently herewith, Lessor, Lessee and
Lessor's lender shall enter into a Subordination, Attornment and Non-Disturbance
Agreement in the form attached hereto as Exhibit E. With respect to Security
Devices entered into by Lessor after the execution of this Lease, Lessee's
subordination of this Lease shall be subject to receiving assurance (a
"non-disturbance agreement") from the Lender that Lessee's possession and this
Lease, including any options to extend the term hereof, will not be disturbed so
long as Lessee is not in Default hereof and attorns to the record owner of the
Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorneys' Fees. If any Party brings an action or proceeding to enforce
the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter
defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys' fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorneys' fee award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. Lessor shall
be entitled to reasonable attorneys' fees, costs and expenses incurred in
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or Lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor shall use its best efforts to minimize any
interference with Lessee's use and occupancy of the Premises or business
operations as a result of such entry which efforts shall include coordination
with Lessee and appropriate arrangements for alternative and un-interrupted
power supply. Lessee may require Lessor or its agents to be accompanied by a
representative of Lessee as a condition of granting Lessor access to any secured
area within the Premises. Lessor may at any time place on or about the Premises
or Building any ordinary "For Sale" signs and Lessor may at any time during the
last one hundred
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eighty (180) days of the term hereof place on or about the Premises any ordinary
"For Lease" signs. All such activities of Lessor shall be without abatement of
rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install such signs as are reasonably required to advertise Lessee's own business
so long as such signs are in a location designated by Lessor and comply with
Applicable Requirements and the signage criteria established for the Industrial
Center by Lessor. The installation of any sign on the Premises by or for Lessee
shall be subject to the provisions of Paragraph 7 (Maintenance, Repairs, Utility
Installations, Trade Fixtures and Alterations). Unless otherwise expressly
agreed herein, Lessor reserves all rights to the use of the roof of the
Building, and the right to install advertising signs on the Building, including
the roof, which do not unreasonably interfere with the conduct of Lessee's
business; Lessor shall be entitled to all revenues from such advertising signs.
Lessor shall provide a tenant directory on the west wall of Building F near Paul
Avenue which shall include Lessee's name and location.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Default by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such interest.
36. Consents.
(A) Except for Paragraph 33 hereof (Auctions) or as
otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be
unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses
(including but not limited to architects', attorneys', engineers' and other
consultants' fees) incurred in the consideration of, or response to, a request
by Lessee for any Lessor consent pertaining to this Lease or the Premises,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee to Lessor upon
receipt of an invoice and supporting documentation therefor. Lessor's consent to
any act, assignment of this Lease or subletting of the Premises by Lessee shall
not constitute an acknowledgment that no Default by Lessee of this Lease exists,
nor shall such consent be deemed a waiver of any then existing Default, except
as may be otherwise specifically stated in writing by Lessor at the time of such
consent.
(B) All conditions to Lessor's consent authorized by this
Lease are acknowledged by Lessee as being reasonable. The failure to specify
herein any particular condition to Lessor's consent shall not preclude the
impositions by Lessor at the time of consent of such further or other conditions
as are then reasonable with reference to the particular matter for which consent
is being given.
37. Guarantor. [Intentionally Deleted]
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises
and the performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, Lessee shall have
quiet possession of the Premises for the entire term hereof subject to all of
the provisions of this Lease.
39. Rules and Regulations. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees; provided
that Lessor shall not enforce any rule or regulation in a discriminatory manner.
40. Security Measures. Lessor shall install exterior security cameras at the
Building, and automated pedestrian and vehicle gates at the entrance to the
Industrial Center. Lessee hereby acknowledges that the Rent payable to Lessor
hereunder includes the cost of guard service 24 hours a day, 7 days a week
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
Lessor shall not be liable to Lessee, Lessee's employees, invitees or any other
person or entity for (and Lessee waives all claims against them arising by
reason of) direct or consequential damages, including, without limitation,
damage or injury to person or property or loss of life, resulting from the
presence, admission to or exclusion from the Building or Industrial Center of
any person, and Lessee acknowledges that Lessor's provision of security guards
or other security services for the Building or Industrial Center shall not be
construed as Lessor's acceptance of any responsibility or liability for the
security of persons or property in, on or about the Premises, the Building or
the Industrial Center. Lessee may install Lessee's own security provided that
Lessee gives to Lessor all info Lessor and emergency personnel access to
41. Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, Common
Area Conduit Installation Areas, and dedications that Lessor deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such
easements, rights of way, Common Area Conduit Installation Areas, dedications,
maps and restrictions do not reasonably interfere with the use of the Premises
by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
42. Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said
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Party shall be entitled to recover such sum or so much thereof as it was not
legally required to pay under the provisions of this Lease, together with
interest thereon at the rate of ten percent (10%) per annum for the period
beginning on the date of such payment and ending on the date of such recovery.
43. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
44. Offer. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to Lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
45. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
46. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
47. Loading Dock. Lessee shall have the non-exclusive right to use any of
the four (4) loading docks at the Building without any special charge, provided
that such use shall be subject to Lessor's reasonable rules and regulations
therefor, in effect from time to time.
48. Non-Interference.
48.1 Interference Defined. As used in this Lease, "Interference"
means individually or collectively, (a) materially interfering with access to
Conduits, or Lessee's Equipment or the equipment of Lessor or other lessees of
the Building or Industrial Center, or Lessee's Utility Installations or the
Utility Installations of Lessor or other lessees of the Building or Industrial
Center, (b) cutting, slicing, damaging, moving, or otherwise physically
affecting use of or transmission through the Conduits, and (c) material signal
fading, attenuation, non-intermittent disparities and propagation anomalies
(individually and collectively, clauses (a), (b) and (c) are referred to as
"Interference").
48.2 Lessee's Permitted Use. Lessee's Permitted Use shall not cause
interference with any other telephone, data, radio or television transmitting or
receiving equipment whether or not located in the Industrial Center. Lessee, at
Lessee's sole cost and expense, shall promptly investigate and resolve any
complaint of Interference, which may include establishing that Lessee is not the
source of the Interference. Lessor acknowledges that in the event of any
Interference by Lessee with equipment installed by Lessor or other lessees of
the Industrial Center after the installation by Lessee of the equipment, or the
commencement of the activity, alleged to be creating Interference, Lessee's sole
obligation shall be to attempt to cure the Interference without material cost to
Lessee, and that Lessee's prior equipment or activity may continue
notwithstanding the Interference so caused.
48.3 Notice of Activities. Prior to Lessor or Lessee carrying out or
permitting others to carry out, any construction, maintenance or repair
activities that could reasonably be expected to affect Conduits in the
Industrial Center, Lessee's Equipment or equipment of Lessor or other lessees of
the Industrial Center, or Utility Installations (whether of Lessee or other
lessees) in the Industrial Center, the party proposing to carry out or permit
such activities (the "Acting Party") shall provide at least three (3) business
days' prior written notice to the other party (the "Noticed Party") of such
work, including the date, time and location in which such work will take place.
Provided that the Noticed Party shall not delay the proposed work, the Noticed
Party shall have the right to monitor and inspect the Acting Party's work at the
Noticed Party's own risk and expense. The Acting Party shall exercise due care
in carrying out such work. The Acting Party shall notify its contractors of the
location and sensitivity of the Conduits and of obligation to coordinate the
work with the Noticed Party to avoid causing an Interference. Lessor shall not
install, and shall not approve the installation by any other person or entity
(to the extent that Lessor has the right to approve such installation), of any
equipment, fixtures, structures, improvements or other items within the
Industrial Center that are actually known to Lessor to cause Interference with
Lessee's Equipment. In connection therewith, if Lessor notifies Lessee of the
proposed installation of equipment, fixtures, structures or improvements Lessee
shall promptly notify Lessor of any anticipated Interference that would be
caused by such installation. If Lessee fails to respond to Lessor's request
within ten (10) business days, Lessor's proposed installation shall be deemed
approved by Lessee.
48.4 Remedies for Interference. Subject to Paragraph 48.2, the Acting
Party shall immediately take all necessary measures, at the Acting Party's sole
cost and expense, to eliminate any Interference of which the Acting Party is
notified or is otherwise actually aware. Such steps include hiring agents to
work extended hours until the Interference is eliminated. If the Acting Party
does not promptly eliminate the Interference after notice, the Noticed Party
shall have the right but not the obligation to (a) take all reasonable steps to
eliminate the Interference, and the Acting Party shall pay such costs thereof to
the Noticed Party within ten (10) business days after receipt of an invoice
therefor, or (b) obtain injunctive relief enjoining or restraining whatever
Interference may have occurred or be occurring, without posting a bond or other
security and without proving damages, it being expressly recognized by Lessor
and Lessee that any Interference will cause irreparable harm to the party
experiencing such Interference which cannot be fully compensable by damages. In
no event shall an Acting Party have any claim for damages against a Noticed
Party as a result of an Interference.
48.5 Restriction of Access to Common Area Utility Rooms. Lessor shall
install locks on all Common Area Utility Rooms shown on the UIP and shall use
reasonable efforts to restrict entry to Common Area Utility Rooms to the
employees, agents and contractors of Lessor and other lessees of the Industrial
Center needing access thereto for the purposes for which such Common Area
Utility Rooms, are designed; provided that Lessor shall not have any duty to
monitor access to the Common Area Utility Rooms, nor, except to the extent of
Lessor's gross negligence or willful misconduct, any liability to Lessee for
damages of any type or nature for any matter arising due to the access of Lessor
or any other party to the Common Area Utility Rooms. Anything to the contrary
contained in this
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Paragraph 48 notwithstanding, in no event shall Lessor be liable to Lessee for
any consequential, incidental or special damages, lost profits or lost revenues,
or loss of goodwill notwithstanding that Lessor has been informed of the
possibility of such consequential damages or is negligent.
49. Reasonable Approvals. Except as otherwise expressly set forth in this
Lease, if a party is required to obtain the other party's approval or consent to
a matter the approving party shall not unreasonably withhold, condition or delay
such approval or consent. The approving party's failure to respond within ten
(10) business days after receipt of a notice that a requested consent or
approval has not received a response, shall be deemed the approving party's
consent or approval.
50. Equipment Ownership; Waiver of Lessor's Lien on Equipment. Lessee's
Equipment shall be the property of and owned by Lessee throughout the Term, and
shall in no event be deemed fixtures, even if affixed to the Premises or
Industrial Center. Lessor hereby expressly waives and releases any and all
contractual liens and security interests or constitutional and/or statutory
liens and security interests arising by operation of law or under the Lease to
which Lessor might now or hereafter be entitled on any of the property of
Lessee, including without limitation, Lessee's Equipment. Lessor further agrees
that, subject to Lessee's obligation to surrender the same in accordance with
Paragraph 7.4, Lessee's Equipment shall be exempt from execution, foreclosure,
sale, levy, or attachment, for any Lessee default hereunder. Except at the
expiration or earlier termination of the term, Lessee's Equipment may be removed
at any time from the Premises or the Industrial Center by Lessee; provided that,
except in the case of Lessee's Must-Stay Equipment, Lessee shall substitute
Lessee's Equipment of an equivalent or better quality.
51. Lessor's Right to Provide Electrical Service. Anything to the contrary
contained in this Lease notwithstanding, Lessee acknowledges and agrees that
Lessor shall have the right, upon at least thirty (30) days prior written notice
to Lessee, to become the service provider for electrical service to the Building
and to charge Lessee for such service at rates equal to or better than the
applicable Pacific Gas and Electric Standard Commercial Utility Tariff, or its
then equivalent. Prior to beginning Lessor's service, Lessor shall establish to
Lessee's reasonable satisfaction that the reliability of such electrical service
is comparable to the service then used by Lessee.
52. Examination of Lease. Submission of this lease document for examination
or signature by Lessee does not constitute a reservation or option to Lessee and
it is not effective for any purpose until execution by and delivery to both
Lessor and Lessee, which delivery may be by facsimile transmission of an
executed signature page.
The parties hereto have executed this Lease as of the date first set forth
above.
BY LESSOR: BY LESSEE:
THE CAMBAY GROUP, INC., UNIVERSAL ACCESS, INC.,
a California corporation an Illinois corporation
By: /s/ JOHN O. WILSON By: /s/ ROBERT J. POMMER
-------------------------------- -------------------------------------
John O. Wilson, Vice President Robert J. Pommer
Its: Chief Operating Officer
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
1350 Treat Boulevard, Suite 560 100 North Riverside Plaza, Suite 2200
Walnut Creek, CA 94596 Chicago, IL 60606
Facsimile: (925) 933-1404 Attn: Robert J. Pommer,
Chief Operations Officer
Facsimile: (312) 660-5050
WITH A COPY TO:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Chicago, IL 60611
Attn: Paul Kelley, Esq.,
Counsel
Facsimile: (312) 527-9285
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ADDENDUM 1
LESSOR'S WORK
This Addendum 1 is attached to and made a part of that certain Lease,
dated as of March 19, 1999, between The Cambay Group, Inc., a California
corporation, as Lessor, and Universal Access, Inc., an Illinois corporation, as
Lessee.
A. Lessor's Work Defined. On or before the Delivery Date, as
defined in Paragraph B, Lessor, through its designated general contractor
("Contractor") shall perform the following work ("Lessor's Work"), in a good and
workmanlike manner, at Lessor's sole cost and expense except as otherwise
expressly provided in subparagraph (iv) below, and in accordance with all
Applicable Requirements, as defined in Paragraph 6.3.
(i) Third Floor Shell ADA and Title 24 Work. All improvements
necessary to cause the shell of the Third Floor Premises and the
path of travel from the Building entry to the Third Floor
Premises to comply with the requirements of the Americans with
Disabilities Act ("ADA"), Title 24 of the California Code
("Title 24") and all other Applicable Requirements.
(ii) Third Floor Restrooms ADA and Title 24 Work. All improvements
necessary to cause the existing third floor restrooms to comply
with the requirements of the ADA, Title 24 and all other
Applicable Requirements.
(iii) Required Electrical Capacity for Third Floor Premises. Lessor
shall provide electrical service to Lessee's circuit breaker
located in Lessor's Building F electrical room in the eastern
section of the second floor of the Building. Lessor shall
provide Lessee with access to such electrical room for Lessee's
conduits and personnel as necessary. Lessee's electrical service
shall be supplied by Lessor as a dedicated feeder and service
circuit breaker rated at 500 amps, 480 volts and 3 phase, 4 wire
alternating current, with one service switch on the Building's
main distribution board (the "Required Electrical Capacity"). At
Lessor's election, the Required Electrical Capacity may be
derived from a either a dedicated or a joint tenant substation
transformer and distribution switchboard system.
(iv) Telecommunications Vaults. Lessor shall install two (2)
telecommunications vaults in the Industrial Center to serve the
Building ("Lessor's Telecommunications Entrance Vaults")
(v) Third Floor Corridor/Sprinkler Work. Install one-hour rated,
taped and painted sheetrock common corridor(s) which shall
demise the Premises, a building standard entry door to the
Premises, and common core sprinklers on the third floor of the
Building. The Third Floor Premises shall be protected by a dry
fire suppression system installed by Lessee as part of Lessee's
Initial Improvements.
(vi) Existing Heating System. Lessor shall remove any existing
heating system exclusively serving the Third Floor Premises.
(vii) Roof Improvements. Lessor shall make improvements to the roof to
eliminate ponding on the roof over the Third Floor Premises.
B. Delivery Date for Lessor's Work. Lessor's Work shall be
coordinated with and performed concurrently with Lessee's Initial Improvements.
Subject to force majeure, Lessor's Work shall be completed on or before the
"Delivery Date", as defined in Paragraph 1.3. Lessor shall use reasonable
efforts to provide Lessee with at least three (3) business days prior notice of
the Delivery Date, provided that the failure to provide such notice shall not
delay the Delivery Date.
C. Force Majeure. Lessor's obligations to perform Lessor's Work
shall not require Lessor to incur overtime costs and expenses, and shall be
subject to unavoidable delays due to acts of God, governmental restrictions,
strikes, labor disturbances, shortages of material or supplies, and for any
other cause or event beyond Lessor's reasonable control.
D. Lessee's Delay. Lessee's obligation to pay Base Rent shall
commence, as set forth In Paragraph 1.5; provided, however, if Lessor shall be
delayed in substantially completing Lessor's Work as a result of (a) Lessee
making material changes in the Lessee's Plans, or (b) hindrance or disruption of
the work of Lessor's contractor resulting from Lessee's Initial Improvements,
then the commencement of Base Rent shall be accelerated by the number of days of
such delay.
Addendum 1
Page 1 of 1
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ADDENDUM 2
BASE RENT AND CABINET AND CONDUIT CHARGES ADJUSTMENTS
This Addendum 2 is attached to and made a part of that certain Lease,
dated as of March 19, 1999, between The Cambay Group, Inc., a California
corporation, as Lessor, and Universal Access, Inc., an Illinois corporation, as
Lessee.
On the first anniversary of the Commencement Date (the "Adjustment
Date"), and continuing on each anniversary of the Adjustment Date thereafter
during the initial term and for the second and each succeeding year, the Base
Rent, and all Cabinet and Conduit Charges then in effect, shall be increased at
the rate of three percent (3%) per annum. As of each Adjustment Date, the
monthly Base Rent and Cabinet and Conduit Charges payable during the ensuing
twelve-month period shall be determined by increasing the previous monthly rent
and charges for the month just ended by three percent (3%). Said increases shall
be on a compounded basis.
Addendum 2
Page 1 of 1
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ADDENDUM 3
OPTION TO RENEW
This Addendum 3 is attached to and made a part of that certain Lease,
dated as of March 19, 1999, between The Cambay Group, Inc., a California
corporation, as Lessor, and Universal Access, Inc., an Illinois corporation, as
Lessee.
Grant of Option to Renew. Lessee shall have the option (the "Option") to
extend the term of this Lease on all the provisions contained in this Lease,
except for provisions relating to this Option to extend, for one five (5) year
period (the "Option Term") following expiration of the initial term, by
delivering written notice of the exercise of the Option to Lessor at least one
hundred eighty (180) days, but not more than twelve (12) months prior to the
expiration of the then applicable term. Prior to the start of the Option Term,
Lessor and Lessee shall execute an amendment to this Lease reflecting the
extended term. The Base Rent for the Option Term shall be the Prevailing Market
Rental, as hereinafter defined, for the Premises as of the date that is thirty
(30) days prior to the expiration of the initial Term or any Option Term, for
the Option Term. As used herein, the term "Prevailing Market Rental" for the
Premises shall mean the rental and all other monetary payments that Lessor could
obtain for each month of the Option Term from a third party desiring to lease
the Premises for a five (5)-year term commencing at the commencement of the
Option Term, taking into account costs that Lessor would incur in re-letting the
Premises, the characteristics of the Building and its telecommunications
facilities, the size, location and floor levels of the Leased Premises, the
quality of construction of the Building and the Leased Premises, the services
provided under the terms of this Lease, the rental and any escalations and
adjustments thereto (including without limitation Consumer Price Indexing) then
being obtained for new leases of space comparable to the Premises in the City
and County of San Francisco, and all other factors, such as rental concessions
and tenant improvement allowances, moving allowances, that would be relevant to
a third party desiring to lease the Premises for a five (5)-year term commencing
at the commencement of the Option Term in determining the rental such party
would be willing to pay therefor, expressly excluding from such consideration
the value of Lessee's Utility Installations.
Determination of Prevailing Market Rental. If Lessee exercises the
Option, Lessor shall send to Lessee, on or before the date that is one hundred
fifty (150) days prior to the Expiration Date, a notice setting forth the
Prevailing Market Rental for the Premises for each month of the Option Term. If
Lessee disputes Lessor's determination of the Prevailing Market Rental for the
Option Term. Lessee shall, within thirty (30) days after the date of Lessor's
notice setting forth the Prevailing Market Rental for the Option Term, send to
Lessor a notice stating that Lessee disagrees with Lessor's determination of
Prevailing Market Rental for the Option Term and elects to resolve the
disagreement as provided below. If Lessee does not send to Lessor a notice as
provided in the previous sentence, Lessee shall be deemed to have approved
Lessor's determination. If Lessee elects to resolve the disagreement as provided
below and such procedures shall not have been concluded prior to the
commencement of the Option Term, Lessee shall pay Base Rent to Lessor hereunder
adjusted to reflect the Prevailing Market Rental as determined by Lessor in the
manner provided above. If the amount of Prevailing Market Rental as finally
determined pursuant to the following is greater than Lessor's determination,
Lessee shall pay to Lessor the difference between the amount paid by Lessee and
the Prevailing Market Rental as so determined within thirty (30) days after the
determination. If the Prevailing Market Rental as finally determined is less
than Lessor's determination, the difference between the amount paid by Lessee
and the Prevailing Market Rental as so determined shall be credited against the
next installments of Base Rent due from Lessee to Lessor hereunder.
Resolution of Disagreement Regarding Prevailing Market Rental. Any
disagreement regarding the Prevailing Market Rental shall be resolved as
follows:
(a) Within thirty (30) days after Lessee's response to Lessor's
notice to Lessee of the Prevailing Market Rental, Lessor and
Lessee shall meet no less than two (2) times, at a mutually
agreeable time and place, to attempt to resolve any such
disagreement.
(b) If within the thirty (30) day period referred to in (a) above,
Lessor and Lessee cannot reach agreement as to the Prevailing
Market Rental, Lessee shall have the right by notice to Lessor
within ten (10) days thereafter to rescind Lessee's exercise of
the Option, whereupon Lessee shall not have any right to extend
the term of this Lease. If Lessee does not rescind its exercise
within such period, then Lessor and Lessee shall each select one
appraiser to determine the Prevailing Market Rental. Each such
appraiser shall arrive at a determination of the Prevailing
Market Rental and submit their conclusions to Lessor and Lessee
within thirty (30) days after the appointment of such appraiser.
(c) If only one appraisal is submitted within the requisite time
period, it shall be deemed to be the Prevailing Market Rental.
If both appraisals are submitted within such time period, and if
the two appraisals so submitted differ by less than ten percent
(10%) of the higher of the two, the average of the two shall be
the Prevailing Market Rental. If the two appraisals differ by
more than ten percent (10%) of the higher of the two, then the
two appraisers shall immediately select a neutral third
appraiser who shall within thirty (30) days after his or her
selection make a determination of the Prevailing Market Rental
and submit such determination to Lessor and Lessee. This third
appraisal will then be averaged with the closer of the two
previous appraisals and the result shall be the Prevailing
Market Rental.
(d) All appraisers specified pursuant to this Paragraph shall be
members of the American Institute of Real Estate Appraisers with
not less than ten (10) years' experience appraising commercial
properties in the vicinity of the Building in San Francisco.
Each party shall pay the cost of the appraiser selected by such
party and one-half of the cost of the third appraiser plus
one-half of any other costs incurred in resolving the
disagreement.
Options Personal to Original Lessee. The Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof and
any Affiliate thereof, and cannot be voluntarily or involuntarily assigned or
exercised by any person or entity other than said original Lessee or Affiliate
thereof while the original Lessee or Affiliate thereof is in full and actual
possession of the Premises and without the intention of thereafter assigning or
subletting. The Options, if any, herein granted to Lessee are not assignable,
either as a part of an assignment of this Lease or separately or apart
therefrom, and no Option may be separated from this Lease in any manner, by
reservation or otherwise.
Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.
Addendum 3
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<PAGE> 26
Effect of Default on Options. Lessee shall have no right to exercise an
Option, notwithstanding any provision in the grant of Option to the contrary:
(i) during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii) during
the period of time any monetary obligation due Lessor from Lessee is unpaid
(after notice thereof is given Lessee), or (iii) during the time Lessee is in
Default of this Lease, or (iv) in the event that Lessor has given to Lessee two
(2) or more notices of separate Defaults under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured. The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of this Paragraph.
All rights of Lessee under the provisions of an Option shall terminate
and be of no further force or effect, notwithstanding Lessee's due and timely
exercise of the Option, if, after such exercise and during the term of this
Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after written notice that such obligation has become
due, or (ii) Lessor gives to Lessee two (2) or more notices of separate Defaults
under Paragraph 13.1 during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Default of this Lease.
Addendum 3
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<PAGE> 27
ADDENDUM 4
COMMON AREA OPERATING EXPENSE EXCLUSIONS
This Addendum 4 is attached to and made a part of that certain Lease,
dated as of March 19, 1999, between The Cambay Group, Inc., a California
corporation, as Lessor, and Universal Access, Inc., an Illinois corporation, as
Lessee.
Notwithstanding anything to the contrary in the definition of Common
Area Operating Expenses, the Common Area Operating Expense shall not include the
following:
(1) The cost of repair to the Building, including the Premises, to
the extent the cost of the repairs is reimbursed by insurance or
condemnation proceeds, covered by warranty or otherwise
reimbursed by third parties other than as a part of Common Area
Operating Expenses;
(2) All items and services for which Lessee or any other lessee in
the Building reimburses Lessor other than through Common Area
Operating Expenses (or is so obligated to reimburse Lessor) and
all items and services supplied selectively to any lessee
without reimbursement, provided that, any item or service
supplied selectively to Lessee shall be paid for by Lessee;
(3) Advertising and marketing costs, including, without limitation,
leasing commissions, attorneys' fees in connection with the
negotiation and preparation of letters, deal memos, letters of
intent, leases, subleases and/or assignments, space planning
costs, and other costs and expenses incurred in connection with
the lease, sublease and/or assignment negotiations and
transactions with present or prospective lessees of the Building
or their successors;
(4) The cost of improving or renovating space for lessees or space
vacated by any lessee (including Lessee), including, without
limitation, architects', engineers' and space planners' fees and
expenses, and costs of permits and inspections;
(5) The cost of utilities charged to individual lessees (including
Lessee) including any and all costs for Lessee's electrical
usage and HVAC usage, and payroll, material and contract costs
of other services charged to lessees (including Lessee);
(6) The depreciation of the Building;
(7) Principal, interest, points and fees on debt or amortization
payments, and late payment penalties and interest on any real
property mortgages or deeds of trust and ground lease payments,
and other costs of financing or refinancing the Building;
(8) Legal, accounting, consulting and other related expenses
associated with the enforcement of leases, disputes with lessees
or prospective lessees, or the defense of Lessor's title to the
Building;
(9) Lessor's general corporate overhead and general administrative
expenses not related to the operation of the Building, including
costs of preparing corporate, partnership or other tax returns,
or financial statements not related to the operation of the
Building, and all compensation to executives, officers or
partners of Lessor or to persons who are executives or officers
of partners of Lessor or to any other person at or above the
level of building manager, other than the building manager of
the Building;
(10) Unless required to be charged by Lessor pursuant to any
Applicable Requirements, any compensation paid to clerks,
attendants or other persons in commercial concessions, including
parking facilities operated by Lessor and other costs directly
related to the operation of such commercial concessions
including bookkeeping, parking insurance, parking management
fees, tickets, striping and uniforms, and all other costs
directly related to the installation, operation and maintenance
of such commercial concessions;
(11) Governmental fines or penalties assessed as a result of Lessor's
failure to make payments in a timely manner or to comply with
Applicable Requirements;
(12) Except for making repairs or keeping permanent systems in
operation while repairs are being made, rentals and other
related expenses incurred in leasing air-conditioning systems,
elevators or other equipment ordinarily considered to be of a
capital nature, except equipment not affixed to the Building
which is used in providing janitorial or maintenance services;
(13) Costs of capital improvements and other costs which are to be
capitalized and not expensed in accordance with generally
accepted accounting principles, including, without limitation,
capital repairs due to casualty, capital costs of any
renovation, improvement or addition (but not repair or
maintenance in accordance with Paragraph 7.2) to common areas,
capital costs of compliance with health, safety and disability
access laws to the extent the Building did not comply with such
Applicable Requirements in effect and as interpreted as of the
date of this Lease; provided that such costs to comply with
Applicable Requirements arising after the date of this Lease or
reinterpreted after the date of this Lease, shall be included in
Common Area Operating Expenses;
(14) Cost of compliance with laws relating to Hazardous Substances or
substances which are incurred (a) as a result of Lessor's
negligence or intentional acts in the course of construction of
the Building, including the selection and use of building
materials which Lessor should have known were Hazardous
Substances at the time of their installation, or (b) as a result
of the presence of Hazardous Substances in the soil or
groundwater under the Building on or before the date of
execution of this Lease;
Addendum 4
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<PAGE> 28
(15) Unless required to be installed pursuant to any Applicable
Requirements, costs of purchasing, installing and replacing
artwork;
(16) Liability covered by insurance carried by Lessor the premiums
for which are included in Common Area Operating Expenses, or
which would have been covered by insurance otherwise required to
be carried by Lessor under this Lease but for failure to insure
as a result of Lessor's intentional acts or omissions or
negligence (but not as a result of commercial impracticability
of obtaining such insurance);
(17) Expenses resulting directly from the willful misconduct or gross
negligence of Lessor;
(18) Costs of repairs or modifications to the Building or Premises,
if the Building or Premises are not in full compliance with all
governmental regulations, ordinances and laws effective at the
effective date of this Lease (but not repair or modifications
related to Lessor's obligations under Paragraph 7.2 for matters
arising on or after the date of execution of this Lease);
(19) Any bad debt loss, rent loss or reserves for bad debts or rent
loss and reserves for Common Area Operating Expenses or capital
improvements;
(20) The cost of goods or services paid to Lessor, or to any
subsidiary or affiliate of Lessor, to the extent such costs
exceed the costs of comparable goods or services delivered or
rendered by unaffiliated third parties;
(21) Costs arising from Lessor's charitable or political
contributions;
(22) Costs, including capital costs, incurred in connection with
upgrading the Building to comply with Applicable Requirements as
such Applicable Requirements were interpreted as of the date of
this Lease; provided that such costs to comply with Applicable
Requirements arising after the date of this Lease or
re-interpreted after the date of this Lease, shall be included
in Common Area Operating Expenses;
(23) Costs for which Lessor has been compensated by a management fee,
including labor, office rent, supplies, and improvements in the
Building; and
(24) Costs arising from repairs for construction defects in the
Building or in lessee improvements installed by Lessor;
Addendum 4
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<PAGE> 29
ADDENDUM 5
LESSEE'S IMPROVEMENT OF THE PREMISES
This Addendum 5 is attached to and made a part of that certain Lease,
dated as of March 19, 1999, between The Cambay Group, Inc., a California
corporation, as Lessor, and Universal Access, Inc., an Illinois corporation, as
Lessee.
A. Lessee's Initial Improvements.
1. Early Access for Lessee's Initial Improvements.
Concurrently with the execution of this Lease and the delivery to Lessor of
certificates or policies of insurance as required by Paragraph 8.5, Lessor shall
provide Lessee with early access to the Premises to permit Lessee to construct
Lessee's improvements to the Premises ("Lessee's Initial Improvements"), subject
to Lessee's obligation to coordinate Lessee's Initial Improvements with Lessor's
Work to permit Lessor to complete Lessor's Work on or before the Delivery Date.
The Third Floor Premises shall be available to Lessee in a broom clean
condition.
2. Lessee's Initial Improvements. Lessee shall at its own
cost obtain all permits and approvals and construct the Lessee's Initial
Improvements to the Premises in a good, workmanlike manner, using architects,
engineers, construction managers, contractors, and subcontractors Approved by
Lessor. Lessee's Initial Improvements shall be performed substantially in
accordance with plans and specifications Approved by Lessor, minor field changes
and variances excepted. All of Lessee's Initial Improvements shall be
constructed and installed by licensed contractors under city permits and in
accordance with Applicable Requirements, including, without limitation, such
contractors' and subcontractors' written safety plans prepared in accordance
with the Applicable Requirements of the California Occupational Safety and
Health Administration.
3. Construction Scheduling. Subject to complying with any
Applicable Requirements, Lessee shall have the right to perform Lessee's Initial
Improvements twenty four (24) hours per day, seven (7) days per week, subject to
Lessor's reasonable rules and regulations, provided that Lessee shall minimize
any interference with the conduct of business by other lessees of the Building
or the Industrial Center.
4. Lessor's Inspections. Lessor shall be notified of
Lessee's construction schedule and shall have the right to inspect Lessee's
Initial Improvements at any time; provided that Lessor shall conduct such
inspections in a manner that will minimize any interference with Lessee's
Initial Improvements. Lessor shall provide Lessee with reasonable notice (which
may be given to Lessee telephonically) of such inspections. Lessee may require
that a representative of Lessee accompany any persons making such inspections.
If, at any time during the course of construction of Lessee's Initial
Improvements, Lessor believes, in good faith, that the work does not
substantially conform to Lessee's Plans ("Defective Work") Lessor shall use good
faith efforts to notify Lessee in writing immediately, which notice shall
specify the non-conformity, provided that the failure to so notify Lessee shall
not be a default or form the basis of any claim for damages or any other
liability to Lessee or any third party. Upon Lessee's receipt of such written
notice Lessee's Initial Improvements on the identified matter shall be stopped
and Lessor, Lessee, and the parties' respective architects and engineers, as
appropriate, shall meet, which meeting may be by telephone, within one business
day to discuss what steps, if any, should be taken to address the Defective Work
specified in the notice. After said meeting, Lessee shall make the final,
reasonable determination regarding what steps, if any, should be taken to
address such matters, and work on Lessee's Initial Improvements may proceed in
accordance with said determination. If Lessor or Lessor's engineer is not
available within such one business day period, then, subject to Lessee's
obligation to correct the work if the work is later determined to be Defective
Work, Lessee may proceed with the allegedly Defective Work unless such work is
allegedly inconsistent with the UIP. No work that allegedly is Defective Work
for failure to conform to the UIP shall proceed without Lessor's approval.
5. Lessee's Use of Facilities Without Charge. Lessor shall
not charge Lessee fees in connection with Lessee's Initial Improvements for (1)
Lessor's review of Lessee's Plans, (2) Lessor's construction supervision, (3)
Lessee's use of the freight elevator, or (4) access to the third floor
telecommunications closets, hoists, or water prior to the Delivery Date. Lessee
shall reimburse Lessor for the reasonably estimated costs of electrical and
other utility services provided to Lessee prior to the Delivery Date.
6. Fire Sprinkler Branch Relocation Work. Concurrently with
obtaining Lessor's approval of Lessee's plans and specifications for Lessee's
Initial Improvements, Lessee shall notify Lessor that Lessee desires to relocate
the existing fire sprinkler branch main and riser within the Premises to a
location outside the Premises (the "Fire Sprinkler Branch Relocation Work").
Lessee shall be solely responsible for the Fire Sprinkler Branch Relocation
Work, and for all costs associated with the Fire Sprinkler Branch Relocation
Work. Lessee shall not be required to restore the Fire Sprinkler Branch
Relocation Work Approved by Lessor to its original condition at the expiration
of the Term.
B. Process for Approval of Construction Related Matters During the
Term.
1. Lessor's Approval. Whenever Lessor's approval of any
plans, specifications, installation location, contractors and other personnel,
or other related matter, including, without limitation, Lessee's Utility
Installations, is required in connection with Lessee's Initial Improvements, or
any Alterations, or any other improvement by Lessee to the Premises or the
Building, (i) such approval shall not be delayed, and, unless expressly provided
otherwise, shall not be unreasonably withheld or conditioned, and (ii) Lessee
and Lessor shall follow the procedures and time frames set forth in this
Paragraph B, and upon Lessor's approval such matter will be deemed "Approved by
Lessor". There shall be no charge to Lessee for Lessor's review of Lessee's
requests for consent or approval pursuant to Paragraphs A and B hereof.
2. Requirement for and Procedure for Approval of Lessee's
Plans. Lessee shall deliver preliminary plans and specifications ("Preliminary
Plans"), working drawings (the "Working Drawings") and all proposed changes to
previously approved Working Drawings that are not immaterial ("Changes") to
Lessor, Lessor's architect and Lessor's designated engineer, for Lessor's
approval. Lessor's Preliminary Plans, Working Drawings and Changes are referred
to collectively in this Lease as "Lessee's Plans". Lessor shall approve or
disapprove the submittal of any of Lessee's Plans, within ten (10) business days
after receipt for the first submittal, and five (5) business days for any
Addendum 5
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<PAGE> 30
re-submittal. Lessor's failure to object to Lessee's Plans within such periods
shall be deemed Lessor's approval of such plans. If Lessor disapproves any of
Lessee's Plans, such disapproval shall note Lessor's specific requested changes.
3. Requirement for and Procedure for Approval of
Contractor, Installation Location and Other Matters. Lessee shall deliver one or
more notices to Lessor to (1) designate Lessee's contractors or other personnel
for Lessor's approval, (2) designate Lessee's proposed installation locations
for Lessor's approval, and (3) to specify any other matter related to the
construction of Lessee's Initial Improvements requiring Lessor's approval under
this Lease (an "Approval Request"). Lessor shall approve or disapprove the
submittal of any Approval Request, within ten (10) business days after receipt
of the first request and within five (5) business days after a subsequent
submittal of a previously disapproved request ("Lessor's Approval Period").
Lessor's failure to object to any Approval Request within Lessor's Approval
Period shall be deemed Lessor's approval of Approval Request. If Lessor
disapproves any of Lessee's Approval Requests, such disapproval shall note
Lessor's specific objections and the curative steps that would result in
Lessor's approval of the Approval Request.
4. Purpose of Lessor's Approval. Lessor's approval of
Lessee's Plans or any other matter associated with Lessee's installation of
improvements to the Premises or the Building during the Term in accordance with
this Lease, or Lessor's inspection of Lessee's Initial Improvements or any other
Alteration to the Premises or the Building made by Lessee during the Term, are
solely for Lessor's convenience and shall not be deemed a representation by
Lessor of any nature, including, without limitation, that Lessee's Plans or
Lessee's Initial Improvements complies with Applicable Requirements or is fit
for its purpose. No approval by Lessor, any employee, agent, contractor or
consultant of Lessor, or Lessor's architect or engineer (collectively, the
"Lessor Parties") of any plans, specifications, drawings or other matters
relating to the construction of Lessee's Initial Improvements or any
Alterations, or any other improvement by Lessee to the Premises or the Building
shall expose the Lessor Parties to any liability to the Lessee or any third
party, and shall not be deemed to constitute any representation or judgment by
the Lessor Parties that Lessee's Initial Improvements, Alterations or any other
improvements by Lessee to the Premises or the Building is free from any
construction defects, safe, reliable, sufficient or suitable for any purpose or
that the same complies with any Applicable Requirements. In addition, no failure
of Lessor to provide notification to Lessee of Defective Work, as provided
above, shall expose Lessor to any liability to the Lessee or any third party,
and shall not be deemed to constitute any representation or judgment by Lessor
that the Lessee's Initial Improvements or any Alterations, or any other
improvement by Lessee to the Premises or the Building, is free from any
construction defects, safe, reliable, sufficient or suitable for any purpose or
that the same complies with any Applicable Requirements. Observations by the
Lessor Parties under the terms of this Agreement shall not constitute approval
by the Lessor Parties of any work done in constructing any Lessee's Initial
Improvements or any Alterations, or any other improvement by Lessee to the
Premises or the Building, nor shall any such observation be construed as a
waiver by the Lessor Parties of any objections the Lessor Parties may have as to
the quality of construction of any Lessee's Initial Improvements or any
Alterations, or any other improvement by Lessee to the Premises or the Building,
or its compliance with Lessee's Plans Approved by Lessor. Notwithstanding the
forgoing, the Lessor Parties shall be deemed to have waived the right to object
to any matter regarding Defective Work, if Lessor had actual knowledge of
Defective Work, without a duty to investigate, and Lessee was not promptly
notified of the Defective Work by Lessor as provided above.
Addendum 5
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<PAGE> 31
ADDENDUM 6
LESSEE'S UTILITY INSTALLATIONS AND OPERATING RIGHTS
This Addendum 6 is attached to and made a part of that certain Lease,
dated as of March 19, 1999, between The Cambay Group, Inc., a California
corporation, as Lessor, and Universal Access, Inc., an Illinois corporation, as
Lessee.
Lessee intends to install certain Utility Installations and Equipment,
as defined in Paragraph 7.3, for use in its operations from time to time.
Subject to such modifications as Lessor shall approve in accordance with
Addendum 4, Lessee and Lessor have agreed as follows:
A. Generally. Lessor and Lessee agree that in connection with all
of Lessee's Utility Installations:
(i) Lessee's Cost. All Utility Installations shall be made
at Lessee's sole cost and expense.
(ii) Location. Utility Installations shall only be made in
the Premises or in Common Areas of the Building Approved
by Lessor, as defined in Addendum 5.
(iii) Conduits. As used in this Lease, "Conduit" means the
metal piping Approved by Lessor through which Lessee
runs utility lines and fiber optic and other
telecommunications wiring and cabling Approved by Lessor
(collectively, the "Conduits"). All Conduits and piping
shall be installed in accordance with Lessor's UIP, as
defined in Paragraph 6.3. All Conduits installed outside
the Premises must be located in the "Common Area Conduit
Installation Areas". The Common Area Conduit
Installation Areas are shown in the UIP and are limited
to Common Area corridors, any vertical riser, chase or
shaft shown on the UIP as available for common use
("Common Vertical Riser"), Common Area utility rooms and
Common Area telecommunications vaults. Lessee shall have
the right to use the Common Area Conduit Installation
Areas for the installation of Conduit permitted under
Paragraph G at no charge to Lessee except as provided
below for the Conduit trapeze system; provided that
Lessor reserves the right to charge other lessees of the
Building for the use of the Common Area Conduit
Installation Area, including, without limitation, for
the purpose of connecting to Lessee's Conduit. Any
Conduit installed by Lessee shall be surrendered to
Lessor with the Premises upon the expiration or earlier
termination of this Lease, in accordance with Paragraph
7.4. Lessee shall reimburse Lessor for a pro rata share,
determined by Lessor in good faith, of the cost of
Lessor's installation of the Conduit trapeze system
located in the Common Area Conduit Installation Areas in
connection with Lessee's Initial Improvements.
(iv) Use of Existing Common Vertical Risers. Whenever
practical, Lessee shall use existing Common Vertical
Risers.
(v) Compliance With Applicable Requirements. All Utility
Installations shall be made in accordance with
Applicable Requirements.
(vi) Connection Fees. Lessee will be solely responsible for
paying all connection fees for any utility service
desired by Lessee.
(vii) Building Systems Upgrade Consent. Lessor shall not
unreasonably withhold Lessor's consent to any upgrade to
the Building utility systems, whether within or without
the Premises proposed by Lessee, provided that such work
shall be performed at Lessee's sole expense, and shall
not interfere with or limit the use of the Building by
Lessor or other lessees of the Building. Any proposed
upgrade of a Building utility system shall be Approved
by Lessor in accordance with Addendum 5.
(viii) Lessor's Concurrent Installation of Additional Conduits.
Concurrently with Lessee's Initial Improvements, Lessor
may request that Lessee install additional Conduits and
related improvements ("Lessor's Incremental Conduit
Work") in connection with Lessee's installation of
Conduit, whether in the Industrial Center or offsite,
provided that Lessor's Incremental Conduit Work shall
not cause any delay in the completion of Lessee's
Initial Improvements, and provided further that (i)
Lessor shall pay the incremental cost of labor and
materials in connection therewith, (ii) Lessor shall
furnish Lessor's plans and specifications for Lessor's
Conduit to Lessee, and (iii) Lessor shall establish to
Lessee's reasonable satisfaction that Lessor has readily
available funds to pay for Lessee's installation of the
additional Conduits in a timely manner, which shall be
within ten (10) days after Lessee's presentation of
invoices for labor and materials. Lessee shall consider
Lessor's request in good faith in light of Lessee's
design requirements and notify Lessor within ten (10)
days after Lessor's request whether or not Lessor's
Incremental Conduit Work is acceptable to Lessee. Lessee
shall be entitled to offset any amounts due from Lessor
for such work against Rent if Lessor shall fail to pay
for such work in a timely manner.
B. HVAC Systems. For the purpose of providing heating, ventilation
and air conditioning to the Premises, Lessee shall have the
right to:
(i) Install approximately 60 tons of HVAC, for the switch
equipment outside of the Third Floor Premises Approved
by Lessor, and the appropriate HVAC equipment that meets
the tonnage requirement for Lessee's Permitted Use,
together with the necessary condensers or dry coolers
(collectively "Condensers") and glycol pumps and piping,
subject to Lessor's review and approval of Lessee's
Plans and Equipment, in an area not to exceed 250 square
feet ("HVAC Roof Area"). Such work (x) shall be
performed pursuant to plans and specifications Approved
by Lessor, (y) shall be performed at Lessee's sole cost,
and (z) shall not interfere with the use of the Building
by any other lessee of the Building. Lessee shall pay
Base Rent for the HVAC Roof Area in an amount equal to
fifty percent (50%) of the then applicable per square
foot monthly rent for the Third Floor Premises, (subject
to adjustment in accordance with Addendum 1) times the
number of useable square feet of the HVAC Roof Area.
Page 1 of 3
<PAGE> 32
(ii) Lessee may remove or cap any heating system or supply an
air system serving the Premises, subject to Lessor's
approval of methods and materials, and restoration at
the end of the term.
(iii) Lessee may install drains for HVAC equipment, subject to
Lessor's review and approval of Lessee's Plans.
(iv) Lessee may relocate and reconnect primary air ductwork,
sprinklers, and/or secondary water piping located in the
Premises, subject to Lessor's approval.
(v) Lessee may enclose any flues serving space outside the
Premises in sheetrock.
(vi) Lessee shall comply with Lessor's UIP and Rules and
Regulations, and with all Applicable Requirements, with
respect to installing, operating and maintaining
Lessee's HVAC Units, as defined in Paragraph 7.3(a), in
the HVAC Roof Area. In addition, Lessee shall reimburse
Lessor for a pro rata share, determined by Lessor in
good faith, of the cost of Lessor's installation of roof
support grids and catwalk facilities for Lessee's HVAC
Units.
C. Electrical Systems.
(i) Lessor shall make available at the main electrical
distribution board of the Building 24 hours per day,
seven days per week Lessee's Required Electrical
Capacity, as defined in Addendum 1.
(ii) If Lessee shall require electric capacity in addition to
the capacity to be provided by Lessor as Lessor's Work,
to the extent available from the utility provider in
accordance with Applicable Requirements, Lessor shall
obtain such capacity to the main panel of the Building
and Lessee shall pay its proportionate share of the cost
of installation of such additional capacity in the ratio
of Lessee's additional capacity to the aggregate of the
increased capacity.
(iii) Lessee shall comply with Lessor's UIP and Rules and
Regulations, and with all Applicable Requirements, with
respect to the grounding of Lessee's Utility
Installations and lightning protection. In addition,
Lessee shall reimburse Lessor for a pro rata share of
the cost of Lessor's installation of Common Area
grounding and lightning protection facilities,
determined by Lessor in good faith. Lessee shall have
the right to use Lessor's electrical grounding and
lightning protection system in accordance with Lessee's
Equipment requirements Approved by Lessor, and in
accordance with Applicable Requirements.
(iv) Lessee shall have the right to use a joint tenant
substation transformer and distribution switchboard, and
to install related Equipment Approved by Lessor, in
Lessor's electrical room located on the second floor of
the Building in an area not to exceed 576 square feet
("Electrical Room Area") that meets the electrical
requirement for Lessee's Permitted Use, subject to
Lessor's review and approval of Lessee's Plans and
Equipment. Lessee shall pay Base Rent for the Electrical
Room Area in an amount equal to fifty percent (50%) of
the then applicable per square foot monthly rent for the
Third Floor Premises, (subject to adjustment in
accordance with Addendum 1) times the number of useable
square feet of the Electrical Room Area.
D. Structural.
(i) Lessee shall have the right to reinforce the existing
floor load capacity of approximately 250 lbs./S.F. at
its own cost and expense, in accordance with Lessee's
Plans Approved by Lessor. Lessor shall provide Lessee
with reasonable after hours access to the building for
the purpose of reinforcing the slab. Lessee shall not be
required to restore the reinforced floor to its original
condition at the expiration of the Term.
(ii) Lessee shall have the right to penetrate the concrete
exterior walls for air intakes and outlets pursuant to
plans and specifications Approved by Lessor. In
connection with any requested approval. Lessee shall
supply such structural and other engineering
calculations as Lessor may require. Lessor shall not
require Lessee to restore such air intake and outlet
work in connection with surrendering the Premises.
(iii) Lessee shall have the right to core slabs for piping
penetrations pursuant to plans and specifications
Approved by Lessor, which approval may be given or
withheld by Lessor in Lessor's sole discretion. In
connection with any Approval Request, Lessee shall
supply such structural and other engineering
calculations as Lessor may require. Lessor shall not
require Lessee to restore such slab penetrations in
connection with surrendering the Premises.
E. Fire Protection.
(i) Lessee shall have the right to install an FM200 or
equivalent gaseous fire suppression system independent
of the Building's systems in accordance with Lessee's
Plans.
(ii) Lessee shall have the right to modify the Building's
sprinkler system serving the Premises to a dry pipe
pre-action system, in accordance with Lessee's Plans.
Such system shall be compatible with and connected to
the Building's fire alarm system and shall remain in the
Premises at the expiration or earlier termination of
this Lease.
F. Shared Generator and Shared Fuel Tank.
(i) Lessee shall have the right, to share the 1250 kw/480
volt diesel emergency generator installed by Lessor (the
"Building F Generator"), and the related above-ground
fuel storage tank (the "Shared
Page 2 of 3
<PAGE> 33
Fuel Tank"). Lessee's use of the Building F Generator
shall be limited to emergencies and to scheduled tests
of which Lessor has been notified in advance:
(ii) Building F Generator Area. The Building F Generator and
Shared Fuel Tank shall be located in an area Approved by
Lessor (the "Building F Generator Area"). Lessor and
Lessee anticipate that the Generator Area will be
located in "Building C". Lessor shall be solely
responsible for the installation of the Building
Generator and of any seismic bracing and weatherproofing
in Building C required by any Applicable Requirements.
Lessee shall be solely responsible for all costs of
conduit and connections to Lessee's Third Floor
Premises. Lessee shall pay Base Rent for the Building F
Generator Area in an amount equal to fifty percent (50%)
of the then applicable per square foot monthly rent for
the Third Floor Premises, (subject to adjustment in
accordance with Addendum 1) times the "Lessee Allocated"
useable square feet of the Building F Generator Area.
The "Lessee Allocated" useable square feet of the
Building F Generator Area shall be calculated by
multiplying the useable square feet of the Building F
Generator Area by a fraction, the numerator of which is
the rentable area of the Third Floor Premises and the
denominator of which is the aggregate rentable area of
all of lessees of Building F using the Building F
Generator and Shared Fuel Tank.
(iii) Lessee shall pay to Lessor a proportionate share of the
cost of the Building F Generator, the installation of
the Building F Generator, and the cost of the Shared
Fuel Tank and installation of the Shared Fuel Tank,
whether such tank is installed by Lessor or another
lessee of the Building. The use of the Building F
Generator and Shared Fuel Tank by Lessee and any other
lessee shall be pursuant to all Applicable Requirements
and Lessor's reasonable rules and regulations. Lessor's
cost of maintaining, repairing and replacing the
Building F Generator and Shared Fuel Tank shall be
reimbursed by all users of the Building F Generator and
Shared Fuel Tank on a pro rata basis based on [the
rentable square feet of Lessee's Third Floor Premises to
the aggregate rentable square feet of the Building F
Premises of all users of the Building F Generator and
Shared Fuel Tank].
(iv) Automatic Switch. Lessee may install one automatic
transfer switch ("ATS") in the Premises.
(v) Noise and Vibration. Lessor will enforce all noise and
vibration limitations on the use of the Building
Generator in a non-discriminatory manner.
(vi) Routine Building Generator Testing. Subject to
compliance with all Applicable Requirements, Lessee
shall have the right to test the Building F Generator
once per week, for a test time period Approved by
Lessor, at a mutually agreed upon time between Lessor
and Lessee, which schedule shall be designed in
consultation with other lessees of the Industrial Center
to minimize any interference with other occupants of the
Industrial Center caused by such testing.
G. Telecommunications Entrances. Lessee shall have the right to
install [____None____________ (_0_) inch Conduits] through the Lessor's
Telecommunications Entrance Vaults, subject to Lessor's review and approval of
Lessee's Plans. If Lessee requires more than______ (___) Conduits, Lessee shall,
at Lessee's sole cost, construct a vault in a location Approved by Lessor near
Lessor's Telecommunications Entrance Vaults and pass all of Lessee's Conduit
through Lessor's Telecommunications Entrance Vaults to the Building
telecommunications room and Common Vertical Risers. The construction of Lessee's
entrance vaults may include removal and replacement of curbs and sidewalk.
Lessee shall not store excess cable in Lessor's Telecommunications Entrance
Vaults.
H. Antenna. Lessee may install on the roof, at Lessee's sole
expense, one line of site microwave and telecommunications reception tower
antenna. Any installation shall be subject to Lessor's approval of the location,
size, design, installation and appearance of such equipment and installation.
Page 3 of 3
<PAGE> 34
EXHIBIT A
THIRD FLOOR PREMISES DIAGRAM
<PAGE> 35
[CHART OMITTED]
EXHIBIT A
<PAGE> 36
EXHIBIT B
[INTENTIONALLY DELETED]
-----------------------
<PAGE> 37
EXHIBIT C
LESSOR'S REPORTS
(i) Phase I Environmental Site Assessment Report prepared by Terra Firma
Environmental Consulting dated June 5, 1997 (the "Phase I Environmental Report")
(ii) Phase II Environmental Site Assessment Report prepared by Terra Firma
Environmental Consulting dated June 20, 1997 (the "Phase II Environmental
Report")
(iii) Site Closure Report dated July 23, 1997, issued by ATC Associates
(iv) Closure Letter dated October 20, 1997, by the San Francisco Department
of Health Services
(v) Asbestos Survey prepared by North Tower Environmental dated August 7,
1997
(vi) Synergy Abatement Proposal dated August 12, 1997
(vii) Waste Manifest dated September 17, 1997
(viii) Air Quality Assessment dated September 2, 1997
<PAGE> 38
EXHIBIT D
FORM OF TENANT ESTOPPEL
ESTOPPEL CERTIFICATE
--------------------
THIS ESTOPPEL CERTIFICATE, ("Certificate") is made as of
_______________, 19__, by and among ___________________________, a
_________________________________, whose address is _____________________,
__________________, California ________________ ("Landlord") and
__________________, a _____________________________, whose address is
__________________________, ___________________, California _________________
("Tenant"); for the benefit of BANK OF THE WEST, a California banking
corporation, whose address is 1450 Treat Boulevard, Walnut Creek, California
94596 ("Beneficiary").
R E C I T A L S:
A. Landlord and Tenant have entered into a written lease agreement
dated ______________________, 19__ [as amended by ___________________ dated
____________, 19__] ([collectively,] the "Lease") with respect to that certain
real property located in the City of _____________________, County of
___________________, State of California, and more particularly described in
Exhibit "A" attached hereto (the "Property"), a portion of which constitutes the
leased premises (the "Leased Premises"), for the term and on the conditions set
forth in the Lease.
B. Landlord has executed, is executing or will execute a
____________ Deed of Trust, Assignment of Leases and Rents, Security Agreement,
Financing Statement and Fixture Filing (the "Deed of Trust") for the benefit of
Beneficiary covering Landlord's fee interest in the Property to secure a Secured
Promissory Note ("Note") dated on or about the date of this Certificate,
executed by Landlord in favor of Beneficiary. Landlord further has executed, is
executing or will execute an Assignment of Leases and Rents in favor of
Beneficiary (the "Assignment of Leases").
C. For the reliance of Beneficiary, the parties desire to certify
the truth and accuracy of certain matters as hereinafter set forth.
CERTIFICATE:
Tenant and Landlord hereby certify and represent to Beneficiary:
1. Attached hereto as Exhibit "B" is a complete, true and correct
copy of the Lease (inclusive of all exhibits, riders, and addenda, if any).
There are no modifications, amendments, supplements or understandings, oral or
written, amending, supplementing or changing the terms of the Lease other than
as attached hereto.
2. The Lease is in full force and effect, having been duly executed
and delivered by Landlord and Tenant, and is a valid binding obligation of
Landlord and Tenant.
3. The Lease is for a term of ___________ (_______) years plus
_________ (_______) _______-year extension option(s). The Commencement Date of
the Lease (as defined therein) has not yet occurred and Tenant has not yet taken
possession of the Leased Premises.
4. As of the date hereof, (i) neither Landlord nor Tenant has given
any notice or taken any action by which the Lease has been terminated prior to
the Commencement Date under Paragraph ______ of the Lease, and (ii) no
construction work has yet commenced.
5. The base monthly rent for the first (1st) ______________
(________) years following the Commencement Date is $_________, which rent is
payable in advance, on the __________ (_______) day of each calendar month. The
base monthly rent is subject to adjustment only as set forth in Paragraph ______
of the Lease. Tenant has not prepaid rent or been given free rent except as
expressly set forth in the Lease.
6. Tenant has made no advancements for or on behalf of Landlord and
there are no offsets, deductions or credits against the payment of rents or
other charges due from Tenant under the Lease. To the best of Tenant's and
Landlord's knowledge, Tenant has no claims or causes of action against Landlord.
To the best of Tenant's and Landlord's knowledge, There is no default under the
Lease on the part of Tenant or Landlord. Tenant and Landlord have each performed
the obligations required to be performed by them under the Lease through the
date hereof. To the best of Tenant's and Landlord's knowledge, There are no
existing conditions which upon giving notice or lapse of time or both would
constitute a default under the Lease. To the best of Tenant's and Landlord's
knowledge, no dispute, quarrel or controversy exists between Landlord and
Tenant.
7. No monetary consideration has been granted to Tenant for
entering into the Lease [except as otherwise specifically set forth therein]
[except for a tenant improvement allowance of $_________ as provided in the
Lease].
8. Tenant has no claim against Landlord for any security, rental,
cleaning or other deposits except for a security deposit under the Lease in the
amount of $__________, as of the date hereof.
9. Tenant has not entered into any sublease, assignment,
hypothecation, encumbrance or otherwise transferred any of its interest in the
Lease or the Leased Premises or entered into any agreement to do so.
10. Except as expressly set forth in the Lease, Tenant has no
options to extend the term of the Lease, no right of first offer or right of
first refusal to lease or occupy any other space within the Leased Premises, and
no right to renew or extend the Lease.
11. There has not been filed by or against Tenant a petition in
bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors,
any petition seeking reorganization or arrangement under the bankruptcy laws of
the United States, or any state thereof, or any other action brought under said
bankruptcy laws with respect to Tenant and Tenant has no notice of any of the
foregoing with respect to Landlord.
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<PAGE> 39
12. All insurance and other items required of Tenant by the Lease,
if due, have been provided by Tenant and all premiums and other charges have
been paid by Tenant or credited in full.
13. Tenant is not engaged in, nor does Tenant permit, any use or
occupancy of the Leased Premises for the handling, manufacturing, treatment,
storage, use, transportation, release spillage, leakage, dumping, discharge or
disposal (whether legal or not and whether accidental or intentional) of any
hazardous or toxic substances, materials or wastes regulated by any federal,
state or local law, other than those de minimis amounts of ordinary office and
cleaning supplies stored and used in the ordinary course of Tenant's business on
the Leased Premises, which are stored and used in compliance with all applicable
federal, state and local laws, regulations, rules and other requirements.
14. Tenant and Landlord acknowledge that Beneficiary shall make a
loan to Landlord in reliance upon the representations and warranties of Tenant
and Landlord as set forth above, and Tenant and Landlord each make the
representations and warranties contained herein with the intent that Beneficiary
shall so rely.
IN WITNESS WHEREOF, Landlord and Tenant have made this Certificate as of
the day and year first written above.
TENANT: ______________________, a
----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
LANDLORD:
______________________, a
----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
2
<PAGE> 40
EXHIBIT "A"
LEGAL DESCRIPTION
All that certain real property located in the City of
____________, County of _____________________, State of California, described
as:
Street Address: ____________________________________
____________________, California ___________
APN: _________________
<PAGE> 41
EXHIBIT E
FORM OF SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Bank of the West
1450 Treat Boulevard
Walnut Creek, California 94596
Attention: Real Estate Industries Group
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
This Subordination, Attornment and Non-Disturbance Agreement
("Agreement") is made as of ____________________, 19__, by and among
______________________________, whose address is
________________________________ ("Landlord"); ____________________________,
whose address is __________________________ ("Tenant"); and BANK OF THE WEST, a
California banking corporation, whose address is 1450 Treat Boulevard, Walnut
Creek, California 94596, Attn: ____________________ ("Beneficiary").
R E C I T A L S
1. [Landlord] [____________________, a ____________________
("Original Landlord")] and Tenant entered into a written lease agreement dated
___________________(the "Lease") with respect to that certain real property
located at _____________________, City of ____________________, County of
_________________, State of California, and more particularly described in
Exhibit "A" attached hereto (the "Property"), a portion of which constitutes the
leased premises (the "Leased Premises"), for the term and on the conditions set
forth in the Lease. [Substantially concurrent with the execution and the
recording of this Agreement, Original Landlord has conveyed the Property to
Landlord and has assigned the entire lessor's interest in the Lease to
Landlord.]
A. Landlord has executed, is executing or will execute a
[Construction] Deed of Trust, Assignment of Leases and Rents, Security
Agreement, Financing Statement and Fixture Filing ("Deed of Trust") covering
Landlord's fee interest in the Property in favor of Beneficiary to secure a
[Construction] Promissory Note ("Note") dated on or about the date of this
Agreement, in favor of Beneficiary[, and further is executing in favor of
Beneficiary a separate Assignment of Leases and Rents to be recorded
substantially concurrent with the Deed of Trust (the "Assignment of Leases")].
B. For the purpose of complying with the provisions of the
Note, [and] Deed of Trust[, and Assignment of Leases], and for the reliance of
Beneficiary, the parties desire to expressly subordinate the Lease to the lien
of the Deed of Trust [and to recognize the rights and interests of Beneficiary
under the Assignment of Leases].
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Except as expressly set forth in the Lease as of the date of
this Agreement, no agreement between Landlord and Tenant amending, extending,
modifying or terminating the Lease, or any provision thereof including without
limitation the amount or timing of rent due or becoming due thereunder, or
surrendering the Leased Premises, shall be effective without the prior written
consent of Beneficiary, nor shall Tenant prepay rent (except as set forth in the
Lease) without the prior written consent of Beneficiary.
2. Tenant hereby absolutely and unconditionally subordinates its
leasehold interest in the Property and all of Tenant's rights under the Lease to
the Deed of Trust and to all extensions, renewals, modifications, consolidations
and replacements of the Note and Deed of Trust, and all advances made or to be
made thereunder, to the full extent of all obligations secured by the Deed of
Trust; and the Deed of Trust shall unconditionally be and at all times remain a
lien or charge on the Property, prior to and superior to the Lease and leasehold
interest of Tenant.
3. So long as the Lease is in full force and effect and Tenant is
not in default (beyond any period given Tenant by the terms of the Lease to cure
such default) in the payment of rent, or in the performance of any of the
obligations, terms, covenant or conditions of the Lease to be performed on
Tenant's part, Tenant's rights under the Lease shall not be affected and
Tenant's possession of the Leased Premises under the Lease, or any extensions or
renewals thereof which may be effected in accordance with any option therefor in
the Lease, shall not be diminished or interfered with by Beneficiary, prior to
or after any foreclosure sale, or sale under private power pursuant to the Deed
of Trust, provided that Tenant complies with the provisions of Paragraph 4
hereof.
4. In the event Beneficiary or any other purchaser succeeds to the
interest of Landlord under the Lease by reason of any foreclosure of or sale
under private power contained in the Deed of Trust or the acceptance by
Beneficiary of a deed in lieu of foreclosure or by any other method, it is
agreed that:
1
<PAGE> 42
(a) Tenant shall recognize and be bound to Beneficiary or
such other purchaser, and to any and all successors-in-interest to
Beneficiary or such other purchaser, under all the terms, covenants and
conditions of the Lease for the remaining balance of the term of the
Lease, with the same force and effect as if Beneficiary or such other
purchaser or successor-in-interest were the landlord under the Lease,
and Tenant does hereby agree to attorn to Beneficiary or such other
purchaser or successor-in-interest as its landlord; and such attornment
shall be effective and self-operative without the execution of any
further instruments on the part of any parties to this Agreement,
immediately upon Beneficiary's or other purchaser's or
successor-in-interest's succeeding to the interest of Landlord under the
Lease;
(b) Subject to the observance and performance by Tenant of
all of the terms, covenants and conditions of the Lease to be observed
and performed on the part of Tenant, Beneficiary or such other purchaser
or successor-in-interest shall recognize the leasehold estate of Tenant
under all of the terms, covenants and conditions of the Lease for the
remaining balance of the term with the same force and effect as if
Beneficiary or such other purchaser or successor-in-interest were the
landlord under the Lease; provided, however, that Beneficiary or such
other purchaser or successor-in-interest shall not be (i) liable for any
act or omission of any prior landlord (including Landlord), (ii) liable
for the return of any security deposits, not delivered to Beneficiary
(iii) subject to any offsets or defenses which Tenant might have against
Landlord or any prior landlord, (iv) liable for any act or omission of
any subsequent landlord, (v) bound by any payment of rent or any other
monetary sums which Tenant might have paid to Landlord or any prior
landlord for more than the current month, or (vi) except as expressly
set forth in the Lease as of the date of this Agreement, bound by any
termination, cancellation, amendment or modification of the Lease or any
continuing waiver of any covenant of Lessee thereunder made without
Beneficiary's or such other purchaser's or successor-in-interest's
express prior written consent; and
(c) The succession of Beneficiary or such other purchaser or
successor-in-interest to the interest of Landlord under the Lease shall
not interfere or otherwise interrupt Tenant in its use and quiet
enjoyment of the premises pursuant to the Lease so long as Tenant is
current in the payment of all rentals and charges required under the
Lease and is not otherwise in default under the Lease.
5. Except as to any termination rights expressly set forth in the
Lease as of the date of this Agreement, in case of any default or alleged
default by Landlord under the Lease, the Lease shall not be subject to
termination by Tenant nor shall rent be subject to offset, abatement, or
deduction unless and until (a) Tenant has delivered to Beneficiary a written
notice describing with reasonable specificity each event of default claimed by
Tenant to exist and requesting Beneficiary to cure such event of default and (b)
such event of default is not cured within ninety (90) days after the date of
delivery of such written notice or, if the default cannot reasonably be cured
within such 90-day period, then so long as such delay does not materially
interfere with Tenant's use of the Leased Premises and so long as all services
are provided without interruption, such longer period of time as may be
reasonably necessary to cure such default, so long as Beneficiary commences
efforts to cure such default and prosecutes such efforts with reasonable
diligence including, without limitation, such time as may be necessary to
foreclose on its Deed of Trust, judicially or by power of sale.
6. Landlord and Tenant acknowledge that Beneficiary shall make a
loan to Landlord in reliance upon the representations, warranties and covenants
of Landlord and Tenant as set forth above, and Landlord and Tenant enter into
this Agreement with the intent that Beneficiary shall so rely.
7. The provisions of this Agreement shall be covenants running with
the Property, and shall be binding upon and shall inure to the benefit of the
parties to this Agreement and their respective heirs, representatives,
successors and assigns.
8. Tenant hereby recognizes and acknowledges Beneficiary's rights
and entitlements under the [Deed of Trust] [Assignment of Leases and Rents] and
understands that pursuant thereto Beneficiary is the unconditional, absolute
owner of the rents, issues and profits of the Property and the leases of the
Property, including but not limited to the Lease, subject only to the right and
license of Landlord to collect the rents so long as no Event of Default has
occurred, as therein provided. Upon written notification from Beneficiary that
an Event of Default has occurred, Tenant immediately shall pay to Beneficiary
(or Beneficiary's designee specified in such notice), and not to Landlord, all
of the rents and other sums owing under the Lease as and when the same become
due and owing from and after the date of such notice unless and until such time
as Beneficiary notifies Tenant that such Event of Default is cured and that
Landlord's license to collect the rents has been reinstated. Landlord hereby
authorizes and directs Tenant to comply with Beneficiary's notices and demands
as aforesaid, irrespective of any contrary or countermanding notice or demand by
Landlord, and without inquiry or investigation by Tenant as to the propriety of
any such notice or demand.
9. If any legal action, arbitration or other proceeding is
commenced to enforce any provision of this Agreement, the prevailing party shall
be entitled to any award of its actual expenses, including without limitation,
expert witness fees, actual attorney's fees and disbursements.
10. All notices to Beneficiary, Landlord, Original Landlord or
Tenant shall be by personal delivery or certified mail, return receipt
requested, to the address given for each such party at the beginning of this
Agreement, and shall be deemed given upon personal delivery and two (2) days
after such deposit in the United States Mail, postage prepaid.
11. From time-to-time upon request by Beneficiary, Tenant shall
execute such additional documents as Beneficiary may require to implement the
terms hereof, and such certificates as Beneficiary may request as to whether or
not to Tenant's knowledge any default on the part of Landlord exists under the
Lease and the nature of any such default, as to the terms of the Lease and any
modifications, amendments, and revisions thereto, and to such other matters as
Beneficiary may request. Tenant shall execute such documents upon thirty (30)
days notice from Beneficiary or Landlord.
12. The recitals and all exhibits attached hereto and referred to
herein are true and correct and are hereby incorporated herein by reference.
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<PAGE> 43
13. This Agreement shall be executed in recordable form and shall be
recorded in the Official Records of the County in which the Property is located
at the request of Beneficiary.
14. This Agreement may not be modified other than by an agreement in
writing signed by the parties hereto or their respective successors.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the day and year first written above.
TENANT:
----------------------------------------
Date:
-----------------------------------
LANDLORD: THE CAMBAY GROUP, INC.,
By:
-------------------------------------
Its:
------------------------------------
Date:
-----------------------------------
BENEFICIARY: BANK OF THE WEST, a California banking
corporation
By:
-------------------------------------
Its:
------------------------------------
Date:
-----------------------------------
(ALL SIGNATURES MUST BE NOTARIZED)
3
<PAGE> 44
State of ________________________________)
) ss.
County of _______________________________)
On ______________________________ before me, __________________________________,
personally appeared ___________________________________________________________,
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal (Seal)
- ----------------------------------------
State of _______________________________)
) ss.
County of ______________________________)
On _____________________________ before me, ___________________________________,
personally appeared ___________________________________________________________,
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal (Seal)
- ----------------------------------------
State of _______________________________)
) ss.
County of ______________________________)
On_______________________________ before me, __________________________________,
personally appeared ___________________________________________________________,
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal (Seal)
- ----------------------------------------
<PAGE> 45
EXHIBIT "A"
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 46
EXHIBIT "A"
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SAN FRANCISCO, CITY OF SAN FRANCISCO, described as follows:
PARCEL ONE:
COMMENCING AT THE POINT OF INTERSECTION OF THE NORTHERLY LINE OF PAUL AVENUE AND
THE WESTERLY LINE OF THE RIGHT OF WAY OF THE SOUTHERN PACIFIC COMPANY; RUNNING
THENCE NORTHERLY ALONG SAID WESTERLY LINE 569.967 FEET TO THE SOUTHERLY BOUNDARY
LINE OF THE PARCEL OF LAND DESCRIBED IN THE DEED FROM GUNN, CARLE & CO., A
PARTNERSHIP, TO GENERAL MANUFACTURING CO., INC., A CORPORATION, DATED JUNE 30,
1950, RECORDED IN THE OFFICE OF THE RECORDER OF THE CITY AND COUNTY OF SAN
FRANCISCO, STATE OF CALIFORNIA, JUNE 30, 1950, IN BOOK 5482 OF OFFICIAL RECORDS
AT PAGE 384; THENCE NORTH 75degree40' WEST ALONG SAID SOUTHERLY BOUNDARY LINE
214.787 FEET TO THE WESTERLY BOUNDARY LINE THEREOF; THENCE NORTH 14degree20'
EAST ALONG SAID WESTERLY BOUNDARY LINE 364 FEET TO THE NORTHERLY BOUNDARY LINE
OF THE PARCEL OF LAND DESCRIBED IN THE DEED FROM R.J. GRUENBERG AND WIFE, TO
GENERAL MANUFACTURING CO. INC., A CORPORATION, DATED OCTOBER 6, 1922, RECORDED
IN THE OFFICE OF THE RECORDER OF THE CITY AND COUNTY OF SAN FRANCISCO, STATE OF
CALIFORNIA, OCTOBER 31, 1922 IN BOOK 569 OF OFFICIAL RECORDS AT PAGE 459; THENCE
NORTH 73degree53' WEST ALONG SAID NORTHERLY BOUNDARY LINE 132.98 FEET TO THE
WESTERLY BOUNDARY LINE THEREOF; THENCE SOUTH 14degree20' WEST ALONG SAID
WESTERLY BOUNDARY LINE 923.782 FEET TO THE NORTHERLY LINE OF PAUL AVENUE; THENCE
EASTERLY ALONG SAID LINE OF PAUL AVENUE 351.234 FEET TO THE POINT OF
COMMENCEMENT.
PARCEL TWO:
COMMENCING AT A POINT ON THE WESTERLY LINE OF THE RIGHT OF WAY OF SOUTHERN
PACIFIC COMPANY DISTANT THEREON 929.63 FEET NORTHERLY FROM THE NORTHERLY LINE OF
PAUL AVENUE, SAID POINT OF COMMENCEMENT BEING THE POINT OF INTERSECTION OF SAID
LINE OF SAID RIGHT OF WAY AND THE NORTHERLY LINE OF THE PARCEL OF LAND DESCRIBED
IN THE DEED FROM R.J. GRUENBERG AND WIFE, TO GENERAL MANUFACTURING CO., INC., A
CORPORATION, DATED OCTOBER 6, 1922, RECORDED IN THE OFFICE OF THE CORPORATION,
DATED OCTOBER 6, 1922, RECORDED IN THE OFFICE OF THE RECORDER OF THE CITY AND
COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA, OCTOBER 31, 1922 IN BOOK 569
OFFICIAL RECORDS AT PAGE 459; RUNNING THENCE NORTH 73degree53' WEST ALONG THE
NORTHERLY LINE OF THE PARCEL OF LAND SO DESCRIBED IN SAID DEED, A DISTANCE OF
184 FEET;
-8-
<PAGE> 47
THENCE SOUTH 14degree20' WEST 364 FEET; THENCE AT A RIGHT ANGLE SOUTH
75degree40' EAST 214.787 FEET TO THE WESTERLY LINE OF SAID RIGHT OF WAY OF
SOUTHERN PACIFIC COMPANY; THENCE NORTHERLY ALONG SAID WESTERLY LINE 359.663 FEET
TO THE POINT OF COMMENCEMENT.
LOTS IF & IG BLOCK 5431A
THE ABOVE LAND IS ALSO DESCRIBED AS FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE NORTHERLY LINE OF PAUL AVENUE WITH
THE WESTERLY LINE OF THE RIGHT OF WAY OF THE SOUTHERN PACIFIC COMPANY, THE
GEARING OF SAID NORTHERLY LINE OF PAUL AVENUE BEING TAKEN TO BE NORTH
73degree21'51" WEST AND ALL BEARINGS HEREIN MENTIONED BEING RELATED THERETO;
RUNNING THENCE NORTH 15degree54'35" EAST ALONG SAID WESTERLY LINE OF THE RIGHT
OF WAY OF THE SOUTHERN PACIFIC COMPANY, 106.700 FEET TO A POINT; THENCE
CONTINUING NORTHERLY ALONG LAST SAID WESTERLY LINE, ON A CURVE TO THE LEFT
TANGENT TO THE PRECEDING COURSE AT LAST SAID POINT, WITH A RADIUS OF 5666.61
FEET AND A CENTRAL ANGLE OF 8degree19degree12.49", A DISTANCE OF 822.870 FEET TO
THE NORTHERLY BOUNDARY LINE OF THE PARCEL OF LAND DESCRIBED IN THE DEED FROM
R.J. GRUENBERG AND WIFE, TO GENERAL MANUFACTURING CO., INC., A CORPORATION,
DATED OCTOBER 6, 1922, RECORDED IN THE OFFICE OF THE RECORDER OF THE CITY AND
COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA, OCTOBER 31, 1922, IN BOOK 569 OF
OFFICIAL RECORDS AT PAGE 459; THENCE NORTH 73degree53' WEST ALONG LAST SAID
NORTHERLY BOUNDARY LINE 316.98 FEET TO THE WESTERLY BOUNDARY LINE OF THE PARCEL
OF LAND DESCRIBED IN SAID DEED; THENCE SOUTH 14degree20' WEST ALONG LAST SAID
WESTERLY BOUNDARY LINE, 923.782 FEET TO THE NORTHERLY LINE OF PAUL AVENUE;
THENCE SOUTH 73degree21'51" EAST ALONG SAID LINE OF PAUL AVENUE 351.234 FEET TO
THE POINT OF BEGINNING.
PROPERTY ADDRESS: 200 PAUL AVENUE, SAN FRANCISCO, CALIFORNIA
ASSESSOR'S PARCEL NOS.: LOT 1F, BLOCK 5431A
LOT 1G, BLOCK 5431A
-9-
<PAGE> 48
I
ESTOPPEL CERTIFICATE
THIS ESTOPPEL CERTIFICATE, ("Certificate") is made as of July 7, 1999.
by and among The Cambay Group, Inc., a California Corporation, whose address is
1350 Treat Blvd., Suite 560, Walnut Creek, California 94596 ("Landlord") and
Universal Access, Inc., a Delaware Corporation, whose address is 100 North
Riverside Plaza, Suite 2200, Illinois, 60600 ("Tenant"); for the benefit of BANK
OF THE WEST, a California banking corporation, whose address is 1450 Treat
Boulevard, Walnut Creek, California 94596 ("Beneficiary").
R E C I T A L S:
A. Landlord and Tenant have entered into a written lease agreement
dated March 19, 1999 ([collectively,] the "Lease") with respect to that certain
real property located in the City of San Francisco, County of San Francisco,
State of California, and more particularly described in Exhibit "A" attached
hereto (the "Property"), a portion of which constitutes the leased premises (the
"Leased Premises") for the term and on the conditions set forth in the Lease.
B. Landlord has executed, is executing or will execute a
Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement,
Financing Statement and Fixture Filing (the "Deed of Trust") for the benefit of
Beneficiary covering Landlord's fee interest in the Property to secure a Secured
Promissory Note ("Note") dated on or about the date of this Certificate,
executed by Landlord in favor of Beneficiary. Landlord further has executed, is
executing or will execute an Assignment of Leases and Rents in favor of
Beneficiary (the "Assignment of Leases").
C. For the reliance of Beneficiary, the parties desire to certify
the truth and accuracy of certain matters as hereinafter set forth.
CERTIFICATE:
Tenant and Landlord hereby certify and represent to Beneficiary:
1. Attached hereto as Exhibit "B" is a complete, true and correct
copy of the Lease (inclusive of all exhibits, riders, and addenda, if any).
There are no modifications, amendments, supplements or understandings, oral or
written, amending, supplementing or changing the terms of the Lease other than
as attached hereto.
2. The Lease is in full force and effect, having been duly executed
and delivered by Landlord and Tenant, and is a valid binding obligation of
Landlord and Tenant.
<PAGE> 49
3. The Lease is for a term of ten (10) years plus one (1), five (5)
- - year extension option(s). The Commencement Date of the Lease (as defined
therein) has not yet occurred and Tenant has not yet taken possession of the
Leased Premises.
4. As of the date hereof, (i) neither Landlord nor Tenant has given
any notice or take any action by which the Lease has been terminated prior to
the Commencement Date under Section 3.4 of the Lease, and (ii) no construction
work has yet commenced.
5. The base monthly rent for the first (1st) year following the
Commencement Date is $ 2.50 per rentable square foot per month + $1.25 per
useable square foot per month of the Support Space, which rent is payable in
advance, on the first (1) day of each calendar month. The base monthly rent is
subject to adjustment only as set forth in Addendum 2 of the Lease. Tenant has
not prepaid rent or been given free rent except as expressly set forth in the
Lease.
6. Tenant has made no advancements for or on behalf of Landlord and
there are no offsets, deductions or credits against the payment of rents or
other charges due from Tenant under the Lease. To the best of Tenant's and
Landlord's knowledge, Tenant has no claims or causes of action against Landlord.
To the best of Tenant's and Landlord's knowledge, There is no default under the
Lease on the part of Tenant or Landlord. Tenant and Landlord have each performed
the obligations required to be performed by them under the Lease through the
date hereof. To the best of Tenant's and Landlord's knowledge, There are no
existing conditions which upon giving notice or lapse of time or both would
constitute a default under the Lease. To the best of Tenant's and Landlord's
knowledge, no dispute, quarrel or controversy exists between Landlord and
Tenant.
7. No monetary consideration has been granted to Tenant for
entering into the Lease [except as otherwise specifically set forth therein]
[except for a tenant improvement allowance of $ 0.00 as provided in the Lease].
8. Tenant has no claim against Landlord for any security, rental,
cleaning or other deposits except for a security deposit under the Lease in the
amount of $ 30,000.00 as of the date hereof.
9. Tenant has not entered into any sublease, assignment,
hypothecation, encumbrance or otherwise transferred any of its interest in the
Lease or the Leased Premises or entered into any agreement to do so.
10. Except as expressly set forth in the Lease, Tenant has no
options to extend the term of the Lease, no right of first offer or right of
first refusal to lease or occupy any other space within the Leased Premises, and
no right to renew or extend the Lease.
11. There has not been filed by or against Tenant a petition in
bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors,
any petition seeking reorganization or arrangement under the bankruptcy laws of
the United States, or any state thereof, or any other action brought under said
bankruptcy laws with respect Tenant, and Tenant has no notice of (??) of the
foregoing with respect to Landlord.
12. All insurance and other items required of Tenant by the Lease,
if due, have been provided by Tenant and all premiums and other charges have
been paid by Tenant or credited in full.
13. Tenant is not engaged in, nor does Tenant permit, any use or
occupancy of the Leased Premises for the handling, manufacturing, treatment,
storage, use, transportation, release spillage,
<PAGE> 50
leakage, dumping, discharge or disposal (whether legal or not and whether
accidental or intentional) of any hazardous or toxic substances, materials or
wastes regulated by any federal, state or local law, other than those de minimis
amounts of ordinary office and cleaning supplies stored and used in the ordinary
course of Tenant's business on the Leased Premises, which are stored and used in
compliance with all applicable federal, state and local laws, regulations, rules
and other requirements.
14. Tenant and Landlord acknowledge that Beneficiary shall make a
loan to Landlord in reliance upon the representations and warranties of Tenant
and Landlord as set forth above, and Tenant and Landlord each make the
representations and warranties contained herein with the intent that Beneficiary
shall so rely.
IN WITNESS WHEREOF, Landlord and Tenant have made this Certificate as of
the day and year first written above.
TENANT: UNIVERSAL ACCESS, INC.
DELAWARE CORPORATION
By: /s/ ROBERT J. POMMER
-------------------------------------
Name: Robert J. Pommer
-----------------------------------
Its: COO
------------------------------------
By: /s/ THOMAS H. HADDEN
-------------------------------------
Name: Thomas H. Hadden
-----------------------------------
Its: C.N.O
------------------------------------
LANDLORD: The Cambay Group, Inc.
California Corporation
By: /s/ JOHN O. WILSON
-------------------------------------
Name: John O. Wilson
-----------------------------------
Its: Vice President
------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
EXHIBIT "A"
<PAGE> 51
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Bank of the West
1450 Treat Boulevard
Walnut Creek, California 94596
Attention: Real Estate Industries Group
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
This Subordination, Attornment and Non-Disturbance Agreement
("Agreement") is made as of July 1, 1999, by and among THE CAMBAY GROUP, INC., a
California corporation, whose address is 1350 Treat Boulevard, Suite 560, Walnut
Creek, California 94596 ("Landlord"); UNIVERSAL ACCESS, INC., a Delaware
corporation, whose address is 100 North Riverside Plaza, Suite 2200, Chicago,
Illinois 60600, Attention: Robert J. Pommer, COO ("Tenant"); and BANK OF THE
WEST, a California banking corporation, whose address is 1450 Treat Boulevard,
Walnut Creek, California 94596, Attn: Real Estate Industries Group
("Beneficiary").
R E C I T A L S:
A. Landlord and Tenant entered into a written lease agreement dated
March 19, 1999 (the "Lease") with respect to that certain real property located
at 200 Paul Avenue, City and County of San Francisco, State of California, and
more particularly described in Exhibit "A" attached hereto (the "Property"), a
portion of which constitutes the leased premises (the "Leased Premises"), for
the term and on the conditions set forth in the Lease.
B. Landlord has executed, is executing or will execute a
Construction and Converting Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Financing Statement and Fixture Filing ("Deed of Trust")
covering Landlord's fee interest in the Property in favor of Beneficiary to
secure a promissory note ("Note") in favor of Beneficiary.
C. For the purpose of complying with the provisions of the Note and
Deed of Trust, and for the reliance of Beneficiary, the parties desire to
expressly subordinate the Lease to the lien of the Deed of Trust.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
-1-
<PAGE> 52
1. Except as expressly set forth in the Lease as of the date of
this Agreement, no agreement between Landlord and Tenant amending, extending,
modifying or terminating the Lease, or any provision thereof including without
limitation the amount or timing of rent due or becoming due thereunder, or
surrendering the Leased Premises, shall be effective without the prior written
consent of Beneficiary, nor shall Tenant prepay rent (except as otherwise set
forth in the Lease) without the prior written consent of Beneficiary.
2. Tenant hereby absolutely and unconditionally subordinates its
leasehold interest in the Property and all of Tenant's rights under the Lease to
the Deed of Trust and to all extensions, renewals, modifications, consolidations
and replacements of the Note and Deed of Trust, and all advances made or to be
made thereunder, to the full extent of all obligations secured by the Deed of
Trust; and the Deed of Trust shall unconditionally be and at all times remain a
lien or charge on the Property, prior to and superior to the Lease and leasehold
interest of Tenant.
3. So long as the Lease is in full force and effect and Tenant is
not in default (beyond any period given Tenant by the terms of the Lease to cure
such default) in the payment of rent, or in the performance of any of the
obligations, terms, covenant or conditions of the Lease to be performed on
Tenant's part, Tenant's rights under the Lease shall not be affected and
Tenant's possession of the Leased Premises under the Lease, or any extensions or
renewals thereof which may be effected in accordance with any option therefor in
the Lease, shall not be diminished or interfered with by Beneficiary, prior to
or after any foreclosure sale, or sale under private power pursuant to the Deed
of Trust, provided that Tenant complies with the provisions of Paragraph 4
hereof.
4. In the event Beneficiary or any other purchaser succeeds to the
interest of Landlord under the Lease by reason of any foreclosure of or sale
under private power contained in the Deed of Trust or the acceptance by
Beneficiary of a deed in lieu of foreclosure or by any other method, it is
agreed that:
(a) Tenant shall recognize and be bound to Beneficiary or
such other purchaser, and to any and all successors-in-interest to Beneficiary
or such other purchaser, under all the terms, covenants and conditions of the
Lease for the remaining balance of the term of the Lease, with the same force
and effect as if Beneficiary or such other purchaser or successor-in-interest
were the landlord under the Lease, and Tenant does hereby agree to attorn to
Beneficiary or such other purchaser or successor-in-interest as its landlord;
and such attornment shall be effective and self-operative without the execution
of any further instruments on the part of any parties to this Agreement,
immediately upon Beneficiary's or other purchaser's or successor-in-interest's
succeeding to the interest of Landlord under the Lease;
(b) Subject to the observance and performance by Tenant of
all of the terms, covenants and conditions of the Lease to be observed and
performed on the part of Tenant, Beneficiary or such other purchaser or
successor-in-interest shall recognize the leasehold estate of Tenant under all
of the terms, covenants and conditions of the Lease for the remaining balance of
the term with the same force and effect as if Beneficiary or such other
purchaser or successor-in-interest were the landlord under the Lease; provided,
however, that Beneficiary or
-2-
<PAGE> 53
such other purchaser or successor-in-interest shall not be (i) liable for any
act or omission of any prior landlord (including Landlord), (ii) liable for the
return of any security deposits not delivered to Beneficiary, (iii) subject to
any offsets or defenses which Tenant might have against Landlord or any prior
landlord, (iv) liable for any act or omission of any subsequent landlord, (v)
bound by any payment of rent or any other monetary sums which Tenant might have
paid to Landlord or any prior landlord for more than the current month, or (vi)
bound by any termination, cancellation, amendment or modification of the Lease
or any continuing waiver of any covenant of Lessee thereunder made without
Beneficiary's or such other purchaser's or successor-in-interest's express prior
written consent; and
(c) The succession of Beneficiary or such other purchaser or
successor-in-interest to the interest of Landlord under the Lease shall not
interfere or otherwise interrupt Tenant in its use and quiet enjoyment of the
premises pursuant to the Lease so long as Tenant is current in the payment of
all rentals and charges required under the Lease and is not otherwise in default
under the Lease.
5. Except as to any termination rights expressly set forth in the
Lease as of the date of this Agreement, in case of any default or alleged
default by Landlord under the Lease, the Lease shall not be subject to
termination by Tenant nor shall rent be subject to offset, abatement, or
deduction unless and until (a) Tenant has delivered to Beneficiary a written
notice describing with reasonable specificity each event of default claimed by
Tenant to exist and requesting Beneficiary to cure such event of default and (b)
such event of default is not cured within ninety (90) days after the date of
delivery of such written notice or, if the default cannot reasonably be cured
within such 90-day period, then so long as such delay does not materially
interfere with Tenant's use of the Leased Premises and so long as all services
are provided without interruption, such longer period of time as may be
reasonably necessary to cure such default, so long as Beneficiary commences
efforts to cure such default and prosecutes such efforts with reasonable
diligence including, without limitation, such time as may be necessary to
foreclose on its Deed of Trust, judicially or by power of sale.
6. Landlord and Tenant acknowledge that Beneficiary shall make a
loan to Landlord in reliance upon the representations, warranties and covenants
of Landlord and Tenant as set forth above, and Landlord and Tenant enter into
this Agreement with the intent that Beneficiary shall so rely.
7. The provisions of this Agreement shall be covenants running with
the Property, and shall be binding upon and shall inure to the benefit of the
parties to this Agreement and their respective heirs, representatives,
successors and assigns.
8. Tenant hereby recognizes and acknowledges Beneficiary's rights
and entitlements under the Deed of Trust and understands that pursuant thereto
Beneficiary is the unconditional, absolute owner of the rents, issues and
profits of the Property and the leases of the Property, including but not
limited to the Lease, subject only to the right and license of Landlord to
collect the rents so long as no Event of Default has occurred, as therein
provided. Upon written notification from Beneficiary that an Event of Default
has occurred, Tenant immediately shall pay to Beneficiary (or Beneficiary's
designee specified in such notice), and not to Landlord,
-3-
<PAGE> 54
all of the rents and other sums owing under the Lease as and when the same
become due and owing from and after the date of such notice unless and until
such time as Beneficiary notifies Tenant that such Event of Default is cured and
that Landlord's license to collect the rents has been reinstated. Landlord
hereby authorizes and directs Tenant to comply with Beneficiary's notices and
demands as aforesaid, irrespective of any contrary or countermanding notice or
demand by Landlord, and without inquiry or investigation by Tenant as to the
propriety of any such notice or demand.
9. If any legal action, arbitration or other proceeding is
commenced to enforce any provision of this Agreement, the prevailing party shall
be entitled to any award of its actual expenses, including without limitation,
expert witness fees, actual attorney's fees and disbursements.
10. All notices to Beneficiary, Landlord or Tenant shall be by
personal delivery or certified mail, return receipt requested, to the address
given for each such party at the beginning of this Agreement, and shall be
deemed given upon personal delivery and two (2) days after such deposit in the
United States Mail, postage prepaid.
11. From time-to-time upon request by Beneficiary, Tenant shall
execute such additional documents as Beneficiary may require to implement the
terms hereof, and such certificates as Beneficiary may request as to whether or
not to Tenant's knowledge any default on the part of Landlord exists under the
Lease and the nature of any such default, as to the terms of the Lease and any
modifications, amendments, and revisions thereto, and to such other matters as
Beneficiary may request. Tenant shall execute such documents upon ten (10) days
notice from Beneficiary or Landlord.
12. The recitals and all exhibits attached hereto and referred to
herein are true and correct and are hereby incorporated herein by reference.
13. This Agreement shall be executed in recordable form and shall be
recorded in the Official Records of the County in which the Property is located
at the request of Beneficiary.
14. This Agreement may not be modified other than by an agreement in
writing signed by the parties hereto or their respective successors.
-4-
<PAGE> 55
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the day and year first written above.
TENANT: UNIVERSAL ACCESS, INC., a Delaware
corporation
By: /s/ ROBERT J. POMMER
-------------------------------------
Robert J. Pommer
Its: Chief Operating Officer
------------------------------------
Date: 7/15/99
-----------------------------------
LANDLORD: THE CAMBAY GROUP, INC., a California
corporation
By: /s/ JOHN O. WILSON
-------------------------------------
John O. Wilson
Its: Vice President
------------------------------------
Date: July 21, 1999
-----------------------------------
BENEFICIARY: BANK OF THE WEST, a California banking
corporation
By: /s/ RICK K. YEE
-------------------------------------
Rick K. Yee
Its: Vice President
------------------------------------
Date: 7/22/99
-----------------------------------
(ALL SIGNATURES MUST BE NOTARIZED)
-5-
<PAGE> 56
STATE OF CALIFORNIA )
)ss.
COUNTY OF _______________ )
On 7/15/99 before me, Kate Sandonato, a Notary Public in and for said
County, personally appeared Bob Pommer, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ KATHRYN M. SANDONATO
----------------------------------------
Kathryn M. Sandonato
Notary Public
STATE OF CALIFORNIA )
)ss.
COUNTY OF Contra Costa )
On July 21, 1999 before me, Lilibeth V. Abad a Notary Public in and for
said County, personally appeared John O. Wilson personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ LILIBETH V. ABAD
----------------------------------------
Lilibeth V. Abad
Notary Public
-6-
<PAGE> 57
STATE OF CALIFORNIA )
) ss.
COUNTY OF CONTRA COSTA )
On 7/22/99 before me GLORIA S. LARSEN, a Notary Public in and for said
County, personally appeared Rick K. Yee personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ GLORIA S. LARSON
----------------------------------------
Gloria S. Larson
Notary Public
-7-
<PAGE> 58
EXHIBIT "A"
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
SAN FRANCISCO, CITY OF SAN FRANCISCO, described as follows:
PARCEL ONE:
COMMENCING AT THE POINT OF INTERSECTION OF THE NORTHERLY LINE OF PAUL AVENUE AND
THE WESTERLY LINE OF THE RIGHT OF WAY OF THE SOUTHERN PACIFIC COMPANY; RUNNING
THENCE NORTHERLY ALONG SAID WESTERLY LINE 569.967 FEET TO THE SOUTHERLY BOUNDARY
LINE OF THE PARCEL OF LAND DESCRIBED IN THE DEED FROM GUNN, CARLE & CO., A
PARTNERSHIP, TO GENERAL MANUFACTURING CO., INC., A CORPORATION, DATED JUNE 30,
1950, RECORDED IN THE OFFICE OF THE RECORDER OF THE CITY AND COUNTY OF SAN
FRANCISCO, STATE OF CALIFORNIA, JUNE 30, 1950, IN BOOK 5482 OF OFFICIAL RECORDS
AT PAGE 384; THENCE NORTH 75degree40' WEST ALONG SAID SOUTHERLY BOUNDARY LINE
214.787 FEET TO THE WESTERLY BOUNDARY LINE THEREOF; THENCE NORTH 14degree20'
EAST ALONG SAID WESTERLY BOUNDARY LINE 364 FEET TO THE NORTHERLY BOUNDARY LINE
OF THE PARCEL OF LAND DESCRIBED IN THE DEED FROM R.J. GRUENBERG AND WIFE, TO
GENERAL MANUFACTURING CO. INC., A CORPORATION, DATED OCTOBER 6, 1922, RECORDED
IN THE OFFICE OF THE RECORDER OF THE CITY AND COUNTY OF SAN FRANCISCO, STATE OF
CALIFORNIA, OCTOBER 31, 1922 IN BOOK 569 OF OFFICIAL RECORDS AT PAGE 459; THENCE
NORTH 73degree53' WEST ALONG SAID NORTHERLY BOUNDARY LINE 132.98 FEET TO THE
WESTERLY BOUNDARY LINE THEREOF; THENCE SOUTH 14degree20' WEST ALONG SAID
WESTERLY BOUNDARY LINE 923.782 FEET TO THE NORTHERLY LINE OF PAUL AVENUE; THENCE
EASTERLY ALONG SAID LINE OF PAUL AVENUE 351.234 FEET TO THE POINT OF
COMMENCEMENT.
PARCEL TWO:
COMMENCING AT A POINT ON THE WESTERLY LINE OF THE RIGHT OF WAY OF SOUTHERN
PACIFIC COMPANY DISTANT THEREON 929.63 FEET NORTHERLY FROM THE NORTHERLY LINE OF
PAUL AVENUE, SAID POINT OF COMMENCEMENT BEING THE POINT OF INTERSECTION OF SAID
LINE OF SAID RIGHT OF WAY AND THE NORTHERLY LINE OF THE PARCEL OF LAND DESCRIBED
IN THE DEED FROM R.J. GRUENBERG AND WIFE, TO GENERAL MANUFACTURING CO., INC., A
CORPORATION, DATED OCTOBER 6, 1922, RECORDED IN THE OFFICE OF THE CORPORATION,
DATED OCTOBER 6, 1922, RECORDED IN THE OFFICE OF THE RECORDER OF THE CITY AND
COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA, OCTOBER 31, 1922 IN BOOK 569
OFFICIAL RECORDS AT PAGE 459; RUNNING THENCE NORTH 73degree53' WEST ALONG THE
NORTHERLY LINE OF THE PARCEL OF LAND SO DESCRIBED IN SAID DEED, A DISTANCE OF
184 FEET;
-8-
<PAGE> 59
THENCE SOUTH 14degree20' WEST 364 FEET; THENCE AT A RIGHT ANGLE SOUTH
75degree40' EAST 214.787 FEET TO THE WESTERLY LINE OF SAID RIGHT OF WAY OF
SOUTHERN PACIFIC COMPANY; THENCE NORTHERLY ALONG SAID WESTERLY LINE 359.663 FEET
TO THE POINT OF COMMENCEMENT.
LOTS IF & IG BLOCK 5431A
THE ABOVE LAND IS ALSO DESCRIBED AS FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE NORTHERLY LINE OF PAUL AVENUE WITH
THE WESTERLY LINE OF THE RIGHT OF WAY OF THE SOUTHERN PACIFIC COMPANY, THE
GEARING OF SAID NORTHERLY LINE OF PAUL AVENUE BEING TAKEN TO BE NORTH
73degree21'51" WEST AND ALL BEARINGS HEREIN MENTIONED BEING RELATED THERETO;
RUNNING THENCE NORTH 15degree54'35" EAST ALONG SAID WESTERLY LINE OF THE RIGHT
OF WAY OF THE SOUTHERN PACIFIC COMPANY, 106.700 FEET TO A POINT; THENCE
CONTINUING NORTHERLY ALONG LAST SAID WESTERLY LINE OF THE RIGHT OF WAY OF THE
SOUTHERN PACIFIC COMPANY, 106.700 FEET TO A POINT; THENCE CONTINUING NORTHERLY
ALONG LAST SAID WESTERLY LINE, ON A CURVE TO THE LEFT TANGENT TO THE PRECEDING
COURSE AT LAST SAID POINT, WITH A RADIUS OF 5666.61 FEET AND A CENTRAL ANGLE OF
8degree19' 12.49", A DISTANCE OF 822.870 FEET TO THE NORTHERLY BOUNDARY LINE OF
THE PARCEL OF LAND DESCRIBED IN THE DEED FROM R.J. GRUENBERG AND WIFE, TO
GENERAL MANUFACTURING CO., INC., A CORPORATION, DATED OCTOBER 6, 1922, RECORDED
IN THE OFFICE OF THE RECORDER OF THE CITY AND COUNTY OF SAN FRANCISCO, STATE OF
CALIFORNIA, OCTOBER 31, 1922, IN BOOK 569 OF OFFICIAL RECORDS AT PAGE 459;
THENCE NORTH 73degree53' WEST ALONG LAST SAID NORTHERLY BOUNDARY LINE 316.98
FEET TO THE WESTERLY BOUNDARY LINE OF THE PARCEL OF LAND DESCRIBED IN SAID DEED;
THENCE SOUTH 14degree20' WEST ALONG LAST SAID WESTERLY BOUNDARY LINE, 923.782
FEET TO THE NORTHERLY LINE OF PAUL AVENUE; THENCE SOUTH 73degree21'51" EAST
ALONG SAID LINE OF PAUL AVENUE 351.234 FEET TO THE POINT OF BEGINNING.
PROPERTY ADDRESS: 200 PAUL AVENUE, SAN FRANCISCO, CALIFORNIA
ASSESSOR'S PARCEL NOS.: LOT 1F, BLOCK 5431A
LOT 1G, BLOCK 5431A
-9-
<PAGE> 1
EXHIBIT 10.15
OFFICE LEASE AGREEMENT
Between
1120 VERMONT AVENUE ASSOCIATES
"Landlord"
And
UNIVERSAL ACCESS, INC.
"Tenant"
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
I. BASIC LEASE INFORMATION; DEFINITIONS 1
II. LEASE GRANT 3
III. ADJUSTMENT OF COMMENCEMENT DATE/POSSESSION 4
IV. RENT 4
V. USE 10
VI. SECURITY DEPOSIT 11
VII. SERVICES TO BE FURNISHED BY LANDLORD 12
VIII. LEASEHOLD IMPROVEMENTS 13
IX. GRAPHICS 13
X. REPAIRS AND ALTERATIONS 14
XI. USE OF ELECTRICAL SERVICES BY TENANT 16
XII. ENTRY BY LANDLORD 17
XIII. ASSIGNMENT AND SUBLETTING 17
XIV. LIENS 19
XV. INDEMNITY AND WAIVER OF CLAIMS 19
XVI. TENANT'S INSURANCE 21
XVII. SUBROGATION 22
XVIII. LANDLORD'S INSURANCE 22
XIX. CASUALTY DAMAGE 23
XX. INTENTIONALLY OMITTED 24
XXI. CONDEMNATION 24
XXII. EVENTS OF DEFAULT 24
XXIII. REMEDIES 26
XXIV. LIMITATION OF LIABILITY 27
XXVI. EVENT OF BANKRUPTCY 28
XXVII. WAIVER OF JURY TRIAL 29
XXVIII. LANDLORD'S ALLOWANCE AND INITIAL IMPROVEMENTS 29
XXIX. HOLDING OVER 30
XXXI. ATTORNEYS' FEES 31
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
XXXII. NOTICE 32
XXXIII. ESTOPPEL CERTIFICATES 32
XXXIV. LANDLORD'S LIEN 32
XXXV. EXCEPTED RIGHTS 33
XXXVI. SURRENDER OF PREMISES 34
XXXVII. PARKING 34
XXVIII. ACCESS 35
XXXX. RENEWAL OPTION TERMS 38
XXXXI. ENTIRE AGREEMENT 39
</TABLE>
-ii-
<PAGE> 4
OFFICE LEASE AGREEMENT
This Office Lease Agreement (the "Lease") is made and entered into as
of the _____ day of March, 1999 by and between 1120 VERMONT AVENUE ASSOCIATES, a
District of Columbia limited partnership ("Landlord") and UNIVERSAL ACCESS,
INC., an Illinois corporation duly qualified to transact business in the
District of Columbia ("Tenant").
I. BASIC LEASE INFORMATION; DEFINITIONS.
A. The following are some of the basic lease information and defined
terms used in this Lease.
1. "Additional Base Rental" shall mean Tenant's Pro Rata Share of
Basic Costs and any other sums (exclusive of Base Rental) that are required to
be paid by Tenant to Landlord hereunder, which sums are deemed to be additional
rent under this Lease. Additional Base Rental and Base Rental are sometimes
collectively referred to herein as "Rent."
2. "Base Rental" shall mean the sums that Tenant is required to pay
to Landlord in accordance with the following schedule (assuming a Rentable Area
of the Premises in an amount equal to 7,680 square feet):
<TABLE>
<CAPTION>
Basic Rent
Lease Year Annual Monthly
<S> <C> <C>
1 $ 145,920.00 $ 12,160.00
2 $ 150,297.60 $ 12,524.80
3 $ 154,806.53 $ 12,900.54
4 $ 159,450.72 $ 13,287.56
5 $ 164,234.25 $ 13,686.19
6 $ 187,274.25 $ 15,606.19
7 $ 192,892.48 $ 16,074.37
8 $ 198,679.25 $ 16,556.60
9 $ 204,639.63 $ 17,053.30
10 $ 210,778.82 $ 17,564.90
</TABLE>
Base Rental shall commence to be payable as of the Lease Commencement
Date. If the Lease Commencement Date does not occur on the 1st day of a calendar
month, the installment of Base Rental for such partial calendar month shall be
appropriately adjusted on a per diem basis assuming a thirty (30) day calendar
month.
3. "Building" shall mean the office building located at 1120 Vermont
Avenue, N.W., Washington, D.C., 20005, commonly known as 1120 Vermont Avenue.
4. The "Lease Term" shall mean a period of one hundred twenty (120)
full months plus the partial month of May, 1999 commencing on the 19th day of
May, 1999 (the "Commencement Date") and ending on May 31, 2009 unless extended
pursuant to Article XXXX below. The "Termination Date" shall, unless sooner
terminated as provided herein, mean the last day of the Lease Term.
Notwithstanding the foregoing, if the Termination Date, as determined herein,
does not occur on the last day of a calendar month, the Lease Term shall be
extended by the number of days necessary to cause the Termination Date to occur
on the last day of the last calendar month of the Lease Term.
<PAGE> 5
Tenant shall pay Base Rental and Additional Base Rental for such additional days
at the same rate payable for the portion of the last calendar month immediately
preceding such extension. The term "Lease Year" shall refer to each consecutive
twelve (12) month period commencing with the Commencement Date (if such date is
the 1st day of a calendar month) or on the first day of the calendar month in
which such Commencement Date shall occur (if such date is other than on the
first day of a calendar month) and each successive anniversary thereof;
provided, however that the first Lease Year shall commence as of the
Commencement Date.
5. "Premises" shall mean the area located on the first (1st) floor
of the Building, as outlined on Exhibit A attached hereto. Landlord and Tenant
hereby stipulate and agree that the "Rentable Area of the Premises" shall mean
7,680 square feet (inclusive of a 10% core factor) and the "Rentable Area of the
Building for Taxes" shall mean 481,554 square feet of office and retail space
and the "Rentable Area of the Building for Expenses" shall mean 481,554 square
feet.
6. "Permitted Use" shall mean general office use with the right to
conduct therein the licensing of the right to operate, maintain, repair and
replace internet telecommunications and other electronic equipment.
7. "Security Deposit" shall mean the sum of One Hundred Thousand
Dollars ($100,000.00) which at Tenant's option may be in cash or by irrevocable
letter of credit as more fully described in Article VI below.
8. "TENANT'S Pro Rata Share" shall mean one and six tenths percent
(1.6%), which is the quotient (expressed as a percentage), derived by dividing
the Rentable Area of the Premises by the Rentable Area of the Building (i.e.
7,680/481,554). "Tenant's Pro Rata Share of Additional Base Rental" shall mean
the sum of (x) the product obtained by multiplying (1) Tenant's Pro Rata Share
by (2) Expenses (defined below) for a particular year plus (y) the product
obtained by multiplying (1) Tenant's Pro Rata Share by (2) Taxes paid by
Landlord in such year. It is expressly recognized by the parties that the Base
Rental be net to Landlord and that Tenant pay its Pro Rata Share of all Taxes
and Expenses without regard to any base year Expenses or base year Taxes. The
respective computations under (x) and (y) above shall be computed separate and
independent of each other.
9. "Guarantor(s)" shall mean any party that agrees in writing to
guarantee the Lease. As of the date hereof, there are no Guarantors of this
Lease.
10. "Notice Addresses" shall mean the following addresses for Tenant
and Landlord, respectively:
Landlord: c/o S. C. Herman & Associates, Inc.
1120 Vermont Avenue, Suite 900
Washington, D.C. 20005
Tenant: Before the Commencement Date:
Universal Access, Inc.
100 North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Attention: Mr. Stuart McDowell
After the Commencement Date:
c/o the Premises
2
<PAGE> 6
Payments of Rent only shall be made payable to the order of:
1120 Vermont Avenue Associates
c/o S.C. Herman & Associates, Inc.
1120 Vermont Avenue, N.W., Suite 900
Washington, D.C. 20005
B. The following are additional definitions of some of the defined
terms used in the Lease.
1. "Basic Costs" shall mean all costs and expenses paid or incurred
in connection with operating; maintaining, repairing, managing and owning the
Building and the Property, as further described in Article IV hereof.
2. "Brokers" mean: Dean Topping & Co. and Pollina Corporate Real
Estate, Inc. ("Tenant's Broker") and Charles E. Smith Commercial Realty
("Landlord's Broker").
3. "Building Standard" shall mean the type, grade, brand, quality
and/or quantity of materials Landlord reasonably designates from time to time to
be the minimum quality and/or quantity to be used in the Building.
4. "Business Day(s)" shall mean Mondays through Fridays exclusive of
those holidays ("Holidays") recognized as federal holidays within the District
of Columbia.
5. "Common Areas" shall mean those areas provided for the common use
or benefit of all tenants of the Building generally and/or the public, such as
corridors, elevator foyers, common mail rooms, restrooms, vending areas, lobby
areas (whether at ground level or otherwise) and other similar facilities.
6. "Expenses" shall mean all Basic Costs other than Taxes.
7. "Initial Leasehold Improvements" shall mean the work that Tenant
caused to be performed within the Premises prior to the expiration of thirty
(30) days following the Commencement Date and/or any additional alterations
performed by Tenant within the Premises for which Tenant intends to apply the
Tenant Allowance towards the payment thereof, in all such instances to be
performed pursuant to the Plans to be first approved by Landlord.
8. "Maximum Rate" shall mean the lesser of (i) eighteen percent
(18%) per annum or (ii) the maximum per annum rate of interest permitted from
time to time under applicable law.
9. "Normal Business Hours" for the Building shall mean 7:00 A.M. to
6:00 P.M. Mondays through Fridays, exclusive of Holidays.
10. "Property" shall mean the Building and the parcel(s) of land on
which it is located and, at Landlord's discretion, the Building garage, if any,
and all other improvements owned by Landlord and serving the Building and the
tenants thereof and the parcel(s) of land on which they are located.
II. LEASE GRANT.
Subject to and upon the terms herein set forth, Landlord leases to
Tenant and Tenant leases from Landlord the Premises, together with the right, in
common with others, to use the Common Areas.
III. ADJUSTMENT OF COMMENCEMENT DATE/POSSESSION.
3
<PAGE> 7
A. The Lease Term, Commencement Date and Termination Date have been
determined in accordance with subsection I.A.4. above.
B. By taking possession of the Premises, Tenant is deemed to have
accepted the Premises and agreed that the Premises is in satisfactory condition,
with no representation or warranty by Landlord as to the condition of the
Premises or the Building or suitability thereof for Tenant's use except as
expressly set forth in this Lease. Notwithstanding the foregoing, should Tenant
elect to have Landlord remove the existing HVAC system from within the Premises,
Landlord shall perform such removal in a diligent manner promptly following
execution of this Lease at no cost or expense to Tenant.
C. Inasmuch as Tenant plans to perform its Initial Leasehold
Improvements within the Premises prior to the Commencement Date, such possession
of the Premises shall be subject to all the terms and conditions of the Lease,
with the understanding, however that no Base Rental nor Additional Base Rental
shall be payable to Landlord prior to the Commencement Date. Tenant shall,
however, be liable for the cost of any services (e.g. utilities or HVAC or
access requirements) (recognizing that there shall be no special charge for use
of the freight or loading dock of the Building during Normal Business Hours)
that are requested by Tenant or are provided by Landlord to the Premises or
within the Building as a result of Tenant's activities during the period of
Tenant's possession of the Premises prior to the Commencement Date. The initial
charge by Landlord for overtime services in order to enable Tenant to access
such areas shall be $75.00 per hour, for a minimum of four (4) hours. In the
event the costs to Landlord shall increase subsequent to the date hereof to
provide such services, Landlord shall be entitled to adjust the $75.00 per hour
charge to reflect Landlord's reasonable estimate of such increase. It is
understood and agreed by the parties that Landlord shall deliver possession of
the Premises to Tenant immediately following execution of this Lease by both
parties, in order to permit Tenant to perform its Initial Leasehold
Improvements. In addition, promptly following execution of this Lease, and
provided Tenant provides no less than one Business Days advance notice to
Landlord, Landlord agrees that Tenant, its architects, engineers, employees,
agents and contractors shall be afforded reasonable access during Normal
Business Hours or anytime other than Normal Business Hours (if so requested by
Tenant) to the Premises, and the Common Areas, together with the rooftop and
other portions of the Building (excluding portions occupied by other tenants) in
order to design, construct and install, as necessary, the Initial Leasehold
Improvements. However, nothing herein shall be construed as granting Tenant the
right to commence performance of its Initial Leasehold Improvements prior to
Landlord's written approval thereof and written approval of the licensed
contractor proposed to be engaged by Tenant for such purposes. Landlord shall
not unreasonably withhold, condition or delay its approval required under the
immediately preceding sentence, or of any items proposed by Tenant to be made as
part of the Initial Leasehold Improvements or the proposed contractor. Tenant
shall be required to deliver certificates of insurance naming Landlord as an
additional insured from all contractors prior to commencement by such
contractors of work or services at the Building, which insurance shall be at
limits consistent with industry standards for similar work.
IV. RENT.
A. During each calendar year, or portion thereof, falling within the
Lease Term, Tenant shall pay to Landlord the Base Rental. The Base Rental shall
be payable in equal monthly installments during the Lease Term, commencing as of
the Commencement Date. In the event the Commencement Date shall occur on other
than the first day of a calendar month, the Base Rental, and if applicable, the
Additional Base Rental, shall be pro-rated for such month based upon a thirty
(30) day month.
Tenant covenants and agrees to also pay during the Lease Term as
Additional Base Rental hereunder Tenant's Pro-Rata Share of Additional Base
Rental. Prior to the first anniversary of the Commencement Date, and prior to
January 1 of each subsequent calendar year during the Lease Term, or as soon
thereafter as practical,
4
<PAGE> 8
Landlord shall provide to Tenant the reasonably estimated amount of Tenant's
Pro-Rata Share of Additional Base Rental (the "Estimate") for the applicable
calendar year. On or before the first day of each month during such calendar
year, Tenant shall pay to Landlord, as Additional Base Rental, a monthly
installment equal to one-twelfth of the Estimate. Landlord shall have the right
from time to time during any such calendar year to revise the reasonable
Estimate to be paid by Tenant for such year to reflect a new reasonable
Estimate, and provide Tenant with a revised statement therefor, and thereafter
the amount Tenant shall pay each month shall be based upon such revised
Estimate. If Landlord does not provide Tenant with an Estimate by January 1 of
any calendar year, Tenant shall continue to pay a monthly installment based on
the previous year's Estimate until such time as Landlord provides Tenant with an
Estimate for the current year. Upon receipt of such current year's Estimate, an
adjustment shall be made for any month during the current year with respect to
which Tenant paid monthly installments of Additional Base Rental based on the
previous year's Estimate. Tenant shall pay Landlord any underpayment within ten
(10) days after demand. Any overpayment shall, at Landlord's option, be refunded
to Tenant within ten (10) days from the date determined by Landlord or credited
against the installment of Additional Base Rental due for the months immediately
following the furnishing of such estimate; provided that in the event Tenant
shall then be in default hereunder, Landlord shall be entitled to apply any such
overpayment on account of other sums then due to Landlord. Any amounts paid by
Tenant based on any Estimate shall be subject to adjustment pursuant to the
immediately following paragraph when actual Expenses are determined for such
calendar year.
As soon as is practical following the end of each calendar year during
the Lease Term, Landlord shall furnish to Tenant a statement of Landlord's
actual Basic Costs and the actual amount of Tenant's Pro-Rata Share of
Additional Base Rental for the previous calendar year. If the amount of the
Estimate actually paid by Tenant for the prior year is in excess of the amount
of Tenant's Pro-Rata Share of Additional Base Rental for such prior year, then
Landlord shall apply such overpayment against Additional Base Rental due or to
become due hereunder, provided if the Lease Term expires prior to the
determination of such overpayment, Landlord shall refund such overpayment to
Tenant after first deducting the amount of any Rent due hereunder. Likewise,
Tenant shall pay to Landlord, within ten (10) days after demand, any
underpayment with respect to the prior year, whether or not the Lease has
terminated prior to receipt by Tenant of a statement for such underpayment, it
being understood that this clause shall survive the expiration of the Lease.
Tenant's Pro Rata Share of Additional Base Rental for any partial calendar year
shall be determined by multiplying the amount of Tenant's Pro Rata Share of
Additional Base Rental for the full calendar year by a fraction, the numerator
of which is the number of days during such calendar year falling within the
Lease Term and the denominator of which is 365.
B. Basic Costs shall mean all costs and expenses paid or incurred in
each calendar year in connection with operating, maintaining, repairing,
managing and owning the Building and the Property, [except to the extent
expressly limited below in the case of the items described in subsections (6)
and (9) below] including, but not limited to, the following:
1. All labor costs for all persons performing services required or
utilized in connection with the operation, repair, replacement and maintenance
of and control of access to the Building and the Property, including but not
limited to amounts incurred for wages, salaries and other compensation for
services, payroll, social security, unemployment and other similar taxes,
workers' compensation insurance, uniforms, training, disability benefits,
pensions, hospitalization, retirement plans, group insurance or any other
similar or like expenses or benefits.
2. All management fees, the cost of equipping and maintaining a
management office at the Building, accounting services, legal fees not
attributable to leasing and collection activity, and all other administrative
costs relating to the Building and the Property. If management services are not
provided by a third party, Landlord shall be
5
<PAGE> 9
entitled to a management fee comparable to that due and payable to third parties
provided Landlord or management companies owned by, or management divisions of,
Landlord perform actual management services of a comparable nature and type as
normally would be performed by third parties with the understanding; however,
that in the event Landlord or an entity owned or controlled by Landlord or
parties owning no less than 51% of the ownership interests in Landlord shall
receive such management fee, Landlord shall waive any general overhead of
Landlord as to general management of the Building for which Landlord receives
such management fee, including, overhead charges for services such as
accounting, secretarial, bookkeeping, office rent for the management office,
office furniture, supplies and equipment.
3. All rental and/or purchase costs of materials, supplies, tools
and equipment used in the operation, repair, replacement and maintenance and the
control of access to the Building and the Property.
4. All amounts charged to Landlord by contractors and/or suppliers
for services, replacement parts, components, materials, equipment and supplies
furnished in connection with the operation, repair, maintenance, replacement of
and control of access to any part of the Building, or the Property generally,
including the heating, air conditioning, ventilating, plumbing, electrical,
elevator and other systems and equipment. At Landlord's option, major repair
items may be amortized over a period of up to five (5) years.
5. All premiums and deductibles paid by Landlord for fire and
extended coverage insurance, earthquake and extended coverage insurance,
liability and extended coverage insurance, rental loss insurance, elevator
insurance, boiler insurance and other insurance customarily carried from time to
time by landlords of comparable office buildings or required to be carried by
Landlord's Mortgagee.
6. Charges for all utilities, including but not limited to water,
electricity, gas and sewer, to the extent provided to the common areas of the
Building located on the first floor.
7. "Taxes," which for purposes hereof, shall mean: (a) all real
estate taxes and assessments on the Property, the Building or the Premises, and
taxes and assessments levied in substitution or supplementation in whole or in
part of such taxes, (b) all personal property taxes for the Building's personal
property, including license expenses, (c) all taxes imposed on services of
Landlord's agents and employees, (d) all other taxes, fees or assessments now or
hereafter levied by any governmental authority on the Property, the Building or
its contents or on the operation and use thereof (except as relate to specific
tenants), (e) all amounts paid to any business improvement district by Landlord
and (f) all costs and fees incurred in connection with seeking reductions in or
refunds in Taxes including, without limitation, any costs incurred by Landlord
to challenge the tax valuation of the Building or to sustain a proposed
assessment by reason of a challenge thereto from a citizens group or other
entity, but excluding income taxes, estate taxes, inheritance taxes or any other
tax computed based upon the net income (as opposed to gross receipts or gross
income) of Landlord. Taxes shall exclude any interest or penalties arising by
reason of the late payment of same. For the purpose of determining real estate
taxes and assessments for any given calendar year, the amount to be included in
Taxes for such year shall be as follows: (1) with respect to any special
assessment that is payable in installments, Taxes for such year shall include
the amount of the installment (and any interest) due and payable during such
year; and (2) with respect to all other real estate taxes, Taxes for such year
shall, at Landlord's election, include either the amount accrued, assessed or
otherwise imposed for such year or the amount due and payable for such year,
provided that Landlord's election shall be applied consistently throughout the
Lease Term. If a reduction in Taxes is obtained for any year of the Lease Term
during which Tenant paid its Pro Rata Share of Basic Costs, then Basic Costs for
such year will be retroactively adjusted and Landlord shall provide Tenant with
a credit, if any, based on such adjustment. Tenant shall pay to Landlord
Tenant's Pro Rata Share of any such increase in Tenant's Pro Rata Share of Basic
Costs within thirty (30) days after Tenant's receipt of a statement therefor
from Landlord.
6
<PAGE> 10
8. All landscape expenses and costs of maintaining, repairing,
resurfacing and striping of the parking areas and garages of the Property, if
any.
9. Cost of all maintenance service agreements, including those for
equipment, alarm service, window cleaning, drapery or venetian blind cleaning,
janitorial services, pest control, uniform supply, plant maintenance,
landscaping, and any parking equipment. However, costs of cleaning and
janitorial services to any tenanted portions of the Building or to any common
areas other than those on the first floor of the Building shall be excluded.
10. Cost of all other repairs, replacements and general maintenance
of the Property and Building neither specified above nor directly billed to
tenants.
11. The amortized cost of capital improvements made to the Building
or the Property which are: (a) primarily for the purpose of reducing operating
expense costs or otherwise improving the operating efficiency of the Property or
Building; or (b) required to comply with any laws, rules or regulations of any
governmental authority first applicable to the Property or Building subsequent
to the date hereof or a requirement of Landlord's insurance carrier. The cost of
such capital improvements (herein referred to collectively as "Permitted Capital
Expenditures") shall be amortized over the estimated useful life of such capital
improvement and shall, at Landlord's option, include interest at a rate that is
reasonably equivalent to the interest rate that Landlord would be required to
pay to finance the cost of the capital improvement in question as of the date
such capital improvement is performed provided if the payback period for any
capital improvement is less than five (5) years, Landlord may amortize the cost
of such capital improvement over the payback period.
12. Cost to furnish or maintain lobby attendants, security services
or personnel for the Building.
13. Any other expense or charge of any nature whatsoever which, in
accordance with general industry practice with respect to the operation of a
building reasonably deemed by Landlord to be of similar class, size, age and
location as the Building, would be construed as an operating expense,
recognizing the express exceptions above in sections (6) and (9).
Basic Costs shall not include the cost of capital improvements (except
as set forth above and as distinguished from replacement parts or components
purchased and installed in the ordinary course), depreciation, lease
commissions, and interest or principal payments on mortgages of Landlord and
other non-operating debts of Landlord; amounts paid to any person, firm or
corporation related to or otherwise affiliated with Landlord or its management
company or any general partner or member of Landlord, or any management fees
whether paid to a related or otherwise affiliated party or not, but which are in
excess of arms-length competitive prices paid in the Washington, D.C.
metropolitan area for the services or goods provided; ground rent payments to
any ground lessor; and the costs of any items for which Landlord (a) is
reimbursed by insurance or parties other than tenants of the Building pursuant
to operating expense provisions included in their respective lease or (b) would
have been covered by insurance proceeds had Landlord maintained the insurance
required to be maintained by Landlord under this Lease. If the Building is not
at least ninety-five percent (95%) occupied during any calendar year of the
Lease Term (including the Base Year) or if Landlord is not supplying services to
at least ninety-five percent (95%) of the total Rentable Area of the Building at
any time during any calendar year of the Lease Term, actual Basic Cost (other
than Taxes) for purposes hereof shall, at Landlord's option, be determined as if
the Building had been ninety-five percent (95%) occupied and Landlord had been
supplying services to ninety-five percent (95%) of the Rentable Area of the
Building during such year. Any necessary extrapolation of Basic Costs under this
Article shall be performed by adjusting the cost of those components of Basic
Costs that are impacted by changes in the occupancy of the Building to the cost
that would have been incurred if the Building had been ninety-five percent (95%)
occupied and Landlord had been supplying services to ninety-five percent (95%)
of the Rentable Area
7
<PAGE> 11
of the Building (recognizing, however that there shall be no such gross-up for
any electricity or char or cleaning services to the extent same are excluded
from the definition of "Basic Costs" above). For example, if at any time during
any calendar year, any part of the Building is leased to a tenant (hereinafter
referred to as a "Special Tenant") who, in accordance with the terms of its
lease, provides its own utilities, cleaning and janitorial services or other
services or is not otherwise required to pay a share of Basic Costs in
accordance with the methodology set forth in this Article, and therefore
Landlord does not incur the cost of such services, Basic Costs for such calendar
year shall be increased by the additional costs for cleaning and janitorial
services and such other applicable expenses as reasonably estimated by Landlord
that would have been incurred by Landlord if Landlord had furnished and paid for
cleaning and janitorial services and such other services for the space occupied
by the Special Tenant, or if Landlord had included such costs in "Basic Costs",
as defined in the Special Tenant's lease.
Basic Costs shall not include the following items:
(i) Any Capital Expenditures, including any capital replacement,
capital repair or capital improvement made to the Building,
the Common Areas, the land or the Project and any other
expense which would be deemed to be a capital expenditure
under generally accepted accounting principles, consistently
applied, other than (1) the Permitted Capital Expenditures
(defined above) or (2) costs for replacement parts or
components purchased and installed in the ordinary course.
(ii) Depreciation or amortization of the Building or its contents
or components except as expressly permitted in this Lease;
(iii) Expenses incurred in leasing or obtaining new tenants or
retaining existing tenants, including leasing commissions,
legal expenses, advertising or promotion; costs incurred by
Landlord to assume existing leases or subleases of any new
tenants; costs to alter, change or renovate any tenant space
in the Building required to lease such space to a new tenant
or in connection with any renewal or extension of an
existing lease;
(iv) Interest (other than interest under Permitted Capital
Expenditures above), principal or other costs, including
legal fees, associated with any mortgage, loan or
refinancing of the land, the Building, or the Common Areas,
as well as costs directly incurred in order to effect or
negotiate any sale or change of ownership of the Building,
such as attorneys' fees, title insurance premiums, and
recording costs;
(v) Any personal property taxes of the Landlord for equipment or
items not used directly in the operation or maintenance of
the Building;
(vi) Contributions to reserves;
(vii) All bad debt loss, rent loss, or reserve for bad debt or
rent loss;
(viii) Any other cost or expense which, under generally accepted
accounting principles consistently applied or under
prevailing local management practices, would not be
considered to be an Expense of the Building.
(ix) Any unfunded pension or other benefits for personnel
accruing for periods prior to the Commencement Date;
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(x) Interest or penalties incurred by reason of late payment,
unless Tenant has failed to timely pay its Base Rental or
Additional Base Rent hereunder during the thirty (30) day
period preceding the due date the particular Expense or Tax
upon which such interest or penalty is assessed;
(xi) Payments for rented equipment, the cost of which if
purchased would be excluded above;
(xii) Compensation of clerks or attendants in concessions operated
for profit by Landlord or any affiliate in the Building;
(xiii) Items includable in Taxes (as defined below) so as to avoid
duplication;
(xiv) Franchise, transfer, inheritance, or capital stock taxes, or
any other tax measured by the net income earned by Landlord;
(xv) Costs of repairs, restoration, replacements or other work
occasioned by (A) fire, windstorm or other casualty (whether
such destruction be total or partial) for which Landlord is
compensated from insurance or would have been compensated
from had Landlord complied with it insurance obligations
under this Lease and (B) the exercise by governmental
authorities of the right of eminent domain (whether such
taking be total or partial);
(xvi) legal fees paid or incurred in connection with litigation
with tenants for any defaults under their leases and any
legal fees paid or incurred in leasing space to tenants (but
not any reasonable legal fees directly relating to the
maintenance, operation or repair of the Building);
(xvii) costs incurred by Landlord which are associated with the
operation of the business of the legal entity which
constitutes Landlord as the same is separate and apart from
the cost of the operation of the Building, including legal
entity formation and maintenance charges, legal entity
accounting (including the incremental accounting fees
relating to the operation of the Building to the extent
incurred separately in reporting operating results to the
Building's owners or lenders), and legal fees (other than
with respect to Building operations properly includable in
Basic Costs);
(xviii) amounts paid to any person, firm or corporation related to
or otherwise affiliated with Landlord or its management
company or any general partner or member of Landlord, or any
management fees whether paid to a related or otherwise
affiliated party or not, but which are in excess of
arms-length competitive prices paid in the Washington, D.C.
metropolitan area for the services or goods provided;
(xix) Ground rent payments to any ground lessor; and
(xx) the costs of any items for which Landlord (a) is reimbursed
by insurance or parties other than tenants of the Building
pursuant to operating expense provisions included in their
respective lease or (b) would have been covered by insurance
proceeds had Landlord maintained the insurance required to
be maintained by Landlord under this Lease.
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(xxi) Costs of asbestos abatement and removal;
(xxii) Management fees in excess of four percent (4%) of the gross
rents of the Building while such services are provided by an
affiliate of Landlord or Landlord.
C. Tenant covenants and agrees to pay to Landlord during the Lease
Term, without any setoff or deduction whatsoever, the full amount of all Base
Rental and Additional Base Rental due hereunder. In addition, Tenant shall pay
and be liable for, as additional rent, all rental, sales and use taxes or other
similar taxes, if any, levied or imposed by any city, state, county or other
governmental body having authority to the extent such taxes are imposed upon any
of the rentals payable under this Lease, such payments to be in addition to all
other payments required to be paid to Landlord by Tenant under the terms and
conditions of this Lease. Any such payments shall be paid concurrently with the
payments of the Rent on which the tax is based. The Base Rental, Tenant's Pro
Rata Share of Additional Base Rental and any recurring monthly charges due
hereunder shall be due and payable in advance on the first day of each calendar
month during the Lease Term without demand, provided that the installment of
Base Rental for the first full calendar month of the Lease Term shall be payable
upon the execution of this Lease by Tenant. All other items of Rent shall be due
and payable by Tenant on or before ten (10) days after billing by Landlord. If
the Lease Term commences on a day other than the first day of a calendar month
or terminates on a day other than the last day of a calendar month, then the
monthly Base Rental and Tenant's Pro Rata Share of Basic Costs for such month
shall be prorated for the number of days in such month occurring within the
Lease Term based on a fraction, the numerator of which is the number of days of
the Lease Term that fell within such calendar month and the denominator of which
is thirty (30). All such payments shall be by a good and sufficient check. No
payment by Tenant or receipt or acceptance by Landlord of a lesser amount than
the correct amount of Rent due under this Lease shall be deemed to be other than
a payment 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 be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance or
pursue any other available remedy. The acceptance by Landlord of any Rent on a
date after the due date of such payment shall not be construed to be a waiver of
Landlord's right to declare a default for any other late payment. Tenant's
covenant to pay Rent shall be independent of every other covenant set forth in
this Lease.
D. All Rent not paid when due and payable shall bear interest from the
date due until paid at the Maximum Rate. In addition, if Tenant fails to pay any
installment of Rent within five (5) days when due and payable hereunder, a
service fee equal to five percent (5%) of such unpaid amount will be due and
payable immediately by Tenant to Landlord.
V. USE.
The Premises shall be used for the Permitted Use 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 reasonable opinion, creates a nuisance or which would increase the
cost of insurance coverage with respect to the Building. Tenant shall conduct
its business and control its agents, servants, contractors, employees,
customers, licensees, and invitees in such a manner as not to interfere with,
annoy or disturb other tenants, or in any way interfere with Landlord in the
management and operation of the Building. Tenant will maintain the Premises in a
clean and healthful condition, and comply with all laws, ordinances, orders,
rules and regulations of any governmental entity with reference to the operation
of Tenant's business and to the use, condition, configuration or occupancy of
the Premises, including without limitation, the Americans with Disabilities Act
(collectively referred to as "Laws"). Tenant, within ten (10) days after receipt
thereof, shall provide Landlord with copies of any notices it receives with
respect to a violation or alleged violation of any Laws. Tenant will comply with
the rules
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and regulations of the Building attached hereto as Exhibit B and such other
rules and regulations adopted and altered by Landlord from time to time and will
cause all of its agents, servants, contractors, employees, customers, licensees
and invitees to do so. Landlord agrees to use reasonable efforts to uniformly
enforce such rules and regulations among those tenants of the Building similarly
affected.
VI. SECURITY DEPOSIT.
Simultaneously with Tenant's execution of this Lease, Tenant shall
deposit with Landlord the Security Deposit (as set forth in Section I.A.7) as a
security deposit which shall be security for the performance by Tenant of all of
Tenant's obligations, covenants, conditions and agreements under this Lease.
Landlord shall not be required to maintain such security deposit in a separate
account. Except as may be required by law, Tenant shall not be entitled to
interest on the security deposit. However, in the event the Security Deposit is
in the form of cash at anytime during the Term, such Security Deposit, while
held by Landlord during the Term, shall accrue interest at the rate of four
percent (4%) per annum. Unless otherwise below expressly provided, within
approximately thirty (30) days after the later of the expiration or earlier
termination of the Lease Term or Tenant's vacating the Premises, Landlord shall
return such security deposit to Tenant, less such portion thereof as Landlord
shall have appropriated to satisfy any of Tenant's obligations, or any default
by Tenant, under this Lease. If there shall be any default under this Lease by
Tenant, then Landlord shall have the right, but shall not be obligated, to use,
apply or retain all or any portion of the security deposit for the payment of
any (a) Base Rental, Additional Rental or any other sum as to which Tenant is in
default, or (b) amount Landlord may spend or become obligated to spend, or for
the compensation of Landlord for any losses incurred, by reason of Tenant's
default (including, but not limited to, any damage or deficiency arising in
connection with the reletting of the Premises). If any portion of the security
deposit is so used or applied, then within three (3) business days after
Landlord gives written notice to Tenant of such use or application, Tenant shall
deposit with Landlord cash in an amount sufficient to restore the security
deposit to the original Security Deposit, and Tenant's failure to do so shall
constitute an Event of Default under this Lease.
At Tenant's option, the Security Deposit may be in the form of an
unconditional and irrevocable letter of credit, consistent with the provisions
set forth below pertaining to letters of credit and issued by a commercial bank
with offices in the Washington, D.C. metropolitan area reasonably acceptable to
Landlord or by Cole Taylor Bank. Any letter of credit delivered hereunder by
Tenant shall be issued in favor of Landlord. The letter of credit shall be
payable to Landlord on sight and shall have an initial expiration date of no
sooner than December 31, 2000. In addition, in the event the issuer of the
Letter of Credit shall be either closed or taken over by a federal or state
regulatory agency or board, or Landlord shall reasonably determine that such
issuer may likely be closed or taken over by a federal or state regulatory
agency or board, and the Landlord shall be advised or shall reasonably determine
that the Letter of Credit may not be able to be drawn against, Tenant shall
within ten (10) days from written demand by Landlord either replace the Letter
of Credit with an alternate Letter of Credit or substitute cash. The letter of
credit shall also contain such other terms and conditions as shall be reasonably
acceptable to Landlord.
Notwithstanding any provision contained herein to the contrary,
provided Tenant shall have timely paid the Base Rental and Additional Rent
required to be paid hereunder, and there shall not have occurred any uncured
Event of Default prior to November 30, 2000, Landlord agrees to return to Tenant
the Deposit no later than December 15, 2000 whereupon Tenant shall have no
further obligation to maintain a security deposit under this Lease.
VII. SERVICES TO BE FURNISHED BY LANDLORD.
A. Landlord, as part of Basic Costs (except as otherwise provided),
agrees to furnish Tenant the following services:
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1. Hot and cold water for use in the lavatories on the floor on
which the Premises is located, with hot water provided during normal Business
Hours only. If Tenant desires water in the Premises for any approved reason,
including a private lavatory or kitchen, cold water shall be supplied, at
Tenant's sole cost and expense, from the Building water main through a line and
fixtures installed at Tenant's sole cost and expense with the prior reasonable
consent of Landlord. If Tenant desires hot water in the Premises, Tenant, at its
sole cost and expense and subject to the prior reasonable consent of Landlord,
may install a hot water heater in the Premises. Tenant shall be solely
responsible for maintenance and repair of any such hot water heater.
2. Central heat and air conditioning is not furnished by Landlord.
Should Landlord be requested to provide central heat and air conditioning, all
costs, including, but not limited to, installation, repair, maintenance,
utilities (i.e. gas, water, electricity) shall be at Tenant's sole expense. If
Tenant desires to utilize the base building HVAC System and/or the 24-hour
cooling system central plants, all services, including, but not limited to
repair, maintenance, utilities or installation shall be metered and/or
calculated by Landlord to identify the costs associated with such service for
reimbursement to Landlord, together with a reasonable and customary overhead
charge and fee to Landlord or its agent as reasonably determined by Landlord
from time to time. Temperatures and hours of operation within the Premises shall
be at Tenant's discretion. Temperatures and hours of operation within the
building core/public space shall be at the building standard temperatures and
hours. At the option of Tenant, maintenance and/or repair of Tenant's special
equipment by Landlord shall be available at a reasonable fee to be determined by
Landlord upon request.
3. Maintenance and repair of the roof and exterior walls of the
Building, and all Common Areas (inclusive of structural elements thereof) in the
manner and to the extent reasonably deemed by Landlord to be standard for
buildings of similar class, size, age and location. However, in no event shall
Landlord be obligated to make any repairs or maintenance caused by reason of any
of Tenant's equipment or other installations installed, placed or located on the
roof, or to any exterior wall or structural element caused by any act or
omission of Tenant or any agent, employee or contractor of Tenant.
4. Tenant shall furnish at its sole cost and expense janitor service
(char and cleaning) for the Premises from its own service contractor, or at
Tenant's option from Landlord's contractor. Landlord shall retain the right to
approve the particular service contractor, which approval shall not be
unreasonably withheld, conditioned or delayed.
5. Passenger elevator service in common with other tenants of the
Building.
6. Existing 500 AMP service at Landlord's electrical vault, with
Tenant responsible for all consumption and hook-up charges for such service.
B. The failure by Landlord to any extent to furnish, or the
interruption or termination of, any services in whole or in part, resulting from
adherence to laws, regulations and administrative orders, wear, use, repairs,
improvements, alterations or any causes beyond the reasonable control of
Landlord shall not render Landlord liable in any respect nor be construed as a
constructive eviction of Tenant, nor give rise to 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, Landlord shall use reasonable
diligence to repair such equipment or machinery. Notwithstanding the foregoing,
in the event the Premises shall be without electricity (i.e. there shall be no
power within the Premises) by reason of matters within the control of Landlord
for more than fifteen (15) consecutive days, and if as a result thereof Tenant
shall suspend using the Premises for the conduct of its business operations,
then and in such event as the sole and exclusive
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remedy available to Tenant, Landlord agrees to abate Base Rental and Additional
Base Rental for the period of time during which such failure shall continue.
C. Tenant expressly acknowledges that if Landlord, from time to time,
elects to provide a lobby attendant or security services, Landlord shall not be
deemed to have warranted the efficiency of any lobby attendant, security
personnel, service, procedures or equipment and Landlord shall not be liable in
any manner for the failure of any such security personnel, services, procedures
or equipment to prevent or control, or apprehend anyone suspected of personal
injury, property damage or any criminal conduct in, on or around the Property.
VIII. LEASEHOLD IMPROVEMENTS.
Any trade fixtures, unattached and movable equipment or furniture, or
other personalty brought into the Premises by Tenant ("Tenant's Property") shall
be owned and insured by Tenant. Tenant shall remove all such Tenant's Property
from the Premises in accordance with the terms of Article XXXVI hereof. Any and
all alterations, additions and improvements to the Premises, including any
built-in furniture (collectively, "Leasehold Improvements") shall be owned by
Landlord and shall remain upon the Premises, all without compensation, allowance
or credit to Tenant. However, in no event shall any switches or racks installed
at the Premises by Tenant be deemed to constitute Landlord's Property and shall
be removed by Tenant upon expiration or termination of this Lease. Landlord may,
nonetheless, at any time prior to, or within six (6) months after, the
expiration or earlier termination of this Lease or Tenant's right to possession,
require Tenant to remove any Leasehold Improvements performed by or for the
benefit of Tenant and all electronic, phone and data cabling as are designated
by Landlord (the "Required Removables") at Tenant's sole cost. In the event that
Landlord so elects, Tenant shall remove such Required Removables within ten (10)
days after notice from Landlord, provided that in no event shall Tenant be
required to remove such Required Removables prior to the expiration or earlier
termination of this Lease or Tenant's right to possession. In addition to
Tenant's obligation to remove the Required Removables, Tenant shall repair any
damage caused by such removal. If Tenant fails to remove any specified Required
Removables or to perform any required repairs within the time period specified
above, Landlord, at Tenant's sole cost and expense, may remove, store, sell
and/or dispose of the Required Removables and perform such required repairs.
Tenant, within five (5) days after demand from Landlord, shall reimburse
Landlord for any and all reasonable costs incurred by Landlord in connection
with the Required Removables or the performance of such repairs.
Connecting equipment and telecommunications equipment located within
the Premises or at the Building by or on behalf of Tenant shall not be deemed to
constitute a fixture and shall be deemed the property of Tenant or its customers
or co-locators. Landlord hereby waives its rights, statutory or otherwise, to
any lien on such telecommunication equipment and the Connecting Equipment
(defined in Article X below). Upon expiration or termination of this Lease,
Tenant shall remove all of the Connecting Equipment and telecommunications
equipment from the Premises or Building in a good and workmanlike manner. Tenant
shall be entitled to obtain the waiver from Landlord in writing of Landlord's
right to require removal of any particular equipment at the time of Landlord's
consent to the installation of same, and Landlord shall be bound by any such
written waiver in the event this Lease shall be terminated or expire other than
by reason of an uncured Event of Default.
IX. GRAPHICS.
Tenant shall not be permitted to install any signs or other
identification without Landlord's prior written consent. In no event shall
Tenant be entitled to any exterior signage at the Building.
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X. REPAIRS AND ALTERATIONS.
A. Except to the extent such obligations are imposed upon Landlord
hereunder, Tenant, at its sole cost and expense, shall perform all maintenance
and repairs to the Premises as are necessary to keep the same in good condition
and repair throughout the entire Lease Term, reasonable wear and tear excepted.
Tenant's repair and maintenance obligations with respect to the Premises shall
include, without limitation, any necessary repairs with respect to: (1) any
carpet or other floor covering, (2) any interior partitions, (3) any doors, (4)
the interior side of any demising walls, (5) any telephone and computer cabling
that serves Tenant's equipment exclusively, (6) any air conditioning units,
private showers and kitchens, including any plumbing in connection therewith,
and similar facilities serving Tenant exclusively, and (7) any alterations,
additions or improvements performed by contractors retained by Tenant. All such
work shall be performed in accordance with section X.B. below and the rules,
policies and procedures reasonably enacted by Landlord from time to time for the
performance of work in the Building. If Tenant fails to make any necessary
repairs to the Premises, Landlord may, at its option, make such repairs, and
Tenant shall pay the cost thereof to the Landlord on demand as Additional Base
Rental, together with an administrative charge in an amount equal to ten percent
(10%) of the cost of such repairs. Landlord shall, at its expense (except as
included in Basic Costs), keep and maintain in good repair and working order,
and make all repairs to and perform necessary maintenance upon: (a) all
structural elements of the Building; and (b) all mechanical, electrical and
plumbing systems that serve the Building in general; and (c) the Building
facilities common to all tenants including, but not limited to, the ceilings,
walls and floors in the Common Areas.
B. Tenant shall not make or allow to be made any alterations, additions
or improvements to the Premises without first obtaining the written consent of
Landlord in each such instance. Prior to commencing any such work and as a
condition to obtaining Landlord's consent, Tenant must furnish Landlord with
plans and specifications reasonably acceptable to Landlord; names and addresses
of contractors reasonably acceptable to Landlord; copies of contracts; necessary
permits and approvals; evidence of contractor's and subcontractor's insurance in
accordance with Article XVI section B. hereof; and payment bond or other
security, all in form and amount reasonably satisfactory to Landlord. All such
improvements, alterations or additions shall be constructed in a good and
workmanlike manner using Building Standard materials or other new materials of
equal or greater quality. Landlord, to the extent reasonably necessary to avoid
any unreasonable disruption to the tenants and occupants of the Building, shall
have the right to designate the time when any such alterations, additions and
improvements may be performed and to otherwise designate reasonable rules,
regulations and procedures for the performance of work in the Building. Upon
completion, Tenant shall furnish "as-built" plans, contractor's affidavits and
full and final waivers of lien and receipted bills covering all labor and
materials. All improvements, alterations and additions shall comply with all
insurance requirements, codes, ordinances, laws and regulations, including
without limitation, the Americans with Disabilities Act. Tenant shall reimburse
Landlord upon demand as Additional Base Rental for all sums, if any, expended by
Landlord for third party examination of the architectural, mechanical, electric
and plumbing plans for any alterations, additions or improvements. In addition,
if Landlord so requests, Landlord shall be entitled to oversee the construction
of any alterations, additions or improvements that may affect the structure of
the Building or any of the mechanical, electrical, plumbing or life safety
systems of the Building. In the event Landlord elects to oversee such work,
Landlord shall be entitled to receive a reasonable hourly fee for such services
and Tenant shall reimburse Landlord no later than thirty (30) days following
written demand those amounts requested by Landlord for such hourly fee as
Additional Base Rental. Landlord's approval of Tenant's plans and specifications
for any work performed for or on behalf of Tenant shall not be deemed to be a
representation by Landlord that such plans and specifications comply with
applicable insurance requirements, building codes, ordinances, laws or
regulations or that the alterations, additions and improvements constructed in
accordance with such plans and specifications will be adequate for Tenant's use.
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C. It is agreed that with respect to the Initial Leasehold
Improvements:
1. All of Tenant's construction activities shall be scheduled at
such times and in such manner by Tenant so as to minimize unreasonable
interference with other tenants, and to avoid disruption in the provision of
Building services to such tenants during Business Hours.
2. Tenant shall be entitled to use the service elevator on a
scheduled basis (as to date and time) with Landlord for the purpose of
installing such equipment scheduled (as to approximate size and weight) with
Landlord in advance. There shall be no charge to Tenant for access to the
service elevator during Business Hours.
3. Landlord shall not unreasonably delay or withhold its approval of
any proposed plans or specifications, nor of the particular contractor proposed
by Tenant to perform such work. Landlord shall be entitled to also approve in
advance in writing any subcontractors or sub-subcontractors proposed to be
engaged by Tenant, its contractor or any subcontractor performing work on or to
any Building system, or performing connections to any utility, fire or life
safety system of the Building.
4. At Tenant's sole cost and expense, and following written approval
by Landlord (which approval shall not be unreasonably withheld or delayed) of
all plans and specifications relating thereto, Tenant shall be entitled to
install within the areas indicated on Exhibit A attached hereto dampers on the
rear alley exterior wall of the Premises for Tenant's liebert air conditioning
unit(s). Tenant shall coordinate with Landlord location of such unit(s) in order
to cause the alley frontage to be reasonably free and clear of all obstacles,
automobiles or trucks at the height of the louvers. Tenant will place the
dampers as indicated on sketches 1 through 4 attached to Exhibit "A" dated March
10, 1999.
5. Tenant shall be entitled to install a battery back-up system
within the Premises and an electrical grounding system, following receipt of
prior written approval by Landlord and its engineer of the plans and
specifications for same. Tenant shall also be entitled to install a diesel
generator and fuel tank on the roof of the Building. In lieu of its own fuel
tank, Tenant shall be entitled to purchase from Landlord diesel fuel from
Landlord's existing tank, at Tenant's expense, located in the alley of the
Building.
D. During the Lease Term, Tenant is also hereby granted the right to
install and maintain telecommunications wiring and cabling (including, without
limitation, supporting structures such as conduits, trenches, backboards, slots,
sleeves, utility spaces, interconnecting locations and facilities (recognizing,
however that Tenant shall be required to use existing risers, chaseways, shafts,
ducts, and conduits on a non-exclusive basis), and related service locations
(collectively the "Connecting Equipment"). Tenant shall be permitted at no
additional rental charge by Landlord to receive at its sole cost, risk and
expense, without any representation or warranty from Landlord as to the
sufficiency or quality, telephone and other data communication services from any
telecommunications service provider serving the area. Any such provider shall
use the Connecting Equipment. Routing of conduit, cable, pipes, and all other
devices shall be coordinated with and approved in advance by Landlord and
restricted to areas that do not interfere with the operations of the Building or
any of its other tenants. Any such Connecting Equipment shall be removed and the
Building restored by Tenant at Tenant's expense upon expiration or earlier
termination of this Lease, or as reasonably required by Landlord. Provisions
addressing Tenant's access to such areas are contained in Article XXXVIII below.
Landlord shall provide existing openings to adequate spaces within the shafts of
the Building for use by Tenant in common with others in order to install power
lines to the generator and any liebert units to be located on the roof by
Tenant. The portion of the roof in which such generator and liebert units is
herein referred to as the "Roof Area". There shall be no additional rent charged
to Tenant for use of the Roof Area for such purposes. Landlord expressly
reserves the right at its expense to revise the designation of the Roof Area to
facilitate future upgrades by its other tenants, and Tenant shall fully
cooperate with Landlord in such regard. None of Tenant's rooftop
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equipment shall be visible from the ground immediately surrounding the Building.
None of Tenant's equipment or modifications shall interfere with any existing,
or to the extent notice thereof is provided to Tenant, presently contemplated,
installations of antennaes by other tenants or Landlord at the Building. The
roof area used shall only be available to Tenant on an "as-needed" basis in
accordance with Tenant's current needs and shall remain subject to Landlord's
reasonable coordination and approval, taking into consideration other current
and future users of the roof.
In addition to any other common rules and regulations Landlord may
reasonably establish from time to time, Tenant shall comply with the following
with respect to the roof of the Building: (i) Tenant's use of any portions of
the Building beyond the Premises shall be at Tenant's sole risk, cost and
expense and Landlord shall have no responsibility therefore and no liability on
account of any damage to or interference with Tenant's equipment; (ii) Tenant
shall be solely responsible for installing, operating, maintaining and repairing
its equipment at its own expense in a manner that causes no interference with or
damage to the roof itself or any other person's use of the roof; (iii) Tenant
shall perform all of such work in such a way as to not damage any Building
systems or void any warranty or guaranty relating thereto of which Tenant is
aware, and Landlord may require that Tenant use contractors reasonably approved
by Landlord in performing such work; (iv) Tenant shall be responsible for
obtaining and paying for all governmental licenses and permits required by law
(and shall deliver copies thereof to Landlord as a condition precedent to its
use of the roof) and for complying with all applicable laws relating to its
exercise of said right; and (v) Tenant shall remove all of its rooftop equipment
no later than thirty (30) days following the expiration of the Lease Term and
shall repair any damage resulting from such removal and restore the roof to the
condition they were in (ordinary wear and tear and damage by fire or other
casualty excepted) before Tenant exercised said right.
Tenant's rights under this subsection D may not be separately assigned
or subleased to a party other than a party succeeding to all of the right, title
or interest of Tenant under this Lease.
E. Landlord shall not be the guarantor of, or responsible for, the
correctness or accuracy of any of Tenant's plans and specifications or for their
compliance with any applicable law, rule or regulation of any governmental or
quasi-governmental authority. All costs associated with the installation,
maintenance, repair, replacement and removal of any of Tenants' roof top
equipment, including, without limitation, all design and engineering costs and
governmental charges, and insurance costs, shall be paid by Tenant. Landlord
shall have no liability, obligation or responsibility with respect to any actual
or alleged failure to perform any of its obligations under this section or under
comparable provisions of leases with other tenants in the Building, unless
Landlord shall have acted with negligence or willful misconduct in connection
therewith. Landlord shall have no liability, obligation or responsibility with
respect to any service actually or allegedly performed or not performed by the
third person, unless Landlord shall have acted with negligence or willful
misconduct in selection of the third person.
XI. USE OF ELECTRICAL SERVICES BY TENANT.
A. All electricity used by Tenant in the Premises shall be paid for by
Tenant either directly to the utility service provider or as additional rent to
Landlord. Tenant also shall be responsible for all costs incurred by reason
thereof, including, without limitation, costs to furnish and install any
separate submeters, checkmeters, utility deposits, etc. Tenant shall be solely
responsible for the costs to furnish and install any switches required to
connect to the existing Building electrical service. Landlord shall be entitled
to establish such conditions as Landlord reasonably elects (including the
installation of utility service upgrades, air handlers or cooling units), and
all such additional usage (to the extent permitted by law), installation and
maintenance thereof shall be paid for by Tenant as Additional Base Rental.
Tenant shall be required to separately meter electrical usage for the Premises
at all times during the Lease Term. Tenant shall be solely responsible for any
increased demand charges resulting to Landlord for the Building by reason of
Tenant's
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consumption of electricity within the Premises. Landlord shall not be entitled
to any profit or markup for any electricity billed to Tenant by Landlord
hereunder.
B. If Landlord generates or distributes electric current for the
Building, Tenant shall obtain all current from Landlord and pay as Additional
Base Rental Landlord's charges therefor, provided, however, the charges to
Tenant shall not exceed the rate that would be charged Tenant if billed directly
by the local utility for the same services. Landlord may cease to furnish
electricity upon thirty (30) days' prior written notice, provided within the
thirty (30) days' Landlord connects the Building to a comparable source of
electric supply. It is expressly agreed that in the event the utility company
shall require Landlord to either generate or distribute electric current to
Tenant or, to require Tenant to obtain such electric current directly from the
utility provider, Tenant shall bear the cost incurred in connection with such
provision of electric current or change of electric current source.
C. It is expressly agreed that Tenant shall have the right, on a
scheduled basis with Landlord, to exercise its generator at least as frequently
as semi-monthly; recognizing that any such exercise by Tenant shall not
interfere with Building operations or other tenants.
XII. ENTRY BY LANDLORD.
Landlord and its agents or representatives shall have the right to
enter the Premises to inspect the same, or to show the Premises to prospective
purchasers, mortgagees, tenants (during the last twelve months of the Lease Term
or earlier in connection with a potential relocation) or insurers, or to clean
or make repairs, alterations or additions thereto, including any work that
Landlord deems necessary for the safety, protection or preservation of the
Building or any occupants thereof, or to facilitate repairs, alterations or
additions to the Building or any other tenants' premises. Landlord will use all
reasonable efforts to minimize interference with Tenant's business operations in
the exercise of its rights hereunder. Except for any entry by Landlord in an
emergency situation, Landlord shall provide Tenant with reasonable prior notice
of any entry into the Premises, which notice may be given verbally. If
reasonably necessary for the protection and safety of Tenant and its employees,
Landlord shall have the right to temporarily close the Premises to perform
repairs, alterations or additions in the Premises, provided that Landlord shall
use reasonable efforts to perform all such work on weekends and after Normal
Business Hours. Entry by Landlord hereunder shall not constitute a constructive
eviction or entitle Tenant to any abatement or reduction of Rent by reason
thereof.
XIII. ASSIGNMENT AND SUBLETTING.
A. Tenant shall not assign, sublease, transfer or encumber this Lease
or any interest therein or grant any license, concession or other right of
occupancy of the Premises or any portion thereof or otherwise permit the use of
the Premises or any portion thereof by any party other than Tenant (any of which
events is hereinafter called a "Transfer") without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed with respect to any proposed assignment or subletting. Landlord's
consent shall not be considered unreasonably withheld if: (1) the proposed
transferee's financial responsibility does not meet the same criteria Landlord
uses to select Building tenants; (2) the proposed transferee's business is not
reasonably suitable for the Building considering the business of the other
tenants and the Building's prestige or would result in a violation of an
exclusive right granted to another tenant in the Building; (3) the proposed use
is different than the Permitted Use; (4) the proposed transferee is a government
agency; (5) an Event of Default exists; or (6) any portion of the Building or
Premises would become subject to additional or different governmental laws or
regulations as a consequence of the proposed Transfer and/or the proposed
transferee's use and occupancy of the Premises. Tenant acknowledges that the
foregoing is not intended to be an exclusive list of the reasons for which
Landlord may reasonably withhold its consent to a proposed Transfer. Any
attempted Transfer in violation of the terms of this Article shall, at
Landlord's option, be void. Consent by Landlord to one or
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more Transfers shall not operate as a waiver of Landlord's rights as to any
subsequent Transfers. In addition, Tenant shall not, without Landlord's consent,
publicly advertise the proposed rental rate for any Transfer.
B. If Tenant requests Landlord's consent to a Transfer, Tenant,
together with such request for consent, shall provide Landlord with the name of
the proposed transferee and the nature of the business of the proposed
transferee, the term, use, rental rate and all other material terms and
conditions of the proposed Transfer, including, without limitation, a copy of
the proposed assignment, sublease or other contractual documents and evidence
satisfactory to Landlord that the proposed transferee is financially
responsible. Tenant shall reimburse Landlord on demand for any reasonable costs
that may be incurred by Landlord in connection with said Transfer, including,
without limitation, the costs of making investigations as to the acceptability
of the proposed assignee or subtenant, and reasonable legal costs incurred in
connection with the granting of any requested consent. Notwithstanding
Landlord's agreement to act reasonably under Section XIII.A. above, Landlord
may, within forty-five (45) days after its receipt of all information and
documentation required herein, either, (1) consent to or reasonably refuse to
consent to such Transfer in writing; or (2) negotiate directly with the proposed
transferee and in the event Landlord is able to reach an agreement with such
proposed transferee, terminate this Lease (in part or in whole, as appropriate)
upon thirty (30) days' notice; or (3) cancel and terminate this Lease, in whole
or in part as appropriate. In the event Landlord consents to any such Transfer,
the Transfer and consent thereto shall be in a form approved by Landlord. Tenant
shall bear all costs and expenses reasonably incurred by Landlord in connection
with the review and approval of such documentation, including without
limitation, Landlord's reasonable attorneys' fees as well as a special
administrative charge of One Thousand Dollars ($1,000.00).
C. Notwithstanding anything to the contrary in this Lease, Tenant shall
have the right to transfer and assign this Lease and/or sublet all or any part
of the Leased Premises without obtaining Landlord's consent (and therefor
Landlord shall have no right to terminate the Lease by reason thereof under this
Article) to any of the following: (1) any entity into which Tenant has been
consolidated; (2) any entity which shall result from a merger of the Tenant with
one or more entities; (3) any affiliate or subsidiary of Tenant or to such other
parties as may be required in connection with any offering on a recognized
security exchange (i.e NYSE, AMEX or NASDAQ) (recognizing that Tenant shall
remain jointly and severally liable with such affiliate, subsidiary or other
party at all times thereafter for the performance and payment of the various
obligations of the original Tenant under this Lease) or (4) any entity to whom
Tenant shall have sold all or substantially all of its assets or stock. Tenant
shall be required to provide Landlord with copies of the Agreement executed by
the assignee of this Lease evidencing the assumption by such assignee of all of
the obligations and liabilities imposed upon Tenant under the Lease.
D. Any Transfer consented to by Landlord in accordance with this
Article XIII shall be only for the Permitted Use and for no other purpose. In no
event shall any Transfer release or relieve Tenant or any Guarantors from any
obligations under this Lease.
E. If Tenant shall sublease the Sublet Premises or assign this Lease to
anyone for rents, additional charges related to the value of the Lease or other
consideration which for any period shall exceed the Rent payable under this
Lease for the same period, Tenant shall pay Landlord, as Additional Rent
hereunder, fifty percent (50%) of any such rents, additional charges, fees or
other consideration (net of any expenses of Tenant reasonably related to making
the Sublet Premises or the Premises, as the case may be, available for the
sublessee or the assignee which is in excess of the rent and Additional Rent
accruing during the term of the sublease with respect to the Sublet Premises or
during the Term with respect to an assignment pursuant to the terms hereof. The
sums payable under this section E shall be paid to Landlord as Additional Rent
as and when payable by the subtenant or assignee to Tenant.
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F. Tenant shall not be prohibited from negotiating or consummating a
sublease at a lower rental rate than the average rental rate then being paid by
tenants in the Building if, and only if, Tenant shall first have offered to
sublet the Sublet Premises to Landlord for the same rent and terms by written
notice given with or after Tenant's request for consent to the subletting or
assignment. Landlord shall accept or reject such offer within fifteen (15) days
from receipt of such request for consent or ten (10) days after receipt of the
offer, whichever is later. Notwithstanding anything to the contrary contained in
this Lease, no assignment of Tenant's interest in this Lease shall be binding
upon Landlord unless the assignee shall execute and deliver to Landlord an
agreement whereby such assignee agrees unconditionally to be bound by and to
perform all of the obligations of Tenant hereunder and further expressly agrees
that notwithstanding such assignment the provisions of this paragraph shall
continue to be binding upon such assignee with respect to all future assignments
and transfers. A failure or refusal of such assignee to execute or deliver such
an agreement shall not release the assignee from its liability for the
obligations of Tenant hereunder assumed by acceptance of the assignment of this
Lease.
G. If Landlord shall decline to give its consent to any proposed
Transfer, or if Landlord shall exercise any of its options under this Article,
Tenant shall indemnify, defend and hold harmless Landlord against and from any
and all loss, liability, damages, costs and expenses (including attorneys' fees
and disbursements) resulting from any claims that may be made against Landlord
by the proposed assignee or sublessee or by any brokers or other persons
claiming a commission or similar compensation in connection with the proposed
assignment or sublease.
XIV. LIENS.
Tenant will not permit any mechanic's liens or other liens to be placed
upon the Premises or Tenant's leasehold interest therein, the Building, or the
Property. Landlord's title to the Building and Property is and always shall be
paramount to the interest of Tenant, and nothing herein contained shall empower
Tenant to do any act that can, shall or may encumber Landlord's title. In the
event any such lien does attach, Tenant shall, within ten (10) days of notice of
the filing of said lien, either discharge or bond over such lien to the
satisfaction of Landlord and Landlord's Mortgagee (as hereinafter defined), and
in such a manner as to remove the lien as an encumbrance against the Building
and Property. If Tenant shall fail to so discharge or bond over such lien, then,
in addition to any other right or remedy of Landlord, Landlord may, but shall
not be obligated to bond over or discharge the same. Any amount paid by Landlord
for any of the aforesaid purposes, including reasonable attorneys' fees (if and
to the extent permitted by law) shall be paid by Tenant to Landlord on demand as
Additional Base Rental. Landlord shall have the right to post and keep posted on
the Premises any notices that may be provided by law or which Landlord may deem
to be proper for the protection of Landlord, the Premises and the Building from
such liens. Nothing contained herein shall be deemed to affect the rights of
Tenant to contest any such lien, so long as the bond has been provided to
protect the interests of Landlord. Notice is hereby given that the Landlord
shall not be liable for any labor or materials furnished or to be furnished to
the Tenant upon credit, and that no mechanic's or materialmen's or other lien
for any such labor or materials shall attach to or affect the reversionary or
other estate or interest of the Landlord in and to the Land and Building. In no
event shall Tenant be deemed to be the agent of Landlord for purposes of Title
38-101 of the District of Columbia Code (1981 Edition, as amended) and no
contractor of Tenant shall by virtue of its contract be entitled to assert any
mechanic's lien against the Building or land appurtenant thereto.
XV. INDEMNITY AND WAIVER OF CLAIMS.
A. Tenant shall indemnify, defend and hold Landlord, its members,
principals, beneficiaries, partners, officers, directors, employees,
Mortgagee(s) and agents, and the respective principals and members of any such
agents (collectively the "Landlord Related Parties") harmless against and from
all liabilities, obligations, damages, penalties, claims, costs, charges and
expenses, including, without limitation, reasonable attorneys' fees and other
professional fees (if and to the extent permitted by law), which may be imposed
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upon, incurred by, or asserted against Landlord or any of the Landlord Related
Parties and arising, directly or indirectly, out of or in connection with the
use, occupancy or maintenance of the Premises by, through or under Tenant
including, without limitation, any of the following: (1) any work or thing done
in, on or about the Premises or any part thereof by Tenant or any of its
transferees, agents, servants, contractors, employees, customers, licensees or
invitees; (2) any use, non-use, possession, occupation, condition, operation or
maintenance of the Premises or any part thereof; (3) any act or omission of
Tenant or any of its transferees, agents, servants, contractors, employees,
customers, licensees or invitees, regardless of whether such act or omission
occurred within the Premises; (4) any injury or damage to any person or property
occurring in, on or about the Premises or any part thereof; or (5) any failure
on the part of Tenant to perform or comply with any of the covenants,
agreements, terms or conditions contained in this Lease with which Tenant must
comply or perform. In case any action or proceeding is brought against Landlord
or any of the Landlord Related Parties by reason of any of the foregoing, Tenant
shall, at Tenant's sole cost and expense, resist and defend such action or
proceeding with counsel approved by Landlord or, at Landlord's option, reimburse
Landlord for the cost of any counsel retained directly by Landlord to defend and
resist such action or proceeding.
B. Landlord and the Landlord Related Parties shall not be liable for,
and Tenant hereby waives, all claims for loss or damage to Tenant's business or
damage to person or property sustained by Tenant or any person claiming by,
through or under Tenant [including Tenant's principals, agents and employees
(collectively, the "Tenant Related Parties")] resulting from any accident or
occurrence in, on or about the Premises, the Building or the Property,
including, without limitation, claims for loss, theft or damage resulting from:
(1) the Premises, Building, or Property, or any equipment or appurtenances
becoming out of repair; (2) wind or weather; (3) any defect in or failure to
operate, for whatever reason, any sprinkler, heating or air-conditioning
equipment, electric wiring, gas, water or steam pipes; (4) broken glass; (5) the
backing up of any sewer pipe or downspout; (6) the bursting, leaking or running
of any tank, water closet, drain or other pipe; (7) the escape of steam or
water; (8) water, snow or ice being upon or coming through the roof, skylight,
stairs, doorways, windows, walks or any other place upon or near the Building;
(9) the falling of any fixture, plaster, title or other material; (10) any act,
omission or negligence of other tenants, licensees or any other persons or
occupants of the Building or of adjoining or contiguous buildings, or owners of
adjacent or contiguous property or the public, or by construction of any
private, public or quasi-public work; or (11) any other cause of any nature
except, as to items 1-9 and item 11, where such loss or damage is due to
Landlord's willful failure to make repairs required to be made pursuant to other
provisions of this Lease, after the expiration of a reasonable time after
written notice to Landlord of the need for such repairs. To the maximum extent
permitted by law, Tenant agrees to use and occupy the Premises, and to use such
other portions of the Building as Tenant is herein given the right to use, at
Tenant's own risk.
C. Notwithstanding any provision contained herein to the contrary,
Landlord shall not be indemnified from any liability for damage or injury to
persons or property caused by or resulting from the negligence or wanton
misconduct of Landlord or any employee or agent of Landlord in the operation or
maintenance of the Building.
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XVI. TENANT'S INSURANCE.
A. At all times commencing on and after the earlier of the Commencement
Date and the date Tenant or its agents, employees or contractors enters the
Premises for any purpose, Tenant shall carry and maintain, at its sole cost and
expense:
1. Commercial General Liability Insurance applicable to the Premises
and its appurtenances providing, on an occurrence basis, a minimum combined
single limit of Two Million Dollars ($2,000,000.00), with a contractual
liability endorsement covering Tenant's indemnity obligations under this Lease.
2. All Risks of Physical Loss Insurance written at replacement cost
value and with a replacement cost endorsement covering all of Tenant's Property
in the Premises.
3. Workers' Compensation Insurance as required by the state in which
the Premises is located and in amounts as may be required by applicable statute,
and Employers' Liability Coverage of One Million Dollars ($1,000,000.00) per
occurrence.
4. Whenever good business practice, in Landlord's reasonable
judgment, indicates the need of additional insurance coverage or different types
of insurance in connection with the Premises or Tenant's use and occupancy
thereof, Tenant shall, upon request, obtain such insurance at Tenant's expense
and provide Landlord with evidence thereof.
B. Before any repairs, alterations, additions, improvements, or
construction are undertaken by or on behalf of Tenant, Tenant shall carry and
maintain, at its expense, or Tenant shall require any contractor performing work
on the Premises to carry and maintain, at no expense to Landlord, In addition to
workers' compensation insurance as required by the jurisdiction in which the
Building is located, All Risk Builder's Risk Insurance in the amount of the
replacement cost of any alterations, additions or improvements (or such other
amount reasonably required by Landlord) and Commercial General Liability
Insurance (including, without limitation, Contractor's Liability coverage,
Contractual Liability coverage and Completed Operations coverage), written on an
occurrence basis with a minimum combined single limit of Two Million Dollars
($2,000,000.00) and adding the "owner(s) of the Building and its (or their)
respective members, principals, beneficiaries, partners, officers, directors,
employees, agents (and their respective members and principals) and
mortgagee(s)" (and any other designees of Landlord as the interest of such
designees shall appear) as additional insureds.
C. Any company writing any insurance which Tenant is required to
maintain or cause to be maintained pursuant to the terms of this Lease (all such
insurance as well as any other insurance pertaining to the Premises or the
operation of Tenant's business therein being referred to as "Tenant's
Insurance"), as well as the form of such insurance, shall at all times be
subject to Landlord's reasonable approval, and each such insurance company shall
have an A.M. Best rating of "A-" or better and shall be licensed and qualified
to do business in the state in which the Premises is located. All policies
evidencing Tenant's Insurance (except for Workers' Compensation) shall specify
Tenant as named insured and the "owner(s) of the Building and its (or their)
respective members, principals, beneficiaries, partners, officers, directors,
employees, agents (and their respective members and principals) and
mortgagee(s)" (and any other designees of Landlord as the interest of such
designees shall appear) as additional insureds. Provided that the coverage
afforded Landlord and any designees of Landlord shall not be reduced or
otherwise adversely affected, all of Tenant's Insurance may be carried under a
blanket policy covering the Premises and any other of Tenant's locations. All
policies of Tenant's Insurance shall contain endorsements that the insurer(s)
will give to Landlord and its designees at least fifteen (15) days' advance
written notice of any change, cancellation, termination or lapse of said
insurance. Tenant shall be solely responsible for payment of premiums for all of
Tenant's Insurance. Tenant shall deliver to Landlord at least fifteen (15) days
prior to the time Tenant's Insurance is first required to be carried by Tenant,
and
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upon renewals at least fifteen (15) days prior to the expiration of any such
insurance coverage, a certificate of insurance of all policies procured by
Tenant in compliance with its obligations under this Lease. The limits of
Tenant's Insurance shall in no event limit Tenant's liability under this Lease.
D. Tenant shall not do or fail to do anything in, upon or about the
Premises which will: (1) violate the terms of any of Landlord's insurance
policies; (2) prevent Landlord from obtaining policies of insurance acceptable
to Landlord or any Mortgagees; or (3) result in an increase in the rate of any
insurance on the Premises, the Building, any other property of Landlord or of
others within the Building. In the event of the occurrence of any of the events
set forth in this Section, Tenant shall pay Landlord upon demand, as Additional
Base Rental, the cost of the amount of any increase in any such insurance
premium, provided that the acceptance by Landlord of such payment shall not be
construed to be a waiver of any rights by Landlord in connection with a default
by Tenant under the Lease. If Tenant fails to obtain the insurance coverage
required by this Lease, Landlord may, at its option, obtain such insurance for
Tenant, and Tenant shall pay, as Additional Base Rental, the cost of all
premiums thereon and all of Landlord's costs associated therewith.
XVII. SUBROGATION.
Notwithstanding anything set forth in this Lease to the contrary,
Landlord and Tenant do hereby waive any and all right of recovery, claim, action
or cause of action against the other, their respective principals,
beneficiaries, partners, officers, directors, agents, and employees, and, with
respect to Landlord, its Mortgagee(s), for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to their respective property, the
Building, the Property or the Premises or any addition or improvements thereto,
or any contents therein, by reason of fire, the elements or any other cause,
regardless of cause or origin, including the negligence of Landlord or Tenant,
or their respective principals, beneficiaries, partners, officers, directors,
agents and employees and, with respect to Landlord, its Mortgagee(s), which loss
or damage is (or would have been, had the insurance required by this Lease been
carried) covered by insurance. Since this mutual waiver will preclude the
assignment of any such claim by subrogation (or otherwise) to an insurance
company (or any other person), Landlord and Tenant each agree to give each
insurance company which has issued, or in the future may issue, policies of
insurance, with respect to the items covered by this waiver, written notice of
the terms of this mutual waiver, and to have such insurance policies properly
endorsed, if necessary, to prevent the invalidation of any of the coverage
provided by such insurance policies by reason of such mutual waiver. For the
purpose of the foregoing waiver, the amount of any deductible applicable to any
loss or damage shall be deemed covered by, and recoverable by the insured under
the insurance policy to which such deductible relates. In the event that Tenant
is permitted to and self-insures any risk which would have been covered by the
insurance required to be carried by Tenant pursuant to Article XVI of the Lease,
or if Tenant fails to carry any insurance required to be carried by Tenant
pursuant to Article XVI of this Lease, then all loss or damage to Tenant, its
leasehold interest, its business, its property, the Premises or any additions or
improvements thereto or contents thereof shall be deemed covered by and
recoverable by Tenant under valid and collectible policies of insurance.
XVIII. LANDLORD'S INSURANCE.
Landlord agrees that Landlord will maintain or cause to be maintained
in full force and effect at all times during the Term fire and extended coverage
insurance covering the Building and the leasehold improvements to the Leased
Premises originally supplied, furnished or installed at Landlord's expense in
amounts equal to no less than ninety percent (90%) of the full insurable value
thereof (actual replacement value, without deduction for physical depreciation
as such may be adjusted to account for increased replacement value costs) or in
such lesser amount as shall be sufficient to avoid the effects of co-insurance
provisions of the policies and public liability insurance with limits no less
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than the minimum limits required of Tenant in the case of Tenant's public
liability insurance required above. The cost of such insurance shall be included
as a part of the Basic Costs, and payments for losses and recoveries thereunder
shall be made solely to Landlord or the Mortgagees of Landlord as their
interests shall appear.
XIX. CASUALTY DAMAGE.
If the Premises or any part thereof shall be damaged by fire or other
casualty, Tenant shall give prompt written notice thereof to Landlord. In case
(i) the Building shall be so damaged that in Landlord's reasonable judgment,
substantial alteration or reconstruction of the Building shall be required
(whether or not the Premises has been damaged by such casualty), (ii) Landlord
will not be permitted by applicable law to rebuild the Building in substantially
the same form as existed prior to the fire or casualty, or (iii) Material Damage
(below defined) has occurred and there is less than one (1) year of the Lease
Term remaining on the date of such casualty, (iv) any Mortgagee should require
that the insurance proceeds payable as a result of a casualty be applied to the
payment of the mortgage debt, or (v) any material uninsured loss to the
Building, Landlord may, at its option, terminate this Lease by notifying Tenant
in writing of such termination within forty-five (45) days after the date of
such casualty. In addition, provided an Event of Default shall not then be
continuing, in the event the Premises has suffered Material Damage and either
(x) there is less than one (1) year of the Lease Term remaining on the date of
such casualty or (y) there shall require more than four (4) months for Landlord
to complete Landlord's completion of repairs or restoration required of Landlord
following the date of the fire or casualty, then and in either such event Tenant
also shall be entitled to terminate this Lease by notifying Landlord in writing
of such termination, within forty-five (45) days after the date of such casualty
(in the case of (x) above) or within fifteen (15) days after the date of
Landlord's estimate (which shall be provided by Landlord no later than
forty-five days following the casualty) to Tenant of the time reasonably
anticipated to be required to complete the requisite repairs and restorations
(in the case of (y) above). Such termination shall be effective as of the date
of fire or casualty, with respect to any portion of the Premises that was
rendered untenantable, and the effective date of termination specified in
Landlord's notice, or, if applicable, Tenant's notice, with respect to any
portion of the Premises that remained tenantable. However, no portion of the
Premises shall be deemed to be tenantable in the event by reason of the damage
to the remaining portion of the Premises Tenant is unable to reasonably conduct
its business therein and Tenant actually does not conduct business within such
undamaged portion of the Premises. If Landlord, or if applicable, Tenant, does
not does not elect to terminate this Lease, Landlord shall commence and proceed
with reasonable diligence to restore the Building (provided that Landlord shall
not be required to restore any unleased premises in the Building) and the
Leasehold Improvements (but excluding any improvements, alterations or additions
made by Tenant in violation of this Lease) located within the Premises, if any,
which Landlord has insured to substantially the same condition they were in
immediately prior to the happening of the casualty. Notwithstanding the
foregoing, Landlord's obligation to restore the Building, and the Leasehold
Improvements, if any, shall not require Landlord to expend for such repair and
restoration work more than the insurance proceeds actually received by the
Landlord (plus the deductible maintained by Landlord) as a result of the
casualty. When repairs to the Premises have been completed by Landlord, Tenant
shall complete the restoration or replacement of all Tenant's Property necessary
to permit Tenant's reoccupancy of the Premises, and Tenant shall present
Landlord with evidence satisfactory to Landlord of Tenant's ability to pay such
costs prior to Landlord's commencement of repair and restoration of the
Premises. Landlord shall not be liable for any inconvenience or annoyance to
Tenant or injury to the business of Tenant resulting in any way from such damage
or the repair thereof, except that, subject to the provisions of the next
sentence, Landlord shall allow Tenant a fair diminution of Rent on a per diem
basis during the time and to the extent any damage to the Premises causes the
Premises to be rendered untenantable and not used by Tenant. If the Premises or
any other portion of the Building is damaged by fire or other casualty resulting
from the negligence of Tenant or any Tenant Related Parties, the Rent hereunder
shall not be diminished during any period during which
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the Premises, or any portion thereof, is untenantable (except to the extent
Landlord is entitled to be reimbursed by the proceeds of any rental interruption
insurance), and Tenant shall be liable to Landlord for the cost of the repair
and restoration of the Building caused thereby to the extent such cost and
expense is not covered by insurance proceeds. Landlord and Tenant hereby waive
the provisions of any law from time to time in effect during the Lease Term
relating to the effect upon leases of partial or total destruction of leased
property. Landlord and Tenant agree that their respective rights in the event of
any damage to or destruction of the Premises shall be those specifically set
forth herein.
For purposes hereof, "Material Damage" shall be deemed to have occurred
if fifty percent (50%) or more of the rentable area of the first floor of the
Building shall have been damaged or destroyed or if the Premises are rendered
inaccessible, impossible to be occupied or impossible to conduct business
operations therein for more than ninety (90) consecutive days.
Notwithstanding anything in this Lease to the contrary, if Landlord
does not so complete such restoration of the Premises within thirty (30) days
following the date estimated by Landlord for such restoration to be completed
within its notice to Tenant, and provided that such delay in such completion
results from a cause other than force majeure, Tenant shall have the right, to
be exercised no later than fifteen (15) days following expiration of such 30
days period, to terminate this Lease by delivering at least fifteen (15) days
prior written notice to Landlord of Tenant's exercise of such termination right.
In the event the restoration of the Leased Premises is completed as required in
this section is restored to Tenant within fifteen (15) days after Tenant's
delivery of such notice to Landlord, such right of termination arising from that
occurrence shall be deemed to be void and without effect.
XX. INTENTIONALLY OMITTED
XXI. CONDEMNATION.
If (a) the whole or any substantial part of the Premises or (b) any
portion of the Building or Property which would leave the remainder of the
Building unsuitable for use as an office building comparable to its use on the
Commencement Date, shall be taken or condemned for any public or quasi-public
use under governmental law, ordinance or regulation, or by right of eminent
domain, or by private purchase in lieu thereof, then Landlord may, at its
option, terminate this Lease effective as of the date the physical taking of
said Premises or said portion of the Building or Property shall occur. In the
event of a taking affecting a substantial portion of the Premises, or of a
taking beyond the Premises which materially and adversely impacts either access
to or use of the Premises by Tenant, then and in either such event Tenant shall
also be entitled to terminate this Lease, effective as of the date the physical
taking shall occur. In the event this Lease is not terminated, the Rentable Area
of the Building, the Rentable Area of the Premises and Tenant's Pro Rata Share
shall be appropriately adjusted. In addition, Rent for any portion of the
Premises so taken or condemned shall be abated during the unexpired term of this
Lease effective when the physical taking of said portion of the Premises shall
occur. All compensation awarded for any such taking or condemnation, or sale
proceeds in lieu thereof, shall be the property of Landlord, and Tenant shall
have no claim thereto, the same being hereby expressly waived by Tenant, except
for any portions of such award or proceeds which are specifically allocated by
the condemning or purchasing party for the taking of or damage to Tenant's
Property or for moving costs, or for any other amounts personal to Tenant which
if paid to Tenant will not reduce the award to which Landlord would in the
absence of such payment be entitled to claim for its account, all of which
Tenant specifically reserves to itself.
XXII. EVENTS OF DEFAULT.
The following events shall be deemed to be Events of Default under this
Lease:
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A. Tenant shall fail to pay when due any Base Rental, Additional Base
Rental or other Rent under this Lease and such failure shall continue for three
(3) days after written notice from Landlord (hereinafter sometimes referred to
as a "Monetary Default").
B. Any failure by Tenant (other than a Monetary Default) to comply with
any term, provision or covenant of this Lease, including, without limitation,
the rules and regulations, which failure is not cured within ten (10) days after
delivery to Tenant of notice of the occurrence of such failure, provided that if
any such failure creates a hazardous condition, such failure must be cured
immediately. However, with respect to any failure to comply with or perform any
covenant or obligation which is not curable within such ten (10) day period, if
(i) Tenant has expeditiously commenced to cure same, (ii) the failure does not
affect the Building or other tenants therein and does not result in any
liability to, or expenditure of funds by, Landlord, and (iii) Tenant diligently
pursues the cure of such condition, the cure period shall be extended to the
time reasonably necessary to cure the condition, not to exceed sixty (60) days
(inclusive of the original 10 days). Notwithstanding the foregoing, if Tenant
fails to comply with any particular provision or covenant of this Lease,
including, without limitation, Tenant's obligation to pay Rent when due, on
three (3) occasions during any twelve (12) month period, any subsequent
violation of such provision or covenant shall be considered to be an incurable
default by Tenant.
C. Tenant or any Guarantor shall become insolvent, or shall make a
transfer in fraud of creditors, or shall commit an act of bankruptcy or shall
make an assignment for the benefit of creditors, or Tenant or any Guarantor
shall admit in writing its inability to pay its debts as they become due.
D. Tenant or any Guarantor shall file a petition under any section or
chapter of the United States Bankruptcy Code, as amended, pertaining to
bankruptcy, or under any similar law or statute of the United States or any
State thereof, or Tenant or any Guarantor shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant or any Guarantor thereunder; or a
petition or answer proposing the adjudication of Tenant or any Guarantor as a
debtor or its reorganization under any present or future federal or state
bankruptcy or similar law shall be filed in any court and such petition or
answer shall not be discharged or denied within sixty (60) days after the filing
thereof.
E. A receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant or any Guarantor or of the Premises or of any of
Tenant's Property located thereon in any proceeding brought by Tenant or any
Guarantor, or any such receiver or trustee shall be appointed in any proceeding
brought against Tenant or any Guarantor and shall not be discharged within sixty
(60) days after such appointment or Tenant or such Guarantor shall consent to or
acquiesce in such appointment.
F. The leasehold estate hereunder shall be taken on execution or other
process of law or equity in any action against Tenant.
G. Tenant shall abandon or vacate any substantial portion of the
Premises without the prior written permission of Landlord.
H. Omitted intentionally.
I. The liquidation, termination, dissolution, forfeiture of right to do
business, or death of Tenant or any Guarantor.
J. Tenant is in default beyond any notice and cure period under any
other lease with Landlord for premises in the Building.
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XXIII. REMEDIES.
A. Upon the occurrence of any event or events of default under this
Lease, Landlord shall have the option to pursue any one or more of the following
remedies without any notice (except as expressly prescribed in Article XXII
above) or demand whatsoever (and without limiting the generality of the
foregoing, Tenant hereby specifically waives notice and demand for payment of
Rent or other obligations due [except as expressly prescribed in Article XXII
above] and waives any and all other notices or demand requirements imposed by
applicable law):
1. Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord. If Tenant fails to surrender the Premises
upon termination of the Lease hereunder, Landlord may without prejudice to any
other remedy which it may have, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying said
Premises, or any part thereof, and Tenant hereby agrees to pay to Landlord on
demand the amount of all loss and damage, including consequential damage, which
Landlord may suffer by reason of such termination, whether through inability to
relet the Premises on satisfactory terms or otherwise, specifically including
but not limited to all Costs of reletting (hereinafter defined) and any
deficiency that may arise by reason of any reletting or failure to relet.
2. Enter upon and take possession of the Premises and expel or
remove Tenant or any other person who may be occupying said Premises, or any
part thereof, without having any civil or criminal liability therefor and
without terminating this Lease. Landlord may (but shall be under no obligation
to) relet the Premises or any part thereof for the account of Tenant, in the
name of Tenant or Landlord or otherwise, without notice to Tenant, for such term
or terms which may be greater or less than the period which would otherwise have
constituted the balance of the Lease Term and on such conditions (which may
include concessions, free rent and alterations of the Premises) and for such
uses as Landlord in its absolute discretion may determine, and Landlord may
collect and receive any rents payable by reason of such reletting. Tenant agrees
to pay Landlord on demand all Costs of Reletting and any deficiency that may
arise by reason of such reletting or failure to relet. Landlord shall not be
responsible or liable for any failure to relet the Premises or any part thereof
or for any failure to collect any Rent due upon any such reletting. No such
re-entry or taking of possession of the Premises by Landlord shall be construed
as an election on Landlord's part to terminate this Lease unless a written
notice of such termination is given to Tenant.
3. Enter upon the Premises without having any civil or criminal
liability therefor, and do whatever Tenant is obligated to do under the terms of
this Lease, and Tenant agrees to reimburse Landlord on demand for any expense
which Landlord may incur in thus affecting compliance with Tenant's obligations
under this Lease together with interest at the per annum rate equal to the
Maximum Rate.
4. In order to regain possession of the Premises and to deny Tenant
access thereto in any instance in which Landlord has terminated this Lease or
Tenant's right to possession, or to limit access to the Premises in accordance
with local law in the event of a default by Tenant, Landlord or its agent may,
at the expense and liability of the Tenant, alter or change any or all locks or
other security devices controlling access to the Premises without posting or
giving notice of any kind to Tenant. Landlord shall have no obligation to
provide Tenant a key or grant Tenant access to the Premises so long as Tenant is
in default under this Lease. Tenant shall not be entitled to recover possession
of the Premises, terminate this Lease, or recover any actual, incidental,
consequential, punitive, statutory or other damages or award of attorneys' fees,
by reason of Landlord's alteration or change of any lock or other security
device. Landlord may, without notice, remove and either dispose of or store, at
Tenant's expense, any property belonging to Tenant that remains in the Premises
after Landlord has regained possession thereof.
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5. Terminate this Lease, in which event, Tenant shall immediately
surrender the Premises to Landlord and pay to Landlord the sum of: (a) all Rent
accrued hereunder through the date of termination, and, upon Landlord's
determination thereof, (b) an amount equal to: the total Rent that Tenant would
have been required to pay for the remainder of the Lease Term discounted to
present value at the Prime Rate then in effect, minus the then present fair
rental value of the Premises for the remainder of the Lease Term, similarly
discounted, after deducting all anticipated Costs of Reletting (as defined
below).
B. For purposes of this Lease, the term "Costs of Reletting" shall mean
all costs and expenses reasonably incurred by Landlord in connection with the
reletting of the Premises, including without limitation, the cost of cleaning,
renovation, repairs, decoration and alteration of the Premises for a new tenant
or tenants, advertisement, marketing, brokerage and legal fees (if and to the
extent permitted by law), the cost of protecting or caring for the Premises
while vacant, the cost of removing and storing any property located on the
Premises, any increase in insurance premiums caused by the vacancy of the
Premises and any other out-of-pocket expenses incurred by Landlord including
tenant incentives, allowances and inducements.
C. Except as otherwise herein provided, no repossession or re-entering
of the Premises or any part thereof pursuant to Article XXIII hereof or
otherwise shall relieve Tenant or any Guarantor of its liabilities and
obligations hereunder, all of which shall survive such repossession or
re-entering. Notwithstanding any such repossession or re-entering by reason of
the occurrence of an event of default, Tenant will pay to Landlord the Rent
required to be paid by Tenant pursuant to this Lease.
D. No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing by agreement, applicable law or in
equity. In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed or construed to
constitute a waiver of such default.
E. This Article XXIII shall be enforceable to the maximum extent such
enforcement is not prohibited by applicable law, and the unenforceability of any
portion thereof shall not thereby render unenforceable any other portion.
XXIV. LIMITATION OF LIABILITY.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD HEREUNDER) TO TENANT SHALL
BE LIMITED TO THE INTEREST OF LANDLORD IN THE BUILDING, AND TENANT AGREES TO
LOOK SOLELY TO LANDLORD'S INTEREST IN THE BUILDING FOR THE RECOVERY OF ANY
JUDGMENT OR AWARD AGAINST THE LANDLORD, IT BEING INTENDED THAT NEITHER LANDLORD
NOR ANY MEMBER, PRINCIPAL, PARTNER, SHAREHOLDER, OFFICER, DIRECTOR OR
BENEFICIARY OF LANDLORD SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR
DEFICIENCY. TENANT HEREBY COVENANTS THAT, PRIOR TO THE FILING OF ANY SUIT FOR AN
ALLEGED DEFAULT BY LANDLORD HEREUNDER, IT SHALL GIVE LANDLORD AND ALL MORTGAGEES
WHOM TENANT HAS BEEN NOTIFIED IN WRITING HOLD MORTGAGES OR DEED OF TRUST LIENS
ON THE PROPERTY, BUILDING OR PREMISES NOTICE AND REASONABLE TIME TO CURE SUCH
ALLEGED DEFAULT BY LANDLORD.
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XXV. NO WAIVER.
Failure of Landlord or Tenant to declare any default immediately upon
its occurrence, or delay in taking any action in connection with an event of
default shall not constitute a waiver of such default, nor shall it constitute
as estoppel against Landlord or Tenant, as the case may be, but Landlord or
Tenant shall have the right to declare the default at any time and take such
action as is lawful or authorized under this Lease. Failure by Landlord or
Tenant to enforce its rights with respect to any one default shall not
constitute a waiver of its rights with respect to any subsequent default.
Receipt by Landlord of Tenant's keys to the Premises shall not constitute an
acceptance or surrender of the Premises.
XXVI. EVENT OF BANKRUPTCY.
In addition to, and in no way limiting the other remedies set forth
herein, Landlord and Tenant agree that if Tenant ever becomes the subject of a
voluntary or involuntary bankruptcy, reorganization, composition, or other
similar type proceeding under the federal bankruptcy laws, as now enacted or
hereinafter amended, then:
A. "Adequate protection" of Landlord's interest in the Premises
pursuant to the provisions of Section 361 and 363 (or their successor sections)
of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (such Bankruptcy Code as
amended from time to time being herein referred to as the "Bankruptcy Code"),
prior to assumption and/or assignment of the Lease by Tenant shall include, but
not be limited to all (or any part) of the following:
1. the continued payment by Tenant of the Base Rental and all other
Rent due and owing hereunder and the performance of all other covenants and
obligations hereunder by Tenant;
2. the furnishing of an additional/new security deposit by Tenant in
the amount of three (3) times the then current monthly Base Rental.
B. "Adequate assurance of future performance" by Tenant and/or any
assignee of Tenant pursuant to Bankruptcy Code Section 365 will include (but not
be limited to) payment of an additional/new Security Deposit in the amount of
three (3) times the then current monthly Base Rental payable hereunder.
C. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, shall be deemed without further act or deed
to have assumed all of the obligations of Tenant arising under this Lease on and
after the effective date of such assignment. Any such assignee shall, upon
demand by Landlord, execute and deliver to Landlord an instrument confirming
such assumption of liability.
D. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Tenant to or on behalf of the Landlord under this Lease, whether or
not expressly denominated as "Rent," shall constitute "rent" for the purposes of
Section 502(b)(6) of the Bankruptcy Code.
E. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, any and all monies or other considerations
payable or otherwise to be delivered to Landlord (including Base Rentals and
other Rent hereunder), shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the bankruptcy estate of
Tenant. Any and all monies or other considerations constituting Landlord's
property under the preceding sentence not paid or delivered to Landlord shall be
held in trust by Tenant or Tenant's bankruptcy estate for the benefit of
Landlord and shall be promptly paid to or turned over to Landlord.
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F. If Tenant assumes this Lease and proposes to assign the same
pursuant to the provisions of the Bankruptcy Code to any person or entity who
shall have made a bona fide offer to accept an assignment of this Lease on terms
acceptable to the Tenant, then notice of such proposed offer/assignment, setting
forth: (1) the name and address of such person or entity, (2) all of the terms
and conditions of such offer, and (3) the adequate assurance to be provided
Landlord to assure such person's or entity's future performance under the Lease,
shall be given to Landlord by Tenant no later than twenty (20) days after
receipt by Tenant, but in any event no later than ten (10) days prior to the
date that Tenant shall make application to a court of competent jurisdiction for
authority and approval to enter into such assumption and assignment, and
Landlord shall thereupon have the prior right and option, to be exercised by
notice to Tenant given at any time prior to the effective date of such proposed
assignment, to accept an assignment of this Lease upon the same terms and
conditions and for the same consideration, if any, as the bona fide offer made
by such persons or entity, less any brokerage commission which may be payable
out of the consideration to be paid by such person for the assignment of this
Lease.
G. To the extent permitted by law, Landlord and Tenant agree that this
Lease is a contract under which applicable law excuses Landlord from accepting
performance from (or rendering performance to) any person or entity other than
Tenant within the meaning of Sections 365(c) and 365(e)(2) of the Bankruptcy
Code.
XXVII. WAIVER OF JURY TRIAL.
Landlord and Tenant hereby waive any right to a trial by jury in any
action or proceeding based upon, or related to, the subject matter of this
Lease. This waiver is knowingly, intentionally, and voluntarily made by Tenant,
and Tenant acknowledges that neither Landlord nor any person acting on behalf of
Landlord has made any representations of fact to induce this waiver of trial by
jury or in any way to modify or nullify its effect. Tenant further acknowledges
that it has been represented (or has had the opportunity to be represented) in
the signing of this Lease and in the making of this waiver by independent legal
counsel, selected of its own free will, and that it has had the opportunity to
discuss this waiver with counsel.
XXVIII. LANDLORD'S ALLOWANCE AND INITIAL IMPROVEMENTS.
Tenant shall receive a total construction allowance (the "Allowance")
in the amount of up to Fifteen Dollars ($15.00) per rentable square foot of the
Premises (namely $115,200.00 assuming a Rentable Area of the Premises of 7,680
square feet), which shall be applied towards the cost of Tenant's Initial
Leasehold Improvements over the existing "as is" condition. For the purposes of
this paragraph, leasehold improvements may specifically include, but not be
limited to, construction of tenant improvements, construction management
services, permit fees, fire suppression systems, HVAC, cabling, DC power
sources, Tenant's design costs (to include architectural, mechanical, electrical
and plumbing drawings), suite security systems, and millwork, or items which
either Tenant may require Landlord or the Tenant's Contractor to furnish,
provide or complete or which under the terms of this Lease shall be provided or
furnished by Landlord or Tenant's Contractor in connection with the completion
of the Initial Leasehold Improvements.
Landlord agrees to disburse the Allowance to Tenant or as directed by
Tenant on account of items delivered to the Premises when delivered, after
approval of such payment by Tenant, provided Landlord receives no less than ten
(10) days advance written notice of such payment. Landlord also agrees to
disburse the Allowance on a monthly basis directly to the general contractor or
others as directed by Tenant on account of work performed, or in the event
Tenant has paid the requested amount itself directly to such contractor or other
party, Landlord shall reimburse Tenant the portion of the Allowance to which
Tenant is then entitled, based upon paid receipts submitted to Landlord. Tenant
shall provide a proposed monthly requisition no later than the twentieth (20th)
day of the calendar month preceding the month in which Tenant requests such
disbursement in order
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to permit Landlord to process Tenant's request by the tenth (10th) day of the
following month. It is hereby agreed that all leasehold improvements paid for by
Landlord out of the Allowance shall immediately become the property of Landlord
upon completion unless otherwise agreed to in writing. In the event the total
cost of the Initial Leasehold Improvements exceeds the Allowance, all such
excess costs shall be solely payable by Tenant. In no event shall any contractor
of Tenant be considered as a third party beneficiary hereunder, and Landlord's
agreement to provide payments directly to Tenant's contractor shall not create
any contractual relationship between Landlord and such contractor, or otherwise
constitute an acknowledgment or representation by Landlord that the particular
work being paid for by Landlord has been performed in accordance with the
specifications therefor, or is otherwise sufficient to fulfill Tenant's
expectations.
XXIX. 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 to
Articles XXII and XXIII hereof, occupancy of the Premises subsequent to such
termination or expiration shall be that of a tenancy at sufferance and in no
event for month-to-month or year-to-year, but Tenant shall, throughout the
entire holdover period, be subject to all the terms and provisions of this Lease
and shall pay for its use and occupancy an amount (on a per month basis without
reduction for any partial months during any such holdover) equal to twice the
sum of the Base Rental and Additional Base Rental due for the period immediately
preceding such holding over, provided that in no event shall Base Rental and
Additional Base Rental during the holdover period be less than the fair market
rental for the Premises. No holding over by Tenant or payments of money by
Tenant to Landlord after the expiration of the term of this Lease shall be
construed to extend the Lease Term or prevent Landlord from recovery of
immediate possession of the Premises by summary proceedings or otherwise. In
addition to the obligation to pay the amounts set forth above during any such
holdover period, Tenant also shall be liable to Landlord for all damage,
including any consequential damage, which Landlord may suffer by reason of any
holding over by Tenant, and Tenant shall indemnify Landlord against any and all
claims made by any other tenant or prospective tenant against Landlord for delay
by Landlord in delivering possession of the Premises to such other tenant or
prospective tenant.
XXX. SUBORDINATION TO MORTGAGES.
Tenant accepts this Lease subject and subordinate to any mortgage, deed
of trust, ground lease or other lien presently existing or hereafter arising
upon the Premises, or upon the Building and/or the Property and to any renewals,
modifications, refinancings and extensions thereof (any such mortgage, deed of
trust, lease or other lien being hereinafter referred to as a "Mortgage", and
the person or entity having the benefit of same being referred to hereinafter as
a "Mortgagee"), but Tenant agrees that any such Mortgagee shall have the right
at any time to subordinate such Mortgage to this Lease on such terms and subject
to such conditions as such Mortgagee may deem appropriate in its discretion
provided the mortgagee for itself and any party claiming by, through or under
such mortgagee agrees in writing to recognize this Lease in the event it or such
party acquires the Building by foreclosure or deed-in-lieu of foreclosure.
Tenant agrees upon demand to execute such further instruments subordinating this
Lease, acknowledging the subordination of this Lease or attorning to the holder
of any such Mortgage as Landlord may reasonably request. If any person shall
succeed to all or part of Landlord's interests in the Premises whether by
purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination
of lease or otherwise, and if and as so requested or required by such
successor-in-interest, Tenant shall, without charge, attorn to such
successor-in-interest.
Tenant waives the provisions of any statute or rule of law, now or
hereafter in effect, which may give or purport to give Tenant any right to
terminate or otherwise adversely affect this Lease and the obligations of Tenant
hereunder in the event that any such
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foreclosure proceeding is prosecuted or completed. In addition, if the
Landlord's leasehold interest in any ground lease shall be terminated, Tenant
agrees that this Lease shall, at the option of the ground lessor, remain in full
force and effect (or if terminated by law as a result of Landlord's interest
being terminated, Tenant will enter into a new Lease with the identical terms
and conditions of this Lease). Tenant agrees to give any Mortgagee, by certified
mail, return receipt requested, a copy of any notice of default served upon
Landlord, provided that prior to such notice Tenant has been notified in writing
(by way of notice of Assignment of Rents and Leases, or otherwise) of the
address of such mortgagees and/or trust deed holders. Tenant further agrees that
if Landlord shall have failed to cure such default within the time provided for
in this Lease, then the mortgagees and/or trust deed holders shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
if within such thirty (30) days, the mortgagee and/or trust deed holder has
commenced and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary, to effect such cure), in which event this Lease shall not be
terminated while such remedies are being so diligently pursued. Tenant agrees
that in the event of the sale of the Land or the Building, by foreclosure or
deed in lieu thereof, Tenant shall substitute the letter of credit, if any, held
by Landlord hereunder in the name of the new purchaser, upon surrender of the
letter of credit then held by the former landlord hereunder. Landlord agrees to
turn over to the purchaser at such sale any Security Deposit paid by Tenant to
Landlord in connection with this Lease whereupon such purchaser shall be
thereafter responsible for its return to Tenant. Tenant further agrees that any
successor to Landlord's interest shall not be bound by (i) any payment of
monthly Rent or Additional Rent for more than one (1) month in advance, except
prepayments in the nature of security for the performance by Tenant of its
obligations under this Lease or (ii) any amendment or modification of this Lease
made without the consent of Landlord's mortgagee or such successor in interest.
Landlord agrees to use all reasonable efforts to obtain from the party
presently holding the note secured by a deed of trust against the Building, and
shall, as a condition to any future subordination obtain from any future
Mortgagee, an agreement (a "Nondisturbance Agreement") which shall provide that,
as long as Tenant is not in default under this Lease after written notice and
expiration of the applicable cure period, this Lease will not be terminated
during the Lease term hereof as a result of any foreclosure or conveyance in
lieu of foreclosure under the deed of trust on the Building held by such
mortgagee. Any such Nondisturbance Agreement shall be in form and content as
required by Landlord's mortgagee, and shall also include such subordination and
attornment provisions as such mortgagee may reasonably require. Landlord has
delivered to Tenant the form of Nondisturbance Agreement received from its
present lender, with the understanding that such lender will not complete its
review of this Lease until it has received a final signed copy. In the event
Tenant desires to negotiate the provisions contained in any such Nondisturbance
Agreement Tenant shall indemnify and hold Landlord harmless from any costs or
expenses incurred with either Landlord's or Lender's counsel in connection
therewith. The form of Nondisturbance Agreement to be used by Landlord's current
lender has been provided to Tenant. Landlord shall obtain approval thereof by
its lender within thirty (30) days of receipt of such agreement signed by
Tenant.
XXXI. ATTORNEYS' FEES.
In the event that Landlord should retain counsel and/or institute any
suit against Tenant for violation of or to enforce any of the covenants or
conditions of this Lease, or should Tenant institute any suit against Landlord
for violation of any of the covenants or conditions of this Lease, or should
either party intervene in any suit in which the other is a party to enforce or
protect its interest or rights hereunder, the prevailing party in any such suit
shall be entitled to all of its costs, expenses and reasonable fees of its
attorney(s) (if and to the extent permitted by law) in connection therewith.
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XXXII. NOTICE.
Whenever any demand, request, approval, consent or notice ("Notice")
shall or may be given to either of the parties by the other, each such Notice
shall be in writing and shall be sent by registered or certified mail with
return receipt requested, or sent by overnight courier service (such as Federal
Express) at the respective addresses of the parties for notices as set forth in
Section I.A.10. of this Lease, provided that if Tenant has vacated the Premises
or an Event of Default has occurred and is continuing under this Lease, Landlord
may serve Notice by any manner permitted by law. Any Notice under this Lease
delivered by registered or certified mail shall be deemed to have been given,
delivered, received and effective on the earlier of (a) the third day following
the day on which the same shall have been mailed with sufficient postage prepaid
or (b) the delivery date indicated on the return receipt. Notice sent by
overnight courier service shall be deemed given, delivered, received and
effective upon the day after such notice is delivered to or picked up by the
overnight courier service. Either party may, at any time, change its Notice
Address by giving the other party Notice stating the change and setting forth
the new address.
XXXIII. ESTOPPEL CERTIFICATES.
Tenant agrees, at any time and from time to time during the Term of
this Lease, upon not more than ten (10) days prior written notice by Landlord,
to execute, acknowledge and deliver to Landlord a statement certifying to
substantially the following provisions (recognizing that any of such statement
may be modified by Tenant to reflect the then state of facts): (i) a statement
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the Lease is in full force as effect as modified and
stating the modifications), (ii) a statement of the dates to which the Rent and
any other charges hereunder have been paid by Tenant, (iii) a statement of
whether or not, to the best knowledge of Tenant, Landlord is in default in the
performance of any covenant, agreement or condition contained in this Lease, and
if so, specifying each such default of which Tenant may have knowledge, (iv) a
statement of the address to which notices to Tenant should be sent, (v) a
statement that all work required to be performed by the Landlord under this
Lease has been completed and that Tenant accepts the Premises and improvements
therein and/or that all payments of the Allowance have been satisfied by
Landlord, (vi) a statement that Tenant will not attempt to terminate this Lease
by reason of Landlord's default or omission without giving written notice of
such default or omission to Landlord and any mortgagee of which Tenant has
knowledge and (vi) such other statement or statements as Landlord, any
prospective purchaser of the Building or the Land, any mortgagee or prospective
mortgagee of the Building or the Land or of Landlord's interest in either and/or
any prospective assignee of any such mortgagee, may reasonably request. Any such
statement delivered pursuant hereto, may be relied upon by any owner of the
Building or the Land, any prospective purchaser of the Building or the Land, any
mortgagee or prospective mortgagee of the Building or the Land or of Landlord's
interest in either, or any prospective assignee of any such mortgagee. Tenant
will agree to make such reasonable changes or modifications to this Lease as may
be required by any mortgagee of the Building and/or the Land, provided that such
changes or modifications shall not increase the amount of Base Rental,
Additional Base Rental, shorten the Term of this Lease or change or redefine the
Premises, or otherwise adversely affect the rights or obligations of the parties
hereunder.
XXXIV. LANDLORD'S LIEN.
In addition to any statutory lien for rent in Landlord's favor,
Landlord (the secured party for purposes hereof) shall have and Tenant (the
debtor for purposes hereof) hereby grants to Landlord, an express contract lien
and a continuing security interest to secure the payment of all Rent due
hereunder from Tenant, upon all goods, wares, equipment, fixtures, furniture,
inventory, accounts, contract rights, chattel paper and other personal property
of Tenant (and any transferees or other occupants of the Premises) presently or
hereafter situated on the Premises and upon all proceeds of any insurance which
may accrue to Tenant by reason of damage or destruction of any such property. In
the event of a default under this Lease, Landlord shall have, in addition to any
other remedies
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provided herein or by law, all rights and remedies under the Uniform Commercial
Code of the state in which the Premises is located, including without limitation
the right to sell the property described in this paragraph at public or private
sale upon ten (10) days' notice to Tenant, which notice Tenant hereby agrees is
adequate and reasonable. Tenant hereby agrees to execute such other instruments
necessary or desirable in Landlord's discretion to perfect the security interest
hereby created. Any statutory lien for rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
Landlord and Tenant agree that this Lease and the security interest granted
herein serve as a financing statement, and a copy or photographic or other
reproduction of this Paragraph of this Lease may be filed of record by Landlord
and have the same force and effect as the original. Tenant warrants and
represents that the collateral subject to the security interest granted herein
is not purchased or used by Tenant for personal, family or household purposes.
Tenant further warrants and represents to Landlord that the lien granted herein
constitutes a first and superior lien and that Tenant will not allow the placing
of any other lien upon any of the property described in this Article without the
prior written consent of Landlord.
XXXV. EXCEPTED RIGHTS.
This Lease does not grant any rights to light or (except for the
liebert vents) air over or about the Building. Landlord specifically excepts and
reserves to itself the use of any roofs, the exterior portions of the Premises,
all rights to the land and improvements below the improved floor level of the
Premises, the improvements and air rights above the Premises and the
improvements and air rights located outside the demising walls of the Premises,
and such areas within the Premises as are required for installation of utility
lines and other installations required to serve any occupants of the Building
and the right to maintain and repair the same, and no rights with respect
thereto are conferred upon Tenant unless otherwise specifically provided herein.
Landlord further reserves to itself the right from time to time: (a) to change
the Building's name or street address; (b) to install, fix and maintain signs on
the exterior and interior of the Building; (c) to designate and approve window
coverings; (d) to make any decorations, alterations, additions, improvements to
the Building, or any part thereof (including the Premises) which Landlord shall
desire, or deem necessary for the safety, protection, preservation or
improvement of the Building, or as Landlord may be required to do by law; (e) to
have access to the Premises to perform its duties and obligations and to
exercise its rights under this Lease; (f) to retain at all times and to use
pass-keys to all locks within and into the Premises recognizing nevertheless
that Tenant may at its election install its own security in the Premises
provided that Tenant provides Landlord in advance with information necessary to
allow Landlord (and emergency personnel) ready access to the Premises in the
event of circumstances reasonably believed by Landlord or such personnel to
constitute an emergency); (g) to approve the weight, size, or location of heavy
equipment, or articles in and about the Premises; (h) to close or restrict
access to the Building at all times other than Normal Business Hours subject to
Tenant's right to admittance at all times under such regulations as Landlord may
prescribe from time to time, or to close (temporarily or permanently) any of the
entrances to the Building; (i) to change the arrangement and/or location of
entrances of passageways, doors and doorways, corridors, elevators, stairs,
toilets and public parts of the Building; (j) if Tenant has vacated the Premises
during the last six (6) months of the Lease Term, to perform additions,
alterations and improvements to the Premises in connection with a reletting or
anticipated reletting thereof without being responsible or liable for the value
or preservation of any then existing improvements to the Premises; and (k) to
grant to anyone the exclusive right to conduct any business or undertaking in
the Building. Landlord, in accordance with Article XII hereof, shall have the
right to enter the Premises in connection with the exercise of any of the rights
set forth herein and such entry into the Premises and the performance of any
work therein shall not constitute a constructive eviction or entitle Tenant to
any abatement or reduction of Rent by reason thereof.
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XXXVI. SURRENDER OF PREMISES.
At the expiration or earlier termination of this Lease or Tenant's
right of possession hereunder, Tenant shall remove all Tenant's Property from
the Premises, remove all Required Removables designated by Landlord and quit and
surrender the Premises to Landlord, broom clean, and in good order, condition
and repair, ordinary wear and tear excepted. If Tenant fails to remove any of
Tenant's Property within one (1) day after the termination of this Lease or
Tenant's right to possession hereunder, Landlord, at Tenant's sole cost and
expense, shall be entitled to remove and/or store such Tenant's Property and
Landlord shall in no event be responsible for the value, preservation or
safekeeping thereof. Tenant shall pay Landlord, upon demand, any and all
expenses caused by such removal and all storage charges against such property so
long as the same shall be in the possession of Landlord or under the control of
Landlord. In addition, if Tenant fails to remove any Tenant's Property from the
Premises or storage, as the case may be, within ten (10) days after written
notice from Landlord, Landlord, at its option, may deem all or any part of such
Tenant's Property to have been abandoned by Tenant and title thereof shall
immediately pass to Landlord.
XXXVII. PARKING.
A. Any areas of the Building which may be set aside by Landlord for the
parking of automobiles may be used by Tenant and Tenant's visitors, invitees and
licensees while engaged in business in the Premises, for the parking of their
automobiles, in common with like use by other tenants of space in the Building,
but subject to any charges which Landlord as its operator may impose from time
to time on such use. The use of said automobile parking areas by Tenant and
Tenant's visitors, invitees and licensees shall be at their sole risk and
expense, and in no event shall Landlord have any liability for damage to, theft
or loss of property of the Tenant or of Tenant's employees, visitors, licensees
or invitees suffered or sustained in or about said parking areas. Said parking
areas (if any) shall be under the exclusive control of Landlord, or its operator
who shall have the right to establish rules and regulations governing the use of
said parking areas, and the right to change such rules and regulations from time
to time, and the right to limit or terminate the right of Tenant, its visitors,
invitees and licensees or any other parties to use such parking areas. Tenant
agrees to keep, observe and comply with all such rules and regulations so
established by Landlord, and will direct and require its employees, licensees,
visitors and invitees to comply therewith. No employee of Landlord is authorized
to accept possession of any vehicle from the Tenant or from Tenant's employees,
licensees, visitors or invitees, nor to accept custody of any articles from
Tenant.
B. Subject to the terms and conditions hereinafter set forth in this
Paragraph (B), Tenant may during the term of this Lease, execute with Landlord
or its designee, parking contracts in the Building garage, at the ratio of one
(1) contract for each 1,800 rentable square feet of area demised hereunder, at
locations to be designated from time to time by Landlord, for parking of
automobiles of Tenant's executives and personnel, such contracts to be upon the
monthly rental and upon the terms and conditions, rules and regulations
prevailing and imposed from time to time by Landlord or its designees. The terms
of such garage contracts shall be as set forth therein. In addition, Tenant will
execute and deliver promptly upon Landlord's request any future garage contracts
which Landlord may require from time to time, covering the spaces to be leased
under this Section XXXVII.B.
C. Upon expiration or any termination of any such garage contracts, the
Tenant will cause all of its automobiles and those of its executives and
personnel (or such automobiles to which the terminated, and not renewed, garage
contract has ceased, as the case may be) to be immediately removed from the
garage. If this Lease is terminated or expires, then in any such event all
parking contracts of Tenant for parking shall thereupon also terminate.
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XXVIII. ACCESS.
Tenant shall have access to the Premises twenty-four (24) hours per
day, seven (7) days per week (subject, however, to the rules and regulations
established from time to time by Landlord for the Building). Access to the
Building entrance outside the Normal Business Hours will be by means of a
security card access system, guard system or other system or arrangement as
established from time to time by Landlord. There will be a minimum of one (1)
elevator in operation for Tenant's use outside of the Normal Business Hours.
In the event of any emergency, or to prevent the interruption of
essential services, Tenant shall have access (without any requirement of prior
notification to Landlord but to be followed by written notice to the Landlord
within three (3) business days thereafter) at all times, 24 hours per day, seven
(7) days per week, 365 days a year, to the Premises, roof, ducts and telephone
closets, equipment rooms and equipment areas, (subject to the requirements of
the next sentence in the case of certain areas more particularly described
therein) required for the replacement and repair of the Connecting Equipment.
Provided Tenant shall first install at its sole cost and expense appropriate
card readers with Landlord's security company at the entrances therefor, in
order to permit Landlord with the ability to monitor Tenant's access thereto at
all times, Tenant shall also have access pursuant to the immediately preceding
sentence to the roof, equipment rooms and electrical systems of the Building.
Tenant agrees to give Landlord a courtesy notice of any access made by Tenant to
any portion of the Building beyond the Premises within the hour of such access,
or, to the extent practical, in advance. Landlord agrees to cooperate with
Tenant in coordinating Tenant's access to any other areas required in order for
Tenant to perform requisite repairs and/or replacements required by reason of
any emergency as described above, following notice to Landlord from Tenant.
XXXIX. MISCELLANEOUS.
A. 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 enforced to the fullest extent permitted by law.
This Lease represents the result of negotiations between Landlord and Tenant,
each of which has been (or has had opportunity to be) represented by counsel of
its own selection, and neither of which has acted under duress or compulsion,
whether legal, economic or otherwise. Consequently, Landlord and Tenant agree
that the language in all parts of the Lease shall in all cases be construed as a
whole according to its fair meaning and neither strictly for nor against
Landlord or Tenant.
B. Tenant agrees not to record this Lease or any memorandum hereof
without Landlord's prior written consent.
C. 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 in which the Building is located.
D. Events of "Force Majeure" shall include strikes, riots, acts of God,
shortages of labor or materials, war, governmental law, regulations or
restrictions and any other cause whatsoever that is beyond the control of
Landlord or Tenant, as the case may be. Whenever a period of time is herein
prescribed for the taking of any action by Landlord or Tenant, 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 events of Force Majeure.
However, in no event shall Force Majeure serve to delay the due dates of any
payment required hereunder.
E. 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
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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
provided such successor has assumed or is deemed to have assumed all prospective
obligations of Landlord under this Lease and Tenant has been given notice of the
successor. Landlord agrees to give Tenant notice of any such successor and to
tender to such successor any security deposit then held by Landlord hereunder.
Any such successor shall be subject to the terms and provisions contained within
this Lease.
F. Tenant hereby represents to Landlord that it has dealt directly with
and only with the party[ies] designated as the Broker under Section 1 of this
Lease as the broker[s] in connection with this Lease. Tenant agrees to indemnify
and hold Landlord and the Landlord Related Parties harmless from all claims of
any other brokers claiming to have represented Tenant in connection with this
Lease. Landlord agrees to indemnify and hold Tenant and the Tenant Related
Parties harmless from all claims of any brokers claiming to have represented
Landlord in connection with this Lease. Landlord agrees to compensate the Broker
in accordance with the terms of a separate written agreement heretofore entered
into by and between Landlord and the Broker.
G. If there is more than one Tenant, or if the Tenant is comprised of
more than one person or entity, the obligations hereunder imposed upon Tenant
shall be joint and several obligations of all such parties. All notices,
payments, and agreements given or made by, with or to any one of such persons or
entities shall be deemed to have been given or made by, with or to all of them.
H. In the event Tenant is a corporation (including any form of
professional association), partnership (general or limited), or other form of
organization other than an individual (each such entity is individually referred
to herein as an "Organizational Entity"), then Tenant hereby covenants, warrants
and represents: (1) that such individual is duly authorized to execute or attest
and deliver this Lease on behalf of Tenant in accordance with the organizational
documents of Tenant and has been duly appointed as the attorney-in-fact for the
Tenant; (2) that this Lease is binding upon Tenant; (3) that Tenant is duly
organized and legally existing in the state of its organization, and is
qualified to do business in the state in which the Premises is located; and (4)
that the execution and delivery of this Lease by Tenant will not result in any
breach of, or constitute a default under any mortgage, deed of trust, lease,
loan, credit agreement, partnership agreement or other contract or instrument to
which Tenant is a party or by which Tenant may be bound. If Tenant is an
Organizational Entity, upon request, Tenant will, prior to the Commencement
Date, deliver to Landlord true and correct copies of all organizational
documents of Tenant, including, without limitation, copies of an appropriate
resolution or consent of Tenant's board of directors or other appropriate
governing body of Tenant authorizing or ratifying the execution and delivery of
this Lease, which resolution or consent will be duly certified to Landlord's
satisfaction by an appropriate individual with authority to certify such
documents, such as the secretary or assistant secretary or the managing general
partner of Tenant.
I. Tenant acknowledges that the financial capability of Tenant to
perform its obligations hereunder is material to Landlord and that Landlord
would not enter into this Lease but for its belief, based on its review of
Tenant's financial statements, that Tenant is capable of performing such
financial obligations. Tenant hereby represents, warrants and certifies to
Landlord that its financial statements previously furnished to Landlord were at
the time given true and correct in all material respects and that there have
been no material subsequent changes thereto as of the date of this Lease. At any
time during the Lease Term, Tenant shall provide Landlord, upon ten (10) days'
prior written notice from Landlord, with its most current financial statement if
requested by Landlord in connection with a proposed sale or refinancing of the
Building. Such statement shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant.
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J. Except as expressly otherwise herein provided, with respect to all
required acts of Tenant, time is of the essence of this Lease. This Lease shall
create the relationship of Landlord and Tenant between the parties hereto.
K. This Lease and the covenants and conditions herein contained shall
inure to the benefit of and be binding upon Landlord and Tenant and their
respective permitted successors and assigns.
L. Notwithstanding anything to the contrary contained in this Lease,
the expiration of the Lease Term, whether by lapse of time or otherwise, shall
not relieve Tenant or Landlord from their respective obligations accruing prior
to the expiration of the Lease Term, and such obligations shall survive any such
expiration or other termination of the Lease Term.
M. The headings and titles to the paragraphs of this Lease are for
convenience only and shall have no affect upon the construction or
interpretation of any part hereof.
N. 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 AN ORIGINAL OF THIS LEASE
EXECUTED BY BOTH LANDLORD AND TENANT AND AN ORIGINAL GUARANTY, IF ANY, EXECUTED
BY EACH GUARANTOR IS DELIVERED TO AND ACCEPTED BY LANDLORD.
O. Tenant shall, and may peacefully have, hold, and enjoy the Premises,
subject to the other terms of this Lease (including, without limitation, Article
XXX hereof), provided that Tenant pays the Rent 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 during its or their respective periods of
ownership of the Landlord's interest hereunder.
P. Landlord hereby advises Tenant that Landlord has no actual knowledge
or credible reports of the presence in the Premises or in the Building or in or
on the land associated with the Building of any Hazardous Material, recognizing,
however, that Landlord has not undertaken any studies or investigations
pertaining to same. Tenant shall defend, indemnify and hold harmless Landlord
from all claims, costs or damages of any kind whatsoever arising during or after
the Term hereof from or in connection with the presence or suspected presence of
Hazardous Materials (including without limitation the diesel fuel permitted
below) in the Premises, the Building or the soil, groundwater or soil vapor on
or under the Building to the extent arising by reason of any act or omission of
Tenant or any agent, employee or contractor of Tenant. Landlord acknowledges
that Tenant shall be storing in lawful manner in strict accordance with all
Environmental Law diesel fuel for its diesel generator to be located at the
Building. "Hazardous Material" means (1) asbestos and any asbestos containing
material and any substance that is then defined or listed in, or otherwise
classified pursuant to, any Environmental Law (as hereinafter defined) as a
"hazardous substance," "hazardous material," "hazardous waste," "infectious
waste," "toxic substance," "toxic pollutant" or any other formulation intended
to define, list, or classify substances by reason of deleterious properties such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, or Toxicity Characteristic Leaching Procedure (TCLP)
toxicity, (2) any petroleum and drilling fluids, produced waters, and other
wastes associated with the exploration, development or production of crude oil,
natural gas, or geothermal resources, and (3) any petroleum product,
polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive material
(including any source, special nuclear, or by-product material), medical waste,
chlorofluorocarbons lead or lead-based product, and any other substance whose
presence could be detrimental to the Building or the Land or hazardous to health
or the environment. Environmental Law" means any present and future Law and any
amendments (whether common law, statute, rule, order, regulation or otherwise),
permits and other requirements or guidelines of governmental authorities
applicable to the Building or the Land and relating to the environment and
environmental conditions or to any Hazardous Material (including,
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without limitation, CERCLA, 42 U.S.C. section 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. section 6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. section 1801 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. section 1251 et seq., the Clean
Air Act, 42 U.S.C. section 7401 et seq., the Toxic Substances Control Act, 15
U.S.C. section 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. section 300f
et seq., the Emergency Planning and Community Right-To-Know Act, 42 U.S.C.
section 11.01 et seq., the Occupational Safety and Health Act, 29 U.S.C. section
651 et seq., and any so-called "Super Fund" or "Super Lien" law, any Law
requiring the filing of reports and notices relating to hazardous substances,
environmental laws administered by the Environmental Protection Agency, and any
similar state and local Laws, all amendments thereto and all regulations,
orders, decisions, and decrees now or hereafter promulgated thereunder
concerning the environment, industrial hygiene or public health or safety).
Q. Landlord has been advised by Tenant that the business intended to be
conducted by Tenant at the Premises requires the installation of certain
telecommunications equipment owned by customers and co-locators of Tenant in
order to interconnect with Tenant's facilities. Tenant shall be entitled to
license to such customers and co-locators the right to access and use portions
of the Premises to locate their equipment (as opposed to operate and conduct
business within the Premises) during the Lease Term for such purposes without
further consent from Landlord notwithstanding the provisions contained in
Article XIII to the contrary. All such usage and access by Tenant's customers
and co-locators shall remain subject to the remaining terms and conditions of
this Lease, and shall be conducted in strict accordance with applicable laws,
rules and regulations. Nothing contained herein shall be deemed to create a
landlord-tenant relationship between Landlord and any such co-locator or
customer of Tenant, nor to constitute the consent of Landlord to anything other
than a license to locate equipment within the Premises subject to the remaining
terms and provisions of this Lease.
XXXX. RENEWAL OPTION TERMS.
Tenant shall have and is hereby granted options to extend the Term
("Option") for up to two (2) periods of five (5) additional Lease Years each
(herein each referred to as an "Extension Period") provided (i) Tenant gives
written notice to Landlord of its election to exercise such Option no earlier
than fifteen (15) months and no later than twelve (12) months prior to the
expiration of the last Lease Year of the Term (recognizing that the Term shall
also include any previously exercised Extension Period); and (ii) no Event of
Default shall then remain uncured, and no Event of Default exists at the
commencement of the Extension Period. In the event Tenant assigns or sublets the
Premises in violation of the terms of this Lease, this Option shall become null
and void.
All terms and conditions of this Lease, including without limitation,
all provisions governing the payment of Additional Rent, shall remain in full
force and effect during the Extension Periods, except that:
(a) Base Rental payable during each such Extension Period shall be
at the 95% of then-current market rental rate then being
offered by landlords for comparable space in comparable
buildings in the central business district of the District of
Columbia (the "Market Rate") at the time of the commencement
of the respective Extension Period, but in no event less than
the fully escalated Base Rent in effect for the calendar month
immediately prior to the commencement of the Extension Period.
Each such Extension Period shall be upon the same terms and
conditions of this Lease, with the exception that (i) Landlord
shall not be required to provide any concessions, allowances,
incentives or similar items ("concessions"); and (ii) no
brokerage commissions shall be payable by Landlord in
connection with the Option.
(b) Landlord shall not be required to provide any Allowance during
either Extension Period. Landlord and Tenant shall negotiate
in good faith to
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determine the amount of Base Rent for the Extension Period
within thirty (30) days of the date of Landlord's receipt of
Tenant's written notice of its election to exercise the
Option. In the event Landlord and Tenant are unable to agree
upon the Base Rent for the Extension Period within said thirty
(30)-day period, the Base Rent shall be determined by the
three (3) broker method. In such event, Landlord and Tenant
shall each select a non-related impartial commercial real
estate broker having no less than ten (10) years experience in
the Central Business District of the District of Columbia and
generally recognized as reputable within the real estate
industry. Within ten days of selection by Landlord and Tenant
of their respective brokers, such brokers shall appoint a
similarly qualified third broker. Each broker shall consider
all components of this Lease. Fair market rental value shall
be determined with reference to the average or normal values
being achieved by landlords in leases entered into with
private sector tenants for comparable space in comparable
buildings in equally desirable locations within the same
market assuming that the Tenant is responsible for payment of
its own electric and char services and assuming no concessions
are provided by Landlord and a constant 3% per annum fixed
increase during the respective extension period, and assuming
that the tenant is being provided with the roof-top and
exterior area rights provided under this Lease for the benefit
of Tenant. If the three brokers cannot agree to a net
effective market rental rate, the determination of the broker
who is the mean of the two extremes shall be binding and
conclusive. Each party shall pay all costs, fees and expenses
of the broker they select and the parties shall share equally
the costs, fees and expenses of the third broker. Upon
agreement on the Base Rent whether by the parties or the
brokers, Landlord and Tenant shall enter into an amendment
modifying this Lease to set forth the Base Rent for the
Premises during the Extension Period within ten (10) days
following written request of either party.
XXXXI. ENTIRE AGREEMENT.
This Lease Agreement, including the following Exhibits:
Exhibit A - Outline and Location of Premises
Exhibit B - Rules and Regulations
Exhibit C - Commencement Letter
constitutes the entire agreement between the parties hereto with
respect to the subject matter of this Lease and supersedes all prior agreements
and understandings between the parties related to the Premises, including all
lease proposals, letters of intent and similar documents. TENANT EXPRESSLY
ACKNOWLEDGES AND AGREES THAT LANDLORD HAS NOT MADE AND IS NOT MAKING, AND
TENANT, IN EXECUTING AND DELIVERING THIS LEASE, IS NOT RELYING UPON, ANY
WARRANTIES, REPRESENTATIONS, PROMISES OR STATEMENTS, EXCEPT TO THE EXTENT THAT
THE SAME ARE EXPRESSLY SET FORTH IN THIS LEASE. ALL UNDERSTANDINGS AND
AGREEMENTS HERETOFORE MADE BETWEEN THE PARTIES ARE MERGED IN THIS LEASE WHICH
ALONE FULLY AND COMPLETELY EXPRESSES THE AGREEMENT OF THE PARTIES, NEITHER PARTY
RELYING UPON ANY STATEMENT OR REPRESENTATION NOT EMBODIED IN THIS LEASE. THIS
LEASE MAY BE MODIFIED ONLY BY A WRITTEN AGREEMENT SIGNED BY LANDLORD AND TENANT.
LANDLORD AND TENANT EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED
WARRANTIES OF MERCHANTABILITY, HABITABILITY, SUITABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, ALL OF WHICH
ARE HEREBY WAIVED BY TENANT, AND THAT THERE ARE NO WARRANTIES WHICH EXTEND
BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
WITNESS/ATTEST: LANDLORD:
1120 VERMONT AVENUE ASSOCIATES
/s/Signature Illegible
J. SCOTT OGDEN By: /s/ SYLVAN C. HERMAN
-----------------------------
Sylvan C. Herman,
General Partner
TENANT:
ATTEST: UNIVERSAL ACCESS, INC.
N/A By: /s/ ROBERT J. POMMER
----------------------------
(Secretary) Authorized Officer and
Attorney-In-Fact
(Corporate Seal) /s/ ROBERT J. POMMER
Secretary and Chief
Operating Officer
<PAGE> 44
EXHIBIT A
PREMISES
--------
[CHART OMITTED]
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[CHART OMITTED]
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[CHART OMITTED]
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[CHART OMITTED]
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EXHIBIT B
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to
the Premises, the Building, the parking garage associated therewith (if any),
the Property and the appurtenances thereto:
The Landlord may, upon request by any Tenant, waive the compliance by
such Tenant of any of the foregoing rules and regulations, provided that (a) no
waiver shall be effective unless signed by Landlord or Landlord's authorized
agent, (b) any such waiver shall not relieve such Tenant from the obligation to
comply with such rule or regulation in the future unless expressly consented to
by Landlord, and (c) no waiver granted to any Tenant shall relieve any other
Tenant from the obligation of complying with the foregoing rules and regulations
unless such other Tenant has received a similar waiver in writing from Landlord.
In the event of any conflict between these Rules and Regulations and
the terms of the attached Lease, the terms of the attached Lease shall govern
and control.
1. The sidewalks, entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls or other parts of
the Building not occupied by any Tenant shall not be
obstructed or encumbered by any Tenant or used for any purpose
other than ingress and egress to and from the demised
premises. Landlord shall have the right to control and operate
the public portions of the Building, and the facilities
furnished for the common use of the Tenants, in such manner as
Landlord deems best for the benefit of the Tenants generally.
No Tenant shall permit the visit to the demised premises of
persons in such numbers or under such conditions as to
interfere with the use and enjoyment by other Tenants of the
entrances, corridors, elevators and other public portions of
facilities of the Building.
2. No awnings or other projections shall be attached to the
outside walls of the Building without the prior written
consent of the Landlord, which consent may be consented or
denied in Landlord's sole and exclusive discretion. No drapes,
blinds, shades, or screens shall be attached to or hung in, or
used in connection with, any window or door of the demised
premises, without the prior written consent of the Landlord
which shall not be unreasonably withheld, conditioned or
delayed. Such projections, curtains, blinds, shades, screens
or other fixtures must be of a quality, type, design and
color, and attached in the manner approved by Landlord.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any
part of the outside or inside of the demised premises or the
Building without the prior written consent of the Landlord. In
the event of the violation of the foregoing by Tenant,
Landlord may remove same without any liability, and may charge
the expense incurred by such removal to the Tenant or Tenants
violating this rule. Interior signs on doors and directory
tablet shall be inscribed, painted or affixed for each Tenant
by the Landlord at the expense of such Tenant, and shall be of
a size, color and style reasonably acceptable to the Landlord.
4. No show cases or other articles shall be put in front of or
affixed to any part of the exterior of the Building, nor
placed in the halls, corridors or vestibules without the prior
written consent of the Landlord.
5. The water and wash closets and other plumbing fixtures shall
not be used for any purposes other than those for which they
were constructed, and no sweepings, rubbish, rags, or other
substances shall be thrown therein. All damages resulting from
any misuse of the fixtures shall be borne by the Tenant who,
or whose servants, employees, agents, visitors or licensees,
shall have caused the same.
<PAGE> 49
6. There shall be no marking, painting, drilling into or in any
way defacing any part of the demised premises or the Building.
No boring, cutting or stringing of wires shall be permitted.
Tenant shall not construct, maintain, use or operate within
the demised premises or elsewhere within or on the outside of
the Building, any electrical device, wiring or apparatus in
connection with a loud speaker system or other sound system
that can be heard outside the demised premises.
7. No bicycles, vehicles or animals (other than guide dogs),
birds or pets of any kind shall be brought into or kept in or
about the demised premises, and no cooking shall be done or
permitted by any Tenant on said premises. No Tenant shall
cause or permit any unusual or objectionable odors to be
produced upon or permeate from the demised premises.
8. No space in the Building shall be used for manufacturing, for
the storage of merchandise, or for the sale of merchandise,
goods or property of any kind at auction.
9. No Tenant shall make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of
this or neighboring buildings or premises of those having
business with them whether by the use of any musical
instrument, radio, talking machines, unmusical noise,
whistling, singing, or in any other way. No Tenant shall throw
anything out of the doors or windows or down the corridors or
stairs.
10. No inflammable, combustible or explosive fluid, chemical or
substance shall be brought or kept upon the demised premises
except for ordinary cleaning supplies.
11. No additional locks or bolts of any kind shall be placed upon
any of the doors, or windows by any Tenant, nor shall any
changes be made in existing locks or the mechanism thereof
without the prior written consent of the Landlord which shall
not be unreasonably withheld, conditioned or delayed. The
doors leading to the corridors or main halls shall be kept
closed during business hours, except as they may be used for
ingress or egress. Each Tenant shall, upon the termination of
his tenancy, restore to Landlord all keys of stores, offices,
storage, and toilet rooms either furnished to, or otherwise
procured by, such Tenant, and in the event of the loss of any
keys so furnished, such Tenant shall pay to the Landlord the
cost thereof.
12. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place
during the hours which the Landlord or its agent may
reasonably determine from time to time. The Landlord reserves
the right to inspect all freight to be brought into the
Building and to exclude from the Building all freight which
violates any of these Rules and Regulations or the lease of
which these Rules and Regulations are a part.
13. Any person employed by any Tenant to do janitor work within
the demised premises must obtain Landlord's consent and such
person shall, while in the Building and outside of said
demised premises, comply with all reasonable instructions
issued by the Property Manager of the Building. No Tenant
shall engage or pay any employees on the demised premises,
except those actually working for such Tenant on said
premises.
14. No Tenant shall purchase spring water, ice, coffee, soft
drinks, towels, or other like service from any company or
persons who, in Landlord's reasonable opinion, has proven to
be an unsatisfactory vendor.
15. Landlord shall have the right to prohibit any advertising by
any Tenant which, in Landlord's opinion, tends to impair the
reputation of the Building or its
2
<PAGE> 50
desirability as a building for offices, and upon written
notice from Landlord, Tenant shall refrain from or discontinue
such advertising.
16. The Landlord reserves the right to exclude from the Building
at all times any person who is not known or does not properly
identify himself to the Building management or watchman on
duty. Landlord may, at his option, require all persons
admitted to or leaving the Building between the hours of 6
P.M. and 7 A.M., Tuesdays through Fridays or at all times
after 6:00 P.M. on Friday through 7:00 A.M. on Mondays or at
all times during any legal holidays, to register. Each Tenant
shall be responsible for all persons for whom he authorizes
entry into or exit out of the Building, and shall be liable to
the Landlord for all acts of such persons.
17. The demised premises shall not be used for lodging or sleeping
or for any immoral or illegal purposes.
18. No Tenant shall occupy or permit any portion of the demised
premises to be used or occupied as an office for a public
stenographer or typist, or for the possession, storage,
'manufacture, or sale of liquor, narcotics, dope, tobacco in
any form, or as a barber or manicure shop, or as an employment
bureau, unless said Tenant's lease expressly grants permission
to do so. No Tenant shall engage or pay any employees on the
demised premises, except those actually working for such
Tenant on said premises, nor advertise for laborers giving an
address at said premises.
19. Each Tenant, before closing and leaving the demised premises
at any time, shall see that all windows are closed and all
lights turned off.
20. The requirements of Tenants will be attended to only upon
application at the office of the Building. Employees shall not
perform any work or do anything outside of their regular
duties, unless under special instruction from the management
of the Building.
21. Canvassing, soliciting and peddling in the Building is
prohibited and each Tenant shall cooperate to prevent the
same.
22. No water cooler, plumbing or electrical fixtures shall be
installed by any Tenant, except in accordance with the Lease.
23. There shall not be used in any space, or in the public halls
of the Building, either by any Tenant or by jobbers or others,
in the delivery or receipt of merchandise, any hand trucks,
except those equipped with rubber tires and side guards.
24. Access plates to underfloor conduits shall be left exposed.
where carpet is installed, carpet shall be cut around access
plates.
25. Mats, trash or other objects shall not be placed in the public
corridors.
26. Drapes installed by the Landlord for the use of the Tenant or
drapes installed by the Tenant, which are visible from the
exterior of the Building must be cleaned by Tenant at Tenant's
expense as required to maintain an image consistent with a
first class office building.
27. There shall be no incandescent bulbs or fixtures used in the
Building.
28. Portable fans and heaters or extension cords shall not be used
within the Building.
29. Microwaves, refrigerators, coffee makers, and warmers shall be
used solely within the kitchenette areas of the Premises.
3
<PAGE> 51
EXHIBIT C
COMMENCEMENT LETTER
-------------------
Date:______________________________________
Tenant:____________________________________
Address:___________________________________
Re: Commencement Letter with respect to that certain Lease dated _____
____________ by and between 1120 Vermont Avenue Associates, as Landlord, and
_______________________, as Tenant, for ________ square feet of Rentable Area on
_____________________ the _____________________ floor of the Building located at
1120 Vermont Avenue, ___________________ N.W., Washington, D.C. 20005.
DEAR ____________________:
In accordance with the terms and conditions of the above referenced
Lease, Tenant hereby accepts possession of the Premises and agrees as follows:
1. The Commencement Date of the Lease is_________________________;
2. The Termination Date of the Lease is _________________________.
Please acknowledge your acceptance of possession and agreement to the
terms set forth above by signing all three (3) copies of this Commencement
Letter in the space provided and returning two (2) fully executed copies of the
same to my attention.
Sincerely,
Agreed and Accepted:
Tenant: _____________________
By:__________________________
Name:________________________
Title:_______________________
Date:________________________
<PAGE> 1
EXHIBIT 10.16
STANDARD FORM OF LOFT LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
AGREEMENT OF LEASE, made as of the 23rd day of September 1999, between 601 WEST
ASSOCIATES LLC, having an office at 601 West 26th Street, Suite 900, New York,
New York 10001. party of the first part, hereinafter referred to as OWNER, and
UNIVERSAL ACCESS, INC., having an office at 100 North Riverside Plaza, Suite
2200, Chicago, Illinois 60606, party of the second part, hereinafter referred to
as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
certain space located on the 7th floor known as 7th Floor East as shown on
Exhibit A attached hereto (the "Premises") in the building known as 601 West
26th Street (the "Building") in the Borough of Manhattan, City of New York, for
the term of approximately ten (10) years (or until such term shall sooner cease
and expire as hereinafter provided) to commence on the Commencement Date (as
hereinafter defined), and to end on the 31st day of December, Two Thousand Nine
and both dates inclusive, at an annual rental rate set forth in Article 43 of
the Rider annexed hereto which Tenant agrees to pay in lawful money of the
United States which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, in equal monthly installments in
advance on the first day of each month during said term, at the office of Owner
or such other place as Owner may designate, without any set off or deduction
whatsoever, except that Tenant shall pay the first monthly installment(s) on the
execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows: Rent: 1. Tenant shall pay the rent as above and as
hereinafter provided. Occupancy: 2. Tenant shall use and occupy demised premises
for telecommunication colocation, switching area and ancillary uses, provided
such use is in accordance with the certificate of occupancy for the building, if
any, and for no other purpose.
ALTERATIONS:
3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, Tenant, at Tenant's
expense, may make alterations, installations, additions or improvements in or to
the interior of the demised premises using contractors or mechanics first
approved in each instance by Owner. Tenant shall, at its expense, before making
any alterations, additions, installations or improvements obtain all permits,
approval and certificates required by any governmental or quasi-governmental
bodies and (upon completion) certificates of final approval thereof and shall
deliver promptly duplicates of all such permits, approvals and certificates to
Owner. Tenant agrees to carry and will cause Tenant's contractors and
sub-contractors to carry such workman's compensation, general liability,
personal and property damage insurance as Owner may require. If any mechanic's
lien is filed against the demised premises, or the building of which the same
forms a part, for work claimed to have been done for, or materials furnished to,
Tenant, whether or not done pursuant to this article, the same shall be
discharged by Tenant within thirty days thereafter, at Tenant's expense, by
payment or filing the bond required by law or otherwise. All fixtures and all
paneling, partitions, railings and like installations, installed in the premises
at any time, either by Tenant or by Owner on Tenant's behalf, shall, upon
installation, become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by notice to Tenant no later
than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed from the demised premises by Tenant
prior to the expiration of the lease, at Tenant's expense. Nothing in this
Article shall be construed to give Owner title to or to prevent Tenant's removal
of trade fixtures, moveable office furniture and equipment, but upon removal of
any such from the premises or upon removal of other installations as may be
required by Owner, Tenant shall immediately and at its expense, repair and
restore the premises to the condition existing prior to installation and repair
any damage to the demised premises or the building due to such removal. All
property permitted or required to be removed by Tenant at the end of the term
remaining in the premises after Tenant's removal shall be deemed abandoned and
may, at the election of Owner, either be retained as Owner's property or removed
from the premises by Owner, at Tenant's expense.
REPAIRS:
4. Owner shall maintain and repair the exterior of and the public
portions of the building. Tenant shall, throughout the term of this lease, take
good care of the demised premises including the bathrooms and lavatory
facilities (if the demised premises encompass the entire floor of the building)
and the windows and window frames and, the fixtures and appurtenances therein
and at Tenant's sole cost and expense promptly make all repairs thereto and to
the building, whether structural or non-structural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefor. If the demised premises be or
become infested with vermin, Tenant shall, at its expense, cause the same to be
exterminated. Tenant shall give Owner prompt notice of any defective condition
in any plumbing, heating system or electrical lines located in the demised
premises and following such notice, Owner shall remedy the condition with due
diligence, but at the expense of Tenant, if repairs are necessitated by damage
or injury attributable to Tenant, Tenant's servants, agents, employees, invitees
or licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall not be entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of any action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other casualty with regard to which Article 9
hereof shall apply.
WINDOW CLEANING:
5. Tenant will not clean nor require, permit, suffer or allow any
window in the demised premises to be cleaned from the outside in violation of
Section 202 of the New York State Labor Law or any other applicable law or of
the Rules of the Board of Standards and Appeals, or of any other Board or body
having or asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE:
6. Prior to the commencement of the lease term, if Tenant is then
in possession, and at all times thereafter Tenant shall, at Tenant's sole cost
and expense, promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire
Underwriters, or the Insurance Services Office, or any similar body which shall
impose any violation, order or duty upon Owner or Tenant with respect to the
demised premises, whether or not arising out of Tenant's use or manner of use
thereof, or, with respect to the building, if arising out of Tenant's use or
manner of use of the demised premises of the building (including the use
permitted under the lease). Except as provided in Article 30 hereof, nothing
herein shall require Tenant to make structural repairs or alterations unless
Tenant has, by its manner of use of the demised premises or method of operation
therein, violated any such laws, ordinances, orders, rules, regulations or
requirements with respect thereto. Tenant shall not do or
<PAGE> 2
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or at any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all fire insurance
premiums thereafter paid by Owner which shall have been charged because of such
failure by Tenant. In any action or proceeding wherein Owner and Tenant are
parties, a schedule or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to said premises shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to said premises. Tenant
shall not place a load upon any floor of the demised premises exceeding the
floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such installations shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient,
in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
SUBORDINATION:
TENANT'S LIABILITY INSURANCE PROPERTY LOSS, DAMAGE, INDEMNITY:
8. Owner or its agents shall not be liable for any damage to
property of Tenant or of others entrusted to employees of the building, nor for
loss of or damage to any property of Tenant by theft or otherwise, nor for any
injury or damage to persons or property resulting from any cause of whatsoever
nature, unless caused by or due to the negligence of Owner, its agents, servants
or employees; Owner or its agents shall not be liable for any damage caused by
other tenants or persons in, upon or about said building or caused by operations
in connection of any private, public or quasi public work. If at any time any
windows of the demised premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by law) for any
reason whatsoever including, but not limited to Owner's own acts, Owner shall
not be liable for any damage Tenant may sustain thereby and Tenant shall not be
entitled to any compensation therefor nor abatement or diminution of rent nor
shall the same release Tenant from its obligations hereunder nor constitute an
eviction. Tenant shall indemnify and save harmless Owner against and from all
liabilities, obligations, damages, penalties, claims, costs and expenses for
which Owner shall not be reimbursed by insurance, including reasonable
attorney's fees, paid, suffered or incurred as a result of any breach by Tenant,
Tenant's agents, contractors, employees, invitees, or licensees, of any covenant
or condition of this lease, or the carelessness, negligence or improper conduct
of the Tenant, Tenant's agents, contractors, employees, invitees or licensees.
Tenant's liability under this lease extends to the acts and omissions of any
sub-tenant, and any agent, contractor, employee, invitee or licensee of any
sub-tenant. In case any action or proceeding is brought against Owner by reason
of any such claim, Tenant, upon written notice from Owner, will, at Tenant's
expense, resist or defend such action or proceeding by counsel approved by Owner
in writing, such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY:
9. (a) If the demised premises or any part thereof shall be damaged
by fire or other casualty, Tenant shall give immediate notice thereof to Owner
and this lease shall continue in full force and effect except as hereinafter set
forth. (b) If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by and
at the expense of Owner and the rent and other items of additional rent, until
such repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of this lease shall expire as fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender and vacate the premises without prejudice however, to
Owner's rights and remedies against Tenant under the lease provisions in effect
prior to such termination, and any rent owing shall be paid up to such date and
any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (e) Nothing contained herein-above
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Notwithstanding the foregoing, including Owner's
obligation to restore under subparagraph (b) above, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty, and to
the extent that such insurance is in force and collectible and to the extent
permitted by law, Owner and Tenant each hereby releases and waives all right of
recovery with respect to subparagraphs (b), (d) and (e) above, against the other
or any one claiming through or under each of them by way of subrogation or
otherwise. The release and waiver herein referred to shall be deemed to include
any loss or damage to the demised premises and/or to any personal property,
equipment, trade fixtures, goods and merchandise located therein. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent, that such waiver can be obtained only by
the payment of additional premiums, then the party benefitting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated to
repair any damage thereto or replace the same. (f) Tenant hereby waives the
provisions of Section 227 of the Real Property Law and agrees that the
provisions of this article shall govern and control in lieu thereof.
EMINENT DOMAIN:
10. If the whole or any part of the demised premises shall be
acquired or condemned by Eminent Do main for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease. Tenant shall
have the right to make an independent claim to the condemning authority for the
value of Tenant's moving expenses and personal property, trade fixtures and
equipment, provided Tenant is entitled pursuant to the terms of the lease to
remove such property, trade fixtures and equipment at the end of the term and
provided further such claim does not reduce Owner's award.
ASSIGNMENT, MORTGAGE, ETC.:
ELECTRIC CURRENT:
ACCESS TO PREMISES:
13. Owner or Owner's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform in
the premises after Tenant's failure to make repairs or perform any work which
Tenant is obligated to perform under this lease, or for the purpose of complying
with laws, regulations and other directions of governmental authorities. Tenant
shall permit Owner to use and maintain and replace pipes and conduits in and
through the demised premises and to erect new pipes and conduits therein
provided, wherever possible, they are within walls or otherwise concealed. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon
<PAGE> 3
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom. Owner may immediately enter,
alter, renovate or redecorate the demised premises without limitation or
abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligation hereunder.
VAULT, VAULT SPACE, AREA:
14. No Vaults, vault space or area, whether or not enclosed or
covered, not within the property line of the building is leased hereunder
anything contained in or indicated on any sketch, blue print or plan, or
anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant, if used by
Tenant, whether or not specifically leased hereunder.
OCCUPANCY:
15. Tenant will not at any time use or occupy the demised premises
in violation of the certificate of occupancy issued for the building of which
the demised premises are a part. Tenant has inspected the premises and accepts
them as is, subject to the riders annexed hereto with respect to Owner's work,
if any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record, affecting the Building but not the demise premises. If any
governmental license or permit shall be required for the proper and lawful
conduct of Tenant's business, Tenant shall be responsible for and shall procure
and maintain such license or permit.
BANKRUPTCY:
16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
of an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the
termination of this lease pursuant to (a) hereof, Owner shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rental reserved hereunder for the unexpired portion of
the term demised and the fair and reasonable rental value of the demised
premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the date of
termination and the fair and reasonable rental value of the demised premises for
the period for which such installment was payable shall be discounted to the
date of termination at the rate of four percent (4%) per annum. If such premises
or any part thereof be relet by the Owner for the unexpired term of said lease,
or any part thereof, before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent reserved upon such
reletting shall be deemed to be the fair and reasonable rental value for the
part or the whole of the premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right of the Owner to
prove for and obtain as liquidated damages by reason of such termination, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the amount
of the difference referred to above.
DEFAULT:
17. (1) If Tenant defaults in fulfilling any of the covenants of
this lease other than the covenants for the payment of rent or additional rent;
"or if this lease be rejected under section 235 of Title 11 of the U.S. Code
(bankruptcy code);" or if any execution or attachment shall be issued against
Tenant or any of Tenant's property whereupon the demised premises shall be taken
or occupied by someone other than Tenant; or if Tenant shall make default with
respect to any other lease between Owner and Tenant; or if Tenant shall have
failed, after five (5) days written notice, to redeposit with Owner any portion
of the security deposited hereunder which Owner has applied to the payment of
any rent and additional rent due and payable hereunder then in any one or more
of such events, upon Owner serving a written fifteen (15) days notice upon
Tenant specifying the nature of said default and upon the expiration of said
fifteen (15) days, if Tenant shall have failed to comply with or remedy such
default, or if the said default or omission complained of shall be of a nature
that the same cannot be completely cured or remedied within said fifteen (15)
day period, and if Tenant shall not have diligently commenced during such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days' notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid; or if Tenant shall make default
in the payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default after expiration of notice and cure periods hereunder
prior to the date fixed as the commencement of any renewal or extension of this
lease, Owner may cancel and terminate such renewal or extension agreement by
written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION:
18. In case of any such default, re-entry, expiration and/or
dispossess by summary proceedings or other wise, (a) the rent, and additional
rent, shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or expiration, (b) Owner may re-let the premises or any part or
parts thereof, either in the name of Owner or otherwise, for a term or terms,
which may at Owner's option be less than or exceed the period which would
otherwise have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in this lease, (c)
Tenant or the legal representatives of Tenant shall also pay Owner as liquidated
damages for the failure of Tenant to observe and perform said Tenant's covenants
herein contained, any deficiency between the rent hereby reserved and or
covenanted to be paid and the net amount, if any, of the rents collected on
account of the subsequent lease or leases of the demised premises for each month
of the period which would otherwise have constituted the balance of the term of
this lease. The failure of Owner to re-let the premises or any part or parts
thereof shall not release or affect Tenant's liability for damages. In computing
such liquidated damages there shall be added to the said deficiency such
expenses as Owner may incur in connection with re-letting, such as legal
expenses, reasonable attorneys' fees, brokerage, advertising and for keeping the
demised premises in good order or for preparing the same for re-letting. Any
such liquidated damages shall be paid in monthly installments by Tenant on the
rent day specified in this lease and any suit brought to collect the amount of
the deficiency for any month shall not prejudice in any way the rights of Owner
to collect the deficiency for any subsequent month by a similar proceeding.
Owner, in putting the demised premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
FEES AND EXPENSES:
19. If Tenant shall default in the observance or performance of any
term or covenant on Tenant's part to be observed or performed under or by virtue
of any of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period if any, (except in
an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorney's fees, in instituting,
prosecuting or defending any action or proceedings, and prevails in any such
action or proceeding, then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within ten (10) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner as damages.
BUILDING ALTERATIONS AND MANAGEMENT:
20. Owner shall have the right at any time without the same
constituting an eviction and without incurring liability to Tenant therefor to
change the arrangement and or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets or other public parts of the
building and to change the name, number or designation by which the building may
be known. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or other Tenant making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
any controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
<PAGE> 4
NO REPRESENTATIONS BY OWNER:
21. Neither Owner nor Owner's agents have made any representations
or promises with respect to the physical condition of the building, the land
upon which it is erected or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the demised
premises or the building except as herein expressly set forth and no rights,
easements or licenses are acquired by Tenant by implication or otherwise except
as expressly set forth in the provisions of this lease. Tenant has inspected the
building and the demised premises and is thoroughly acquainted with their
condition and agrees to take the same "as is" on the date possession is tendered
and acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
END OF TERM:
22. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, broom
clean, in good order and condition, ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted, and Tenant
shall remove all its property from the demised premises. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of this Lease or any
renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
QUIET ENJOYMENT:
23. Owner covenants and agrees with Tenant that upon Tenant paying
the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof.
FAILURE TO GIVE POSSESSION:
24. If Owner is unable to give possession of the demised premises on
the date of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants or if the
demised premises are located in a building being constructed, because such
building has not been sufficiently completed to make the premises ready for
occupancy or because of the fact that a certificate of occupancy has not been
procured or if Owner has not completed any work required to be performed by
Owner, or for any other reason, Owner shall not be subject to any liability for
failure to give possession on said date and the validity of the lease shall not
be impaired under such circumstances, nor shall the same be construed in any
wise to extend the term of this lease, but the rent payable hereunder shall be
abated (provided Tenant is not responsible for Owner's inability to obtain
possession or complete any work required) until after Owner shall have given
Tenant notice that Owner is able to deliver possession in the condition required
by this lease. If permission is given to Tenant to enter into the possession of
the demised premises or to occupy premises other than the demised premises prior
to the date specified as the commencement of the term of this lease, Tenant
covenants and agrees that such possession and/or occupancy shall be deemed to be
under all the terms, covenants, conditions and provisions of this lease, except
the obligation to pay the fixed annual rent set forth in page one of this lease.
The provisions of this article are intended to constitute "an express provision
to the contrary" within the meaning of Section 223-a of the New York Real
Property Law.
NO WAIVER:
25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations, set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. All checks tendered to Owner as and for the
rent of the demised premises shall be deemed payments for the account of Tenant.
Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to
operate as an attornment to Owner by the payor of such rent or as a consent by
Owner to an assignment or subletting by Tenant of the demised premises to such
payor, or as a modification of the provisions of this lease. No act or thing
done by Owner or Owner's agents during the term hereby demised shall be deemed
an acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
WAIVER OF TRIAL BY JURY:
26. It is mutually agreed by and between Owner and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant, Tenant's use of or occupancy of said premises,
and any emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Owner commences any proceeding or action for
possession including a summary proceeding for possession of the premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding including a counter-claim under Article 4 except for statutory
mandatory counterclaims.
INABILITY TO PERFORM:
27. This Lease and the obligation of Tenant to pay rent hereunder
and perform all of the other covenants and agreements hereunder on part of
Tenant to be performed shall in no wise be affected, impaired or excused because
Owner is unable to fulfill any of its obligations under this lease or to supply
or is delayed in supplying any service expressly or impliedly to be supplied or
is unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures or other materials if Owner is prevented or delayed from doing so by
reason of strike or labor troubles or any cause whatsoever beyond Owner's sole
control including, but not limited to, government preemption or restrictions or
by reason of any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions which have been
or are affected, either directly or indirectly, by war or other emergency.
BILLS AND NOTICES:
28. Except as otherwise in this lease provided, a bill statement,
notice or communication which Owner may desire or be required to give to Tenant,
shall be deemed sufficiently given or rendered if, in writing, delivered to
Tenant personally or sent by registered or certified mail addressed to Tenant at
the building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
WATER CHARGES:
29. If Tenant requires, uses or consumes water for any purpose in
addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner
to be the sole judge) Owner may install a water meter and thereby measure
Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost
of the meter and the cost of the installation, thereof and throughout the
duration of Tenant's occupancy Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant's own cost and expense in
default of which Owner may cause such meter and equipment to be replaced or
repaired and collect the cost thereof from Tenant, as additional rent. Tenant
agrees to pay for water consumed, as shown on said meter as and when bills are
rendered, and on default in making such payment Owner may pay such charges and
collect the same from Tenant, as additional rent. Tenant covenants and agrees to
pay, as additional rent, the sewer rent, charge or any other tax, rent, levy or
charge which now or hereafter is assessed, imposed or a lien upon the demised
premises or the realty of which they are part pursuant to law, order or
regulation made or issued in connection with the use, consumption, maintenance
or supply of water, water system or sewage or sewage connection or system. If
the building or the demised premises or any part thereof is supplied with water
through a meter through which water is also supplied to other premises Tenant
shall pay to Owner, as additional rent, on the first day of each month, Tenant's
Proportionate Share (as defined in the Rider attached hereto) of the total meter
charges as Tenant's portion. Independently of and in addition to any of the
remedies reserved to Owner hereinabove or elsewhere in this lease, Owner may sue
for and collect any monies to be paid by Tenant or paid by Owner for any of the
reasons or purposes hereinabove set forth.
SPRINKLERS:
30. Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or additional sprinkler heads
or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, modifications, alterations, additional sprinkler
heads or other such equipment, become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent on the
first day of each month during the term of this lease, as Tenant's Proportionate
Share (as defined in the Rider attached hereto) of the contract price for
sprinkler supervisory service.
ELEVATORS, HEAT, CLEANING:
31. As long as Tenant is not in default under any the covenants of
this lease beyond the applicable grace period provided in this lease for the
curing of such defaults, Owner shall: (a) provide necessary passenger elevator
facilities on business days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m.
to 1 p.m.; (b) if freight elevator service is provided, same shall be provided
only on regular business days Monday through Friday inclusive, and on those days
only between the hours of 9 a.m. and 12 noon and between 1 p.m. and 5 p.m.; (c)
furnish heat, water and other services supplied by Owner to the demised
premises, when and as required by law, on business days from 8 a.m. to 6 p.m.
and on Saturdays from 8
<PAGE> 5
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense, keep
the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or corporation approved by Owner. Tenant shall pay to Owner the cost
of removal of any of Tenant's refuse and rubbish from the building. Bills for
the same shall be rendered by Owner to Tenant at such time as Owner may elect
and shall be due and payable hereunder, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall contract at Tenant's
sole cost and expense, for the removal of rubbish and refuse. However, the
removal of such refuse and rubbish by others shall be subject to such rules and
regulations as, in the judgment of Owner, are necessary for the proper operation
of the building. Owner reserves the right to stop service of the heating,
elevator, plumbing and electric systems, when necessary, by reason of accident,
or emergency, or for repairs, alterations, replacements or improvements, in the
judgment of Owner desirable or necessary to be made, until said repairs,
alterations, replacements or improvements shall have been completed. If the
building of which the demised premises are a part supplies manually operated
elevator service, Owner may proceed diligently with alterations necessary to
substitute automatic control elevator service without in any way affecting the
obligations of Tenant hereunder.
SECURITY:
32. Tenant has deposited with Owner the sum of $156,000.00 as
security for the faithful performance and observance by Tenant of the terms,
provisions and conditions of this lease; it is agreed that in the event Tenant
defaults in respect of any of the terms, provisions and conditions of this
lease, including, but not limited to, the payment of rent and additional rent,
Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which Tenant is in default or for any sum which Owner may
expend or may be required to expend by reason of Tenant's default in respect of
any of the terms, covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the reletting of the premises, whether
such damages or deficiency accrued before or after summary proceedings or other
re-entry by Owner. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this lease, the
security shall be returned to Tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the demised premises to Owner.
In the event of a sale of the land and building or leasing of the building, of
which the demised premises form a part, Owner shall have the right to transfer
the security to the vendee or lessee and Owner shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Owner solely for the return of said security, and it is agreed
that the provisions hereof shall apply to every transfer or assignment made of
the security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
CAPTIONS:
33. The Captions are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope of this lease
nor the intent of any provision thereof.
DEFINITIONS:
34. The term "Owner" as used in this lease means only the owner of
the fee or of the leasehold of the building, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
ADJACENT EXCAVATION SHORING:
35. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Owner, or diminution or abatement of
rent.
RULES AND REGULATIONS:
36. Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faith fully, and comply strictly with, the Rules and
Regulations annexed hereto and such other and further reasonable Rules and
Regulations as Owner or Owner's agents may from time to time adopt. Notice of
any additional rules or regulations shall be given in such manner as Owner may
elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the parties
hereto agree to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
GLASS:
ESTOPPEL CERTIFICATE:
38. Tenant, at any time, and from time to time, upon at least 10
days' prior notice by Owner, shall execute, acknowledge and deliver to Owner,
and/or to any other person, firm or corporation specified by Owner, a statement
certifying that this Lease is unmodified in full force and effect (or, if there
have been modifications, that the same is in full force and effect as modified
and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
DIRECTORY BOARD LISTING:
39. If, at the request of and as accommodation to Tenant, Owner
shall place upon the directory board in the lobby of the building, one or more
names of persons other than Tenant, such directory board listing shall not be
construed as the consent by Owner to an assignment or subletting by Tenant to
such person or persons.
SUCCESSORS AND ASSIGNS:
40. The covenants, conditions and agreements contained in this lease
shall bind and inure to the benefit of Owner and Tenant and their respective
heirs, distributees, executors, administrators, successors, and except as
otherwise provided in this lease, their assigns. Tenant shall look only to
Owner's estate and interest in the land and building for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
against Owner in the event of any default by Owner hereunder, and no other
property or assets of such Owner (or any partner, member, officer or director
thereof, disclosed or undisclosed), shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant's remedies under or with
respect to this lease, the relationship of Owner and Tenant hereunder, or
Tenant's use and occupancy of the demised premises.
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
Witness for Owner: 601 WEST ASSOCIATES LLC
By: SLB Manager, LLC [CORP. SEAL]
/s/ Mark Karasick
----------------------------------------
By: /s/ MARK KARASICK [L.S.]
-------------------------------------
Name: Mark Karasick
Title:
Witness for Tenant UNIVERSAL ACCESS, INC. [CORP. SEAL]
Dean Topping By: /s/ Robert Pommer [L.S.]
- ---------------------------------- -------------------------------------
Name: Robert Pommer
Title: Chief Operating Officer
<PAGE> 6
ACKNOWLEDGEMENTS
CORPORATE TENANT INDIVIDUAL TENANT
STATE OF NEW YORK, ss.: STATE OF NEW YORK, ss.:
County of County of
On this day of , 19 , before me personally came to me
known, who being by me duly sworn, did depose and say that he resides in that
he is the of the corporation described
in and which executed the foregoing instrument, as TENANT; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation, and that he signed his name thereto by like order.
On this day of , 19 , before me personally came to be
known and known to me to be the individual described in and who, as TENANT,
executed the foregoing instrument and acknowledged to me that he executed the
same.
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts,
elevators, vestibules, stairways, corridors or halls shall not be obstructed or
encumbered by any Tenant or used for any purpose other than for ingress or
egress from the demised premises and for delivery of merchandise and equipment
in a prompt and efficient manner using elevators and passageways designated for
such delivery by Owner. There shall not be used in any space, or in the public
hall of the building, either by any Tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards. If said premises are situated on the ground floor
of the building, Tenant thereof shall further, at Tenant's expense, keep the
sidewalk and curb in front of said premises clean and free from ice, snow, dirt
and rubbish.
2. The water and wash closets and plumbing fixtures shall not be
used for any purposes other than those for which they were designed or
constructed and no sweepings, rubbish, rags, acids or other substances shall be
deposited therein, and the expense of any breakage, stoppage, or damage
resulting from the violation of this rule shall be borne by the Tenant who, or
whose clerks, agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of
any window of the building; and no Tenant shall sweep or throw or permit to be
swept or thrown from the demised premises any dirt or other substances into any
of the corridors of halls, elevators, or out of the doors or windows or
stairways of the building and Tenant shall not use, keep or permit to be used or
kept any foul or noxious gas or substance in the demised premises, or permit or
suffer the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface
any part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon
any of the doors or windows by any Tenant, nor shall any changes be made in
existing locks or mechanism thereof. Each Tenant must, upon the termination of
his Tenancy, restore to Owner all keys of stores, offices and toilet rooms,
either furnished to, or otherwise procured by, such Tenant, and in the event of
the loss of any keys, so furnished, such Tenant shall pay to Owner the cost
thereof.
8. Freight, furniture, business equipment, merchandise and bulky
matter of any description shall be delivered to and removed from the premises
only on the freight elevators and through the service entrances and corridors,
and only during hours and in a manner approved by Owner. Owner reserves the
right to inspect all freight to be brought into the building and to exclude from
the building all freight which violates any of these Rules and Regulations of
the lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises towel
and other similar services, or accept barbering or bootblacking services in the
demised premises, except from persons authorized by Owner, and at hours and
under regulations fixed by Owner. Canvassing, soliciting and peddling in the
building is prohibited and each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building all
persons who do not present a pass to the building signed by Owner. Owner will
furnish passes to persons for whom any Tenant requests same in writing. Each
Tenant shall be responsible for all persons for whom he requests such pass and
shall be liable to Owner for all acts of such persons. Tenant shall not have a
claim against Owner by reason of Owner excluding from the building any person
who does not present such pass.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a loft building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Except in accordance with applicable law, Tenant shall not bring
or permit to be brought or kept in or on the demised premises, any inflammable,
combustible, or explosive, or hazardous fluid, material, chemical or substance,
or cause or permit any odors of cooking or other processes, or any unusual or
other objectionable odors to permeate in or emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
ATTACHED HERETO ARE ADDITIONAL RULES AND REGULATIONS OF THE BUILDING IN
FURTHERANCE OF ARTICLE 36, BY WHICH TENANT AGREES TO ABIDE BY EXECUTION OF THIS
LEASE.
Address
-------------------------------
Premises
-------------------------------
================================================================================
TO
================================================================================
STANDARD FORM OF
LOFT LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
(C) COPYRIGHT 1994. ALL RIGHTS RESERVED.
REPRODUCTION IN WHOLE OR IN PART PROHIBITED.
================================================================================
Dated ___________, ___19
Rent Per Year
Rent Per Month
Term
From
To
Drawn by
------------------------------
Checked by
-----------------------------
Entered by
-----------------------------
Approved by
----------------------------
================================================================================
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
41. RIDER PROVISIONS PREVAIL ..............................................1
42. COMMENCEMENT OF TERM ..................................................1
43. FIXED RENTAL AND ADDITIONAL RENTAL ....................................1
44. RENEWAL OPTION ........................................................3
45. INTENTIONALLY OMITTED .................................................4
46. AS IS CONDITION; LANDLORD'S WORK ......................................4
47. SUBSTANTIAL COMPLETION ................................................5
48. TENANT'S INITIAL INSTALLATIONS ........................................5
49. ESCALATIONS FOR INCREASE IN REAL ESTATE TAXES .........................6
50. WATER, SEWER AND SPRINKLER CHARGES ....................................7
51. ESCALATION FOR OPERATING EXPENSES .....................................7
52. ALL ADDITIONAL RENTAL PAYMENTS .......................................11
53. ASSIGNMENT AND SUBLETTING ............................................11
54. LIMITATION OF LIABILITY ..............................................15
55. INDEMNIFICATION ......................................................15
56. INSURANCE ............................................................16
57. ELECTRIC CURRENT .....................................................18
58. BROKER ...............................................................19
59. BINDING EFFECT .......................................................20
60. LATE FEE .............................................................20
61. SECURITY .............................................................20
62. HOLDOVER .............................................................20
63. APPLICABLE LAW .......................................................20
64. HAZARDOUS MATERIALS ..................................................21
65. NOTICES ..............................................................21
66. ADDENDUM TO ARTICLE 16 - BANKRUPTCY ..................................21
67. RENT CONTROL .........................................................22
68. REPAIRS ..............................................................22
69. CONDITIONAL LIMITATION ...............................................23
70. LANDLORD'S SERVICES ..................................................23
71. TENANT'S ALTERATIONS .................................................24
72. SUBORDINATION AND ATTORNMENT .........................................27
73. MISCELLANEOUS ........................................................29
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
74. LEASE NOT BINDING UNLESS EXECUTED ....................................30
75. SUBMISSION TO JURISDICTION ...........................................30
76. QUALIFICATIONS AS TO USE .............................................30
77. PARTNERSHIP TENANT ...................................................31
78. CERTIFICATE OF OCCUPANCY .............................................31
79. ACCESS TO PREMISES ...................................................32
80. USE OF PREMISES ......................................................32
81. EXCLUSION OF PERSONS FROM PREMISES, AND DELIVERY SYSTEMS .............32
82. ADDENDUM TO RULES AND REGULATIONS ....................................33
83. SCAFFOLDING ..........................................................33
84. FIRE ALARM SYSTEM ....................................................33
85. CONDENSER WATER FOR AIR CONDITIONING UNIT ............................33
86. GENERATOR ............................................................34
87. CONDUIT/RISER ACCESS .................................................35
88. ELECTRICAL SERVICE ...................................................35
89. TELECOMMUNICATIONS POINT OF ENTRY ....................................36
90. AIR CONDITIONING .....................................................37
91. RIGHT TO INSTALL ANTENNA AND OTHER EQUIPMENT ON ROOF .................37
92. RIGHT OF FIRST OFFER .................................................38
93. LANDLORD'S WAIVER OF LIEN ON TELECOMMUNICATIONS EQUIPMENT ............38
94. TENANT'S SECURITY INSTALLATION .......................................39
95. FIRE SUPPRESSION SYSTEM ..............................................39
96. TERMINATION OF LEASE DUE TO DESTRUCTION TO BUILDING ..................39
</TABLE>
<PAGE> 9
RIDER
ANNEXED TO LEASE DATED AS OF SEPTEMBER 23, 1999
BETWEEN
601 WEST ASSOCIATES LLC, AS LANDLORD
AND
UNIVERSAL ACCESS, INC., AS TENANT
41. RIDER PROVISIONS PREVAIL
If and to the extent that any of the provisions of this Rider conflict
or are otherwise inconsistent with any of the preceding printed provisions of
this Lease, or of the Rules and Regulations attached to this Lease, whether or
not such inconsistency is expressly noted in this Rider, the provisions of this
Rider shall prevail, and in case of inconsistency with said Rules and
Regulations, shall be deemed a waiver of such Rules and Regulations.
42. COMMENCEMENT OF TERM
The commencement date of the term of this Lease ("Commencement Date")
shall be the earliest to occur of (i) the date on which Landlord's Work (as
hereinafter defined) to be performed in the Premises is substantially completed
(as hereinafter defined), or (ii) the date on which Landlord's Work in the
Premises would have been substantially completed but for Tenant's Delay (as
hereinafter defined) or, (iii) the date Tenant or anyone claiming under or
through Tenant first occupies the Premises for the conduct of its business. In
the event Landlord's Work is not substantially completed within forty-five (45)
days after the date Landlord executes this Lease and delivers a fully executed
copy to Tenant (except by reason of Tenant's Delay), Tenant shall be entitled to
an abatement against its obligation to pay Fixed Rental in the amount of $802.00
for each day's delay in the completion of Landlord's Work beyond such
forty-fifth (45th) day. In the event Landlord's Work is not substantially
completed within seventy-five (75) days after the date Landlord executes this
Lease and delivers a fully executed copy to Tenant (except by reason of Tenant's
Delay), Tenant shall be entitled to an abatement against its obligation to pay
Fixed Rental in the amount of $1,203.00 for each day's delay in the completion
of Landlord's Work beyond such seventy-fifth (75th) day (which shall be in lieu
of, and not in addition to, the foregoing $802.00 per day abatement).
43. FIXED RENTAL AND ADDITIONAL RENTAL
43.1 Tenant covenants to pay Landlord, at the above address, or at
such other address as Landlord shall designate:
43.1.1 A fixed rental ("Fixed Rental") at an annual rate of:
(i) $288,750 per year ($24,062.50 per month) for the
period commencing on the Commencement Date
(defined in Article 42 above) and continuing
thereafter to and including December 31, 2000;
(ii) $294,525 per year ($24,543.75 per month) for the
lease year commencing January 1, 2001 and
continuing thereafter to and including December
31, 2001;
(iii) $300,415 per year ($25,034.58 per month) for the
lease year commencing January 1, 2002 and
continuing thereafter to and including December
31, 2002;
(iv) $329,523 per year ($27,460.25 per month) for the
lease year commencing January 1, 2003 and
continuing thereafter to and including December
31, 2003;
PAGE 1
<PAGE> 10
(v) $336,113 per year ($28,009.42 per month) for the
lease year commencing January 1, 2004 and
continuing thereafter to and including December
1, 2004;
(vi) $342,835 per year ($28,569.58 per month) for the
lease year commencing January 1, 2005 and
continuing thereafter to and including December
31, 2005;
(vii) $384,342 per year ($32,028.50 per month) for the
lease year commencing January 1, 2006 and
continuing thereafter to and including December
31, 2006;
(viii) $392,029 per year ($32,669.08 per month) for the
lease year commencing January 1, 2007 and
continuing thereafter to and including December
31, 2007;
(ix) $399,870 per year ($33,322.50 per month) for the
lease year commencing January 1, 2008 and
continuing thereafter to and including December
31, 2008; and
(x) $407,867 per year ($33,989.92 per month) for the
lease year commencing January 1, 2009 and
continuing thereafter to and including December
31, 2009.
Fixed Rental shall be payable by Tenant in equal monthly
installments in advance at the office of Landlord without previous demand
therefor and without any setoff or deduction whatsoever, on the first day of
each and every calendar month throughout the term of this Lease, except that the
first monthly installment of Fixed Rental due hereunder shall be paid on the
execution of this Lease. Provided that Landlord countersigns and delivers a
fully-executed copy of this Lease, Landlord may deposit the first monthly
payment of rent. So long as Tenant is not in default hereunder at the time that
the Fixed Rental becomes due and payable, the payment made on this date shall be
applied to the first installment of Fixed Rental due, after application of the
Initial Rent Credit (defined below); otherwise, the same shall be applied to the
damages, if any, to which Landlord is entitled upon Tenant's breach of this
Lease. If the payment made on this date is uncollectible, the Lease shall, at
Landlord's option, be of no force and effect, AB INITIO, whether or not Tenant
shall have entered into possession of the Premises. If the Commencement Date (as
defined in Article 42 above) occurs on a day other than the first day of a
calendar month, the Fixed Rental due after the application of the Initial Rent
Credit shall be prorated, and the balance of the first month's Fixed Rental
theretofore paid shall be credited against the next monthly installment of Fixed
Rental.
Tenant's obligation to pay for the cost of electricity
for the Premises shall commence on the Commencement Date.
43.1.2 Additional rental ("Additional Rental"), consisting of
all such monies other than Fixed Rental as shall be due and payable under this
lease by Tenant.
43.2 Provided that Tenant is not then in default under the terms of
this Lease, Tenant shall be entitled to a one-time, non-recurring credit against
the obligation to pay Fixed Rental, in the aggregate amount of $120,312.50 (the
"Credit"), to be applied against the Fixed Rental due commencing on the
Commencement Date and continuing thereafter until the Credit has been reduced to
$0. Notwithstanding the foregoing, the Credit shall not be applied against any
Additional Rental, electricity charges, or other like sums from time to time
payable by Tenant pursuant to this Lease, which amounts shall be paid without
abatement in accordance with the terms of this Lease.
PAGE 2
<PAGE> 11
44. RENEWAL OPTION
44.1 Lessee shall have two (2) options (respectively, the "First
Renewal Option" and the "Second Renewal Option" and collectively, the "Renewal
Options") to renew or extend this Lease for two (2) additional terms of five (5)
years each, provided that at the time of the exercise of the Renewal Options,
this Lease is in full force and effect and no default, after the expiration of
any applicable cure period, exists hereunder. Lessee may exercise each of the
Renewal Options by giving written notice (the "Renewal Notice") to Lessor not
more than nine (9) months nor less than six (6) months prior to the expiration
of the then current term.
44.2 The Renewal Options may not be severed from this Lease nor
separately sold or assigned.
44.3 If Lessee timely exercises the First Renewal Option, the term of
this Lease will be extended for one (1) additional period of five (5) years,
commencing January 1, 2010 and expiring on December 31, 2014 (the "First Renewal
Period"), and, if Tenant exercises the Second Renewal Option, the term of this
Lease will be extended for a second period of five (5) years, commencing January
1, 2015 and expiring on December 31, 2019 (the "Second Renewal Period") (the
First Renewal Period and the Second Renewal Period are hereinafter referred to
collectively as the "Renewal Periods"), on all the same terms, covenants and
conditions as set forth herein for the initial term, except that during such
Renewal Periods: (i) Lessee shall be entitled to no further Renewal Option,
except as set forth herein; (ii) Landlord shall have no obligation to perform
Landlord's Work or any other work at the Premises, (iii) Tenant shall not be
entitled to the Credit, and (iv) the Fixed Rental during each Renewal Period
shall be 95% of the fair market rental value for each Renewal Period (the "Fair
Market Rental Rate") of the Premises determined as of the last day of the term
of the Lease prior to the First Renewal Period and Second Renewal Period,
respectively.
44.4 As used herein, the term "Fair Market Rental Rate" shall mean
the annual fair market rental value for the Premises for each Renewal Period,
taking into account all relevant factors including, without limitation, (a) the
size and location of, and leasehold improvements in, the Premises, (b) the
quality of the Building, (c) the fact that during each Renewal Period Tenant
shall continue to pay Additional Rent as provided for in this Lease, except that
the Base Year for the calculation of Operating Expenses and the Base Tax for the
purpose of calculating the Real Estate Tax escalation shall be changed to the
calendar year within which each respective Renewal Period commences, (d) the
annual rental rate charged by landlords to tenants in recent transactions for
comparable space in comparable buildings located in New York City, New York, and
(e) the fact that no work will be performed by Landlord in the Premises upon
such renewal, no free rent will be given by Landlord with respect to the
Premises upon such renewal, and a brokerage commission will be paid by Landlord
on such renewal.
44.5 Landlord and Tenant will endeavor to agree on each Renewal Term
Fixed Rental within 30 days after Tenant's exercise of its renewal option. If
Landlord and Tenant are unable to do so, then the dispute shall be resolved by
arbitration in accordance with the provisions set forth below.
(i) Each party shall give the other party notice (the
"Arbitration Notice") specifying in said notice the name and address of the
person designated to act as an arbitrator on its behalf. Each arbitrator so
chosen by the parties shall be a competent person having the qualifications
described in subparagraph (ii) below. The two arbitrators so chosen shall meet
within ten (10) days after the second arbitrator is appointed and if, within
thirty (30) days after the second arbitrator is appointed, the two arbitrators
shall not agree upon the question in dispute, they shall themselves appoint a
third arbitrator who shall be a competent and impartial person having the
qualifications described in said subparagraph (ii). The determination of the
third arbitrator shall be binding upon the parties. In the event of their being
unable to agree upon such appointment within ten (10) days after the time
aforesaid, the third arbitrator shall be selected by the parties themselves if
they can agree thereon within the further period of fifteen (15) days. If the
parties do not so agree, then either party, on behalf of both and on notice to
the other, may request such appointment by the American Arbitration Association
("AAA") in accordance with its rules then prevailing. The date on which the
third arbitrator is appointed is referred to herein as the "Appointment Date".
If any arbitrator appointed hereunder shall be unwilling or unable, for any
reason, to serve, or continue to serve, a
PAGE 3
<PAGE> 12
replacement arbitrator shall be appointed in the same manner as provided herein
for the appointment of such arbitrator.
(ii) The arbitration shall be conducted in accordance with
the then prevailing rules of the AAA. The arbitrators shall not be affiliated
with Landlord or Tenant and shall be (a) MAI appraisers with at least ten (10)
years experience in the determination of fair market rentals in office buildings
in the City of New York or (b) real estate brokers or consultants with at least
ten (10) years experience in leasing, owning, operating, selling or buying
office buildings in the City of New York.
(iii) This provision shall constitute a written agreement to
submit any dispute regarding the determination of the Renewal Term Fixed Rental
to arbitration.
(iv) The arbitration decision, determined as provided in this
paragraph, shall be conclusive and binding on the parties, shall constitute an
"award" by the arbitrator within the meaning of the AAA rules and applicable law
and judgment may be entered thereon in any court of competent jurisdiction.
(v) Each party shall pay its own fees and expenses relating
to the arbitration under this paragraph (including, without limitation, the fees
and expenses of the one of the two original arbitrators appointed by or for such
party, of its counsel and of experts and witnesses retained or called by it).
Each party shall pay one-half (1/2) of the fees and expenses of the AAA and of
the third arbitrator.
44.6 If arbitration concerning the Renewal Term Fixed Rental shall
not be concluded prior to the commencement of each of the Renewal Periods,
Tenant shall pay to Landlord, as Fixed Rental, an amount equal to the Fixed
Rental payable twelve (12) months immediately preceding the commencement of each
of the respective Renewal Periods, until a determination is made by the
arbitrators under subparagraph 44.5 hereof. Upon the determination of the
Renewal Term Fixed Rental by the arbitrators in accordance with subparagraph
44.5 hereof, Tenant shall pay to Landlord within fifteen (15) days thereafter
any underpayment of Renewal Term Fixed Rental by Tenant since the beginning of
the First Renewal Period.
45. INTENTIONALLY OMITTED
46. AS IS CONDITION; LANDLORD'S WORK
46.1 Tenant has thoroughly examined the Premises (including the
terrace) and is fully familiar with the condition thereof, and, except as
specifically set forth in this Lease, neither Landlord nor Landlord's agents
have made any representations, warranties or promises, either express or
implied, with regard to the physical condition of the Building, or the Premises,
the use or uses to which the Premises may be put, or the condition of any
mechanical, plumbing, electrical, flue, ventilation or exhaust systems servicing
the Premises. It is expressly understood that Landlord shall not be liable for
any latent or patent defects in the Premises. Tenant agrees to accept the
Premises "as is" and in such condition as the same may be in at the Commencement
Date, and, except for the work set forth on Exhibit B attached hereto, Landlord
shall not be obligated or required to do any work or to make any alterations or
decorations or install any fixtures, equipment or improvements, or make any
repairs or replacements to or in the Premises to prepare or fit the same for
Tenant's use or for any other reason whatsoever. Unless specifically agreed
otherwise, all Landlord's Work shall be of material, design, finish and color of
the building standard adopted from time to time by Landlord. The installations,
facilities, materials and work so to be furnished, installed and performed in
the Premises by Landlord at its expense are hereinafter and in Exhibit B
referred to as "Landlord's Work." All other installations, facilities, materials
and work which may be undertaken by or for the account of Tenant to prepare,
equip, decorate and furnish the Premises for Tenant's occupancy, shall be at
Tenant's expense, and are hereinafter called "Tenant's Work." In the event
specific locations or dimensions are not provided for the furnishing or
installation of any particular item of Landlord's Work, the judgment of Landlord
reasonably exercised shall be binding on Tenant. In no event shall Landlord be
required to provide any material, work or installation not specifically
described or included in Landlord's Work.
PAGE 4
<PAGE> 13
46.2 Landlord shall deliver the Premises to Tenant clean and free of
debris on the Commencement Date and warrants to Tenant that the existing
plumbing, electrical systems, sprinkler system, lighting, air conditioning and
heating systems and loading floors in the Premises (other than those constructed
by Tenant) shall be in good operating condition on the Commencement Date. If a
noncompliance with said warranty exists as of the Commencement Date, Landlord
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Tenant setting forth with specificity the nature and extent
of such noncompliance, rectify same at Landlord's sole cost and expense.
47. SUBSTANTIAL COMPLETION
47.1 The Premises shall be deemed ready for occupancy on the second
(2nd) business day after Landlord gives Tenant written notice of the substantial
completion of Landlord's Work and the opportunity to inspect Landlord's Work.
The Premises shall be substantially completed when all major items of
construction have been substantially completed and the Premises is accessible
and reasonably usable and is broom clean and free of all debris, notwithstanding
the fact (i) that minor or insubstantial details of construction, mechanical
adjustment or decoration remain to be performed, the non-completion of which do
not materially interfere with Tenant's use of the Premises, and (ii) that
Landlord's Work has been substantially completed except for portions thereof
which shall be completed upon the completion of Tenant's Work.
47.2 If the completion of Landlord's Work shall be delayed due to any
act or omission of Tenant or any of its employees, agents or contractors or any
failure to plan or to execute Tenant's Work diligently and expeditiously
("Tenant's Delay"), the Premises shall be deemed ready for occupancy on the date
when they would have been ready but for the Tenant's Delay.
47.3 If and when Tenant shall take actual possession of the Premises,
it shall be conclusively presumed that the same were in satisfactory condition
as of the date of such taking of possession, unless within twenty (20) days
after such date Tenant shall give Landlord notice specifying the respects in
which the Premises were not in satisfactory condition.
48. TENANT'S INITIAL INSTALLATIONS
48.1 Tenant agrees, at Tenant's sole cost and expense, to cause the
Premises to be improved in accordance with the plans approved by Landlord in
writing ("Approved Plan") (which improvement is hereinafter referred to as
"Tenant's Initial Installations"), which approval shall not be unreasonably
withheld or delayed. Tenant's obligation hereunder shall include, without
limitation, the obligation to pay for all soft costs, environmental and other
investigatory expenses, construction expenses, filings, architectural fees,
engineering fees and other like items necessary in order to lawfully complete
Tenant's Initial Installations. Tenant's performance of Tenant's Initial
Installations shall be performed with due diligence and in a good and
workmanlike manner.
48.2 During the period following the date of this Lease and during
the performance by Landlord of Landlord's Work, if any, Tenant agrees to submit
to Landlord for Landlord's review and approval all items mentioned in Article 71
below of this Lease with respect to Alterations as the same may pertain to
Tenant's Initial Installations. Landlord shall either approve or comment on
Tenant's submissions within five (5) business days after receipt. If any of
Tenant's submissions are not approved by Landlord, Tenant shall resubmit any
disapproved items in a timely manner. Tenant's Initial Installations shall be
commenced promptly after receipt by Tenant of all permits and approvals
necessary for the same to be legally carried out and after delivery to Landlord
of all items that must be delivered prior to the commencement of any
Alterations. All of Tenant's Initial Installations shall be performed in
accordance with the provisions of Article 71 below of this Lease.
48.3 Landlord agrees that if Tenant requests in writing prior to the
installation of any Tenant's Initial Installations or Tenant's Changes (as
defined in Article 71 below) that Landlord specify whether it will require the
removal of such Tenant's Changes or Tenant's Initial Installations upon
termination or expiration of this Lease, Landlord shall so specify within ten
(10) days after Tenant's request in writing, which writing includes a statement
that if Landlord fails to respond within ten (10) days of the request, that
Landlord shall be deemed not to require removal. If Landlord fails to respond to
such a request, Landlord shall be deemed to have not required the removal of
such
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Tenant's Changes or Tenant's Initial Installations upon the termination or
expiration of this Lease. Notwithstanding the foregoing, Tenant shall be
responsible for removing and, unless Landlord notifies Tenant to the contrary,
Tenant shall remove, all generators, antennae, conduit, fuel tanks, and any
other equipment belonging to Tenant or Tenant's Customers (as defined in Section
53.17 below) upon the expiration of this Lease and will repair all damage to the
Building incurred in connection therewith.
49. ESCALATIONS FOR INCREASE IN REAL ESTATE TAXES
49.1 For each Tax Year or portion thereof occurring in whole or in
part during the term or any renewal term of this Lease, Tenant shall pay, as
Additional Rental, the Tax Payment (hereafter defined) for such Tax Year or
portion thereof.
49.2 "Taxes" shall mean the total of all real estate taxes and
assessments and special assessments, business improvement district charges, and
other levies of a similar or dissimilar nature levied, assessed or imposed upon
or against the land, the Landlord and/or Building located at 601 West 26th
Street, New York, New York (individually referred to hereinafter as the "Land"
and the "Building"). If at any time during the term of this Lease the methods of
taxation prevailing at the commencement of the term hereof shall be altered so
that if and to the extent that in lieu of or as a substitute for the whole or
any part of the taxes, assessments, levies or impositions of charges now levied,
assessed or imposed on real estate and the improvements thereon, there shall be
levied, assessed or imposed: (i) a tax, assessment, levy, imposition or charge
wholly or partially as capital levy or otherwise on the rents received
therefrom; (ii) a tax, assessment, levy, imposition or charge measured by or
based in whole or in part upon the Building or the Land or the Premises and
imposed upon Landlord; (iii) a license fee measured by the rents payable by
Tenant to Landlord; or (iv) any additional or substitute tax assessment, levy,
imposition or charges against the Land and/or the Building; then all such taxes,
assessments, levies, impositions or charges or part thereof so measured or
based, shall be deemed to be included with the term "Taxes."
49.3 Notwithstanding anything to the contrary contained in this
Article, there shall be excluded from the definition of Taxes (i) all excess
profit taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and
succession taxes, estate taxes, federal and state income taxes, capital gains
taxes, and other taxes to the extent applicable to Landlord's general or net
income, (ii) any items included as Expenses, and (iii) any taxes or other
charges for which Tenant is directly responsible to such taxing authority. Taxes
shall also not include interest and penalties for late payment. Landlord
represents that the Building and the Land is assessed as a single tax parcel for
real property tax purposes separate and apart from any other land.
49.4 "Tax Year" shall mean the fiscal year for which Taxes are levied
by the applicable governmental authority.
49.5 "Base Tax" shall mean the Taxes payable in the calendar year
commencing January 1, 1999 and ending December 31, 1999 (such fiscal year being
hereinafter referred to as the "Base Tax Year").
49.6 "Tenant's Proportionate Share" shall mean 0.56%.
49.7 If the Taxes for any Tax Year occurring wholly or partially
within the term of this Lease or any renewal or extension thereof shall be
greater than the Base Tax, Tenant shall pay as Additional Rental for such Tax
Year a sum equal to Tenant's Proportionate Share of the amount by which the
Taxes for such Tax Year are greater than the Base Tax (which amount is
hereinafter called the "Tax Payment"). Should this Lease commence or terminate
prior to the expiration of a Tax Year, such Tax Payment shall be prorated to
correspond with that portion of a Tax Year occurring within the term of this
Lease. Tenant's obligation to pay such Additional Rental and Landlord's
obligation to refund pursuant to Paragraph 49.8 below, as the case may be, shall
survive the termination or sooner expiration of this Lease.
49.8 Only Landlord shall be eligible to institute proceedings to
contest the Taxes or reduce the assessed valuation of the Land and Building.
Landlord shall be under no obligation to contest the Taxes or the assessed
valuation of the Land and Building for any Tax Year or to refrain from
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contesting the same, and may settle any such contest on such terms as Landlord
in its sole judgment considers proper. If Landlord shall receive a refund for
any Tax Year for which a Tax Payment shall have been made by Tenant pursuant to
Paragraph 49.7 above, Landlord shall repay to Tenant, with reasonable
promptness, Tenant's Proportionate Share of such refund after deducting from
such refund the reasonable costs and expenses (including experts' and attorneys'
fees) of obtaining such refund.
49.9 Landlord shall render to Tenant a comparative statement, with a
copy of the then current tax bill, showing the amount of the Base Tax, the
amount of the Taxes for the then current Tax Year, and the Tax Payment, if any,
due from Tenant for such Tax Year. The Tax Payment shown on such comparative
statement shall be paid in full by Tenant to Landlord within thirty (30) days
after Tenant's receipt of such comparative statement, or, at Landlord's option,
shall be paid in two (2) installments on July 1 and January 1 of each Tax Year.
At the election of Landlord, the Tax Payment may be billed by Landlord and paid
by Tenant in equal monthly installments, together with installments of Fixed
Rental payable under this Lease. Tenant shall pay the amount of the Tax Payment
shown on such comparative statement (or the balance of a proportionate
installment thereof, if only an installment is involved) concurrently with the
installment of Fixed Rental then or next due, or if such statement shall be
rendered at or after the termination of this Lease, within ten (10) days after
such rendition. Each comparative statement shall be conclusive and binding on
Tenant, unless within thirty (30) days after receipt of such comparative
statement, Tenant shall notify Landlord of any discrepancy in specific detail.
Pending the determination of such dispute, by agreement or otherwise, Tenant
shall pay the Tax Payment set forth on the comparative statement.
50. WATER, SEWER AND SPRINKLER CHARGES
Tenant shall pay to Landlord, as additional rent hereunder, Tenant's
Proportionate Share of (i) any and all water meter and/or frontage charges and
sewer rents levied, assessed or imposed against the Building and the Land and
(ii) all charges paid by Landlord for sprinkler supervisory services for the
Building. The amounts payable to Tenant under the preceding sentence shall be
payable on the first day of each and every month during the term of this Lease
commencing from and after the Commencement Date.
51. ESCALATION FOR OPERATING EXPENSES
51.1 The term "Expense Year" shall mean the calendar year following
the Base Year, and each calendar year thereafter occurring in whole or in part
during the Term.
51.2 The term "Expenses" shall mean the total of all the costs and
expenses paid, incurred or borne by Landlord or on Landlord's behalf with
respect to the repair, operation and maintenance of the Premises and the
sidewalks, plazas, curbs, and other appurtenances adjoining the same. As used in
this Article, the term "Premises" shall mean the land, building and improvements
located on the tax block and lot described in the Definitions Article of this
Lease. The term Expenses shall include all such items incurred (whether directly
or through independent contractors) to the extent the same are not chargeable to
any other tenant or occupant of the Building, and which, in accordance with the
accounting practices of Landlord maintained in accordance with generally
accepted accounting principles applicable to real estate accounting transactions
and/or the standard and customary practices for office buildings of similar
nature in The City of New York are properly chargeable to the repair,
maintenance and operation of the Premises, including, but not limited to, the
costs and expenses (including all applicable taxes) which belong within any one
or more of the following categories:
51.2.1 salaries, wages, disability benefits, pensions, medical,
surgical insurance (including group life and disability), union and general
welfare benefits respecting employees of Landlord employed exclusively to
service the Premises up to and including the building manager (herein,
"Qualified Employees");
51.2.2 payroll taxes, workers' compensation, uniforms and
related expenses for Qualified Employees;
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51.2.3 the cost of painting, window washing, lobby decorations
or displays and the cost of interior and exterior landscape maintenance and
repairs;
51.2.4 if carried on a blanket or program basis, the allocable
cost or the cost for the premiums and other charges for rent, casualty, boiler,
sprinkler, plate glass, public liability and property damage, fidelity and any
other insurance Landlord maintains or is required to maintain with respect to
the Premises or the maintenance or operation thereof;
51.2.5 the cost of the rental of all supplies (including,
without limitation, cleaning supplies) hand tools and other materials used in
the repair, maintenance or operation of the Premises;
51.2.6 the depreciation for, or the rental cost or value of all
movable equipment used in the repair, maintenance or operation of the Premises;
51.2.7 the cost or value of or the cost or value of the rental
of, together with the cost of the installation of, any security or other system
used in connection with life or property protection installed after the Base
Year (including the cost of, or the cost or value of the rental of, all
machinery, electronic systems and other equipment comprising any part thereof),
as well as the cost of the operation and repair of such system in operation
during the Base Year;
51.2.8 the cost of all charges for cleaning, janitorial and
security services;
51.2.9 whether or not capitalized under generally accepted
accounting principles, the cost of repairs and the cost of replacements made in
connection with repairs of sidewalks, cables, fans, pumps, boilers, cooling
equipment, wiring and electrical fixtures and metering, control and distribution
equipment, component parts of the HVAC, electrical, plumbing, elevator and life
or property protection systems (including, without limitation, sprinkler
systems) window washing equipment and snow removal equipment, provided, however,
that if such costs are capitalized under GAAP, such costs shall be amortized
over a period of time equal to the anticipated useful life of such improvements;
51.2.10 whether or not capitalized under generally accepted
accounting principals, costs for alterations and improvements to the Premises
made after the Base Year by reason of the laws and requirements of any public
authorities enacted after the Base Year or the requirements of insurance bodies
or Landlord's insurer enacted after the Base Year for which any tenant is not
solely responsible under the provisions of its Lease, provided, however, that to
the extent such costs are capitalized under generally accepted accounting
principles, such costs shall be amortized over a period of time equal to the
anticipated useful life of such improvements;
51.2.11 management fees not to exceed the then prevailing rates
for management fees of other buildings of a similar class as the Premises in New
York County or, if no managing agent is employed by Landlord, a sum in lieu
thereof which is not in excess of the then prevailing rates;
51.2.12 whether or not capitalized under generally accepted
accounting principles, the cost of improvements, equipment or machinery
installed for the purpose of reducing energy consumption or reducing other
Expenses and which, at such time, reasonably prudent owners of office buildings
in New York County would reasonably agree with the purpose, provided, however
that to the extent such costs are capitalized under generally accepted
accounting principles, such costs shall be amortized over a period of time equal
to the anticipated useful life of such improvements;
51.2.13 reasonable legal, accounting and other professional fees
incurred in connection with the operation, maintenance and management of the
Premises;
51.2.14 fees, dues and other contributions by Landlord to civic
or other organizations;
51.2.15 water, sewer and sprinkler charges to the extent not
included in Taxes or in Article 50;
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51.2.16 the cost of all charges for gas, oil, steam, electricity
(for common areas of the Building), heat, ventilation, air conditioning, water
and other utilities furnished to the Premises;
51.2.17 the charges incurred in connection with Building
telephone service or the allocable portion thereof (excluding any telephone
service utilized by leasing agents); and
51.2.18 all other charges properly allocable to the repair,
operation or maintenance of the Premises in accordance with real estate
accounting practices customarily used in New York City.
51.3 Provided, however, that the foregoing costs and expenses shall
exclude or have deducted from them, as the case may be and as shall be
appropriate and Expenses shall specifically exclude the following:
51.3.1 leasing commissions;
51.3.2 management fees (whether payable to an unrelated party
or to a party related to Landlord) in excess of the rates then customarily
charged for building management for buildings of like class and character;
51.3.3 executives' salaries and benefits above the grade of
building manager;
51.3.4 the cost of capital improvements, except as otherwise
provided herein;
51.3.5 amounts received by Landlord through proceeds of
insurance to the extent the proceeds are compensation for Expenses which were
previously (or in any current comparative year will be) included in Expenses
hereunder;
51.3.6 the cost of repairs or replacements incurred by reason
of fire or other casualty to the extent that Landlord is compensated (or would
have been compensated had Landlord maintained the insurance required by this
Lease) therefor through proceeds of insurance, or caused by the exercise of the
right of eminent domain;
51.3.7 advertising and promotional expenditures;
51.3.8 legal fees and related costs for disputes with tenants
or for negotiating, entering into or for terminating any leases or tenancies in
the Building;
51.3.9 refinancing costs and principal and interest payments
and amortization of any Mortgage and the amounts payable under any Ground Lease;
51.3.10 interest or penalties for late payments by Landlord;
51.3.11 compensation and benefits of service personnel to the
extent that such personnel perform services not solely in connection with the
management, operation, repair or maintenance of the Building;
51.3.12 depreciation or amortization of improvements, except as
provided herein;
51.3.13 costs incurred in performing work or furnishing services
for any tenant (including, without limitation, Tenant), whether at such tenant's
or at Landlord's expense, to the extent that such work or service is in excess
of any work or service that Landlord is obligated to furnish to Tenant at
Landlord's expense;
51.3.14 expenditures for any alteration, renovation,
subdivision, layout and finish of any space in the Building performed in
connection with the occupancy of such space by a tenant;
51.3.15 Taxes;
51.3.16 costs of repairs, additions or replacements caused by
the exercise of the rights of eminent domain, for which Landlord is compensated
by the condemning authority;
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51.3.17 any payments made to subsidiaries of Landlord or
entities under common control with Landlord except if such payments are for
services or goods on, to or for the Building, and only to the extent that the
cost of such services and goods are at market rates being paid for such services
or goods by owners of similar buildings in New York County from time to time;
51.3.18 any expenses for services or items for which any tenant
of the Building (including Tenant) directly reimburses Landlord (other than as a
component of Expenses);
51.3.19 any costs, fines or penalties incurred resulting from
violations by Landlord of any governmental rule or regulations;
51.3.20 expenses arising as a result of Landlord's gross
negligence or willful misconduct or the negligence or willful misconduct of
Landlord's agents or employees; and
51.3.21 expenses incurred by Landlord in connection with the
transfer or distribution of the Land or Building or any ground lease, underlying
or overriding lease, including, without limitation, transfer, deed or gains
taxes.
51.4 The term "Expense Payment" shall mean Tenant's Proportionate
Share of the amount by which the Expenses for an Expense Year exceed the
Expenses for the Base Year. Landlord agrees that the Expense Payment in any one
Expense Year shall not be greater than 4% of the then adjusted Fixed Rental for
said year.
51.5 The term "Base Year" shall mean January 1, 1999 to December 31,
1999.
51.6 The cost of any item which was included in Expenses for the Base
Year and which thereafter is not incurred by Landlord by reason of the
installation of a labor saving device or other improvement shall be deleted from
Expenses for the Base Year in connection with the calculation of the Expense
Payment for all Expense Years from and after the Expense Year in which such
installation or improvement occurs.
51.7 If during any Expense Year (a) any rentable space in the
Building shall be vacant or unoccupied and such space was rented or occupied
during the Base Year or (b) the tenant or occupant of any space in the Building
undertook to perform work or services therein in lieu of having Landlord perform
the same and the cost thereof would have been included in Expenses, then in
either of such events, at Landlord's option, the Expenses for such Expense Year
shall be adjusted to reflect the Expenses that would have been incurred if such
space had been occupied, or if Landlord had performed such work or services, as
the case may be, provided, however, that Landlord shall in computing the
Expenses during the Base Year and each Expense Year, adjust the same to reflect
the Expenses that would have been incurred if not less than 95% of the Building
were occupied during the Base Year and the relevant Expense Year, as the case
may be.
51.8 At any time during each Expense Year, Landlord may furnish to
Tenant a written statement (an "Estimate Statement") setting forth Landlord's
estimate of the Expense Payment for such Expense Year (the "Estimated Payment").
Tenant shall pay to Landlord on the first day of each month during each Expense
Year an amount equal to one twelfth (1/12th) of the Estimated Payment. If
Landlord furnishes an Estimate Statement for an Expense Year subsequent to the
commencement thereof, then (i) beginning on the first day of the then current
Expense Year and until the first day of the month following the month in which
the Estimate Statement is furnished to Tenant, Tenant shall pay to Landlord on
the first day of each month an amount equal to 104% of the monthly sum payable
by Tenant to Landlord with respect to the next previous Expense Year; (ii)
promptly after the Estimate Statement is furnished to Tenant, Landlord shall
give notice to Tenant stating whether the amount previously paid by Tenant to
Landlord for the current Expense Year was greater or less than the installments
of Estimated Payment to be paid for the current Expense Year, and (a) if there
shall be a deficiency, Tenant shall pay the amount thereof within fifteen (15)
days after demand therefor, or (b) if there shall have been an overpayment,
Landlord shall credit the amount thereof against the next monthly installment(s)
of Fixed Rent payable under this Lease (unless the credit cannot be made prior
to the expiration of the Term, in which case, within fifteen (15) days after the
expiration of the Term (so long as Tenant is not in default as of the expiration
of the Term), Landlord shall refund the then uncredited excess to Tenant, and
(iii) on the first day of the month following
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the month in which an Estimate Statement is furnished to Tenant and monthly
thereafter throughout the remainder of such Expense Year, Tenant shall pay to
Landlord an amount equal to one twelfth (1/12th) of the Estimated Payment shown
on the Estimate Statement. Landlord may, not more often than twice in each
Expense Year, furnish to Tenant a revised Estimate Statement; if a revised
Estimate Statement is furnished to Tenant, the Estimated Payment for such
Expense Year shall be adjusted in the same manner as provided in the preceding
sentence.
51.9 Following the conclusion of each Expense Year and promptly after
such time as Landlord shall have obtained such information and shall have made
such calculations as are necessary, Landlord shall furnish to Tenant an annual
statement (the "Annual Statement") for such Expense Year. If the Annual
Statement shows that the Estimated Payment (or other payments) for such Expense
Year exceeded the Expense Payment which should have been paid for such Expense
Year in accordance with the Annual Statement, Landlord shall credit the amount
of such excess against the next monthly installment(s) of Fixed Rent payable
under this Lease (unless the credit cannot be made prior to the expiration of
the Term, in which case, fifteen (15) days after the expiration of the Term (so
long as Tenant is not in default as of the expiration of the Term), Landlord
shall refund the then uncredited excess to Tenant); if the Annual Statement for
such Expense Year shows that the Estimated Payment for such Expense Year was
less than the Expense Payment (or other payments) which should have been paid
for such Expense Year in accordance with the Annual Statement, Tenant shall pay
the amount of such deficiency within fifteen (15) days after receipt of the
Annual Statement, such obligation to survive the expiration or sooner
termination of this Lease.
51.10 Each Annual Statement shall be conclusive and binding upon
Tenant unless, within ninety (90) days after receipt thereof, Tenant shall
notify Landlord that it disputes the correctness of the Annual Statement. If
such notice is sent, provided Tenant shall pay to Landlord the amounts shown to
be due to Landlord on the disputed Annual Statement, the parties agree that due
to the confidential nature of Landlord's books and records, either party may
refer the decision of the issues raised to a reputable independent firm of
certified public accountants mutually agreeable to Landlord and Tenant, and the
decision of such accountants shall be conclusive and binding on the parties. The
fees and expenses involved in such decisions shall be borne by the unsuccessful
party (and if both parties are partially unsuccessful, the accountants shall
apportion the fees and expenses between the parties based on the degree of
success of each party). Each Annual Statement shall be conclusive and binding
upon Landlord unless, within ninety (90) days after the rendering thereof,
Landlord prepares and forwards to Tenant a corrected Annual Statement.
52. ALL ADDITIONAL RENTAL PAYMENTS
52.1 Landlord's delay or failure during the term of this Lease to
prepare and deliver any statements or bills required to be delivered to Tenant
under Articles 49, 50 and 51 shall not in any way be deemed to be a waiver of,
or cause Landlord to forfeit or surrender its rights to collect any Additional
Rental which may have become due pursuant to these Articles during the term of
this Lease. Tenant's liability for Additional Rental due under Articles 49, 50
and 51 shall continue unabated during the remainder of the term of this Lease
and shall survive the expiration or sooner termination of this Lease.
52.2 In no event shall any adjustment of any payments payable by
Tenant in accordance with the provisions of Articles 49, 50 and 51 result in a
decrease in the Fixed Rental.
52.3 If any Additional Rental is payable with respect to any period
that shall end after the expiration or termination of this Lease, the Additional
Rental payable by Tenant in respect thereof shall be prorated to correspond to
that portion of such Escalation Year occurring within the term of this Lease.
53. ASSIGNMENT AND SUBLETTING
53.1 Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage, or encumber this Lease or any of
its rights or estates hereunder, sublet the Premises or any part thereof, or
permit the Premises, or any part thereof, to be used or occupied by others,
pursuant to a management agreement, license agreement or otherwise (each of the
foregoing hereinafter referred
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to as a "Transfer"), without the prior written consent of Landlord in each
instance. If this Lease be assigned, or if the Premises or any part thereof be
sublet or occupied by anybody other than Tenant, Landlord may, after default by
Tenant, collect rent from the assignee, subtenant, or occupant, and apply the
net amount collected to the rent herein reserved, but no assignment, subletting,
occupancy, or collection shall be deemed a waiver of the provisions hereof, the
acceptance of the assignee, subtenant, or occupant as tenant, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained. Landlord's consent to an assignment or subletting shall not,
in any wise, be construed to relieve Tenant from obtaining Landlord's express
written consent to any further assignment or subletting. In no event shall any
permitted sublessee assign or encumber its sublease, further sublet all or any
portion of its sublet space, or otherwise suffer to permit the sublet space, or
any part thereof, to be used or occupied by others, without Landlord's prior
written consent in each instance. A modification, amendment or extension of a
sublease shall be deemed to be a subletting.
53.2 If Tenant shall, at any time or times during the term of this
Lease, desire to assign this Lease or sublet all or part of the Premises, Tenant
shall give notice thereof to Landlord, which notice shall be accompanied by: (a)
a conformed or photostatic copy of the proposed assignment or sublease, the
effective or commencement date of which shall be not less than fifteen (15) nor
more than forty-five (45) days after the giving of such notice; (b) a statement
setting forth, in reasonable detail, the identity of the proposed assignee or
subtenant and its principals, the nature of its business and its proposed use of
the Premises; and (c) current financial information with respect to the proposed
assignee or subtenant and its principals, including its (and their) most recent
financial report(s).
53.3 Provided that Tenant is not in default of any of Tenant's
obligations under this Lease, Landlord's consent (which shall be in form
reasonably satisfactory to Landlord) to the proposed assignment or sublease
shall not be unreasonably withheld or delayed, provided and upon condition that:
53.3.1 Tenant shall have complied with the provisions of
Article 53.2 above;
53.3.2 In Landlord's reasonable judgment the proposed assignee
or subtenant is engaged in a business or activity, and the Premises, will be
used in a manner, which (a) is limited to the use of the Premises for the use
permitted herein or a use specifically permitted under a lease for space in the
Building executed by Landlord on or after June 1, 1998; and (b) will not violate
any negative covenant as to use contained in any other lease of space in the
Building;
53.3.3 The proposed assignee or subtenant (or its principal) is
a reputable person and with sufficient financial worth considering the
responsibility involved, and Landlord has been furnished with reasonable proof
thereof;
53.3.4 Neither the proposed assignee or subtenant nor any
person who, directly or indirectly, controls, is controlled by, or is under
common control with, the proposed assignee or subtenant, (a) is then a tenant or
an occupant of any part of the Building, nor (b) is a party who dealt with, or
is then negotiating with, Landlord or Landlord's agent (directly or through a
broker) with regard to space in the Building either currently or during the six
(6) months immediately preceding Tenant's request for consent;
53.3.5 The form of the proposed sublease or instrument of
assignment shall be in form reasonably satisfactory to Landlord and shall comply
with the applicable provisions of this Article;
53.3.6 Tenant shall reimburse Landlord on demand for the
reasonable costs (not to exceed $2,000) that may be incurred by Landlord in
connection with said assignment or sublease, including, without limitation, the
costs of making investigations as to the acceptability of the proposed assignee
or subtenant, and legal fees incurred in connection with the granting of any
requested consent;
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53.3.7 The Premises shall not, without Landlord's prior written
consent, have been listed or otherwise been publicly advertised for assignment
or subletting at a rental rate lower than the then prevailing rental for other
similar space in the Building; and
53.3.8 The proposed occupancy shall not impose an extra burden
upon services to be supplied by Landlord to Tenant.
53.4 No assignment or subletting shall be made:
53.4.1 by the legal representatives of Tenant or by any person
to whom Tenant's interest under this Lease passes by operation of law, except in
compliance with the provisions of this Article; or
53.4.2 to any person or entity for the conduct of a business
which is not in keeping with the Certificate of Occupancy and applicable zoning
laws.
53.5 The sublease shall expressly prohibit the use of the Premises or
any part thereof for any use other than the use set forth in paragraph 2 of the
prefixed printed form.
53.6 In the event that Tenant fails to execute and deliver the
assignment or sublease to which Landlord consented within one hundred twenty
(120) days after the giving of such consent, then Tenant shall again comply with
all of the provisions and conditions of Article 53.2 before assigning this Lease
or subletting all or part of the Premises.
53.7 Each subletting pursuant to this Article shall be subject to all
of the applicable covenants, agreements, terms, provisions and conditions
contained in this Lease. Notwithstanding any such subletting and/or acceptance
of rent or additional rent by Landlord from any subtenant, Tenant shall and will
remain fully liable for the payment of the Fixed Rental and Additional Rental
due, and to become due, hereunder, for the performance of all of the covenants,
agreements, terms, provisions and conditions contained in this Lease on the part
of Tenant to be performed and for all acts and omissions of any licensee,
subtenant, or any other person claiming under or through any subtenant that
shall be in violation of any of the obligations of this Lease, and any such
violation shall be deemed to be a violation by Tenant. Tenant further agrees
that, notwithstanding any such subletting, no other and further subletting of
the Premises by Tenant, or any person claiming through or under Tenant shall, or
will be made, except upon compliance with, and subject to, the provisions of
this Article. If Landlord shall decline to give its consent to any proposed
assignment or sublease, Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all losses, liabilities, damages, costs and
expenses (including reasonable counsel fees) resulting from any claims that may
be made against Landlord by the proposed assignee or subtenant or by any brokers
or other persons claiming a commission or similar compensation in connection
with the proposed assignment or sublease.
53.8 With respect to each and every sublease or subletting, it is
further agreed that:
53.8.1 no subletting shall be for a term ending later than one
day prior to the expiration date of the term of this Lease;
53.8.2 no sublease shall be valid, and no subtenant shall take
possession of the Premises or any part thereof, until an executed counterpart of
such sublease has been delivered to Landlord;
53.8.3 each sublease shall provide that it is subject and
subordinate to this Lease and to the matters to which this Lease is or shall be
subordinate, and that, in the event of termination, re-entry, or dispossess by
Landlord under this Lease, Landlord may, at its option, take over all of the
right, title and interest of Tenant as sublandlord under such sublease, and such
subtenant shall, at Landlord's option, attorn to Landlord pursuant to the then
executory provisions of such sublease, except that Landlord shall not: (a) be
liable for any previous act or omission of Tenant under such sublease; (b) be
subject to any offset, not expressly provided in such sublease, that theretofore
accrued to such subtenant against Tenant; or (c) be bound by any previous
modification of such
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sublease or by any previous prepayment of more than one month's fixed rent or
any additional rent then due.
53.9 Any assignment or transfer shall be made only if, and shall not
be effective until, the assignee shall execute, acknowledge and deliver to
Landlord an agreement, in form and substance satisfactory to Landlord, whereby
the assignee shall assume all of the obligations of this Lease on the part of
Tenant to be performed or observed and whereby the assignee shall agree that the
provisions contained in Article 53.1 shall, notwithstanding such assignment or
transfer, continue to be binding upon it in respect of all future assignments
and transfers. The original named Tenant covenants that, notwithstanding any
assignment or transfer, whether or not in violation of the provisions of this
Lease, and notwithstanding the acceptance of fixed rent and/or additional rent
by Landlord from an assignee, transferee, or any other party, the original named
Tenant shall remain fully liable for the payment of Fixed Rental and Additional
Rental and for the other obligations of this Lease on the part of the Tenant to
be performed or observed.
53.10 In no event shall Tenant be entitled to make, nor shall Tenant
make, any claim, and Tenant hereby waives any claims, for money damages (nor
shall Tenant claim any money damages by way of set-off counterclaim or defense)
based upon any claim or assertion by Tenant that Landlord has unreasonably
withheld or unreasonably delayed its consent or approval to a proposed
assignment or subletting as provided for in this Article. Tenant's sole remedy
shall be an action or proceeding to enforce any such provision, or for' specific
performance, injunction or declaratory judgment.
53.11 If applicable, one or more sales or transfers, by operation of
law or otherwise, or creation of new stock, partnership, membership or voting
interests, aggregating in excess of fifty percent (50%) of (i) the voting stock
of any corporate tenant, or (ii) the limited or general partnership interest in
any partnership tenant, or (iii) the membership interests in any limited
liability company tenant, whether in a single transaction or in a series of
transactions, shall be deemed an assignment within the meaning of this Article
and shall require Landlord's prior written consent.
53.12 The joint and several liability of Tenant and any immediate or
remote successor in interest to Tenant, and the due performance of the
obligations of this Lease on Tenant's part to be performed or observed, shall
not be discharged, released, or impaired in any respect by any agreement or
stipulation made by Landlord extending the time of, or modifying any of the
obligations of this Lease so that such obligations are increased, or by any
waiver or failure of Landlord to enforce any of the obligations of this Lease.
53.13 The listing of any name other than that of Tenant, whether on
the doors of the Premises, or otherwise, shall not operate to vest any right or
interest in this Lease or in the Premises, nor shall it be deemed to be the
consent of Landlord to any assignment or transfer of this Lease, to any sublease
of the Premises, or to the use or occupancy thereof by others.
53.14 If Tenant shall enter into any subleases, assignments or other
agreements for the occupancy of the Premises or any portion thereof, or if there
is a transfer of this Lease by operation of law, or otherwise, and if Tenant
shall receive any consideration from its assignee, subtenant or licensee for or
in connection with the assignment or the subletting, as the case may be, or, if
Tenant shall sublet or otherwise permit occupancy of the Premises at a rental
rate (including Additional Rental) or other periodic aggregate consideration in
excess of the Fixed and Additional Rental due hereunder, Tenant shall pay to
Landlord, upon receipt, as Additional Rental hereunder, one-half of such
consideration or excess, less broker's commissions and legal fees incurred by
Tenant solely in connection with subletting the Premises or assigning this Lease
or performing the work to the Premises to ready the Premises for sublet or
assignment (amortized on a straight line basis over each month in the term of
the sublease or assignment).
53.15 INTENTIONALLY OMITTED
53.16 Tenant shall have the right, without the consent of, but on
written notice to, Landlord, but subject to Tenant's satisfaction of the
conditions set forth in Section 53.2(a) and (b) (provided, however, that
notwithstanding the provisions of Section 53.2(a), the written notice to be
given by Tenant to Landlord under this Section 53.16 may be given simultaneously
with, or at any time prior
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to, effecting any of the transactions described in this Section), 53.3.2,
53.3.6, 53.3.8 and 53.9 (but only so long as the assumption of the obligations
of Tenant hereunder are not effective by operation of law) above, (A) to assign
its interest in this Lease (i) to any person or entity which is a successor to
Tenant either by merger or by consolidation, (ii) to a purchaser of all or
substantially all of Tenant's assets (provided such purchaser shall have also
assumed substantially all of Tenant's liabilities), or (iii) to a person or
entity which shall control, be under the control of, or be under common control
with Tenant (any such entity referred to in this clause (iii) being a Related
Entity), (B) to transfer or change the ownership of Tenant as long as the new
ownership interest continues to operate the business of Tenant in the same
manner, or (C) to effect a transaction in which Tenant becomes an entity whose
shares of stock or other ownership interests are, directly or indirectly, sold
on a national stock exchange or an inter-dealer quotation system; and in the
event the foregoing transaction has occurred, any subsequent sale of ownership
interests or issuance of new ownership interest, directly or indirectly, in
Tenant shall be subject to the provisions of this Section 53.16.
53.17 Landlord acknowledges that Tenant's permitted use requires the
installation in the Premises of certain telecommunications equipment owned by
customers, licensees and co-locators of Tenant ("Tenant Customers") in order for
such Tenant Customers to interconnect with Tenant's equipment or to permit
Tenant to manage or operate such Tenant Customers' equipment. Notwithstanding
anything to the contrary provided herein, Landlord approves such use of portions
of the Premises by Tenant Customers for such purposes without Landlord's further
consent. All use or occupancy of the Premises by said Tenant Customers shall
comply with any and all applicable governmental laws, rules or regulations. No
part of this Article 53 shall apply to the foregoing license or co-location
arrangements. It is expressly understood and agreed that under no circumstances
shall Landlord be responsible for any damage to such equipment, regardless of
the cause.
54. LIMITATION OF LIABILITY
54.1 If Landlord shall be an individual, joint venture, tenancy in
common, co-partnership, limited liability company, unincorporated association,
or other unincorporated aggregate of individuals and/or entities or a
corporation, Tenant shall look only to such Landlord's estate and property in
the Land and the Building for the satisfaction of Tenant's remedies for the
collection of a judgment (or other judicial process) requiring the payment of
money by Landlord in the event of any default by Landlord hereunder, and no
other property or assets of Landlord or any member, partner or principal of
Landlord shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder or Tenant's use or occupancy of
the Premises.
54.2 If Tenant shall request Landlord's consent or approval pursuant
to any of the provisions of this Lease or otherwise, and Landlord shall fail or
refuse to give, or shall delay in giving, such consent or approval, including,
but not limited to, Article 53 above, Tenant shall in no event make, or be
entitled to make, any claim for damages (nor shall Tenant assert, or be entitled
to assert, any such claim by way of defense, set-off, or counterclaim) based
upon any claim or assertion by Tenant that Landlord unreasonably withheld or
delayed its consent or approval, and Tenant hereby waives any and all rights
that it may have from whatever source derived, to make or assert any such claim.
Tenant's sole remedy for any such failure, refusal, or delay shall be an action
for a declaratory judgment, specific performance, or injunction, and such
remedies shall be available only in those instances where Landlord has expressly
agreed in writing not to unreasonably withhold or delay its consent or approval
or where, as a matter of law, Landlord may not unreasonably withhold or delay
the same.
55. INDEMNIFICATION
Tenant shall, at all times and at its sole cost and expense, indemnify,
defend and hold Landlord, any holder of a Superior Mortgage (defined below), and
any lessor under a Superior Lease (defined below), together with their
respective agents, affiliates, employees, partners, members, officers, directors
and shareholders (collectively, the "Indemnitees") harmless from and against any
and all claims, suits, actions, damages, fines, charges, penalties, losses,
liens, fees, costs, court costs, expenses (including, but not limited to, all
reasonable fees and disbursements of attorneys, architects, engineers and other
professionals engaged by one or more Indemnitees) and liabilities which may
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be incurred by or imposed on any Indemnitee or which may arise in connection
with any claims, suits or actions, the investigation thereof or the defense of
any action or proceeding brought thereon, or from the enforcement of this
indemnity, or from and against any orders, judgments and/or decrees which may be
entered or which may arise, wholly or in part, with respect to or on account of:
(a) any personal injury, bodily injury, loss of life and/or damage to property
that may occur or be claimed by or with respect to any person(s) or property on
or about the Premises, and resulting from the use, misuse, occupancy, operation
and/or management of the Premises by Tenant, its successors, permitted assigns
or any subcontractors, or by other persons or entities claiming by, through or
under Tenant, or by their respective agents, employees, contractors, licensees,
invitees, guests or other such persons or entities, except to the extent such
injury, loss and/or damage is due to Landlord's, its agents' or employees'
willful or negligent acts or omissions, (b) the breach of any term, covenant or
condition of this Lease by Tenant, its successors, permitted assigns or any
subcontractors, or by other persons or entities claiming by, through or under
Tenant, or by their respective agents, employees, contractors, licensees,
invitees, guests or other such persons or entities, (c) the filing of any
mechanic's or materialmen's lien or of any other attachment or encumbrance
against the Land and/or the Building due to work done by or on behalf of Tenant,
(d) the condition of the Premises, including any repairs, replacements, changes
or Alterations which Tenant has or will perform or fail to perform therein, but
only to the extent Tenant is obligated to do so under this Lease, or (e)
Tenant's use or storage of any Hazardous Materials (defined below). All such
actions, suits, claims, damages and/or proceedings shall be resisted and
defended by Tenant at its sole cost and expense. Except as a result of
Landlord's, its agents' or employees' willful or negligent acts or omissions,
Landlord shall in no event be liable for any injury or damage to the Premises or
to Tenant or any successors, permitted assigns or subcontractors, or other
persons claiming by, through or under Tenant or their respective agents,
employees, licensees, invitees, business visitors and guests or other such
persons, or to any property of any such persons. Tenant shall promptly reimburse
each Indemnitee for any and all expenditures covered by this indemnity and hold
harmless.
56. INSURANCE
56.1 Tenant shall obtain and keep in full force and effect during the
term of this Lease:
56.1.1 a policy of commercial general public liability
insurance, including bodily injury and property damage coverage, with a broad
form contractual liability endorsement or its equivalent, naming Tenant as
insured and protecting Landlord, Landlord's employees and managing agent, and
any mortgagees or lessors having an interest in the Building, as additional
insureds (issued on an "occurrence" basis and not a "claims made" basis) against
claims for personal injury, death and/or third-party property damage occurring
in or about the Premises or the Building, and under which the insurer agrees to
waive any right of recovery such insurer may have had against Landlord,
Landlord's employees and managing agent, and any mortgagees or lessors having an
interest in the Building and to indemnify, defend and hold Landlord harmless
from and against, among other things, all cost, expense and/or liability
(including, without limitation, reasonable attorneys' fees) arising out of or
based upon any and all claims, accidents, injuries and damages occurring in, on
or about the Premises (whether or not such claims, accidents, injuries and
damages occurred as a result of Landlord's negligence). Such policy shall
contain a provision that no act or omission of Tenant shall affect or limit the
obligation of the insurance company to pay the amount of any loss sustained to
Landlord. The minimum limits of liability applicable exclusively to the Premises
shall be a combined single limit with respect to each occurrence in an amount of
not less than $3,000,000; and
56.1.2 Tenant shall have the right to maintain the required
liability insurance in the form of a blanket policy covering other business
locations of Tenant in addition to the Premises, provided, however, that Tenant
shall provide Landlord with a certificate of insurance specifically naming the
location of the Premises and naming Landlord as required in this Article, the
limits of which coverage are to be in the amounts set forth in this Article; and
56.1.3 insurance against loss or damage by fire and such other
risks and hazards (including burglary, theft, vandalism, sprinkler leakage,
water damage, explosion, breakage of glass within the Premises and, if the
Premises are located at or below grade, broad form flood insurance) as are
insurable under then available standard forms of "all risk" insurance policies,
to Tenant's
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personal property and business equipment and fixtures (hereinafter, "Tenant's
Property") and, whether or not such alterations or tenant improvements had been
paid for or performed by Tenant, any alterations and tenant improvements in and
to the Premises (hereinafter, "Tenant's Work") for the full replacement cost
value thereof (with such policy having a deductible not in excess of an amount
to be determined by Landlord in the exercise of Landlord's commercially
reasonable discretion) protecting Tenant, Landlord, Landlord's employees and
managing agent, and any mortgagees or lessors having an interest in the
Building; and
56.1.4 business interruption insurance in an amount sufficient
to cover Tenant's lost profits and continuing expenses for alone (1) year
period.
56.2 Prior to the time such insurance is first required to be carried
by Tenant and thereafter, at least thirty (30) days prior to the expiration or
other termination of any such policies, Tenant agrees to deliver to Landlord
evidence of payment for the policies and true and complete copies of the actual
policies together with certificates evidencing such insurance. All such policies
shall contain endorsements that (a) such insurance may not be modified or
cancelled or allowed to lapse except upon thirty (30) days' written notice to
Landlord by certified mail, return receipt requested, containing the policy
number and the names of the insured and the certificate holder, and (b) Tenant
shall be solely responsible for payment of all premiums under such policies and
Landlord shall have no obligation for the payment thereof notwithstanding that
Landlord is or may be named as an additional insured. Tenant's failure to
provide and keep in force the aforementioned insurance shall be regarded as a
material default hereunder, entitling Landlord to exercise any or all of the
remedies as provided in this Lease in the event of Tenant's default. All
insurance required to be carried by Tenant pursuant to the terms of this Lease
shall be effected under valid and enforceable policies issued by reputable and
independent insurers permitted to do business in the State of New York which
rate, in Best's Insurance Guide, or any successor thereto (or if there be none,
an organization having a national reputation), as having a general policyholder
rating of "A" and a financial rating of at least "XIII." Tenant shall not carry
separate or additional insurance, whether concurrent or contributing, in the
event of any loss or damage, with any insurance required to be obtained by
Tenant under this Lease.
56.3 All policies to be maintained by Tenant hereunder and by
Landlord with respect to the Building shall contain a provision that no act or
omission of Landlord or Tenant, as the case may be, shall affect or limit the
obligation of the insurer to pay the amount of any loss sustained.
56.4 The parties hereto shall procure an appropriate clause in, or
endorsement on, any "all risk" or fire or extended coverage insurance covering
the Premises, the Building, the personal property, fixtures or equipment located
thereon or therein, pursuant to which the insurance companies waive subrogation
or consent to a waiver of right of recovery by the insured prior to any loss.
The waiver of subrogation or permission for waiver of the right of recovery in
favor of Tenant shall also extend to all other persons or entities occupying or
using the Premises in accordance with the terms of the Lease. If the payment of
an additional premium is required for the inclusion of such waiver of
subrogation provisions or consent to a waiver of right of recovery, each party
shall advise the other of the amount of any such additional premiums by written
notice and the other party shall pay the same or shall be deemed to have agreed
that the party obtaining the insurance coverage in question shall be free of any
further obligations under the provisions hereof relating to such waiver or
consent. It is expressly understood and agreed that Landlord will not be
obligated to carry insurance on Tenant's Property or Tenant's Work or insurance
against interruption of Tenant's business.
56.5 Each party hereby waives all rights of recovery, claim, action,
cause of action and releases the other party with respect to any claim
(including a claim for negligence) which it might otherwise have against the
other party for loss, damage or destruction with respect to its property
(including rental value or business interruption) occurring during the term of
this Lease to the extent to which such party is insured under a policy
containing a waiver of subrogation or naming the other party as an additional
assured, as provided in this Article. If notwithstanding the recovery of
insurance proceeds by either party for loss, damage or destruction of its
property (or rental value or business interruption) the other party is liable to
the first party with respect thereto or is obligated under this Lease to make
replacement, repair or restoration, then provided the first party's right of
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full recovery under its insurance policies is not thereby prejudiced or
otherwise adversely affected, the amount of the net proceeds of the first
party's insurance against such loss, damage or destruction shall be offset
against the second party's liability to the first party therefor, or shall be
made available to the second party to pay for the replacement, repair or
restoration, as the case may be. Each party shall advise insurers of the
foregoing and such waiver shall be part of each policy maintained by Tenant or
Landlord which applies to the Premises, any part of the Premises or Tenant's use
and occupancy of any part thereof, or, in the case of Landlord, which applies to
the Building.
56.6 Landlord shall, throughout the term of this Lease, maintain
insurance on the Building against fire and other casualty and liability
insurance, in each case in limits at least equal to those mandated by the then
holder of the Superior Mortgage (defined below), or if no mortgage shall
encumber the Building, commercially reasonable levels of such insurance covering
the Building and general liability insurance in amounts and types customarily
carried by owners of similar buildings.
57. ELECTRIC CURRENT
57.1 Tenant agrees that Tenant shall not make any electrical or
mechanical installations, alterations, additions or changes to the electrical
equipment or appliances in the Premises (except that Tenant may connect standard
office equipment without Landlord's consent) without the prior written consent
of Landlord, in each such instance and Tenant will at all times comply with the
rules and regulations applicable to the service, equipment, wiring and
requirements of Landlord and of the utility company supplying electricity to the
Building. Tenant covenants and agrees that at all times its use of electricity
will not exceed the capacity of existing feeders to the Building or the risers
or wiring installations therein and Tenant shall not use any electrical
equipment which, in Landlord's sole reasonable judgment, will overload such
installations or interfere with the use thereof by other tenants in the
Building. In the event that, in Landlord's reasonable judgment (considering the
needs and consumption of power by other tenants or anticipated tenants in the
Building), Tenant's electrical requirements above those needed for normal office
use necessitate installation of an additional riser, risers or other proper and
necessary equipment or services, including additional ventilating or air
conditioning, the same shall be provided or installed by Landlord at Tenant's
sole expense, provided Tenant's proposed installations shall be reasonably
accommodated in the Building and shall not be detrimental, in Landlord's sole
judgment, to the proper and economic functioning of the Building or the use and
enjoyment by other tenants therein. Any such installations shall be paid for by
Tenant prior to Landlord's commencement of the work therefor, such charges shall
be chargeable and collectible as additional rent. In all electrical
installations, rigid conduits only will be allowed.
If either the quantity or character of the electrical service is
changed by the utility company supplying electrical service to the Building or
is no longer available or suitable for Tenant's requirements, no such change,
unavailability or unsuitability shall constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any abatement or diminution
of Fixed Rental or Additional Rental, or relieve Tenant from any of its
obligations under this Lease or impose any liability upon Landlord, or its
agents, by reason of inconvenience or annoyance to Tenant, or injury to or
interruption of Tenant's business, or otherwise, unless such change,
unavailability or unsuitability is due to Landlord's negligence or wrongful act,
or if, as a direct result of such change, the electrical service to the Premises
is permanently decreased below 750 amperes at 480 volts.
57.2 Electricity shall be furnished by Landlord to Tenant on a
"submetering" basis, as follows:
57.2.1 If not already installed, Landlord shall, at its sole
cost and expense, install a meter or meters for the purpose of measuring the
electric current consumed in the Premises; and
With respect to the Premises and/or any portion(s) thereof that
constitute less than a full floor of the Building, Landlord may, at its option,
either:
57.2.2 Install a meter to measure the amount of Usage
(hereinafter defined) with respect solely to the Premises and/or to such
portion(s); or
57.2.3 Measure the amount of Usage with respect thereto through
common meter(s).
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Landlord shall, from time to time, furnish Tenant with a
statement indicating the appropriate period during which the Usage was measured
and the amount of Tenant's Cost payable by Tenant to Landlord for furnishing
electrical current. Within five (5) days after receipt of each such statement,
Tenant shall pay to Landlord as Additional Rental hereunder, the amount of
Tenant's Cost as set forth thereon, plus an amount equal to the out-of-pocket
costs and expenses incurred by Landlord in connection with reading such meters
and preparing bills therefor, failing which Landlord may, upon ten (10) days'
written notice to Tenant, discontinue the service of electric current to the
Premises without releasing Tenant from any liability under this Lease and
without Landlord or Landlord's agent incurring any liability to Tenant from any
damage or loss sustained by Tenant by reason of such discontinuance of service.
For the purposes of this subsection, "Usage" shall mean the
number of kilowatt hours of electric current consumed in the Premises, as
measured by a meter or meters through which the electric current supplied to the
Premises is drawn, for each calendar month or such other period as Landlord
shall determine during the term of this Lease.
"Rate" shall mean the amount per kilowatt hour that would be
charged, at the time in question, by the public utility company supplying
electric current to the Building, at the rate schedule payable by Landlord from
time to time, including, without limitation, all applicable surcharges, demand
charges, time-of-day charges, energy charges, fuel adjustment charges, rate
adjustment charges, taxes, and other sums payable in respect thereof, as if the
Usage were the total current being purchased.
"Tenant's Cost" shall mean an amount equal to the product of (i)
the Rate, multiplied by (ii) the Usage, multiplied by (iii) 105%. If any tax is
imposed upon Landlord's receipt from the sale or resale of electrical energy or
gas or telephone service to Tenant by any Federal, State or Municipal Authority,
Tenant covenants and agrees that, where permitted by law, Tenant's pro-rata
share of such taxes shall be passed on to, and in included in the bill of, and
paid by, Tenant to Landlord.
57.3 Landlord reserves the right to terminate the furnishing of
electricity on a submetering basis upon ninety (90) days' written notice to
Tenant, in which event, Tenant shall not be released from any liability under
this Lease and Tenant may make application directly to the public utility for
the Tenant's entire separate supply of electric current and Landlord shall
permit its wire and conduits, to the extent available and safely compatible, to
be used for such purpose. Any meters, risers or other equipment or connections
necessary to enable Tenant to obtain electric current directly from such
utility, shall be installed at Tenant's sole cost and expense. Rigid conduits
only will be allowed. Landlord, upon the expiration of the aforementioned ninety
(90) days' written notice to Tenant, may discontinue furnishing the electric
current, but this Lease shall otherwise remain in full force and effect on all
of its terms.
57.4 Any meter(s) installed by Landlord pursuant to this Article
shall be maintained and repaired by Tenant at Tenant's sole cost and expense.
57.5 The provisions of this Article 57 shall be subject to the
provisions of Article 88 below.
58. BROKER
Landlord and Tenant represent and warrant to each other that neither
Landlord nor Tenant consulted nor negotiated with any broker or finder with
regard to the rental of the Premises from Landlord, other than Dean Topping &
Company and S.L. Realty Corp., whose commissions shall be paid by Landlord
pursuant to Landlord's separate agreement with said brokers. Landlord and Tenant
agree to indemnify and hold each other harmless from any damages, costs and
expenses (including reasonable attorneys' fees incurred in defending an action
or claim or enforcing this indemnity) suffered by Landlord or Tenant by reason
of any claim or action for a commission by any other person, partnership or
corporation arising out of the inaccuracy of the foregoing representation. The
provisions of this Article shall survive the expiration or earlier termination
of this Lease.
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59. BINDING EFFECT
It is specifically understood and agreed that this Lease is offered to
Tenant for signature by the managing agent of the Building solely in its
capacity as such agent and subject to Landlord's acceptance and approval, and
that Tenant shall have affixed its signature hereto with the understanding that
such act shall not, in any way, bind Landlord or its agent until such time as
this Lease shall have been executed by Landlord and delivered to Tenant.
60. LATE FEE
In the event that any payment to be made by Tenant hereunder shall
become overdue for a period in excess of five (5) days, a "late charge" equal to
Five Percent (5%) of the overdue payment may be charged by Landlord and shall be
payable by Tenant as Additional Rental on the 1st day of the month following
Landlord's demand therefor.
61. SECURITY
61.1 It is agreed that in the event Tenant defaults under the terms
of this Lease beyond the expiration of all grace and notice periods, Landlord
may (but shall not be required to) use or apply such part of the security so
deposited for any sum Landlord may expend by reason of Tenant's default, or for
the payment of any past-due rental. In the event Landlord shall apply all or any
portion of Tenant's security in accordance with this lease, Tenant shall
promptly deposit with Landlord an amount sufficient to restore such security to
the amount set forth in Article 34. If Landlord retains or applies all or a
portion of Tenant's security deposit as a result of Tenant's default in the
payment of Fixed Rental or Additional Rental and Tenant fails to restore the
same as aforesaid, Tenant's failure to restore such security deposit shall be
deemed to be a default in the payment of Additional Rental, for default in the
payment of which Landlord shall have the same remedies as for a default in the
payment of Fixed Rental.
61.2 In the event of a sale or lease of the Building, Landlord shall
have the right to transfer the security to the purchaser, and, to the extent
such funds (or letter of credit, if applicable) are or is actually transferred
by Landlord, Landlord shall thereupon be released by Tenant from all liability
for the return of such security.
61.3 Tenant agrees that it shall not assign or encumber the funds
deposited as security hereunder.
62. HOLDOVER
Tenant expressly waives, for itself and for any person claiming through
or under Tenant, any rights which Tenant or any such person may have under the
provisions of Section 2201 of the New York Civil Practice Law and Rules and of
any similar or successor law of same import then in force, in connection with
any holdover proceedings which Landlord may institute to enforce the provisions
of this Lease. In the event Tenant remains in possession of the Premises after
the termination of this Lease, without the execution of a new lease, Tenant, at
the option of Landlord, shall be deemed to be occupying the Premises as a tenant
from month to month, at a monthly rental equal to 150% of the Fixed Rental and
Additional Rental payable during the last month of the term, subject to all of
the other terms of this Lease insofar as the same are applicable to a
month-to-month tenancy. Tenant's obligations under this Paragraph shall survive
the termination of this Lease.
63. APPLICABLE LAW
This Lease shall be governed in all respects by the laws of the State of
New York. Tenant hereby specifically consents to jurisdiction in the State of
New York in any action or proceeding arising out of this Lease and/or the use
and occupation of the Premises and waives any right to trial by jury and the
right to interpose any non-mandatory counterclaim in any summary proceeding
commenced by Landlord. If Tenant at any time after date of execution hereof or
during the term hereof shall not be a New York partnership or a New York
corporation or a foreign corporation qualified to do business in New York State,
Tenant shall designate in writing an agent in New York County for service under
the laws of the State of New York for the entry of a personal judgment
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against Tenant. Tenant, by notice to Landlord, shall have the right to change
such agent, provided that at all times there shall be an agent in New York
County for service. In the event of any revocation by Tenant of such agency,
such revocation shall be void and have no force and effect unless and until a
new agent has been designated for service and Landlord notified to such effect.
If any such agency designation shall require a filing in the office of the Clerk
of the County of New York, same shall be promptly accomplished by Tenant, at its
expense, and a certified copy transmitted to Landlord.
64. HAZARDOUS MATERIALS
64.1 Except in accordance with applicable environmental laws, Tenant
shall not cause or permit any Hazardous Materials (hereinafter defined) to be
used, stored, transported, released, handled, produced or installed in, on or
from the Premises or the Building. "Hazardous Materials," as used herein, shall
mean any flammables, explosives, radioactive materials, hazardous wastes,
hazardous and toxic substances or related materials, asbestos or any material
containing asbestos, or any other substance or material defined as a hazardous
waste or substance by any federal, state or local environmental law, ordinance,
rule or regulation, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended, and in the regulations adopted and publications
promulgated pursuant to each of the foregoing.
64.2 Landlord agrees to hold Tenant harmless from and against any
costs or damages resulting from the presence or release of Hazardous Materials
in or about the Building or the Land, provided such release is not caused by
Tenant, its employees or agents. Notwithstanding anything to the contrary
contained herein, Tenant shall have no obligation to indemnify, defend, or hold
Landlord harmless for claims originating from the presence of Hazardous
Materials which are not placed on or released in the Premises or in the Building
or the Land by Tenant.
65. NOTICES
Any notice or demand which, under the terms of this Lease or under any
statute, must or may be given or made by the parties hereto, shall be in
writing, and shall be given or made by mailing the same by certified mail,
return receipt requested, or by personal delivery, or by nationally recognized
overnight delivery service, addressed to the parties at their respective
addresses hereinabove mentioned, with a copy of any notice to Landlord to be
delivered simultaneously in the same manner to Landlord's attorneys, Greenstein
Starr Gerstein & Rinaldi LLP, 57 West 38th Street, New York, New York 10018,
Attention: Victor Gerstein, Esq., and with a copy of any notice to Tenant to be
delivered simultaneously in the same manner to Tenant's attorneys, Shefsky &
Froelich, Ltd., 444 North Michigan Avenue, Suite 2500, Chicago, Illinois 60611,
Attention: Paul Kelley, Esq. Either party, however, may designate in writing
such new or other address to which such notice or demand shall thereafter be so
given, made or mailed. Any notice given hereunder shall be deemed delivered on
the third (3rd) day after the notice is deposited in a United States General
branch post office, maintained by the United States Government in the City of
New York, enclosed in a certified, prepaid wrapper addressed as hereinbefore
provided, or, if sent by hand, on the date the same is actually delivered, or if
sent by nationally recognized overnight delivery service, the next business day.
66. ADDENDUM TO ARTICLE 16 - BANKRUPTCY
66.1 If Tenant assumes this Lease and proposes to assign the same
pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. 101 et seq. (the
"Bankruptcy Code") to any person or entity who shall have made a bona fide offer
to accept an assignment of this Lease on terms acceptable to Tenant, then notice
of such proposed assignment, setting forth (i) the name and address of such
person, (ii) all of the terms and conditions of such offer, and (iii) the
adequate assurance to be provided Landlord to assure such person's future
performance under the Lease, including, without limitation, the assurance
referred to in Section 365(b)(3) of the Bankruptcy Code, shall be given to
Landlord by Tenant not later than twenty (20) days after receipt by Tenant, but
in no event later than ten (10) days prior to the date that Tenant shall make
application to a court of competent jurisdiction for authority and approval to
enter into such assignment and assumption, and Landlord shall
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thereupon have the prior right and option, to be exercised by notice to Tenant
given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this Lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage commissions which may be paid by such person for the assignment of
this Lease.
66.2 Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease on and
after the date of such assignment. Any such assignee shall, upon demand, execute
and deliver to Landlord an instrument confirming such assumption.
66.3 Nothing contained in this Article shall, in any way, constitute
a waiver of the provisions of this Lease relating to assignment. Tenant shall
not, by virtue of this Article, have any further rights relating to assignment
other than those granted in the Bankruptcy Code.
66.4 Notwithstanding anything in this Lease to the contrary, all
amounts payable by Tenant to or on behalf of Landlord under this Lease, whether
or not expressly denominated as rent, shall constitute rent for the purposes of
Section 502(b)(7) of the Bankruptcy Code.
66.5 The term "Tenant," as used in this Article, includes any
trustee, debtor in possession, receiver, custodian or other similar officer.
67. RENT CONTROL
In the event the Fixed Rental or Additional Rental or any part thereof
provided to be paid by Tenant under the provisions of this Lease during the
demised term shall become uncollectible or shall be reduced or required to be
reduced or refunded by virtue of any federal, state, county or city law, order
or regulation, or by any direction of a public officer or body pursuant to law,
or the orders, rules, code or regulations of any organization or entity formed
pursuant to law, whether such organization or entity be public or private, then
Landlord, at its option, may at any time thereafter terminate this Lease by not
less than thirty (30) days' written notice to Tenant, on a date set forth in
said notice, in which event this Lease and the term hereof shall terminate and
come to an end on the date fixed in said notice as if the said date were the
Expiration Date. Landlord shall not have the right to so terminate this Lease if
Tenant, within such period of thirty (30) days, shall, in writing, lawfully
agree that the rentals herein reserved are a reasonable rental and agrees to
continue to pay said rentals, and if such agreement by Tenant shall then be
legally enforceable by Landlord.
68. REPAIRS
68.1 Notwithstanding anything contained in Articles 3, 4, 6 or
elsewhere in this Lease, all repairs and other work which Tenant is required to
perform under any provision of this Lease may be performed by Landlord at
Tenant's cost, provided, however, that Tenant shall have fifteen (15) days'
notice prior to Landlord's undertaking of any non-emergency repair which
Landlord intends to undertake. Tenant shall be permitted to perform such
non-emergency repair if it diligently pursues the undertaking thereof within
such fifteen (15) day period. Tenant shall pay the cost of such repairs and
other work, as Additional Rental, within five (5) days after rendition of a
statement therefor by Landlord.
68.2 In addition to Tenant's obligations under Article 4, Tenant, at
its sole cost and expense, shall take good care of the Premises and all
improvements, and air conditioning and heating equipment, building systems used
by Tenant within the Premises, fire and safety systems within the Premises, and
personal property located therein or throughout the Building, including, without
limitation, all furniture, fixtures, machinery, equipment and all other personal
property and stock purchased by Tenant or used in connection with the operation
of its business at the Premises (all of the foregoing being hereinafter
collectively referred to as "Tenant's Property"), and Tenant shall make all
necessary repairs to the Premises and/or Tenant's Property in accordance with
the provisions contained herein, whether ordinary, extraordinary, foreseen, or
unforeseen, provided; however, that Tenant shall not be obligated to make any
repairs to the extent that the same is necessitated by the negligent acts or
omissions of Landlord, its agents, employees or contractors. Nevertheless, any
damage to the Building (including, without limitation, the Premises and the
roof),
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interior and exterior, arising from or caused by the negligence or omissions of
Tenant (or its agents, servants, employees, invitees or contractors) shall be
the liability of Tenant, subject to the waiver of subrogation and insurance
provisions set forth in this Lease.
68.3 When used in this Article, the term "repairs" shall include
replacements and substitutions of all property when necessary, of a quality,
class and value at least equal to the property replaced or substituted.
68.4 Anything contained in this Lease to the contrary
notwithstanding, Tenant acknowledges that it shall be Tenant's responsibility to
clean, maintain and repair (subject to applicable legal requirements, including
the requirements of the New York City Landmarks Preservation Commission) the
windows and window frames in the Premises and any and all interior bathrooms
within the Premises at Tenant's sole cost and expense.
68.5 Nothing contained herein shall obligate Tenant to make any
structural repairs to the Premises except if caused by or resulting from the
carelessness, omission, neglect or improper conduct of Tenant, Tenant's
employees, contractors, invitees or licensees, subject to the waiver of
subrogation and insurance provisions set forth in this Lease. Tenant
acknowledges that it shall be Tenant's responsibility to repair any leaks in the
bathrooms or emanating through the windows in the Premises. The obligation to
repair any other leaks in the pipes servicing the Premises shall be that of
Landlord, except if the same are caused by or resulting from the carelessness,
omission, neglect or improper conduct of Tenant, Tenant's employees,
contractors, invitees or licensees.
69. CONDITIONAL LIMITATION
If Tenant shall default in the payment of the rent reserved herein, or
any items of Additional Rental herein mentioned, or any part of either, during
any two (2) months, whether or not consecutive, in any twelve (12) month period,
and Landlord served upon Tenant petitions and notices of petition to dispossess
Tenant by summary proceedings in each such instance, then, notwithstanding that
such defaults may have been cured prior to the entry of a judgment against
Tenant, any further default in the payment of any moneys due Landlord hereunder
which shall continue for more than ten (10) days shall be deemed to be
deliberate, and Landlord may thereafter serve a written five (5) days' notice of
cancellation of this Lease, and the term hereunder shall end and expire as fully
and completely as if the expiration of such five (5) day period were the day
herein definitely fixed for the end and expiration of this Lease and the term
thereof, and Tenant shall then quit and surrender the Premises to Landlord, but
Tenant shall remain liable as elsewhere provided in this Lease.
70. LANDLORD'S SERVICES
70.1 Landlord shall furnish Tenant with the following services:
70.1.1 Non-exclusive passenger elevator service during regular
hours (that is, between the hours of 8:00 a.m. and 6:00 p.m.) of business days
(which term is used to mean all days except Saturdays, Sundays, those days that
are observed by the State or Federal governments as legal holidays, and those
days designated as holidays by the applicable building service union employees'
contract) through the year ("Regular Hours"). At all other times, Landlord shall
have one elevator subject to call.
70.1.2 Non-exclusive freight elevator service during Regular
Hours (that is, between the hours of 8:00 a.m. and 6:00 p.m.) of business days
(which term is used to mean all days except Saturdays, Sundays, those days that
are observed by the State or Federal governments as legal holidays, and those
days designated as holidays by the applicable building service union employees'
contract) through the year ("Regular Hours"). Use of the freight elevator during
hours other than Regular Hours shall be arranged by Tenant on not less than
twenty-four (24) hours prior notice and shall be provided by Landlord to the
extent that no conflict exists with other tenants or other parties requesting
such usage (all such conflicts to be resolved by Landlord, in Landlord's sole
discretion) and Tenant shall reimburse Landlord for all costs relating thereto.
If Tenant's initial occupancy or relocation into or out of the Building requires
the use of the freight elevator or other standard
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services at times other than Regular Hours, Tenant shall reimburse Landlord for
all costs relating to such elevator usage or other services.
70.2 All waste and garbage shall be removed from the Premises to the
outside of the Building, at Tenant's sole cost and expense, on a daily basis, by
a private sanitation company independently contracted for and paid for by
Tenant. Tenant shall not store any garbage, cartons or inventory outside of the
Premises. Tenant covenants and agrees, at its sole cost and expense, to comply
with all present and future laws, orders and regulations of all state, federal,
municipal and local governmental, departments, commissions and boards regarding
the collection, sorting, separation and recycling of waste products, garbage,
refuse and trash. Tenant shall sort and separate such waste products, garbage,
refuse and trash into such categories as provided by law.
70.3 Landlord reserves the right, without any liability to Tenant
(except as otherwise expressly provided in this Lease), to stop operating any of
the heating, ventilating, electric, sanitary, elevator, or other Building
systems serving the Premises, and to stop the rendition of any of the other
services required of Landlord under this Lease, whenever and for so long as may
be necessary by reason of accidents, emergencies, strikes, or the making of
repairs or changes that Landlord is required by this Lease or by law to make or
in good faith deems necessary, by reason of difficulty in securing proper
supplies of fuel, steam, water, electricity, labor, or supplies, or by reason of
any other cause beyond Landlord's reasonable control.
70.4 Notwithstanding anything to the contrary contained in this
Lease, Landlord agrees that if during the term hereof, Tenant shall be
materially interrupted in its ability to conduct its business in all or any
portion (other than a DE MINIMUS portion) of the Premises in a manner
substantially comparable to the manner in which Tenant conducted such business
therein immediately preceding such interruption (an "Interruption") as a
consequence of Landlord's failure to provide services or perform its obligations
under this Lease, and provided (x) Tenant entirely ceases operating its business
in the Premises (provided that Tenant shall not be required to vacate the
Premises or the applicable portion thereof); and (y) none of the conditions
resulting in Tenant so being able to conduct its business in the Premises is due
to the improper, negligent or willful acts of, or breach of this Lease by,
Tenant or any other persons occupying any portion of the Premises by, through or
under Tenant, or any of its employees, servants, agents, contractors or
invitees, then, if the Interruption shall continue for eight (8) or more
consecutive business days (or, if the Interruption is a result of (i) causes
beyond Landlord's reasonable control, thirteen (13) or more consecutive business
days, or (ii) the construction or making of a Building addition or improvement
by Landlord, three (3) or more consecutive business days), Tenant may elect, on
notice to Landlord sent no later than ten (10) days following the expiration of
the aforesaid eight (8), thirteen (13) or three (3) consecutive day period, as
the case may be, time being of the essence with respect to the sending of said
notice of election, that the Fixed Rental and Additional Rental, payable by
Tenant hereunder, shall fully abate, from the business day immediately following
the expiration of such eight (8), thirteen (13) or three (3) business day
period, as the case may be, to the day which is the first to occur of (A) the
cessation of the Interruption, or (B) when Tenant shall be able to resume the
operation of its business in the Premises. Tenant's right to make such an
election with respect to the subject Interruption shall not constitute a waiver
of any other right or remedy available to Tenant under this Lease. The foregoing
provisions shall not apply in the event the Premises are damaged in whole or in
part as a result of fire or other casualty and in such event the provisions of
Article 9 of this Lease shall govern.
71. TENANT'S ALTERATIONS
71.1 Tenant may, without the consent of Landlord, from time to time
during the term of this lease and at Tenant's sole expense, make such
alterations, additions, installations, substitutions, improvements and
decorations (hereinafter collectively called changes and, as applied to changes
provided for in this Article, Tenant's Changes) in and to the Premises, the
estimated cost of which does not exceed $20,000.00 as Tenant may reasonably
consider necessary for the conduct of its business therein, on the following
conditions:
71.1.1 the outside appearance or strength of the Building, or
of any of its structural parts, shall not be affected;
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71.1.2 no part of the Building outside of the Premises shall be
physically affected;
71.1.3 the proper functioning of any of the mechanical,
electrical, sanitary and other service systems of the Building and/or the
Premises shall not be adversely affected, and the usage of such systems by
Tenant shall not be increased;
71.1.4 before proceeding with any change either costing in
excess of $20,000.00 (exclusive of the costs of decorating work and of any
architect's and engineer's fees), or involving any change to the mechanical,
electrical, sanitary, Building HVAC and/or other service systems, irrespective
of cost, Tenant shall submit to Landlord, for Landlord's prior approval, plans
and specifications for the work to be done, drawn by a registered architect or
duly licensed engineer. Without limiting the generality of the foregoing, Tenant
shall cause to be prepared all drawings, plans and specifications, and all other
reports, applications and materials, required by the Department of Buildings of
the City of New York, the Department of Labor and any other governmental
authorities having jurisdiction with respect to Tenant's Changes and any permits
and special licenses which may be required for or in connection with Tenant's
Changes or the permitted use. Any and all filings of such drawings, plans,
specifications, reports, applications and other materials with the Department of
Buildings of the City of New York, the Department of Labor and any other
governmental authorities having jurisdiction shall be made solely by Tenant at
Tenant's sole cost and expense. Landlord shall reasonably cooperate with Tenant
in connection with the execution and delivery of documents necessary to obtain
work permits. Nothing herein shall be deemed to, or operate to create any
liability or other obligation on the part of Landlord in the event that any such
filings shall not be approved by the Department of Buildings of the City of New
York or any other governmental authority having jurisdiction, unless caused by
Landlord's failure to reasonably cooperate with Tenant's requests. Landlord may,
as a condition of its consent, require Tenant to reimburse Landlord for
Landlord's out-of-pocket cost for an independent architect or engineer to review
the plans and specifications and make revisions in and to the plans and
specifications.
71.2 Tenant shall, at its expense, obtain all necessary governmental
licenses, permits and certificates for the commencement and prosecution of
Tenant's Changes, and, upon completion, obtain all necessary signoffs and
certificates of acceptance and completion which may be required from such
governmental authorities, and Tenant shall cause Tenant's Changes to be
performed in compliance with such licenses, permits and certificates, as well as
with all applicable laws, codes, ordinances, regulations and requirements of
public authorities (including, without limitation, the New York City Landmarks
Commissions [the "Landmarks Commission"]) and all applicable standards and
requirements of insurance bodies, the New York Board of Fire Underwriters, the
National Electric Code, the Occupational Safety and Health Administration, the
American Society of Heating, Refrigeration and Air Conditioning Engineers,
I.S.O., and any similar or successor bodies thereto, in a good and workmanlike
manner, using new materials and equipment of a quality and class at least equal
to the original installations in the Premises. Tenant's Changes shall be
performed during the hours of 9:00 a.m. to 5:00 p.m. on days other than
Saturdays, Sundays and holidays in such a manner as not to unreasonably
interfere with or delay, and (unless Tenant shall indemnify Landlord therefor to
the latter's reasonable satisfaction) so as not to impose any additional expense
upon Landlord in the maintenance or operation of the Premises, and so as not to
interfere with the safety, use, occupancy, comfort or quiet enjoyment of any
other tenant or occupant of the Building. If Landlord incurs any costs or
expenses in connection with the performance of Tenant's Changes, other than
those set forth in the previous sentence, Tenant shall reimburse Landlord for
the actual costs and expenses incurred by Landlord. Throughout the performance
of Tenant's Changes, Tenant shall, at its expense, carry, or cause to be
carried, builder's risk insurance, insuring against loss from fire, vandalism or
other risks as are customarily covered by a broad-form extended coverage
endorsement on a completed value basis for the full insurable value at all
times, workers' compensation insurance in statutory limits, and general
liability insurance for any occurrence in or about the Building, all as set
forth in, and written by insurance companies described in, Article 56 hereof.
All such insurance policies (other than the workers' compensation) shall name
Landlord and its agents as additional parties insured, and shall be in such
limits as Landlord may reasonably prescribe and be placed with insurers
satisfactory to Landlord. Tenant shall furnish Landlord with satisfactory
evidence that such insurance is in effect at or before the commencement of
Tenant's Changes and, on request, at reasonable intervals thereafter during the
continuance of Tenant's Changes. Tenant shall not cause damage to the Building,
building systems or any personal property
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of Landlord or any other tenant or occupant of the Building, and in the event of
any such damage will promptly repair any such damage to Landlord's satisfaction.
If any of Tenant's Changes shall involve the removal of any fixtures, equipment,
or other property in the Premises that are not Tenant's property, such fixtures,
equipment, or other property shall be, upon Landlord's request, stored and
preserved, and returned to Landlord upon the expiration or sooner termination of
this lease. All electrical and plumbing work in connection with Tenant's Changes
shall be performed by contractors or subcontractors licensed therefor by all
governmental agencies having or asserting jurisdiction and satisfactory to
Landlord.
71.3 For the purposes of this Article 71 and Article 48 above, Tenant
shall select and use general contractors and subcontractors, and electrical
engineers and plumbers, from a list of those pre-approved by Landlord. In the
event Tenant desires to use a general contractor or subcontractor, or electrical
engineer or plumber, not on Landlord's list, Tenant shall (a) obtain Landlord's
prior written consent, and (b) pay to Landlord, as Additional Rental, a
supervisory/administrative fee in an amount equal to Five Percent (5%) of the
"hard" costs of the construction.
71.4 Tenant, at its sole cost and expense, shall: (i) furnish
evidence satisfactory to Landlord that all of Tenant's Changes have been
completed and paid for in full and that any and all liens therefor that have
been or might be filed have been discharged of record (by payment, bond, order
of a court of competent jurisdiction, or otherwise) or waived, and that no
security interests relating thereto are outstanding; (ii) pay Landlord for the
cost of any Tenant's Changes done for Tenant by Landlord, and all other charges
due hereunder; (iii) to the extent not previously provided, furnish to Landlord
the insurance and certificates required by this Lease; and (iv) if an architect
has been used, furnish an affidavit in the form recommended by the American
Institute of Architects from Tenant's registered architect certifying that all
work performed in the Premises is substantially in accordance with the plans and
specifications.
71.5 Tenant shall, at its expense and with diligence and dispatch,
procure the cancellation or discharge of all notices of violation arising from,
or otherwise connected with, Tenant's Changes that shall be issued by the
Department of Buildings of the City of New York, the Landmarks Commission, or
any other public or quasi-public authority having or asserting jurisdiction.
Tenant shall defend, indemnify and save Landlord harmless from and against any
and all notices of violation and mechanic's and other liens filed in connection
with Tenant's Changes, including the liens of any security interest in,
conditional sales of, or chattel mortgages upon, any materials, fixtures, or
articles so installed in and constituting part of the Premises, and against all
costs, expenses and liabilities incurred in connection with any such lien,
security interest, conditional sale, or chattel mortgage or any action or
proceeding brought thereon. Tenant, at its expense, shall procure the
satisfaction or discharge of, by bonding, payment or otherwise, all such liens
within thirty (30) days after Landlord makes written demand therefor. Notice is
hereby given that neither Landlord, Landlord's agents, nor any mortgagee shall
be liable for any labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's or other lien for such labor or materials shall
attach to or affect any estate or interest of Landlord, or any mortgagee in and
to the Premises or the Building.
71.6 Tenant agrees that the exercise of its rights pursuant to the
provisions of this Article shall not be done in a manner that would, in the
reasonable judgment of Landlord: (a) create any work stoppage, picketing, labor
disruption, or dispute; or (b) violate the Building's union contracts affecting
the Land and/or Building or Landlord's union and/or service contracts, if any,
affecting the Premises. In the event of the occurrence of any condition
described above arising from Tenant's exercise of any of its rights pursuant to
the provisions of subparagraph 71.7, Tenant shall, immediately upon notice from
Landlord, cease the manner of exercise of such right giving rise to such
condition. In the event that Tenant fails to cease such manner of exercise of
its rights as aforesaid, Landlord, in addition to any rights available to it
under this lease and pursuant to law, shall have the right to seek an
injunction.
71.7 Any approval or consent by Landlord shall in no way obligate
Landlord in any manner whatsoever in respect to the finished product designed
and/or constructed by Tenant, nor be deemed a representation of warranty of
Landlord as to the adequacy or sufficiency of any matter approved or consented
to for Tenant's purposes or otherwise. Any deficiency in design or construction,
although approved by Landlord, shall be solely the responsibility of Tenant.
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71.8 Landlord shall have the right to inspect Tenant's Work at any
time to verify compliance by Tenant with the provisions of this Article.
72. SUBORDINATION AND ATTORNMENT
72.1 This Lease and all rights of Tenant hereunder are, and shall be,
subject and subordinate to: (i) all present and future ground leases, operating
leases, superior leases, underlying leases and grants of term of the land on
which the Building stands ("Land") and the Building or any portion thereof
(collectively, including the applicable items set forth in subparagraph 72.3
below, the "Superior Lease"); (ii) all mortgages and building loan agreements,
including leasehold mortgages and spreader and consolidation agreements, which
may now or hereafter affect the Land, the Building or the Superior Lease
(collectively, including the applicable items set forth in subparagraphs 72.3
and 72.4 below, the "Superior Mortgage") whether or not the Superior Mortgage
shall also cover other lands or buildings or leases, except that a mortgage on
the Land only shall not be a Superior Mortgage so long as there is in effect a
Superior Lease which is not subordinate to such mortgage; (iii) each advance
made or to be made under the Superior Mortgage; and (iv) all amendments,
modifications, supplements, renewals, substitutions, refinancings and extensions
of the Superior Lease and the Superior Mortgage and all spreaders and
consolidations of the Superior Mortgage. The provisions of this Article shall be
self-operative and no further instrument of subordination shall be required.
Tenant shall promptly execute and deliver, at its own expense, any instrument,
in recordable form, if requested, that Landlord, the Superior Lessor or the
Superior Mortgagee may reasonably request at any time and from time to time to
evidence such subordination; and if Tenant fails to execute, acknowledge or
deliver any such instrument within fifteen (15) business days after request
therefor, Tenant hereby irrevocably constitutes and appoints Landlord as
Tenant's attorney-in-fact, coupled with an interest, for the limited purpose of
executing, acknowledging and delivering any such instruments for, and on behalf
of, Tenant. The Superior Mortgagee may elect that this Lease shall be deemed to
have priority over such Superior Mortgage, whether this Lease is dated prior to,
or subsequent to, the date of such Superior Mortgage. If, in connection with
obtaining, continuing or renewing of financing for which the Building, Land or
the interest of the lessee under the Superior Lease represents collateral, in
whole or in part, the Superior Mortgagee shall request reasonable modifications
of this Lease as a condition of such financing, Tenant will not unreasonably
withhold its consent thereto, provided that such modifications do not materially
and adversely increase the obligations of Tenant hereunder, diminish the rights
of Tenant hereunder, or cause a change in Tenant's financial obligations
hereunder.
72.2 Landlord hereby notifies Tenant that this Lease may not be
cancelled or surrendered, or modified or amended so as to reduce the Rentals,
shorten the term or adversely affect in any other respect, to any material
extent, the rights of Landlord hereunder, and that Landlord may not accept
prepayments of any installments of Fixed Rental or Additional Rental except for
prepayments in the nature of security for the performance of Tenant's
obligations hereunder without the consent of any Superior Lessor or Superior
Mortgagee in each instance, except that said consent shall not be required for
the prosecution of any action or proceedings against Tenant by reason of a
default on the part of Tenant under the terms of this Lease.
72.3 If, at any time prior to the termination of this Lease, any
Superior Lessor or Superior Mortgagee or any other person or the successors or
assigns of the foregoing (collectively referred to as "Successor Landlord")
shall succeed to the rights of Landlord under this Lease, Tenant agrees, at the
election and upon request of any such Successor Landlord, to fully and
completely attorn to and recognize any such Successor Landlord, as Tenant's
Landlord under this Lease upon the then executory terms of this Lease, provided
such Successor Landlord shall agree in writing to accept Tenant's attornment.
The foregoing provisions of this subparagraph shall inure to the benefit of any
such Successor Landlord, shall apply notwithstanding that, as a matter of law,
this Lease may terminate upon the termination of the Superior Lease, shall be
self-operative upon any such demand, and no further instrument shall be required
to give effect to said provisions. Upon the request of any such Successor
Landlord, Tenant shall execute and deliver, from time to time, instruments
satisfactory to any such Successor Landlord in recordable form, if requested, to
evidence and confirm the foregoing provisions of this subparagraph,
acknowledging such attornment and setting forth the terms and conditions of its
tenancy. Tenant hereby constitutes and appoints Landlord attorney-in-fact for
Tenant for the limited purpose of executing any such instrument, for and on
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behalf of Tenant, such appointment being coupled with an interest. Upon such
attornment this Lease shall continue in full force and effect as a direct Lease
between such Successor Landlord and Tenant upon all of the then executory terms
of this Lease except that such Successor Landlord shall not be: (i) liable for
any previous act or omission or negligence of Landlord under this Lease; (ii)
subject to any counterclaim, defense or offset, not expressly provided for in
this Lease and asserted with reasonable promptness, which theretofore shall have
accrued to Tenant against Landlord; (iii) bound by any previous modification or
amendment of this Lease made after the granting of such senior interest, or by
any previous prepayment of more than one month's Fixed Rental or Additional
Rental, unless such modification or prepayment shall have been approved in
writing by any Superior Lessor or Superior Mortgagee through or by reason of
which the Successor Landlord shall have succeeded to the rights of Landlord
under this Lease; (iv) obligated to repair the Premises or the Building or any
part thereof, in the event of total or substantial damage beyond such repair as
can reasonably be completed with the net proceeds of insurance actually made
available to Successor Landlord, provided all insurance to be maintained by the
Landlord hereunder is thus maintained; or (v) obligated to repair the Premises
or the Building or any part thereof, in the event of partial condemnation beyond
such repair as can reasonably be completed with the net proceeds of any award
actually made available to Successor Landlord, or consequential damages
allocable to the part of the Premises or the Building not taken. Nothing
contained in this subparagraph shall be construed to impair any right otherwise
exercisable by any such Successor Landlord.
72.4 If any act or omission by Landlord would give Tenant the right,
immediately or after lapse of time, to cancel or terminate this Lease or to
claim a partial or total eviction, Tenant will not exercise any such right until
(i) it has given written notice of such act or omission to each Superior
Mortgagee and each Superior Lessor, whose name and address shall have previously
been furnished to Tenant, by delivering notice of such act of omission addressed
to each such party at its last address so furnished, and (ii) a ten (10) day
period for remedying such act or omission shall have elapsed following such
giving of notice and following the time when such Superior Mortgagee or Superior
Lessor shall have become entitled under such superior Lease or Superior
Mortgage, as the case may be, to remedy the same (which shall in no event be
less than the period to which Landlord would be entitled under this Lease to
effect such remedy) provided such Superior Mortgagee or Superior Lessor shall,
with reasonable diligence, give Tenant notice of its intention to remedy such
act or omission and shall commence and continue to act upon such intention.
72.5 Anything in this Article 72 to the contrary notwithstanding,
Landlord shall use its best efforts to obtain from the holder of any Superior
Lease an agreement in recordable form between the holder of the Superior Lease
and Tenant providing in substance that so long as Tenant shall not be in default
under this Lease beyond any period of time given to such Tenant to cure such
default, that the holder of such Superior Lease shall not name or join Tenant as
a party defendant or otherwise in any suit, proceeding (including any summary
proceeding) or action to enforce, nor will this Lease be terminated by
enforcement of any rights given to such holder of such Superior Lease or its
successors or assigns pursuant to the terms, covenants or conditions contained
in the Superior Lease or otherwise disturb the right of Tenant to the quiet
enjoyment of the Premises in the event of the termination of the Superior Lease;
except that to the extent required by law, Landlord may name Tenant in such
proceeding so long as the relief requested does not contravene the provisions of
this Section. Provided Landlord shall have used its best efforts to obtain such
agreement, Landlord shall have no liability to Tenant in the event the holder of
the Superior Lease shall fail or refuse to issue the agreement referred to in
this paragraph or if issued, shall fail to comply with the terms thereof. The
provisions of this Section shall be of no force or effect if the holder of the
Superior Lease shall elect to make this Lease superior to the Superior Lease.
Tenant shall join in any agreement issued by the holder of the Superior Lease to
evidence its agreement and consent thereto and to any other such terms as may be
reasonably required by the holder of the Superior Lease as a condition to its
issuance of such agreement, provided that any such agreement shall not increase
the obligations or reduce the rights of Tenant under this Lease.
72.6 Anything in this Article 72.2 of this Lease to the contrary
notwithstanding, Landlord shall use its best efforts to obtain from the holders
of the existing Superior Mortgages and the holder of any Superior Mortgage which
may be entered into by Landlord at any time after the Commencement Date, an
agreement or agreements in recordable form between the holder(s) of the Superior
Mortgage(s) and Tenant providing in substance that so long as Tenant shall not
be in
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default under this Lease beyond any period of time given to Tenant to cure such
default, that the holder of such Superior Mortgage shall not name or join Tenant
as a party defendant or otherwise in any suit, proceeding or action to enforce,
nor will this Lease be terminated by enforcement of any rights given to such
holder of the Superior Mortgage or its successors or assigns pursuant to the
terms, covenants or conditions contained in the Superior Mortgage (including the
foreclosure of the same) or otherwise disturb the right of Tenant to the quiet
enjoyment of the Premises in the event of the enforcement of the terms of the
Superior Mortgage by such holder (including the foreclosure of the same); except
that to the extent required by law, Tenant may be named in such proceeding so
long as the relief requested does not contravene the provisions of this Section.
Provided Landlord shall have used its best efforts to obtain such agreement,
Landlord shall have no liability to Tenant in the event the holder of a Superior
Mortgage shall fail or refuse to issue the agreement referred to in this
paragraph or shall fail to comply with the terms and provisions thereof. Tenant
shall join in any agreement issued by the holder of the Superior Mortgage to
evidence its agreement and consent thereto and to any other such terms as may be
reasonably required by the holder of the Superior Mortgage as a condition to its
issuance of such agreement, provided that any such agreement shall not increase
the obligations or reduce the rights of Tenant under this Lease.
72.7 In connection with Landlord's attempts to obtain one or more
non-disturbance agreement(s), Landlord shall in no event be required to (x) make
any payment to the holder of any Superior Mortgage or Superior Lease other than
reasonable attorneys' fees in connection with its review of this Lease and the
preparation of such agreements, or (y) alter any of the terms of any existing or
future Superior Lease or Superior Mortgage, or (z) commence any action or
proceeding against any holder of a Superior Mortgage or Superior Lease.
72.8 Tenant agrees to consent to such reasonable modifications of
this Lease as a holder of a Superior Mortgage or of a Superior Lease may request
as a condition to entering into such Superior Lease or granting any financing
contemplated under a Superior Mortgage, provided such modifications do not
substantially increase the obligations of Tenant or reduce or significantly and
adversely affect the rights of Tenant under this Lease and, in any event, so
long as the basic economic provisions of this Lease are not thereby altered in a
fashion adverse to Tenant, the area of the Premises reduced or relocated and the
term hereof materially altered.
73. MISCELLANEOUS
73.1 In the event of any action, suit or proceeding concerning the
negotiation, interpretation, validity, performance, enforcement or breach of
this Lease, the prevailing party in such action, suit or proceeding shall
recover all of such party's reasonable and actual attorneys' fees, expenses and
costs, not limited to costs of suit, incurred in each and every such action,
suit or other proceeding, including any and all appeals or petitions relating
thereto. The obligations of the parties under this Paragraph shall survive the
expiration of the term hereof or any other termination of this Lease. This
Paragraph is intended to supplement, and not to limit, other provisions of this
Lease pertaining to indemnities and/or attorneys' fees.
73.2 If any of the provisions of this Lease, or the application
thereof to any person or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
or provisions to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable, shall not be affected thereby, and every
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
73.3 No agreement to accept a surrender of all or any part of the
Premises shall be valid unless in writing and signed by Landlord. The delivery
of keys to an employee of Landlord or of its agent (other than the building
manager) shall not operate as a termination of this Lease or a surrender of the
Premises. If Tenant shall, at any time, request Landlord to sublet the Premises
for Tenant's account, Landlord or its agent is authorized to receive said keys
for such purposes without releasing Tenant from any of its obligations under
this Lease, and Tenant hereby releases Landlord from any liability for loss or
damage to any of Tenant's property in connection with such subletting.
73.4 The receipt by Landlord of rent with knowledge of breach of any
obligation of this Lease shall not be deemed a waiver of such breach.
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73.5 No payment by Tenant, or receipt by Landlord, of a lesser amount
than the correct Fixed Rental or Additional Rental due hereunder shall be deemed
to be other than a payment on account, nor shall any endorsement or statement on
any check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance or pursue any other remedy in this Lease or at law provided.
73.6 The terms "person" and "persons" as used in this Lease shall be
deemed to include natural persons, firms, corporations, associations and any
other private or public entities.
73.7 If Tenant is in arrears in the payment of Fixed Rental or
Additional Rental, Tenant waives its right, if any, to designate the items in
arrears against which any payments made by Tenant are to be credited, and
Landlord may apply any of such payments to any such items in arrears as
Landlord, in its sole discretion, shall determine, irrespective of any
designation or request by Tenant as to the items against which any such payments
shall be credited.
73.8 The terms "Owner" and "Landlord" as used in this Lease are
interchangeable. The terms "Article" and "Paragraph" as used in this Lease are
interchangeable.
73.9 If Tenant is a corporation, the person executing this Lease on
behalf of Tenant hereby covenants, represents and warrants that Tenant is duly
incorporated in the State of Delaware and, to the extent required by applicable
law, authorized to do business in New York State and that the person executing
this Lease on behalf of Tenant is an officer of the corporation authorized to
execute this Lease.
74. LEASE NOT BINDING UNLESS EXECUTED
Submission by Landlord of this Lease for execution by Tenant shall
confer no rights nor impose any obligations on either party unless and until (i)
Tenant shall have submitted to Landlord (a) at least four copies of this Lease
to Landlord, duly executed by or on behalf of Tenant (and in the case that
Tenant is a corporation, Tenant shall submit to Landlord a duly executed
resolution of Tenant's board of directors authorizing this Lease), (b) separate
checks payable to the direct order of Landlord on a bank account in Tenant's
name in the amount of the first monthly installment of Fixed Rental payable upon
the execution of this Lease and the security deposit, (c) a certificate of
insurance in form required in this Lease and (d) any other deliveries
specifically called for under this Lease to be submitted to Landlord on or prior
to the Commencement Date, and (ii) Landlord shall have countersigned this Lease
and duplicate originals thereof shall have been delivered by Landlord to Tenant.
In the event Landlord countersigns and delivers this Lease to Tenant at a time
when any of the aforementioned deliveries have not been received by Landlord or
are not in proper form, this Lease shall be effective, but Tenant shall remain
obligated to provide such deliveries, the same not being waived by Landlord,
unless Landlord specifically waives receipt of the same in writing.
75. SUBMISSION TO JURISDICTION
This Lease shall be deemed to have been made in New York County, City
and State of New York, and shall be construed in accordance with the laws of the
State of New York. All actions or proceedings relating, directly or indirectly,
to this Lease shall be litigated only in courts located within the County of New
York. Tenant, any guarantor of the performance of its obligations hereunder, and
their successors and assigns, hereby subject themselves to the jurisdiction of
any state or federal court located within such county, waive personal service of
any process upon them in any action or proceeding therein, and consent that such
process be served by certified or registered mail, return receipt requested,
directed to the Tenant and any successor at Tenant's address hereinabove set
forth, or to Guarantor and any successor at the address set forth in the
instrument of guaranty and to any assignee at the address set forth in the
instrument of assignment. Such service shall be deemed made five (5) days after
such process is so mailed.
76. QUALIFICATIONS AS TO USE
Tenant shall not suffer or permit the Premises or any part thereof to be
used in any manner or anything to be done therein, or suffer or permit anything
to be brought into or kept therein, which would in any way, (i) violate any of
the provisions of any Superior Mortgage or Superior Lease of
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which Tenant has prior notice, or the requirements of public authorities, (ii)
make void or voidable any fire or liability insurance policy then in force with
respect to the Building; (iii) make unobtainable from reputable insurance
companies authorized to do business in the State of New York any fire insurance
with extended coverage, or liability, elevator, boiler, or other insurance
required to be furnished by Landlord under the terms of any Superior Mortgage or
Superior Lease at standard rates, if obtainable at such rates prior to the
execution and delivery of this Lease; (iv) cause or in Landlord's reasonable
opinion be likely to cause physical damage to the Building or any part thereof;
(v) constitute a public or private nuisance or otherwise violate any law
relating to the protection of the environment or requiring manufacture,
treatment or disposal of any material used by Tenant at the Premises in any
particular manner; (vi) impair, in the sole opinion of Landlord, the appearance,
character or reputation of the Building; (vii) discharge objectionable fumes,
vapors or odors into the Building air conditioning system or into the Building
flues or vents not designed to receive them or otherwise in a manner as may
offend other tenants or occupants of the Building; (viii) impair or interfere
with any of the Building services or the proper and economic heating, cleaning,
air conditioning or other servicing of the Building or the Premises, or impair
or interfere with or tend to impair or interfere with the use of any of the
other areas of the Building by, or occasion discomfort, annoyance or
inconvenience to, Landlord or any of the other tenants or occupants of the
Building, any such impairment or interference to be in the sole judgment of
Landlord; (ix) violate any provision of law pursuant to which Landlord may incur
civil or criminal liability as a result of Tenant's action, including, without
limitation, civil or criminal forfeiture, padlocking or other restraint of the
Premises or the Building by governmental authority; (x) increase the pedestrian
traffic in and out of the Premises and/or the Building above an ordinary level
or (xi) engage in the sale of any product from the Premises or the Building in
violation of 15 U.S.C.A. Section 1051 et seq. or any similar federal or state
law. Landlord shall not be liable for the violation by any tenant or other party
of the rules and regulations of the Building or for such other party's breach of
its lease. Landlord is not aware that Tenant's permitted use set forth in
Article 2 of this Lease violates any of the foregoing provisions.
77. PARTNERSHIP TENANT
If Tenant is a partnership (or is comprised of two [2] or more persons,
individually and as co-partners of a partnership), or if Tenant's interest in
this Lease shall be assigned to a partnership (or to two [2] or more persons,
individually and as co-partners of a partnership) pursuant to Article 53 (any
such partnership and such persons are referred to in this Article as
"Partnership Tenant"), the following provisions of this Article shall apply to
such Partnership Tenant: (i) the liability of each of the parties comprising
Partnership Tenant shall be joint and several, and (ii) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by, any written instrument which may hereafter be executed, changing,
modifying or discharging this Lease, in whole or in part, or surrendering all or
any part of the Premises to Landlord, and by any notices, demands, requests or
other communications which may hereafter be given by Partnership Tenant or by
any of the parties comprising Partnership Tenant, and (iii) any bills,
statements, notices, demands, requests or other communications given or rendered
to Partnership Tenant and all such parties shall be binding upon Partnership
Tenant and all such parties, and (iv) if Partnership Tenant shall admit new
partners, all of such new partners shall, by their admission to Partnership
Tenant, be deemed to have assumed performance of all of the terms, covenants and
conditions of this Lease on Tenant's part to be observed and performed, and (v)
Partnership Tenant shall give prompt notice to Landlord of the admission of any
such new partners, and upon demand of Landlord, shall cause each such new
partner to execute and deliver to Landlord an agreement in form satisfactory to
Landlord, wherein each such new partner shall assume performance of all the
terms, covenants and conditions of this Lease on Tenant's part to be observed
and performed (but neither Landlord's failure to request any such agreement nor
the failure of any such new partner to execute or deliver any such agreement to
Landlord shall vitiate the provisions of subdivision (iv) of this Article).
78. CERTIFICATE OF OCCUPANCY
Tenant shall not at any time use or occupy the Premises in violation of
the Certificate of Occupancy issued for the Premises or for the Building, and in
the event that any department of the City or State of New York shall hereafter
at any time contend and/or declare by notice, violation, order or in any other
manner whatsoever that the Premises are used for a purpose which is a violation
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of such Certificate of Occupancy, Tenant shall, after the expiration of all
appeal periods contesting such violation and upon five (5) days' written notice
from Landlord, immediately discontinue such use of the Premises. Failure by
Tenant to discontinue such use after such notice shall be considered a default
in the fulfillment of a covenant of this Lease, and Landlord shall have the
right to terminate this Lease immediately, and in addition thereto shall have
the right to exercise any and all rights and privileges and remedies given to
Landlord by and pursuant to the provisions of Articles 17 and 18 hereof.
79. ACCESS TO PREMISES
Tenant understands and agrees that all parts (except surfaces facing the
interior of the Premises) of all walls, windows and doors bounding the Premises
(including exterior Building walls, core corridor walls, doors and entrances),
all balconies, terraces and roofs adjacent to the Premises, all space in or
adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes,
conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical
facilities, service closets and other Building facilities are not part of the
Premises, and Landlord shall have the use thereof, as well as access thereto
through the Premises for the purposes of operation, maintenance, alteration and
repair. Landlord shall use reasonable efforts to minimize disruption of Tenant's
business operations. When possible, Landlord shall give Tenant prior notice
prior to performing construction work to space in the Building immediately
above, below or adjacent to the Premises.
80. USE OF PREMISES
Supplementing Article 2, under no circumstances whatsoever shall the
Premises or any part thereof be used: (1) by a foreign or domestic governmental
agency; (2) as a betting parlor or gambling casino; (3) as a restaurant,
luncheonette or coffee shop; (4) for the on-premises or off-premises sale of
alcoholic beverages or as a catering or events facility; (5) for the sale of
candy or cigarettes; (6) as an amusement arcade or for use of video games,
pinball machines or other customer-attracting devices; (7) for the playing of
amplified music, for live entertainment, for dancing or as a discotheque or
club; (8) for the sale, display or rental of "adult" or pornographic books,
magazines or videos; (9) as a medical, psychiatric, abortion, drug or alcohol
clinic; (10) as an employment agency or search firm; (11) for retail,
manufacturing or residential use; and/or (12) for any use other than the use set
forth in Article 2.
81. EXCLUSION OF PERSONS FROM PREMISES, AND DELIVERY SYSTEMS
Landlord reserves the right to exclude from all portions of the Building
at any time or times during the term hereof, all messengers, couriers and
delivery people other than those who are employees of Tenant. In such event
Landlord shall accept on behalf of Tenant all deliveries of mail, air courier
packages, express packages and other packages sent by similar means (including
any hand deliveries of such mail and packages), shall permit messengers and
couriers to pick up mail or packages left by Tenant, and shall provide an area
to be used for such purposes to which Tenant's employees shall deliver mail and
packages to be picked up by others and from which such employees shall pick up
and distribute mail and packages to be delivered to Tenant, provided, however,
that Landlord may elect to provide such distribution to Tenant at Tenant's
expense. Tenant shall comply with Landlord's rules relating to such area and
services. Neither Landlord nor Landlord's agents or security personnel shall be
liable to Tenant or Tenant's agents, employees, contractors, customers, clients,
invitees or licensees or to any other person for, and Tenant hereby indemnifies
Landlord and Landlord's agents and security personnel against, liability in
connection with or arising out of damage to mail or packages, or the performance
or non-performance by Landlord or any person acting by, through or under the
direction of Landlord of the services set forth in this Paragraph (including any
liability in respect of the property of such persons), unless due to the gross
negligence or willful misconduct of Landlord or Landlord's agents or security
personnel. No representation, guaranty or warranty is made or assurance given
that the communications or security systems, devices or procedures of the
Building will be effective to prevent injury to Tenant or any other person or
damage to, or loss (by theft or otherwise) of, any property of Tenant or of any
other person, and Landlord reserves the right to discontinue or modify at any
time such communications or security systems or procedure without liability to
Tenant.
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82. ADDENDUM TO RULES AND REGULATIONS
The following additional Rules and Regulations are hereby incorporated
into and made a part of the Rules and Regulations set forth at the end of the
printed form of the Lease:
82.1 Fire exits and stairways are for emergency use only, and they
shall not be used for any other purpose by Tenant or Tenant's employees,
licensees or invitees. Landlord reserves the right to control and operate the
public portions of the Building and the public facilities, as well as facilities
furnished for the common use of the tenants, in such manner as it deems best for
the benefit of the tenants generally.
82.2 Notwithstanding anything provided to the contrary in this Lease,
Tenant shall not cause any machinery, equipment, sign, banner, or any other
thing to protrude from the Premises to the exterior of the Building beyond the
horizontal plane of the exterior windows of the Premises or beyond the Premises
within the interior of the Building.
82.3 Attached hereto as Exhibit C is a copy of additional Rules and
Regulations for the Building.
83. SCAFFOLDING
In the event Landlord shall desire (or becomes obligated) to modify
portions of the Building or to alter or renovate the same or clean, repair or
waterproof the Building's facade (whether at Landlord's option or to comply with
law), Landlord may erect scaffolding, "bridges" and other temporary structures
to accomplish the same, notwithstanding that such structures may obscure signs
or windows forming a part of the Premises, and notwithstanding that access to
portions of the Premises may be temporarily diverted or partially obstructed,
provided, however, that Landlord agrees to use reasonable efforts to minimize
impairment of access to the Premises. Landlord shall not be liable to Tenant or
any party claiming through Tenant for loss of business or other consequential
damages arising out of any change in the Building or temporary diversion or
partial obstruction resulting from such alteration, renovation, repair or
cleaning, out of the foregoing structures, or out of any noise, dust and debris
from the performance of work in connection therewith, nor out of the disruption
of Tenant's business or access to the Premises necessary to perform such
repairs, nor shall any matter arising out of any of the foregoing be deemed a
breach of Landlord's covenant of quiet enjoyment or entitle Tenant to any
abatement of rent. Landlord agrees to use reasonable efforts to minimize
disruption of Tenant's business operations.
84. FIRE ALARM SYSTEM
In the event that Landlord elects, or is required by law, to install a
fire alarm system in the Building and the Premises, Tenant shall be responsible
to reimburse to Landlord as Additional Rental, when billed, the cost to install
in the Premises every fire device required by law or the system, including, but
not limited to, pull stations, speaker strobes, strobes, smoke detectors, duct
detectors, fan shutdowns, water flow switches, warden phones, and door releases.
In addition, Tenant shall be responsible for the cost of any modifications in
programming the system or in the command station required as a result of
Tenant's use or modification of the system within the Premises. Nothing
contained herein shall obligate Landlord to install a fire alarm system in the
Building or the Premises.
85. CONDENSER WATER FOR AIR CONDITIONING UNIT
Landlord shall provide to Tenant condenser water at the Premises for the
purpose of operating an air conditioning unit within the Premises, so long as
Tenant is not in default of its obligations hereunder. Tenant shall pay to
Landlord, as Additional Rental, a one time hook up fee upon the execution of
this Lease in the amount of $750.00 per nominal ton of the air conditioning unit
servicing the Premises and an amount equal to $650.00 per annum per nominal ton
of the air conditioning unit servicing the Premises the first payment due on
execution of this Lease and each subsequent annual payment on January 1 of each
year commencing January 1, 2000.
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86. GENERATOR
86.1 Subject to Tenant's submissions to Landlord for Landlord's
approval (which approval shall not be unreasonably withheld or delayed, provided
that the provisions of this Article 86 are complied with) of detailed
engineering plans and specifications therefor, Tenant shall have the right, at
Tenant's sole cost and expense, to install one (1) 1000 kilowatt emergency
electrical generator in the Premises or in the basement, at Tenant's election,
including an associated 3000 gallon diesel fuel-storage tank to support the
generator, in a location in the basement of the Building (not to exceed 2000
useable square feet) mutually agreed to by Landlord and Tenant. In addition to
the Fixed Rental and Additional Rental set forth herein, Tenant shall pay to
Landlord, during the entire term and any renewal term hereof, the annual rental
at the annual rate of $12.00 per square foot (in equal monthly installments,
together with the installments of Fixed Rental payable hereunder) for the
location in which the fuel tank is installed. Tenant shall also be responsible,
at Tenant's sole cost and expense, for installing all hookups from such
generator to the Premises, including those to the perimeter of the Premises, and
for electrically grounding the generator, and, subject to Landlord's written
approval (which shall not be unreasonably withheld or delayed), Tenant may bore
into the floor of the Building for such purpose, at Tenant's expense, provided,
however, that (i) Landlord shall make available space in the Building reasonably
designated by Landlord so as to permit Tenant to install a riser pathway for
Tenant's generator conduit, and (ii) any work required to install such riser
(including, without limitation, any core drilling work or repairs necessitated
thereby), shall be the sole responsibility of Tenant. Such generator shall be
vented through the Building's chimney or other interior flue in the Building or
through the Building's windows, as Landlord shall direct in writing to Tenant.
86.2 Prior to the installation of any generator or fuel tank, Tenant
shall obtain, at its sole cost and expense, all licenses, permits, approvals and
signoffs required for the installation and maintenance of such generator and
diesel fuel tank servicing the same from any and all governmental authorities
having jurisdiction, including, without limitation, the New York City Department
of Buildings and the Environmental Protection Agency, to the extent applicable.
86.3 Tenant shall take all steps and precautions necessary to insure
that no fuel or other Hazardous Materials (as hereinafter defined) is or are
released, discharged, spilled or leaked (collectively, "Release") from the
generator and/or fuel tank, and, if any such Release does occur, Tenant shall
promptly remediate the same, at Tenant's sole cost and expense, in accordance
with applicable law. Tenant shall indemnify and hold Landlord harmless from and
against any and all actions, proceedings, fines, penalties, settlement payments,
costs and expenses (including, without limitation, reasonable legal fees and
claims by other tenants of the Building) incurred by Landlord and resulting from
any Release of fuel or other Hazardous Materials from the generator or tank,
provided, however, that Tenant shall not be obligated to indemnify Landlord with
respect to any Release caused by the negligent acts or omissions of Landlord,
its agents or employees.
86.4 Tenant shall maintain and test the generator in accordance with
all applicable laws and customary industry practice.
86.5 Tenant shall take all steps to minimize the noise emanating from
the generator or the room within which it is located so as to avoid disrupting
other tenants in the Building. To that end, (i) if requested to do so in writing
by Landlord, Tenant shall, at Tenant's sole cost and expense, soundproof the
demising walls in the area in which the generator and fuel tank are located, and
(ii) Tenant shall conduct its periodic startups of the generator, at Tenant's
expense, on a monthly basis only, either on Saturdays or Sundays between the
hours of 4:00 a.m. and 8:00 a.m., or on Mondays between the hours of 4:00 a.m.
and 6:30 a.m., or on a day and time mutually agreeable to Landlord and Tenant
between 6:00 p.m. on Fridays and 6:00 a.m. on Mondays. Tenant shall have the
right to run the generator, at Tenant's expense, at such times as electricity is
not available to Tenant through the Building's normal power source or when
Tenant is otherwise required, in an emergency situation and on an emergency
basis, to obtain power through said generator. Tenant shall discontinue using
the generator when the normal supply of electrical energy to the Premises has
resumed or when Tenant's emergency situation has been rectified.
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87. CONDUIT/RISER ACCESS
Subject to Landlord's approval as to the size, location, manner and
method of installation, Tenant may install, at its expense, the necessary
vertical and horizontal conduit cabling and other connecting equipment
("Connecting Equipment") from the point of exit from the Premises for the
purpose of providing telecommunications services to tenants in the Building,
provided, however, that (a) such conduit shall be installed in areas in the
Building mutually agreed to by Landlord and Tenant, and same shall be concealed
within walls where reasonably possible, (b) Tenant shall obtain, at its sole
cost and expense, all licenses, permits, approvals and signoffs for installation
of the same from all governmental authorities having jurisdiction, (c) Tenant
shall use best efforts (which shall include the use of overtime labor) to
install such conduit in a manner so as to minimize disruption of Building
services and to avoid interference with other tenants in the Building, and (d)
Tenant shall promptly repair and restore, at Tenant's sole cost and expense, any
damage to the Building resulting from such installation. To the extent possible,
and subject to the rights of other tenants of the Building, Landlord shall
provide Tenant with twenty-four (24) hour a day seven (7) day a week access to
all common areas of the Building within which its Connecting Equipment is
installed. Tenant shall be entitled to access the common areas of the Building
for the purpose of installing its Connecting Equipment without charge for the
term of this Lease, including any extensions and renewals thereof.
88. ELECTRICAL SERVICE
88.1 Simultaneously with executing this Lease, Tenant shall pay to
Landlord, as Additional Rental, a one-time electrical connection fee of in the
amount of $70,000.00. On the Commencement Date, Landlord shall deliver to the
Premises, at Landlord's sole cost and expense, six hundred (600) amperes of
three phase electrical service at two hundred and eight (208) volts. On or
before November 1, 1999, Landlord, at Landlord's sole cost and expense, shall
provide Tenant with an additional two hundred (200) amperes of three phase
electrical service at two hundred and eight (208) volts.
88.2 On the Commencement Date, Tenant shall pay to Landlord as
Additional Rental a one-time excess power fee in the amount of one hundred and
forty-nine thousand dollars ($149,000) for seven hundred and fifty (750) amperes
of three phase electrical service at four hundred and eighty (480) volts (or 460
volts), which service is anticipated to be delivered on or before January 31,
2000. Landlord shall bear all costs associated with the conversion from two
hundred and eight (208) volt to four hundred and eighty (480) volt (or 460 volt)
electrical service and delivery of same to a single point within in the
Premises.
88.3 In the event Tenant exercises its option to lease additional
space in the Building, Landlord shall provide Tenant with additional electrical
service based upon the calculation of twelve (12) amperes per usable square feet
of additional space, provided that Tenant shall pay to Landlord as Additional
Rental, upon the execution of the new lease or lease modification agreement, a
one-time fee equal to the sum of one hundred and twenty-five dollars ($125) per
ampere at 208 volt service for each ampere provided.
88.4 At any time after January 31, 2000, if Tenant determines that it
needs additional electrical service, then Tenant shall have the option to
request additional electrical service ("Electric Service Option") from Landlord.
Tenant may exercise its Electric Service Option not more than once every six (6)
months during the term hereof and not more than twice during the term of the
Lease and not more than twice during any renewal term. For each exercise of its
Electric Service Option, Tenant may request an additional two hundred (200)
amperes of three phase electrical service at four hundred and eighty (480) volts
(or 460 volts), which Landlord shall deliver to Tenant within twelve (12) months
from the date of Tenant's exercise of its Electric Service Option. Tenant shall
pay to Landlord as Additional Rental, upon exercising the Electric Service
Option, a one-time fee equal to the sum of one hundred twenty-five dollars
($125.00) per ampere at two hundred eight (208) volt service for each ampere
provided.
88.5 Upon receipt of the seven hundred and fifty (750) amperes of
three phase electrical service at four hundred and eighty (480) amperes, Tenant
shall return to Landlord and relocate the conduit containing the eight hundred
(800) amperes of three phase electrical service at two hundred
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and eight (208) volts, at Tenant's cost and expense, to a point designated by
Landlord located on the exterior of the Premises.
88.6 In the event that Landlord fails to deliver to Tenant the seven
hundred and fifty (750) amperes of three phase electrical service at four
hundred and eighty (480) volts (or 460 volts) described above, on or before May
31, 2000, Landlord shall refund to Tenant the sum of sixty-five thousand dollars
($65,000) within thirty (30) days. In addition, Fixed Rental and Additional
Rental shall be abated from June 1, 2000 to the date the additional seven
hundred and fifty (750) amperes of electrical service is delivered to the
Premises.
88.7 Provided that Tenant is not in default of its monetary
obligations under the terms of this Lease beyond applicable notice, cure and
grace periods, in the event Landlord has not delivered the seven hundred and
fifty (750) ampere service to the Premises on or before July 30, 2000, Tenant
may serve Landlord with a written notice of termination of this Lease, no
earlier than August 1, 2000 and no later than August 15, 2000, time being of the
essence as to the delivery of the notice. The termination date set forth in the
notice shall be a date at least thirty (30) days from the date Landlord receives
the notice. In the event Landlord delivers the seven hundred and fifty (750)
ampere service prior to the date set forth in the notice, the termination of the
Lease shall be deemed to be void AB INITIO and of no force and effect. In the
event Landlord does not deliver the seven hundred and fifty (750) ampere service
prior to the termination date set forth in the notice, and provided the notice
was timely sent, this Lease shall terminate on the date set forth in the notice
as if such date were the Termination Date, and Landlord's sole liability to
Tenant shall be to return any prepaid rent (including, without limitation, Fixed
Rental and Additional Rental) paid in respect of the period following such
termination date and to return the security deposit paid by Tenant hereunder (to
the extent the same was not theretofore properly applied by Landlord), and to
refund to Tenant the difference between (i) the excess power fee in the sum of
one hundred forty-nine thousand dollars ($149,000) paid by Tenant to Landlord
pursuant to Section 88.2 above, and (ii) the amount of the refund previously
paid by Landlord to Tenant under Section 88.6 above.
88.8 Tenant shall have the right to purchase 480-volt three-phase
electrical service directly from Consolidated Edison without seeking or
receiving the prior consent or approval of Landlord. Landlord agrees to
cooperate with and provide assistance to Tenant, to the extent necessary, to
enable Tenant to obtain the 480-volt three-phase electrical service directly
from Consolidated Edison. Tenant will be metered directly by Consolidated
Edison, and Tenant will be billed directly by Consolidated Edison for such
electrical service. In the event that Tenant receives electrical service
directly from Consolidated Edison, Tenant shall pay to Landlord $25 per square
foot per annum for vault space occupied by Tenant's electrical service provided
directly to Tenant by Consolidated Edison. There shall be no adjustments or
increases in the charge for the vault space over the Term.
88.9 Upon receipt of the 480-volt three-phase electrical service from
Consolidated Edison, Tenant shall return to Landlord the 750 amperes of 480-volt
(or 460 volt) three-phase electrical service provided to Tenant by Landlord in
accordance with this Lease (or, if such service was not theretofore furnished by
Landlord to Tenant, Landlord shall be relieved of the obligation to furnish the
same). Upon return of the electrical service by Tenant, Landlord shall refund to
Tenant the amount of seventy thousand dollars ($70,000.00), provided such sum
was previously paid by Tenant to Landlord pursuant to this Article.
88.10 The fees payable under this Article shall not be credited
against any Fixed Rental or Additional Rental hereunder or any amounts payable
by Tenant pursuant to Article 57 hereof.
89. TELECOMMUNICATIONS POINT OF ENTRY
Tenant shall have the right, at its sole cost and expense, and subject
to Tenant's obtaining all necessary consents from any required party, to make
connections with any offsite or onsite telecommunications company or other
company or companies whose facilities may be accessed through the Tenant's point
of entry in the Building. To that end, subject to Landlord's approval as to the
size, location, manner and method of installation, Tenant may install (i) a
single point of entry into the Building and (ii) the necessary conduit from the
point of entry to the Premises for the purpose of providing telecommunications
services to third parties, provided, however, that (a) such
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conduit shall be installed in areas in the Building mutually agreed to by
Landlord and Tenant, and same shall be concealed within walls where reasonably
possible, (b) Tenant shall obtain, at its sole cost and expense, all licenses,
permits, approvals and signoffs for installation of the same from all
governmental authorities having jurisdiction, (c) Tenant shall use best efforts
(which shall include the use of overtime labor) to install such conduit in a
manner so as to minimize disruption of Building services and to avoid
interference with other tenants in the Building, and (d) Tenant shall promptly
repair and restore, at Tenant's sole cost and expense, any damage to the
Building resulting from such installation.
90. AIR CONDITIONING
Tenant shall be responsible, at Tenant's own cost and expense, for
installing within the Premises all compressors, ductwork and other equipment and
devices of any nature whatsoever required in connection with Tenant's air
conditioning system. Tenant shall, throughout the term of this Lease, at
Tenant's expense, perform, or cause to be performed, ordinary periodic
maintenance to its air conditioning unit(s) and system. Tenant's obligation to
maintain its air conditioning unit(s) and system shall include, but not be
limited to, the periodic cleaning and/or replacement of filters, replacement of
fuses and belts, the calibration of thermostats, and all startup and shutdown
maintenance of the unit(s). Such maintenance obligations shall be performed
through the term of this Lease, on Tenant's behalf, by a reputable air
conditioning maintenance company engaged by Tenant at its expense, and first
approved by Landlord, which approval shall not be unreasonably withheld. Tenant
shall also be responsible, at Tenant's sole cost and expense, to repair and, if
necessary, replace its air conditioning unit(s) and system.
91. RIGHT TO INSTALL ANTENNA AND OTHER EQUIPMENT ON ROOF
91.1 Subject to the following, Tenant may use up to twenty-five (25)
square feet to be designated by Landlord, (the "Site") to be used solely for the
installation by Tenant at its sole cost and expense, of an antenna and/or
satellite dish ("Antenna Equipment"), the size and specifications of which are
described below. The Antenna Equipment can be used only by Tenant for the
purpose of transmitting its own signals. Tenant may not allow any third party to
use the Antenna Equipment, nor may Tenant assign or transfer any rights therein,
nor create any license for the use thereof nor encumbrance thereof.
91.2 For so long as Tenant is using such roof space, Tenant shall pay
to Landlord as Additional Rental, the sum of $20.00 per square foot of roof
space provided by Landlord, which shall be payable in equal monthly installments
throughout the term of this Lease (and any renewal term) together with the
installments of Fixed Rental.
91.3 The Antenna Equipment to be installed and all cabling and wiring
required in connection therewith shall be subject to Landlord's reasonable
approval. Any change in the Antenna Equipment shall require the prior written
consent of Landlord.
91.4 Prior to the installation of any Antenna Equipment on the Site,
in order to prevent damage to the roof or the voiding or other problems with the
enforcement of the warranty for the roof, Tenant agrees to provide Landlord, for
Landlord's prior approval, all plans and specifications for the installation of
same. If Landlord requires, Tenant will, at Tenant's sole cost and expense, have
Landlord's contractor perform any work to the Site that would affect any roof
warranty, or have such contractor present while the installation is being done.
Once the installation has been made, Tenant will not make any material
alterations to same without obtaining Landlord's prior written consent. Landlord
shall have the right to disapprove any installation or alterations that may
adversely affect the roof or void or adversely affect the roof warranty,
91.5 Tenant shall install the Antenna Equipment at the sole cost,
expense and risk of Tenant, and shall do so in a good, workmanlike manner and in
compliance with all federal, State, and local building, zoning, electric,
telecommunications and safety codes, ordinances, standards, regulations, laws
and requirements, including, without limitation, those of the Federal
Communications Commission ("FCC") and the Landmarks Commission. Tenant shall, at
its sole cost and expense, obtain any permits, licenses, variances, or other
approvals required with respect
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to the installation of the Antenna Equipment. Tenant shall deliver true and
complete copies thereof to Landlord prior to commencing any installations or
alterations.
91.6 In the event Tenant is granted a frequency from the FCC (or
other agency), Tenant will provide Landlord with a copy of same. Tenant may not
change the frequency without the consent of Landlord. The use of the Antenna
Equipment shall not interfere with the frequency of any existing tenants, and
Tenant must make its own investigations as to any potential interference. In the
event Tenant's use of the Antenna Equipment does interfere with the frequency of
existing tenants, Tenant will correct same at its sole cost and expense.
91.7 Tenant shall, in accordance with the provisions of Article 57
above, pay for all electricity consumed in connection with the operation of the
Antenna Equipment.
91.8 Landlord shall have the right to enter the Site at any time for
any reason.
91.9 Landlord may, at any time, relocate the Antenna Equipment and
any wiring to an alternative site on the Building, upon thirty days prior
written notice to Tenant. Landlord shall use reasonable efforts (which shall
include the use of overtime labor) to relocate the Antenna Equipment in a manner
so as to minimize disruption of Tenant's business operations.
91.10 Anything to the contrary contained herein notwithstanding, if,
during the term of this Lease, Landlord, in its absolute and sole judgment,
believes that Tenant's use of the Site poses a human health or environmental
hazard that cannot be remedied within thirty (30) days after written notice
thereof, then (i) Tenant shall immediately cease operation of the offending
equipment and (ii) Tenant shall immediately remove, at its sole cost and
expense, the offending equipment.
92. RIGHT OF FIRST OFFER
From and after the Commencement Date, and subject to the right of any
tenant in the Building existing prior to the date hereof, Landlord shall notify
Tenant in writing ("Landlord's Notice") whenever up to 10,000 square feet of
space on the 7th Floor of the Building that is immediately adjacent to any
portion of the Premises ("Adjacent Space") is available for lease by Landlord.
Landlord's Notice shall set forth the terms under which Landlord is willing to
lease the Adjacent Space, including, but not limited to, fixed rental and
additional rental, and shall provide Tenant with the right to lease any such
Adjacent Space on the terms set forth in the Landlord's Notice. If Tenant elects
within ten (10) days of the date of Landlord's Notice, time being of the essence
with regard to Tenant's right to make the election, to lease said Adjacent Space
on the terms set forth in Landlord' Notice, Landlord and Tenant shall, at
Landlord's election, either (i) enter into an agreement modifying this Lease to
include the terms set forth in Landlord's Notice, or (ii) enter into a new lease
for the Adjacent Space. In the event Tenant fails to elect to lease the Adjacent
Space within ten (10) business days of the date of Landlord's Notice, Landlord
shall have no obligation to lease the aforesaid space to Tenant, nor shall
Tenant have any right to lease the Adjacent Space from Landlord, provided that
if Landlord desires to lease such Adjacent Space on terms and conditions less
favorable to Landlord than those set forth in Landlord's Notice, Landlord shall
again provide Tenant with the opportunity to lease such Adjacent Space on such
new terms and conditions in accordance with this Article 92.
93. LANDLORD'S WAIVER OF LIEN ON TELECOMMUNICATIONS EQUIPMENT
Landlord and Tenant agree that during the term of this Lease the
Connecting Equipment and all of the telecommunications equipment by or on behalf
of Tenant in or on the Building shall be deemed the property of Tenant, and not
fixtures of the Building. Landlord hereby waives its right, statutory or
otherwise, to any lien on the telecommunications equipment and the Connecting
Equipment. At the end of the term of the Lease, Tenant shall remove the
Connecting Equipment at its sole cost and expense and repair any damage to the
Building resulting from such removal
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94. TENANT'S SECURITY INSTALLATION
Tenant shall have the right to install, at Tenant's own expense, its own
security system in the Premises provided that Tenant provides Landlord with the
information necessary to allow Landlord (and emergency personnel) access to the
Premises in the event of an emergency.
95. FIRE SUPPRESSION SYSTEM
Tenant may install, at its sole cost and expense, a fire suppression
system or pre-action system, provided that Landlord consents to the type, size
and specifications of the systems to be installed and the location of the
system.
96. TERMINATION OF LEASE DUE TO DESTRUCTION TO BUILDING
Modifying Article 9 of the pre-fixed printed form, if there is a fire or
other casualty which causes damage or destruction to the Building, in whole or
in part, whereby Tenant is unable to occupy or gain access to all of the
Premises, Tenant may, in writing delivered to Landlord within sixty (60) days
after the damage or destruction, terminate the Lease as of the date of the
damage or destruction, provided that in Landlord's reasonable estimate, given in
writing by Landlord to Tenant within fifty (50) days, the repair, replacement,
restoration or renewal would likely require more than nine (9) months to
substantially complete or if the damage or destruction occurs within the final
twenty-four (24) months of the lease term. If Tenant does not give the notice
within said sixty (60) day period, or if in landlord's reasonable estimate the
repair, replacement, restoration or renewal will not likely require more than
nine (9) months to substantially complete, this Lease shall not terminate; but
if the repairs and restoration are not substantially completed within nine (9)
months after the damage or destruction occurred, Tenant shall have thirty (30)
days after the end of such nine (9) month period to give notice to landlord that
will terminate the Lease upon its receipt; provided, however, that if the
repairs and restorations are substantially completed within the said thirty (30)
day notice period, the termination of this Lease shall be void AB INITIO, and
this Lease shall continue in full force and effect.
LANDLORD
601 WEST ASSOCIATES LLC
BY: SLB MANAGER LLC
BY: /s/ [Signature Illegible]
-------------------------------------
Name:
Title:
FEDERAL ID NO.: 13-4009702
TENANT:
UNIVERSAL ACCESS, INC.
BY: /s/ ROBERT J. POMMER
-------------------------------------
Name: Robert Pommer
Title: Chief Operating Officer
FEDERAL ID NO.: 36-418543
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EXHIBIT A
DESCRIPTION OF PREMISES
[This drawing of the Premises is only an approximation of the space demised, and
Landlord makes no representation that the dimensions indicated on this drawing
are the actual dimensions of the Premises.]
<PAGE> 49
[FLOORPLAN CHART OMITTED]
<PAGE> 50
EXHIBIT B
TO LEASE BETWEEN
601 WEST ASSOCIATES LLC, AS LANDLORD,
AND UNIVERSAL ACCESS, INC., AS TENANT
LANDLORD'S WORK
---------------
1. Paint entire Premises white.
2. Acid clean all windows and paint all window frames.
3. Repair, re-putty or replace any damaged window panes.
4. Demolish all existing walls, acoustical ceilings, existing lighting
fixtures, electrical conduit, plumbing, flooring and radiators.
5. Erect demising wall or walls necessary to create the Premises, with
sound attenuation materials and decorating.
6. Install entry door and secondary entrance with doors, which secondary
entrance shall be at least six feet (6') wide.
7. Remove all friable asbestos from the Premises.
<PAGE> 51
EXHIBIT C
ADDITIONAL RULES & REGULATIONS OF BUILDING
<PAGE> 52
STARRETT LEHIGH BUILDING
601 West 26th Street
New York, New York 10001
------------------
SUPPLEMENTAL RULES AND REGULATIONS
Pursuant To Lease Article 36
Note: The following constitute SUPPLEMENTAL RULES AND REGULATIONS (collectively
"SUPPLEMENTAL RULES") pursuant to Article 36 of each Tenant's lease ("Lease").
These SUPPLEMENTAL RULES are in addition to Rules and Regulations 1 through 13,
which are set forth on the Lease form itself, and are intended to and shall
remain in full force and effect notwithstanding the promulgation of these
SUPPLEMENTAL RULES.
14. No Tenant shall sponsor or hold an Event (as hereinafter
defined) in the Building without (i) the express prior written consent of the
Owner, (ii) the payment, in advance, of any and all expenses, costs and fees
specified by the Owner in connection therewith, and (iii) otherwise in
conformity with these SUPPLEMENTAL RULES. As used in these SUPPLEMENTAL RULES,
the term "Event" shall include a show, party, reception, or other gathering of
people, held solely in accordance with the "use" clause for Tenant's premises as
set forth in Tenant's lease, which has been consented to by Owner in accordance
herewith, at which any of the following occur: invitations are issued; the Event
is the subject of pre-Event publicity in trade or general news media; music or
any other form of entertainment is presented; a sound system is employed; food
and/or liquor is served, or more than fifty (50) people are present. Any request
for Owner's consent to an Event shall be on such form(s) and accompanied by such
documentation establishing compliance with these SUPPLEMENTAL RULES and
applicable provisions of law as Owner may from time-to-time prescribe or
require.
15. No Tenant shall sponsor or hold an Event in the Building (A)
which is not permitted under the Certificate of Occupancy for the Building or is
otherwise in violation of any applicable law, and (B) without first obtaining
(i) a Temporary Place of Assembly Permit from The New York City Department of
Buildings, and (ii) a Temporary On-Premises Liquor or Caterer's License from the
New York State Liquor Authority. Any prior written consent of the Owner to any
proposed Event shall be deemed conditioned
<PAGE> 53
upon Tenant obtaining such Temporary Place of Assembly Permit and Temporary
On-Premises Liquor License, and compliance by Tenant in all other respects with
all applicable provisions of law and these SUPPLEMENTAL RULES.
16. An Event shall be held only in the space demised to the Tenant
under the Lease or in such other space within the Building, if any, as may be
expressly designated by Owner in writing. Ingress and egress to/from from the
Building for an Event shall only be through the main entrance/exit to/from the
Building and common areas (such as the lobby, passenger elevator, and directly
connecting hallways), or such other entrance/exit and interior portions of the
Building, if any, as may be expressly designated by Owner.
17. Owner. may condition consent to an Event upon the Event being
attended by a maximum number of people fixed by Owner, fewer than the maximum
number permitted by law.
18. No Event shall be held or sponsored by a Tenant which in any
way, shape, manner or form (A) constitutes a nuisance or danger of any kind, (B)
gives rise to a hazardous condition of any kind, or (C) violates Temporary Place
of Assemble Permit, the Temporary On-Premises Liquor or Caterer's License, the
New York City Building Code, the New York City Fire Code, the New York Alcoholic
Beverage Control Law, the New York Penal Law, or any other applicable provision
of law. Without in any way limiting the generality of the foregoing, no Tenant
shall: (i) invite or permit a greater number of people to attend an Event than
the greatest number permitted under (a) the Temporary Place of Assembly Permit
or any other applicable provision of law, and without (b) the Owner's consent;
(ii) hold or sponsor an Event which includes the use of open flames to cook
food, or for any other purpose; nor (iii) hold or sponsor an Event which (a)
involves the playing of music (whether live or produced or broadcast through any
medium) on weekdays, prior to 9:00 A.M. or after 6:00 P.M., or on weekends and
legal holidays, prior to 9:00 A.M. or after 6:00 P.M., (b) results in loud or
offensive noises of any kind; and (c) involves or results in the illegal use of
sale of controlled substances or the illegal serving of alcohol to minors within
the Building.
19. Any Tenant holding or sponsoring an Event in the Building shall
be responsible for all clean-up and restoration to pre-Event condition of all
Building common areas used for the Event. Such clean-up and restoration shall be
completed with three (3) hours after the conclusion of the Event, but in no case
later than 8:00 A.M. the following morning.
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<PAGE> 54
20. An Event may be attended only by Tenant's employees, independent
contractors and invitees. Tenant shall not suffer or permit any of its invitees
to trespass into areas of the Building in which the Event is not being held or
which are not designated by the Owner for ingress/egress to/from the Event. Any
Tenant holding or sponsoring an Event in the Building shall arrange for an
adequate number of professional licensed security personnel to be continuously
present at the Building, from no later than one (1) hour prior to the scheduled
starting time of the Event, to no earlier than one (1) hour after the scheduled
ending time of the Event, for the purposes of limiting attendance to Tenant's
employees, independent contractors and invitees, preventing trespassing, crowd
control, and to insure compliance with these SUPPLEMENTAL RULES and applicable
law. Such arrangements shall include (A) one security guard at each
entrance/exit to the Building to be utilized in connection with the Event, one
(1) security guard stationed at the Event itself, and one (1) security guard to
patrol the elevator and hallways to be used in connection with the Event, and
(B) such additional number of security personnel as shall be appropriate taking
into account the nature of the Event, the number of invitees, the extent of
pre-Event publicity and any and all other relevant circumstances.
21. No Tenant holding or sponsoring an Event in the Building shall
use the words "Starrett", "Lehigh" or "Starrett-Lehigh" (or any abbreviation or
variation thereof) on any invitation to, or publicity for, or advertisement of,
such Event without the express prior written consent of the Owner.
22. No Tenant shall hold or sponsor an Event in the Building without
first obtaining and delivering to Owner a Certificate of Insurance (or other
proof of insurance acceptable to Owner) with respect to such Event, naming Owner
as an additional insured thereunder and otherwise acceptable to Owner in form
and substance, and with such coverage limits as Owner determines to be
acceptable taking into account the nature of the Event, the number of invitees,
the extent of pre-Event publicity and any and all other relevant circumstances.
23. Any Tenant who holds or sponsors an Event in the Building shall
be fully responsible for any and all injury or damages caused by, or arising out
of or in connection with, the Event, including but not limited to personal
injury and property damage. In the case of physical damage to the Building,
other than damage in the premises demised to Tenant under the Lease, Owner shall
have the exclusive right (but not the obligation)
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to have such damage repaired, in which case Tenant shall pay or reimburse Owner
for the cost of such repair(s) within three (3) business days of demand therefor
accompanied by a copy of the bill for the repair(s). No Tenant shall hold or
sponsor an Event in the Building without first executing and delivering to Owner
a duly executed waiver, release and and indemnity and hold harmless agreement,
in a form acceptable to Owner, providing that Tenant waives and releases Owner
with respect to and agrees to indemnify, defend and hold Owner free and harmless
from and against any and all costs, demands, claims, suits, actions,
proceedings, orders, judgments, writs, decrees, forfeitures, subpoenae,
warrants, and the like, arising out of or in connection with the Event
(collectively "Claims"), including but not limited to demands for the payment of
principal sums, interest and penalties, and including but not limited to the
legal expenses incurred by Owner (including legal fees, costs, disbursements,
and expenses) in enforcing rights against Tenant or defending against any such
Claim through counsel of Owner's choice.
24. No Tenant shall hold or sponsor an Event in the Building without
first delivering to Owner, in a form acceptable to Owner, a duly executed and
acknowledged statement that violation of these SUPPLEMENTAL RULES shall be
deemed a material breach of the Lease.
25. No noise or other activity, including the playing of musical
instruments, radio, television or other sound reproduction system, which would,
in Owner's judgment, disturb other tenants in the Building, shall be made or
permitted by Tenant.
26. The Owner may refuse admission to the Building outside of
ordinary business hours (8:00 A.M. to 6:00 P.M.) to any person not having a pass
issued by the Owner or not properly identified, and may require all persons
admitted to or leaving the Building, outside of ordinary business hours, to
register.
27. All entrance doors in Tenant's demised premises shall be left
locked by Tenant when the demised premises are not in use. Entrance doors shall
be kept closed at all times.
28. All locks affording access to Tenant's demised premises and to
circulation within the demised premises shall be conformed to Owner's master key
system.
4
<PAGE> 56
29. The requirements of Tenant will be attended to only upon
application to the Building Superintendent at his office in the Building.
Building employees shall not be requested by Tenant, and will not be permitted,
to perform any work or services specifically for Tenant, unless expressly
authorized to do so by the Building Superintendent.
30. Tenant shall not at any time store or keep any material,
supplies, furniture, furnishings or equipment of any kind in any machine room or
in any mechanical or electrical equipment room in the Building whether such room
be within or outside the demised premises.
31. Owner may charge Tenant for changes to the Building's
directory(ies) subsequent to the initial listings. All requests for directory
listings shall be in writing on Tenant's letterhead signed by an authorized
officer of Tenant.
32. In no event and under no circumstances shall freight, furniture,
business equipment and bulky matters of any description be brought into or used
in any passenger elevators in the Building, it being understood that such items
shall be moved into and out of the Building and between floors therein only on
the freight elevator and otherwise in accordance with other applicable Rules.
33. All Tenant's employees will be issued Building ID cards.
Replacement cards are $10.00 each. Cards can be obtained at the Building
Manager's office during regular office hours. All cards will be numbered and
controlled by the Building Manager.
34. Effective 9:00 A.M., November 23, 1998, loading dock and freight
elevator hours are from 8:00 A.M. to 6:00 P.M., Monday through Friday. The use
of a freight elevator at any other time shall be subject to Owner's prior
written consent and shall be conditioned upon payment of overtime charges
therefor at such hourly rate and minimum hours as Owner may specify.
35. Effective January 1, 1999:
(a) All major deliveries must be coordinated with the
Building Manager to insure proper handling.
(b) No messengers or deliveries of any kind will be allowed
beyond the Concierge Desk at the main Building entrance on 26th
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<PAGE> 57
Street during off hours. The Tenant will be notified of the delivery and must
come to the lobby and accept or refuse the package.
(c) All messengers must register in the Lobby at the
Building Entrance on 26th Street prior to making delivery to Tenant.
(d) Hand trucks and luggage carriers must only use freight
elevator.
(e) No equipment, furniture, typewriters, etc. may be
removed from the Building at any time unless a pass authorizing such removal has
been signed by the Tenant's authorized officer. Passes may be in the form of
written authorization on Tenant's letterhead and signed by an authorized
official or on a Building pass.
(f) Trucks entering the Building or using the freight
elevator shall be limited to a maximum length of twenty (20) feet
bumper-to-bumper.
36. At no time shall animals be brought or kept in the Building.
37. At no time shall bicycles be brought or kept in the Building,
nor shall roller blades and/or roller skates be used in any portion of the
Building.
38. No smoking shall be allowed in any public areas of this
Building.
39. Owner reserves the right to rescind, alter, waive, expand or add
any rule or regulation at any time prescribed for the Building when, in its
judgment, it deems it necessary, desirable or proper for its best interest and
for the best interests of the tenants thereof, and no alteration or waiver of
any rule or regulation in favor of one tenant shall operate as an alteration or
waiver in favor of any other tenant. Owner shall not be responsible to Tenant
for the non-observance or violation by any other tenant of any of the rules and
regulations at any time prescribed for the Building.
40. If attendance of Owner's personnel and/or service contractors
shall be required, as determined by Owner in its sole discretion, in connection
with the use by Tenant of freight elevators or other Building services or
equipment, Tenant shall pay to Owner on demand, as additional
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<PAGE> 58
rent, such amount as Owner shall determine to be appropriate as a charge for
Owner's personnel and/or service contractors but there shall be no charge for
Tenant's initial move into the Building.
41. These SUPPLEMENTAL RULES shall be effective on the date hereof.
Dated: New York, New York
November 20, 1998
601 WEST ASSOCIATES LLC, OWNER
601 West 26th Street
New York, New York 10001
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<PAGE> 59
[SEAL OF THE CITY OF NEW YORK]
ISSUANCE #503
DEPARTMENT OF BUILDINGS
EXECUTIVE OFFICES
60 HUDSON STREET, NEW YORK, N.Y. 10013
JOEL A. MIELE, SR., P.E., Commissioner
SATISH K. BABBAR, R.A.
ASSISTANT COMMISSIONER
TECHNICAL AFFAIRS
(212) 312-8324
---------------------------------
TECHNICAL
POLICY AND PROCEDURE NOTICE #7/96
---------------------------------
TO Distribution
FROM: Satish K. Babbar, R.A.
Assistant Commissioner
DATE: June 24, 1996
SUBJECT: Temporary Places of Assembly
EFFECTIVE: immediately
PURPOSE: To establish uniform requirements for the issuance of a letter of
acceptance to have a temporary place assembly.
SPECIFICS: The following procedure shall be implemented:
1. The applicant, a Professional Engineer or Registered Architect
(P.E./R.A.), should submit a request letter for a Temporary Place of
Assembly permit at least ten (10) business days in advance of the
planned event at the respective borough office. A request received less
than three (3) business days prior to the event cannot be assured review
and acceptance.
The following documents shall be submitted:
A. The request letter shall be filed in the Borough Commissioner's
Office and include: event description, date(s), time(s), place
of event, maximum occupancy and owner's authorization for the
use of the premises.
B. Plans in triplicate, which shall include:
<PAGE> 60
1. Seal & signature of the P.E./R.A.
2. Layout details showing seating, aisles, travel
distances, exits, etc.
3. Construction details for tent(s), bleacher(s), booth(s),
stage(s), structure(s), etc. (DOB application for
construction shall also be filed in this case).
4. Fire protection to be available at the premises, such as
sprinklers, standpipes, hand fire extinguishers, and
location of nearest fire hydrants.
5. Emergency measures such as emergency lighting, emergency
generator, fire alarm system, etc.
6. Parking area location and layout, when necessary.
7. Sanitary facilities unless waived by the Borough
Commissioner.
8. Provisions for access to and use of the premises by
people with physical disabilities.
C. A description of the safety measures to be provided for review
by the Borough Commissioner:
1. F.D.N.Y. Certified Fire Guards
2. Communication lines to be made available during the
event to the Fire and Police Departments.
D. A. Signed and Sealed Statement by the P.E./R.A. ensuring that
the premises will be in accordance with the accepted plans.
E. Controlled Inspections, where required by the Borough
Commissioner, must be hand delivered or faxed to the Department
during business hours prior to the event.
II. THE BOROUGH OFFICE SHALL:
A. Charge a fee of two hundred fifty dollars ($250) for processing
of the request received at least ten (10) business days prior to
the scheduled event. Additional charge of one hundred dollars
($100) per day will be due for each day that the request letter
is received less than the ten (10) business days prior to the
event.
B. For a major event, through the Chief Plan Examiner or higher
level staff, consult the Fire and Police Departments and other
emergency services prior to acceptance, as appropriate.
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<PAGE> 61
C. Retain the original documents filed
D. Return two copies of the accepted documents to the P.E./R.A., of
which one copy shall be made available at the site before and
during the event for consultation by the appropriate authorities
E. Fax copies of the acceptance letter to the:
1. Local police precinct and firehouse.
2. Emergency Response Team
60 Hudson Street, 14th Floor
Attn.: James O'Malley
(212)312-8013 - Fax (212)312-8012
3. New York City Police Department
One Police Plaza
Operations Division, 8th Floor
New York, New York 10038
Attn.: Inspector Thomas Mullen, Commanding Officer
(212)374-5500 Fax (212)374-3840
(for events with over 500 people)
3
<PAGE> 62
STARRETT LEHIGH BUILDING EVENT APPROVAL APPLICATION
TO: 601 WEST ASSOCIATES, LLC
PURSUANT TO THE SUPPLEMENTAL RULES OF THE STARRETT LEHIGH BUILDING (BUILDING)
CONCERNING EVENTS HELD IN THE BUILDING, THE TENANT IDENTIFIED BELOW HEREBY
REQUESTS THE CONSENT OF THE OWNER TO THE EVENT DESCRIBED BELOW. ALL ITALICIZED
TERMS HAVE THE SAME MEANING AS IN THE SUPPLEMENTAL RULES ATTACHED TO AND WHICH
FORM PART OF THE TENANT'S LEASE.
Name of Tenant__________________________________________________________________
Leased Space # _______ Name of Responsible Individual___________________________
__________________________________ Tenant's Telephone # ______________ Tenant's
FAX # ________________________
Date of Proposed Event___________________________
Time of Proposed Event__________________________________________________________
Nature of Proposed Event _________________________ # of Invitees _______________
Proposed Location of Event within Building: Tenant's Space _____________________
Other (specify) _________________________
Has Tenant obtained a Temporary Place of Assembly Permit from the NYC Dept. of
Buildings? ______ Yes ______ No If yes, attach copy of NYC Dept. of Buildings
Permit Application and Permit to this application. If no, NYC Dept. of Buildings
Permit Application and Permit MUST be submitted to Owner prior to approval of
application.
Will liquor be served at the proposed Event? ______ Yes ______ No If yes, has
Tenant obtained a Temporary On-Premises Liquor or Caterer's License from the NYS
Liquor Authority? _____ Yes _____ No _____. If yes, attach to application. If
no, License MUST be submitted to Owner prior to approval of application.
Has Tenant prepared a detailed Statement of the type(s) and source(s) of all
food to be served at the proposed Event (or Statement that no food will be
served)? _____ Yes _____ No If yes, attach to application. If no, Statement MUST
be submitted to Owner prior to approval of application.
Has Tenant prepared an accurate Plan showing all means of ingress and egress
(including designation of corridors and other common areas) proposed to be
utilized in connection with the proposed Event? _____ Yes _____ No If yes,
attach to application. If no, Plan MUST be submitted to Owner prior to approval
of application.
Has Tenant obtained a Certificate of Insurance with respect to the proposed
Event? _____ Yes _____ No If yes; attach to application If no, Certificate MUST
be submitted to Owner prior to approval of application.
Has Tenant arranged for professional licensed security personnel to be present
at the Building in connection with the proposed Event? _____ Yes _____ No If
yes, attach a copy of Tenant's Contract with the security agency or personnel,
together with proof of licensing-If no, the Contract and proof of licensing MUST
be submitted to Owner prior to approval of application.
Has Tenant executed an Indemnification of Owner with respect to the proposed
Event on the form prescribed by Owner for that purpose? _____ Yes _____ No If
yes, attach to application. If no, Indemnification MUST be submitted to Owner
prior to approval of application.
Tenant acknowledges and agrees to pay the following fees and costs of Owner in
connection with the proposed Event: Non-Refundable Application Processing Fee -
$500: Maintenance/Clean Up Crew Fee - $200 minimum plus $50/hour for each hour
(or part thereof) after 4 hours; Elevator Overtime (6 PM - 9 AM) - $300 minimum
plus $75/hour for
<PAGE> 63
Maintenance/Clean Up Crew Fee - $200 minimum plus $50/hour for each hour (or
part thereof) after 4 hours; Elevator Overtime (6 PM - 9 AM) - $300 minimum plus
$75/hour for each hour (or part thereof) after 4 hours; Building Security
Overtime (6 PM - 9 AM) - $200 minimum plus $50/hour for each hour (or part
thereof) after 4 hours.
Is the Non-Refundable Application Processing Fee being paid by Tenant at this
time? _____ Yes _____ No If yes, attach to application. If no, Fee MUST be paid
prior to processing of application by Owner.
Does Tenant anticipate incurring Overtime expenses? _____ Yes _____ No If yes,
Tenant acknowledges that approval of application, is expressly conditional upon
payment of minimum costs and fees of $700 in accordance with above schedule,
prior to date of proposed Event If no. Tenant acknowledges that approval of
application, is expressly conditional upon payment of minimum costs and fees of
$200 in accordance with above schedule, prior to date of proposed Event. Such
minimum fees and costs are in addition to the Non-Refundable Application
Processing Fee. Tenant shall have no right to hold or sponsor the Event if such
fees and costs are not paid.
Tenant agrees that additional fees and costs, over and above the minimum fees
and costs set forth above, if any, shall be paid as follows: if ascertainable
and billed by Owner prior to the proposed Event, immediately upon billing and in
any event prior to the Event; if not ascertainable prior to the proposed Event,
as soon as practicable after being ascertained and billed, and in any event not
later than the 1st day of the month immediately following the month in which
such fees and costs are billed by Owner to Tenant. (Fees and costs billed after
the Event shall be deemed additional rent under the Lease.)
Tenant certifies that it has read and is familiar with the Supplemental Rules;
that it agrees that the proposed Event shall in all respects be governed by the
same; and that violation of the Supplemental Rules shall be deemed a material
breach of Tenant's Lease. Tenant acknowledges that Owner retains all rights to
approve or disapprove submissions and/or this application, as the case may be,
in accordance with the Supplemental Rules and applicable law.
Date of Application: ____________________
AUTHORIZED SIGNATORY FOR TENANT/APPLICANT:
------------------------------------------
PRINT NAME & TITLE BELOW:
FOR OWNER:
Date: _______________
_____ APPROVED _____ DISAPPROVED
_____ APPROVED ON CONDITION THAT TENANT ________________________________________
________________________________________________________________________________
AUTHORIZED SIGNATORY FOR OWNER:
- --------------------------------------
PRINT NAME & TITLE BELOW:
- --------------------------------------
2
<PAGE> 64
INDEMNIFICATION
To induce 601 West Associates LLC, Owner ("Owner") of the Starrett
Lehigh Building, located at 601 West 26th Street, New York, New York 10001
("Building") to accept, process and approve an application by
_____________________________________ ("Tenant") to hold an event in the
Building on __________________ ("Event"), pursuant to the Supplemental Rules and
Regulations of the Building attached to and part of Tenant's Lease, Tenant
hereby agrees to waive and release Owner with respect to, and indemnify, defend
and hold Owner harmless from and against, any and all costs, demands, claims,
suits, actions, proceedings, orders, judgments, writs, decrees, forfeitures,
subpoena, warrants, and the like, arising out of or in connection with the Event
(collectively, "Claims"), including but not limited to demands for the payment
of principal 'sums, interest and penalties, and including but not limited to the
legal expenses incurred by Owner (including legal fees, costs, disbursements and
expenses) in enforcing rights against Tenant or defending against any such Claim
through counsel of Owner's choice.
IN WITNESS WHEREOF, the undersigned has executed this Indemnification at
New York, New York on the _____ day of ________, _____.
----------------------------------------
TYPE/PRINT NAME OF TENANT
By:
-------------------------------------
(Authorized Signatory) (Title)
-------------------------------------
TYPE/PRINT NAME OF AUTH. SIGN.
Acknowledgement - Individual
STATE OF NEW YORK )
: as.:
COUNTY OF NEW YORK )
On the _____ day of _________, _____, before me personally appeared
______________, known to me, who, being by me duly sworn, did depose and say
that (s)he is the Tenant named in and who executed the foregoing
Indemnification.
----------------------------------------
Notary Public
Acknowledgement - Entity
STATE OF NEW YORK )
: as.:
COUNTY OF NEW YORK )
On the _____ day of __________, _____, before me personally appeared
__________________, known to me, who, being by me duly sworn, did depose and say
that - (s)he resides at ___________________________; that (s)he is the
____________________ of __________________________, the Tenant named in and on
behalf of whom/which (s)he executed the foregoing Indemnification; that (s)he
signed his/her name thereto by order of the Tenant; and that if the Tenant is a
corporation the seal of which has been affixed to the foregoing instrument, that
the same is by order of the Board of Directors of such corporation.
----------------------------------------
Notary Public
3
<PAGE> 1
Exhibit 10.17
Paramount
Group, Inc.
ONE WILSHIRE ARCADE IMPERIAL, LTD.
LICENSE AGREEMENT
FOR USE OF TELECOMMUNICATIONS CONDUIT
AND CONDUIT INTERCONNECTION ROOM
PARTIES: ONE WILSHIRE ARCADE IMPERIAL, LTD.,
a California Limited Partnership
624 S. Grand Avenue, Suite 1207
Los Angeles, CA 90017
("One Wilshire")
UNIVERSAL ACCESS, INC.
100 North Riverside Plaza, Suite 2200
Chicago, Illinois 60606
("Licensee")
DATE: July 6, 1999
PLACE: Los Angeles
ESTIMATED EFFECTIVE DATE September 1, 1999
LICENSE EXPIRATION DATE: August 31, 2009
RECITALS
A. One Wilshire is the owner of the One Wilshire Building, located at
624 S. Grand Avenue, Los Angeles, California 90017 (the "Building"). One
Wilshire has set aside a portion of the fourth floor of the Building for use as
a special conduit room (the "Conduit Room") and has set aside a portion of the
Building's parking elevator shaft for use as a special conduit shaft (the
"Conduit Shaft"). Additional conduits owned by One Wilshire (the "Extension
Conduits") extend from the base of the Conduit Shaft out of the Building to the
property line of certain property in which Licensee has an ownership or
leasehold interest ("Licensee's Property"). The purpose of the Conduit Room, the
Conduit Shaft, and the Extension Conduits will be to facilitate interconnections
between various telecommunications providers and users who enter license
agreements with One Wilshire for the use of such facilities.
B. Licensee wishes to obtain a license from One Wilshire for use of the
Conduit Room, in common with others, and use of certain conduit space (the
"Connecting Conduit") running from the exterior of 530 W. 6th Street through the
Extension Conduits and the Conduit Shaft to the Conduit Room. One Wilshire is
willing to give Licensee a non-exclusive
1
<PAGE> 2
license, revocable by One Wilshire at will under the circumstances described in
Section 6 below, for use of the Conduit Room and the Connecting Conduit on the
terms and conditions set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
AGREEMENT
1. License for Use of Conduit Room and Connecting Conduit. One Wilshire
hereby grants to Licensee a non-exclusive license, revocable by One Wilshire at
will under the circumstances described in Section 6 below, for use of the
Conduit Room and the Connecting Conduit. Such use shall be on the terms and
conditions set forth in this Agreement. Licensee shall have the right to
commence such use on or after the date (the "Effective Date") which is the later
of (a) the "Estimated Effective Date" as shown on page 1; provided Landlord
first makes the Conduit Room (including the "One Wilshire Installations"
assigned to Licensee as described below) and the Connecting Conduit available
for use by Licensee. If for any reason the Conduit Room has not been made
available for Licensee's use or the Connecting Conduit has not been installed by
the Estimated Effective Date, One Wilshire shall have no liability to Licensee
for any reasonable delay. However, in such event, Licensee, as Licensee's sole
and exclusive remedy, shall have no obligation for the Monthly License Fee
described in Section 2 until the Conduit Room has been made available for
Licensee's use, the Connecting Conduit has been installed, and the Effective
Date has occurred. A reasonable delay shall not exceed 30 days from Effective
Date. Any delay which extends beyond the 30 days shall constitute a default by
One Wilshire and Licensee may terminate this Agreement as its sole remedy.
In connection with Licensee's use of the Conduit Room, Licensee shall be
provided with use of the following items ("One Wilshire Installations") in the
Conduit Room in the quantities indicated:
N/A 110 volt AC outlets
1/3 of a 2' by 2' lockable cabinets
N/A backup generator connections for 110 volts AC
N/A 5' by 5' lockable cages
The Connecting Conduit shall run from the property line of Licensee's
Property, on the first basement level below grade, up to and through the Conduit
Shaft to one of Licensee's racks, cages or cabinets in the Conduit Room, as
designated by Licensee. One Wilshire, in its reasonable discretion, shall
designate the precise route of the Connecting Conduit, including which conduit
in the Extension Conduits and the Conduit Shaft shall be used for the Connecting
Conduit. The Connecting Conduit shall consist of conduit in the following
quantities and sizes:
1 1-inch innerduct
N/A 4-inch conduits
Licensee acknowledges that other tenants and licensees will also be
using similar One Wilshire Installations in the Conduit Room. Licensee agrees to
use the Conduit Room only for the purpose of facilitating interconnections
between Licensee's telecommunications system and the telecommunications systems
of other tenants and licensees of One Wilshire who reserve One Wilshire
Installations in the Conduit Room and who consent in writing to such an
interconnection. Licensee agrees not to store, install or use any equipment,
conduit, cable, wiring, connecting lines or other property of Licensee in the
Conduit Room for any other purpose. Licensee shall cooperate in keeping the
Conduit Room locked and in restricting access to the Conduit Room to employees,
contractors and other persons who need access in order to facilitate such
interconnections. In no event shall Licensee cause (or permit its employees,
representatives, contractors or invitees to cause) any interference with or
damage to the One Wilshire Installations, equipment, conduits, cable, wiring or
connecting lines owned or used by other tenants or licensees in the Conduit
Room. One Wilshire shall equip the Conduit Room with security cameras and a
24-hour security access system. One Wilshire shall also provide all tenants and
licensees of One Wilshire who use the Conduit Room with standard specifications
for all wiring, cabling and connecting lines to be installed in the Conduit Room
by such tenants or licensees. One Wilshire also shall have the right, in One
Wilshire's reasonable discretion, to enforce such other security measures and
installation guidelines as One Wilshire deems appropriate. However, One Wilshire
shall have no liability to
2
<PAGE> 3
License for any damage or interference caused by any unaffiliated person to the
One Wilshire Installations assigned to Licensee or to the cable, wiring,
connecting lines, equipment or other property of Licensee in the Conduit Room or
the Connecting Conduit.
One Wilshire's only obligation to Licensee regarding the installation of
facilities pursuant to this Agreement shall be to install the One Wilshire
Installations assigned to Licensee in the Conduit Room and the Connecting
Conduit. The cost of such work, together with One Wilshire's related
administrative fee, is included in Licensee's installation payment to One
Wilshire described in item (b) in Section 2 below. Licensee's share of One
Wilshire's cost of constructing the Conduit Room and the Conduit Shaft
themselves is included in Licensee's one-time participation payment described in
item (a) in Section 2.
All installation of wiring or cabling that Licensee wishes installed in
the Connecting Conduit shall be installed by One Wilshire's designated
contractor at Licensee's expense, provided the designated contractor's prices
are competitive within the industry. Licensee agrees to pay One Wilshire the
cost of such work, together with One Wilshire's 10% administrative fee, within
30 days after receipt of a billing from One Wilshire.
All installation of wiring, cabling and connections for Licensee's use
within the Conduit Room, including but not limited to any wiring, cabling or
connections in or about the One Wilshire Installations, shall be performed at
Licensee's sole expense by a qualified, duly licensed contractor selected by
Licensee. One Wilshire shall have no obligation or liability with respect to
such work by Licensee's contractors. Licensee shall cause all such work by
Licensee's contractors to be completed and paid for promptly to prevent any
mechanic's liens being filed. Licensee shall also cause all such work by
Licensee's contractors to comply with One Wilshire's rules and regulations in
effect from time to time for work in the Building, as well as the requirements
in One Wilshire's Conduit Room Rules in effect from time to time. (The Conduit
Room Rules initially shall be as set forth in Exhibit A.) Such requirements
include, but shall not be limited to, the requirement that, prior to starting
the work, the contractor or Licensee must provide to One Wilshire (i) evidence
of insurance coverage for the work in conformity with the standards in One
Wilshire's rules, (ii) copies of all legally required permits for the work, and
(iii) a copy of the written consent of any other tenant or licensee in the
Conduit Room with whose facilities a connection will be made as part of the
work. Licensee shall notify One Wilshire in writing before Licensee's contractor
commences any such work, so that One Wilshire may, if One Wilshire so elects,
post notices of nonresponsibility.
Licensee's ongoing use of the Conduit Room, the Connecting Conduit and
Licensee's cable, wiring, and connecting lines shall comply with all applicable
laws and the Building's rules (including but not limited to the Conduit Room
Rules) adopted by One Wilshire from time to time. Licensee's use shall not
interfere in any way with the operation of the Building or with the occupancy or
activities of any other tenant or licensee.
2. License Fees. Licensee agrees to pay One Wilshire a license fee for
use of the Conduit Room and the Connecting Conduit, which initially shall be (a)
a one-time participation fee of $N/A for use of the Conduit Room, plus (b)
installation costs of $4.000 for the Connecting Conduit and for the One Wilshire
Installations assigned to Licensee in the Conduit Room (not including Licensee's
cable, wiring, or connecting lines in the Connecting Conduit and the Conduit
Room). Such amounts shall be due and payable upon execution of this Agreement.
(No portion of such amounts shall be refundable if this license is terminated,
except in the event One Wilshire is in default of this Agreement. Such payments
shall be a condition precedent to Licensee's rights to use this license.
After Licensee's initial payment, the monthly license fee (the "Monthly
License Fee") for the Conduit Room and the Connecting Conduit shall be $1.500
per month, subject to adjustment as provided below. Such Monthly License Fee
shall be due and payable to One Wilshire at the address shown on page 1 on the
first day of each month or portion of a calendar month until this license
expires pursuant to Section 6 below or is revoked by One Wilshire, without any
fault by Licensee, in accordance with Section 6 below. The first such
installment of the license fee shall be due on the Effective Date. The Monthly
License Fee for any partial calendar month shall be equitably prorated, as
calculated by One Wilshire in its reasonable discretion.
The amount of the Monthly License Fee shall be adjusted as of each
January 1 until the License Expiration Date set forth on page 1. For purposes of
calculating such adjustment, the Consumer Price Index for All Urban Consumers,
U.S. City
3
<PAGE> 4
Average, All Items (1967=100), unadjusted (herein the "Index") published by the
Bureau of Labor Statistics of the United States Department of Labor for the
month during which the Effective Date occurs shall be the base Index figure (the
"Base Index"). The Base Index shall be compared to the Index figure for December
of each year that the license continues in force until it expires pursuant to
Section 6, including the initial partial calendar year during which the
Effective Date occurs. In the event that the Index figure for December of any
such year shall be greater than the Base Index, then in addition to the Monthly
License Fee, Licensee shall pay to One Wilshire a monthly amount equal to the
same percentage increase in the Monthly License Fee as the percentage increase
in the Index for such December over the Base Index. Such amount shall be payable
monthly commencing with the payment of the Monthly License Fee for the January
immediately following such December.
In the event that the Index for any such December is not yet available
upon the date that any installment of the Monthly License Fee is due, Licensee
shall continue paying the Monthly License Fee, as previously adjusted, in the
amount applicable for such December until the Index for that month is published,
whereupon Licensee shall immediately pay One Wilshire the adjustments which
would have been due in the months following such December had the Index for such
December been available. In the event that publication of the Index is
discontinued, One Wilshire and Licensee agree that the index of consumer prices
which is most closely analogous to the Index shall be used in place of the Index
for calculation of the adjustments payable hereunder. In the event that the
referents or techniques employed in the calculation of the Index shall be
modified and such modification would have resulted in a different figure for the
Base Index, One Wilshire and Licensee agree that the Base Index shall be
appropriately adjusted and that the Index, as modified, shall be used as
provided hereunder.
3. Electrical Usage. If the One Wilshire Installations include
electrical outlets, Licensor may elect to separately meter at Licensee's expense
the electrical usage of some or all of such outlets. Licensee shall pay the
charges for all such separately metered electrical usage within 30 days after
receipt of a billing therefor. Licensee shall also pay monthly within 30 days
after Licensee's receipt of a billing such sums as Licensor's building engineer
may reasonably determine to be necessary in order to reimburse Licensor for the
additional cost of any electrical usage by Licensee within the Conduit Room
which has not been separately metered to Licensee. Licensee shall have the right
to review supporting documentation (electric bills, formulas/calculations) used
to determine electric costs billed to Licensee.
4. Indemnity, Waiver and Insurance. Licensee hereby agrees to indemnify
and hold harmless One Wilshire and its partners, its agent Paramount Group, Inc.
and their respective officers, directors, shareholders, agents and employees
(collectively, the "One Wilshire Group") from and against any and all claims
(including but not limited to claims for bodily injury or property damage),
actions, mechanic's liens, losses, liabilities, and expenses (including
reasonable attorney fees and costs of defense by One Wilshire's legal counsel)
(collectively, "Claims"), which may arise from the installation, operation, use,
maintenance or removal of conduit, cable, wiring, connecting lines, equipment or
other property pursuant to this Agreement or from Licensee's use of the Conduit
Room, the Connecting Conduit, or the One Wilshire Installations. Similarly,
Licensee shall pay upon demand by One Wilshire the costs to repair any physical
damage to the Building caused by such installation, operation, use, maintenance
or removal. Licensee hereby waives and releases the One Wilshire Group from any
Claims Licensee may have at any time (including but not limited to Claims
relating to interruptions in services) arising out of or relating in any way to
the installation, operation, use, maintenance, or removal of conduit, cable,
wiring, connecting lines, equipment or other property described in this
Agreement or Licensee's use of the Conduit Room, the Connecting Conduit, or the
One Wilshire Installations, except to the extent caused by the negligence of any
member of the One Wilshire Group or One Wilshire's contractors. Such waiver and
release shall not apply to Claims to the extent caused by One Wilshire's wilful
misconduct. However, in no event shall One Wilshire or any member of the One
Wilshire Group be liable to Licensee for lost profits or consequential,
incidental or punitive damages of any kind. Licensee agrees to provide One
Wilshire, prior to Licensee's use of the Conduit Room or the Connecting Conduit
hereunder and at all times during such use, with evidence of liability insurance
coverage for Licensee's activities in or about the Building, the Conduit Room,
and the Connecting Conduit. Such insurance shall be in an amount of not less
than $2,000,000 combined single limit for injuries to persons and damage to
property, shall provide for deductibles of not more than $5,00 per occurrence,
shall include coverages reasonably acceptable to One Wilshire (including but not
limited to contractual coverage covering Licensee's indemnity obligations to One
Wilshire under this Agreement) and shall name as additional insureds One
Wilshire, is managing agent Paramount Group, Inc. and any lenders or ground
lessors designated by One Wilshire.
5. Removal of Cable, Wiring and Connecting Lines. Licensee agrees that,
upon the expiration or termination of this license as described in Section 6
below, Licensee (or, at One Wilshire's election, the contractor designated by
One Wilshire) shall promptly remove, at Licensee's sole cost and expense, all
cable, wiring, connecting lines, and other installations, equipment or property
installed or placed by or for Licensee in the Conduit Room or the Connecting
Conduit
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<PAGE> 5
(excepting the Connecting Conduit itself and the One Wilshire Installations,
which shall remain the property of One Wilshire), and restore those portions of
the Building damaged by such removal to their condition immediately prior to the
installation or placement of such items. If Licensee fails to promptly remove
all such items pursuant to this Section 5, or if One Wilshire elects to have
such work performed by One Wilshire's contractor, One Wilshire may remove such
items and restore those portions of the Building damaged by such removal to
their condition immediately prior to the installation or placement of such
items, in which case Licensee agrees promptly to pay One Wilshire's reasonable
costs of removal and restoration, including One Wilshire's administrative fee.
6. No Lease or Easement of Conduit Room or Connecting Conduit;
Termination of License. Licensee acknowledges that the rights granted to
Licensee hereunder do not constitute a lease of any portion of the Conduit Room,
the Connecting Conduit or the One Wilshire Installations nor an easement, but
rather constitute a non-exclusive license for use in common with others. Such
license is revocable by One Wilshire in One Wilshire's sole discretion (a) upon
any default by Licensee under this Agreement which is not cured within 30 days
after written notice from One Wilshire to Licensee; or (b) if the Connecting
Conduit runs through the right-of-way for Grand Avenue, upon any failure to
obtain, or any revocation of, in whole or in part, for any reason, One
Wilshire's permit or franchise to use such right-of-way for the Connecting
Conduit, or the placing of unduly burdensome (economic or otherwise)
restrictions or conditions on such use (as determined by One Wilshire in its
reasonable discretion), by the City of Los Angeles or other governmental agency
with jurisdiction; or (c) if the Connecting Conduit runs under the outdoor
parking lot south of the Building (which parking lot is ground leased by One
Wilshire on a long-term basis), upon the termination for any reason of One
Wilshire's ground lease for such parking lot, or upon the arising of any other
need for One Wilshire to terminate this license in order to comply with the
terms of such ground lease. (Licensee agrees not to violate any provision of
which Licensee has notice contained in the permit or franchise described in item
(b) or in the ground lease described in item (c).) One Wilshire shall retain
such rights of revocation notwithstanding any expenditure of money on the
installations described herein or other actual or alleged reliance by Licensee.
Such revocation shall be made by written notice from One Wilshire to Licensee.
The license shall expire in any event, without notice from One Wilshire,
upon the License Expiration Date set forth on page 1.
This license is personal to Licensee, and Licensee's rights hereunder
may not be assigned, sub-licensed, or otherwise transferred in any fashion,
regardless of whether such an arrangement is called an assignment, a
sub-license, a co-location agreement or any other name. Licensee agrees not to
permit any third party to place, use or operate their own equipment, wiring,
cabling or connecting lines in or about Licensee's One Wilshire Installations or
Connecting Conduit.
In the event of any termination of this license due to a default by
Licensee, One Wilshire, in addition to any other rights it may have at law or in
equity, may collect from Licensee (i) the worth at the time of award of all
license fees earned at the time of termination; (ii) the worth at the time of
award of the amount by which the unpaid license fees which would have been
earned after termination until the time of award exceed the amount of such loss
of license fees that the Licensee proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which the unpaid license
fees after the time of award up through the License Expiration Date shown on
page 1 exceed the amount of such loss of license fees that Licensee proves could
be reasonably avoided; and (iv) any other amount necessary to compensate One
Wilshire for all the detriment proximately caused by the Licensee's default or
which in the ordinary course of things would be likely to result therefrom. The
"worth at the time of award" as described in items (i) and (ii) shall include
interest at Bank of America's prime rate at that time plus 3%. The "worth at the
time of award" as described in item (iii) shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus 1%.
7. Attorneys' Fees. In the event of any lawsuit or other proceeding
between the parties arising out of this Agreement, the prevailing party shall be
entitled to recover from the losing party the prevailing party's reasonable
attorneys' fees and costs of suit.
8. Miscellaneous. This Agreement supersedes all prior or contemporaneous
understandings, negotiations, or agreements between the parties, whether written
or oral, with respect to its subject matter. This Agreement may be amended only
in a writing signed by both One Wilshire and Licensee.
One Wilshire's obligations under this Agreement shall be enforceable
only against One Wilshire's interest in the Building and not any other asset of
One Wilshire. Upon any sale or other conveyance by One Wilshire of its interest
in the
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<PAGE> 6
Building, One Wilshire shall be released from any further obligations under this
Agreement, and Licensee shall acknowledge One Wilshire's transferee of the
Building as the new licensor under this Agreement. Subject to the other
provisions hereof, this Agreement shall be binding on the parties and their
respective successors and assigns.
Licensee acknowledges that One Wilshire and its agents, employees, and
representatives have made no representation to Licensee of any kind regarding
any matter, including but not limited to the Building, the Conduit Room, the One
Wilshire Installations, the Connecting Conduit, or the effect of applicable laws
or zoning on Licensee's intended use of this license. Licensee is relying on its
own investigation of all such matters and agrees to obtain at its expense all
licenses, conditional use permits, or other governmental approvals legally
required for its intended use of this license.
The interpretation and enforcement of this Agreement shall be governed
by the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and at the place first written above.
ONE WILSHIRE: ONE WILSHIRE ARCADE IMPERIAL, LTD.
a California Limited Partnership
By: Paramount Group, Inc., Its Agent
By: /s/ DANIEL K. BROWN
-------------------------------
Daniel K. Brown
Its Director, Property Management Western Region
By:
-------------------------------
Its
----------------------------
LICENSEE: UNIVERSAL ACCESS, INC.
By: /s/ THOMAS HADDEN
Its Chief Network Officer
By: Thomas Hadden
-------------------------------
Its
----------------------------
6
<PAGE> 7
Paramount
Group, Inc.
EXHIBIT A
ONE WILSHIRE BUILDING
CONDUIT ("MEET POINT") ROOM RULES
The Meet Point Room is a conduit room located on the fourth floor of the
One Wilshire Building located at 624 S. Grand Avenue, Los Angeles, California
90017 (the "Building") for the special purpose of facilitating interconnections
between various telecommunications providers and users who currently hold
licenses with the Building for the use of such facilities ("Participants"). As a
condition to maintaining their license and to the ongoing use of the Meet Point
Room, all Participants must comply with the Meet Point Room Rules set forth
herein and as may be adopted or revised by the Building in its reasonable
discretion from time to time.
These Meet Point Room Rules are in addition to the terms, covenants, and
conditions of any agreement (including but not limited to a lease) between
Participant and the Building for use of the Meet Point Room. In the event these
Rules conflict with any provision of such agreement, such agreement shall
control.
The Building may waive any one or more of these Meet Point Room Rules
for the benefit of a Participant, but no such waiver by the Building shall be
construed as a waiver of such Rules in favor of anyone other than such
Participant for whose benefit such waiver was expressly intended, nor prevent
the Building from thereafter enforcing such Rules against such Participant or
any or all of the other Participants.
The Building reserves the right to make such other and reasonable Meet
Point Room Rules as, in its judgment, may from time to time be necessary or
desirable. Participant agrees to abide by all such Meet Point Room Rules as
stated herein and any additional rules and regulations which are adopted.
1. Participants must furnish the Building with the names (and other
necessary identification as Building may require) of its personnel who
are authorized by Participant to enter the Meet Point Room. Participants
are responsible for keeping such authorized user list current.
2. Participants wishing to enter into the Meet Point Room must sign in at
the Meet Point Room log book located at the Building Security Desk.
3. Each person wishing to enter the Meet Point Room must be on the
authorized user list. Positive proof of identity is required before
entrance to the Meet Point Room is permitted. A driver's license or
other authenticated photograph identification is the only acceptable
form of positive proof. Such form of identification will be held as
security until Participant completes Participant's activities in the
Meet Point Room.
4. Each person wishing to enter the Meet Point Room must obtain a security
access card from Building Security each time he or she wishes to enter.
On entering or leaving the Meet Point Room, Participant must make sure
the door is shut and not left ajar.
5. If Participant intends to perform cross-connect work in the Meet Point
Room, upon entry Participant must submit a fully executed (by
Participant and the Building's authorized representative) Cross-Connect
Authority Form in the form provided by the Building.
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<PAGE> 8
6. Upon leaving the Meet Point Room, Participant must sign out in the Meet
Point Room log book at which time Participant's photo identification
will be returned.
7. All activities in the Meet Point Room must be in compliance with the law
including all applicable local, state, and federal laws, rules, codes
and regulations.
8. Participants desiring to interconnect to another Participant's
cross-connect array must negotiate such interconnection directly with
such other Participant and the Building shall have no obligation in that
regard.
9. All cross-connects must be accomplished utilizing Building-standard
cable and wire and following approved procedures.
10. All wiring shall be routed through the furnished channels, raceways,
etc. All cable shall be dressed-in and secured so as to ensure a
professional appearance, run straight and level, with 90 degree corners
where possible. Where tie wraps are used, the end shall be cut to
preserve the professional appearance.
11. Groups of cable routed to the Meet Point Room shall remain bundled
together to the degree possible for easy identification.
12. All cables must be clearly labeled utilizing Building-provided tags.
13. The Meet Point Room must be kept clean and free of debris at all times.
14. Tampering in any way with other Participants' circuits and
cross-connects is not permissible and is grounds for immediate
revocation of Participant's Meet Point Room rights. All other
infractions of Meet Point Room Rules must be corrected within 24 hours
of notification.
15. If circuit tampering is detected at any time by any Participant, it must
be reported immediately to the Building Security Desk.
16. Notification of infraction is accomplished by Building Management's
delivery of a written warning to the Participant.
17. Receipt of three (3) warnings within a six-month period is cause for
immediate revocation of Meet Point Room participation rights.
18. Meet Point Room participation rights are subject to revocation for any
default under the agreement between the Building and Participant
regarding Participant's use of the Meet Point Room.
19. Upon expiration or revocation of Meet Point Room participation rights,
Participant must make arrangements to vacate the Meet Point Room and
remove all cross-connects associated with Participant's assigned
array(s) within 30 calendar days of notification.
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<PAGE> 1
EXHIBIT 10.18
IXC
MASTER SERVICE AGREEMENT
This Agreement for telecommunications services is made as of the date of last
execution below (the "Effective Date") and entered into by and between IXC
Carrier, Inc./ IXC Long Distance, Inc./ IXC Broadband Services, Inc.
(generically "IXC"), a Nevada/Delaware corporation with its principal place of
business at 5000 Plaza on the Lake, Suite 200, Austin, Texas 78746 ("Supplier"),
and Universal Access, Inc., an Illinois corporation with its principal place of
business at 1021 West Adams Street, Suite 101, Chicago, Illinois 60607
("Customer").
WHEREAS, Customer desires to obtain telecommunications services as described
below (the "Service") from Supplier, and Supplier is willing to provide the
Service for the rates attached hereto.
NOW, THEREFORE, Customer and Supplier hereby mutually agree as follows:
CREDIT REQUIREMENTS: Deposit. Customer shall pay Supplier in advance a deposit
equal to the monthly recurring charges plus installation for each circuit
ordered with Supplier hereunder.
SERVICE, TERM AND RATES: Supplier agrees to provide and Customer agrees to
purchase Service(s) indicated below. This agreement, including any terms and
conditions, addenda, schedules, supplements or exhibits which are attached
hereto and incorporated herein, constitutes the entire agreement (the
"Agreement") by Supplier and Customer pertaining to the subject matter(s) hereof
and supersedes all prior and contemporaneous agreements and understandings in
connection herewith.
SERVICE TYPE:
<TABLE>
<CAPTION>
SWITCHED SERVICE: BROADBAND SERVICE:
----------------- ------------------
<S> <C>
_______ Xclusive ___________ ATM
_______ Xnet ___________ Frame Relay
PRIVATE LINE SERVICE: ___________ Network Management Services
X Digital ___________ Training
_________ Optical CUSTOMER INTERFACE:
___________ Rack Space & Power
___________ Shelf Space
___________ Collocation
</TABLE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date last
written below.
IXC UNIVERSAL ACCESS, INC.
BY: /s/ JOHN R. FLEMING BY: /s/ PATRICK C. SHUTT
- ----------------------------------- ----------------------------------------
NAME: JOHN R. FLEMING NAME: PATRICK C. SHUTT
TITLE: EXECUTIVE VICE-PRESIDENT TITLE: PRESIDENT
----------------------------- ----------------------------------
DATE: 11/6/97 DATE: 10/27/97
------------------------------ -----------------------------------
FULL BUSINESS ADDRESS: FULL BUSINESS ADDRESS:
5000 PLAZA ON THE LAKE, SUITE 200 1021 WEST ADAMS STREET, SUITE 101
AUSTIN, TEXAS 78746-1050 CHICAGO, ILLINOIS 60607
TELEPHONE: 512-427-3700 TELEPHONE: 312-706-7500
FACSIMILE: 512-328-7902 FACSIMILE: 312-706-9006
BILLING CONTACT: MARIA CAVAZOS
TELEPHONE: 312-491-1700
APPROVED AS TO FORM
LEGAL DEPT.
<PAGE> 2
MASTER SERVICE AGREEMENT
TERMS & CONDITIONS
1. CREDIT. All Services ordered hereunder are subject to credit approval.
Customer shall complete a credit application form attached hereto as
Exhibit A.
2. PROVISION OF BALANCE SHEET. Prior to commencement of Service, Customer
shall provide Supplier with financial statements including a
consolidated balance sheet of Customer as of the end of the most recent
quarter and consolidated statements of income and retained earnings of
such quarter and the fiscal year to date through such quarter, all in
reasonable detail and certified by Customer's chief financial officer as
having been prepared in accordance with generally accepted accounting
principles, consistently applied. Customer shall provide updated
financial statements as reasonably requested by Supplier.
3. PAYMENT TERMS. Invoices for Service are due and payable within thirty
(30) days of the date of invoice (unless otherwise indicated in the
Credit Requirements section of the Master Service Agreement), without
demand or set off by Customer. Payments not received within thirty (30)
days of the date of invoice are considered past due. In addition to
Supplier undertaking any of the actions set forth in this Agreement, if
any invoice is not paid when due: (i) a late charge shall accrue equal
to 1-1/2% (or the maximum legal rate, if less) of the unpaid balance per
month; (ii) Supplier may require a Security Deposit or other forms of
security acceptable to Supplier; and/or (iii) Supplier may take any
action in connection with any other right or remedy Supplier may have
under this Agreement in law or in equity.
4. BILLING DISPUTES. If Customer in good faith disputes any portion of any
Supplier invoice, Customer shall submit to Supplier, within 30 days
following the date of the invoice, full payment of the undisputed
portion of the invoice and written documentation identifying and
substantiating the disputed amount. If Customer does not report a
dispute within the 30 day period, Customer shall have waived its dispute
rights for that invoice. Supplier and Customer agree to use their
respective best efforts to resolve any dispute within fifteen (15) days
after Supplier receives written notice of the dispute from Customer. Any
disputed amounts resolved in favor of Customer shall be credited to
Customer's account on the next invoice following resolution of the
dispute. Any disputed amounts determined to be payable to Supplier shall
be due within ten (10) days of the resolution of the dispute.
Any dispute arising out of or relating to this Agreement which has not
been resolved by the good faith efforts of the parties will be settled
by binding arbitration conducted expeditiously in accordance with
Section 16.
5. ADDITIONAL ASSURANCES. If at any time during the term of this Agreement
there is a material and adverse change in Customer's financial condition
or business prospects, which shall be determined by Supplier in its sole
and absolute discretion, then Supplier may demand that Customer deposit
with Supplier a security deposit (the "Security Deposit"), pursuant to
Supplier's standard terms and conditions, as security for the full and
faithful performance of Customer of the terms, conditions and covenants
of this Agreement; provided, however, that in no event shall the amount
of the Security Deposit ever exceed two months' estimated Usage Charges
and other amounts payable by Customer to Supplier hereunder.
6. SUBJECT TO LAWS. Customer hereby represents and warrants that it is
certified to do business in all jurisdictions in which it conducts
business and is in good standing in all such jurisdictions. Customer
further represents and warrants that it is certified by the proper
regulatory agencies to provide interstate, intrastate and international
long distance services to End-Users in those jurisdictions where such
services are to be provided by Customer. Customer shall keep current
during the term of this Agreement, copies of its Certificates of Public
Convenience and Necessity or similar documents certifying Customer's
interstate, intrastate, or international operating authority in any
local, state, or federal jurisdiction (collectively, "Service Compliance
Certificates") and furnish copies thereof to Supplier within ten days of
written request by Supplier. Supplier reserves the right to refuse or
withhold Service in any jurisdiction in which Customer's Service
Compliance Certificate has not been furnished to Supplier in a timely
manner. Customer shall defend and indemnify Supplier from any losses,
expenses, demands and claims in connection with Customer's failure to
provide Supplier with such Service Compliance Certificates. Such
indemnification includes costs and expenses (including reasonable
attorney's fees) incurred by Supplier in settling, defending or
appealing any claims or actions brought against it relating to
Customer's failure to provide such Service Compliance Certificates.
7. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the validity and performance hereof, shall be
governed by the laws of the State of Texas without regard to its
principles of choice of law.
8. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given as of the date of
delivery, facsimile transmission or mailing, and if mailed, first class
postage prepaid, certified or registered mail, return receipt requested
to the following persons, unless contrary instructions are given by the
parties in writing:
If to Supplier: IXC
5000 Plaza on the Lake, Suite 200
Austin, Texas 78746
Attention: Contract Administration
If to Customer: Universal Access, Inc.
1021 West Adams Street, Suite 101
Chicago, Illinois 60607
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<PAGE> 3
9. WAIVER OF BREACH OR VIOLATION NOT DEEMED CONTINUING. The waiver by
either party of a breach or violation of any provision of this Agreement
shall not operate as or be construed to be a waiver of any subsequent
breach hereof.
10. BANKRUPTCY. In the event of the bankruptcy or insolvency of either party
hereto or if either party hereto shall make an assignment for the
benefit of creditors or take advantage of any act or law for relief of
debtors, the other party to this Agreement shall have the right to
terminate this Agreement without further obligation or liability on its
part.
11. BUSINESS RELATIONSHIP. This Agreement shall not create any agency,
employment, joint venture, partnership, representation, or fiduciary
relationship between the parties. Neither party shall have the authority
to, nor shall any party attempt to, create any obligation on behalf of
the other party.
12. INDEMNITY.
A. Each party shall indemnify, defend, release and hold harmless
the other party and all of its officers, agents, directors,
shareholders, subcontractors, subsidiaries, employees and other
affiliates (collectively "Affiliates") from and against any action,
claim, court cost, damage, demand, expense, liability, loss, penalty,
proceeding or suit, (collectively, together with related attorneys'
fees; including costs and disbursements, "Claims") imposed upon either
party by reason of damages to property or injuries, including death, as
a result of an intentional or a negligent act or omission on the part of
the indemnifying party or any of its Affiliates in connection with: (i)
the performance of this Agreement; or (ii) other activities relating to
the property or facilities which are the subject of this Agreement,
whether or not the Claims result from a sole negligent act or omission
on the part of the indemnifying party, whether the Claims result from
the concurrent negligent act or omission on the part of both parties, or
whether the Claims result from the negligent act or omission of the
indemnifying party and some other third party. In the event a Claim
relates to the negligence of both parties, the relative burden of the
Claim shall be attributed equitably between the parties in accordance
with the principles of comparative negligence.
B. In the event any action shall be brought against the indemnified
party, such party shall immediately notify the indemnifying party in
writing, and the indemnifying party, upon the request of the indemnified
party, shall assume the defense thereof on behalf of the indemnified
party and its Affiliates and shall pay all expenses and satisfy all
judgments which may be incurred by or rendered against the indemnified
party or its Affiliates in connection therewith, provided that the
indemnified party shall not be liable for any settlement of any such
action effected without its written consent.
C. Notwithstanding the termination of this Agreement for any
reason, this Section 12 shall survive such termination.
13. INSURANCE. Throughout the term of this Agreement and any extension
thereof, each party shall maintain and, upon written request, shall
provide to the other proof of adequate liability insurance:
(i) Worker's compensation insurance up to the amount of the
statutory limit in the state or states where work is to be performed;
(ii) Employer's liability insurance with a limit of not less than
$200,000 per claim with an all-states endorsement;
(iii) Comprehensive general liability insurance with a limit of not
less than $1,000,000 per occurrence for bodily injury liability and
property damage liability, including coverage extensions for blanket
contractual liability, personal injury liability and products and
completed operations liability; and
(iv) Comprehensive Auto Liability insurance with a limit of not less
than $1,000,000 per accident for Bodily Injury Liability and Property
Damage Liability arising out of the ownership, maintenance or use of any
vehicle in the performance of this Agreement.
14. AUTHORIZED USE OF SUPPLIER NAME. Without Supplier's prior written
consent, Customer shall not: (i) refer to itself as an authorized
representative of Supplier in promotional, advertising or other
materials; or (ii) use Supplier's logos, trade marks, service marks, or
any variations thereof in any of its promotional, advertising or other
materials or in any activity using or displaying Supplier's name or the
Services to be provided by Supplier. Customer agrees to change or
correct, at Customer's expense, any such material or activity which
Supplier, in its sole judgment, determines to be inaccurate, misleading
or otherwise objectionable in relation to using or marketing Supplier's
services. Customer is explicitly authorized to only use the following
statements in its sales literature: (i) "Customer utilizes the
Supplier's network"; (ii) "Customer utilizes Supplier's facilities";
(iii) "Supplier provides only the network facilities"; and (iv)
"Supplier is our network services provider".
15. ASSIGNMENT. Neither party hereto may assign this Agreement without the
express written consent of the other party hereto, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing: (i) a
security interest in this Agreement may be granted by Supplier to any
lender to secure borrowings by Supplier or any of its affiliates; (ii)
Supplier may assign all its rights and obligations hereunder to any
Affiliate; and (iii) any subsidiary of Supplier may assign any amounts
due from Customer under any Supplement to Supplier for billing purposes.
16. BINDING ARBITRATION. The parties will attempt in good faith to resolve
any controversy or claim arising out of or relating to this Agreement
promptly through discussions between themselves at the operational
level. In the event a resolution cannot be reached, such controversy or
claim shall be negotiated between appointed counsel or senior executives
of the parties who have authority to settle the controversy.
The disputing party shall give the other party written notice of the
dispute. If the parties fail to resolve such controversy or claim within
thirty days of the disputing party's notice, either party may seek
arbitration as set forth below.
2
<PAGE> 4
Any controversy or claim arising out of or relating to this Agreement,
or a breach of this Agreement, shall be finally settled by arbitration
in Austin, Texas and shall be resolved under the laws of the State of
Texas. The arbitration shall be conducted before a single arbitrator in
accordance with the commercial rules and practices of the American
Arbitration Association then in effect.
The arbitrator shall have the power to order specific performance if
requested. Any award, order, or judgment pursuant to such arbitration
shall be deemed final and binding and may be enforced in any court of
competent jurisdiction. The parties agree that the arbitrator shall have
no power or authority to make awards or issue orders of any kind except
as expressly permitted by this Agreement, and in no event shall the
arbitrator have the authority to make any award that provides for
punitive or exemplary damages. All such arbitration proceedings shall be
conducted on a confidential basis. The arbitrator may, as part of the
arbitration award, permit the substantially prevailing party to recover
all or part of its attorney's fees and other out-of-pocket costs
incurred in connection with such arbitration. Customer may, at its
option, continue to accept what it considers to be below-standard
Services and pay the charges hereunder relating thereto during such
pendency of such arbitration, without prejudice thereto.
17. LEGAL CONSTRUCTION. In the event one or more of the provisions contained
in this Agreement shall, for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
18. NO PERSONAL LIABILITY. Each action or claim of any party arising under
or relating to this Agreement shall be made only against the other party
as a corporation, and any liability relating thereto shall be
enforceable only against the corporate assets of such party. No party
shall seek to pierce the corporate veil or otherwise seek to impose any
liability relating to, or arising from, this Agreement against any
shareholder, employee, officer or director of the other party. Each of
such persons is an intended beneficiary of the mutual promises set forth
in this Section and shall be entitled to enforce the obligations of this
Section.
19. NOTICE OF BREACH OF AGREEMENT. To be effective, written notice of any
material breach (except Payment Default) must prominently contain the
following sentences in capital letters: "THIS IS FORMAL NOTICE OF A
BREACH OF CONTRACT. FAILURE TO CURE SUCH BREACH WILL HAVE SIGNIFICANT
LEGAL CONSEQUENCES."
20. LIMITATION OF LIABILITY. Supplier's liability arising out of delays in
restoration of the Services to be provided under this Agreement or out
of mistakes, accidents, omissions, interruptions, or errors or defects
in transmission in the provision of Services or any other
telecommunications services, shall be subject to the limitations set
forth above and in the applicable Tariff. IN NO EVENT SHALL SUPPLIER BE
LIABLE TO CUSTOMER OR ANY OF THE CUSTOMER'S OWN CUSTOMERS OR ANY OTHER
THIRD PARTY IN ANY RESPECT, INCLUDING, WITHOUT LIMITATION, FOR ANY
DAMAGES, EITHER DIRECT, INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL,
ACTUAL, PUNITIVE, OR ANY OTHER DAMAGES, OR FOR ANY LOST PROFITS OF ANY
KIND OR NATURE WHATSOEVER, ARISING OUT OF MISTAKES, ACCIDENTS, ERRORS,
OMISSIONS, INTERRUPTIONS, OR DEFECTS IN TRANSMISSION, OR DELAYS,
INCLUDING THOSE WHICH MAY BE CAUSED BY REGULATORY OR JUDICIAL
AUTHORITIES, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OBLIGATIONS OF SUPPLIER PURSUANT TO THIS AGREEMENT; AND IN NO EVENT
SHALL SUPPLIER BE LIABLE AT ANY TIME FOR ANY AMOUNT IN EXCESS OF THE
AGGREGATE AMOUNT IT HAS PRIOR TO SUCH TIME COLLECTED FROM CUSTOMER WITH
RESPECT TO SERVICES DELIVERED HEREUNDER. SUPPLIER MAKES NO WARRANTY TO
CUSTOMER OR ANY OTHER PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED, OR
STATUTORY, AS TO THE DESCRIPTION, QUALITY, MERCHANTABILITY, COMPLETENESS
OR FITNESS FOR ANY PURPOSE OF ANY SERVICE PROVIDED HEREUNDER OR
DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH WARRANTIES BY
SUPPLIER ARE HEREBY EXCLUDED AND DISCLAIMED. For purposes of this
Section, the term "Supplier" shall be deemed to include Supplier, its
shareholders, directors, officers and employees, and any person or
entity assisting Supplier in its performance pursuant to this Agreement.
21. SYSTEM MAINTENANCE. In the event Supplier determines to interrupt
Services for the performance of routine system maintenance, Supplier
will use reasonable efforts to notify Customer prior to the interruption
and to conduct such maintenance during non-peak hours. In no event shall
interruption for system maintenance constitute a Failure of Performance
by Supplier.
22. MAINTENANCE & TROUBLE REPORTING. Supplier's standard fees for Customer
maintenance support services are as follows:
Maintenance services shall be defined as all work performed by Supplier
on equipment provided by or on behalf of the Customer, or supervision of
the Customer's work within Supplier's terminal facilities. Maintenance
Service charges are not billed for troubles found within that portion of
a circuit provided by Supplier. The following billing rates apply for
these services:
A. $75 per hour (4 hour minimum-if dispatch is required) Monday
through Friday during the business hours of 8:00 a.m. - 5:00 p.m. local
time, exclusive of the following holidays: New Year's Day, President's
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and the
day after Thanksgiving and Christmas Day.
B. $95 per hour (4 hour minimum) for overtime work
3
<PAGE> 5
done after business hours (defined above) and/or on holidays (defined
above) and/or all day on Saturdays and Sundays.
C. As requests for maintenance services are typically made via
telephone, Supplier must be advised in writing as to the person(s) who
are authorized to request service. It is the Customer's responsibility
to keep Supplier apprised of any changes to its list of
representative(s).
D. To request technical assistance and help under the maintenance
services, a call must be made to Supplier's Network Control Center at
1-800-526-2488. This number should be used for Supplier technical
assistance, troubleshooting or testing of circuits, not for service
impairment or outages. The person calling in must be on the authorized
list in order to commit for charges for this technical assistance. If
that person is not on the list, the request cannot be accommodated.
The Network Control Center personnel will take the call, record the
caller's name and phone number along with facts concerning the
assistance and support needed. The caller will then be given the number
of the "Assistance Ticket." Upon completion of work, this "Assistance
Ticket" will be given to Supplier's Accounting Department, and the
Customer will subsequently be billed based upon the information on that
ticket. A copy will be attached to the invoice.
Except for emergencies, Supplier's technicians cannot be dispatched
unless requests are made in accordance with the above call-out
procedure.
23. SUBJECT TO LAWS. This Agreement is subject to, and Customer agrees to
comply with, all applicable federal, state and local laws, and
regulations, rulings and orders of governmental agencies, including, but
not limited to, the Communications Act of 1934, the Telecommunications
Act of 1996, the Rules and Regulations of the Federal Communications
Commission ("FCC") and state public utility or service commissions
("PSC"), tariffs and the obtaining and continuance of any required
certification, permit, license, approval or authorization of the FCC and
PSC or any governmental body, including, but not limited to regulations
applying to feature group termination and Letter of Agencies ("LOAs").
24. FCC PERMITS, AUTHORIZATION AND FILINGS. Supplier shall take all
necessary and appropriate steps, as soon as possible, to procure from
the FCC the necessary authorizations, if any, to deliver Services
hereunder to Customer and whatever approvals are necessary from any
other federal or state agency. In the event that Supplier cannot obtain
all necessary federal, state or local authority to provide Services
hereunder, Supplier shall promptly give written notice thereof to
Customer, and such notice shall constitute termination without liability
of either party hereto of all obligations hereunder.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and when taken
together shall constitute one document.
26. CONFIDENTIAL INFORMATION AND NONSOLICITATION. "Confidential Information"
shall mean all information disclosed in writing by one party to the
other party which is clearly marked "CONFIDENTIAL" by the disclosing
party at the time of disclosure. "Confidential Information" shall also
include certain oral information disclosed by one party to the other
party, provided that the disclosing party designates such information as
confidential at the time of disclosure and gives recipient a written
summary of such information within five business days after the oral
disclosure was made. Notwithstanding the foregoing, all information
concerning the traffic volume/distribution of Supplier, pricing rates,
and customer lists is hereby deemed to be Confidential Information
regardless of whether it is so identified. The term "Confidential
Information" does not include any information which: (i) was already
known by the receiving party free of any obligation to keep it
confidential at the time of its disclosure by the disclosing party, (ii)
becomes publicly known through no wrongful act of the receiving party,
(iii) is rightfully received from a third person without knowledge of
any confidentiality obligation, (iv) is independently acquired or
developed without violating any of the obligations under this Agreement,
(v) is disclosed to a third person by the disclosing party without
similar confidentiality restrictions on such third persons rights, or
(vi) is approved for release by written authorization of the disclosing
party.
Further, the recipient may disclose Confidential Information pursuant to
any judicial or governmental request, requirement or order. The
recipient, however, shall take reasonable steps to give the disclosing
party sufficient prior notice to contest such request, requirement or
order. Confidential Information shall remain the property of the
disclosing party, and shall be returned to the disclosing party or
destroyed upon request of the disclosing party. Supplier may make such
Confidential Information available to its lenders.
Accordingly, in the event of a breach or threatened breach of the
foregoing provisions, Supplier shall be entitled to an injunction or
restraining order, in addition to such other rights or remedies as may
be available under this Agreement, at law or in equity, including but
not limited to money damages.
27. FORCE MAJEURE. Supplier shall not be liable for any failure of
performance hereunder due to causes beyond its reasonable control,
including, but not limited to: acts of God, fire, explosion, vandalism,
cable cut, storm or other similar catastrophes; any law, order,
regulation, direction, action or request of the United States
government, or of any other government, including state and local
governments having jurisdiction over either of the parties, or of any
department, agency, commission, court, bureau, corporation or other
instrumentality of any one or more of said governments, or of any civil
or military authority; national emergencies; insurrections; riots; wars;
or strikes, lock outs, work stoppages or other labor difficulties.
28. SURVIVAL. The covenants and agreements of Customer contained in this
Agreement with respect to payment of amounts due, confidentiality and
indemnification shall
4
<PAGE> 6
survive any termination of this Agreement. The rights and obligations
under this Agreement shall survive any merger or sale of either party
and shall be binding upon the successors and permitted assigns of each
party.
29. REGULATORY. Customer is responsible for payment of, or reimbursement to
Supplier for, Universal Service Fund and Lifeline Assistance Charges
(Presubscribed line charges) set forth in the National Exchange Carrier
Association (NECA) Tariff FCC #5, sections 8.5., 8.5.2 and 17.1.4 (A) &
(B), as the same may be amended from time to time, or any successor
tariffs or sections, with respect to any Customer ANI's subscribed to
Supplier. In addition, with respect to the Services, Customer is
responsible for payment of, or reimbursement to Supplier for: (i)
telecommunication relay service charges required by the Americans with
Disabilities Act or otherwise (both federal and state); (ii)
interexchange carrier fees payable to the FCC under the Omnibus Budget
Reconciliation Act of 1993 or otherwise; and (iii) universal service
fund charges, intraLATA compensation charges and other federal or state
fees or charges imposed on Supplier. Supplier will furnish, at
Customer's request, documentation to support the fees or charges payable
by Customer to Supplier pursuant to this Section 29.
Customer shall furnish to Supplier valid and appropriate tax exemption
certificates for all applicable jurisdictions (federal, state and local)
in which it performs customer billing. Customer is responsible for
properly charging tax to its subscribers and for the proper and timely
reporting and payment of applicable taxes to the taxing authorities and
shall defend and indemnify Supplier from payment and reporting of all
applicable federal, state and local taxes, including, but not limited
to, gross receipts taxes, surcharges, franchise fees, occupational,
excise and other taxes (and penalties and interest thereon), relating to
the Services. Such indemnification includes costs and expenses
(including reasonable attorney's fees) incurred by Supplier in settling,
defending or appealing any claims or actions brought against it relating
to said taxes. If Customer fails to provide and maintain the required
certificates, Supplier may charge Customer and Customer shall pay such
applicable taxes.
The amounts payable by Customer under this Agreement do not include any
state or local sales or use taxes, or utility taxes, however designated,
which may be levied on the goods and services provided by Supplier
hereunder. With respect to such taxes, if applicable, Customer shall
furnish Supplier with an appropriate exemption certificate or pay to
Supplier, upon timely presentation of invoices therefore, such amounts
thereof as Supplier may be by law required to collect or pay. Any and
all other taxes, including but not limited to franchise, net or gross
income, license, occupation, and real or personal property taxes, shall
be timely paid by Supplier. Customer shall pay to Supplier any such
taxes that Supplier may be required to collect or pay.
30. OBLIGATIONS SEVERAL AND NOT JOINT. Each party shall be responsible only
for its own performance under the Agreement (including any attachments,
exhibits, schedules or addenda) and not for that of any other party.
31. AMENDMENTS. This Agreement may only be modified or supplemented by an
instrument in writing executed by each party.
5
<PAGE> 7
PRIVATE LINE SERVICE SUPPLEMENT
DIGITAL SERVICE
1. SCOPE AND RATES. Supplier shall use its best efforts (considering the
needs of its other customers) to provide Service for which a Purchase
Order has been accepted. A form of Purchase Order is attached hereto as
Exhibit A. The rates for Service are set forth in Exhibit D, unless
otherwise specified in the applicable Purchase Order. Such rates are
valid for the term of this Agreement. Supplier may thereafter change
such rates, but not for any Circuit then in service. Customer may also
order the services listed in Exhibit B, subject to availability.
2. TERM. The Agreement is for a term of [***] years commencing on the
Effective Date and shall continue through the end of the Circuit Lease
Term which is last to expire. If Service continues after such Circuit
Lease Term, the applicable rates will be equal to 120% of the rates
hereunder and Service may be terminated by either party upon 30 days'
notice.
3. INVOICE. Customer will be invoiced monthly for: (i) the monthly lease
rate (prorated for any partial month) for each Available Circuit; and
(ii) the charges for other services received. The first invoice shall be
for the first two months; each invoice thereafter shall be for the
following month.
4. TERMINATION. Customer may terminate any Circuit upon 90 days' notice;
provided that if termination occurs: (i) prior to the Activation Date,
Customer shall reimburse Supplier for all costs of the implementation of
such Circuit; or (ii) on or after such date Customer shall pay: (A) all
charges for Service previously rendered; and (B) the amount due through
the end of the applicable Circuit Lease Term (Supplier shall try to
re-lease such Circuit for such term, refunding to Customer the amount so
collected, if any). If Supplier: (i) fails to provide Service within six
months of the Requested Service Date; or (ii) fails to cure a material
breach hereof within 45 days of notice from Customer, Customer may, as
its only remedy, terminate the affected Circuit.
5. OUTAGE CREDITS. Supplier shall give Customer a credit in accordance with
its then-current outage policy for periods in which any Circuit loses
continuity and fails to comply with applicable specifications. Such
credit shall be Customer's sole remedy with respect to such an event;
provided, however, that no such credits shall be allowed and Supplier
shall not be liable for any Service defect from causes outside its
control, including accidents, cable cuts, fires, floods, emergencies,
government regulation, wars, or acts of God. SUPPLIER DISCLAIMS ALL
EXPRESS AND IMPLIED WARRANTIES RELATING TO SERVICE, INCLUDING BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE. CUSTOMER HAS NOT RELIED ON ANY REPRESENTATION NOT SET FORTH
HEREIN. CUSTOMER SHALL INDEMNIFY SUPPLIER FROM ANY CLAIMS MADE BY ANY
CUSTOMER OF CUSTOMER.
6. DEFINITIONS. For purposes hereof: "Available" means all necessary
Supplier equipment for a Circuit has been installed. "Activation Date"
means the date a Circuit is first made Available to Customer. "Circuit"
means a DS-O, DS-1 or a DS-3. "Circuit Lease Term" means the term of a
Circuit specified in the applicable Purchase Order. "Circuit Mileage"
means the length of a Circuit specified in the applicable Purchase
Order. "DS-0" means a circuit complying with TR-TSY-000333 "Switched and
Special Access Services - Transmission Parameter Limits and Interface
Combinations" Issue 1, July 1990. "DS-1" means a circuit complying with
AT&T Tech. Ref. Pub. 62411, December 1990,with Addendum 1, March 1991,
and Bellcore TR-NWT-000499, Issue 5, December 1993. "DS-3" means a
circuit meeting the specifications set forth in AT&T Technical Reference
Pub. 54014 Addendum 1, November 1992 and Bellcore TR-NWT-000499, Issue
5, December 1993. "Purchase Order" means any Customer purchase order
accepted by Supplier. "Requested Service Date" means the date Service on
a Circuit is requested to commence specified in the applicable Purchase
Order. "Service" means transmission service provided between North
American DSX standard cross-connect panels located in Supplier's
terminal locations.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
1
<PAGE> 8
EXHIBIT A
Req'st Svc Date:________ IXC - PRIVATE LINE OFFICE USE ONLY
Accepted Earlier Activation: MARKET SERVICE ORDER (MSO) MSO #______________
Y______N_______
CKT ID:_____________ RELATED MSO:____________
PURCHASE ORDER FORM FOR CUSTOMER ORDER NO:__________
Pursuant to the MASTER SERVICE AGREEMENT by and between IXC as Supplier and
__________________________ as Customer, dated______________, 19___, Customer
orders and Supplier shall provide the following Digital Transmission Service:
<TABLE>
<CAPTION>
QTY RATE TERM MILES
<S> <C> <C> <C> <C> <C>
New ________ Renew __________
Cancel ________ Disconnect __________ DS-3 _____ _____ _____ _____
Change ________ Expedite Y____ N___ DS-1 _____ _____ _____ _____
On Net ________ Off Net __________ DS0 _____ _____ _____ _____
Protocol________ Reconfigure__________ CIF _____ _____ _____ _____
Other ________________________________ Other _____ _____ _____ _____
Customer Contact:____________________ Phone #: ________________ Fax # _______________
Technical Contact____________________ Phone #: ________________ Fax # _______________
CITY LOCATION A: ____________________ CITY LOCATION B:_________________________________
Special____________ Switched____________ Special________________ Switched________________
Bypass Y_____N_____ Owner ____________ Bypass Y_______N_______ Owner ________________
LESSOR TO PROVIDE CFA: Y_____N_____ LESSOR TO PROVIDE: CFA: Y_____N_____
LOA: Y_____N_____ ASR: Y_____N_____ LOA: Y_____N_____ ASR: Y_____N_____
CUSTOMER (LESSEE) TO PROVIDE: CUSTOMER (LESSEE) TO PROVIDE:
LOA: Y___N___ Coordinated Convert Y___N___ LOA: Y___N___ Coordinated Convert Y___N____
CIF Arrangement Y___N___ CIF Attach Y___N___ CIF Arrangement Y___N___ CIF Attach ___N___
Special Instructions________________________ Special Instructions_________________________
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MONTHLY LEASE RATE: NON RECURRING CHARGES:
<S> <C>
Monthly IXC Change: $__________ Installation $__________ ASR: $_____
Eqpt. Lease Charge: $__________ Installation $__________ Reconfig $_____
Echo Canceller: $__________ Installation $__________ Expedite $_____
CIF Racks: $__________ Installation $__________
CIF Power: $__________ Installation $__________
Other $__________ Installation $__________
TOTAL: $__________ TOTAL OF NON RECURRING CHARGES: $_____
</TABLE>
Notwithstanding anything in the Master Service Agreement to the contrary, (1) a
security interest in this Agreement may be granted by Supplier to a Lender (2)
Supplier may from time to time assign all its rights and obligations hereunder
with respect any Circuits to any Affiliate. Upon such assignment herein this
Agreement shall be deemed to be multiple agreements, each upon the terms and
conditions set forth herein by and between Customer and such affiliate with
respect to such circuit between Supplier and Customer with respect to the
circuit not so assigned.
IN WITNESS WHEREOF, the parties have executed this PURCHASE ORDER on the
_____day of_____ 19______
- ------------------------------------ ---------------------------------------
SUPPLIER APPROVAL/TITLE CUSTOMER AUTHORIZED REPRESENTATIVE/
(Service Provider) TITLE (CUSTOMER)
PLEASE FAX THIS DOCUMENT TO CUSTOMER SERVICE FAX # (512) 433-7810
FOR OFFICE USE ONLY VERSION 3.0 10/2/97
PRIVATE LINE EXHIBIT - PAGE 1
<PAGE> 9
EXHIBIT B - PRIVATE LINE SERVICE ANCILLARY PRICING
<TABLE>
<CAPTION>
NON-RECURRING CHARGES DS-0 DS-1 DS-3
- --------------------- ---- ---- ----
<S> <C> <C> <C>
New Order Installation [***] [***] [***]
Order Change [***] [***]
Order Cancellation (prior to activation) [***] [***] [***]
ASR (new or disconnect) Special Access [***] [***]
ASR Supplement [***] [***]
Order Expedite [***] [***] [***]
Reconfiguration [***] [***] [***]
DACS Charge (switching only) [***]
DACS Port Charge (Bell access to DACS) [***]
DS-1 DACS Port [***]
</TABLE>
<TABLE>
<CAPTION>
OTHER CHARGES MONTHLY RECURRING NON-RECURRING
- ------------- ----------------- -------------
<S> <C> <C>
Cross-Connect Charge (Other Interexchange carrier, local
access or customer interconnect/collocation facility to
Supplier local access or bypass facility within the same
Supplier POP):
DS-1 [***] [***]
DS-3 [***] [***]
OC-3* [***] [***]
OC-12* [***] [***]
OC-48* [***] [***]
Interconnect Charge (Supplier POP to Supplier POP in the
same city or local area using Supplier owned or leased
transmission systems, with no Supplier long haul attached at
either Supplier POP):
DS-1 [***] [***]
DS-3 [***] [***]
OC-3* [***] [***]
OC-12* [***] [***]
OC-48* [***] [***]
M1/3 - 1 Year Term [***]
2 Year Term [***]
3 Year Term [***]
Echo Canceller (per circuit end) [***] [***]
Second End Loop (Ex: for ADPCM) [***] [***]
Rack Space I.C.B - Subject to Availability
Shelf Space [***]/ea/mo. I.C.B.
DC Power [***]/amp/mo (5 amp minimum; 5 amp increments)
</TABLE>
NOTES:
1. ALL CHARGES INCURRED BY SUPPLIER ON CUSTOMER'S BEHALF FROM ANY LOCAL
EXCHANGE CARRIER, COMPETITIVE ACCESS PROVIDER OR COMPETITIVE LOCAL
EXCHANGE CARRIER WILL BE DIRECTLY PASSED ON TO THE CUSTOMER.
2. SERVICES NOT DESCRIBED ABOVE WILL BE CONSIDERED SPECIAL HANDLING AND
CHARGES WILL BE ASSESSED ON AN INDIVIDUAL CASE BASIS (ICB).
3. ALL OF THE ABOVE CHARGES ARE SUBJECT TO CHANGE WITH A 30-DAY NOTICE.
4. ALL PRIVATE LINE ANCILLARY SERVICE CHARGES TO CITIES NOT LISTED ON
EXHIBIT C WILL BE PRICED ON AN INDIVIDUAL CASE BASIS AND WILL BE SUBJECT
TO THE TERMS AND CHARGES OF THE UNDERLYING CARRIER.
*All OC product cross-connects and interconnects will be provided based upon
availability. OC interconnects shall have a minimum term of 12 months.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
PRIVATE LINE EXHIBIT - PAGE 2
<PAGE> 10
EXHIBIT C - ON-NET CITY LISTING
<TABLE>
<CAPTION>
LOCATION LATA ADDRESS/(NPA)NXX
- -------- ---- ----------------
<S> <C> <C>
Abilene, TX 550 1049 N. Third, #500,
(915)675
Akron, OH 325 1 Cascade Plaza, Suite 1950,
Main & Bowery, (216)535
Albuquerque, NM 664 200 Lomas Blvd., N.W.,
13th Floor, (505)247
Amarillo, TX 546 Amarillo Petroleum Bldg.,
203 W. 8th, Suite 607/608
(806)373
Ann Arbor, MI 346 1615 Plymouth Rd, (313)994
Austin, TX 558 621 Pleasant Valley Road
(512)389
Bakersfield, CA 734 1430 Truxton Ave., Suite 730
(805)327
Baltimore, MD 238 1220 S. Howard (301)752
Battle Creek, MI 348 175 Main Street (616)962
Bay City, MI 344 100 E. Hart (517)667
Chicago, IL 358 Prudential Bldg., Suite 4001
130 E. Randolph, (312)861
Cincinnati, OH 922 2300 Carew Tower, #4701
441 Vine Street, (513)651
Cleveland, OH 320 R.F. Keith Bldg., Suite 2117
1621 Euclid Ave., (216)771
Columbus, OH 324 Borden Bldg., Leval 2B
180 E. Broad St., (614)469
Colorado Springs, CO 658 102 S. Tejon, # 780, (719)471
Corpus Christi, TX 564 606 N. Carancahua, Suite 816
(512)882
Dallas, TX 552 2223 Houston Street, (214)969
Dallas, TX 552 Tower of the Americas, #380
2323 Bryan, (214)954
Dayton, OH 328 1 Nat'l Bank Bldg., Ste. 2220
130 W. Second, (513)461
Denver, CO 656 Bell Building, 931 14th Street,
Suite 622, (303)572
Detroit, MI 340 1860 Gratio Avenue, (313)259
Detroit, MI 340 Book Bldg., Suite 2609
1249 Washington (313)961
El Paso, TX 540 El Paso Natl Bank Bldg.
201 E. Main, #1702, (915)533
Flint, MI 340 2001 S. Grand Traverse
(313)767
Fresno Term, CA 728 Guarantee Savings, #1201
B1171 Fulton Mall, (209)268
Fresno, CA 728 4605 E. Vine, (209)486
Ft. Worth, TX 552 WT Waggoner Bldg.,
810 Houston,
Suite 1705, (817)870
Grand Rapids, MI 348 209 Graham, S.W., (616)235
Harlingen, TX 568 513 E. Jackson, Matz Bldg.,
(210)425
Houston, TX 560 293 N. Main Street, (713)224
Indianapolis, IN 336 Merchants Bank Bldg.,
11 S. Meridian, #1798/1799
(317)637
Jackson, MI 346 170 W. North Street,
(517)783
Kalamazoo, MI 348 303 Mill Street, (616)385
Kansas City, MO 524 Bank of Kansas City, # 1704
1125 Grand Ave., (816)283
Lansing, MI 346
Las Vegas, NV 821 125 S. Las Vegas
Suite 400, (702)388
Los Angeles, CA 730 One Wilshire, 624 S. Grand
Suite 1615, (213)689
Lubbock, TX 544 1220 Broadway, Ste. 1901,
(806)762
McAllen, TX 568 200 S. 10th Street, Ste. 704,
(210)687
Midland, MI 344 1000 Jefferson, (517)631
Midland, TX 542 KMID-TV Studio, LaForce
Blvd @ Air Terminal(915)561
New York, NY 132 60 Hudson St., Ste. 206
(212)285
Newark, NJ 224 744 Broad Street, 3rd Floor
(201)824
Oklahoma City, OK 536 Liberty Tower, Suite 3020,
100 N. Broadway, (405)232
Philadelphia, PA 228 2401 Locust St., 2nd Floor
(215)564
Phoenix, AZ 666 2600 N. Central, Suite 1702
Phelps-Dodge Twr, (602)279
Pittsburgh, PA 234 Oliver Bldg., 535 Smithfield
Suite 2650, (412)281
Pontiac, MI 344 324 S. Saginaw, (313)338
Royal Oak, MI 3100 W. 14 Mile Road
(313)435
Saginaw, MI 344 315 Meredith, (517)771
San Angelo, TX 961 36 E. Twohig, 15th Floor
(915)653
San Antonio, TX 566 660 S. Santa Rosa, (210)225
San Francisco, CA 722 Metropolitan Life Bldg.
Suite 3800C
425 Market St., (415)543
Southbend, IN 332 211 West Washington St.
19th Floor, (219)233
St. Louis, MO 520 900 Walnut, Suite 220
(314)231
Sunnyvale, CA 722 111 Uranium, (408)739
Toledo, OH 326 319 Madison Ave., Suite 2901
(419)242
Tucson, AZ 668 Arizona Bank Bldg., #1610
33 N. Stone, (520)792
Tulsa, OK 538 3500 S. 26th West Ave.
(918)584
Waco, TX 556 100 S. 26th Street, (817)750
Washington, D.C. 236 1828 L Street, N.W., #260
(202)833
</TABLE>
PRIVATE LINE EXHIBIT - PAGE 3
<PAGE> 11
EXHIBIT D - PRIVATE LINE PRICING
<TABLE>
<CAPTION>
SERVICE TYPE MILES RATE/DS-0 V&H MILE
RATES FOR ONE YEAR TERM
<S> <C> <C>
DS-0 I.C.B.
DS-1 1-200 [***]
201-500 [***]
501-1,000 [***]
1,001-2,000 [***]
2,001+ [***]
DS-3 1-200 [***]
201-500 [***]
501-1,000 [***]
1,001-2,000 [***]
2,001+ [***]
</TABLE>
<TABLE>
<CAPTION>
SERVICE TYPE MILES RATE/DS-0 V&H MILE
RATES FOR THREE YEAR TERM
<S> <C> <C>
DS-0 I.C.B.
DS-1 1-200 [***]
201-500 [***]
501-1,000 [***]
1,001-2,000 [***]
2,001+ [***]
DS-3 1-200 [***]
201-500 [***]
501-1,000 [***]
1,001-2,000 [***]
2,001+ [***]
Minimum Circuit Charges: DS-0 [***]
DS-1 [***]
DS-3 [***]
</TABLE>
NOTES:
1. ALL PRIVATE LINE SERVICE TO CITIES NOT LISTED ON EXHIBIT C WILL BE
PRICED ON AN INDIVIDUAL CASE BASIS AND WILL BE SUBJECT TO THE TERMS OF
THE UNDERLYING CARRIER.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Private Line Exhibit - Page 4
<PAGE> 12
SECTION 2. UNIFORM SALES & USE TAX CERTIFICATION FORM
Issued to: IXC, 5000 Plaza on the Lake, Suite 200, Austin, Texas 78746
Certify that Universal Access, Inc. is a registered and/or identified with the
below listed cities and/or states within which your firm would deliver purchases
to us and that any such purchases are for wholesale, resale, ingredients or
components of a new product to be resold, leased, rented or used in the normal
course of our business. We are in the business of wholesaling, retailing,
manufacturing, leasing, renting or providing non-taxable services or products.
Check applicable box: (___) Single Purchase Certificate (X) Blanket Certificate
Is engaged as a registered (where applicable): (___) Wholesaler (___) Lessor (X)
Retailer (___) Manufacturer (___) Exempt Organization Use (___)
Other (Specify)_________________
Product or service rendered by Customer: Telecommunication Services
<TABLE>
<CAPTION>
STATE REGISTRATION OR I.D. NO. STATE REGISTRATION OR I.D. NO.
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
IL 36-4186543 __________ _______________
- -- ----------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
- ---------- --------------- ----- -----------------
</TABLE>
I further certify that if any property so purchased tax free is used or consumed
by the firm as to make it subject to a sales or use tax we will pay the tax due
direct to the proper taxing authority when state law so provides or inform the
seller for added tax billing. This certificate shall be part of each order which
we may hereafter give to you, unless otherwise specified, and shall be valid
until cancelled by us in writing or revoked by the city or state.
Exemption Claimed: (___) Resale (___) Federal Government (___) Exempt
Organization (___) State & Local Government (___) Direct Payment Permit (___)
Other (Specify) ??
I swear and affirm that the information on this form is true and correct as to
every material matter.
<TABLE>
<S> <C> <C>
/s/ PATRICK C. SHUTT President 10.28.97.
- ----------------------------------------------------------------------
Signature Title Date
</TABLE>
<PAGE> 13
TAXES ON TELECOMMUNICATIONS SERVICES
Please check one of the following:
X Telecommunications services purchased from Supplier are for
resale purposes in the normal course of our business (or are
subject to other tax exemptions). These services are exempt from
federal, state and local taxes.
IF CHECKED, COMPLETE SECTION 1 & SECTION 2 BELOW FOR THE
APPLICABLE STATES WHERE SERVICE IS PROVIDED.
_____ Telecommunications services purchased from Supplier are not for
resale purposes, but are purchased for our own use. These
services are not subject to other exemptions.
IF CHECKED, SIGN HERE:______________________________
DATE:_______________
SECTION 1. CERTIFICATE OF EXEMPTION FROM FEDERAL EXCISE TAXES ON COMMUNICATIONS
SERVICES AND FACILITIES
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the service furnished by Supplier is
exempt from the Federal Excise Tax on Communications and Facilities imposed by
Internal Revenue Code (IRC) Section 4251 because the undersigned is exempt under
IRC Section 4253 for such reason as marked below (check one). The undersigned
agrees to notify Supplier in writing when the claimed status no longer applies.
_____ A nonprofit hospital referred to in IRC Section 170(b)(1)(A)(ii) which
is exempt from income tax under Section 501(a).
_____ A nonprofit educational organization described in IRC Section
(170)(b)(1)(A)(ii) which is exempt from income tax under Section 501(a).
_____ A School which is operated as an activity of an organization described
in IRC Section 501 (c)(3) which is exempt from income tax under Section
505(a), and operates as described in IRC Section 4253(j).
_____ The U.S. government, government of a State, political subdivision of a
state of the District of Columbia.
_____ The American Red Cross or an international organization described in
Internal Revenue Code Sections 7701(a)(18) and 4253(c).
_____ A news service company of the type referred to in Internal Revenue Code
Section 4253(b).
_____ Diplomatic, consular or other officers of foreign governments
temporarily residing in the United States who are nationals of the
foreign country on a diplomatic mission.
_____ The service will be used exclusively in the rendering of a
communications services upon which tax is imposed by IRC Section 4251.
It is understood that no tax will be collected by Supplier on charges
for said service and that it will be the responsibility of the
undersigned to collect such tax as may be due from its customers.
_____ The service, which is defined in Section 4252(b)(2), is for use by a
common carrier, telephone or telegraph company, or radio broadcasting
station or network in the conduct of its business as such.
FOR THIS CERTIFICATE TO BE VALID YOU MUST CHECK ONE OF THE ABOVE BOXES, SIGN AND
DATE THE CERTIFICATE AND PROVIDE AN EFFECTIVE DATE. ANY MODIFICATIONS TO THE
ABOVE WILL RENDER THE CERTIFICATE NULL AND VOID.
THE EXEMPT STATUS OF THE UNDERSIGNED IS EFFECTIVE AS OF _____________.
Customer: Universal Access, Inc. FEDERAL TAX I.D.36-4186543
I swear under penalty of fines, imprisonment, or both, together with cost of
prosecution that the statement contained herein are true to the best of my
knowledge.
<TABLE>
<S> <C> <C>
/s/ PATRICK C. SHUTT President 10.27.97
- ----------------------------------------------------------------------
Signature Title Date
</TABLE>
<PAGE> 1
EXHIBIT 10.18.1
AMENDMENT NO. 1 TO IXC
MASTER SERVICE AGREEMENT
This Amendment No. 1 to the Master Service Agreement is made and entered into by
and between IXC COMMUNICATIONS SERVICES, INC., (F/K/A IXC CARRIER, INC./IXC LONG
DISTANCE, INC./IXC BROADBAND SERVICES, INC.), a Delaware corporation with its
principal place of business at 1122 Capital of Texas Hwy. South, Austin, Texas
78746 ("Supplier"), and Universal Access, Inc. an Illinois corporation with its
principal place of business at 1021 West Adams Street, Suite 101, Chicago,
Illinois 60607 ("Customer").
For purposes of this Amendment, the Effective Date shall mean the first day of
the next IXC billing cycle after the date of last execution below (the
"Amendment Effective Date").
This Amendment is made with reference to the following facts:
A. Customer and Supplier are parties to that certain Master Service
Agreement dated as of November 06, 1997 (the "Agreement").
B. The parties desire to amend the Agreement pursuant to the terms
set forth below.
TERMS OF AMENDMENT
Accordingly, in consideration of the mutual promises set forth below, the
parties agree as follows:
1. Section 8 of the Master Service Agreement, Terms and
Conditions shall be modified as follows:
8. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given as of the date of delivery, facsimile transmission or
mailing, and if mailed, first class postage prepaid, certified
or registered mail, return receipt requested to the following
persons, unless contrary instructions are given by the parties
in writing:
If to Supplier: IXC Communications Services, Inc.
1122 Capital of Texas Hwy. South
Austin, Texas 78746
Attention: Contract Administration
If to Customer: Universal Access, Inc.
1021 West Adams Street, Suite 101
Chicago, Illinois 60607
Attention:________________
2. Exhibit B of the Private Line Service Exhibit shall be
replaced by Exhibit B attached hereto.
3. Exhibit C of the Private Line Service Exhibit shall be
replaced by Exhibit C attached hereto.
4. Exhibit D of the Private Line Service Exhibit shall be
replaced by Exhibit D attached hereto.
5. Section 6, Definitions, shall be reinstated as follows:
DEFINITIONS. For purposes hereof: "Available" means all
necessary Supplier equipment for a Circuit has been
installed. "Activation Date" means the date a Circuit is
first made Available to Customer. "Circuit" means a
DS-0, DS-1, DS-3, OC-3 or a OC-12. "Circuit Lease Term"
means the term of a Circuit specified in the applicable
Purchase Order. "Circuit Mileage" means the length of a
Circuit specified in the applicable Purchase Order.
"DS-0" means a circuit complying with TR-TSY-000333
"Switched and Special Access Services - Transmission
Parameter Limits and Interface Combinations" Issue 1,
July 1990.
<PAGE> 2
A "DS-1" is a signal conforming to the requirements set
forth in Sections 9.3 and 10.2 of ?? TR, NWT-000499.
Issue 5, December, 1993. A "DS-3" is a signal conforming
to the requirements set forth in Section 9.6 and 10.5 of
?? TR-NWT-000499, Issue 5, December, 1993. An "OC-3" is
a signal based on the SONET frame structure as specified
in Bellcore GR-253-CORE, Synchronous Optical Network
(SONET) Transport Systems: Common Criteria Physical
Layers, and ANS1 T1.105, Digital Hierarchy, Optical
interface Rates and Formats Specifications. An "OC-12"
is a signal based on the SONET ?? structure as specified
in Bellcore GR-253-CORE, Synchronous Optical Network
(SONET) Transport Systems: Common Criteria Physical
Layers, and ANSI T1.105, Digital Hierarchy-Optical
Interface Rates; and Formats Specifications. "Purchase
Orders" means any Customer purchase order accepted by
Supplier. "Requested Service Dates" means the date
Service on a Circuit is requested to commence specified
in this applicable Purchase Order. "Service" means
transmission service provided between North American DSX
standard cross-comment ?? located in Supplier's terminal
locations.
6. The following shall be added in its ?? as Section 7 to
the Private Line Service Supplement, Digital Service:
7. CIRCUIT UPGRADE.[***]
7. The following shall be added in ?? as Section 8 to the
Private Line Service Supplement, Digital Service:
8. LATE DELIVERY. Customer shall request Services
by submitting to the Supplier a completed order form
which shall include without limitation a requested
service date and whether services from an underlying
carrier are necessary. The order form shall be the
Purchase Order form. In the event Supplier fails to meet
the mutually agreed upon Requested Service Date (as set
forth in IXC's confirmation letter), upon Customer's
written request provided in accordance with the "Notice"
provision of this Agreement, a late delivery credit
shall be allowed and calculated following the activation
date of the Service(s) as follows:
(a) Customer shall be credited for late
delivery of ??-Net Service(s) which are ordered
in accordance with Supplier's standard
installation intervals to the extent that such
late delivery was not caused by the failure of
equipment or systems provided by Customer or
persons other than Supplier, including any
provider of local access service to Supplier.
Such credit will be calculated for each day of
delay at the rate of 1/30 of the Monthly Lease
Rate or charge applicable to the Circuit which
is subject to the late delivery.
(b) The Monthly Lease Rates used to
determine any credit hereunder shall be the then
current Monthly Lease Rates being ??.
(c) In an event shall any credit be allowed
hereunder (1) in excess of the then current
Monthly Lease Rate for the applicable Circuit or
(2) with respect to any Circuit for which
Customer (i) fails to make or (ii) is excused
from making any payment because of operation of
law or any other reason.
(d) Calculations of credits shall be based
upon Supplier's provisioning/installation
records.
(e) The credit provided for hereunder shall
be Supplier's sole liability and Customer's sole
remedy in the event of any late delivery of
Service.
8. The following shall be added under CREDIT REQUIREMENTS
of the Master Service Agreement:
Letter of Credit. Concurrently with the
execution hereof, Customer has established with Supplier
the sum of [***] (the "Letter of Credit"), which amount
is equal to the estimated Usage Charges and
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 3
other amounts due and payable by Customer to Supplier
hereunder, as security for the full and faithful
performance of Customer of the terms, conditions and
covenants of this Agreement. If at any time during the
term of the Agreement, Customer defaults in the payment
of any Usage Charges, or any other amounts payable by
Customer to Supplier hereunder, then Supplier may
appropriate and apply any portion of the Letter of
Credit reasonably necessary to remedy any such default.
If during the term of the Agreement, Supplier so applies
all or any portion of the Letter of Credit, then
Customer shall restore the amount of the Letter of
Credit so applied by Supplier on or before the next due
payment of Usage Charges under this Agreement. If,
however, invoices for Services during any month provided
by Supplier exceed one half of the Letter of Credit, at
the request of Supplier, Customer shall within five (5)
days (i) provide an additional Letter of Credit and/or a
cash deposit; or (ii) other form of security
satisfactory to Supplier which in either case, shall be
in an amount equal to the amount by which the invoice
for such month exceeds one-half of the amount of the
Letter of Credit held by Supplier.
Release of Letter of Credit. Notwithstanding
anything to the contrary herein at any time during the
term of the Agreement, Supplier shall release the Letter
of Credit to Customer, in consideration of Customer's
undertaking of any of the following actions: (i)
obtaining for the benefit of Supplier a cash deposit
securing the prompt payment, when due, of the estimated
Usage Charges and other amounts due and payable by
Customer to Supplier hereunder: (ii) (a) granting to
Supplier a continuing, floating, first priority security
interest and lien in and to the Collateral (as defined
below) on the terms and subject to the conditions of a
security agreement in form and substance reasonably
satisfactory to Supplier; and (iii) directing all of
Customer's End-Users to deposit any money owed by such
End-Users to Customer directly into a lockbox account at
Supplier's bank for the benefit of Supplier, and
authorize Supplier's bank to make automatic clearing
house fund transfers from such lockbox account to the
account of Supplier in amounts initially agreed to by
Customer and Supplier, on the terms and subject to the
conditions of an escrow agreement in form and substance
reasonably satisfactory to Supplier.
Customer shall execute from time to time such
additional instruments as may be reasonably required by
Supplier to preserve and perfect any security interest
created hereunder. For purposes of this subparagraph
(ii), the term "Collateral" shall mean all of the
following assets of Customer, now or hereafter existing,
wherever located, and all additions, substitutions,
proceeds, products, offsprings, rents and profits
thereof: all accounts receivable, all customer lists,
mailing lists, customer information and customer data
bases, including, without limitation, any and all
tangible assets embodying any or all of the foregoing
information, and any and all computer software or
printouts embodying any or all of the foregoing
information.
9. The following shall be added in its entirety as Section
7 of the Private Line Supplement.
7. CUSTOMER DEFAULT. In the event of a
"Customer Default", upon notice to Customer, Supplier
may (in addition to such other rights or remedies as
Supplier may have under this Agreement, at law or in
equity), at its sole option do any or all of the
following: (i) suspend Services to Customer until such
time as such circumstance is corrected (provided
Supplier shall not be prohibited from terminating this
Agreement after suspending Services); (ii) cease
accepting or processing orders for services; (iii)
withhold delivery of CDR's; (iv) draw on any security
deposit or other assurance of payment submitted under
this Agreement; (v) terminate this Agreement without
liability to Supplier, which termination may include
immediate cancellation of the Services, or (x) pursue
such other remedy or relief as may be appropriate.
"Customer Default" shall mean Customer: (i) breaches any
material provision of this Agreement, including, but not
limited to, the provisions regarding payment, and does
not cure such breach within thirty days (five days with
respect to the first three payment breaches and no
notice period with respect to any further payment
breach) of notice thereof by Supplier; or (ii) files or
initiates proceedings or has proceedings filed or
initiated against it, relating to its liquidation,
insolvency, reorganization or other relief (such as the
appointment of a trustee, receiver, liquidator,
custodian or other official) under any bankruptcy,
insolvency or other similar law or makes an assignment
for the benefit of its creditors or enters into an
agreement for the composition, extension or readjustment
of its obligation in connection with the foregoing. If
Customer uses the Services for any unlawful purpose or
in any unlawful manner, Supplier shall have the right to
suspend any or all services hereunder to Customer until
the unlawful use ceases.
10. All other terms and conditions, provisions, supplements
and exhibits of the Agreement shall remain in full force
and effect.
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date last
written below.
IXC COMMUNICATIONS SERVICES, INC. UNIVERSAL ACCESS, INC.
BY: /s/ Signature Illegible BY: /s/ Signature Illegible
NAME: LEO WELSH NAME: Robert J. Pommer
------------------------------ -----------------------------------
TITLE: PRES-WHOLESALE TITLE: Chief Operating Officer
----------------------------- ----------------------------------
DATE: 3/23/99 DATE: March 18, 1999
------------------------------ -----------------------------------
<TABLE>
<S> <C> <C>
FULL BUSINESS ADDRESS: FULL BUSINESS ADDRESS:
1122 CAPITAL OF TEXAS HWY. SOUTH 100 N. RIVERSIDE PLAZA, SUITE 2200
AUSTIN, TEXAS 78746-6426 APPROVED AS TO FORM CHICAGO, ILLINOIS 60606
TELEPHONE: 512-427-3700 LEGAL DEPT. TELEPHONE: 312-660-5000
FACSIMILE: 512-328-7902 FACSIMILE: 312-660-5050
BILLING CONTACT: MARIA CAVAZOS
TELEPHONE: 312-491-1700
</TABLE>
<PAGE> 5
Exhibit A
IXC
PURCHASE ORDER/MARKET SERVICE ORDER
<TABLE>
<CAPTION>
(MSO) F&E# __________
ORBIT #: __________
<S> <C> <C> <C>
Customer _____________________________________________________
Order Contact _____________________ Phone Ext. Fax _______________
Tech Contact _____________________ Phone Ext. Fax _______________
Req'st Svc Date: _____________ Term __________ Customer PON: ________________
New [ ] Change [ ] Disconnect [ ] Expedite [ ]
IXC Circuit ID: _________________________
Circuit Type DS0 Protocol* AMI/SF QTY ________ Rate _______ Mile _______
LOCATION A _________________________________ LOCATION Z ________________________________
LEC/CAP Provider __________________________ LEC/CAP Provider __________________________
CFA Release (Customer to Order Loop) [ ] CFA Release (Customer to Order Loop) [ ]
IXC to Order Loop (Tech Sheet Required) [ ] IXC to Order Loop (Tech Sheet Required) [ ]
Special Instructions _______________________ Special Instructions ______________________
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
Monthly IXC Charge _______________ Installation _____________ ASR ______
Location A Loop _______________ Installation _____________ Expedite ______
Location Z Loop _______________ Installation _____________ Reconfig ______
LSA Charge A _______________
LSA Charge Z _______________
Mux Charge _______________ Installation _____________
Echo Canceller _______________ Installation _____________
TOTAL _______________ TOTAL NON-RECURRING CHARGES ____________
</TABLE>
Pursuant to the MASTER SERVICE AGREEMENT by and between IXC and Customer, IXC
agrees to provide the service described above. Service is contingent upon City
and circuit availability, Requested Service Dates and charges for service are
not binding on IXC and are subject to change until accepted by authorized
Customer Representative.
IN WITNESS WHEREOF, the parties have executed this PURCHASE ORDER on the _______
day of ________, 19______.
- ------------------------------------ ----------------------------------------
CUSTOMER APPROVAL/TITLE SUPPLIER AUTHORIZED REPRESENTATIVE
PLEASE FAX THIS DOCUMENT TO CUSTOMER SERVICE FAX # (512) 433-7810
<PAGE> 6
EXHIBIT B PRIVATE LINE SERVICE ANCILLARY PRICING
<TABLE>
<CAPTION>
Service Charges DS-0 DS-1 DS-3 OC-3 OC-12 OC-48
- --------------- ---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
RECURRING:
- ----------
Minimum Circuit Charge [***] [***] [***] [***] [***] [***]
NON RECURRING:
- --------------
New Order Installation
Change of requested service date - 1st
Change of requested service date - 2nd
and more
Order Change (pre-engineering)
Order Change (post-engineering) [***]
Order Cancellation (pre-engineering)
Order Cancellation (post-engineering)
ASR (new or disconnect) Special Access
ASR Supplement
Order Expedite
Reconfiguration
</TABLE>
*Customer must notify IXC of service date changes 45 days prior to due date.
Service date changes can be extended a maximum of 30 days after due date.
Service date changes for OC3, OC12, and OC48 bandwidth are restricted to one
change after which order will be subject to billing.
<TABLE>
<CAPTION>
CROSS-CONNECT CHARGE:
- ---------------------
<S> <C>
Recurring [***]
Non Recurring
INTERCONNECT CHARGE:
- --------------------
Recurring [***]
Non Recurring
</TABLE>
* (Other Interexchange carrier, local access or customer
interconnect/collocation facility to Supplier local access or bypass
facility within the same Supplier POP):
* Interconnect charges apply to connections between Supplier POP's in the
same city or between Supplier suite to another suite in the same
building.
* Since costs vary widely by location, the interconnect charges indicated
above are the minimum amount that will be charged monthly.
* All I.C.B. charges incurred by Supplier will be passed through to the
Customer.
The following shall apply for all Waivers or discounted fees: If Circuit is
terminated prior to end of Circuit Lease Term, Supplier will pass on charges
incurred but not billed.
# Installation charges for On-Net circuits with a term of three (3) years or
greater shall be waived. The Installation Charge waiver does not apply for
circuits which are being up-graded. If Circuit is terminated prior to end of the
Circuit Lease Term, Supplier will pass on charges incurred but not billed.
<TABLE>
<CAPTION>
Other Charges Recurring Non-Recurring
- ------------- --------- -------------
<S> <C> <C>
M1/3 multiplex charges:
- -----------------------
1 Year Term [***]
2 Year Term [***]
3 Year Term [***]
DACS Charge (Switching Only) per DSO [***]
DACS Port Charge (Bell Access to DACS) per [***]
DSO
</TABLE>
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Private Line Services Exhibit - Page 2
<PAGE> 7
<TABLE>
<S> <C> <C>
DS-1 DACS PORT [***]
ECHO CANCELLER (PER CIRCUIT END) [***] [***]
SECOND END LOOP (EX; FOR ADPCM) [***] [***]
MAINTENANCE CHARGES:
- --------------------
Trouble Assistance Ticket per dispatch:
- ---------------------------------------
Monday through Friday, 8 am to 5 pm [***] / hr, 4 hr
minimum
After Hours [***] / hr, 4 hr
minimum
(Work limited to recovery of downed circuits or
Equipment, not new installations)
</TABLE>
NOTES:
1. All charges incurred by Supplier on Customer's behalf from any Local
Exchange Carrier, Competitive Access Provider or Competitive Local Exchange
Carrier will be directly passed on to the Customer.
2. Services not described above will be considered special handling and
charges will be assessed on an Individual Case Basis (I.C.B.).
3. All of the above changes are subject to changes with a 30-day notice.
4. All Private Line ancillary service charges to cities not listed will be
priced on an individual case basis and will be subject to the terms and charges
of the underlying carrier.
** ALL PRODUCTS, CROSS-CONNECTS AND INTERCONNECTS WILL BE PROVIDED BASED
UPON AVAILABILITY.
*** Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
PRIVATE LINE SERVICES EXHIBIT - PAGE 3
<PAGE> 8
EXHIBIT C - ON-NET CITY LISTING FOR PRIVATE LINE *
- --------------------------------------------------
<TABLE>
<CAPTION>
LOCATION LATA ADDRESS/(NPA)NXX
- -------- ---- ----------------
<S> <C> <C>
Abilene, TX 550 United Bank Bldg.
1049 N. Third, #500,
Abilene, Texas 79601
(915)675
Albany, NY 134 99 Washington St., Suite 411
Albany, NY 12210
(518)426
Atlanta, GA 438 4311 Best Road
College Park, GA 30337
(404)762
Austin, TX 558 621 Pleasant Valley Road
Austin, TX 78702
(512)320
Buffalo, NY 140 350 Main St. Suite 512
Buffalo, NY 14202
(716)854
Charlotte, NC 422 112 N. Myers St.
Charlotte, NC 28205
(704)347
(NO CO-LOCATE)
Chicago, IL 358 Doral Plaza
155 North Michigan Ave. #450
Chicago, Illinois 60601
(312)240
Cincinnati, OH 922 150 E. Forth
2nd floor
Cincinnati, OH 45202
(513)784
(NO CO-LOCATE)
Cleveland, OH 320 1150 W. 3 rd St.
1st floor
Cleveland, Oh 44110
(216)771
(NO CO-LOCATE)
Columbus, OH 328 550 W Broad St.
Columbus, OH 43209
(614)228
(NO CO-LOCATE)
Corpus Christi, TX 564 606 N. Carancahua, Suite 816W
Corpus Christi, TX 78476
(512)882
Dallas-Americas 552 Tower of the Americas
2323 Bryan St. Dallas TX 75201
(214)969
Dallas-Electra 552 2223 N. Houston St.
Dallas, TX 75202
(214)954
Dayton, OH 720 Germantown Rd.
Dayton, OH 45402
(513)461
(NO CO-LOCATE)
El Paso, TX 540 Texas Commerce Bank
201 E. Main, #1702,
(915)533
Fort Worth, TX 548 1101 E. 9th St.
Ft. Worth, TX 76102
(817)870
Harlingen, TX 568 513 E. Jackson, Matz Bldg.,
Harlingen, TX 78550
(210)425
Hayward, CA 722 23965 Connecticut Ave.
Hayward, CA. 94546
(510) 259
Houston, TX 560 293 N. Main Street,
Houston, TX 77002
(713)224
Houston, TX 560 300 W. Richey Road
Houston, TX 77090-5806
(281)444
Indianapolis, IN 336 Indy Tel-Com Center
720 Kentucky Ave., Suite 1
Indianapolis, IN 46225
(317)632
Joplin, MO 522 501 South Main St., 2nd Floor
Joplin, MO 64801
(417)623
Kansas City, MO 524 Bank of Kansas City
1125 Grand Ave., Ste. 1704
Kansas City, MO 64106
(816)283
Las Vegas, NV 721 4275 E Sahara Blvd.
Suite 8 & 28
Las Vegas, NV 89104
(702)432
Los Angeles, CA 730 One Wilshire, 624 S. Grand Suite 1615
Los Angeles, CA 90017
(213)689
McAllen, TX 568 Texas Commerce Bank
200 S. 10th Street, Ste. 1704,
McAllen, Texas 78501
(956)687
Midland, TX 542 2719 S. Midkiff Rd.
Midland, Texas 79706
(915)697
Newark, DE 228 504 Interchange Blvd.
Newark DE 19715
(302)283
New York, NY 132 Western Union Bldg.
60 Hudson St., Ste. 1010
(212)732
Oklahoma City, OK 536 2112 East California
Oklahoma City, OK 73104
(405)232
Phoenix, AZ 666 2600 N. Central, Basement
Phelps-Dodge Tower
Phoenix, AZ 85004
(602)279
Phoenix, AZ 666 2120 N. Central, Ste. G33
Phoenix, AZ 85004
(602)238
Rochester, NY 136 1 Exchange St., Suite 311
Rochester, NY 14608
(716)232
San Antonio, TX 566 660 S. Santa Rosa.
San Antonio, TX 78204
(210)225
</TABLE>
* SUBJECT TO AVAILABILITY.
PRIVATE LINE SERVICES EXHIBIT - PAGE 4
<PAGE> 9
EXHIBIT C - ON-NET CITY LISTING FOR PRIVATE LINE (CONT.) * 3.9.99
- ----------------------------------------------------------
<TABLE>
<CAPTION>
LOCATION LATA ADDRESS/(NPA)NXX
- -------- ---- ----------------
<S> <C> <C>
St. Louis, MO 520 900 Walnut, Suite 400
St. Louis, MO 63102
(314)436
Syracuse, NY 136 109 S. Warren St. Suite 628
Syracuse, NY 13202
(315)472
Tucson, AZ 668 Bank of America Plaza, #1610-1620
33 N. Stone
Tucson, AZ 85701
(520)792
Tulsa, OK 538 Boatman's Center
15 W. 6th St.
Tulsa, OK 74119
(918)584
Waco, TX 556 100 S. 26th Street,
Waco, X 76702
(254)750
Washington, D.C. 236 1828 L. St.
5th floor
Washington, D.C. 20036
(202)833
</TABLE>
* SUBJECT TO AVAILABILITY
PRIVATE LINE SERVICES EXHIBIT - PAGE 5
<PAGE> 10
EXHIBIT C - ON-NET CITY LISTING FOR OC PRODUCT 3.9.99
- ----------------------------------------------
<TABLE>
<CAPTION>
LOCATION LATA ADDRESS/(NPA)NXX
- -------- ---- ----------------
<S> <C> <C>
Atlanta, GA 438 4311 Best Road
College Park, GA 30337
(404)762
Albany, NY 134 99 Washington St., Suite 411
Albany, NY 12210
(518)426
Austin, TX 558 621 Pleasant Valley Road
Austin, TX 78702
(512)320
Charlotte, NC 422 112 N. Myers St.
Charlotte, NC 28205
(704)347
(NO CO-LOCATE)
Chicago, IL 358 Doral Plaza
155 North Michigan Ave. #450
Chicago, Illinois 60601
(312)240
Dallas-Electra 552 2223 N. Houston St.
Dallas, TX 75202
(214)954
Fort Worth 548 1101 E. 9th St.
Ft. Worth, TX 76102
(817)870
Hayward, CA 722 23965 Connecticut Ave.
Hayward, CA. 94546
(510)259
Houston, TX 560 293 N. Main Street,
Houston, TX 77002
(713)224
Las Vegas, NV 721 4275 East Sahara Ave.
Suites 8 & 28
Las Vegas, NV 89104
(702)432
Houston, TX 560 300 W. Richey Road
Houston, TX 77090-5806
(281)444
Los Angeles, CA 730 One Wilshire
624 S. Grand Suite 1615
Los Angeles, CA 90017
(213)689
New York, NY 132 Western Union Bldg.
60 Hudson St.,
Ste. 1010
(212)732
Newark, DE 228 504 Interchange Blvd
Newark, DE 19715
(302)283
Phoenix, AZ 666 2600 N. Central, Basement
Phelps-Dodge Tower
Phoenix, AZ 85004
(602)279
Phoenix, AZ 666 2120 N. Central, Ste. G33
Phoenix, AZ 85004
(602)238
Rochester, NY 136 1 Exchange St., Suite 311
Rochester, NY 14608
(716)232
San Antonio, TX 566 660 S. Santa Rosa,
San Antonio, Texas 78204
(210)225
St. Louis, MO 520 900 Walnut, Suite 400
St. Louis, MO 63102
(314)436
Washington, D.C. 236 1828 L. St.
5th floor
Washington D.C. 20036
(202)296
</TABLE>
All OC-X service is subject to availability.
PRIVATE LINE SERVICES EXHIBIT - PAGE 6
<PAGE> 11
EXHIBIT D - PRIVATE LINE PRICING
- --------------------------------
<TABLE>
<CAPTION>
RATE PER V&H DS-0 MILE/CIRCUIT LEASE TERM
-----------------------------------------
SERVICE TYPE 1 YEAR 3 YEAR 5 YEAR
- ------------ ------ ------ ------
<S> <C> <C> <C>
DS-0 [***] [***] [***]
DS-1
DS-3 [***]
OC-3
OC-12
MINIMUM CIRCUIT CHARGES:
DS-0 [***]
DS-1 [***]
DS-3 [***]
OC-3 [***]
OC-12 [***]
MINIMUM CIRCUIT TERM: One (1) Year
</TABLE>
NOTES:
- ------
1. ALL PRIVATE LINE SERVICE TO CITIES NOT LISTED ON EXHIBIT C WILL BE
PRICED ON AN INDIVIDUAL CASE BASIS AND WILL BE SUBJECT TO THE TERMS OF
THE UNDERLYING CARRIER.
2. CIRCUITS CURRENTLY UNDER TERM MAY BE RE-RATED IF A NEW CIRCUIT LEASE
TERM IS REQUESTED.
Private Line Services Exhibit - Page 7
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 1
EXHIBIT 10.18.2
IXC AMENDMENT NO. 2 TO IXC
COMMUNICATIONS, INC. MASTER SERVICE AGREEMENT
This Amendment No. 2 to the Master Service Agreement is made and entered into by
and between IXC COMMUNICATIONS SERVICES, INC., f/k/a IXC Carrier, Inc./IXC Long
Distance, Inc./IXC Broadband Services, Inc. (generically "IXC"), a Delaware
corporation with its principal place of business at 1122 Capital of Texas Hwy.
South, Austin, Texas 78746 ("Supplier"), and UNIVERSAL ACCESS, INC., an Illinois
corporation with its principal place of business at 100 North Riverside Plaza,
Suite 2200, Chicago, Illinois 60606-1502 ("Customer").
For purposes of this Amendment, the rates, terms and conditions set forth herein
shall become effective on the first day of the next IXC billing cycle following
the last date of execution below (the "Amendment Effective Date").
This Amendment is made with reference to the following facts:
A. Customer and Supplier are parties to that certain Master Service
Agreement dated as of November 6, 1997 and subsequent Amendment No. 1 dated
March 23, 1999 (as amended, the "Agreement").
B. The parties desire to amend the Agreement pursuant to the terms
set forth below.
TERMS OF AMENDMENT
Accordingly, in consideration of the mutual promises set forth below, the
parties agree as follows:
1. Section 8, Notices, of the Master Service Agreement Terms &
Conditions shall be modified as follows:
8. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given as of the
date of delivery, facsimile transmission or mailing, and if
mailed, first class postage prepaid, certified or registered
mail, return receipt requested to the following persons, unless
contrary instructions are given by the parties in writing:
If to Supplier: IXC Communications Services, Inc.
1122 Capital of Texas Hwy. South
Austin, Texas 78746-6426
Attention: Contract Administration
If to Customer: Universal Access, Inc.
100 North Riverside Plaza, Suite 2200
Chicago, Illinois 60606-1502
Attention: Robert J. Pommer, COO
2. Exhibit D, Private Line Pricing, shall be replaced in its
entirety by Exhibit D, Private Line Pricing, attached hereto.
3. All other terms and conditions, provisions, supplements and
exhibits of the Agreement shall remain in full force and effect.
[SIGNATURE LINES ON NEXT PAGE]
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date last
written below.
IXC COMMUNICATIONS SERVICES, INC. UNIVERSAL ACCESS, INC.
BY: /s/ LEO WEISH BY: /s/ ROBERT J. POMMER
--------------------------------- -------------------------------------
NAME: LEO WEISH NAME: Robert J. Pommer
------------------------------- -----------------------------------
TITLE: PRES-WHOLESALE TITLE: Chief Operating Officer
------------------------------ ----------------------------------
DATE: 7/19/99 DATE: 7/1/99
------------------------------- -----------------------------------
<TABLE>
<S> <C>
FULL BUSINESS ADDRESS: FULL BUSINESS ADDRESS:
1122 CAPITAL OF TEXAS HWY. SOUTH 100 NORTH RIVERSIDE PLAZA, SUITE 2200
AUSTIN, TEXAS 78746-6426 Approved as to form CHICAGO, ILLINOIS 60606-1502
TELEPHONE: (512) 427-3700 Legal dept. TELEPHONE: (312) 660-5000
FACSIMILE: (512) 328-7902 FACSIMILE: (312) 660-5050
BILLING CONTACT: ACCOUNTS PAYABLE
TELEPHONE: (312) 660-5000
</TABLE>
AMENDMENT NO. 2 TO MSA
<PAGE> 3
EXHIBIT D - PRIVATE LINE PRICING
- --------------------------------
<TABLE>
<CAPTION>
RATE PER V&H DS-0 MILE/CIRCUIT LEASE TERM
SERVICE TYPE MONTHLY VOLUME 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS
- ------------ -------------- -------- -------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
DS-0 N/A [***] [***] [***] [***] [***]
DS-1 [***] [***] [***] [***] [***] [***]
[***]
DS-3 [***] [***] [***] [***] [***] [***]
[***]
OC-3 [***] [***] [***] [***] [***] [***]
[***]
OC-12 [***] [***] [***] [***] [***] [***]
[***]
OC-48 [***] [***] [***] [***] [***] [***]
MINIMUM CIRCUIT CHARGES:
DS-0 [***]
DS-1 [***]
DS-3 [***]
OC-3 [***]
OC-12 [***]
OC-48 [***]
MINIMUM CIRCUIT TERM: 1 Year
</TABLE>
NOTES:
1. ALL PRIVATE LINE SERVICE TO CITIES NOT LISTED ON EXHIBIT C WILL BE
PRICED ON AN INDIVIDUAL CASE BASIS AND WILL BE SUBJECT TO THE TERMS OF
THE UNDERLYING CARRIER.
2. EXISTING CIRCUITS MAY BE RE-RATED AT THE [***] MONTHLY VOLUME RATES
PROVIDED (A) CUSTOMER REACHES AND MAINTAINS [***] IN INVOICED MONTHLY
VOLUME AND (B) CUSTOMER SUBMITS A NEW MARKET SERVICE ORDER FOR EACH
CIRCUIT TO BE RE-RATED WITH A NEW CIRCUIT LEASE TERM.
AMENDMENT NO. 2 TO MSA PRIVATE LINE SERVICES EXHIBIT - PAGE 7
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 1
EXHIBIT 10.19
CARRIER SERVICES AGREEMENT
(MULTIMEDIA)
AGREEMENT NO.98R0613.00
This Carrier Services Agreement (this "Agreement") is made this 29th day of
June, 1998, by and between Williams Communications, Inc. d/b/a Williams Network
Services, a Delaware corporation ("Seller"), with its principal place of
business at One Williams Center, 26th Floor, Tulsa, Oklahoma 74172 and Universal
Access, Inc., an Illinois corporation ("Customer"), with its principal place of
business at 1021 Adams Street, Suite 101, Chicago, Illinois 60607, for the
provision of multimedia telecommunications services, set forth in this
Agreement.
1.0. SCHEDULES.
The Schedules attached to this Agreement and made a part hereof are:
Schedule A - Williams Network Services Asynchronous Transfer Mode Service
Schedule including Pricing and Specifications
Schedule B - Williams Network Services Private Line Service Schedule including
Pricing and Specifications
Schedule C - List of Seller's On-Net Cities
2.0. DESCRIPTION OF SERVICES AND PRICING.
Customer may order from Seller multimedia transmission services ("Services"),
the terms and conditions of which and the charges for which are set forth in
Seller's currently prevailing Multimedia Transmission Service Schedule relating
to such Services (the "Service Schedule"). Current Service Schedules are
attached to this Agreement, labeled as consecutive Schedules and incorporated
herein by this reference. Seller offers such Services, as defined in the
applicable Service Schedule, upon the terms and conditions set forth in the
Service Schedule, this Agreement, and any applicable tariff (the "Tariff") filed
by Seller with the Federal Communications Commission. The terms and conditions
of this Agreement (including the Schedules) are subject to change in accordance
with and to the extent of any changes made in such Tariff, if applicable, or as
such changes are generally applicable to Seller's other customers ordering
similar services, provided, however in no event shall the cost of On-Net IXC
Services be increased from current levels for the remainder of the term of this
Agreement. All Services and "Ancillary Services," as defined in Section 5.3, are
subject to availability.
3.0 EFFECTIVE DATE AND TERM
3.1 This Agreement shall become effective on the date on which Seller signs
the Agreement ("Effective Date").
3.2 The duration of this Agreement shall continue for a term of [***]
years (the "Initial Term") from the date by which Customer must meet its Revenue
Commitment (as defined below). This Agreement shall thereafter automatically
renew for successive five-year periods (each, a "Renewal Term") unless canceled
by either party by giving written notice of such cancellation not less than
sixty (60) days before the end of the Initial Term or any Renewal Term. Unless
Customer is in Default, any Service being provided at the time of termination
shall continue until the natural end of such Service as specified in the
applicable Service Schedule upon the terms and conditions of this Agreement;
provided that Customer may not order any new Service without first renewing this
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 1 of 24
<PAGE> 2
Agreement. The charges for Services and Ancillary Services during any such
extension shall be the then current Seller charges provided, however in no event
shall the cost of On-Net IXC Services be increased from current levels for the
remainder of the term of this Agreement. To the extent Seller (a) files a Tariff
incorporating a reduction in the price applicable to any Service or Ancillary
Service being provided to Customer under this Agreement or any Service Schedule,
or (b) reduces its standard list price for any Service or Ancillary Service for
such Service being provided to Customer under this Agreement or any Service
Schedule, then Seller shall reduce the prices charged to Customer
proportionately with respect to any such Service or Ancillary Service as of the
date of filing of such Tariff or reduction of such standard list price, as the
case may be (i.e. a retail price reduction of 10% would constitute a 10% price
reduction on existing rates for Customer on the services effected.)
3.3 Commencing [***] months after the calendar month including the Effective
Date, Customer shall be obligated to have signed orders for on-network Services
in the amount of [***] dollars [***] in total aggregate monthly billings (the
"Revenue Commitment"). For the first [***] months, Customer will receive the
discounted rate associated with the [***] revenue level. If, after the [***]
month, Customer reaches [***]in monthly revenues, it will receive the discounted
rate associated with the [***] revenue level. If Customer reaches [***] in
monthly revenues by month [***], it will receive the discounted rate associated
with the [***]revenue level. If Customer reaches [***] in monthly revenues by
month [***] or at the month thereafter, Customer will receive the discounted
rate associated with the [***] and over revenue level. If any of the above
revenue levels are achieved, Customer will be billed at the discounted rate
associated with the revenue level they have achieved. All charges for Services
in this Agreement shall be determined in accordance with the pricing set forth
in the Service Schedules attached hereto or on Customer's Service Orders, as
applicable, inclusive of any discounts applicable to Customer, but exclusive of
any credits to which Customer may be entitled, late payment penalties, taxes and
other government-imposed surcharges. Customer's purchases of Services shall also
not include payments made by Customer to Seller to reimburse Seller for third
party costs paid to unaffiliated entities, including, but not limited to, local
access charges, taxes, installation charges, off-network charges, one-time fees
and other similar costs. To the extent that, in any month during the Initial
Term hereof, Customer fails to have signed orders or a total aggregate billing
of applicable Services from Seller greater than or equal to the Revenue
Commitment amount, Williams shall invoice Customer on Customer's next invoice,
an amount equal to the difference between the Revenue Commitment amount and the
amount of Services actually purchased or committed to by order by Customer. For
purposes of this entire agreement, "on-network" means interexchange service
provided by Seller on facilities owned by Seller and bounded by Seller points of
presence or services that are ordered and scheduled to be Seller owned
facilities within a one year period from the date of order. (i.e. Customer will
receive On-Net pricing at the time of the order provided that the Seller has
indicated that the route will be On-Net within 12 months of the order.) At the
time that the Off-Net circuit is available for On-net use, Customer agrees to
convert circuit to On-net facilities at the first mutually acceptable date and
time.
4.0 SERVICE ORDERS.
Services requested by Customer hereunder shall be requested on Seller's Service
Order forms in effect from time to time or on Customer's forms accepted in
writing by Seller ("Service Orders"). Each Service Order shall reference this
Agreement and its respective Agreement number. Seller reserves the right not to
accept a Service Order under this Agreement at any time.
When a Service Order is placed, the Customer will indicate a requested start
date (A Requested Start Date). Seller will make reasonable efforts to meet the
Requested Start Date. In the event that a Requested Start Date is altered, the
actual Start Date will be changed to reflect the number of days of delay or
advance, as appropriate.
This Agreement shall apply to all Services and Ancillary Services provided by
Seller to the Customer whether
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 2 of 24
<PAGE> 3
pursuant to a Service Order or otherwise.
Any conflicting, different or additional terms and conditions contained in
Customer's acknowledgment or Service Order or elsewhere are objected to by
Seller and shall not constitute part of this Agreement. No action by Seller
(including, without limitation, provision of Services or Ancillary Services to
Customer pursuant to such Service Order) shall be construed as binding or
estopping Seller with respect to such term or condition, unless the Service
Order containing said specific term or condition has been signed by an
authorized headquarters representative of Seller.
Seller shall make reasonable efforts to provide Services within its standard
service implementation interval or on Customer's requested Start Date. Services
shall begin on the date Seller issues notice that service is available (the
"Start of Service Notice or (SOSN), indicating the service has been tested by
Seller in accordance with Seller's standard specifications and that the service
meets or exceeds those specifications.
[***]
5.0. LOCAL ACCESS AND ANCILLARY SERVICES.
[***].
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 3 of 24
<PAGE> 4
[***]
6.0. CHANGES IN SERVICE PARAMETERS.
6.1. Cancellation of Services. Customer may cancel any Service or Ancillary
Service provided hereunder by providing written notification to Seller thereof
ninety 90) days in advance of the effective date of cancellation. In the event
of such cancellation, Customer shall not be required to pay to Seller a
cancellation charge as long as the circuit has been in service for at least
twelve (12) months, Customer's Revenue Commitment is still being met the
cancellation, and as long as Customer pays to Seller all termination liability
and one-time charges for local access or off-net, third party provided
facilities that are impacted by the cancellation. Customer shall also not be
required to pay to Seller a cancellation charge (except as set forth in Section
6.2 below) if Customer exercises the portability option defined in Section 6.2.
In the event the cancellation of the Service or Ancillary Service causes
Customer's monthly purchase of Services to fall below the Revenue Commitment
amount, Customer agrees to pay, the monthly difference between the Committed
Revenue amount and the amount actually billed until such time as Customer's
orders or billings exceed this Committed Revenue amount, and (ii) any
non-recurring payments not yet paid together with any termination liability
associated with Local Access. Customer agrees that the actual damages in the
event of such cancellation would be difficult or impossible to ascertain, and
that the cancellation charge in this Section 6.1 is intended, therefore, to
establish liquidated damages and is not intended as a penalty. Notwithstanding
the foregoing, and upon thirty (30) day's prior written notice to the other
party, either Customer or Seller shall have the right, without cancellation
charge or other liability to the other party, to cancel the affected portion of
any Service or Ancillary Service, if Seller is prohibited by governmental
authority from furnishing or Customer is prohibited from using such portion, or
if any material rate or term contained herein and relevant to the affected
portion of any Service or Ancillary Service is substantially changed by order of
the highest court of competent jurisdiction to adjudicate the matter, the
Federal Communications Commission, or other local, state or federal government
authority.
6.2 Portability. [***]
6.3 Service Migration. [***]
7.0. PAYMENT TERMS.
7.1. Due Date and Invoice. All amounts stated on each monthly invoice are
due and payable thirty (30) days from the date of the invoice ("Due Date")
subject to postponement of disputed charges until resolution thereof as set
forth
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 4 of 24
<PAGE> 5
below. Customer agrees to remit payment to Seller at the remittance address. In
the event Customer fails to make full payment to the proper address by the Due
Date, Customer shall also pay a late fee in the amount of the lesser of one and
one-half percent (1 1/2) of the unpaid balance per month or the maximum lawful
rate under applicable state law which shall accrue from the Due Date. Customer
acknowledges and understands that all charges are computed exclusive of any
applicable federal, state or local use, excise, valued added, gross receipts,
sales and privilege taxes, duties, fees or similar liabilities (other than
general income or property taxes imposed on Seller), whether charged to or
against Seller, its suppliers or affiliates or Customer associated with the
Service or Ancillary Service provided to Customer ("Additional Charges"). Such
Additional Charges shall be paid by Customer in addition to all other charges
provided for herein.
Payment for all prorated monthly recurring charges (charges for monthly Service
or Ancillary Service provided for less than a calendar month), installation and
other non-recurring charges shall be billed following the receipt of any such
Services or Ancillary Service. Payment for all monthly recurring charges for
full months during which Service or Ancillary Service are to be provided shall
be due in advance.
If Customer in good faith disputes any portion of an invoice it must pay the
undisputed amount of the invoice on or before its Due Date and provide written
notice to Seller of the billing dispute within sixty (60) days thereafter. Such
notice must include documentation substantiating the dispute. Customer's failure
to notify Seller, of a dispute shall be deemed to be Customer's acceptance of
such charges. The parties will make a good faith effort to resolve billing
disputes as expeditiously as possible. If a dispute is resolved in favor of
Customer, Customer shall receive a credit on their next bill for the amount
determined to be due, if not, the additional sum due shall be payable no later
than 30 days following a dermination that it is due.
7.2. Suspension of Service. In the event payment in full is not received
from Customer on or before sixty (60) days following the Due Date, Seller shall
have the right, after giving Customer ten (10) days notice, to suspend all or
any portion of the Services or Ancillary Service to Customer. If only a portion
of the Services or Ancillary Service are suspended and Customer does not cure
within ten days of delivery of notice of such partial suspension of Service,
Seller may suspend all or any additional portion of the Services or Ancillary
Service to Customer. Seller may continue suspension until such time as Customer
has paid in full all charges then due, including any late fees as specified
herein. Following such payment, Seller shall be required to reinstitute Service
or Ancillary Service to Customer only on the provision by Customer of
satisfactory assurance, in Seller's sole discretion which shall not be
unreasonably exercised of Customer's ability to pay for Service or Ancillary
Service. If Customer fails to provide such satisfactory assurance by a date
determined by and acceptable to Seller, Customer shall be deemed to have
canceled the Services or Ancillary Service provided under this Agreement
effective on the date of such suspension and shall remain liable for all
cancellation charges as set forth in Section 6.1. Further, if at any time there
is a material adverse change in Customer's creditworthiness or a material change
in Customer's financial position, then in addition to any other remedies
available to Seller, Seller may elect, in its sole discretion, to exercise one
or more of the following remedies: (i) cause the start of the Service or
Ancillary Service described in a previously executed Service Order to be
withheld; (ii) cease providing Service pursuant to a notice of suspension; (iii)
decline to accept a Service Order or other requests from Customer to provide
Service or Ancillary Service which Seller may otherwise be obligated to accept;
and/or (iv) condition its provision of Service or Ancillary Service or
acceptance of a Service Order on Customer's assurance of payment which shall be
a deposit or such other means to establish reasonable assurance of payment. An
adverse material change in Customer's creditworthiness shall include, but not be
limited to: (a) Customer's default of its financial obligations to Seller under
this or any other agreement with Seller; which default remains uncured. (b)
failure of Customer to make full payment of charges due hereunder on or before
the Due Date on three (3) or more occasions during any period of twelve (12) or
fewer months or Customer's failure to make such payment on or before the Due
Date in any two (2) consecutive months; (c) acquisition of Customer (whether in
whole or by majority or controlling interest) by an entity which is insolvent,
which is subject to bankruptcy or insolvency proceedings, which owes past due
amounts to Seller or any entity affiliated with Seller or which is a materially
greater credit risk than Customer; or, (d)
Page 5 of 24
<PAGE> 6
Customer having filed for bankruptcy or insolvency proceedings or an involuntary
petition for Bankruptcy has been filed against Customer which has not been
deismissed within 60 days of the initial filing date. An adverse material change
in Customer's financial position shall include, but not be limited to: (a) a
decrease in net worth or working capital of five percent (5%) or greater; or,
(b) negative net worth or working capital. If Customer's financial statements
are not public information, Customer shall be required to provide financial
statements upon the request of Seller and Seller agrees hereby to hold such
financial statements in strict confidence subject only to the right to use such
financial statements for the purposes of this Agreement.
7.3. Taxes. If any sales taxes, valued added taxes or similar charges or
impositions are asserted against Seller after, or as a result of, Customer's use
of Services or Ancillary Service by any local, state, national, international,
public or quasi-public governmental entity or foreign government or its
political subdivision, including without limitation, any tax or charge levied to
support the Universal Service Fund contemplated by the Telecommunications Act of
1996, Customer shall be solely responsible for such taxes, charges or
impositions. Customer agrees to pay any such taxes, charges or impositions and
hold Seller harmless from any liability or expense associated with such taxes,
charges or impositions.
7.4 Adjustments. Seller may make billing adjustments for a period of two
(2) years after the Due Date of an invoice, or two (2) years after the date a
service is rendered, whichever is later.
8.0. GENERAL AGREEMENT.
8.1. Warranty and Disclaimer of Warranty. Seller warrants that Services or
Ancillary Service shall be provided to Customer in accordance with the technical
parameters set forth in the applicable Service Schedule. Seller shall use
commercially reasonable efforts under the circumstances to remedy any delays,
interruptions, omissions, mistakes, accidents or errors in the Services or
Ancillary Service and restore such Services or Ancillary Service to comply with
the terms hereof. THE FOREGOING WARRANTY AND THE OUTAGE CREDITS REMEDY PROVIDED
TO CUSTOMER AS SET FORTH IN THE APPLICABLE SERVICE SCHEDULE FOR THE FAILURE TO
COMPLY WITH THIS WARRANTY ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES OR
REMEDIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION,
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8.2. Limitation of Liability. IN THE EVENT OF ANY BREACH OF THIS AGREEMENT
OR ANY FAILURE OF THE SERVICES OR THE ANCILLARY SERVICES, WHATSOEVER, NO
PROVIDER (AS DEFINED IN SECTION 8.3) SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, SPECIAL, ACTUAL, INCIDENTAL, PUNITIVE OR ANY OTHER DAMAGES, OR
FOR ANY LOST PROFITS OF ANY KIND OR NATURE WHATSOEVER.
NEITHER CUSTOMER NOR ANY PROVIDER SHALL BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL, SPECIAL, INCIDENTAL, PUNITIVE OR ANY OTHER SIMILAR DAMAGES, OR
FOR ANY LOST PROFITS OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT TO THIS
AGREEMENT OR FOR THE LOSS OR FAILURE OF THE SERVICES OR THE ANCILLARY SERVICES.
8.3. Customer Content and Indemnity. Customer shall make all arrangements
with copyright holders, music licensing organizations, performers'
representatives or other parties for necessary authorizations, clearances or
consents with respect to transmission contents ("Consents"). Customer shall
indemnify and hold harmless Seller and any third party or affiliated provider,
operator or maintenance/repair contractor of facilities employed in connection
with the provision of Services or Ancillary Service (all of which shall be
referred to as "Providers")
Page 6 of 24
<PAGE> 7
against and from any court, administrative or agency action, suit or similar
proceeding, whether civil or criminal, private or public, brought against
Providers arising out of or related to the contents transmitted hereunder (over
Seller's network or otherwise) including, but not limited to, claims, actual or
alleged, relating to any violation of copyright law, export control laws,
failure to procure Consents, failure to meet governmental or other technical
broadcast standards, or that such transmission contents are libelous,
slanderous, an invasion of privacy, pornographic, or otherwise unauthorized or
illegal. Seller may terminate or restrict any transmissions over the network if,
in its judgment, (a) such actions are reasonably appropriate to avoid violation
of applicable law; or (b) there is a reasonable risk that criminal, civil or
administrative proceedings or investigations based upon the transmission
contents shall be instituted against Providers. Customer agrees not to use
Services or Ancillary Service for any unlawful purpose, including without
limitation any use which constitutes or may constitute a violation of any local,
state or federal obscenity law.
8.4. a) Customer and Seller shall, indemnify and hold harmless the other
against and from any and all claims for physical property damage, physical
personal injury or wrongful death to the extent that such arises out of the
negligence or willful misconduct of the respective indemnifying party, its
employees, agents, or contractors in connection with the provision of Services,
Ancillary Services or other performance.
b) With respect to third parties that use Services or Ancillary Service
through Customer, Customer shall, indemnify and hold harmless Providers against
any claims by such third parties for damages arising or resulting from any
defect in or failure to provide Services or Ancillary Service.
c) Customer shall, indemnify and hold harmless Providers for any breach
of Customer's obligations under Section 8.3.
d) The indemnifying party agrees to defend the other against the claims
as set forth above and to pay all reasonable litigation costs, attorneys' fees,
court costs, settlement payments, and any damages awarded or resulting from any
such claims. The indemnified party shall promptly notify the indemnifying party
in writing of any such claims and tender the defense thereto.
8.5. Force Majeure. If either party's performance of this Agreement or any
obligation (other than the obligation to make payments) hereunder is prevented,
restricted or interfered with by causes beyond its reasonable control including,
but not limited to, acts of God, fire, explosion, vandalism, cable cut, power
outage, storm or other similar occurrence including rain fade or other
atmospheric conditions, any law, order, regulation, direction, action or request
of the United States Government or state or local governments, or of any
department, agency, commission, court, bureau, corporation or other
instrumentality of any one or more said governments, or of any civil or military
authority, or by national emergencies, insurrections, riots, wars, acts of
terrorism, strikes, lockouts or work stoppages or other labor difficulties,
supplier failures, shortages, breaches or delays, then the affected party shall
be excused from such performance on a day-to-day basis to the extent of such
prevention, restriction or interference. The affected party shall use
commercially reasonable efforts under the circumstances to avoid and remove such
causes of non-performance and shall proceed to perform with reasonable dispatch
whenever such causes cease.
8.6. Events of Default. If the quality of transmission provided under such
Service or Ancillary Service falls below the level of quality set forth in the
technical parameters applicable to such Service or Ancillary Service set forth
in the applicable Schedule, then Customer may terminate that Service or
Ancillary Service, provided that written notice is given to Seller setting forth
the specifics of a default and provided that Seller is unable to cure such
quality default within five (5) days after notice of the default is received by
Seller.
Either party may terminate this Agreement if the other is in default of any
material obligation contained herein, which default has not been cured within
fifteen (15) days following the receipt of notice of such default setting
Page 7 of 24
<PAGE> 8
forth the specifics of such default. Customer may terminate this Agreement if
Seller is unable to provide operational circuits for at least 90% of the
circuits Customer has contracted for for at least 48 hours and such outage
continues as of the date of serving notice of termination by Customer then
Customer may immediately terminate this Agreement without penalty. Termination
and receipt of any applicable refund are Customer's remedies in the event of any
such Seller's default.
8.7. Use of Services. Seller's obligation to provide Services or Ancillary
Service to Customer is subject to the following conditions: (a) Services or
Ancillary Service shall not be used for any unlawful purpose, (b) Services may
be used only for multimedia transmissions (i.e., video and radio transmission
services and/or related applications including, but not limited to, graphic,
visual, imaging, interactive and multimedia), and (c) at least ten percent (10%)
of the transmissions shall be interstate transmissions. Customer represents that
this Agreement, to the extent it is subject to FCC regulation, is an
inter-carrier agreement not subject to the filing requirements of Section 211(a)
of the Communications Act of 1934, as amended.
8.8. Proprietary Information. Customer understands and agrees that the terms
and conditions of this Agreement and all documents referenced herein (including
invoices to Customer for Services or Ancillary Service provided hereunder) are
confidential as between Customer, Seller and its affiliates and shall not be
disclosed by Customer to any party other than the directors, officers, and
employees of Customer or agent's of Customer who have specifically agreed to
nondisclosure of the terms and conditions hereof. Violation by Customer or its
agents of the foregoing provision shall entitle Seller, at its option, to
discontinue Services or Ancillary Service to Customer without further obligation
or liability to Customer. Customer further agrees that any Customer generated
press release, advertisement or publication regarding this Agreement, Services
or Ancillary Service provided hereunder or in which Seller, or its affiliates
are to be mentioned, will be submitted to Seller for its written approval prior
to publication. Customer understands and agrees that Seller may disclose such
information as may be required under applicable law including, without
limitation, filing of tariffs.
8.9. Intrastate Interexchange Services. Customer may use any interexchange
Service provided under this Agreement only if such interexchange Service is used
for carrying interstate telecommunications (i.e., telecommunications subject to
the jurisdiction of the Federal Communications Commission). Seller and its
affiliates shall not be obligated to make available interexchange Service on a
circuit with end points within a single state or service on a circuit which
originates/terminates at points both of which are situated within a single state
unless Customer represents in writing that such interexchange Service or
circuits shall be used to carry interstate telecommunications. If it is
determined at any time that such interexchange Service or circuit is subject to
state regulation, the interexchange Service or circuit may be provided by Seller
or its affiliates pursuant to applicable state laws, regulations and applicable
tariffs, or Seller and its affiliates may discontinue provision of the affected
interexchange Service or circuit.
8.10. Customer Responsibilities. Customer has sole responsibility for
installation, testing and operation facilities, services and equipment
("Customer Facilities") other than those specifically provided by Seller as part
the Service or Ancillary Service as described in a Service Order. In no event
will the untimely installation or ?? operation of Customer Facilities relieve
Customer of its obligation to pay charges for the Service or Ancillary Service
after the start of Services as set forth in the Service Order.
9.0. MISCELLANEOUS PROVISIONS.
9.1. Title to Equipment. This Agreement shall not, and shall not be deemed
to, convey from Seller to Customer title of any kind to any of the transmission
facilities, digital encoder/decoders, telephone lines, microwave facilities or
other facilities utilized in connection with the Services or Ancillary Service.
Any equipment provided by Customer must be itemized on a schedule listing all
such Customer-provided equipment and appended to the Service Order to which use
of that equipment relates ("Customer Equipment Inventory"). Seller shall not be
Page 8 of 24
<PAGE> 9
obligated to provide any Services or Ancillary Service for Customer if Customer
will be providing any of its own equipment unless and until such equipment is
itemized on the applicable Customer Equipment Inventory.
9.2. Notice. All notices to be sent to a party pursuant to this Agreement
shall be in writing and deemed to be effective upon (i) personal delivery, (ii)
three days after mailing certified mail return receipt requested, (iii) on the
day when the notice has been telexed or telecopied if during business hours and
followed by express mail priority next-day delivery, or (iv) in the case of
invoices, upon the Due Date. In each case, the notice shall be sent to the
person identified in this Section at the Full Business Addresses of the parties
as they appear herein. The effective date for any notice under this Agreement
shall be the date of delivery of such notice, not the date of mailing.
The Full Business Address for purposes of notice under this Section as well as
telephone voice and facsimile numbers for reservation of services and
troubleshooting shall be:
One Williams Center, 26th Floor
Tulsa, Oklahoma 74172
Telephone: (918) 588-5760
Fax: (918) 561-6578
Attention: Contract Administration
CUSTOMER: Universal Access, Inc.
1021 Adams Street, Suite 101
Chicago, Illinois 60607
Telephone: (312)491-1700
Fax: (312) 421-9006
Attn: Robert J. Pommer
9.3. Merger/Integration. This Agreement (including the attached Schedules,
as they may be modified from time to time) consists of all the terms and
conditions contained herein and in documents incorporated herein specifically by
reference. This Agreement constitutes the complete and exclusive statement of
the understanding between the parties and supersedes all proposals and prior
agreements (oral or written) between the parties relating to Services or
Ancillary Service provided hereunder.
9.4. Written Amendment. Customer agrees that any addition, deletion or
modification to this Agreement shall not be binding on Seller except by written
agreement executed by Seller and Customer.
9.5. No Venture. The provision of Services or Ancillary Service shall not
create a partnership or joint venture between the parties.
9.6. Conflict of Law. In addition to the nonpayment of any sum due
hereunder, Seller may immediately suspend Services or Ancillary Service in whole
or part if Seller determines that such Services or Ancillary Service violate the
Communications Act of 1934, as amended (including the Telecommunications Act of
1996), or that the imposition of any state or federal statute, or promulgation
of any rule, regulation, or order of the Federal Communications Commission
("FCC") or other governing body makes Seller's performance commercially
impracticable.
9.7. Assignment. Customer shall not assign or otherwise transfer (including
without limitation, a transfer due to a "Change of Control") its rights or
obligations under this Agreement without the prior written consent of Seller,
which shall not be unreasonably withheld. Any such assignment or transfer of
Customer's rights or obligations without such consent shall entitle Seller to
terminate the Services or Ancillary Service provided hereunder at its
Page 9 of 24
<PAGE> 10
option upon ten (10) days' prior written notice to Customer. A "Change in
Control" shall be deemed to be an assignment, merger, sale of a controlling
interest or other transfer of a controlling ownership interest provided that if
Customer engages in an initial (or any subsequent) public offering of its equity
securities, none of such offering shall be deemed to constitute a "Change in
Control" for the purposes of this Agreement. In the case of a merger, sale or
change or transfer of controlling interest, Should Seller withhold assignment of
contract, Customer has the right to terminate this agreement. In the event that
Universal Access becomes insolvent, Seller agrees to consider a direct
relationship with Universal Access's end customers prior to disconnection
subject to normal credit and approval processes.
9.8. Choice of Law. This Agreement shall be governed by the laws of the
State of Oklahoma without regard to choice of law principles. Customer hereby
consents to the jurisdiction of the federal and state courts having a situs in
Tulsa County, Oklahoma over any proceeding initiated with respect to the
enforcement or interpretation of this Agreement.
9.9. Interpretation. No rule of construction requiring interpretation
against the draftsman hereof shall apply in the interpretation of this
Agreement.
9.10. No Third Party Beneficiary. The provisions of this Agreement are for
the benefit only of the parties hereto, and no third party may seek to enforce
or benefit from these provisions.
9.11. Attorneys' Fees. If a proceeding is brought for the enforcement of this
Agreement or because of any alleged or actual dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs and expenses incurred in such action or proceeding in addition to
any other relief to which such party may be entitled.
9.12. Severability. In the event any provision of this Agreement conflicts
with any statute, rule or order of any governmental unit or regulatory body, or
tariff then, if required by law, such statute, rule, order or tariff shall
control.
9.13. No Waiver. The failure of either party to enforce any provision hereof
in whole or in part, shall not constitute the permanent waiver of such
provision.
UNIVERSAL ACCESS, INC. WILLIAMS COMMUNICATIONS, INC.
AN ILLINOIS CORPORATION. A DELAWARE CORPORATION
By: /s/ ROBERT J. POMMER By: /s/ GORDON C. MARTIN
Name: Robert J. Pommer Name: Gordon C. Martin
--------------------------- ---------------------------
Title: Chief Operating Officer Title: Vice President,
-------------------------- --------------------------
Sales, Marketing
---------------------------
Date: 7/14/98 Date: 7/21/98
--------------- ---------------
Page 10 of 24
<PAGE> 11
Schedule A
Williams Network Asynchronous Transfer Mode ServiceTM
SERVICES & PRICING
This Asynchronous Transfer Mode Service Schedule ("ATMSS") is made as of this
__21st__ day of __May ______, 1998__, and is subject to that Carrier Services
Agreement No. _____________ (the "CSA") by and between Williams Communications,
Inc. d/b/a Williams Network Services, a Delaware corporation ("Williams"), and
Universal Access, Inc., an __ Illinois______________ corporation ("Customer").
1. DESCRIPTION: Williams Network Asynchronous. Transfer Mode (ATM) is
multi-service technology that provides integration of disparate
networks onto a single communications infrastructure. ATM technology
takes voice, data and video packets and divides them into equally
sized, 53-byte cells and transmits them over the Williams Network ATM
network. Williams Network ATM service is designed for two (2) primary
applications. These applications include ATM transport and backbone
connectivity. ATM transport provides multimedia aggregation and video
transmission. Multimedia transmission is suited for transporting voice,
data and video while video transmission is best designed for
point-to-point video services. Backbone connectivity provides for the
interconnection of local area networks (LANs) as well as
interconnection of existing Network Access Points (NAPs) or private
peering backbones.
2. RATES & CHARGES: Williams Network ATM service has three basic rate
elements; Access, Port Connections, and either Committed Bit Rate
(CBR), or Variable Bit Rate (VBR) Permanent Virtual Circuits (PVCs) and
Virtual Paths (VPs).
2.1 Permanent virtual circuit (PVC) and Virtual Path (VP)
bandwidth charges. PVC and VP charges are based on the class
of service (CoS) and bandwidth selected. Bandwidth charges are
stated in Committed Information Rates (CIR) or Megabit per
second (Mbps) increments for one-way, or Simplex PVCs. CIR
increments are available in 1Meg increments up to 40Mbps for
DS3 ports, 5 Meg increments up to 150 Mpbs for OC3 ports and
25 Meg increments up to 600 Mbps for OC12 ports. Two Classes
of Service are offered; Constant Bit Rate (CBR) and Variable
Bit Rate non real time (VBRnrt). Monthly recurring charges for
port, PVCs and VPs are as follows:
2.1.1 ATM SERVICES
PRICING
ATM Transport includes both Recurring and Non-Recurring charges and discounts
based on term and monthly revenue commitment.
RECURRING CHARGES
ATM pricing is based on flat monthly fee assessed per node, which includes a
flat port charge based on the port connection speed, a charge for each PVCs CIR
going out from the port, and local access. ATM Transport Service is priced
simplex, meaning that a PVCs CIR is priced for both the ingress and egress CIR.
Page 11 of 24
<PAGE> 12
CIRS INCREMENTS ARE AVAILABLE IN 1MEG INCREMENTS UP TO 40MBPS FOR DS3 PORTS, 5
MEG INCREMENTS UP TO 150 MPBS FOR OC3 PORTS AND 25 MEG INCREMENTS UP TO 600 MBPS
FOR OC12 PORTS (OC12 IS ICB ONLY).
<TABLE>
<CAPTION>
<?>
<?> <?> <?> <?> <?>
<S> <C> <C> <C> <C>
20-29 [***] VBRnrt [***]
30-40 [***] VBRnrt [***]
OC3 5-20 [***] VBRnrt [***]
25-35 [***] VBRnrt [***]
40-55 [***] VBRnrt [***]
60-75 [***] VBRnrt [***]
80-95 [***] VBRnrt [***]
100-120 [***] VBRnrt [***]
125-150 [***] VBRnrt [***]
DS3 1-9 [***] CBR [***]
10-19 [***] CBR [***]
20-29 [***] CBR [***]
30-40 [***] CBR [***]
OC3 5-20 [***] CBR [***]
25-35 [***] CBR [***]
40-55 [***] CBR [***]
60-75 [***] CBR [***]
80-95 [***] CBR [***]
100-120 [***] CBR [***]
125-150 [***] CBR [***]
</TABLE>
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 12 of 24
<PAGE> 13
NON RECURRING CHARGES
Non-recurring charges include installation, configuration changes, cancellation,
order change that may be incurred for the Port or PVC.
<TABLE>
<CAPTION>
<?>
<?> <?>
<S> <C>
Installation
45Mb Port [***]
155Mb Port [***]
622Mb Port [***]
per PVC [***]
Ancillary
Configuration Changes [***]
Cancellation [***]
PVC Order Change [***]
Port Order Change [***]
</TABLE>
DISCOUNT STRUCTURE
Contributing Williams Network ATM Service charges include recurring port and PVC
charges. The discount structure is based on the monthly revenue commitment
(contributing charges) and the stated length of the contract established.
Discount Structure
<TABLE>
<CAPTION>
Monthly 1 Year 2 Year 3 Year 4 Year 5 Year
Revenue
<S> <C> <C> <C> <C> <C>
$ 0 0% 0% 0% 0% 0%
[***] 12% 14% 18% 22% 27%
[***] 14% 16% 20% 24% 29%
[***] 16% 18% 22% 26% 31%
[***] 18% 20% 24% 28% 33%
[***] 20% 22% 26% 30% 35%
</TABLE>
PARENT/SUBSIDIARY RELATIONSHIPS. If parent/subsidiary billing is provided, all
subsidiaries will contribute toward the overall commitment. The same discount,
based on the revenue commitment will apply for all subsidiary accounts.
CROSS PRODUCT DISCOUNTING. Revenue commitment levels are transferable to any of
the products in the product suite. For example, a private line revenue
commitment of $50,000 for 1 Year term can be used to determine the discount
applied for ATM services for the same term ($50,000 1 Year commitment would
equate to a.14% discount).
2.1.2 Non-recurring PVC and VP charges: Installation: -[***]
2.1.3 Configuration Changes -[***]
2.1.4 Cancellation Charge -[***]
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 13 of 24
<PAGE> 14
For on-net, IXC Services, installation and non-recurrning charges shall
be waived by Seller at the time of order. Should an individual on-net,
IXC circuit cancel prior to the eighteen month anniversary of its
installation, Seller will back bill Customer the full installation and
non-recurring amount fo?? circuit.
Configuration charges are applied when the parameters of Virtual
Channels (VCs) are changed.
Cancellation Charges apply when a PVC has been ordered and needs to be
canceled.
2.2 Ports. Port charges are based on port speed connections selected.
Options currently are DS3, OC3 and OC12. Port charges are as follows:
2.2.1 Non-recurring charges: DS3 Port Installation -[***]
OC3 Port Installation -[***]
OC12 Port Installation -[***]
Port Order Change Charge: -[***]
Port Cancellation Charge: -[***]
Port Order Change Charges apply when the customer requests to change
the port size ordered. If the Port has been installed and accepted, the
customer will be charged for a new port installation.
Port Cancellation Charges apply when a port has been ordered (does not
apply for ports installed and accepted) and needs to be canceled.
2.3 Local Address Charges. [***]
3. OFF-NET SERVICES PRICING: All services provided to Customer which are
not on network facilities owned by Williams will be priced on an
individual case basis at the time Customer requests such service.
4. OUTAGE CREDITS:
4.1 Customer acknowledges the possibility of an unscheduled, continuous
and/or interrupted period of time when a Service or Services are
"UNAVAILABLE" (as defined in the Specifications) for a continuous
period of two (2) hours (hereafter an "OUTAGE"). An Outage shall begin
upon recognition by Williams that the Service is interrupted. In the
event of an Outage, Customer shall be entitled to a credit (the "OUTAGE
CREDIT") in the amount of ten percent (10%) of the monthly Port, PVC
and/or usage charges (as stated on the applicable Service Order)
regardless of the length of such Outage.
4.2 Customer shall not receive an Outage Credit if the interruptions are
(a) of a duration of less than tw??
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 14 of 24
<PAGE> 15
consecutive hours, (b) caused by the negligence or willful misconduct
of Customer or others authorized by Customer to use the services under
this Agreement, (c) due to the failure of power, facilities, equipment,
systems or connection not provided by Seller, (d) caused by the failure
of access to Seller's fiber optic network, (e) resultant from scheduled
maintenance where Customer has been notified of scheduled maintenance
in advance, (f) due to a Force Majeure event as defined in Section 8.5
of the CSA.
4.3 All Outage Credits shall be credited on the next monthly invoice for
the affected Service.
4.4 The Outage Credit described in this Section 4 of this ATMSS shall be
the sole and exclusive remedy of Customer in the event of any Outage,
and under no circumstance shall an outage be deemed a Default under
this Agreement.
SIGNATURE PAGE TO FOLLOW
Page 15 of 24
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Asynchronous Transfer
Mode Service Schedule as of the day and year first above written.
UNIVERSAL ACCESS, INC. WILLIAMS COMMUNICATIONS, INC:
/s/ Signature Illegible /s/ Signature Illegible
Signature of Authorized Signature of Authorized
Representative Representative
Robert J. Pommer Gordon C. Martin
- -------------------------------- --------------------------------
Printed Name Printed Name
Chief Operating Officer Vice President, Sales, Marketing
- -------------------------------- --------------------------------
Title Title
Page 16 of 24
<PAGE> 17
Williams Network Asynchronous Transfer Mode Service
Technical Specifications
1.0 Definition. Williams Network technical specifications are stated as an
objective that the ATM network will perform in accordance with
prevailing telecommunications industry standards. Williams Network will
use reasonable efforts to remedy delays, interruptions, omissions or
mistakes within the ATM network.
1.1 Performance Objectives. All service provided under the Williams Network
Asynchronous Transfer Mode Service are measured using two variables:
Network availability and Mean-time-to-repair.
1.2 Network Availability is a measurement of actual service time to stated
service time. Network Availability objective: -99.99%
1.3 MTTR is the average time required to restore service and resume
availability and is stated in terms of equipment and cable outages. The
time is measured from the moment the outage is reported until the
service is available and applies specifically to equipment outages or
failures.
MTTR objective: -2 Hours (Equipment)
-6 Hours (First Fibers on Cable)
1.4 Calculation. Williams Network calculates network availability on
customer action requests. The customer must notify Williams Network
Customer Care Department and initiate an action request to determine if
service level variables 1.2 & 1.3 were met.
Page 17 of 24
<PAGE> 18
Schedule B
Williams Network Private Line Service
SERVICES & PRICING
This Private Line Service Schedule ("PLSS") is made as of this_21st __ day of
___ May ________, 1998, and is subject to that Carrier Services Agreement No.
____________ (the "CSA") by and between Williams Communications, Inc. d/b/a
Williams Network Services, a Delaware corporation ("Williams"), and Universal
Access, Inc., an _ Illinois _ corporation ("Customer").
1. Description: Williams Network Private Line Service (the "Private Line
Service" or "Service") provides domestic DS-3 and optical SONET (OC-N)
circuits which are specifically dedicated to Customer's use between two
(2) points specified by the Parties in a Service Order and meeting the
technical requirements defined in the "Technical Specifications for
Private Line Service" attached hereto.
2. RATES & CHARGES: Williams Network Private Line Service has three basic
rate elements; IXC Charges, Local Access Charges, and Non-recurring
Charges.
2.1 IXC. DS-3 and OC-3 Services will be provided at the following rates for
on-net services only:
<TABLE>
<CAPTION>
TIME FRAME MONTHLY COMMITMENT DS3 OC3 OC12
<S> <C> <C> <C> <C>
YEAR 1 [***] [***] [***] [***]
YEAR 2 OR AS ACHIEVED [***] [***] [***] [***]
YEAR 3 OR AS ACHIEVED [***] [***] [***] [***]
YEAR 4 OR AS ACHIEVED [***] [***] [***] [***]
YEAR 5 OR AS ACHIEVED [***] [***] [***] [***]
</TABLE>
Monthly minimum charges for Private Line Service:
DS3s - [***]
OC3s - [***]
OC12s - [***]
OC48s - [***]
All other IXC rates will be determined on an individual case basis and
will be set forth on the Service Order.
2.2 Local Access Charges. [***]
2.3 Non-recurring charges:
DS-3 OC-3 OC-3C OC-12 OC-12C OC-48
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 18 of 24
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Installation [***] [***] [***] [***] [***] [***]
Additional
Installation/ [***]/hr. [***]/hr. [***]/hr. [***]/hr. [***]/hr. [***]/hr.
Maintenance/
Engineering
After hours [***]/hr. [***]/hr. [***]/hr. [***]/hr. [***]/hr. [***]/hr.
Local Loop
Billing [***] [***] [***] [***] [***] [***]
Administration
</TABLE>
[***] Additional Installation charges shall apply when Williams is required to
install equipment other than that normally required to provide the service or
when Customer requests special equipment. The above non-recurring charges are
subject to change, upon thirty (30) days prior written notice from Williams to
Customer.
3. TERM OF SERVICES:
3.1 Upon acceptance of a Service Order, Williams shall confirm Customer's
requested Start Date, or inform Customer of the estimated date for the
delivery of each service. Williams shall use reasonable efforts to
install each such service on or before the Start Date, but the
inability of Williams to deliver a facility by such date shall not be a
Default under this Agreement. If Williams fails to make any facility
available within thirty (30) days after the Start Date, Customer's sole
remedy shall be to cancel the Service Order which pertains to such
Service by ten (10) calendar days prior written notice to Williams.
3.2 The effective date of each service (the "Service Effective Date") shall
begin on the date on which Customer accepts delivery of such Service.
If Customer fails to give written notice that the Service is in
material non-compliance with the applicable technical specifications,
as modified from time to time by Williams (the "Specifications") within
fifteen (15) business days after notification to Customer by Williams
that the Service is available, Customer shall be deemed to have
accepted such Service, and the Service Effective Date shall commence as
of the fifteenth (15th) business day following such notification by
Williams. Following notice by Customer of material non-compliance as
set forth above, Williams shall promptly take such reasonable action as
is necessary to correct any such non-compliance in the Service and
shall, upon correction, notify Customer of a new Service Effective
Date.
4. CHANGE OF SERVICES:
4.1 Change of Service Date. If Customer desires to change the date on which
Customer has requested that Service be available, Customer may be
charged a Change of Service Date Charge. Such charge will not apply to
Customer's first change request, as long as such request is made within
fifteen (15) business days prior to the original Requested Service
Date. If Customer makes a second change, or such change is requested
after fifteen (15) days prior to the original Requested Service Date,
Customer will be charged Williams' then applicable Change of Service
Date Charge. Customer will also be charged for any charges incurred by
Williams from third party providers as a result of Customer's request
for Change of Service Date.
4.2 Change of Service Order. If Customer requests a modification to the
information contained in a Service Order (other than a Change of
Service Date) prior to completion of installation of the Service,
Customer will incur a Change of Service Order Charge. No charge will be
incurred if the change is to the IXC part of the Service Order and is
administrative in nature (i.e. billing address, contact information,
etc.). A charge will be incurred if the administrative change relates
to Local Access for which Williams is acting as agent.
Change of Service Order charges will be lower if the Customer requests
such change within five (5) business days after a Service Order has
been accepted by Williams ("pre-engineering") and will be higher if
such change is received after that time ("post-engineering"). Any
expedited order will be considered to be in the post-engineering stage
two (2) business days after the Service Order is accepted by Williams.
*** Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
Page 19 of 24
<PAGE> 20
4.3 Change of Service Charges. If Customer requests a change to Services
after such Services have been installed, Customer will incur a Change
of Service Charge. If such Change of Service is administrative in
nature, Customer will not incur a charge, unless such administrative
change applies to Local Access services which have been ordered by
Williams as agent for Customer. In addition to the Change of Service
Charge, Customer will be responsible for any charges due to
re-engineering which is required as a result of Customer's request for
Change of Service.
5. OFF-NET SERVICES PRICING: All services provided to Customer which are
not on network facilities owned by Williams will be priced on an
individual case basis at the time Customer requests such service.
6. OUTAGE CREDITS:
6.1 Customer acknowledges the possibility of an unscheduled, continuous
and/or interrupted period of time when a Service or Services are
"UNAVAILABLE" (as defined in the Specifications) for a continuous
period of two (2) hours (hereafter an "OUTAGE"). An Outage shall begin
upon recognition by Williams that the Service is interrupted. In the
event of an Outage, Customer shall be entitled to a credit (the "OUTAGE
CREDIT") at the rate of 1/720 of the monthly recurring charge for the
IXC portion of the circuit for each hour in excess of the first two (2)
consecutive hours that the affected service fails to conform to the
Specifications.
6.2 Customer shall not receive an Outage Credit if the interruptions are
(a) of a duration of less than two (2) consecutive hours, (b) caused by
the negligence or willful misconduct of Customer or others authorized
by Customer to use the services under this Agreement, (c) due to the
failure of power, facilities, equipment, systems or connection not
provided by Seller, (d) caused by the failure of access to Seller's
fiber optic network, (e) resultant from scheduled maintenance where
Customer has been notified of scheduled maintenance in advance, (f) due
to a Force Majeure event as defined in Section 8.4 of the CSA.
6.3 All Outage Credits shall be credited on the next monthly invoice for
the affected Service.
6.4 The Outage Credit described in this Section 6 of this PLSS shall be the
sole and exclusive remedy of Customer in the event of any Outage, and
under no circumstance shall an outage be deemed a Default under this
Agreement.
Page 20 of 24
<PAGE> 21
VILLIAM'S
3/18/98
SCHEDULE C
TIER 1 CITY LIST (TO BE UPDATED AS NEEDED)
<TABLE>
<CAPTION>
CITY LOCATION PROJECTED IN-SERVICE DATE
- ----------------------------------------------------------------------
<S> <C>
ALBANY, NY 12/98
ATLANTA, GA 8/98
BATON ROUGE, LA 10/98
BOISE, ID 3/99
BIRMINGHAM, AL 10/98
BUFFALO, NY 12/98
CHARLOTTE, NC 10/98
CHICAGO, IL 6/98
CINCINNATI, OH 4/99
CLEVELAND, OH 9/98
COLORADO SPRINGS, CO 11/98
COLUMBUS, OH 3/99
DALLAS, TX 6/98
DAYTON, OH 2/99
DAYTONA BEACH, FL 12/98
FT. LAUDERDALE, FL 12/98
FORT MEYERS, FL 4/99
GREENSBORO, NC 9/98
HOUSTON, TX 10/98
INDIANAPOLIS, IN 8/98
JACKSON, MS 10/98
JACKSONVILLE, FL 12/98
KANSAS CITY, MO 10/98
LAS VEGAS, NV 8/98
LAS ANGELES, CA 8/98
MACON, GA 1/99
MELBOURNE, FL 12/98
MIAMI, FL 12/98
NEW ORLEANS, LA 10/98
NEW YORK, NY 10/98
OKLAHOMA CITY, OK 11/98
ORLANDO, FL 1/99
PHOENIX, AZ 1/99
PORTLAND, OR 3/99
RALEIGH, NC 9/98
RICHMOND, VA 10/98
ROCHESTER, NY 12/98
SPARTANBURG, SC 8/98
ST. LOUIS, MO 8/98
</TABLE>
Page 21 of 24
<PAGE> 22
<TABLE>
<S> <C>
SYRACUSE, NY 2/99
TAMPA, FL 1/99
TULSA, OK 6/98
TUCSON, AZ 3/99
WASHINGTON, DC 8/98
WEST PALM BEACH, FL 12/98
</TABLE>
NEAR FUTURE TIER 1 CITIES
<TABLE>
<CAPTION>
CITY LOCATION PROJECTED IN-SERVICE DATE
- ---------------------------------------------------------------------
<S> <C>
BALTIMORE, MD 5/99
EL PASO, TX 6/99
NEWARK, NJ 5/99
PHILADELPHIA, PA 5/99
</TABLE>
SIGNATURE PAGES TO FOLLOW
Page 22 of 24
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this Private Line Service
Schedule as of the day and year first above written.
UNIVERSAL ACCESS, INC.: WILLIAMS COMMUNICATIONS, INC:
/s/ ROBERT J. POMMER /s/ GORDON C. MARTIN
Signature of Authorized Signature of Authorized
Representative Representative
Robert J. Pommer Gordon C. Martin
Printed Name Printed Name
Chief Operating Officer Vice President, Sales & Marketing
- -------------------------------- --------------------------------
Title Title
Page 23 of 24
<PAGE> 24
TECHNICAL SPECIFICATIONS FOR PRIVATE LINE SERVICE
1.0 Interconnection Specifications
1.1 DS-3. DS-3 service is provided in accordance with ANSI Standard T1.102
(formerly AT&T Compatibility Bulletin 119) and Technical Reference
54014'4. DS-3 Service operates at 44.736 Mbps.
1.2 Optical SONET Services (OC-N). Optical SONET Services are provided in
accordance with ANSI Standard T1.105. OC-3 Service operates at 155.520
Mbps and is configured with 3 separate STS-1 signaling paths. OC-3C
Service operates at 155.520 Mbps and is configured with 1 STS-3C
signaling path (or 3 concatenated STS-1 signaling paths). OC-12 Service
operates at 622.080 Mbps with 12 separate STS-1 signaling paths. OC-12C
Service operates at 622.080 Mbps with 1 STS-12C signaling path (or 4
separate STS-3C signaling paths). OC-48 Service operates at 9953.280
Mbps and is configured with 48 separate STS-1 signaling paths.
2.0 Quality Standards
2.1 General. DS-3 and Optical SONET Service standards apply on a one-way
basis between the Customer Premises Network Interface Points ("CPNIP")
which are connected to Local Access between which DS-3 and Optical
SONET Interexchange Service is provided (CPNIP to CPNIP or End-to-End)
and exclude nonperformance due to force majeure or planned
interruptions for necessary maintenance purposes. The actual end-to-end
availability and performance of DS-3 and Optical SONET Service may be
affected by the Customer provided equipment, dependent upon the type
and quality of Customer equipment used. (Customer provided Local Access
may not meet these specifications.)
2.2 Availability. Availability is a measurement of the percent of total
time that service is operative when measured over a 365 consecutive day
(8760 hour) period. DS-3 and Optical SONET Service is considered
inoperative when there has been a loss of signal or when two
consecutive 15 second loop-back tests confirm the observation of any
severely errored seconds or a bit error rate equal to or worse than 1 x
10-3. The Local Access availability standards for DS-3 and Optical
SONET Services are established by the Local Access Provider. For
Services on the Williams network, availability shall be 99.99% from
point-of-presence ("POP") to POP measured over a one year period. For
Services not on the Williams network, the off-net provider will
establish availability. For multi-media services, availability will be
the same as established by WorldCom, Inc.
2.3 Performance (% Error Free Seconds, while Available). Performance is
noted in Error Free Seconds (EFS) which are a measure of the percentage
of total seconds when measured over a consecutive 24 hour period that
do not contain bit errors. Performance shall be measured on a one-way
basis using a Pseudo Random Bit Sequence test pattern as defined in
CCITT Recommendation 0.151. The Error Free Seconds standards for the
Local Access for DS-3 and Optical SONET Service is established by the
Local Access Provider. For Services on the Williams network, Error Free
Seconds shall be 99.5% from POP to POP measured over a monthly period.
For Services not on the Williams network, the off-net provider will
establish Error Free Seconds. For multi-media services, Error Free
Seconds will be as defined by WorldCom, Inc.
3.0 Maintenance
Repair efforts will be undertaken upon notification of trouble by
internal network surveillance and network surveillance and performance
systems or by notification of trouble and release of all or part of the
DS-3 or Optical SONET Service by the Customer for testing.
* Mean Time to Restore (MTTR) is the average time
required to restore service and resume availability
and is stated in terms of equipment and cable
outages. The time is measured from the moment the
outage is reported until the service is available and
applies specifically to equipment outages or
failures.
* MTTR objective: -2 Hours (Equipment)
-6 Hours (Equipment)
4.0 Calculation. Williams Network calculates network availability on
customer action requests. The customer must notify Williams Network
customer Care Department and initiate an action request to determine if
service level variables 1.2 & 1.3 were met.
Page 24 of 24
<PAGE> 1
EXHIBIT 10.19.1
AMENDMENT NO. 1
THIS AMENDMENT ("Amendment") is made and entered into effective this 12th day of
March, 1998; by and between WILLIAMS COMMUNICATIONS, INC. D/B/A WILLIAMS NETWORK
SERVICES ("Seller") and UNIVERSAL ACCESS, INC. ("Customer").
WHEREAS, Seller and Customer are parties to that certain Carrier Services
Agreement, Contract No. 98R0613.00 which is dated June 29, 1998, (the
"Agreement"); and
WHEREAS, Seller and Customer desire to amend the Agreement; and
NOW, THEREFORE in consideration of the foregoing premises and mutual promises
and covenants of the parties hereto, the receipt and sufficiency of which is
hereby acknowledged, Seller and Customer agree to amend the Agreement as
follows:
1. Section 3.2 of the Agreement shall be amended to read as follows:
"The duration of this Agreement shall continue for a term of [***] years (the
"Initial Term") from the Effective Date. This Agreement shall thereafter
automatically renew for successive one-year periods (each, a "Renewal Term")
unless canceled by either party by giving written notice of such cancellation
not less than sixty (60) days before the end of the Initial Term, or any Renewal
Term. Unless Customer is in default, any Service being provided at the time of
termination shall continue until the natural end of such Service as specified in
the applicable Service Order upon the terms and conditions of this Agreement;
provided that Customer may not order any new Service without first renewing this
Agreement. The charges for Services or Ancillary Services during any such
extension shall be the then current Seller charges."
2. Section 3.3 of the Agreement shall be amended to read as follows:
"Commencing twelve (12) months after the calendar month including the Effective
Date, Customer shall be obligated to purchase on-network interexchange Services
under this Agreement in the amount of [***] dollars [***] per month (the
"Revenue Commitment"). All charges for Services in this Agreement shall be
determined in accordance with the pricing set forth in the Service Schedules
attached hereto or on Customer's Service Orders, as applicable. In determining
whether the monthly charges are of a sufficient dollar amount to meet Customer's
Revenue Commitment, Seller will include any discounts applicable to Customer but
will not include any credits to which Customer may be entitled, late payment
penalties, taxes and other government imposed surcharges, or payments made by
Customer to reimburse Seller for third party costs paid to unaffiliated
entities, including, but not limited to, local access charges, taxes,
installation charges, off-network charges, one-time fees and other similar
costs. To the extent that, in any month during the Initial Term hereof, Customer
fails to have signed Service Orders or a total aggregate billing of applicable
Services from Seller greater than or equal to the Revenue Commitment amount,
Seller shall invoice Customer on Customer's next invoice, an amount equal to the
difference between the Revenue Commitment amount and the amount of Services
actually purchased or committed to by Service Order by Customer. For purposes of
this Agreement, "on-network" or "on-net" shall mean interexchange service
provided by Seller on facilities owned by Seller and bounded by Seller points of
presence or Services that are ordered and scheduled to be on Seller owned
facilities within a one year period from the date of order (i.e. Customer will
receive On-Net pricing at the time of the Service Order provided that the Seller
has indicated that the route will be On-Net within twelve (12) months of the
Service Order). At the time that any off-net circuit is available for on-net
use, Customer agrees to convert circuit to on-net facilities at the first
mutually acceptable date and time."
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 2
3. Section 2.1 of the Private Line Service Schedule which is a part of the
Agreement shall be amended to read as follows:
"2.1 IXC. DS-3, OC-3 and OC-12 On-Net Private Line Services shall be
provided at the following rates:
DS-3: [***] per DS-0 V & H mile per month
OC-3: [***] per DS-0 V & H mile per month
OC-12: [***] per DS-0 V & H mile per month
Notwithstanding the foregoing, the minimum monthly charges for Private
Line Service shall be as follows:
<TABLE>
Minimum Monthly Charges
<S> <C>
DS-3 [***]
OC-3 [***]
OC-12 [***]
OC-48 [***]
</TABLE>
All other IXC rates will be determined on an individual case basis and
will be set forth on the Service Order."
4. Customer shall begin receiving the pricing set forth in this Amendment
beginning on Customer's December 1, 1998 invoice and shall receive such pricing
for the remainder of the Term of the Agreement. Customer's pending and existing
Services shall receive the pricing set forth in this Amendment on a going
forward basis only and shall not receive any credit for Services which have been
billed prior to Customer's December 1, 1998 invoice.
5. Except as specifically amended herein, all terms, conditions and
provisions contained in the Contract shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day and year
first above set forth.
WILLIAMS COMMUNICATIONS, INC. UNIVERSAL ACCESS, INC.
/s/ RON HARDEN /s/ ROBERT POMMER
(SIGNATURE) (SIGNATURE)
Ron Harden Robert Pommer
- ---------------------------- ----------------------------
(PRINT) (PRINT)
V.P. Sales & Marketing Chief Operating Officer
- ---------------------------- ----------------------------
(TITLE) (TITLE)
<PAGE> 3
WILLIAMS
COMMUNICATIONS
One Williams Center
Tulsa, Oklahoma 74172
918/573-2000
April 15, 1999
Mr. Robert J. Pommer
Universal Access, Inc.
1021 Adams Street, Suite 101
Chicago, IL 60607
Reference: Amendment No. 1 to the Carrier Services Agreement
date June 29, 1998 Williams Agreement 98R0613.00
Dear Mr. Pommer:
Please find enclosed for your files a fully executed original of the above
referenced Amendment No. 1 to that certain Carrier Services Agreement between
Universal Access and Williams.
If you should have any questions or if this office may be of future assistance,
please contact me at 918-573-2123.
Sincerely,
Debra Stockton
Contract Administration
Enclosure
<PAGE> 1
EXHIBIT 10.19.2
AMENDMENT NO. 2
THIS AMENDMENT ("Amendment") is made and entered into effective this 1st day of
July, 1999, by and between WILLIAMS COMMUNICATIONS, INC. D/B/A WILLIAMS NETWORK
SERVICES ("Seller") and UNIVERSAL ACCESS, INC. ("Customer").
WHEREAS, Seller and Customer are parties to that certain Carrier Services
Agreement, Contract No. 98R0613.00 which is dated June 29, 1998 as amended by
Amendment No. 1 dated March 12, 1999, (together the "Agreement"); and
WHEREAS, Seller and Customer desire to amend the Agreement; and
NOW, THEREFORE in consideration of the foregoing premises and mutual promises
and covenants of the parties hereto, the receipt and sufficiency of which is
hereby acknowledged, Seller and Customer agree to amend the Agreement as
follows:
1. Section 3.2 of the Agreement shall be amended to read as follows:
"The duration of this Agreement shall continue for a term of [***] years (the
"Initial Term") from the Effective Date. This Agreement shall thereafter
automatically renew for successive one-year periods (each, a "Renewal Term")
unless canceled by either party by giving written notice of such cancellation
not less than sixty (60) days before the end of the Initial Term, or any Renewal
Term. Unless Customer is in default at the end of any applicable cure period,
any Service being provided at the time of cancellation shall continue until the
end of such Service as specified in the applicable Service Order upon the terms
and conditions of this Agreement; provided that Customer may not order any new
Service without first renewing this Agreement. The charges for Services or
Ancillary Services during any such extension shall be the then current Seller
charges."
2. Section 2.1 of the Private Line Service Schedule which is a part of the
Agreement shall be amended to read as follows:
"2.1 IXC. DS-1, DS-3, OC-3 and OC-12 and OC-48 On-Net Private Line
Services shall be provided at the following rates:
DS-1: [***] per DS-0 V & H mile per month
DS-3: [***] per DS-0 V & H mile per month
OC-3: [***] per DS-0 V & H mile per month
OC-12: [***] per DS-0 V & H mile per month
OC-48: [***] per DS-0 V & H mile per month
Notwithstanding the foregoing, the minimum monthly charges for Private
Line Service shall be as follows:
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
1
<PAGE> 2
<TABLE>
<CAPTION>
Minimum Monthly Charges
<S> <C>
DS-1 [***]
DS-3 [***]
OC-3 [***]
OC-12 [***]
OC-48 [***]
</TABLE>
All other IXC rates will be determined on an individual case basis and
will be set forth on the Service Order."
2. The pricing set fourth in Section 2 of this Amendment shall not apply
to any existing Services being purchased by Customer (except as set forth in
paragraph 3 of this Amendment) and shall only apply to and be reflected on new
Service Orders placed by Customer after July 1, 1999. The above rates for new
Service Orders placed by Customer after July 1, 1999 shall be reflected on
Customer's July 1, 1999 invoice and Customer shall receive such pricing for any
new Service Orders placed during the remainder of the Term of the Agreement.
3. [***]
4. [***]
5. Except as specifically amended herein, all terms, conditions and
provisions contained in the Agreement shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day and year
first above set forth.
WILLIAMS COMMUNICATIONS, INC. UNIVERSAL ACCESS, INC.
/s/ GORDON MARTIN
- --------------------------------------- /s/ ROBERT J. POMMER
(SIGNATURE) (SIGNATURE)
Gordon Martin
- --------------------------------------- /s/ ROBERT J. POMMER
(PRINT) (PRINT)
Senior Vice President, Network Services
- --------------------------------------- /s/ Chief Operating Officer
(TITLE) (TITLE)
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
2
<PAGE> 1
Exhibit 10.20
GTE TELECOM INCORPORATED
CAPACITY AGREEMENT
This CAPACITY AGREEMENT is made and entered into as of August 20, 1999, by and
between GTE Telecom Incorporated (hereinafter referred to as "TELECOM" or
Party), a Delaware corporation with principal offices at 201 N. Franklin Street,
Suite 2400, Tampa, Florida 33602; and Universal Access, Inc. (hereinafter
referred to as "CUSTOMER" or Party), with offices at 100 N. Riverside Plaza,
Suite 2200, Chicago, Illinois 60606 for the provision of capacity and related
ancillary telecommunications services (hereinafter referred to as "Services") as
described herein and accepted by CUSTOMER under this Agreement, subject to the
terms and conditions contained herein. This Capacity Agreement together with any
Capacity Descriptions (as described in Section 1 below) accepted by TELECOM
pursuant to the terms hereof shall be referred to collectively as the
"Agreement".
1. SERVICE REQUESTS/CAPACITY DESCRIPTIONS: Requests for Services to be provided
hereunder shall be issued by CUSTOMER from time to time on TELECOM Capacity
Description Form(s) (hereinafter referred to as a "CD", a copy of which is
attached hereto and made a part hereof as Exhibit 1). Each CD shall reference
this Capacity Agreement by CA Number. Such CDs shall be effective when accepted
in writing by TELECOM and shall become part of this Agreement to the extent that
they specify the type of Service to be provided, quantity of circuits,
originating and terminating cities, requested service date, Service Term,
recurring and non-recurring charges for provision of Service, and other
information necessary for TELECOM to provide Service to the CUSTOMER. No action
by TELECOM (including, without limitation, provision of Service to CUSTOMER
pursuant to such CD) shall be construed as binding or estopping TELECOM with
respect to such term or condition, unless the CD containing said specific term
or condition has been duly executed by an authorized representative of TELECOM.
2. EFFECTIVE DATE AND APPLICATION OF THIS AGREEMENT: This Agreement shall be
effective between the parties as of the date first written above. The applicable
Rates and Charges are set forth in Exhibit 2 attached hereto and made a part
hereof. This Agreement shall apply exclusively to the Service provided to
CUSTOMER pursuant to the CD(s) identified with this Agreement and accepted by
TELECOM, for the Service Term stated therein and any automatic extensions
thereof. Services are provided subject to availability and TELECOM reserves the
right not to accept a CD under this Agreement at any time.
3. SERVICE TERM: (a) After a CD is accepted by TELECOM, a Firm Order
Confirmation Date ("FOC" Date) will be scheduled for Service installation. The
Service Term for Services subject to recurring charges and described in a CD
shall commence on the Firm Order Confirmation Date or the date upon which the
Service actually becomes available (the "In Service" Date), in conformity with
technical standards, whichever is later. The Service being provided hereunder
will be released to CUSTOMER for testing for seventy-two (72) hours prior to the
In Service Date.
(b) TELECOM will make reasonable efforts to meet the CUSTOMER requested In
Service Date, however, the inability of TELECOM to install Service on or before
the date requested shall not be a Default under this Agreement. Except for any
installation delays caused by those events described in Section 12 below, in the
event Service installation is delayed for ninety (90) days beyond the CUSTOMER
requested In Service Date with respect to each Service ordered, then CUSTOMER's
sole remedy shall be cancellation of the CD which pertains to such Service upon
ten (10) calendar days prior written notice to TELECOM. Cancellation charges
described in Section 11 below shall not apply to such cancellation.
(c) Upon expiration of the Service Term set forth in the CD, if CUSTOMER is not
then in Default under this Agreement, Service will automatically be extended for
continuing thirty (30) day periods and may be canceled by either party upon
thirty (30) calendar days prior written notice. Unless otherwise agreed to in
writing, the charges for Service during any such extension shall be the then
current TELECOM month to month rate for such Services.
1
<PAGE> 2
(d) Price Protection Commencing [***] months after the effective date of the
Agreement and continuing thereafter semi-annually at the semi-annual date of the
Agreement, CUSTOMER may request TELECOM to review the prices contained in the
CD(s) entered into between the parties if the CUSTOMER has received an offer
from a qualified vendor (i.e., a vendor that is suitable to the CUSTOMER that
has obtained any required licenses, approvals or other authorizations) for all
Services provided hereunder which reduces the total prices by [***] or greater.
TELECOM reserves the right to review such an offer, subject to confidentiality
or non-disclosure obligations imposed on CUSTOMER in connection therewith, and
if warranted, will enter into negotiations with CUSTOMER for a reduction in
price.
4. DESCRIPTION OF SERVICES: As specified in the CD accepted by TELECOM
hereunder, TELECOM will provide to CUSTOMER the following Services:
(a) Capacity Service through the installation and operation of either owned
or leased telecommunications facilities between TELECOM designated termination
points in accordance with the Service Level Objectives set forth in Exhibit 3
(hereinafter "Capacity"), and
(b) Ancillary Services Other Services, available on an optional basis, as
may be requested by the CUSTOMER (hereinafter referred to "Ancillary Service")
as described in Section 5 below.
5. [***]
(b) TELECOM may also provide Other or Ancillary Services to CUSTOMER, including
but not limited to any one or more of the following:
(1) Multiplexing/demultiplexing service ("Muxing");
(2) Digital cross-connect service,
(3) Extraordinary service under the following circumstances
including but not limited to:
(i) CUSTOMER's request to expedite Service
availability to a date earlier than a
previously accepted start date or Firm Order
Confirmation Date;
(ii) Service redesign or other activity
occasioned by receipt of inaccurate
information from CUSTOMER;
(iii) Reinstallation services for any suspension
of Service for cause by TELECOM;
(iv) CUSTOMER's request for use of routes or
facilities other than those selected by
TELECOM for provision of the Service;
(v) CUSTOMER'S request for use of rack space and
power in TELECOM facilities;
(vi) Other circumstances in which extraordinary
costs and expenses are generated by CUSTOMER
and reasonably incurred by TELECOM.
(c) Recurring and non-recurring charges to CUSTOMER for Local Access (including
TELECOM's Coordination Fee) and Ancillary Services shall be established as of
TELECOM's acceptance of the CD relevant thereto.
2
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 3
6. CUSTOMER RESPONSIBILITIES: CUSTOMER has sole responsibility for installation,
testing, and operation of facilities, services, and equipment other than those
specifically provided by TELECOM under a duly accepted CD. In no event will the
untimely installation or non-operation of CUSTOMER's facilities, services, and
equipment (including local exchange access and customer premise equipment)
relieve CUSTOMER of its obligation to pay charges for Capacity or Ancillary
Service as of the In Service Date. Notwithstanding the immediately preceding
sentence, CUSTOMER may request one extension of the In Service Date for not more
than thirty (30) calendar days. Such requests for extension of local exchange
access together with the interexchange portion of the Service must be in writing
and must be received by TELECOM at least ten (10) calendar days prior to the
initial FOC Date established by TELECOM. Written requests for extension of the
In Service Date for the interexchange portion only must be and must be received
by TELECOM at least five (5) calendar days prior to the initial FOC Date
established by TELECOM. Any such extension will not relieve CUSTOMER of its
obligations to pay charges for any local access services ordered by TELECOM on
behalf of CUSTOMER as of the FOC Date first established by TELECOM.
7. PAYMENT OF CHARGES: (a) Subject to Section 8 below, all charges for Services
provided by TELECOM pursuant to this Agreement shall be specified in the CD
referred to in this Agreement.
(b) CUSTOMER shall pay each TELECOM invoice for Service in full, without
deduction or offset of any kind, within thirty (30) days after the date of
invoice ("Due Date"); provided however, if CUSTOMER in good faith disputes any
portion of an invoice, it must pay the undisputed amount on or before the Due
Date and provide written notice to TELECOM of the billing dispute within ninety
(90) days thereafter. Such notice must include documentation substantiating the
dispute. CUSTOMER's failure to notify TELECOM of a dispute shall be deemed to be
CUSTOMER's acceptance of such charges. The Parties will make a good faith effort
to resolve billing disputes as expeditiously as possible. If a dispute is
resolved in favor of CUSTOMER, CUSTOMER shall receive a credit on its invoice
within a commercially reasonable period of time for the disputed amount and any
related fees or penalties. All pro-rated monthly recurring charges (i.e.,
charges for monthly Services provided for less than a calendar month),
installation, and other non-recurring charges shall be payable on the Due Date.
All payment shall be made in US dollars. CUSTOMER agrees to timely remit payment
to TELECOM at the remittance address indicated on the TELECOM invoice to
CUSTOMER.
(c) Except for any reasonably disputed amount, in the event CUSTOMER fails to
pay TELECOM's invoice in full or remit payment at the proper address on or
before the Due Date, CUSTOMER shall pay a late fee in an amount equal to one and
one-half percent (1 1/2%) per month of the unpaid balance. The late fee will be
applied for the number of days from the payment Due Date up to and including the
date payment is received by TELECOM. Notwithstanding the foregoing, late fees
shall apply to, but shall not be due and payable for, amounts reasonably
disputed by CUSTOMER provided: (i) CUSTOMER notifies TELECOM of the basis of
such dispute in writing within sixty (60) days after the Due Date and (ii)
negotiates in good faith with TELECOM for the purpose of resolving such dispute.
In the event such dispute is resolved in favor of TELECOM, CUSTOMER will pay to
TELECOM the once disputed amount together with the applicable late fees. In the
event the dispute is resolved in favor of the CUSTOMER, CUSTOMER will receive a
credit for the amounts determined not to be owed together with a credit for the
applicable late fees. The Parties shall use their best efforts to negotiate in
good faith to resolve the disputed invoice within thirty (30) days of CUSTOMER's
written notice of such dispute. If such resolution is not attained or the time
to resolve the dispute is not extended by mutual agreement of the Parties, the
dispute shall be settled by arbitration as set forth below in this Agreement.
(d) TELECOM may, in order to safeguard its interests, require CUSTOMER which has
no credit history with TELECOM or habitually pays late to make a deposit prior
to or any time after the provision of Service to the CUSTOMER to be held by
TELECOM as a guarantee of the payment of the rates and charges. In lieu of such
a deposit, TELECOM may accept an unconditional, irrevocable Letter of Credit in
a form acceptable to TELECOM in an amount required by TELECOM, subject to
increase from time to time as CUSTOMER orders additional circuits hereunder. At
such time as the provision of the Service to CUSTOMER is terminated, the amount
of the deposit will be credited to the CUSTOMER's account and any credit balance
which may remain will be refunded. After the CUSTOMER has established a six (6)
month prompt payment record, such deposit may be refunded or credited to the
CUSTOMER account at any time prior to the termination of the provision of the
Service to CUSTOMER. In the event CUSTOMER pays a deposit as described above,
simple interest at the rate of six percent (6%) will be
3
<PAGE> 4
applied to the deposit for the number of days from the date such deposit is
credited to the CUSTOMER'S account or the date the deposit is refunded by
TELECOM.
8. TAXES/ADDITIONAL CHARGES: (a) CUSTOMER acknowledges and understands that all
charges stated in the CD are computed by TELECOM exclusive of any applicable
federal, state, or local use, excise, gross receipts, sales, and privilege
taxes, duties, fees, including but not limited to applicable Universal Service
Fund contributions, or similar liabilities (other than general income or
property taxes), whether charges to or against TELECOM or CUSTOMER because of
the Service furnished by TELECOM ("Additional Charges"), and that such
Additional Charges shall be paid by CUSTOMER in addition to all other charges
provided for herein.
(b) Such taxes, surcharges or fees shall be separately stated on the invoice and
shall be paid directly to TELECOM at the same time as all other charges are due
and payable in accordance with this Agreement. Simultaneous with the signing of
this Agreement, CUSTOMER shall provide TELECOM with a valid Certificate of
Exemption from taxes that would otherwise be paid by CUSTOMER for all foreign,
federal, state, country and local taxes and fees, (if any) or other evidence
reasonably satisfactory to TELECOM that CUSTOMER is not subject to such taxes,
surcharges, or fees. TELECOM will invoice CUSTOMER for taxes that are not
covered by a valid tax exempt certificate properly filed with TELECOM.
9. EARLY TERMINATION: (a) Either Party may terminate this Agreement if:
(i) the other Party ceases doing business as a going concern,
makes an assignment for the benefit of creditors, admits
in writing to its inability to pay its debts as they
become due; or
(ii) the other Party files a voluntary petition in bankruptcy,
is adjudicated a bankrupt or an insolvent; or
(iii) the other Party files a petition seeking for itself any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar arrangement under any
present or future statute, law or regulation or files an
answer admitting the material allegations of a petition
filed against it in any such proceeding; or
(iv) the other Party consents or acquiesces in the appointment
of a trustee, receiver, or liquidator of it or of all or
any substantial part of its assets or properties, or it or
its shareholders shall take any action looking to its
dissolution or liquidation;
(v) the other Party breaches any material provision of this
Agreement, other than those related to payment of charges,
and fails to cure such breach within thirty (30) calendar
days after the receipt of notice thereof ("Default").
(b) Both Parties may terminate this Agreement upon mutual written consent.
10. SUSPENSION OF SERVICE: (a) In the event payment in full is not received from
CUSTOMER on or before the Due Date with respect to any undisputed amounts,
TELECOM shall have the right, after giving CUSTOMER fifteen (15) days written
notice via express courier service or registered mail, to suspend all or any
portion of Service until such time as CUSTOMER has paid in full all charges then
due, including any late fees as specified herein.
(b) Following such payment, TELECOM shall be required to reinstate Service to
CUSTOMER only upon CUSTOMER's provision to TELECOM of satisfactory assurance
(such as a deposit) of CUSTOMER's ability to pay for Service and CUSTOMER's
advance payment of the cost of reinstating Service. If CUSTOMER fails to make
such payment by a date determined by and acceptable to TELECOM, CUSTOMER will be
deemed to have canceled the suspended Service effective the date of the
suspension. Upon such termination, all balances become due and payable.
11. CANCELLATION OF SERVICE: (a) CUSTOMER may cancel a CD without liability if a
Service does not become available within ninety (90) days of the FOC Date as
described in Section 3 (b) above.
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<PAGE> 5
(b) After a CD is submitted to TELECOM by the CUSTOMER except as noted in
Section 3(b) above, CUSTOMER may cancel all or a portion of the Services ordered
upon written notice to TELECOM. The charges for such Cancellation are as
follows:
Prior to issuance of the FOC [***]
Subsequent to issuance of the FOC [***]
up to the FOC Date
(c) It is agreed that TELECOM's damages in the event of a cancellation can be
difficult or impossible to ascertain. The provision for cancellation charges in
this subsection is intended to establish liquidated damages in the event of
Service cancellation and is not intended as a penalty. Unless otherwise stated
in the CD and specifically agreed to in writing by both Parties, in the event
CUSTOMER cancels existing Service prior to the end of the Service Term described
in the CD, CUSTOMER shall pay TELECOM an amount equal to the balance of the
monthly Service charges that otherwise would have become due for the unexpired
portion of the Service Term ("Cancellation Charges/Early Cancellation Charges").
Notwithstanding the immediately preceding sentence, no Early Cancellation
charges shall apply for the cancellation of the interexchange Service on
Telecom's Network for period that the CUSTOMER is responsible for the payment of
the Minimum Monthly Recurring Charge as set forth in Exhibit 2 - Rates and
Charges.
(d) Notwithstanding the foregoing, and upon thirty (30) days prior written
notice, either Party shall have the right, without cancellation charge or
liability, to cancel (i) an affected portion of the Service, if TELECOM is
prohibited by governmental authority from furnishing said portion, or (ii) an
affected portion of the Service if any material rate or term contained herein is
substantially changed by final order of a court of competent jurisdiction, the
Federal Communication Commission, or other local, state or federal government
authority.
12. FORCE MAJEURE: If either Party's performance of this Agreement or any other
obligation hereunder (other than the obligation to make payments for amounts
due) is prevented, restricted or interfered with by causes beyond their
reasonable control including but not limited to acts of God, fire, explosion,
vandalism, cable cut, storm, or other similar occurrence, any law, order,
regulation, direction, action or request of the United States government or
state or local government, or of any department, agency, commission, court,
bureau, corporation or other instrumentality of any one or more said
governments, or civil or military authority, or by national emergencies,
insurrections, riots, wars, strikes, lockouts or work stoppages or other labor
difficulties, actions or inactions of a third party provider or operator of
facilities employed in the provision of the Services, suppliers' failures,
shortages, breaches, or delays, then the affected Party shall be excused from
such performance on a day-to-day basis to the extent of such prevention,
restriction, or interference. The affected Party shall use reasonable efforts
under the circumstances to avoid or remove such causes of non-performance and
shall proceed to perform with reasonable dispatch whenever such causes are
removed or cease.
13. SERVICE WARRANTY: TELECOM warrants that it will provide the Service to
CUSTOMER in accordance prevailing telecommunication industry standards
(hereinafter "Technical Standards"). TELECOM will use reasonable efforts under
the circumstances to remedy any delays, interruptions, omissions, mistakes,
accidents or errors in any Service and restore the Service in accordance with
Technical Standards. THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL
OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT
LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
14. LIMITATION OF LIABILITY: TELECOM shall not be liable for interruptions,
delays, errors, or defects in transmission caused by the CUSTOMER, or the
CUSTOMER's agents, end users, or by facilities or equipment provided by the
CUSTOMER or by equipment interconnected with the CUSTOMER. UNDER NO
CIRCUMSTANCES, WHETHER IN CONTRACT TORT OR OTHERWISE, SHALL EITHER PARTY BE
LIABLE FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, SPECIAL, ACTUAL, PUNITIVE,
OR ANY OTHER DAMAGES OR ANY KIND OR NATURE WHATSOEVER REGARDLESS OF THE CAUSE OR
FORESEEABILITY THEREOF, INCLUDING BUT
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NOT LIMITED TO DAMAGES ARISING FROM DELAY OR LOSS OF DATA, PROFITS, REVENUE OR
GOODWILL.
15. INDEMNIFICATION: Each Party agrees to release, indemnify, defend, and hold
harmless the other Party from losses, claims, demands, damages, expenses, suits,
or other actions, including reasonable attorney's fees, for personal injury,
including death of any person or persons, and for losses, damage, or destruction
of property, to the extent proximately caused by the negligence or willful
misconduct of the indemnifying Party, its employees, contractors, or agents.
This indemnity applies where the indemnifying Party's negligence or willful
misconduct is either the sole or the contributing cause of the injury, death, or
damage. This indemnity does not extend to any portion of the injury, death or
damage caused by either the sole or the contributing negligence of the
non-indemnifying Party or third parties. In the event parties other than
CUSTOMER shall have use or benefit of or shall be otherwise affected by the
Service provided through CUSTOMER, then CUSTOMER agrees to forever indemnify and
hold TELECOM and any third party provider or operator of the facilities employed
in the provision of the Service harmless from and against any and all claims,
demands, suits, actions, losses, damages, assessments or payments which may be
asserted by said parties, arising out of or related to any outage in Service.
16. NOTICES: Notices under this Agreement shall be in writing and shall be given
or made by telephonically confirmed facsimile transmissions, certified or
registered mail, express mail or other overnight delivery service, or hand
delivery, proper postage or other charges prepaid. Notices shall be sent to the
address listed below until such address is changed by written notice. Such
notice shall be deemed to have been given or made when actually received or
seventy-two (72) hours after being sent, whichever occurs first.
TO GTE TELECOM:
GTE Telecom Incorporated
201 N. Franklin Street
Suite 2400
Tampa, Florida 33602
Attention: Manager - Contracts and Tariffs
Fax No.: 813/209-9620
TO CUSTOMER:
Universal Access, Inc.
100 N. Riverside Plaza, Suite 2200
Chicago, IL 60606
Attention: Robert Pommer
Fax. No.: 312-660-5050
17. USE OF SERVICE/CAPACITY: (a) TELECOM's obligation to provide Services
specified herein is conditioned upon CUSTOMER not allowing the Services to be
used for any unlawful purpose or in violation of any governmental regulations or
authorizations. TELECOM shall have the right to limit, terminate or suspend
Service by written notice for improper use of the Service by CUSTOMER or any
activity by CUSTOMER, as determined in the sole discretion of TELECOM, that
threatens public health, safety, or welfare, or the integrity or reliability of
TELECOM's facilities or service to TELECOM's other customers.
(b) If CUSTOMER wishes to purchase capacity in an amount exceeding the
equivalent of OC-12 on any one route, then CUSTOMER represents and warrants that
it is not now, nor shall it become during the Term of this Agreement, a Capacity
Reseller (as defined below) with respect to any Services provided under this
Agreement. If CUSTOMER is or becomes during the Term of this Agreement a
Capacity Reseller with respect to any of the Services purchased hereunder, then
CUSTOMER may not purchase capacity in excess of the equivalent of one OC-12 on
any one route (referred to in this Section as the "Maximum Capacity"). If, at
the time CUSTOMER becomes a Capacity Reseller with respect to the Services
hereunder, CUSTOMER has ordered in excess of the Maximum Capacity, then CUSTOMER
shall immediately terminate all capacity in excess of the Maximum Capacity. Such
termination shall be subject to all applicable Early Cancellation/Termination
Charges. As used herein, a "Capacity Reseller" is any person or entity which, in
whole or in part, seeks to obtain telecommunications
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<PAGE> 7
capacity for the purpose of reselling or otherwise providing access thereto to
third parties for profit, whether or not such person or entity actually realizes
a profit as a result of such transaction. CUSTOMER's failure to comply with this
Section shall constitute a material default and shall be grounds for immediate
termination.
18. NONDISCLOSURE: CUSTOMER shall not use, except as provided herein, nor
disclose to any third party during the Term of this Agreement and for a period
of two (2) years thereafter, any of the terms and conditions relating to this
Agreement, including but not limited to the rates and charges set forth in this
Agreement, unless such disclosure is lawfully required by any federal
governmental agency, is otherwise required to be disclosed by law, or is
necessary in any proceeding establishing the rights and obligations under this
Agreement. Prior to any such required disclosure by CUSTOMER, CUSTOMER shall
provide TELECOM with adequate written notice so as to enable TELECOM to seek
appropriate protection. TELECOM reserves the right to terminate this Agreement
immediately upon written notice of any unpermitted third party disclosure
hereunder.
19. LICENSES, APPROVALS AND AUTHORIZATIONS: CUSTOMER represents that in all
jurisdictions in which it provides services that require licenses, approvals or
other authorizations it has obtained such licenses, approvals or other
authorizations from the appropriate governmental authority. Further, if required
by TELECOM, CUSTOMER shall provide proof of such licenses, approvals or other
authorizations. CUSTOMER shall immediately notify TELECOM in writing, in the
event CUSTOMER is prohibited, either on a temporary or permanent basis, from
continuing to provide its telecommunications services in any jurisdiction. In
such event, TELECOM reserves the right to terminate this Agreement.
20. RESOLUTION OF DISPUTES: The Parties desire to resolve disputes arising out
of this Agreement without litigation. Accordingly, except for action seeking a
temporary restraining order or injunction related to the purposes of this
Agreement, or suit to compel compliance with this dispute resolution provision,
the parties agree to submit the dispute to a single arbitrator for resolution by
binding arbitration 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. Discovery shall be controlled by the
arbitrator. Each Party shall bear its own costs of these procedures. A Party
seeking discovery shall reimburse the responding Party the costs of production
of documents (to include search time and reproduction costs). The Parties shall
equally split the fees of the arbitration and the arbitrator.
21. GENERAL PROVISIONS: (a) Other Documents CUSTOMER will execute such other
documents, provide such information, and affirmatively cooperate with TELECOM,
all as may be reasonably required by TELECOM and relevant to providing the
Service. In particular, CUSTOMER accepts the responsibility for providing
TELECOM with special access surcharge exemption forms as may be required by the
local exchange carrier and as applicable, TELECOM's Universal Service Fund
exemption form.
(b) Non-Waiver The failure of either Party to give notice of default or to
enforce or insist upon compliance with any of the terms or conditions of this
Agreement, the waiver of any term or condition of this Agreement or the granting
of an extension of time for the performance shall not constitute the permanent
waiver of any term or condition of this Agreement and this Agreement and each of
its provisions shall remain at all times in full force and effect until modified
by the Parties in writing.
(c) Relationship of the Parties The provision of Service will not create a
partnership or joint venture between the parties or result in a joint
communications service offering to third parties.
(d) Enforcement In the event suit is brought or an attorney is retained by
either Party to enforce terms of this Agreement or to collect money damages for
breach hereof or by TELECOM to collect any monies due hereunder, then the
prevailing Party shall be entitled to recover, in addition to any other remedy,
reimbursement for reasonable attorneys' fees, court costs, costs of
investigation, and other related expenses incurred in connection therewith.
(e) Modification No subsequent agreement shall change, modify or discharge this
Agreement, in whole or in part, unless such agreement is in writing and signed
by authorized representatives of both parties.
(f) Assignment This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors or assigns,
provided, however, that CUSTOMER shall not assign
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<PAGE> 8
or transfer its rights or obligations under this Agreement without the prior
written consent of TELECOM, which consent shall not be unreasonably withheld,
and further provided that any assignment or transfer without such consent shall
be deemed void and shall entitle TELECOM to terminate the Service provided
hereunder, at its option, upon ten (10) days prior written notice.
Notwithstanding any other language contained in this Agreement, either Party
may, without further permission but upon proper notice to the other Party,
assign the Agreement to any affiliated entity or successor in interest whether
by merger, reorganization, or transfer of all or substantially all of its
assets.
(g) Governing Law This Agreement shall be a contract between TELECOM and
CUSTOMER and the terms hereof shall be construed under the laws of the State of
Florida without regard to choice of law principles.
(h) Severability If any part or any provision of this Agreement shall be invalid
or unenforceable under applicable law, said part shall be ineffective to the
extent of such invalidity only, without in any way affecting the remaining parts
of said provision or the remaining provisions of this Agreement, and the
CUSTOMER and TELECOM hereby agree to negotiate with respect to any such invalid
or unenforceable part to the extent necessary to render such part valid and
enforceable.
(i) Survival The terms and provisions contained in this Agreement that by their
sense and content are intended to survive the performance thereof by the parties
hereto shall survive the completion of performance and termination of this
Agreement, including, without limitation, provisions for indemnification,
nondisclosure and the making of any and all payments due hereunder.
(j) Headings The section headings are for convenience only and shall not be
considered in its interpretation.
(k) Interpretation Words having well-known technical or trade meanings shall be
so construed, and all listing of items shall be taken to be exclusive, but shall
include other items, whether similar or dissimilar to those listed, as the
context reasonably applies in the interpretation of this Agreement.
(l) Entire Agreement This Agreement consists of all the terms and conditions
contained herein, in Capacity Descriptions, if applicable, that conform hereto,
and documents incorporated herein specifically by reference; this Agreement
constitutes the complete and exclusive statement of agreements and
understandings between the parties, and supersedes all proposals and prior
agreements (oral and written) between the parties relating to Service provided
hereunder. No representations or warranties, express or implied, have been made
or relied upon in the making of this Agreement, other than those specifically
contained in this Agreement.
Attachments: Exhibit 1 - Capacity Description
Exhibit 2 - Rates and Charges
Exhibit 3 - Service Level Objectives
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<PAGE> 9
IN WITNESS WHEREOF, the Parties have executed this Capacity Agreement by their
duly authorized representatives.
GTE TELECOM INCORPORATED UNIVERSAL ACCESS, INC.
By: /s/ Signature Illegible By: /s/ Signature Illegible
Name: Joe Boland Name: Robert J. Pommer
---------- ----------------
Title: Vice President/General Manager Title: Chief Operating Officer
------------------------------ -----------------------
Date: 8/25/99 Date: 8/20/99
------- -------
and
By: /s/ Signature Illegible
Name: Kenneth Shelton
---------------
Title: Controller
----------
Date: 8/27/99
-------
Approved As To Form
ECD 8/25/99
-----------
Contracts
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<PAGE> 10
Exhibit 1 to Capacity Agreement
GTE TELECOM INCORPORATED Customer Name________________
210 N. Franklin Street Suite 2400 Service Address: ____________
Tampa, Florida 33602 Billing Address:_____________
Account Manager Customer Contact:____________
Tel: (___)______ Fax. No. (___)______ Tel: (___)______ Fax. No. (___)_______
CAPACITY DESCRIPTION
Order No. P.O. Number Date:
<TABLE>
<CAPTION>
Monthly Monthly
Service Non- Recurring Recurring
TerminationPoints/ Requested Term Recurring Charges Charges
Description of Services Number Service Date (months) Charges (each) (TOTAL)
<S> <C> <C> <C> <C> <C> <C>
TOTAL CHARGES: NRC$________ MRC $____________
</TABLE>
REMARKS:
REFERENCE: Capacity Agreement No__________
Cancellation Charges Apply as set forth in the referenced Capacity Agreement in
the event Services are canceled or changed.
THIS CAPACITY DESCRIPTION IS ENTERED INTO PURSUANT TO THE CAPACITY AGREEMENT
IDENTIFIED HEREIN, THE TERMS AND CONDITIONS OF WHICH ARE INCORPORATED HEREIN IN
THEIR ENTIRETY; PROVIDED, HOWEVER, THAT IN THE EVENT OF ANY CONFLICT OR
INCONSISTENCY BETWEEN THIS CD AND THE TERMS AND CONDITIONS OF THE APPLICABLE
CAPACITY AGREEMENT, THE TERMS AND CONDITIONS CONTAINED IN THE CAPACITY AGREEMENT
SHALL PREVAIL.
<TABLE>
<S> <C> <C>
The Customer hereby orders the Services described ACCEPTED BY GTE TELECOM INCORPORATED
in this Capacity Description
Company
Signature
Joe Boland, Vice President/General Manager Date
Printed Name
Lu Whanger, Director of Sales Date
Title Date
Account Manager Date
</TABLE>
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<PAGE> 11
EXHIBIT 2
RATES AND CHARGES
1. Minimum Monthly Recurring Charge (MMRC): CUSTOMER will maintain Minimum
Monthly Recurring Charges for the interexchange Service on TELECOM's Network
(i.e., not including local access or other charges) in an amount equal to [***]
per month after a Ramp Up Period of [***] months and continuing through [***].
2. Ramp Up Period: The Ramp Up Period shall commence on the actual in Service
Date of the first circuit to be provided hereunder and shall continue for a
period of [***] months thereafter. Following the Ramp Up Period, in the event
CUSTOMER fails to achieve or maintain the MMRC, CUSTOMER will be responsible for
payment of the MMRC in the amount of [***] for each month that CUSTOMER fails to
attain the MMRC.
3. MRC During the Ramp Up Period: Circuits greater than One Hundred (100) miles
in distance will be charged at the following rates during the Ramp Up Period:
<TABLE>
<S> <C>
DS-3 [***] per DS-0 mile (672 DS-0 per DS-3)
OC-3 [***] per DS-0 mile (2016 DS-0 per OC-3)
OC-12 [***] per DS-0 mile (8,064 DS-0 per OC-12)
OC-48 [***] per DS-0 mile (32,256 DS-0 per OC48)
</TABLE>
4. MRC Following the Ramp Up Period: Circuits greater than One Hundred
(100) miles in distance will be charged at the following rates following
the Ramp Up Period:
<TABLE>
<S> <C>
DS-3 [***] per DS-0 mile (672 DS-0 per DS-3)
OC-3 [***] per DS-0 mile (2016 DS-0 per OC-3)
OC-12 [***] per DS-0 mile (8,064 DS-0 per OC-12)
OC-48 [***] per DS-0 mile (32,256 DS-0 per OC48)
</TABLE>
5. All circuits less than One Hundred Miles (100) in distance will be
charged at the following rates:
<TABLE>
<CAPTION>
Circuit Speed During Ramp Up Period Following Ramp Up Period
<S> <C> <C>
DS-3 [***] [***]
OC-3 [***] [***]
OC-12 [***] [***]
OC-48 [***] [***]
</TABLE>
6. MRC Validity: The above MRCs are effective [***], and shall remain
valid for Services ordered under this Agreement through [***].
7. Non-Recurring Charges: The Non-Recurring Charges for additional Services are
as follows:
(a) Move Charge without local access (to different POP at Customer
request) [***] one time;
(b) Add Charges (e.g., increasing a circuit from DS-3 to OC3) at the
same POP [***] one time;
(c) Extend the In Service Date for a second time - Cancellation
Charges apply
(d) Move of a local loop - pass through from local loop provider
plus [***] one time administrative charge;
(e) On site technician (subject to availability) - [***] per hour
during business hours only, two hour minimum plus travel.
(f) Other than above - individual case basis
8. NRC Validity: The above NRC's are effective June 1, 1999, and shall
remain valid through May 31, 2000, at which time, unless otherwise
agreed to in writing, the NRCs will be at TELECOM's then prevailing
rates for such Services.
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Exhibit 3
SERVICE LEVEL OBJECTIVES
TELECOM will make commercially reasonable efforts to meet the following Service
Level Objectives:
(a) Mean Time to Repair - less than or equal to four (4) hours for DS3's,
OC3's, OC12's.
(b) Network Availability for "on net" private line Services:
99.95% for Linear Network
99.99% for SONET Ring Network (when available).
Credits for Outages:
(i) For the purposes of this Agreement, a circuit shall be deemed to be in an
"Outage" condition if, following the start of Service while CUSTOMER is actually
using or attempting to use such circuit, the circuit and becomes unavailable as
defined above.
CUSTOMER's request for credit for Outages must be submitted to TELECOM in
writing within thirty (30) calendar days of such Outage. TELECOM will respond to
each of CUSTOMER's requested credits and upon Outage verification by TELECOM,
TELECOM will apply the applicable credit to the next or subsequent Service
invoice. Service Outages do not include (a) Outage periods when CUSTOMER has
released the Service to TELECOM for maintenance purposes or to make
rearrangements or CUSTOMER requested changes in the Service; (b) circuits
outside the contiguous U.S.; (c) any circuits ordered by CUSTOMER from another
telecommunications service provider or carrier; (d) any local access circuits
ordered by or on behalf of CUSTOMER; (e) failure of CUSTOMER applications,
equipment or facilities, (f) acts or omissions of CUSTOMER, or any use or user
of the Service authorized by CUSTOMER or (g) reasons of Force Majeure. [***] No
credit is allowed for Service Outages of less than thirty (30) minutes. Outages
will be credited to CUSTOMER in half hour multiples for each half hour or major
fraction thereof, from the time TELECOM receives notification until Service is
restored. The credit shall not be applicable for the time that TELECOM stands
ready to repair the Service and CUSTOMER does not provide access to TELECOM to
perform such repair and restoration work. The credit allowance for an Outage or
a series of Outages shall not exceed the current monthly recurring charge for
such Service. The credit provided for in this Section shall be TELECOM's sole
liability and CUSTOMER's sole and exclusive remedy in the event of any Outage or
Service interruption.
(ii) Chronic Outages In the event that a single circuit experiences three (3)
or more Outages of fifteen (15) minutes duration or longer during any thirty
(30) day period, CUSTOMER may declare that the circuit has a chronic problem.
Upon written notice from CUSTOMER, TELECOM will have thirty (30) days to correct
the chronic problem. In the event that the problem is not corrected within
thirty (30) days of TELECOM's receipt of written notice, CUSTOMER may cancel
this circuit without any additional charges or any further liability and such
cancellation will be CUSTOMER's sole and exclusive remedy for chronic Outages.
Credit allowances will be calculated on a monthly basis and the applicable
Outage credit by circuit will be included in TELECOM's invoice. CUSTOMER shall
have thirty (30) days from date of receipt of the invoice to contest the credit
allowance offered by TELECOM.
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<PAGE> 1
EXHIBIT 10.29
PROMISSORY NOTE
$200,000 May 28, 1999
Chicago, Illinois
FOR VALUE RECEIVED, Robert J. Pommer, Jr. ("Borrower") promises to pay to
Universal Access, Inc. (the "Lender") or order, at 100 North Riverside Place,
Suite 2200, Chicago, Illinois 60601, or such other place as the Leader or
holder hereof may from time to time designate, the principal sum of Two Hundred
Thousand Dollars ($200,000).
1. INTEREST RATE. Interest shall accrue on the unpaid principal portion
of this Note at the rate of six percent (6%) per annum, simple interest.
2. PAYMENT SCHEDULE. Principal and accrued and unpaid interest, if any,
shall be due and payable on April 30, 2004 (the "Maturity Date").
3. REPAYMENT OF INDEBTEDNESS. On or before the Maturity Date, Borrower
shall repay the entire principal and interest owing under this Note by one of
the following methods, to be selected in Borrower's sole discretion: (i) in
each or immediately available funds; (ii) by delivering and transferring to
Lender 250,000 shares (the "Shares") of the common stock, no par value per
share (the "Common Stock") of Universal Access, Inc. (the "Company"), so long
as the Shares are no longer subject to the restrictions on transfer (the
"Transfer Restrictions") set forth in the Shareholders Agreement dated as of
February 8, 1999 by and among the Company and other parties thereto (as
amended, the "Shareholders Agreement"); or (iii) if the Shares are no longer
subject to the Transfer Restrictions, by delivering and transferring to Lender
the number of shares of Common Stock whose Fair Market Value equals the entire
principal and interest owing under this Note as of the Maturity Date. The Fair
Market Value of the Common Stock shall be determined (i) by reference to the
national securities market or exchange on which the Common Stock is traded on
the Maturity Date, or (ii) by the Lender, if the Common Stock is not traded on
a national securities market or exchange on the Maturity Date. Notwithstanding
any provision of this Note, the Lender shall not be required to accept Shares
or Common Stock in repayment of amounts due hereunder if the Lender is
restricted by law or written agreement from doing so. The number of Shares
referred to above shall be adjusted to give effect to any stock split, stock
dividend or combination of the Common Stock occurring after the date hereof.
4. PREPAYMENT. Borrower shall have the right to prepay all or any part
of the unpaid balance hereof at any time, without premium or penalty.
5. SECURITY. Borrower agrees that at such time as the shares are no
longer subject to the transfer restrictions set forth in the Shareholders
Agreement, or, if earlier, at such time as Borrower has obtained a waiver by
the other parties to the Shareholders Agreement of the transfer restrictions on
the Shares, then Borrower shall execute and deliver to Lender a Stock Pledge
Agreement pursuant to which Borrower will pledge the Shares to Lender as
collateral security (the "Collateral") for the loan evidenced by this Note.
Unless and until Borrower delivers to Lender a Stock Pledge Agreement, the
Shares shall not be deemed to have been pledged or otherwise transferred to
Lender.
<PAGE> 2
Borrower and Lender agree that the reference to the Shares set forth in this
paragraph shall not constitute a "Transfer" as defined in the Shareholders
Agreement.
6. AMENDMENT OF NOTE. This note may be terminated or amended only by
prior written consent of Lender and Borrower.
7. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without giving
effect to the conflict of law principles thereof, in which state it shall be
performed, and shall be binding upon Borrower and his heirs and assigns.
BORROWER:
/s/ Robert J. Pommer, Jr.
----------------------------------
Robert J. Pommer, Jr.
100 N. Riverside Plaza
Suite 2200
Chicago, IL 60601
LENDER:
UNIVERSAL ACCESS, INC.
By: /s/ Patrick Shum
------------------------------
Name: Patrick Shum
Title: President
100 N. Riverside Plaza
Suite 2200
Chicago, IL 60601
2
<PAGE> 1
EXHIBIT 10.30
LEASE
DATED August , 1999
BY AND BETWEEN
LAFAYETTE BUSINESS PARK, LLC
as Landlord
and
UNIVERSAL ACCESS, INC.
as Tenant
AFFECTING PREMISES COMMONLY KNOWN AS
1940 Lafayette Street
Santa Clara, California 95058
<PAGE> 2
SUMMARY OF BASIC LEASE TERMS
<TABLE>
<CAPTION>
SECTION
(LEASE REFERENCE) TERMS
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<S> <C>
A. LEASE REFERENCE DATE: August __, 1999
(Introduction)
B. Landlord: LAFAYETTE BUSINESS PARK, LLC,
(Introduction) a California limited liability company
C. Tenant: UNIVERSAL ACCESS, INC.
(Introduction) an Illinois corporation
D. Premises: That area consisting of 14,040 square feet of
(Section 1.15) rentable area the address of which is 1940 Lafayette
Street, Units A-J, Santa Clara, California, within the
Building approximately as shown on Exhibit A.
E. Project: The land and Improvements shown on Exhibit A
(Section 1.16) consisting of Four buildings the aggregate rentable area of
which is 65,400 square feet.
F. Building: The building in which the Premises are located
(Section 1.6) known as 1940 Lafayette Street containing 14,040 square
feet of rentable area.
G. Tenant's Share: 100.00% of Building Common Operating
(Section 1.31) Expenses, 21.47% of Project Common Operating
Expenses
H. Tenant's Allocated Parking Stalls: Twenty (20) stalls.
(Section 4.4)
I. Scheduled Commencement Date: January 1, 2000
(Section 2.2)
J. Lease Term: Thirteen (13) Years (plus the partial month
(Section 1.13) following the Commencement Date if such date is not the
first day of a month) with two (2), five (5) year options
to extend as set forth in Exhibit E.
K. Initial Base Monthly Rent: $14,040.00
(Section 3.1/8.1) Thereafter, increases as described in the Lease Rider.
Initial Monthly COE Estimate: $560.00
INITIAL MONTHLY RENT AND COE: $14,600.00
L. Prepaid Rent; $28,640.00 to be applied to first month's
(Section 3.3) rent.
M. Security Deposit: See Lease Rider
(Section 3.6)
N. Permitted Use: Telecommunications business, including
(Section 4.1) general office use, the installation and maintenance of its
telecommunication systems and equipment and the
collocation of telephone systems belonging to Tenant's
customers.
O. Tenant's Liability Insurance Minimum: $1,000,000.00
(Section 9.1)
P. Landlord's Address: 1733 Dell Avenue
(Section 1.2) Campbell, California 95088
Q. Tenant's Address: 1900 Lafayette Street
(Section 1.2) Santa Clara, California 95050
R. Lease: This Lease includes the Summary of Basic Lease Terms,
(Section 1.12) the Lease, and the following exhibits and addenda: Lease
Rider, Exhibit A (site plan of the Project indicating
location of the Premises), Exhibit B (Landlord's
Improvements), Exhibit C (Sign Criteria), Exhibit D
(Surrender Condition), Exhibit E (Option to Extend), and
Exhibit F (Tenant's Alterations).
</TABLE>
The foregoing Summary is hereby incorporated into and made a part of this
Lease. Each reference in this Lease to any terms of the Summary shall mean the
respective information set forth above and shall be construed to incorporate
all of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.
LANDLORD: TENANT:
LAFAYETTE BUSINESS PARK, LLC UNIVERSAL ACCESS, INC.,
a California limited liability an Illinois corporation
corporation
By: /s/ [Signature Illegible] By: /s/ ROBERT J. POMMER, JR.
------------------------------- ------------------------------------
Its: Member Its: COO
------------------------------ -----------------------------------
Dated: 9/21/99 Dated: 8/31/99
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<PAGE> 3
L E A S E
ARTICLE I
DEFINITIONS
1.1 ADDITIONAL RENT: The term "Additional Rent" is defined in Section
3.2.
1.2 ADDRESS FOR NOTICES: The term "Address for Notices" shall mean the
addresses set forth in Sections P and Q of the Summary; provided, however, that
after the Commencement Date, Tenant's Address for Notices shall be the address
of the Premises.
1.3 AGENTS: The term "Agents" shall mean the following: (i) with respect
to Landlord or Tenant, the agents, employees, contractors, and invitees of such
party; and (ii) in addition with respect to Tenant, Tenant's subtenants and
their respective agents, employees, contractors, and invitees.
1.4 AGREED INTEREST RATE: The term "Agreed Interest Rate" shall mean the
lesser of (i) ten percent (10%) or (ii) the maximum interest rate permitted by
Law.
1.5 BASE MONTHLY RENT: The term "Base Monthly Rent" shall mean the fixed
monthly rent payable by Tenant pursuant to Paragraph 3.1 which is specified in
Section K of the Summary.
1.6 BUILDING: The term "Building" shall mean the building in which the
Premises are located which Building is identified in Section F of the Summary,
the rentable area of which is referred to herein as the "Building Rentable
Area."
1.7 COMMON AREA: The term "Common Area" shall mean all areas and
facilities within the Project that are not designated by Landlord for the
exclusive use of Tenant or any other lessee or other occupant of the Project,
including the parking areas, access and perimeter roads, pedestrian sidewalks,
landscaped areas, trash enclosures, recreation areas and the like.
1.8 COMMON OPERATING EXPENSES: The term "Common Operating Expenses" is
defined in Paragraph 8.2.
1.9 EFFECTIVE DATE: The term "Effective Date" shall mean the date the
last signatory to this Lease whose execution is required to make it binding on
the parties hereto shall have executed this Lease.
1.10 LANDLORD'S INSURANCE: The term "Landlord's Insurance" is defined in
Paragraph 9.2.
1.11 LAW: The term "Law" shall mean any judicial decision, statute,
resolution, regulation, rule, administrative court order, or other requirement
of any municipal, county, state, federal or other government agency or authority
having jurisdiction over the parties to this Lease or the Premises, or both, in
effect either at the Effective Date or any time during the Lease Term.
1.12 LEASE: The term "Lease" shall mean the Summary and all elements of
this Lease identified in Section B of the Summary, all of which are attached
hereto and incorporated herein by this reference.
1.13 LEASE TERM: The term "Lease Term" shall mean the term of this Lease
which shall commence on the Commencement Date and continue for the period
specified in Section 1 of the Summary.
1.14 LENDER: The term "Lender" shall mean any beneficiary, mortgagee,
secured party, lender, or other holder of any Security Instrument.
1.15 PREMISES: The term "Premises" shall mean the rentable area within
the Building described in Section D of the Summary located approximately as
shown on Exhibit A.
1.16 PROJECT: The term "Project" shall mean that real property and the
improvements thereon which are specified in Section E of the Summary, the
rentable area of which is referred to herein as the "Project Rentable Area."
1.17 REAL PROPERTY TAXES: The term "Real Property Taxes" is defined in
Paragraph 8.4.
1.18 SECURITY INSTRUMENT: The term "Security Instrument" shall mean any
underlying lease, mortgage or deed of trust which now or hereafter affects any
portion of the Project.
1.19 SUMMARY: The term "Summary" shall mean the Summary of Basic Lease
Terms executed by Landlord and Tenant that is part of this Lease.
1.20 TENANT'S ALTERATIONS: The term "Tenant's Alterations" shall mean all
improvements, additions, alterations, and fixtures installed in the Premises by
Tenant at its expense.
1.21 TENANT'S SHARE: The term "Tenant's Share" shall mean the percentage
obtained by dividing Tenant's rentable area by the Building Rentable Area, which
as of the Effective Date is the percentage identified in Section G of the
Summary.
ARTICLE 2
DEMISE, CONSTRUCTION, AND
ACCEPTANCE
2.1 DEMISE OF PREMISES: Landlord hereby leases to Tenant, and Tenant
leases from Landlord, the Premises for the Lease Term upon the terms and
conditions hereof.
2.2 COMMENCEMENT DATE: The Lease Term shall begin on the first to occur
of the following, which shall be the "Commencement Date": (i) the date specified
in Section 1 of the Summary (the "Scheduled Commencement Date") if Landlord is
not required to construct improvements under Exhibit B; or (ii) the date
Landlord offers to deliver possession of the Premises to Tenant following
substantial completion of all improvements to be constructed by Landlord under
Exhibit B, except for punchlist items which do not prevent Tenant from using the
Premises; or (iii) the date Tenant enters into occupancy of the Premises.
<PAGE> 4
2.3 DELIVERY AND ACCEPTANCE OF POSSESSION: If Landlord is unable to
deliver possession of the Premises to Tenant on or before the Scheduled
Commencement Date for any reason whatsoever, this Lease shall not be void or
voidable, and Landlord shall not be liable for any loss or damage resulting
therefrom; provided that, the Lessor Term shall not commence until Landlord
delivers possession of the Premises to Tenant. At the time Landlord delivers
possession of the Premises to Tenant. Tenant agrees to accept possession of the
Premises in its then existing condition, "as-is", including all patent and
latent defects, subject only to any defects in the Premises existing at the time
Tenant takes possession and of which Tenant notifies Landlord in writing within
one hundred eighty (180) days of the Commencement Date.
ARTICLE 3
RENT
3.1 BASE MONTHLY RENT: Throughout the Lease Term, Tenant shall pay to
Landlord the Base Monthly Rent set forth in Section K of the Summary (the "Base
Monthly Rent").
3.2 ADDITIONAL RENT: All charges due from Tenant under this Lease shall
be deemed additional rent (the "Additional Rent").
3.3 PAYMENT OF RENT: Concurrently with the execution of this Lease,
Tenant shall pay to Landlord the amount set forth in Section L of the Summary as
prepayment of rent for credit against the first installment(s) of Base Monthly
Rent. All rent required to be paid in monthly installments shall be paid in
advance on the first day of each calendar month during the Lease Term to
Landlord at the address set forth in Section P of the Summary or to such other
address as Landlord may from time to time indicate. All rent shall be paid in
lawful money of the United States, without any abatement (except as set forth
herein) detection or affect whatsoever, and without any prior demand therefor.
3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: If any Base Monthly Rent
or Additional Rent is not received by Landlord from Tenant when due, then Tenant
shall immediately pay to Landlord a late charge equal to the greater of (i) then
percent (10%) of each delinquent rent or (ii) One Hundred Dollars ($100.00), as
liquidated damages for Tenant's failure to make timely payment. If any rent
remains delinquent for a period in excess of thirty (30) days then, in addition
to such late charge, Tenant shall pay to Landlord interest on any rent that is
not paid when due at the Agreed Interest Rate following the date such amount
became due until paid. This paragraph shall not be deemed to grant Tenant an
extension of time within which to pay rent or prevent Landlord from exercising
any other right or remedy.
3.5 RETURNED CHECK FEE: A Twenty Five Dollar ($25.00) charge will be
paid by Tenant as Additional Rent to Landlord for each check returned unpaid by
the bank and Tenant shall replace the payment with a Cashier's Check or
Certified Check. If Tenant has two (2) or more checks returned for insufficient
funds at any time during its tenancy, Landlord, at its option, may request all
payments, current and future, be made by Cashier's Check or Certified Check.
3.6 SECURITY DEPOSIT: On the Effective Date, Tenant shall deposit with
Landlord the amount set forth in Section M of the Summary as security for the
performance by Tenant of its obligations under this Lease, and not as
prepayment of rent (the "Security Deposit"). Landlord may from time to time
apply all or any portion of the Security Deposit to remedy any default by
Tenant to the extent permitted by Law. If any part of the Security Deposit is
so used, Tenant agrees to pay promptly upon demand on account in cash
sufficient to restore the Security Deposit to the full original amount.
Landlord shall not be deemed a trustee of the Security Deposit, may use the
Security Deposit in business, and shall not be required to regregate if from
its general accounts. Tenant shall not be entitled to any interest on the
Security Deposit.
ARTICLE 4
USE OF PREMISES
4.1 LIMITATION ON USE: Tenant shall use the Premises solely for the use
specified in Section N of the Summary (the "Permitted Use"). Tenant shall not
do anything in or about the Premises which will cause any damage or structural
injury to the Building or Common Area or operate any equipment within the
Premises which will overload, damages or impair electrical systems, HVAC,
sprinkler systems, sanitary sewer systems or other mechanical equipment
servicing the Building or the Project. Tenant shall not attach, hang or
suspend anything from the ceiling, roof, walls or columns of the Building or
set any load on the floor in excess of the load limits for which such items are
designed nor operate hard wheel forklifts within the Premises. Tenant shall not
change the exterior of the Building or install any equipment or antennas on or
make any penetrations of the exterior or roof of this Building. Tenant shall
not commit or permit any waste or nuisance in or about the Premises. Tenant
shall not conduct on any portion of the Premises or the Project any sale of any
kind. No articles of any kind shall be stored upon or permitted to resale
outside of the Premises.
4.2 COMPLIANCE WITH LAW: Tenant shall comply with, and shall not use the
Premises in any manner which violates any Laws now or hereafter affecting the
Project. Tenant shall not use the Premises in any manner which will cause a
cancellation of any insurance policy covering the Building or which posses an
unreasonable risk of damage or injury to the Premises. Tenant shall comply with
all reasonable requirements of any insurance company, insurance underwriter, or
Board of Fire Underwriters which are necessary to maintain the insurance
coverage carried by either Landlord or Tenant pursuant to this Lease.
Notwithstanding anything contained in this Lease to the contrary, Tenant shall
not be required to make any structural repairs or alterations to the Premises
which may be required by Law (whether presently existing or hereafter enacted),
insurance regulations or otherwise, except to the extent as may be required by
the acts or omissions of Tenant or its Agents or required as a result of
Tenant's or its Agent's specific use of the Premises.
4.3 SIGNS: Tenant shall not place on any portion of the Premises any
signage or communicative material which is visible from the exterior of the
Building without the prior written approval of Landlord. All such approved signs
shall strictly conform in all Laws, restrictive covenants and Landlord's sign
criteria attached as Exhibit C and shall be installed and maintained in good
condition at the expense of Tenant throughout the Lease Term.
4.4 PARKING: Tenant shall be entitled to the non-exclusive use of
unreserved and unassigned parking spaces equal to the number of Tenant's
Allocated Parking Stalls contained within the Project described in Section H of
the Summary for its use and the use of Tenant's Agents, the location of which
may be designated from time to time by Landlord. Tenant and Tenants Agents
shall park vehicles no larger than full size passenger automobiles or pick-up
trucks on the Project and any oversized vehicles (i.e., larger than full size
passenger automobiles or pick-up trucks) may be parked at the Project only on a
temporary basis for pick-up and delivery purposes. Tenant shall not at any time
park or permit the parking of Tenant's vehicles or trucks, or the vehicles or
trucks of his employees, invitees or others, in any portion of the Common Area
not designated by Landlord for such use by Tenant. Tenant shall not abandon any
inoperative vehicles or equipment on any portion of the Common Area, nor shall
Tenant, its employees, invitees, suppliers or others park or store any vehicle
on any portion of the Common Areas, including designated parking areas
unattended for any period longer than twenty-four (24)
2
<PAGE> 5
hours. Landlord reserves the right, after having given Tenant reasonable
notice, to have any vehicles owned by Tenant or Tenant's Agents utilizing
parking spaces in excess of the parking spaces allowed for Tenant's use or
parked in unauthorized areas to be towed away at Tenant's cost.
4.5 RULES AND REGULATIONS: Landlord may promulgate reasonable rules and
regulations applicable to the occupants of the Project. Such rules and
regulations shall be binding upon Tenant upon delivery of a copy to Tenant, and
Tenant agrees to abide by such rules and regulations. Landlord shall enforce
rules and regulations in a non-discriminatory manner.
ARTICLE 5
TRADE FIXTURES AND ALTERATIONS
5.1 TRADE FIXTURES: Throughout the Lease Term, Tenant may provide and
install, and shall maintain in good condition, any trade fixtures required in
the conduct of its business in the Premises. All trade fixtures shall remain
Tenant's property.
5.2 TENANT'S ALTERATIONS: Tenant shall not construct any Tenant's
Alterations or otherwise alter the Premises without Landlord's prior written
approval. At the expiration or sooner termination of the Lease Term, all
Tenant's Alterations shall be surrendered to Landlord as part of the realty and
shall then become Landlord's property, and Landlord shall have no obligation to
reimburse Tenant for all or any portion of the value or cost thereof, provided,
however, that if Landlord requires Tenant to remove any Tenant's Alterations,
Tenant shall so remove such Tenant's Alterations prior to the expiration or
sooner termination of the Lease Term. All Tenant's Alterations shall be
constructed by a licensed contractor in accordance with all Laws, using new
materials of good quality. Landlord agrees that if Tenant requests in writing
prior to the installation of any Tenant Alterations that Landlord specify
whether it will require the removal of such Tenant's Alterations upon
termination or expiration of this Lease. Landlord shall so specify within ten
(10) days after Tenant's request. If Landlord fails to respond to such a
request, Landlord shall be deemed to have required the removal of such Tenant's
Alterations upon the termination or expiration of this Lease.
5.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make any alteration,
addition or change of any sort to the Premises that is required by Law because
of (i) Tenant's particular use or change of use of the Premises, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's
construction or installation of any Tenant's Alterations or trade fixtures.
5.4 MECHANIC'S LIENS: Tenant shall keep the Project free from any liens
and shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant or Tenant's Agents. If any claim
of lien is recorded, Tenant shall bond against or discharge the same within 30
days after the same has been recorded against the Project.
5.5 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any
and all taxes, assessments, license fees and public charges imposed against
Tenant or Tenant's estate in this Lease or the property of Tenant.
ARTICLE 6
REPAIR AND MAINTENANCE
6.1 TENANT'S OBLIGATION TO MAINTAIN: Except as set forth in Section 6.2
below, Tenant shall, at its sole cost and expense, clean and maintain in good
order, condition, and repair and replace when necessary the Premises and every
part thereof regardless of whether the damaged portion of the Premises or the
means of repairing the same are accessible to Tenant, including but not limited
to, floors, ceilings, windows, doors, skylights, interior walls, and the
interior surfaces of the exterior walls, plumbing, all wall mounted HVAC
equipment serving only the Premises, telecommunications equipment and
intrabuilding network cabling, electrical and lighting facilities and equipment
including circuit breakers, and exterior lighting attached to the Premises. All
glass, both interior and exterior, is at the sole risk of Tenant and any broken
glass shall promptly be replaced by Tenant at Tenant's expense with glass of
the same kind, size and quality according to the current local code. In the
event Tenant fails to perform Tenant's obligations under this Paragraph 6.1,
Landlord shall give Tenant notice to do such acts as are reasonably required to
so maintain the Premises. If Tenant, within ten (10) days after notice from
Landlord, fails to commence to do the work and diligently prosecute it to
completion, then Landlord shall have the right (but not the obligation) to do
such acts and expend such funds at the expense of Tenant as are reasonably
required to perform such work. Any amount as expended by Landlord shall be paid
by Tenant promptly after demand with interest at the Agreed Interest Rate from
the date of such work until paid. Landlord shall have no liability to Tenant for
any damages, inconvenience or interference with the use of the Premises by
Tenant as a result of performing any such work. All repairs and replacements
required of Tenant shall be promptly made with new materials of like kind and
quality. If the work affects the structural parts of the Building or if the
estimated cost of any item of repair or replacement is in excess of One Thousand
Dollars ($1,000.00), then Tenant shall first obtain Landlord's written approval
of the name in accordance with Paragraph 5.2 hereof.
6.2 LANDLORD'S OBLIGATION TO MAINTAIN: Landlord shall, at its sole cost
and expense (subject to reimbursement as set forth in this Lease), repair,
maintain and operate the Common Area and repair and maintain the exterior roof,
all roof mounted HVAC equipment, the exterior and structural parts of the
Building so that the same are kept in good order and repair and if there is
building service equipment and/or utility facilities serving portions of the
Common Area and/or both the Premises and other parts of the Building, Landlord
shall maintain and operate (and replace when necessary) such equipment.
Landlord shall not be responsible for repairs required for damage caused to any
part of the Project by any act or omission of Tenant or Tenant's Agents and
Tenant shall be solely responsible for such repairs.
6.3 CONTROL OF COMMON AREA: Landlord shall at all times have exclusive
control of the Common Area. Subject to Paragraph 15.1, Landlord shall have the
right, without the same constituting an actual or constructive eviction and
without entitling Tenant to any abatement of rent, to close any part of the
Common Area for any reason, eliminate from or add to the Project any land or
improvement, make changes to the Common Area, remove unauthorized persons from
the Project, and/or change the name or address of the Building or Project.
Landlord shall have no obligation to provide guard services or other security
measures for the benefit of the Project and Tenant assumes all responsibility
for the protection of Tenant and Tenant's Agents from acts of third parties.
ARTICLE 7
WASTE DISPOSAL AND UTILITIES
7.1 WASTE DISPOSAL: Tenant shall cause all of its waste to be stored only
in designated areas and regularly removed from the Premises at Tenant's sole
cost; provided that, Landlord may elect to provide for waste disposal at the
Premises and/or Project and the cost thereof shall be considered a Common
Operating Expense. Tenant shall keep all fire corridors and mechanical
equipment rooms in the Premises free and clear of all obstructions.
3.
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7.2 HAZARDOUS MATERIALS: Landlord and Tenant agreement as follows with
respect to the existence or use of Hazardous Materials on the Project:
A. Any handling, transportation, storage, treatment, disposal or use
of Hazardous Materials by Tenant and Tenant's Agents in or about the Project
shall strictly comply with all applicable Hazardous Materials Laws. Tenant
shall indemnify, defend upon demand with counsel reasonably acceptable to
Landlord, and hold harmless Landlord from and against any and all liabilities,
losses, claims, damages, interest, penalties, fines, monetary sanctions,
reasonable attorneys' fees, experts' fees, court costs, remediation costs,
investigation costs and other expenses which result from or arise in any manner
whatsoever out of the use, storage, treatment, transportation, release, or
disposal of Hazardous Materials on or about the Project by Tenant or Tenant's
Agents.
B. If the presence of Hazardous Materials on or about the Project
caused or permitted by Tenant or Tenant's Agents results in contamination of
water or soil, then Tenant shall promptly take any and all action necessary to
investigate and remediate such contamination as required by Law or as a
condition to the issuance or continuing effectiveness of any governmental
approval which relates to the use of the Project or any part thereof. Tenant
shall further be solely responsible for, and shall defend, indemnify and hold
Landlord and its agents harmless from and against, all claims, costs and
liabilities, including attorneys' fees and costs arising out of or in
connection with any investigation and remediation to return the Project to its
condition existing prior to the appearance of such Hazardous Materials.
C. Tenant shall give written notice to Landlord as soon as reasonably
practicable of (i) any communication received from any governmental authority
concerning Hazardous Materials which relates to the Project, and (ii) any
contamination of the Project by Hazardous Materials which constitutes a
violation of any Hazardous Materials Law. Tenant may use such Hazardous
Materials as are necessary to the operation of Tenant's business of which
Landlord receives notice prior to such Hazardous Materials being brought onto
the Premises and to which Landlord consents in writing. At any time during the
Lease Term, Tenant shall, within five days after written request therefor
received from Landlord, disclose in writing all Hazardous Materials that are
being used by Tenant on the Project, the nature and quantity of such use, and
the manner of storage and disposal. Landlord acknowledges that Tenant's use
requires batteries which may contain Hazardous Materials and Landlord consents
to Tenant's use of such batteries provided Tenant is in compliance with all
other terms of this Article 7.
D. Landlord may cause testing wells to be installed on the Project,
and may cause the ground water to be tested to detect the presence of Hazardous
Materials by the use of such tests as are then customarily used for such
purposes. The cost of such tests and of the installation, maintenance, repair
and replacement of such wells shall be paid by Tenant. If such tests disclose
the existence of facts which give rise to liability of Tenant pursuant to its
indemnify given in Paragraph 7.2A and Paragraph 7.2B.
E. As used herein, the term "Hazardous Material," means any hazardous
or toxic substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States
Government. As used herein, the term "Hazardous Material Law" shall mean any
Law which regulates the use, storage, release or disposal of any Hazardous
Material.
F. The obligations of Landlord and Tenant under this Paragraph 7.2
shall survive the expiration or earlier termination of the Lease Term. The
rights and obligations of Landlord and Tenant with respect to issues relating to
Hazardous Materials are exclusively established by this Paragraph 7.2. In the
event of any inconsistency between any other part of this Lease and this
Paragraph 7.2, the terms of this Paragraph 7.2 shall control.
G. Landlord hereby represents and warrants to Tenant, that, to the
best of its knowledge, no Hazardous Materials exist in or about the Project in
violation of Law. Landlord agrees to hold Tenant harmless from and against any
costs, liabilities, losses, claims, or damages resulting from the presence or
release of Hazardous Materials in or about the Project caused by Landlord, or
its Agents. Notwithstanding anything to the contrary contained in the Lease,
Tenant shall have no obligation to indemnify, defend, or hold Landlord harmless
for claims originating from the presence of Hazardous Materials which are not
placed on or in the Premises or the Project by the Tenant or its Agents.
Landlord and Tenant agree to comply with all relevant statutes, ordinances and
regulations involving Hazardous Materials.
7.3 UTILITIES: Tenant shall promptly pay, as the same become due, all
charges for water, gas, electricity, telephone, sewer service, waste pick-up
and any other utilities, materials or services furnished to or used by Tenant
on or about the Premises during the Lease Term, including, without limitation,
meter, use and/or connection fees, hook-up fees or standby fees, and penalties
for discontinued or interrupted service. Landlord may, at Landlord's option,
require Tenant to place any utility service serving only the Premises in
Tenant's name. If any utility service is not separately metered to the
Premises, then Tenant shall pay its pro rata share of the cost of such utility
service with all others served by the service not separately metered. However,
if Landlord determines that Tenant is using a disproportionate amount of any
utility service not separately metered, then Landlord at its election may (i)
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
reasonable estimate of the cost of Tenant's excess use of such utility service,
or (ii) install a separate meter (at Tenant's expense) to insure the utility
service supplied to the Premises.
ARTICLE 8
COMMON OPERATING EXPENSES
8.1 TENANT'S OBLIGATION TO REIMBURSE COMMON OPERATING EXPENSES: As
Additional Rent, Tenant shall pay Tenant's Share (specified in Section G of the
Summary) of all Common Operating Expenses; provided, however, that if the
Project contains more than one building, then Tenant shall pay Tenant's Share
of all Common Operating Expenses fairly allocable to the Building, and provided
further, that Tenant shall pay all Common Operating Expenses fairly allocable
to the Premises. Tenant shall pay such share of the actual Common Operating
Expenses incurred or paid by Landlord but not therefore billed to Tenant within
thirty (30) days after receipt of a written bill therefor from Landlord, on
such periodic basis as Landlord shall designate, but in no event more
frequently than once a month. Alternatively, Landlord may from time to time
require that Tenant pay Tenant's Share of Common Operating Expenses in advance
in estimated monthly or, at Landlord's option, quarterly installments. In
accordance with the following: (i) Landlord shall deliver to Tenant Landlord's
reasonable estimate of the Common Operating Expenses it anticipates will be
paid or incurred for the Landlord's fiscal year in question, (ii) during such
Landlord's fiscal year, Tenant shall pay Tenant's Share of the estimated Common
Operating Expenses in advance in equal monthly installments due with each
installment of Base Monthly Rent, and (iii) within ninety (90) days after the
end of such Landlord's fiscal year, Landlord shall furnish to Tenant a
statement in reasonable detail of the actual Common Operating Expenses paid or
incurred by Landlord in accordance with this paragraph during the just ended
Landlord's fiscal year, and thereupon there shall be an adjustment between
Landlord and Tenant, with payment to or repayment by Landlord, as the case may
require, within 30 days after delivery by Landlord to Tenant of such statement,
so that Landlord shall receive the entire amount of Tenant's Share of all
Common Operating Expenses for such Landlord's fiscal year and no more. Tenant
shall have the right, at its expense, exercisable upon reasonable written
notice to Landlord, to audit Landlord's books and records for Common Operating
Expenses provided such audit is conducted during normal business hours and
within twelve (12) months following the Lease year subject to audit. Landlord
shall pay the reasonable cost of such audit if it is determined that Tenant
has been overcharged for Common Operating Expense by more than five percent
(5%) and shall promptly refund the amount of such overpayment to Tenant.
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8.2 COMMON OPERATING EXPENSES DEFINED: The term "Common Operating
Expenses" shall mean all costs and expenses incurred by Landlord with respect
to the operation, protection, improvement, maintenance, repair and replacement
of the Project, including, without limitation, the following: (i) the operation,
repair, maintenance and replacement of the roof (excluding replacement of the
roof structure and/or membrane), the exterior surfaces and interior improvements
of all buildings located on the Project, the roof mounted HVAC equipment,
utility facilities and other building service equipment, and the Common Area;
(ii) reserves and aside for Common Operating Expenses or for maintenance, repair
and/or replacement of the Common Area; (iii) the amounts of any "deductible" and
"coinsurance" paid by Landlord with respect to damage caused by an "Insured
Peril" (as hereafter defined) or amounts incurred in connection with an
"Uninsured Peril" ( as hereinafter defined) up to a minimum amount in any twelve
(12) month period equal to two percent (2%) of the replacement cost of the
building or other improvements damaged; and (v) reasonable management fees.
Specifically excluded from Operating Expenses (to the extent provided below)
shall be the following:
(1) Costs of initial improvements to any tenant's premises, or any
architectural, engineering or legal fees, relocation expense or any permit or
similar fees or charges associated with such improvements;
(2) Principal or interest payments on loans, including loans accrued by
mortgages or trust deeds on the Project and ground lease payments, if any;
(3) Costs of capital improvements, except that Operating Expenses shall
include the cost during the Term, as reasonably amortized by Landlord pursuant
to sound management and accounting principles consistently applied, with
interest on the unamortized amount at ten percent (10%) per annum of any
capital improvements which are intended to reduce any component cost included
within Operating Expenses (and which, at such time, prudent owners of office
buildings in Santa Clara, California would reasonably determine to be
necessary).
(4) Depreciation or amortization of any improvements, except as
specifically set forth in this Lease;
(5) Costs of repairs, alterations or replacements caused by casualty
losses for which Landlord is compensated through proceeds of insurance or for
which Landlord would have been compensated had Landlord maintained the
insurance required by this Lease;
(6) Costs of repairs, alterations or replacements caused by the exercise
of the rights of eminent domain;
(7) Costs and expenses incurred in connection with leasing space in the
Project, such as legal fees for the preparation of ????, tenant allowances,
space planner fees, real estate brokers' leasing commissions and advertising
and promotional expenses, expenses of any leasing office incurred with regard
to leasing the Project or portions thereof;
(8) Court costs and legal fees incurred with regard to enforcing the
obligations of tenants under other leases;
(9) Leasing commissions, attorneys' fees, costs and disbursements and
other expenses insured in connection with negotiations or disputes with
tenants, occupants or prospective tenants or occupants of the Project;
(10) Costs incurred due to violation by Landlord of any lease for space in
the Project or any indemnity payments made by Landlord pursuant to any such
lease because of a violation by Landlord under such lease;
(11) Any payments made to subsidiaries of Landlord or entities under
common control with Landlord except if such payments are for services or goods
on, to or for the Building and only to the extent that the cost of such services
and goods are at market rates being paid for such services or goods by owners of
other office buildings in Santa Clara, California from time to time;
(12) Any expense for which Landlord is compensated by proceeds of
insurance;
(13) Any expense for services or items for which any tenant of the
Building (including Tenant) directly reimburses Landlord (other than as a
component of Operating Expenses);
(14) Accounting fees (including those for the preparation of Landlord's
income taxes), except reasonable accounting fees incurred in connection with
the operation and management of the Project;
(15) Any lender's fees;
(16) Variable expense that are not being furnished to Tenant, including,
without limitation, janitorial services and Buildings HVAC system;
(17) Costs of asbestos abatement and/or removal and/or any other measures
needed to comply with environmental requirements or to investigate or remediate
environmental contamination from Hazardous Materials except as set forth in
Article 7;
(18) Any costs, fines or penalties incurred due to violations by Landlord
of any governmental rule or authority;
(19) Management fees in excess of four percent (4%) of gross ????;
(20) Wages, salaries and other compensation paid to clerks or attendants in
newsstands or other commercial concessions, if any, operated by Landlord and any
expense or costs for wages, salaries or other benefits or compensation paid to
any person above the level of building manager;
(21) Costs relating to relocating existing tenants in the Project;
(22) Expenses arising as a result of Landlord's gross negligence or
willful misconduct or the negligence or willful misconduct of Landlord's agents
or employees;
(23) Real Property Taxes (reimbursement of Real Property Taxes is dealt
with exclusively in Article 8.3); and
(24) Repairs necessary to bring the Project or any part thereof into
compliance with Laws in effect as of the Commencement Date.
8.3 TENANTS OBLIGATION TO REIMBURSE REAL PROPERTY TAXES AND LANDLORD'S
INSURANCE: As Additional Rent, Tenant shall pay Tenant's Share (specified in
Section G of the Summary) of the amount (if any) by which Real Property Taxes
and/or Landlord's insurance costs paid or incurred in any Landlord's fiscal
year during the Lease Term exceed the Real
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Property Taxes and/or Landlord's Insurance costs, respectively, paid or
incurred during the fiscal year in which the Commencement Date occurs (which
excess is referred to herein as the "Excess Expenses") for any amount or
portion thereof. If the Project contains more than one building, then Tenant
shall pay Tenant's share of the Excess Expenses for the Landlord's fiscal year
in question based upon the real Property Taxes and/or Landlord's Insurance
costs fairly allocable to the Building. Tenant shall pay such share of
the Excess Expenses on the same payment terms as are contained in Paragraph 8.1
hereof regarding payment of Common Operating Expenses.
8.4 REAL PROPERTY TAXES DEFINED: The term "Real Property Taxes"
shall mean all taxes, assessments, levies, and other charges of any kind or
nature whatsoever, general and special, foreseen and unforeseen, now or
hereafter imposed by any governmental or quasi-governmental authority or
special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the
value, occupancy or use of, all or any portion of the Project or the rents
derived therefrom (except federal and state and income taxes). Notwithstanding
anything contained in the Lease to the contrary, during the first five (5) years
of the Lease Term only (after such time this exclusion shall no longer apply)
there shall be excluded from the tax bill for the purposes of computing Real
Property Taxes, any increase in real estate taxes caused solely by a "change in
ownership," as defined in the law under which reassessment or tax increase
results from a transfer of all or a portion of Landlord's interest in the
Project. Real Property Taxes shall also not include interest and penalties for
late payment. If assessments or other special taxes that are payable in
installments are levied against all or any portion of the Project, Landlord
shall pay such assessments or taxes in installments over the maximum period of
time permitted by law, and all interest payments thereon shall be considered
part of the assessment for purposes of this provision. Landlord represents that
the Project is assessed as a single tax parcel for Real Property Tax purposes
separate and apart from any other land.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE; Tenant shall maintain insurance complying
with all of the following:
A. Tenant shall procure, pay for and keep in full force and
effect: (i) commercial general liability insurances, including property damage,
against liability for personal injury, bodily injury, death and damage to
property occurring in or about, or resulting from an occurrence in or about,
the Premises with combined single limit coverage of not less than the amount
specified in Section O of the Summary, which insurance shall contain a
"contractual liability" endorsement insuring performance of Tenant's obligation
indemnify Landlord contained in Paragraph 10.3; (ii) fire and property damage
insurance in so-called "all risk" form insuring Tenant's Alterations for their
full actual replacement cost; and (iii) such other insurance and amounts of
insurance as are either (1) reasonably required by any Lender, or (2)
reasonably required by Landlord and customarily carried by tenants of similar
property in similar businesses.
B. Where applicable and required by Landlord, each policy of
insurance required to be carried by Tenant pursuant to this Paragraph 9.1: (i)
shall name Landlord and such other parties in interest as Landlord reasonably
designates as additional insured; (ii) shall be primary and not secondary or
contributing; (iii) shall be in a form and carried with companies reasonably
acceptable to Landlord; (iv) shall provide that such policy shall not be subject
to cancellation, lapse or change except after at least thirty (30) days prior
written notice to Landlord; (v) shall not have a "deductible" in excess of such
amounts as are approved by Landlord; and (vi) shall contain a cross liability
endorsement and a "severability" clause.
C. A copy of such paid-up policy evidencing the insurance
required to be carried by Tenant pursuant to this Paragraph 9.1 (appropriately
authenticated by the insurer) shall be delivered to Landlord prior to the time
Tenant or any of its Agents enter the Premises and upon renewal of such
policies, but not less than five (5) days prior to the expiration of the term
of such coverage.
D. Tenant shall have the right to maintain the required
liability insurance in the form of a blanket policy covering other business
locations of Tenant in addition to the Premises; provided, however, that
Tenant shall provide Landlord with a certificate of insurance specifically
naming the location of the Premises and naming Landlord as required in this
Section, the limits of which coverage applicable to the Premises are to be in
the amounts set forth in this Section.
9.2 LANDLORD'S INSURANCE: Landlord shall maintain a policy or
policies of fire and property damage insurance in so-called "all risk" form
insuring Landlord (and such others as Landlord may designate) from physical
damage to the Project with coverage of not less than the full replacement cost
thereof, and if Landlord elects, a commercial general liability policy
("Landlord's Insurance"). Such insurance may be endorsed to cover loss caused by
such additional perils against which Landlord may elect to insure (including
earthquake and/or flood), and to provide such additional coverage as Landlord
reasonably requires, and shall contain reasonable "deductibles" which, in the
case of earthquake and flood insurance, may be up to such amount as is then
available at commercially reasonable rates. Landlord shall not be required to
cause such insurance to cover any of Tenant's Alterations or trade fixtures.
9.3 RELEASE AND WAIVER OF SUBROGATION: The parties hereto release
each other, and their respective agents and employees, from any liability for
injury to any person or damage to property that is caused by or results from
any risk insured against under any valid and collectible insurance policy
carried by either of the parties which contains a waiver of subrogation by the
insurer and is in force at the time of such injury or damage; subject to the
following limitations: (i) the foregoing provision shall not apply to the
commercial general liability insurance described by subparagraph Paragraph 9.1A;
and (ii) Tenant shall not be released from any such liability to the extent any
damages resulting from such injury or damage are not covered by the recovery
obtained by Landlord from such insurance, but only if the insurance in question
permits such partial release in connection with obtaining a waives of
subrogation from the insurer. Each party shall use reasonable efforts to cause
each insurance policy obtained by it to provide that the insurer waiver all
right of recovery by way of subrogation against the other party and its agents
and employees.
ARTICLE 10
LIMITATION ON LANDLORD'S LIABILITY
AND INDEMNITY
10.1 LIMITATION ON LANDLORD'S LIABILITY: Landlord shall not be
liable to Tenant, nor shall Tenant be entitled to terminate this Lease or to
any abatement of rent, for any injury to Tenant or Tenant's Agents, damage to
the property of Tenant or Tenant's Agents, or loss to Tenant's business
resulting from any cause whatsoever unless same is proximately caused by
Landlord's willful misconduct or gross negligence of which Landlord has actual
notice and a reasonable opportunity to cure but which it fails to so cure.
10.2 LIMITATION ON TENANT'S RECOURSE: Tenant shall have recourse
only to the interest of Landlord in the Project for the satisfaction of the
obligations of Landlord and shall not have recourse to any other assets of
Landlord or in the assets of any officers, directors, trustees, partners, joint
venturers, members, owners, stockholders, or other principals or
representatives of Landlord for the satisfaction of such obligations.
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10.3 INDEMNIFICATION OF LANDLORD: Tenant shall hold harmless, indemnify
and defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord, from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising from or relating to (i) any cause or extent whatsoever (other than the
willful misconduct or gross negligence of Landlord of which Landlord has had
notice and a reasonable time to cure, but which Landlord has failed to cure)
occurring in or about or resulting from an occurrence in or about the Premises
during the Lease Term, (ii) the negligence or willful misconduct of Tenant or
Tenant's Agents, wherever the cause may occur, or (iii) an Event of Tenant's
Default. The provisions of this Paragraph 10.3 shall survive the expiration or
sooner termination of this Lease. Notwithstanding anything herein to the
contrary, Landlord shall not be indemnified from any liability for damage or
injury to persons or property caused by or resulting from the gross negligence
or wanton misconduct of Landlord or its Agents.
ARTICLE II
DAMAGES TO PREMISES
11.1 LANDLORD'S DUTY TO RESTORE: If the Premises are damaged by any
peril, Landlord shall restore the Premises unless the Lease is terminated by
Landlord pursuant to Paragraph 11.2. All insurance proceeds available from the
fire and property damage insurance carried by Landlord pursuant to Paragraph
9.2 shall be paid to and become the property of Landlord. Landlord's obligation
to restore shall be limited to the Premises and Interior Improvements
constructed by Landlord as they existed as of the Commencement Date, excluding
any Tenant's Alterations, trade fixtures and/or personal property. Tenant shall
forthwith replace or fully repair all Tenant's Alterations and trade fixtures
existing at the time of the damages.
11.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the right to
terminate this Lease in the event any of the following occurs: (i) either the
Project or the Building is damaged by an Insured Peril to such an extent that
the estimated cost to restore exceeds thirty three (33%) of the then actual
replacement cost thereof; (ii) either the Project or the Building is damaged by
an Uninsured Peril to such an extent that the estimated cost to restore exceeds
two percent (2%) of the then actual replacement cost thereof; or (iii) the
Premises are damaged by any peril within twelve (12) months of the last day of
the Lease Term. As used herein, "Insured Peril" shall mean a peril actually
insured against for which the insurance proceeds actually received by Landlord
are sufficient (except for any "deductible" amount specified by such insurance)
to restore the Project under then-existing building codes to the condition
existing immediately prior to the damage; and "Uninsured Peril" shall mean any
peril which is not an Insured Peril. Notwithstanding the foregoing, if the
"deductible" for earthquake or flood insurance exceeds two percent (2%) of the
replacement cost of the improvements insured, such peril shall be deemed an
"Uninsured Peril."
11.3 ABATEMENT OF RENT: In the event of damage to the Premises which
does not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated during the period of restoration
in proportion to the degree to which Tenant's use of the Premises is impaired
by such damage. Tenant shall not be entitled to any compensation or damage from
Landlord for loss of Tenant's business or property caused by such damage or
restoration. Tenant hereby waives the provisions of California Civil Code
Sections 1932(2) and 1933(4) and the provisions of any similar law hereinafter
enacted.
11.4 TENANT'S RIGHT TO TERMINATE: If the Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to this Article, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be complete. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised in the case of A or B below only by delivery to Landlord of a written
notice of election to terminate within ten (10) business days after Tenant
receives from Landlord the estimate of the time needed to complete such
restoration:
A. If the time estimated to substantially complete the restoration
exceeds nine months from and after the date of such damage; or
B. If the damage occurred within nine months of the last day of the
Term and the time estimated to substantially complete the restoration exceeds
ninety days from and after the date such restoration is commenced; or
C. Landlord does not complete the restoration within nine months
from the date of the damage.
ARTICLE 12
CONDEMNATION
12.1 LANDLORD'S TERMINATION RIGHT: Landlord shall have the right to
terminate this Lease if, as a result of a condemnation, more than 40% of the
Premises or 20% of the Project is so taken; provided that if Landlord elects to
terminate due to 20% of the Project being taken, Landlord terminates the Leases
of substantially all other Tenants at the Project.
12.2 TENANT'S TERMINATION RIGHT: Tenant shall have the right to
terminate this Lease if, as a result of any condemnation, ten percent (10%) or
more of the Premises is taken and the remaining part of the Premises cannot be
restored within a reasonable period of time and thereby made reasonably
suitable for the continued operation of the Tenant's business.
12.3 ABATEMENT OF RENT: If any part of the Premises is taken by
condemnation and this Lease is not terminated, Base Monthly Rent shall be
reduced in the same proportion that the floor area of that part of the Premises
so taken (less any addition thereto by reason of any reconstruction) bears to
the original floor area of the Premises.
12.4 DIVISION OF CONDEMNATION AWARD: Any award made as a result of any
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award.
ARTICLE 13
DEFAULT AND REMEDIES
13.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occurs (an "Event
of Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or Additional
Rent when due, and such failure is not cured within 3 days after delivery of
written notice from Landlord specifying such failure to pay; or
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B. Tenant shall have failed to perform any term, covenant, or
condition of this Lease other than these requiring the payment of Base Monthly
Rent or Additional Rent, and Tenant shall have failed to cure such breach within
thirty (30) days after written notice from Landlord specifying the nature of
such breach where such breach could reasonably be cured within said thirty (30)
day period, or if such breach could not reasonably be cured within said thirty
(30) day period, Tenant shall have failed to commence such cure within said
thirty (30) day period and thereafter continues with due diligence to prosecute
such cure to completion within such time period as is reasonably needed; or
C. Tenant shall have sublet the Premises or assigned its
Interest in the Lease in violation of the provisions contained in Article 14; or
D. (i) The making by Tenant of any general arrangements or
assignments for the benefit of creditors; (ii) Tenant becomes a "debtor" as
defined in 11 USC paragraph 101 or any successor status thereto (unless, in the
case of a petition filed against Tenant, the [Illegible] is dismissed within
ninety (90) days; (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within sixty (60) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such seizure is not discharged within
sixty (60) days; provided, however, is the event that any provision of this
Paragraph 13.1D is contrary to any applicable Law, such provision shall be of no
force or effect; or
E. Tenant shall have failed to deliver documents required of
it pursuant to Paragraph 15.4 or Paragraph 15.6 within the time periods
specified therein.
13.3 LANDLORD'S REMEDIES: If an Event of Tenant's Default occurs,
Landlord shall have the following rights and remedies in addition to all other
rights and remedies provided by Law or otherwise provided in this Lease, to
which Landlord may resort cumulatively or in the alternative:
A. This Lease shall not terminate unless Landlord gives Tenant
written notice of its election to terminate and no act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach shall constitute
a termination of Tenant's right in possession unless Landlord gives Tenant
written notice of termination. Should Landlord not terminate this Lease giving
Tenant written notice, Landlord may enforce all of its rights and remedies under
this Lease or available at law or its equity, including (i) the right to perform
Tenant's obligations and be reimbursed by Tenant for the cost thereof together
with interest at the Agreed Interest Rate from the date any sum is paid by
Landlord until Landlord is reimbursed by Tenant, and (ii) the remedy described
in California Civil Code Section 1951.4 (Landlord may continue Lease in affect
after Tenant's breach and abandonment and recover rent as it becomes due, if
Tenant has right to sublet or assign, subject only to reasonable limitations).
B. Landlord may terminate this lease, to which event Landlord
shall be entitled, at Landlord's election, to damages in an amount as set forth
in California Civil Code Section 1951.2. For purposes of computing damages
pursuant to California Civil Code Section 1951.2; (i) an interest rate equal to
the Agreed Interest Rate shall be used where permitted; and (ii) the term "rent"
includes Base Monthly Rent and Additional Rent. Such damages shall include: (i)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided, computed by discounting
such amount at the discount rate of the Federal Reserve Banks of San Francisco
at the time of award plus one percent (1%); and (ii) any other amount necessary
to compensate Landlord for all detriment proximately caused by Tenant's failure
to perform. Tenant's obligations under this Lease, or which in the ordinary
course of things would be likely to result therefrom.
C. The remedies set forth herein are not intended to be
exclusive and shall be in addition to the rights and remedies granted to
Landlord by Law or in equity. Nothing in this Paragraph 13.2 shall limit
Landlord's right to indemnification from Tenant as provided in Paragraph 7.2 and
Paragraph 10.3. Any notice give by Landlord in order to satisfy the requirements
of Paragraph 13.1A or Paragraph 13.1B above shall also satisfy this notice
requirements of California Code of Civil Procedure Section 1161 regarding
unlawful detainer proceedings.
13.3 WAIVER: Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be [Illegible] to waive or
render unnecessary Landlord's consent to or approval of any subsequent similar
act by Tenant. The receipt by Landlord of any rent or payment with or without
knowledge of the breach of any provision hereof shall not be deemed a waiver of
or consent to any such breach unless such waiver is in writing and signed by
Landlord. No delay or omission in the exercise of any right or remedy occurring
to Landlord upon any breach by Tenant shall impair such right or remedy or be
construed as a waiver of any such breach theretofore or thereafter occurring.
The waiver by either party of any breach of any provision of this Lease shall
not be deemed to be a waiver of any subsequent breach of the same or of any
other provisions herein contained.
13.4 WAIVER BY TENANT OF CERTAIN REMEDIES: Tenant waives the
provisions of Sections 1932(1), 1941 and 1942 of the California Civil Code and
any similar or successor law regarding Tenant's right to terminate this Lease or
to make repairs and deduct the expense of such repairs from the rent due under
this Lease. Tenant hereby waives any right of redemption or relief from
forfeiture under the laws of the State of California, or under any other present
or future law, including the provisions of Sections 1174 and 1179 of the
California Code of Civil Procedure.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFER BY TENANT: The following provisions shall apply to any
assignment, subletting or other transfer by Tenant or any subtenant or assignee
or other successor in interest of the original Tenant (collectively referred to
in this Paragraph 14.1 as "Tenant"):
A. Tenant shall not do any of the following (collectively
referred to herein as a "Transfer"), whether voluntarily, involuntarily or by
operation of law, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed: (i) sublet all or any part of the
Premises or allow it to be sublet, occupied or used by any person or entity
other than Tenant or assign its interest in this Lease; (ii) mortgage or
encumber the Lease (or otherwise use the Lease as a security device) in any
manner; or (iii) amend or modify as assignment, sublease or other transfer that
has been previously approved by Landlord. The dissolution, merger, or other
reorganization of Tenant of the sale, transfer, withdrawal, or substitution of
twenty five percent (25%) or more of the ownership interests in Tenant shall be
deemed a Transfer. Any attempted Transfer without Landlord's consent shall
constitute an Event of Default and shall be voidable at Landlord's option. No
Transfer, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant hereunder. Tenant shall reimburse Landlord
for all responsible costs and attorneys' fees in connection with the processing
and/or documentation of a requested Transfer, whether or not Landlord's consent
is given. In the event Landlord consents to any proposed Transfer, Tenant agrees
to pay to Landlord, an Additional Rent, fifty percent (50%) of any and all rents
or other consideration (including key money) received by Tenant from the
transferee by reason of such Transfer in excess of the rent payable by Tenant to
Landlord under the Lease (less any brokerage commissions, attorneys' fees and
advertising expenses incurred by Tenant in connection with the Transfer).
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B. At least thirty (30) days before a proposed Transfer is
to become effective, Tenant shall give Landlord written notice of the proposed
terms of such Transfer and request Landlord's approval, which notice shall
include the name and legal composition of the proposed transferor, a current
financial statement and financial statements of the transferee covering the
preceding three years if the same exist all of which statements prepaid in
accordance with generally accepted accounting principles, the nature of the
proposed transferee's business to be carried on in the Premises, and the form of
Transfer agreement to be used. Tenant shall provide to Landlord such other
information as may be reasonably requested by Landlord, and Tenant shall
immediately notify Landlord of any material modification to the proposed terms
of such Transfer.
C. In the event that Tenant seeks to make any Transfer,
Landlord shall have the right to terminate this Lease or, in the case of a
sublease of less than all of the Premises, terminate this Lease as to that part
of the Premises proposed to be so sublet. Upon such termination, Tenant shall be
released from any further obligation under this Lease if it is terminated in its
capacity, or shall be released from any further obligation under the Lease with
respect to the space proposed to be sublet in the case of a proposed partial
sublease. In the case of a partial termination of the Lease, the Base Monthly
Rent and Tenant's Share shall be reduced to an amount which bears the same
relationship to the original amount thereof as the area of that part of the
Premises which remains subject to the Lease bears to the original area of the
Premises. Landlord and Tenant shall execute a cancellation and release with
respect to the Lease to effect such termination.
D. Notwithstanding anything contained herein to the
contrary, none of the following, or any changes, assignments or transfers
resulting from the following shall be deemed a "Transfer" or require Landlord's
prior written consent, the payment by Tenant of any fees or charges of any kind,
or give rise to any right of Landlord to cancel or recapture all or any part of
the Premises; provided, however, Tenant shall provide at least twenty (20) days
prior written notice of such transfer below (except subparagraph v) and shall
provide Landlord with all information regarding such transfer as is reasonably
requested by Landlord:
(i) a transfer by Tenant of its interest in
this Lease to a person or entity controlling, controlled by or under common
control with Tenant;
(ii) a transfer of or change in the ownership
interest of Tenant as long as the new ownership interest continues to operate
the business of the Tenant in the same manner, provided such new ownership
interest has an equal to or greater net worth than existing ownership at the
time of transfer;
(iii) a transaction in which Tenant becomes an entity
whose shares of stock or other ownership interests are, directly or indirectly,
sold on a national stock exchange or an inter-dealer quotation system; and in
the event the foregoing transaction has occurred, any subsequent sale of
ownership interests or issuance of new ownership interest, directly or
indirectly, to Tenant;
(iv) the merger, consolidation or amalgamation of
Tenant with a third party or the sale of all, or substantially all, of the
assets used by Tenant in the conduct of its business at the Premises; provided
such new ownership interest has an equal to or greater net worth than existing
ownership at the time of Transfer; and
(v) any license or co-location agreement of
portions of the Premises to persons or entities which interconnect with Tenant's
equipment in the Premises.
H. Landlord acknowledges that Tenant's Permitted Use
requires the installation in the Premises of certain telecommunications
equipment owned by customers, licensees and co-locators of Tenant ("Tenant
Customers") in order for such Tenant Customers to interconnect with Tenant's
equipment or to permit Tenant to manage or operate such Tenant Customers'
equipment. Notwithstanding anything to the contrary provided herein, Landlord
approves such use of portions of the Premises by Tenant Customers for such
purposes without Landlord's further consent. All use or occupancy of the
Premises by said Tenant Customers shall comply with the terms of the Lease and
any and all applicable governmental laws, rules, or regulations, and shall be in
the form of a license agreement which shall terminate upon any termination of
the Lease.
14.3 TRANSFER BY LANDLORD: Landlord and its successors in interest
shall have the right to transfer their interest in this Lease and the Project
at any time. In the event of any such transfer, the Landlord originally named
herein (and, in the case of any subsequent transfer, the transferer) shall
automatically be relieved, from the date of such transfer and without any
further act by any person or entity, of all liability for the performance of
the obligations of the Landlord hereunder which may accrue after the date of
such transfer.
ARTICLE 15
GENERAL PROVISIONS
15.1 LANDLORD'S RIGHT TO ENTER: Landlord and its agents may enter
the Premises at any reasonable time after giving at least twenty four (24)
hours' prior notice to Tenant (and immediately in the case of emergency) for any
reasonable purposes including, without limitation, showing the Premises to
prospective purchasers, mortgagees or tenants and posting upon the Premises
ordinary "for lease" signs or "for sale" signs. Landlord shall have the right
to use any and all means Landlord may deem necessary and proper to enter the
Premises in an emergency. Any entry into the Premises obtained by Landlord in
accordance with this Paragraph 15.1 shall not be a forcible or unlawful entry
into, or a detainer of, the Premises, or an actual or constructive eviction of
Tenant from the Premises. No entry or repairs by Landlord or rights reserved
to Landlord to alter, modify or otherwise improve all or any part of this
Project shall be deemed or construed to be a disturbance of Tenant's quiet or
peaceful possession of the Premises so long as the aforesaid work or actions do
not disturb or disrupt Tenant's business operations. Tenant shall have the
right to install its own security in the Building provided that Tenant provides
Landlord with the information necessary to allow Landlord (and emergency
personnel) access to the Building in the event of an emergency.
15.2 SURRENDER OF THE PREMISES: Upon the expiration or sooner
termination of this Lease, Tenant shall vacate and surrender the Premises to
Landlord in the same condition as existed at the Commencement Date, broom
clean, ordinary wear and tear, fire, other casualty and condemnations excepted.
Tenant, at its sole cost and expense, agrees to repair any damage to the
Premises caused by Tenant or caused by or in connection with the removal of any
article of personal property, business or trade fixtures, machinery, equipment,
or furniture, including without limitation thereto, repairing the floor and
patching and painting the walls where required by Landlord to Landlord's
reasonable satisfaction. Tenant shall indemnify Landlord against any loss or
liability resulting from delay by Tenant in so surrendering the Premises,
including without limitation, any claims made by any succeeding tenant founded
on such delay. If the Premises are not so surrendered at the termination of
this Lease, Tenant shall be liable to Landlord for all costs incurred by
Landlord in returning the Premises to the required condition, plus interest on
all costs incurred at the Agreed Interest Rate. Tenant shall indemnify Landlord
against loss or liability resulting from delay by Tenant in so surrendering the
Premises.
15.3 HOLDING OVER: This Lease shall terminate without further notice
at the expiration of the Lease Term. Any holding over by Tenant after
expiration of the Lease Term shall not constitute a renewal or extension of the
Lease or give Tenant any
9
<PAGE> 12
rights in or to the Premises except as expressly provided in this Lease. Any
holding over after such expiration with the written consent of Landlord shall
be construed to be a tenancy from month to month on the same terms and
conditions herein specified insofar as applicable except the Base Monthly Rent
shall be increased to an amount equal to one hundred and fifty percent (150%)
of the Base Monthly Rent payable during the last full calendar month of the
Lease Term.
15.4 SUBORDINATION: This Lease is subject and subordinate in all
Security Instruments now or hereafter encumbering the Premises. However, if any
Lender so requires, this Lease shall become prior and superior to any such
Security Instrument. Tenant shall upon request execute any document or
instrument reasonably required by any Lender to make this Lease either superior
or subordinate to a Security Instrument, which may include such other matters as
the Lender reasonably requires in connection which such agreements; provided,
such Lender agrees to recognize Tenant's rights under this Lease and agrees not
to disturb Tenant's quiet possession of the Premises so long as there is no
Event of Tenant's Default. Landlord, if requested by Tenant, shall use
reasonable efforts to obtain a recognition and non-disturbance agreement from
any existing Lender. Tenant's failure to execute any such document or instrument
within ten (10) days after written demand thereafter shall constitute an Event
of Tenant's Default.
15.5 ATTORNMENT: Tenant shall attorn to any purchaser of the Premises
at any foreclosure sale or private sale conducted pursuant to any Security
Instrument encumbering the Premises, or to any grantee or transferee designated
in any deed given in lieu of foreclosure.
15.6 ESTOPPEL CERTIFICATES: At all times during the Lease Term,
Tenant agrees to execute and deliver to Landlord within 10 business days
following delivery of Landlord's request an estoppel certificate certifying such
factual information about the Lease and such financial information of Tenant as
may be reasonably required by Landlord.
15.7 NOTICES: Any notice required or desired to be given regarding
this Lease shall be in writing and may be given by personal delivery, by
facsimile telecopy, or by mail. A notice shall be deemed to have been given (i)
on the third business day after mailing if such notice was deposited in the
United States mail, certified or registered, postage prepaid, addressed to the
party to be served at its Address for Notices, (ii) when delivered if given by
personal delivery, and (iii) in all other cases when actually received at the
party's Address for Notices. Either party may change its address by giving
notice of the same in accordance with this Paragraph 15.7.
15.8 ATTORNEYS' FEES: If wither Landlord or Tenant shall bring any
action or legal proceeding for an alleged breach of any provision of this
Lease, to recover rent, to terminate this Lease or otherwise to enforce,
protect or establish any term of covenant of this Lease, the prevailing party
shall be entitled to recover as a part of such action or proceeding, or in a
separate action brought for that purpose, reasonably attorney's fees, court
costs, and experts' fees as may be fixed by the court.
15.9 CORPORATE AUTHORITY: If Tenant is a corporation or partnership,
each individual executing this Lease on behalf of Tenant represents and
warrants that he or she is duly authorized to execute and deliver this Lease of
such corporation or partnership and that this Lease is binding upon such
corporation or partnership in accordance with its terms.
15.10 MISCELLANEOUS: Time is of the essence of this Lease. This Lease
shall, subject to the provisions regarding assignment, apply to and bind the
respective heirs, successors, executors, administrators and assigns of Landlord
and Tenant. If Tenant consists of more than one person or entity, then all
members of Tenant shall be jointly and severally liable hereunder. The language
in all parts of this Lease shall in all cases be construed as a whole according
to its fair meaning, and not ???? for or against either Landlord or Tenant.
Landlord and Tenant agree that (i) the rentable area of the Premises is measured
from the exterior ???? of exterior walls to the centerline or interior
partitions and includes any atriums, depressed loading docks, covered entrances
or egresses, and covered loading areas, and (ii) all measurements of area
contained in this Lease are conclusively agreed to be correct and binding upon
the parties for all purposes hereunder, even if a subsequent measurement of any
one of these areas determines that is more or less than the amount of area
reflected in this Lease. Any prevention, delay or stoppage due to inclement
weather, inability to obtain labor or materials, governmental restrictions, fire
or other acts of God, and other causes beyond the reasonable control of the
party obligated to perform (except financial inability) shall excuse the
performance, for a period equal to the period of any said prevention, delay or
stoppage, of any obligation hereunder except the obligation of Tenant to pay
rent or any other sums due hereunder.
15.1 ENTIRE AGREEMENT: this Lease constitutes the entire agreement
between the parties, and there are no agreements or representations between the
parties except as expressed herein. This Lease supersedes and cancels any and
all previous negotiations, arrangements, brochures and understandings, if any,
between Landlord and Tenant. No modification to this Lease shall be effective
unless in writing signed by the parties. This Lease shall not be legally binding
until fully executed by Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease to be
effective as of the Effective Date.
LANDLORD: TENANT:
LAFAYETTE BUSINESS PARK, LLC UNIVERSAL ACCESS, INC.,
a California limited liability company an Illinois corporation
By: /s/ [Signature illegible] By: /s/ ROBERT J. POMMER, JR.
--------------------------------- ------------------------------------
Its: MEMBER Its: COO
-------------------------------- -----------------------------------
Date: 9/21/99 Dated: 8/31/99
-------------------------------- ----------------------------------
10
<PAGE> 13
LEASE RIDER
1. BASE MONTHLY RENT INCREASES. Base Monthly Rent shall be subject to
increases as follows:
A. Effective June 1, 2000, Base Monthly rent shall increase to
$2?,0?0.00 and thereafter shall be subject to increases set forth in B and C
below.
B. Base Monthly Rent shall be subject to adjustment on the anniversary
of each Lease Year ("the Adjustment Date") as follows: the base for computing
the adjustment is the Consumer Price Index for All Urban Consumers (base year
1982-84?100) for San Franscisco-Oakland-San Jose. All items published by the
United States Department of Labor, Bureau of labor Statistics ("Index"), which
is most recently published prior to the Commencement Date ("Beginning Index").
If the Index most recently published prior to the Adjustment Date ("Extension
Index") has increased over the Beginning Index, the Base Monthly Rent for the
following year shall be set by multiplying the Initial Base Monthly Rent by a
fraction, the numerator of which is the Extension Index, and the denominator of
which is the Beginning Index. In no case shall the Base Monthly Rent increase
less than three percent (3%) or more than eight percent (8%) on each Adjustment
Date. The term "Lease Year" shall mean the twelve month period beginning with
the first day of the month in which the Commencement Date occurs and each
successive twelve month period thereafter during the Lease Term.
C. If the Index is changed so that the base year differs from that used
for the Beginning Index, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of
Labor Statistics. If the Index is discontinued or revised during the term, such
other government index or computation with which it is replaced shall be used
in order to obtain substantially the same result as would be obtained if the
Index had not been discontinued or revised. Rent adjustments made hereunder
shall be final and binding on Landlord and Tenant.
2. SURRENDER CONDITION. At the expiration or earlier termination of the
Lease, Landlord shall have the option of requiring Tenant to return the Premises
to its original configuration and improvements, substantially as the Premises
existed prior to Tenant's occupancy. If Landlord requests, Tenants obligations
shall include, without limitation, the following:
i) Floorplan shall be as shown on Exhibit D;
ii) All areas of the Premises to be served by roof mounted HVAC as
existed prior to Tenant's occupancy;
iii) All units to have its own electrical meter and standard electrical
outlets and lighting serviced only to that space as existed prior
to Tenant's occupancy; and
iv) Each unit to have its own restroom.
3. SECURITY DEPOSIT. Tenant shall provide Landlord with a Security Deposit
equal to the sum of $100,000.00 and the Return Cost. As used herein, the term
"Return Cost" shall mean the cost of restoring the Premises as a result of
Tenant's Alterations in excess of $50,000.00. The Return Cost shall be
established by an estimate provided by a contractor selected by Landlord and
reasonably approved by Tenant. If at anytime the Return Cost increases for any
reason, including without limitation, Tenants future improvements in the
Premises the Security Deposit shall be increased. Tenant may provide the
Security Deposit by posting a letter of credit in the amount of the Security
Deposit in favor of Landlord. Such letter of credit shall be in a form
reasonably acceptable to Landlord and shall include, without limitation, the
following: i) payable on demand by Landlord; (ii) not terminable without at
least 30 days prior written notice to Landlord, and (iii) Landlord may demand
payment of the letter of credit if it is not renewed at least 30 days prior to
expiration.
4. CROSS-DEFAULT. A default by Tenant under any lease at Lafayette Business
Park between Landlord and Tenant shall be considered a default under this Lease
and Landlord shall have all rights and remedies provided in the Lease for
Tenant's default.
5. ROOF RIGHTS, CONDUIT. Landlord maintains ownership of the roof of the
Premises and ability to lease space on the roof of the Premises and all conduit
located outside the Premises. Notwithstanding the above, Tenant shall have the
right to utilize existing conduit at the Project to bring fiberoptic cable to
the Premises without charge for the Lease Term, including any extension or
renewal thereof, (i) Tenant may install a CIPS antenna on the roof subject to
Landlord's prior written approval; and (ii) Tenant may directly connect 1900
Lafayette and 1940 Lafayette via conduit under the parking areas subject to
Paragraph 10 of the Lease Rider. Tenant shall have the right at its sole cost
and expense, to install and maintain to and from the Premises through
horizontal and vertical shafts, chasms, floors and other areas within the
Building. Tenant's cabling, conduits and other connecting equipment
(collectively, "Connecting Equipment"), to the extent such Connecting Equipment
does not unreasonably interfere with the operation of the Building. Landlord
agrees to provide Tenant with reasonable advance written notice prior to any
construction occurring in space immediately adjacent to the Premises. Landlord
shall have the right to review and approve the location of all said Connecting
Equipment, which approval will not be unreasonably withheld, conditioned or
delayed. Tenant shall be entitled to such access without charge for the term of
this Lease including any extensions and renewals thereof. In addition, Landlord
shall permit Tenant to receive such telephone and other data communications
services direct from any telecommunications service provider serving the area
at Tenant's cost and shall permit Tenant access to the Building telephone riser
cable and all other telephone or communications cables or wiring, junction
boxes, wire conduits and associated facilities and equipment serving the
Premises, to the point of connection to Tenant's communication equipment and
all telephones and communications closets in the Building without charge for
the term of this Lease, including any extensions and renewals thereof.
6. FUTURE DEVELOPMENT. Tenant acknowledges that Landlord may convert all or a
portion of the Project to telecommunications use. Landlord shall have the right
to connect into and through the Premises to accommodate future development so
long as such actions do not disturb or disrupt Tenant's business operations.
Landlord and Tenant shall use reasonable and good faith to allow Landlord, if
they so elect, to develop the Project for telecommunications use.
7. CONSENT APPROVAL. Whenever the consent or approval of Landlord is required
under the Lease, Landlord agrees not to unreasonably withhold, delay or
condition such approval.
8. QUIET ENJOYMENT. Upon payment by Tenant of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Tenant's
part to be performed under this Lease, Tenant shall have and enjoy quiet
possession of the Premises and all other rights granted to Tenant under the
Lease for the entire Lease Term (including any extensions or renewals) subject
to all of the provisions of this Lease.
9. EARLY OCCUPANCY. If Landlord is able to deliver any portion of the
Premises to Tenant prior to the Scheduled Commencement Date, Tenant may occupy
such space subject to the following: (i) prior to occupancy, Landlord and
Tenant shall agree on a reasonable
<PAGE> 14
rental rate for such space and (ii) such occupancy shall be subject to all
terms and conditions of the Lease except for rent which shall be as agreed in
subparagraph (i) above.
10. TENANT'S ALTERATIONS. Landlord acknowledges that Tenant's use of the
premises will require that tenant perform certain Tenant's Alterations in and
around the Premium including the installation of conduit in the parking area
for electrical and telecommunications fiber, placement of backup generator,
transformer and switchgear, fuel tanks, condensors and chillers, FM200 or
equivalent fire suppression system, and other improvements necessary to utilize
the Premises as a telecommunications facility. All such Tenant's Alterations
shall comply with Article 5 of the Lease, provided, however, Landlord hereby
approves (i) the location of exterior equipment as set forth on the plan
attached as Exhibit F, and (ii) the right to place conduit and/or the parking
areas to accommodate the electrical upgrade and fiber installation. In
addition to the requirements of Article 5, all Tenant's alterations, including,
without limitation, those set forth above, shall be subject to the following:
(a) receipt of Landlord's prior written approval; (b) prior delivery to
Landlord of detailed plans and schedules which Tenant shall adhere to or
immediately notify Landlord of any changes; (c) Tenant's construction shall not
unreasonably interfere with the use of the Project by any other tenants; and
(d) promptly upon completion of Tenant's Alterations, tenant shall deliver to
Landlord "as-bulk" plans.
11. TELECOMMUNICATIONS FIBER: Landlord shall use reasonable efforts to allow
fiber optic telecommunications carriers access to the Premises and 1900
Lafayette. Tenant shall be allowed to install its own dark fiber to the
Premises and 1900 Lafayette.
<PAGE> 15
EXHIBIT A
SITE PLAN
LAFAYETTE BUSINESS PARK
1900 LAFAYETTE 15,600 SQ.FT.
1902 LAFAYETTE 16,560 SQ.FT.
1920 LAFAYETTE 19,200 SQ.FT.
1940 LAFAYETTE 14,040 SQ.FT.
PROJECT TOTAL 65,400 SQ.FT.
[PLOT DIAGRAM]
<PAGE> 16
EXHIBIT B
LANDLORD'S IMPROVEMENTS
Tenant to accept the premises in its "as-is" condition.
<PAGE> 17
EXHIBIT C
SIGN CRITERIA
All signage at the Premises shall be at Tenant's cost and subject to Landlord's
prior approval and shall be consistent with the existing signage at the Project.
<PAGE> 18
EXHIBIT D
SURRENDER CONDITION
[ ] Office Areas
[ ] Restrooms
[ ] Warehouse Area
[FLOOR PLAN]
<PAGE> 19
EXHIBIT E
OPTION TO EXTEND:
Provided that there has been no Event of Tenant's Default, Landlord hereby
grants to Tenant two (2) options to extend the Lease Term for a period of five
(5) years each (each an "Option Period") upon all of the same terms and
conditions as are contained in the Lease, except that Base Monthly Rent during
an Option Period shall be the greater of (i) Base Monthly Rent payable in the
last month of the Lease Term or Initial Option Term or (ii) the then Fair
Market Rent for the Premises (as hereafter defined). In order to ?????? the
option granted herein Tenant must give written notice of its election to
exercise the option no later than one hundred eighty (180) days prior to the
expiration of the Lease Term or Initial Option Term.
The "then Fair Market Rent for the Premises" shall mean the fair market rental
value of the Premises as of the commencement of the Option Period including,
without limitation, rent increases over the extended term which are customary
at the commencement of the Option Period. If the parties are unable to agree on
the Base Monthly Rent for the Option Period prior to ninety (90) days before
the expiration of the Initial Lease Term, or Initial Option Term, then Tenant
may withdraw its exercise of the option on the following terms:
i) Tenant must notify Landlord in writing of its election to withdraw
its exercise of the Option; and
ii) If less than 180 days remain in the Lease Term or Initial Option
Period, whichever is applicable, on the date Tenant withdraws its exercise of
the option, the Lease Term or Initial Option Period shall be extended on all
terms and conditions of the Lease then in effect, the number of days necessary
to make the remaining term 180 days.
<PAGE> 20
EXHIBIT F
TENANT'S ALTERATIONS
[DIAGRAM OF BUILDINGS 1940 and 1900]
<PAGE> 1
EXHIBIT 10.31
[LEVEL (3) LOGO]
TERMS AND CONDITIONS
FOR DELIVERY OF SERVICE
These Terms and Conditions for Delivery of Service (the "Terms and Conditions")
shall be applicable to Customer Orders executed by Customer for Services
delivered by Level 3 Communications, LLC ("Level 3"), and shall be incorporated
into each Customer Order. These Terms and Conditions are applicable to sales of
Services originating or terminating in the United States.
DEFINITIONS
CONFIDENTIAL INFORMATION: Licensed Software, and all source code, source
documentation, inventions, know-how, and ideas, updates and any documentation
and information related to the Licensed Software, and any non-public information
regarding the business of a party provided to either party by the other party
where such information is marked or otherwise communicated as being
"proprietary" or "confidential" or the like, or where such information is, by
its nature, confidential.
CUSTOMER: The person, firm or corporation so named on the Customer Order.
CUSTOMER ORDER: A request for Level 3 Service submitted by the Customer in the
format devised by Level 3 and accepted by Level 3.
FIRM ORDER COMMITMENT: A written communication from Level 3 to Customer within
which Level 3 commits to deliver some or all of the Services requested in a
Customer Order.
LICENSED SOFTWARE: Computer software, in object code format only, the use of
which is required for use of Service ordered by Customer hereunder.
PREMISES: The location(s) occupied by Customer or its end users specified in the
Customer Order to (or from) which Service will be delivered.
REVENUE COMMITMENT: A commitment which, if made by Customer in a Customer Order
or in any other form specified and accepted by Level 3, obligates Customer to
order and pay for a minimum volume of Services during an agreed term.
SERVICE: Any communications (or related) service offered by Level 3 pursuant to
a Customer Order.
SECTION 1. CUSTOMER ORDERS
1.1 SUBMISSION OF CUSTOMER ORDERS. Customer may submit to Level 3 Customer Order
forms requesting the provision of Service. Each Customer Order form shall be
submitted on a form designated by Level 3. Level 3 shall confirm the accuracy of
information on the Customer Order form and the availability of the Services
requested. Level 3's delivery of a Firm Order Commitment respecting such
Services shall constitute Level 3's acceptance of the Customer Order for such
Services. The Customer Order form and attachments shall set forth the Service,
the locations for delivery of same, the prices to be charged for same and any
applicable term and/or Revenue Commitment.
1.2 UNDERTAKING OF LEVEL 3. If Level 3 issues a Firm Order Commitment respecting
Services, Level 3 will furnish such Services in accordance with these Terms and
Conditions and any Customer Orders executed by Customer. All title to equipment
or materials used to deliver the Services (except as otherwise expressly agreed)
shall be and remain with Level 3.
SECTION 2. BILLING AND PAYMENT
2.1 PAYMENT AND RENDERING OF BILLS. Level 3 shall bill all charges incurred by
and credits due to Customer on a monthly basis (unless otherwise agreed in
writing by Level 3 and Customer). Level 3 shall bill in advance charges for all
Services to be provided during the ensuing month except for charges which are
dependent upon usage of Service (which charges shall be billed in arrears).
Adjustments for the quantities of Service established or discontinued in any
billing period will be prorated to the number of days based on a 30-day month.
Level 3 will, upon request and if available, furnish such detailed information
as may reasonably be required for verification of the bill.
2.2 PAYMENT OF BILLS. All bills are due upon receipt thereof by Customer, and
become past due thirty (30) days thereafter. The unpaid balance of any past due
bills shall bear interest at a rate of 1.5% per month (prorated on a daily
basis), or the highest rate allowed by law, whichever is less. Interest will be
applied for the number of days from the date the bill became past due to and
including the date that payment is received by Level 3.
2.3 TAXES AND FEES. Except for taxes based on Level 3's net income and except
with respect to ad valorem personal and real property taxes imposed on Level 3's
property, Customer shall be responsible for payment of all sales, use, gross
receipts, excise, access, bypass, franchise or other local, state and federal
taxes, fees, charges, or surcharges, however designated, imposed on or based
upon the provision, sale or use of the Services delivered by Level 3 (including,
but not limited to, taxes and fees lawfully assessed by nations outside of the
United States). Any taxes shall be separately stated on Customer's bill. Any
state or local tax, fee, charge, or surcharge shall be payable only for Services
that are subject to such imposition.
Page 1 of 17
<PAGE> 2
2.4 REGULATORY AND LEGAL CHANGES. In the event of any change in applicable law
or regulation that materially increases the cost of delivery of Service, Level 3
and Customer shall negotiate regarding the rates charged to Customer to reflect
such increase in cost and, in the event that the parties are unable to reach
agreement respecting new rates within thirty (30) days after Level 3's delivery
of written notice requesting renegotiation, then (a) Level 3 may pass such
increased costs through to Customer, and (b) Customer may terminate the affected
Customer Order upon no less than sixty (60) days' prior written notice without
payment of any applicable termination charge
2.5 DISPUTED BILLS. In the event that Customer disputes any portion of the
charges contained in a bill, Customer must pay the undisputed portion of the
invoice in full and submit a documented claim for the disputed amount. All
claims must be submitted to Level 3 within sixty (60) days of receipt of billing
for those Services. If Customer does not submit a claim within such period and
in the manner stated above, Customer waives all rights to dispute such charges.
2.6 CREDIT APPROVAL AND DEPOSITS. Customer shall provide Level 3 with credit
information as requested in advance of the commencement of delivery of Service
under any Customer Order. Delivery of Service is subject to credit approval.
Level 3 may require any Customer to make a deposit as a condition to Level 3's
acceptance of any Customer Order submitted by Customer, or as a condition to
Level 3's continuation of Service under any Customer Order (but only when
Customer's consumption of Service materially exceeds Customer's anticipated use
or when, in Level 3's reasonable discretion, such deposit is required in order
to secure Customer's continued payment obligation), which deposit shall be held
by Level 3 as security for payment of charges. A deposit may not exceed the
actual or estimated rates and charges for the Service for a two (2) month
period. At such time as the provision of Service to Customer is terminated, the
amount of the deposit will be credited to Customer's account and any credit
balance which may remain will be refunded.
2.7 FRAUDULENT USE OF SERVICES. Customer shall be solely responsible for all
charges incurred respecting the Services, even if such charges were incurred
through or as a result of fraudulent or unauthorized use of the Services, unless
Level 3 has actual knowledge of such fraudulent or unauthorized use and fails to
inform Customer thereof or otherwise limit or preclude such use. Nothing in this
Section 2.7, however, shall be construed to obligate Level 3 to detect or report
unauthorized or fraudulent use of Services.
SECTION 3. CANCELLATION OF CUSTOMER ORDERS
3.1 CANCELLATION OF CUSTOMER ORDER BY LEVEL 3.
A. For nonpayment: Level 3 may, upon fourteen (14) days' written notice,
discontinue Service without incurring any liability when there is an unpaid
balance for Service that is past due.
B. For any violation of law or of any of the provisions governing the furnishing
of Service: Any Customer Order shall be subject to cancellation, without notice,
for any violation of any law, rule, regulation or policy of any government
authority having jurisdiction over Service or by reason of any order or decision
of a court or other government authority having jurisdiction which prohibits
Level 3 from furnishing such Service.
C. For other causes: Any Customer Order shall be subject to cancellation, upon
fourteen (14) days' prior written notice, in the event of a breach of a Customer
Order, fraudulent use of the Service, or fraud or misrepresentation in any
submission of information required in a Customer Order or any other information
submitted to Level 3.
D. For any Customer filing of bankruptcy or reorganization or failing to
discharge an involuntary petition therefor within sixty (60) days after filing:
Level 3 may immediately discontinue or suspend delivery of Service without
incurring any liability.
E. For consumption of Services that materially exceeds Customer's credit limit:
Level 3 may, upon fourteen (14) days prior written notice and provided Customer
has not provided additional security for payment which is sufficient in Level
3's reasonable discretion, discontinue or suspend delivery of Service without
incurring any liability.
3.2 EFFECT OF CANCELLATION. Upon Level 3's discontinuance of Service to Customer
under any of the foregoing subparagraphs, Level 3 may, in addition to all other
remedies that may be available to Level 3 at law or in equity or under any other
provision of a Customer Order, assess and collect from Customer any termination
charge set forth herein (to the extent applicable).
3.3 RESUMPTION OF SERVICE. If Service has been discontinued by Level 3, and
Customer requests that Service be restored, Level 3 shall have the sole and
absolute discretion to restore such Service only after satisfaction of such
conditions as Level 3 determines to be required for its protection. Nonrecurring
charges apply to restoration of Service.
SECTION 4. DELIVERY OF SERVICES
4.1 LEVEL 3 ACCESS TO PREMISES. Customer shall allow Level 3 continuous and
reasonable access to the Premises to the extent reasonably determined by Level 3
to be appropriate to the installation, inspection and maintenance of equipment,
facilities and systems relating to the Service. Level 3 shall notify Customer
two (2) business days in advance of any regularly scheduled maintenance that
will require access to the Premises.
4.2 LEVEL 3 FACILITIES. Level 3 will use reasonable efforts to maintain the
facilities and equipment required to deliver Service. Customers shall not and
shall not permit others to rearrange, disconnect, remove, attempt to repair, or
otherwise tamper with any of the facilities or equipment installed by Level 3,
except upon the written consent of Level 3. Equipment provided or installed at
the Premises by Level 3 for use in connection with the Service shall not be used
for any purpose other than that for which Level 3 provided it. In the
Page 2 of 17
<PAGE> 3
event that Customer or a third party attempts to operate or maintain any Level
3-owned equipment without first obtaining Level 3's written approval, in
addition to any other remedies of Level 3 for a breach by Customer of Customer's
obligations hereunder, Customer shall pay Level 3 for any damage to Level
3-owned equipment caused thereby. Customer shall be responsible for the payment
of service charges in the event that maintenance or inspection of the equipment
is required as a result of Customer's breach of this Section. Level 3 shall, in
the event that such expenses are incurred, deliver to Customer a written invoice
therefor. In no event shall Level 3 be liable to Customer or any other person
for interruption of Service or for any other loss, cost or damage caused or
related to improper use or maintenance of Level 3-owned equipment.
4.3 TITLE AND POWER. Title to all facilities (except as otherwise agreed),
including terminal equipment, shall remain with Level 3. The electric power
consumed by such equipment on the Premises shall be provided by and maintained
at the expense of Customer.
4.4 CUSTOMER-PROVIDED EQUIPMENT. Level 3 shall not be responsible for the
operation or maintenance of any Customer-provided communications equipment.
Level 3 may install certain Customer provided communications equipment upon
installation of Service; unless otherwise agreed by Level 3 in writing, Level 3
shall not thereafter be responsible for the operation or maintenance of such
equipment. Level 3 shall not be responsible for the transmission or reception of
signals by Customer-provided equipment or for the quality of, or defects in,
such transmission.
4.5 REMOVAL OF EQUIPMENT. Customer agrees to allow Level 3 to remove all Level
3-owned equipment from the Premises: A. after termination, interruption or
suspension of the Service in connection with which the equipment was used; and
B. for repair, replacement or otherwise as Level 3 may determine is necessary or
desirable. At the time of such removal, such equipment shall be in the same
condition as when delivered to Customer or installed in the Premises, normal
wear and tear only excepted. Customer shall reimburse Level 3 for the
depreciated cost of any equipment which is not in such condition.
4.6 SERVICE SUBJECT TO AVAILABILITY. The furnishing of Service under these Terms
and Conditions is subject to the availability on a continuing basis of all the
necessary facilities and is limited to the capacity of Level 3's facilities, as
well as facilities Level 3 may obtain from other carriers to furnish Service
from time to time as required at the sole discretion of Level 3. Nothing in
these Terms and Conditions shall be construed to obligate Customer to submit, or
Level 3 to accept, Customer Orders.
4.7 NO LIABILITY FOR FAILURE TO TRANSMIT MESSAGES. Level 3 does not undertake to
transmit messages, but offers the use of its Service when available, and, as
more fully set forth elsewhere in these Terms and Conditions and any applicable
Customer Orders, shall not be liable for errors in transmission or for failure
to establish connections.
4.8 SERVICE LEVEL AGREEMENTS. All warranties respecting the Service, and the
remedies applicable to a failure of Level 3 to meet such warranties, shall be
set forth in Service Level Agreements applicable to the particular Service,
which Service Level Agreements (when and if issued by Level 3) shall be deemed
attached hereto and by this reference incorporated herein.
SECTION 5. OBLIGATIONS AND LIABILITY LIMITATION
5.1 OBLIGATIONS OF THE CUSTOMER. Customer shall be responsible for:
A. The payment of all charges applicable to the Service (including charges
incurred as a result of fraud or unauthorized use of the Service).
B. Damage or loss of Level 3's facilities or equipment installed on the Premises
(unless caused by the negligence or willful misconduct of the employees or
agents of Level 3);
C. Providing the level of power, heating and air conditioning necessary to
maintain the proper environment on the Premises for the provision of Service;
D. Providing a safe place to work and complying with all laws and regulations
regarding the working conditions on the Premises;
E. Granting Level 3 or its employees access to the Premise for the purpose of
maintaining Level 3's facilities in accordance herewith;
F. Keeping Level 3's equipment and facilities located on Premises free and clear
of any liens or encumbrances.
5.2 LIABILITY. The liability of Level 3 for damages arising out of the
furnishing of Service, including but not limited to mistakes, omissions,
interruptions, delays, tortious conduct or errors, or other defects,
representations, use of Service or arising out of the failure to furnish
Service, whether caused by acts of commission or omission, shall be limited to
the extension of credit allowances due under any Service Level Agreement. The
extension of such credit allowances or refunds shall be the sole remedy of
Customer and the sole liability of Level 3. Neither party shall be liable for
any indirect, incidental, special, consequential, exemplary or punitive damages
(including but not limited to damages for lost profits or lost revenues),
whether or not caused by the acts or omissions or negligence of its employees or
agents, and regardless of whether such party has been informed of the
possibility or likelihood of such damages.
5.3 DISCLAIMER OF WARRANTIES. LEVEL 3 MAKES NO WARRANTIES OR REPRESENTATIONS,
EXPRESS OR IMPLIED EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR
OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
USE, EXCEPT THOSE EXPRESSLY SET FORTH HEREIN OR IN ANY APPLICABLE SERVICE LEVEL
AGREEMENT.
Page 3 of 17
<PAGE> 4
SECTION 6. SOFTWARE TERMS
6.1 LICENSE. If and to the extent that Customer requires the use of Licensed
Software in order to use the Service supplied under any Customer Order, then
Customer shall have a nonexclusive, nontransferable license to use such Licensed
Software only and solely to the extent required to permit delivery of the
Service. Customer shall in no event be entitled to claim title to or any
ownership interest in any Licensed Software (or any derivations or improvements
thereto), and Customer shall execute any documentation reasonably required by
Level 3 to memorialize Level 3's existing and continued ownership of Licensed
Software.
6.2 RESTRICTIONS. Customer agrees that it shall not:
A. copy the Licensed Software except as allowed and permitted by the express
written consent of Level 3;
B. reverse engineer, decompile or disassemble the Licensed Software;
C. sell, lease, license or sublicense the Licensed Software; or
D. create, write or develop any derivative software or any other software
program based on the Licensed Software or any Confidential Information of Level
3.
SECTION 7. CONFIDENTIAL INFORMATION
7.1 DISCLOSURE AND USE. The Confidential Information disclosed by either party
constitutes the confidential and proprietary information of the disclosing party
and the receiving party shall retain same in strict confidence and not disclose
to any third party (except as authorized by these Terms and Conditions) without
the disclosing party's express written consent. Each party agrees to treat all
Confidential Information of the other in the same manner as it treats its own
proprietary information, but in no case will the degree of care be less than
reasonable care.
7.2 RESTRICTED USE. Each party agrees:
A. to use Confidential Information only for the purposes of performance of any
Customer Order or as otherwise expressly permitted by these Terms and
Conditions;
B. not to make copies of Confidential Information or any part thereof except for
purposes consistent with these Terms and Conditions; and
C. to reproduce and maintain on any copies of any Confidential Information such
proprietary legends or notices (whether of disclosing party or a third party) as
are contained in or on the original or as the disclosing party may otherwise
reasonably request.
7.3 EXCEPTIONS. Notwithstanding the foregoing, each party's confidentiality
obligations hereunder shall not apply to information which:
A. is already known to the receiving party;
B. becomes publicly available without fault of the receiving party;
C. is rightfully obtained by the receiving party from a third party without
restriction as to disclosure, or is approved for release by written
authorization of the disclosing party;
D. is developed independently by the receiving party without use of the
disclosing party's Confidential Information;
E. is required to be disclosed by law.
7.4 PUBLICITY. This agreement shall not be construed as granting to either party
any right to use any of the other party's or its affiliates' trademarks, service
marks or trade names or otherwise refer to the other party in any marketing,
promotional or advertising materials or activities. Without limiting the
generality of the forgoing, neither party shall issue any publication or press
release relating to, or otherwise disclose the existence of, any contractual
relationship between Level 3 and Customer, except as may be required by law.
7.5 REMEDIES. Notwithstanding any other section of these Terms and Conditions,
the non-breaching party shall be entitled to seek equitable relief to protect
its interests, including but not limited to preliminary and permanent injunctive
relief. Nothing stated herein shall be construed to limit any other remedies
available to the parties.
7.6 SURVIVAL. The obligations of confidentiality and limitation of use shall
survive the termination of any applicable Customer Order.
SECTION 8. GENERAL TERMS
8.1 FORCE MAJEURE. Except with respect to payment obligations, neither party
shall be liable, nor shall any credit allowance or other remedy be extended, for
any failure of performance or equipment due to causes beyond such party's
reasonable control, including but not limited to: acts of God, fire, flood or
other catastrophes; any law, order, regulation, direction, action, or request of
any governmental entity or agency, or any civil or military authority; national
emergencies, insurrections, riots, wars; unavailability of rights-of-way or
materials; or strikes, lock-outs, work stoppages, or other labor difficulties.
In the event Level 3, for reasons set forth in this paragraph 8.1, is unable to
deliver Service pursuant to any Customer Order for 90 consecutive days, then
Customer may terminate the affected Customer Order without termination
liability.
8.2 ASSIGNMENT OR TRANSFER. Customer may not transfer or assign the use of
Service without the express prior written consent of Level 3, and then only when
such transfer or assignment can be accomplished without interruption of the use
or location of Service. These Terms and Conditions shall apply to all such
permitted transferees or assignees. Customer shall, unless otherwise expressly
agreed by Level 3 in writing, remain liable for the payment of all charges due
under each Customer Order.
8.3 NOTICES. Any notice Level 3 may give to Customer or Customer shall give to
Level 3 shall be deemed properly given when delivered, if delivered in person,
or when sent via facsimile, overnight courier, electronic mail or when deposited
with the U.S. Postal Service, (a) with respect to Customer, the
Page 4 of 17
<PAGE> 5
address listed on each Customer Order, or (b) with respect to Level 3, to:
Contracts Administration, Level 3 Communications, LLC, 1450 Infinite Drive,
Louisville, CO 80027. Customer shall notify Level 3 of any changes to its
addresses listed on any Customer Order.
8.4 INDEMNIFICATION BY CUSTOMER. Customer shall indemnify, defend and hold Level
3 harmless from claims, loss, damage, expense (including attorney's fees and
court costs), or liability (including liability for patent infringement) arising
from (1) any claims made against Level 3 by any end user in connection with the
delivery or consumption of Service, (2) use of facilities furnished by Level 3
in a manner inconsistent with the terms hereof or in a manner that Level 3 did
not contemplate and over which Level 3 exercises no control and (3) all other
claims, loss, damage, expense (including attorneys fees and court costs), or
liability arising out of any commission or omission by Customer in connection
with the Service.
8.5 INDEMNIFICATION BY LEVEL 3. Level 3 shall indemnify, defend and hold
Customer harmless from claims, loss, damage, expense (including attorney's fees
and court costs), or liability (including liability for patent infringement)
arising from all claims, loss, damage, expense (including attorneys fees and
court costs), or liability for property damage or personal injury to the extent
that such claims arise out of or are caused by Level 3's negligence or willful
misconduct.
8.6 APPLICATION OF TARIFFS. Level 3 may elect or be required by law to file with
the appropriate regulatory agency tariffs respecting the delivery of certain
Service. In the event and to the extent that such tariffs have been or are filed
respecting Service ordered by Customer, then (to the extent such provisions are
not inconsistent with the terms of a Customer Order) the terms set forth in the
applicable tariff shall govern Level 3's delivery of, and Customer's consumption
or use of, such Service.
8.7 CONTENTS OF COMMUNICATIONS Level 3 shall have no liability or responsibility
for the content of any communications transmitted via the Service by Customer or
any other party, and Customer shall hold Level 3 harmless from any and all
claims (including claims by governmental entities seeking to impose penal
sanctions) related to such content.
8.8 ENTIRE UNDERSTANDING These Terms and Conditions, including any Customer
Orders executed hereunder (and any tariff applicable to the delivery of
Service), constitutes the entire understanding of the parties related to the
subject matter hereof. In the event of a conflict between these Terms and
Conditions and any Customer Order executed hereunder, the Customer Order shall
control. These Terms and Conditions shall be governed and construed in
accordance with the laws of the state of Colorado.
8.9 NO WAIVER. No failure by either party to enforce any rights hereunder shall
constitute a waiver of such right.
Page 5 of 17
<PAGE> 6
TERMS AND CONDITIONS
PRIVATE LINE SERVICE
The following Terms and Conditions shall be applicable to metropolitan (local),
city to city (within the United States) and international (from the United
States to another country) private line, non-switchable circuits (the "Private
Line Services") ordered by Customer under any Customer Order.
1. Any state or federal tariffs applicable to the Private Line Services to be
delivered under any Customer Order are incorporated into the terms thereof.
2. The nonrecurring charges and monthly recurring rates for the Private Line
Services provided by Level 3 to Customer shall be set forth in each Customer
Order.
3. Customer hereby agrees to pay for the Private Line Services for the period of
time specified in each Customer Order, which period shall commence with the
initiation of delivery of such Services. The rates and other charges set forth
in each Customer Order are established in reliance on the term commitment made
therein. In the event that Customer terminates Services ordered in any Customer
Order or in the event that the delivery of Services terminated due to a failure
of Customer to satisfy the requirements set forth herein or in the Terms and
Conditions prior to the end of the agreed term, Customer shall (unless Customer
has made a Revenue Commitment) pay a termination charge equal to the termination
or other charges paid or to be paid by Level 3 for services purchased from other
sources used to deliver the Private Line Services to Customer, plus the
percentage of the monthly recurring charges for the terminated Private Line
Services calculated as follows:
[***]
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 6 of 17
<PAGE> 7
Standard Service Level Agreement (SLA)
INTERNATIONAL / US NATIONAL PRIVATE LINE
International/National Private Line service will be backed by a Standard Service
Level Agreement that has two components: a Service Delivery SLA and a Network
Performance SLA.
NOTE: The total number of credits per month for both Service Delivery is limited
to four days.
SERVICE DELIVERY SLA
<TABLE>
<CAPTION>
==============================================================================================
US ON-NET CITY STANDARD SERVICE DELIVERY INTERVALS
(US NPLS AND IPL)
==============================================================================================
NX64K, DS1, E1* DS3 0C3/0C12
- ----------------------------------------------------------------------------------------------
US NPLS IPL US NPLS IPL US NPLS IPL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ON-NET 20 20 30 30 40 30
working working working working working
days days days days days
- ----------------------------------------------------------------------------------------------
OFF-NET BUILDING 30 60 45 60 60 ICB
WITHIN SSA working working working working working
(either end) days days days days days
- ----------------------------------------------------------------------------------------------
OFF-NET BUILDING 30 60 45 60 70 ICB
OUTSIDE SSA (WITHIN working working working working working
50 MILES) days days days days days
(either end)
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================
US DOMESTIC SERVED STANDARD SERVICE DELIVERY INTERVALS
OFF-NET CITY1
==============================================================================================
DS1 DS3 0C3
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ONE SIDE OF THE 30 working days 45 working days 60 working days (70 days
CIRCUIT IS SERVED BY would apply if the
AN OFF-NET CITY POP customer location served
by the gateway city is
outside of the SSA)
==============================================================================================
</TABLE>
*Off-net building must have DS3 local service availability in order to support
**E1 delivery is available in NYC only and is dependant upon local availability
of E1 delivery
- - Single toll-free number to reach Level 3 Customer Service for all customer
issues, including technical, billing, and product inquiries.
- - Mean Time to Respond - Within 30 minutes
- - 2 hour calendar month Average Time To Repair (MTTR)
If Level 3 fails to meet any of the guarantees above, Level 3 will review all
reported failures at the end of the month, and calculate the applicable credits:
- - Any customer inquiry to the Level 3 Customer Service Center that results in
a Time to Respond of >30 minutes will result in a one day service credit
when the customer notifies Level 3 of the failure.
- - MTTR is calculated as a monthly average. All reported customer trouble
tickets will be totaled over the month, then the average time to close each
ticket will be calculated. If the MTTR is greater than 2 hours, the
customer will receive a one day service credit.
- - Credits will only be applied to events where the Customer reports a failure
to the Level 3 Customer Care organization. Customers must report any
Service Delivery failures within five business days of the event
Page 7 of 17
<PAGE> 8
NETWORK PERFORMANCE SLA
- - 99.99 % Service Availability
- - Target Bit Error Rate(1)
<TABLE>
<S> <C>
End-to-end link (Level 3 on-net) < 1 x 10-11 at T1 Rate (equivalent rate for DS0 1x10-6)
End-to-end link (Non-Level 3 access) < 1 x 10-7 (Dependent on local supplier)
</TABLE>
- - Target Severely Errored Seconds(2)
<TABLE>
<S> <C>
End-to-end link (Level 3 fiber access) < 0.008%
End-to-end link (Non-Level 3 access) < 0.013% (Dependent on local supplier)
</TABLE>
- Availability refers to customer's access point to the Level 3
Backbone Network, including their Level 3 provided local access
circuit.
- Availability does not include regularly scheduled or emergency
maintenance events, or customer caused outages or disruptions.
- Customers may report service unavailability events of longer than 15
consecutive minutes to Level 3 customer service within 48 hours of
the event. If the event is confirmed by Level 3 customer service,
the customer will receive a pro-rated service credit that equals the
time of the unavailability.
NOTES:
- - All measurements are based on monthly averages.
- - These guarantees only apply to the Level 3 Network (including the Local
Access to the customer). They do not apply to off-net city circuits which
do not transit the Level 3 Backbone Network (or the portion the circuit
which does not transit the Level 3 Backbone)
- - This SLA does not apply to periods of regularly scheduled or emergency
maintenance that Level 3 performs on its network or associated hardware
and software.
- - Credits will only be applied to events where the Customer reports a
network performance failure to the Level 3 Customer Care organization.
- - Customers must report any Network Performance failures (unavailability or
delay) within 48 hours (two business days) of the service affecting event
in order to receive a credit. Customers must report any Service Delivery
failures within five business days of the event.
- -----------------------
1 Bit Error Rate Figure excludes periods of more than 10 seconds having
error rates equal to, or worse than 1x10-3
2 Severely Errored Seconds have bit error rates, to, or worse than 1x10-3
TERMS AND CONDITIONS
Page 8 of 17
<PAGE> 9
TELEPHONY COLOCATION
The following Terms and Conditions shall be applicable to Customer's use of
space within Level 3 facilities used for the purpose of colocating
telecommunications equipment (the "Space") ordered by Customer under any
Customer Order.
1. Upon execution and performance of Customer's obligations under a Customer
Order for use of Space, Customer shall be granted the right to occupy the Space
identified therein. Customer may submit multiple Customer Orders requesting use
of different Space, each of which shall be governed by the terms hereof.
2. Customer shall be permitted to use the Space only for placement and
maintenance of communications equipment which shall be interconnected to the
network services offered by Level 3. Customer may use the Space to cross connect
to the facilities of other communications carriers if and only if Level 3 cannot
or will not provide such services to Customer on commercially reasonable terms.
The nonrecurring and monthly recurring charges for the Space and any Services
ordered by Customer shall be set forth in each Customer Order.
3. During the term for use of the Space set forth in each Customer Order,
Customer shall commit to use, order and pay for Level 3 network communications
services (not including monthly recurring fees charged for the use of the Space)
with monthly recurring charges of at least $2,000.00 for each cabinet of Space
ordered by Customer. Customer shall achieve the minimum service level no later
than six (6) months after submission and acceptance of each Customer Order.
Level 3 may terminate use of the Space in the event that Customer does not
satisfy this minimum service commitment.
4. Level 3 shall perform such janitorial services, environmental systems
maintenance, power plant maintenance and other actions as are reasonably
required to maintain the facility in which the Space is located in good
condition which is suitable for the placement of communications equipment.
Customer shall maintain the Space in orderly and safe condition, and shall
return the Space to Level 3 at the conclusion of the term set forth in the
Customer Order in the same condition (reasonable wear and tear excepted) as when
such Space was delivered to Customer. EXCEPT AS EXPRESSLY STATED HEREIN OR IN
ANY CUSTOMER ORDER, THE SPACE SHALL BE DELIVERED AND ACCEPTED "AS IS" BY
CUSTOMER, AND NO REPRESENTATION HAS BEEN MADE BY LEVEL 3 AS TO THE FITNESS OF
THE SPACE FOR CUSTOMER'S INTENDED PURPOSE.
5. The term of use of the Space shall begin on the later to occur of the date
requested by Customer or the date that Level 3 completes the build-out of the
Space. Customer's use of the Space beyond the initial term shall be on a
month-to-month basis, unless Customer and Level 3 have agreed in writing to a
renewal of the right to use such Space.
6. Level 3 shall use reasonable efforts to complete the build-out and make the
Space available to Customer on or before the date requested by Customer. In the
event that Level 3 fails to complete the build-out within sixty (60) days of the
date requested by Customer, then Customer may terminate its rights to use such
Space and receive a refund of any fees paid for the use or build-out of such
Space.
7. Customer shall abide by any posted or otherwise communicated rules relating
to use of, access to, or security measures respecting the Space. In the event
that unauthorized parties gain access to the Space through access cards, keys or
other access devices provided to Customer, Customer shall be responsible for any
damages incurred as a result thereof. Customer shall be responsible for the cost
of replacing any security devices lost or stolen after delivery thereof to
Customer. In addition, Level 3 shall have the right to terminate Customer's use
of the Space in the event that: (a) Level 3's rights to use the facility within
which the Space is located terminates or expires for any reason; (b) Customer
has violated the terms hereof or any Customer Order submitted hereunder; (c)
Customer makes any material alterations to the Space without first obtaining the
written consent of Level 3; (d) Customer allows personnel or contractors to
enter the Space who have not been approved by Level 3 in advance; or (e)
Customer violates any posted or otherwise communicated rules relating to use of
or access to the Space. Level 3 shall use reasonable efforts to notify Customer
of any events that may result in termination of the use of the Space.
8. Customer shall pay all monthly recurring fees, cross-connect fees, power
charges and nonrecurring fees specified in each Customer Order for the agreed
term thereof. In the event that Customer terminates a Customer Order for Space
or in the event that the Customer Order is terminated due to a failure of
Customer to satisfy the requirements set forth herein or in the Customer Order
prior to the end of the agreed term, Customer shall pay a termination charge
equal to the costs incurred by Level 3 in returning the Space to a condition
suitable for use by other parties, plus the percentage of the monthly recurring
fees for the terminated Space calculated as follows:
[***]
Page 9 of 17
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 10
9. Level 3 reserves the right to change the location or configuration of the
Space, provided, however, that Level 3 shall not arbitrarily or discriminatorily
require such changes. Level 3 and Customer shall work in good faith to minimize
any disruption in Customer's services that may be caused by such changes in
location or configuration of the Space.
10. Prior to occupancy and during the term of use of any Space, Customer shall
procure and maintain the following minimum insurance coverage: (a) Workers'
Compensation in compliance with all applicable statutes of appropriate
jurisdiction. Employer's Liability with limits of $500,000 each accident; (b)
Commercial General Liability with combined single limits of $1,000,000 each
occurrence; and (c) "All Risk" Property insurance covering all of Customers
personal property located in the Space. Customer's Commercial General Liability
policy shall be endorsed to show Level 3 (and any underlying property owner, as
requested by Level 3) as an additional insured. All policies shall provide that
Customer's insurers waive all rights of subrogation against Level 3. Customer
shall furnish Level 3 with certificates of insurance demonstrating that Customer
has obtained the required insurance coverages prior to occupancy of the Space.
Such certificates shall contain a statement that the insurance coverage shall
not be materially changed or cancelled without at least thirty (30) days' prior
written notice to Level 3. Customer shall require any contractor entering the
Space on its behalf to procure and maintain the same types, amounts and coverage
extensions as required of Customer above.
11. The liability of Level 3 for damages arising out of the furnishing of Space,
including but not limited to mistakes, omissions, interruptions, delays,
tortious conduct or errors, or other defects arising out of the failure to
furnish Space, whether caused by acts of commission or omission, shall be
limited to a prorated refund of the charges paid by Customer for the use of the
Space hereunder. The extension of such refunds shall be the sole remedy of
Customer and the sole liability of Level 3.
Page 10 of 17
<PAGE> 11
TERMS AND CONDITIONS
IP COLOCATION
The following Terms and Conditions shall be applicable to Customer's use of
space within Level 3 facilities used for the purpose of colocating equipment
used for connection to the internet (the "Space") ordered by Customer under any
Customer Order.
1. Upon execution and performance of Customer's obligations under a Customer
Order for use of Space, Customer shall be granted the right to occupy the Space
identified therein. Customer further agrees to purchase certain communications
services ("Services") identified in Customer Orders for such Services submitted
by Customer hereunder. Customer may submit multiple Customer Orders requesting
use of different Space, each of which shall be governed by the terms hereof.
Services ordered by Customer shall at all times be used by Customer in
compliance with Level 3's then-current Acceptable Use Policy and Privacy Policy,
as amended by Level 3 from time to time and which are available through Level
3's web site.
2. Customer shall be permitted to use the Space only for placement and
maintenance of computer and/or communications equipment which shall be
interconnected to the Services provided by Level 3. Customer may use the Space
to cross connect to the facilities of other communications carriers if and only
if Level 3 cannot or will not provide such services to Customer on commercially
reasonable terms. The nonrecurring and monthly recurring charges for the Space
and the Services shall be set forth in each Customer Order.
3. During the term for use of the Space set forth in each Customer Order,
Customer shall commit to use, order and pay for the following amounts of
bandwidth provided by Level 3: (a) for Customers using cabinets, at least 1 Mbps
of bandwidth for each partial cabinet and at least 2 Mbps of bandwidth for each
full cabinet of Space ordered by Customer; and (b) for Customers using private
rooms, at least 1 Mbps of bandwidth for each 10 square feet of Space ordered by
Customer. Customer shall achieve the minimum service level immediately after
submission and acceptance of each Customer Order. Level 3 may terminate use of
the Space in the event that Customer does not satisfy this minimum service
commitment.
4. Level 3 shall perform such janitorial services, environmental systems
maintenance, power plant maintenance and other actions as are reasonably
required to maintain the facility in which the Space is located in good
condition which is suitable for the placement of communications equipment. In
addition, Customer may order and pay for Level 3 to perform certain limited
("remote hands") maintenance services on Customer's equipment within the space,
which shall be performed in accordance with Customer's directions. "Remote
hands" maintenance services includes power cycling equipment. Level 3 shall in
no event be responsible for the repair, configuration or tuning of equipment, or
for installation of Customer's equipment (although Level 3 will provide
reasonable assistance to Customer in such installation). Customer shall maintain
the Space in orderly and safe condition, and shall return the Space to Level 3
at the conclusion of the term set forth in the Customer Order in the same
condition (reasonable wear and tear excepted) as when such Space was delivered
to Customer. EXCEPT AS EXPRESSLY STATED HEREIN OR IN ANY CUSTOMER ORDER, THE
SPACE SHALL BE DELIVERED AND ACCEPTED "AS IS" BY CUSTOMER, AND NO REPRESENTATION
HAS BEEN MADE BY LEVEL 3 AS TO THE FITNESS OF THE SPACE FOR CUSTOMER'S INTENDED
PURPOSE.
5. The term of use of the Space shall begin on the later to occur of the date
requested by Customer or the date that Level 3 completes the build-out of the
Space. Customer's use of the Space beyond the initial term shall be on a
month-to-month basis, unless Customer and Level 3 have agreed in writing to a
renewal of the right to use such Space. Customer hereby agrees to pay for the
Space and Services for the period of time specified in each Customer Order,
which period shall commence when both completion of the build-out of the Space
and initiation of delivery of such Services has occurred. The rates and other
charges set forth in each Customer Order are established in reliance on the term
commitment made therein. In the event that Customer terminates a Customer Order
for Space or in the event that the Customer Order is terminated due to a failure
of Customer to satisfy the requirements set forth herein or in the Customer
Order prior to the end of the agreed term, Customer shall pay a termination
charge equal to the costs incurred by Level 3 in returning the Space to a
condition suitable for use by other parties, plus the percentage of the monthly
recurring fees for the terminated Space calculated as follows:
[***]
6. Level 3 shall use reasonable efforts to complete the build-out and make the
Space available to Customer on or before the date requested by Customer. In the
event that Level 3 fails to complete the build-out within sixty (60) days of the
date requested by Customer, then Customer may terminate its rights to use such
Space and receive a refund
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 11 of 17
<PAGE> 12
of any fees paid for the use or build-out of such Space.
7. Customer shall abide by any posted or otherwise communicated rules relating
to use of, access to, or security measures respecting the Space. In the event
that unauthorized parties gain access to the Space through access cards, keys or
other access devices provided to Customer, Customer shall be responsible for any
damages incurred as a result thereof. Customer shall be responsible for the cost
of replacing any security devices lost or stolen after delivery thereof to
Customer. In addition, Level 3 shall have the right to terminate Customer's use
of the Space or the Services in the event that: (a) Level 3's rights to use the
facility within which the Space is located terminates or expires for any reason;
(b) Customer has violated the terms hereof or of any Customer Order submitted
hereunder; (c) Customer makes any material alterations to the Space without
first obtaining the written consent of Level 3; (d) Customer allows personnel or
contractors to enter the Space who have not been approved by Level 3 in advance;
or (e) Customer violates any posted or otherwise communicated rules relating to
use of or access to the Space. Level 3 shall use reasonable efforts to notify
Customer of any events that may result in termination of the use of the Space or
delivery of Services.
8. Level 3 reserves the right to change the location or configuration of the
Space, provided, however, that Level 3 shall not arbitrarily or discriminatorily
require such changes. Level 3 and Customer shall work in good faith to minimize
any disruption in Customer's services that may be caused by such changes in
location or configuration of the Space.
9. Level 3 provides only access to the Internet; Level 3 does not operate or
control the information, services, opinions or other content of the Internet.
Customer agrees that it shall make no claim whatsoever against Level 3 relating
to the content of the Internet or respecting any information, product, service
or software ordered through or provided by virtue of the Internet.
10. Prior to occupancy and during the term of use of any Space, Customer shall
procure and maintain the following minimum insurance coverage: (a) Workers'
Compensation in compliance with all applicable statutes of appropriate
jurisdiction. Employer's Liability with limits of $500,000 each accident; (b)
Commercial General Liability with combined single limits of $1,000,000 each
occurrence; and (c) "All Risk" Property insurance covering all of Customers
personal property located in the Space. Customer's Commercial General Liability
policy shall be endorsed to show Level 3 (and any underlying property owner, as
requested by Level 3) as an additional insured. All policies shall provide that
Customer's insurers waive all rights of subrogation against Level 3. Customer
shall furnish Level 3 with certificates of insurance demonstrating that Customer
has obtained the required insurance coverages prior to occupancy of the Space.
Such certificates shall contain a statement that the insurance coverage shall
not be materially changed or cancelled without at least thirty (30) days prior
written notice to Level 3. Customer shall require any contractor entering the
Space on its behalf to procure and maintain the same types, amounts and coverage
extensions as required of Customer above.
11. The liability of Level 3 for damages arising out of the furnishing of
Services or the Space, including but not limited to mistakes, omissions,
interruptions, delays, tortious conduct or errors, or other defects arising out
of the failure to furnish Services or Space, whether caused by acts of
commission or omission, shall be limited to a prorated refund of the charges
paid by Customer for the use of the Space hereunder. The extension of such
refunds shall be the sole remedy of Customer and the sole liability of Level 3.
Page 12 of 17
<PAGE> 13
TERMS AND CONDITIONS
INTERNET ACCESS - DEDICATED AND DIAL UP
The following Terms and Conditions shall be applicable to dedicated and dial-up
Internet Access Service (the "Internet Access Services") ordered by Customer
under any Customer Order.
1. Any state or federal tariffs applicable to the Internet Access Services to be
delivered under any Customer Order are incorporated into the terms thereof. The
Internet Access Services shall at all times be used in compliance with Level 3's
then-current Acceptable Use Policy and Privacy Policy, as amended by Level 3
from time to time and which are available through Level 3's web site.
2. The nonrecurring charges and monthly recurring rates for the Internet Access
Services provided by Level 3 to Customer shall be set forth in each Customer
Order.
3. Customer hereby agrees to pay for the Internet Access Services for the period
of time specified in each Customer Order, which period shall commence with the
initiation of delivery of such Internet Access Services. The rates and other
charges set forth in each Customer Order are established in reliance on the term
and/or volume commitment made therein. In the event that Customer terminates
Internet Access Services ordered in any Customer Order or in the event that the
delivery of Internet Access Services is terminated due to a failure of Customer
to satisfy the requirements set forth herein or in the Customer Order prior to
the end of the agreed term, Customer shall (unless Customer has made a Revenue
Commitment) pay a termination charge equal to the termination or other charges
paid or to be paid by Level 3 for services purchased from other sources used to
deliver the Internet Access Services to Customer, plus the percentage of the
monthly recurring charges for the terminated Internet Access Services calculated
as follows:
[***]
Customer may, in the event that a Revenue Commitment is made and is then being
satisfied by Customer, terminate, rearrange or reconfigure the Internet Access
Services ordered under a Customer Order without payment of the termination
charge specified above; PROVIDED, HOWEVER, that Customer shall be responsible
for payment of Level 3's then-current standard nonrecurring charges for such
termination, rearrangement or reconfiguration.
4. Level 3 provides only access to the Internet; Level 3 does not operate or
control the information, services, opinions or other content of the Internet.
Customer agrees that it shall make no claim whatsoever against Level 3 relating
to the content of the Internet or respecting any information, product, service
or software ordered through or provided by virtue of the Internet.
5. This Section 5 shall apply only to Customers who order Dial-Up Internet
Access Services. The Dial-Up Internet Access Services shall be used only by an
officer, director, employee or agent ("Employee") of Customer. Customer shall
assure that each Employee accessing the Dial-Up Internet Access Service abides
by these Terms and Conditions. Prior to any Employee accessing Dial-Up Internet
Access Services, such Employee will be required to accurately complete an
on-line registration process. During this registration process, each Employee
will be required to identify himself/herself through some means satisfactory to
Level 3. Pursuant to the registration process, by clicking an "ACCEPT" icon,
each Employee will (i) agree to accurately complete the registration; (ii) agree
to abide by all of the provisions, terms, limitations, conditions and
restrictions of these Terms and Conditions; and (iii) agree to use the Dial-Up
Internet Access Services in accordance with any requirements set forth in the
online registration process and for the legitimate business purposes of Customer
only. Each Employee will also receive a password which such Employee will agree
to keep in strict confidence and which will be required whenever accessing the
Dial-Up Internet Access Services.
Page 13 of 17
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 14
Standard Service Level Agreement (SLA)
Release 1
INTERNET DEDICATED ACCESS
Dedicated Internet Access service will be backed by a Standard Service Level
Agreement that has two components: a Service Delivery SLA and a Network
Performance SLA.
NOTE: The total number of credits per month for both Service Delivery and
Network Performance is limited to four days.
SERVICE DELIVERY SLA
- - 30 Calendar Day Installation Guarantee for Customers buying Dedicated
Internet Access in speeds from 64 Kbps - 1.544 Kbps within the Standard
Service Area..
- - 45 Calendar Day Installation Guarantee for Customers buying Dedicated
Internet Access in speeds from 3 Mbps - 45 Mbps within the Standard Service
Area.
- - Single toll-free number to reach Level 3 Customer Service for all customer
issues, including technical, billing, and product inquiries.
- - Time to Respond - Within 30 minutes
- - 2 hour calendar month Average Time To Repair (ATTR)
If Level 3 fails to meet any of the guarantees above, Level 3 will review all
reported failures at the end of the month, and calculate the applicable credits:
- - Any customer inquiry to the Level 3 Customer Service Center that results in
a Time to Respond of >30 minutes will result in a one day service credit
when the customer notifies Level 3 of the failure.
- - ATTR is calculated as a monthly average. All reported customer trouble
tickets will be totaled over the month, then the average time to close each
ticket will be calculated. If the ATTR is greater than 2 hours, the
customer will receive a one day service credit.
- - Credits will only be applied to events where the Customer reports a failure
to the Level 3 Customer Care organization. Customers must report any
Service Delivery failures within five business days of the event.
NETWORK PERFORMANCE SLA
- - SERVICE AVAILABILITY
- Availability refers to customer's access point to the Level 3
Internet network, including their Level 3 provided local access
circuit, and the customer's port.
- Unavailability Events are defined as any outage of the Level 3
provided local access circuit and the customer's port of longer than
15 consecutive minutes.
Page 14 of 17
<PAGE> 15
- The Availability Guarantee does not extend to the performance of
Internet networks controlled by other companies, or traffic exchange
points (including NAPs and MAEs) which are controlled by other
companies.
- Availability does not include regularly scheduled or emergency
maintenance events, or customer caused outages or disruptions.
- Customers may report service unavailability events of longer than 15
consecutive minutes to Level 3 customer service within 48 hours of
the event. If the event is confirmed by Level 3 customer service,
the customer will receive a pro-rated service credit that equals the
time of the unavailability.
- - 40 MS ONE-WAY DELAY GUARANTEE
- The Delay guarantee refers to the average delay parameters among the
Level 3 Gateway sites in the United States. It does not extend to
the customer's local access circuit, transit or peering connections,
or to circuits to the traffic exchange points, including NAPs and
MAEs.
- Delay is measured as the average delay, over a calendar month, of
traffic between all major Gateways on the Level 3 U.S. Internet
network.
- Level 3 will publicly report the Average Monthly Delay measurement
for the Level 3 U.S. Internet Network at the end of every month.
- If the customer reports that Level 3 has failed to meet the Delay
guarantee, and this is confirmed by Level 3 customer service, the
customer will be issued one day service credit.
NOTES:
- - All measurements are based on monthly averages.
- - These guarantees only apply to the Level 3 Internet Network. They do not
apply to NAP or transit connections, or to any traffic once it leaves the
Level 3 network.
- - This SLA does not apply to periods of regularly scheduled or emergency
maintenance that Level 3 performs on its network or associated hardware
and software.
- - Credits will only be applied to events where the Customer reports a
network performance failure to the Level 3 Customer Care organization.
- - Customers must report any Network Performance failures (unavailability or
delay) within 48 hours (two business days) of the service affecting event
in order to receive a credit. Customers must report any Service Delivery
failures within five business days of the event.
Page 15 of 17
<PAGE> 16
TERMS AND CONDITIONS
MANAGED MODEM -- DEDICATED, QUICKSTART AND TRANSIT SERVICES
The following Terms and Conditions shall be applicable to services required to
allow access to "Dedicated Services," "Dedicated Service with QuickStart" and
"Transit Services" as offered by Level 3 (the "Managed Modem Services") ordered
by Customer under any Customer Order.
1. Any state or federal tariffs applicable to the Managed Modem Services to be
delivered under any Customer Order are incorporated into the terms thereof. The
Managed Modem Services shall at all times be used in compliance with Level 3's
then-current Acceptable Use Policy and Privacy Policy, as amended by Level 3
from time to time and which are available through Level 3's web site.
2. In the event Customer orders "Dedicated Service," end user traffic will be
routed through and aggregated in Level 3's facility, sent to the Customer's
Premises via a dedicated circuit, and then routed to its final destination by
Customer. In the event that Customer orders "Transit Services," End User traffic
will be routed to Level 3's facility and then routed to its final destination by
Level 3 via the Internet. Dedicated Service with "QuickStart" will initially be
provisioned to the Customer in the same fashion as Transit Services, until such
time as Level 3 has provisioned the dedicated circuit to send end user traffic
from Level 3's facility to the Customer's Premises. QuickStart will then be
migrated to standard Dedicated Service. Customers ordering Dedicated Services
will be required to make a portion of the Premises available to Level 3 for the
placement of equipment necessary to provide such Dedicated Services. For
Dedicated Service, all Customer CPE as well as the private line necessary to
support this service will be ordered, installed and managed by Level 3. Any
telephone numbers assigned to Customer for the purpose of providing Managed
Modem Services hereunder shall be property of Customer; PROVIDED, however, that
Level 3 shall be obligated to release such numbers to Customer upon expiration
or termination hereof if and only if Customer is then in compliance with all of
the terms contained herein or in the Standard Terms and Conditions.
3. The nonrecurring charges and monthly recurring rates for the Managed Modem
Services provided by Level 3 to Customer shall be set forth in each Customer
Order. Level 3 will dedicate the specified number of ports to Customer in the
Level 3 facilities as identified in each Customer Order. Customer may be
responsible for additional monthly charges if Customer's use of the Managed
Modem Services requires and utilizes more ports than the number committed to and
ordered by Customer.
4. Customer hereby agrees to pay for the Services for the period of time
specified in each Customer Order, which period shall commence with the
initiation of delivery of such Managed Modem Services. The rates and other
charges set forth in each Customer Order are established in reliance on the term
commitment made therein. In the event that Customer terminates Managed Modem
Services ordered in any Customer Order or in the event that the delivery of
Managed Modem Services is terminated due to a failure of Customer to satisfy the
requirements set forth herein or in the Customer Order prior to the end of the
agreed term, Customer shall (unless Customer has made a Revenue Commitment) pay
a termination charge equal to the termination or other charges paid or to be
paid by Level 3 for services purchased from other sources used to deliver the
Managed Modem Services to Customer, plus the percentage of the monthly recurring
charges for the terminated Managed Modem Services calculated as follows:
[***]
Customer may, in the event that a Revenue Commitment is made and is then being
satisfied by Customer, terminate, rearrange or reconfigure the Managed Modem
Services ordered under a Customer Order without payment of the termination
charge specified above; PROVIDED, HOWEVER, that Customer shall be responsible
for payment of Level 3's then-current standard nonrecurring charges for such
termination, rearrangement or reconfiguration.
5. Level 3 provides only access to the Internet; Level 3 does not operate or
control the information, services, opinions or other content of the Internet.
Customer agrees that it shall make no claim whatsoever against Level 3 relating
to the content of the Internet or respecting any information, product, service
or software ordered through or provided by virtue of the Internet.
Page 16 of 17
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 17
Standard Service Level Agreement (SLA)
Release 1
MANAGED MODEM
Managed Modem service will be backed by a Service Delivery SLA.
NOTE: The total number of credits per month is limited to four days.
SERVICE DELIVERY SLA
- - 30 Calendar Day Installation Guarantee for Customers buying Managed Modem
service in speeds from 64 Kbps - 1.544 Kbps within the Standard Service
Area.
- - 45 Calendar Day Installation Guarantee for Customers buying Managed Modem
service in speeds from 3 Mbps - 45 Mbps within the Standard Service Area.
- - Single toll-free number to reach Level 3 Customer Service for all customer
issues, including technical, billing, and product inquiries.
- - Time to Respond - Within 30 minutes
- - 2 hour calendar month Average Time To Repair (ATTR)
If Level 3 fails to meet any of the guarantees above, Level 3 will review all
reported failures at the end of the month, and calculate the applicable credits:
- - Any customer inquiry to the Level 3 Customer Service Center that results in
a Time to Respond of >30 minutes will result in a one day service credit
when the customer notifies Level 3 of the failure.
- - ATTR is calculated as a monthly average. All reported customer trouble
tickets will be totaled over the month, then the average time to close each
ticket will be calculated. If the ATTR is greater than 2 hours, the
customer will receive a one day service credit.
- - Credits will only be applied to events where the Customer reports a failure
to the Level 3 Customer Care organization. Customers must report any
Service Delivery failures within five business days of the event.
Page 17 of 17
<PAGE> 1
EXHIBIT 10.31.1
ADDENDUM
This addendum (the "Addendum") modifies the Level 3 Terms and Conditions for
Delivery of Service, Version 2.0 ("Terms & Conditions") between Level 3 and
Universal Access, ______ ("Customer"). Capitalized terms used but not defined
herein shall have the meanings set forth in the Terms & Conditions, and the
terms and conditions contained in this Addendum modify the Terms and Conditions
in the following limited respects:
MODIFICATIONS TO TERMS AND CONDITIONS FOR DELIVERY OF SERVICE
1. In the "Definitions" section of the Terms and Conditions the
following definition is added:
SERVICE LEVEL AGREEMENT: An agreement by Level 3 with respect to its
Services, backed by a credit if the Agreement is not met, and which is
contained within the Terms and Conditions applicable to a specific Level
3 Service.
2. Section 2.1 of the Terms and Conditions is modified by adding the
following to the end of that section:
Customer may direct Level 3 to deliver bills to it in any of the
following formats: (i) paper format (which shall be the format for the
billing in the event Customer does not direct Level 3 otherwise), (ii) a
paper format bill summary with a magnetic tape to provide the detailed
information of the bill, (iii) magnetic tape only, (iv) computer disk or
(v) electronic transmission.
3. Section 3.1 of the Terms and Conditions is deleted in its entirety
and replaced with the following provision:
3.1 DISCONTINUANCE OF CUSTOMER ORDER BY LEVEL 3. Level 3 may terminate
any Customer Order and discontinue Service without liability:
A. If Customer fails to pay a past due balance for Services within
thirty (30) days of written notice thereof provided by Level 3;
B. If Customer violates any law, rule, regulation or policy of any
government authority having jurisdiction over the Services; if Customer
makes a material misrepresentation in any submission of information in a
Customer Order or other submission of information to Level 3; if
Customer engages in any fraudulent use of the Services; or if a court or
other government authority having jurisdiction over the Services
prohibits Level 3 from furnishing the Services;
C. If Customer fails to cure its breach of any provision of these Terms
and Conditions or any Customer Order within thirty (30) days written
notice thereof provided by Level 3;
D. If Customer files bankruptcy, for reorganization, or fails to
discharge an involuntary petition therefore within sixty (60) days;
E. If Customer's use of the Services materially exceeds Customer's
credit limit, unless within fourteen (14) days written notice thereof by
Level 3, Customer provides adequate
<PAGE> 2
security for payment for the Services.
Any discontinuance of Service by Level 3 pursuant to this Section shall not
affect Customer's Revenue Commitment.
4. Section 3.3 of the Terms and Conditions is modified by inserting the
word "reasonable" immediately before the words "conditions as Level 3."
5. Section 4.2 of the Terms and Conditions is amended by adding the word
"reasonable" between the phrase "Customer shall be responsible for the payment
of" and the phrase "service charges in the event that maintenance or
inspection..."; and further by replacing the phrase "or related to" in the last
sentence of that section with the phrase "directly by."
6. Section 5.1(F) of the Terms and Conditions is deleted and replaced
with the following provision:
Keeping Level 3's equipment and facilities located on the Premises free
and clear of any liens or encumbrances imposed as a result of any action
or inaction by Customer.
[***]
8. Section 7.3(E) of the Terms and Conditions is deleted and replaced
with the following provision:
is required to be disclosed by law, provided that the disclosing party
is given notice of such legally required disclosure and an opportunity
to protect the confidentiality of the information.
9. Sections 8.1, 8.2 and 8.3 of the Terms and Conditions are deleted and
replaced with the following provisions:
8.1 FORCE MAJEURE. Except with respect to force majeure events affecting
Customer's ability to meet its payment obligations to Level 3, neither
party shall be liable, nor shall any credit allowance or other remedy be
extended, for any failure of performance or equipment due to causes
beyond such party's reasonable control, including but not limited to:
acts of God, fire, flood or other catastrophes; any law, order,
regulation, direction, action, or request of any governmental entity or
agency, or any civil or military authority; national emergencies,
insurrections, riots, wars; unavailability of rights-of-way or
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 3
materials; or strikes, lock-outs, work stoppages, or other labor
difficulties. In the event Level 3, for reasons set forth in this
paragraph 8.1, is unable to deliver Service pursuant to any Customer
Order for 45 consecutive days, then Customer may terminate the affected
Customer Order without paying any termination charges.
8.2 ASSIGNMENT OR TRANSFER. Except with respect to a merger or sale of
substantially all of Customer's assets, Customer may not transfer,
sublease or assign the use of Service without the express prior written
consent of Level 3, and then only when such transfer or assignment can
be accomplished without interruption of the use or location of Service.
Level 3 will not unreasonably withhold its consent. These Terms and
Conditions shall apply to any transferees or assignees. Customer shall
remain liable for the payment of all charges due under each Customer
Order.
8.3 NOTICES. Notices hereunder shall be deemed properly given when
delivered, if delivered in person, or when sent via facsimile, overnight
courier, electronic mail or five (5) days after deposited with the U.S.
Postal Service, (a) with respect to Customer, the address listed on any
Customer Order, or (b) with respect to Level 3, to: Contracts
Administration, Level 3 Communications, LLC, 1450 Infinite Drive,
Louisville, CO 80027. Customer shall notify Level 3 of any changes to
its addresses listed on any Customer Order.
10. The second sentence of Section 8.8 of the Terms and Conditions is
deleted and replaced with the following provision:
These Terms and Conditions may be amended by written agreement signed by
Customer and Level 3 at any time, and Customer agrees to be bound by the
amended Terms and Conditions from and after the effective date of such
amendment.
CHANGES TO TERMS AND CONDITIONS, PRIVATE LINE SERVICE
1. A new Section 4 to the Terms and Conditions, Private Line Service is
added reading as follows:
[***]
2. Level 3's current pricing for Private Line Service is as set forth
below and is conditioned upon the term of this Addendum and the Revenue
Commitment set forth herein:
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 4
UNIVERSAL ACCESS, INC.
DOMESTIC INTERCITY PRIVATE LINE RATES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
<S> <C> <C>
DS-1 MIN CIRCUIT CHARGE RATE (PER DS0 MILE)
- -----------------------------------------------------------------------
ON NET [***] [***]
- -----------------------------------------------------------------------
DS-3 MIN CIRCUIT CHARGE RATE (PER DS0 MILE)
- -----------------------------------------------------------------------
ON NET [***] [***]
- -----------------------------------------------------------------------
OC-3 MIN CIRCUIT CHARGE RATE (PER DS0 MILE)
- -----------------------------------------------------------------------
ON NET [***] [***]
- -----------------------------------------------------------------------
OC-12 MIN CIRCUIT CHARGE RATE (PER DS0 MILE)
- -----------------------------------------------------------------------
ON NET [***] [***]
- -----------------------------------------------------------------------
</TABLE>
Level 3 further states that its non-recurring charge for termination,
rearrangement or reconfiguration of Private Line Services shall not exceed
[***].
CHANGES TO TERMS AND CONDITIONS, TELEPHONY COLOCATION
1. Section 7 of the Terms and Conditions, Telephony Colocation is
deleted and replaced with the following provision:
7. Customer shall abide by any posted or otherwise communicated rules
relating to use of, access to, or security measures respecting the
Space. Customers use of the Space will be immediately terminated in the
event Customer or any of its agents or employees is found in Level 3's
gateway with any firearms, drugs, alcohol or is found engaging in any
criminal activity, eavesdropping, foreign intelligence, card selling or
slamming. Persons found engaging in any such activity or in possession
of the aforementioned prohibited items will be immediately escorted from
the gateway. In the event that unauthorized parties gain access to the
Space through access cards, keys or other access devices provided to
Customer, Customer shall be responsible for any damages incurred as a
result thereof. Customer shall be responsible for the cost of replacing
any security devices lost or stolen after delivery thereof to Customer.
In addition, Level 3 shall have the right to terminate Customer's use of
the Space or the Services in the event that: (a) Level 3's rights to use
the facility within which the Space is located terminates or expires for
any reason; (b) Customer has violated the terms hereof or of any
Customer Order submitted hereunder; (c) Customer makes any material
alterations to the Space without first obtaining the written consent of
Level 3; (d) Customer allows personnel or contractors to enter the Space
who have not been approved by Level 3 in advance; or (e) Customer
violates any posted or otherwise communicated rules relating to use of
or access to the Space. With respect to items (b), (c), (d) and (e)
immediately above, unless the same interferes or has the potential to
interfere with other Level 3 Colocation customers, Level 3 shall provide
Customer a written notice of the foregoing and a 10-day opportunity to
cure the same before terminating Customer's rights to the Space.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 5
2. Section 8 of the Terms and Conditions, Telephony Colocation is
modified by adding the word "reasonable" between the phrase "termination charge
equal to the " and the phrase "cost incurred by Level 3 in returning the Space";
and the phrase "as a colocation facility" is added between the phrase "to a
condition suitable for use by the other party" and the phrase ", plus the
percentage of the monthly recurring fees. . .".
CHANGES TO TERMS AND CONDITIONS, IP COLOCATION
1. Section 5 of the Terms and Conditions, IP Colocation is modified by
adding the word "reasonable" between the phrase "termination charge equal to the
" and the phrase "cost incurred by Level 3 in returning the Space"; and the
phrase "as a colocation facility" is added between the phrase "to a condition
suitable for use by the other parties" and the phrase ", plus the percentage of
the monthly recurring fees. . .".
2. Section 7 of the Terms and Conditions, IP Colocation is deleted and
replaced with the following provision:
7. Customer shall abide by any posted or otherwise communicated rules
relating to use of, access to, or security measures respecting the
Space. Customers use of the Space will be immediately terminated in the
event Customer or any of its agents or employees is found in Level 3's
gateway with any firearms, drugs, alcohol or is found engaging in any
criminal activity, eavesdropping, foreign intelligence, card selling or
slamming. Persons found engaging in any such activity or in possession
of the aforementioned prohibited items will be immediately escorted from
the gateway. In the event that unauthorized parties gain access to the
Space through access cards, keys or other access devices provided to
Customer, Customer shall be responsible for any damages incurred as a
result thereof. Customer shall be responsible for the cost of replacing
any security devices lost or stolen after delivery thereof to Customer.
In addition, Level 3 shall have the right to terminate Customer's use of
the Space or the Services in the event that: (a) Level 3's rights to use
the facility within which the Space is located terminates or expires for
any reason; (b) Customer has violated the terms hereof or of any
Customer Order submitted hereunder; (c) Customer makes any material
alterations to the Space without first obtaining the written consent of
Level 3; (d) Customer allows personnel or contractors to enter the Space
who have not been approved by Level 3 in advance; or (e) Customer
violates any posted or otherwise communicated rules relating to use of
or access to the Space. With respect to items (b), (c), (d) and (e)
immediately above, unless the same interferes or has the potential to
interfere with other Level 3 Colocation customers, Level 3 shall provide
Customer a written notice of the foregoing and a 10-day opportunity to
cure the same before terminating Customer's rights to the Space.
<PAGE> 6
ADDITIONAL TERMS AND CONDITIONS
1. Customer and Level 3 agree that the term of this Addendum shall be
[***]. Customer may place Customer Orders for Level 3 Services for that term
pursuant to the Level 3's Terms and Conditions as amended by this Addendum.
2. Subject to the Ramp Period discussed below, for the remaining term of
this Addendum, Customer makes a Revenue Commitment to Level 3 of [***].
The Monthly Revenue Commitment may be satisfied by Customer using any
combination of Level 3 Services, including the pro-rated portion of any charges
associated with Customer's purchase of IRU capacity from Level 3. Such pro-rated
portion of IRU charges shall be calculated on a monthly basis by taking the
total cost of the IRU and dividing it by the total number of months for which
the Customer purchases such IRU capacity from Level 3, and shall exclude any O&M
charges. Customer shall have a Ramp Period of [***] from the date Level 3
installs and tests the first circuit ordered under this Agreement.
The Revenue Commitment made by Customer is a "take or pay" commitment.
In the event that by the end of the Ramp Period Customer has not submitted
Customer Orders for the agreed commitment of Level 3 Services and does not
thereafter utilize (on a continuing basis) the monthly commitment of Level 3
Services, Customer will be billed for and obligated to pay the amount of the
Revenue Commitment until such time as the commitment is (on a continuing basis)
being satisfied, after which Customer will be billed based upon its actual usage
of Service.
3. The Service Level Agreements contained within the Terms and
Conditions are deleted and are replaced with the Service Level Agreements
attached to this Addendum as Exhibit "A." The Service Level Agreements attached
hereto shall apply only with respect to Customer Orders relating to the Services
to which the applicable Service Level Agreement relates.
CUSTOMER ACCEPTANCE LEVEL 3 ACCEPTANCE
/s/ ROBERT POMMER /s/ KATHY PERONE
- ------------------------------------ ---------------------------------------
Authorized Customer Signature Authorized Level 3 Signature
11/15/99 11/17/99
- ------------------------------------ ---------------------------------------
Date Date
Robert J. Pommer Kathy Perone
- ------------------------------------ ---------------------------------------
Typed or Printed Name Typed or Printed Name
Chief Operating Officer SVP Sales
- ------------------------------------ ---------------------------------------
Title Title
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<PAGE> 7
EXHIBIT A
COLOCATION SERVICE LEVEL AGREEMENT
Level 3 Colocation Services are backed by the following Service Level Agreement
(SLA). If the Level 3 obligation is missed, the credit set forth below will be
issued to the customer if requested, once verified by Level 3. The total number
of credits per month is limited to the Monthly Recurring Charge (MRC) for the
affected service. To receive credit if these obligations have not been met, the
customer must contact Level 3 Customer Service within fifteen (15) days of the
end of the month for which credit is requested.
Level 3 provides a toll-free number connecting the customer to Level 3 Customer
Service for all issues -- including technical, billing, and product inquiries:
1-877-4LEVEL3 (1-877-453-8353).
(page 1 of 4)
<PAGE> 8
ORDER ACCEPTANCE DEFINITION
An order is accepted by Level 3 (for the purposes of this Installation Guarantee
only) as soon as the Order Entry Specialist receives the order in Customer
Implementation Management (CIM).
OBLIGATIONS AND CREDITS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
LEVEL 3 OBLIGATION CREDIT
--------------------------------------------------------------------------------------------------
<S> <C>
[***]
POWER GUARANTEE
Level 3 guarantees that AC and/or DC power will be available to the customer's
Colocation space 100% of the time.
Should Level 3 fail to meet the Power Guarantee, Level 3, upon the customer's
request, will credit the customer's monthly invoice [***] for each instance
that power is not available to the customer's space, up to a maximum of [***] .
--------------------------------------------------------------------------------------------------
[***]
HOURS OF OPERATION GUARANTEE
Level 3 will guarantee that the Gateway will be open and available to the
customer twenty-four hours a day and seven days a week for unescorted access
to the Colocation and customer work areas.
Should Level 3 fail to meet the Hours of Operation Guarantee for any one
instance, Level 3, upon the customer's request, will credit the customer's
monthly invoice [***] for each instance within a 24-hour period, up to a
maximum of seven [***] per month.
--------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
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<S> <C>
[***]
REMOTE HANDS RESPONSE TIME GUARANTEE*
Level 3 will guarantee to respond to Remote Hands requests within these
parameters:
- At the following Gateways, Level 3 will guarantee to have a technician
available within 15 minutes, on a 24 x 7 basis: Sunnyvale, San Francisco,
Los Angeles, Denver, Chicago, Dallas, New York City, and Washington D.C.
- At all other Gateways, Level 3 will guarantee to have a technician
available within 15 minutes during normal business hours (7 a.m. to 7
p.m.), Monday through Friday. Level 3 will guarantee to have a technician
available within 2 hours on weekends and holidays or after normal business
hours in these Gateways.
*NOTE: BASIC REMOTE HANDS SERVICE IS OFFERED ON A 24 X 7 BASIS AND IS AVAILABLE
TO PROVIDE SUPPORT FOR SUPERVISED FIRST-LINE MAINTENANCE SITUATIONS. SUPERVISED
FIRST-LINE MAINTENANCE SITUATIONS INCLUDE FIXES SUCH AS RESTARTS, CARD SWAPS
(WHERE CARDS ARE VISIBLE AND ACCESSIBLE -- LEVEL 3 WILL NOT OPEN THE OUTER CASE
OF THE EQUIPMENT), RE-BOOTS OF SOFTWARE (NO RELOADS OF HARDWARE OR SOFTWARE),
AND SIMPLE TESTING.
Should Level 3 fail to meet the Remote Hands Response Time Guarantee for any
one instance, Level 3, upon the customer's request, will credit the customer's
monthly invoice [***] for each instance, up to a maximum of [***].
--------------------------------------------------------------------------------------------------
[***]
HVAC GUARANTEE
Level 3 will guarantee to maintain -- over a 24-hour period at 100% load --
an average temperature of 72 degrees Fahrenheit within the Colocation area.
However, temperatures may temporarily fluctuate in the range of 68-78 degrees
Fahrenheit, and Level 3 does not guarantee temperatures inside cabinets or
within private suites.
Should Level 3 fail to meet the HVAC guarantee, Level 3, upon the customer's
request, will credit the customer's monthly invoice [***] for each instance
that the colocation temperature is outside the temperature range outlined
above, up to a maximum of [***].
--------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------
[***]
RELATIVE HUMIDITY GUARANTEE
Level 3 will guarantee to maintain -- over a 24-hour period at 100% load -- an
average relative humidity of 50% within the Colocation area. However, operating
percentages may temporarily fluctuate in the range of 47.5-52.5 percent, and
Level 3 does not guarantee humidity percentages within specific cabinets or
private suites.
Should Level 3 fail to meet the Relative Humidity Guarantee, Level 3, upon the
customer's request, will credit the customer's monthly invoice [***] for each
instance that the colocation temperature is outside the temperature range
outlined above, up to a maximum of [***].
--------------------------------------------------------------------------------------------------
[***]
SECURITY GUARANTEE
Level 3 will guarantee that all card readers and palm scanners will be in
operation 100% of the time. Level 3 also guarantees that doors will not be
propped open without a Level 3 employee monitoring the door. In addition,
Level 3 guarantees that in the event of a security breach, Level 3 will make
available, at the customer's request, video surveillance tapes to be reviewed
with the supervision of a Level 3 employee. Level 3 will also guarantee that
access logs will be provided within 30 minutes of the customer's request.
Access logs will either be e-mailed within 30 minutes or made available by
hard copy at the Gateway within 30 minutes.
Should Level 3 fail to meet the Security Guarantee, Level 3, upon the
customer's request, will credit the customer's monthly invoice [***] for
each instance that the Security Guarantee is not met, up to a maximum of one
[***].
--------------------------------------------------------------------------------------------------
[***]
CABINET INSTALL GUARANTEE is not completed
Level 3 guarantees that up to 15 cabinets, in an individual Gateway, will beyond the
be delivered within 20 business days beginning with Level 3's acceptance of installation
a customer order. 16-50 cabinet orders, within an individual Gateway, will be guarantee
delivered within 40 business days beginning with Level 3's acceptance of a
customer order. Delivery times on 51 cabinets or more will be
determined on an individual case basis.
PRIVATE SUITE INSTALL GUARANTEE
Level 3 guarantees that up to a 5,000-square-foot private suite will be
delivered within 40 business days beginning with the customers signed approval
of the private suite drawings.
Should Level 3 fail to meet the Cabinet or Private Suite Installation
Guarantee, Level 3, upon the customer's request, will credit the customer's
monthly invoice [***] for each day beyond the installation guarantee.
The customer is entitled to a [***] prorated credit for each day beyond
the service commitment.
--------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 11
IP CROSSROADS SERVICE LEVEL AGREEMENT
Level 3 IP CrossRoads Services are backed by the following Service Level
Agreement (SLA). If the Level 3 obligation is missed, the credit set forth below
will be issued to the customer if requested, once verified by Level 3. The total
number of credits per month is limited to the Monthly Recurring Charge (MRC) for
the affected service. To receive credit if these obligations have not been met,
the customer must contact Level 3 Customer Service within five (5) days of the
end of the month for which credit is requested.
Level 3 provides a toll-free number connecting the customer to Level 3 Customer
Service for all issues -- including technical, billing, and product inquiries:
1-877-4LEVEL3 (1-877-453-8353).
(page 1 of 4 pages)
<PAGE> 12
ORDER ACCEPTANCE DEFINITION
An order is accepted by Level 3 (for the purposes of this Installation Guarantee
only) as soon as the Order Entry Specialist receives the order in Customer
Implementation Management (CIM).
OBLIGATIONS AND CREDITS
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------
Level 3 Obligation Credit
- -------------------------------------------------------------------------------------------------
[***]
INSTALLATION GUARANTEE
Level 3 guarantees the following installation time frames in Level 3's standard
service areas, beginning with Level 3's acceptance of a Customer Order. This
guarantee does not cover incorrect data on the customer order, a change in the
customer order, or a non-standard implementation. The maximum installation
credit is [***].
- Ethernet port speeds of 10Mbps or 100Mbps terminating in Level 3
Colocation: 10 business days or less for North America and Europe
- 64-1.920Kbps (DS-1/E-1) port speeds: 45 business days or less for
North America and Europe
- 3-45Mbps (DS-3/E-3) port speeds: 60 business days or less for North
America and Europe
- 155Mbps (OC-3), 622Mbps (OC-12), and 1000Mbps (GigE): Individual Case
Basis (ICB)
- Customer Provided Access: 20 business days or less for North America
for circuits less than or equal to DS-3, after the CPA is delivered
-------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------
[***]
100% SERVICE AVAILABILITY GUARANTEE*
Service Unavailability refers to any outage reported by the customer within 48
hours of the outage and confirmed by Level 3 Customer Service. Service
Unavailability covers any outage associated with the customer's access port to
the Level 3 Internet network, extending across the Level 3 Internet network,
and across the local access circuit if provisioned on the Level 3 metropolitan
network. Service Unavailability does not include outages associated with
scheduled maintenance events, customer-caused outages or disruptions, the
performance of Internet networks controlled by other companies, or traffic
exchange points which are controlled by other companies.
We guarantee that for any outage lasting between 15 minutes and 24 hours within
the same 24-hour period, customers will receive a [***].
*NOTE: IF THE CUSTOMER HAS SIGNED A CONTRACT GOVERNED BY GERMAN LAW, AND/OR DIA
SERVICE IS PROVISIONED IN GERMANY, THE FOLLOWING AVAILABILITY GUARANTEES SHALL
INSTEAD APPLY:
LOCAL LOOP GUARANTEE: 97.5% ANNUAL AVAILABILITY
The unavailability time is calculated as the total number of outages a customer
experiences during a calendar month. The maximum unavailability time may vary
depending on the total number of days in the month. Example: in a 365-day year,
the unavailability maximum would be 219 hours. If Level 3 exceeds the maximum
unavailability time of 219 hours over the first 12 months of the customer's
contract, then Level 3 would be liable to pay the customer service credits for
the unavailability time exceeding 219 hours.
INTERNET NETWORK GUARANTEE: 99.9% MONTHLY AVAILABILITY
The unavailability time is calculated as the total number of outages a customer
experiences during a calendar month. The maximum unavailability time may vary
depending on the total number of days in the month. Example: in a typical
30-day month, the unavailability maximum would be 44 minutes. If Level 3
exceeds the maximum unavailability time of 44 minutes, then we would be liable
to pay the customer a service credit equal to time of total service
unavailability exceeding 44 minutes.
-------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------
[***]
DELAY GUARANTEE
Delay refers to the one-way average delay, over a calendar month, of traffic
between all major Gateways on the Level 3 U.S. and European Internet network.
Delay does not apply to the customer's local access circuit, transit or peering
connections, circuits to the traffic exchange points, maintenance events, or to
customer-caused outages or disruptions. Customers may obtain delay measurements
directly from the Level 3 Web site at www.Level3.com.
- North American Network Delay Guarantee: 40 ms average one-way
- European Network Delay Guarantee: 30 ms average one-way
- London to New York Guarantee: 40 ms average one-way
-------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 15
DIA & RAPID ACCESS SERVICE LEVEL AGREEMENT
Level 3 Dedicated Internet Access (DIA) and Rapid Access Services are backed by
the following Service Level Agreement (SLA). If the Level 3 obligation is
missed, the credit set forth below will be issued to the customer if requested,
once verified by Level 3. The total number of credits per month is limited to
the Monthly Recurring Charge (MRC) for the affected service. To receive credit
if these obligations have not been met, the customer must contact Level 3
Customer Service within five (5) days of the end of the month for which credit
is requested.
Level 3 provides a toll-free number connecting the customer to Level 3 Customer
Service for all issues -- including technical, billing, and product inquiries:
1-877-4LEVEL3 (1-877-453-8353).
(page 1 of 4 pages)
<PAGE> 16
ORDER ACCEPTANCE DEFINITION
An order is accepted by Level 3 (for the purposes of this Installation Guarantee
only) as soon as the Order Entry Specialist receives the order in Customer
Implementation Management (CIM).
OBLIGATIONS AND CREDITS
<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------------------------------------------------------------
Level 3 Obligation Credit
-------------------------------------------------------------------------------------------------
[***]
INSTALLATION GUARANTEE
Level 3 guarantees the following installation time frames in Level 3's
standard service areas, beginning with Level 3's acceptance of a Customer
Order. This guarantee does not cover incorrect data on the customer order,
a change in the customer order, or a non-standard implementation.
The maximum installation credit is [***].
- Ethernet port speeds of 10Mbps or 100Mbps terminating in Level 3
Colocation: 10 business days or less for North America and Europe
- 64-1.920Kbps (DS-1/E-1) port speeds: 45 business days or less for
North America and Europe
- 3-45Mbps (DS-3/E-3) port speeds: 60 business days or less for North
America and Europe
- 155Mbps (OC-3), 622Mbps (OC-12), and 1000Mbps (GigE): Individual Case
Basis (ICB)
- Customer Provided Access: 20 business days or less for North America
for circuits less than or equal to DS-3, after the CPA is delivered
-------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 17
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------
[***]
100% SERVICE AVAILABILITY GUARANTEE*
Service Unavailability refers to any outage reported by the customer within 48
hours of the outage and confirmed by Level 3 Customer Service. Service
Unavailability covers any outage associated with the customer's access port to
the Level 3 Internet network, extending across the Level 3 Internet network,
and across the local access circuit if provisioned on the Level 3 metropolitan
network. Service Unavailability does not include outages associated with
scheduled maintenance events, customer-caused outages or disruptions, the
performance of Internet networks controlled by other companies, or traffic
exchange points which are controlled by other companies.
We guarantee that for any outage lasting between 15 minutes and 24 hours within
the same 24-hour period, customers will receive a [***].
*NOTE: IF THE CUSTOMER HAS SIGNED A CONTRACT GOVERNED BY GERMAN LAW, AND/OR DIA
SERVICE IS PROVISIONED IN GERMANY, THE FOLLOWING AVAILABILITY GUARANTEES SHALL
INSTEAD APPLY:
LOCAL LOOP GUARANTEE: 97.5% ANNUAL AVAILABILITY
The unavailability time is calculated as the total number of outages a customer
experiences during a calendar month. The maximum unavailability time may vary
depending on the total number of days in the month. Example: in a 365-day year,
the unavailability maximum would be 219 hours. If Level 3 exceeds the maximum
unavailability time of 219 hours over the first 12 months of the customer's
contract, then Level 3 would be liable to pay the customer service credits for
the unavailability time exceeding 219 hours.
INTERNET NETWORK GUARANTEE: 99.9% MONTHLY AVAILABILITY
The unavailability time is calculated as the total number of outages a customer
experiences during a calendar month. The maximum unavailability time may vary
depending on the total number of days in the month. Example: in a typical
30-day month, the unavailability maximum would be 44 minutes. If Level 3
exceeds the maximum unavailability time of 44 minutes, then we would be liable
to pay the customer a service credit equal to time of total service
unavailability exceeding 44 minutes.
- -------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 18
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------
[***]
DELAY GUARANTEE
Delay refers to the one-way average delay, over a calendar month, of traffic
between all major Gateways on the Level 3 U.S. and European Internet network.
Delay does not apply to the customer's local access circuit, transit or peering
connections, circuits to the traffic exchange points, maintenance events, or to
customer-caused outages or disruptions. Customers may obtain delay measurements
directly from the Level 3 Web site at www.Level3.com.
- North American Network Delay Guarantee: 40 ms average one-way
- European Network Delay Guarantee: 30 ms average one-way
- London to New York Guarantee: 40 ms average one-way
-------------------------------------------------------------------------------------------------
</TABLE>
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omitted portions.
<PAGE> 19
PRIVATE LINE SERVICE LEVEL AGREEMENT
Level 3 Private Line Services (PLS) are backed by the following Service Level
Agreement (SLA). If the Level 3 obligation is missed, the credit set forth below
will be issued to the customer if requested, once verified by Level 3. The total
number of credits per month is limited to the Monthly Recurring Charge (MRC) for
the affected service. To receive credit if these obligations have not been met,
the customer must contact Level 3 Customer Service within five (5) days of the
end of the month for which credit is requested.
Level 3 provides a toll-free number connecting the customer to Level 3 Customer
Service for all issues -- including technical, billing, and product inquiries:
1-877-4LEVEL3 (1-877-453-8353).
ORDER ACCEPTANCE DEFINITION
An order is accepted by Level 3 (for the purposes of this Installation Guarantee
only) as soon as the Order Entry Specialist receives the order in Customer
Implementation Management (CIM).
INDIVIDUAL CASE BASIS (ICB) DEFINITION
Individual Case Basis (ICB) is defined as a service where a standard service
interval is not defined. For ICB categories, Level 3 will provide a Firm Order
Commitment Date (FOC) for services as soon as possible. The FOC date is
determined by a combination of Level 3 internal process as well as the dates
supplied to Level 3 by Level 3 vendors (where applicable). These vendor-supplied
FOC dates vary by vendor, region, and city.
CHANGES TO EXISTING ORDERS IN PROGRESS
The SLA implementation dates apply to intervals between original order date and
original due date. If a customer requests a change to an order date during the
implementation of a service, the following effects
will occur:
CHANGES TO ORDERS IN PROGRESS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Change Order Placed Charge Effect on Delivery
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
1st Week of Order Process [***] SLA implementation clock will begin again once
change is accepted
- --------------------------------------------------------------------------------------------------
2nd Week of Order Process [***] SLA implementation clock will begin again once
change is accepted
- --------------------------------------------------------------------------------------------------
3rd Week of Order Process [***] SLA implementation clock will begin again once
change is accepted
- --------------------------------------------------------------------------------------------------
4th Week of Order Process [***] SLA implementation clock will begin again once
change is accepted
- --------------------------------------------------------------------------------------------------
< 3 Days Before Delivery [***] sla implementation clock will begin again once
change is accepted
- --------------------------------------------------------------------------------------------------
</TABLE>
Level 3 will accept [***] requested change of delivery date per circuit order.
Level 3 will begin billing the service on the day that the service is made
available to the customer.
(page 1 of 3)
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<PAGE> 20
INSTALLATION OBLIGATIONS
Level 3 guarantees installation of its PLS within the following times beginning
with Level 3's acceptance of a customer order (see definition of order
acceptance on page 1) following Level 3's approval of client credit:
NATIONAL AND INTERNATIONAL PLS (GATEWAY CITIES ONLY)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
LEVEL 3 OBLIGATION CREDIT
- --------------------------------------------------------------------------------
Service Standard Service Delivery Intervals By
Product (Business Days)*
-------------------------------------------
DS-1, E-1+ DS-3 STM-1/OC-3/
OC-12
-------------------------------------------
NPLS IPL NPLS IPL NPLS IPL
- --------------------------------------------------------------------------------------------------
20 20 20 20 20 20 [***]
ON-NET GATEWAY-TO-GATEWAY,
100% LEVEL 3 FIBER
- --------------------------------------------------------------------------------
40 40 60 60 ICB ICB
NON-LEVEL 3 FIBER BETWEEN
GATEWAYS OR OFF-NET WITHIN SSA
(EITHER END)
- --------------------------------------------------------------------------------
40 ICB ICB ICB ICB ICB
OUTSIDE SSA (<50 MILES)
(EITHER END)
- --------------------------------------------------------------------------------
</TABLE>
U.S. METROPOLITAN PLS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
LEVEL 3 OBLIGATION CREDIT
- --------------------------------------------------------------------------------
Speed of On-Net Building Service Interval* Off-Net Building Service Interval*
Service
- -------------------------------------------------------------------------------------------------
E-1+ 20 business days N/A [***]
- --------------------------------------------------------------------------------
DS-1 20 business days 40 business days
- --------------------------------------------------------------------------------
DS-3 20 business days 60 business days
- --------------------------------------------------------------------------------
STM-1 20 business days Individual case basis
- --------------------------------------------------------------------------------
OC-3 20 business days Individual case basis
- --------------------------------------------------------------------------------
OC-12 20 business days Individual case basis
- --------------------------------------------------------------------------------
OC-48 Individual case basis Individual case basis
- --------------------------------------------------------------------------------
OC-192 Individual case basis Individual case basis
- --------------------------------------------------------------------------------
</TABLE>
*Service interval dates exclude any additional riser infrastructure within a
building required to reach the customer suite (where this infrastructure
is not already in place).
+E-1 Off-Net Metro Private Line is not a stand-alone service in the U.S. In
the U.S., this service is sold only in conjunction with an International
Private Line.
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omitted portions.
<PAGE> 21
AVAILABILITY OBLIGATIONS
Level 3 makes the following additional guarantees respecting it's PLS:
PRIVATE LINE SERVICES AVAILABILITY
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------------------
LEVEL 3 OBLIGATION CREDIT+
- -----------------------------------------------------------------------------------------------
99.99% SERVICE AVAILABILITY GUARANTEE*
Service Unavailability refers to a period during which there is a break in
transmission, reported to and confirmed by Level 3 Customer Service. The start
of the break is signaled by the first of ten consecutive severely erred
seconds ("SESs"), as defined below, and the end is signaled by the first of
ten consecutive non-SESs. An SES is a second with a bit error ratio of greater
than or equal to 1 in 1000. Service Unavailability does not include SESs
associated with maintenance events, customer-caused SESs or SESs caused by
companies other than Level 3. Customers will receive credits, calculated
monthly as an aggregate of all Service Unavailability events, in accordance
with the chart below:
- -----------------------------------------------------------------------------------------------
Service unavailable [***] [***]
- -----------------------------------------------------------------------------------------------
Service unavailable [***] [***]
- -----------------------------------------------------------------------------------------------
Service unavailable [***] [***]
- -----------------------------------------------------------------------------------------------
Service unavailable [***] [***]
- -----------------------------------------------------------------------------------------------
Service unavailable [***] [***]
- -----------------------------------------------------------------------------------------------
+The total number of credits per month is limited to the Monthly Recurring
Charge (MRC) for the affected service.
Service Availability is calculated from the ingress of the Level 3 Network to
the egress of the Level 3 network. Where a customer is served directly by the
Level 3 Metro networks (lit by Level 3 fiber) this parameter is extended to
the customer building. Where we are dependant upon a third party for local
connectivity to the backbone, the availability of 99.99% is applicable from
Level 3 Gateway to Level 3 Gateway. For circuits terminating in Germany, the
local loop will hold, and the availability target of 97.5% is applicable.
Please see note on Germany below.
*NOTE: IF THE CUSTOMER HAS SIGNED A CONTRACT GOVERNED BY GERMAN LAW, AND/OR
PRIVATE LINE SERVICE IS PROVISIONED IN GERMANY, THE FOLLOWING AVAILABILITY
GUARANTEE SHALL INSTEAD APPLY:
LOCAL LOOP GUARANTEE: 97.5% ANNUAL AVAILABILITY
The unavailability time is calculated as the total number of outages a
customer experiences during a calendar month. The maximum unavailability time
may vary depending on the total number of days in the month. Example: in a
365-day year, the unavailability maximum would be 219 hours. If Level 3
exceeds the maximum unavailability time of 219 hours over the first 12 months
of the customer's contract, then Level 3 would be liable to pay the customer
service credits for the unavailability time exceeding 219 hours.
- -----------------------------------------------------------------------------------------------
</TABLE>
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omitted portions.
<PAGE> 22
MANAGED MODEM SERVICE LEVEL AGREEMENT
Level 3 U.S. Managed Modem Services are backed by the following Service Level
Agreement (SLA). If the Level 3 obligation is missed, the credit set forth below
will be issued to the customer if requested, once verified by Level 3. The total
number of credits per month is limited to the Monthly Recurring Charge (MRC) for
the affected service.
Level 3 provides a toll-free number connecting the customer to Level 3 Customer
Service for all issues -- including technical, billing, and product inquiries:
1-877-4LEVEL3 (1-877-453-8353).
ORDER ACCEPTANCE DEFINITION
An order is accepted by Level 3 (for the purposes of this Installation Guarantee
only) as soon as the Order Entry Specialist receives the order in Customer
Implementation Management (CIM).
OBLIGATIONS AND CREDITS
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------
LEVEL 3 OBLIGATION CREDIT
- ---------------------------------------------------------------------------------------------------
- [***]
90% CALL SUCCESS RATE (CSR)
- - CSR will be determined by Level 3 thorugh its own internal
reporting procedures. The CSR will be calculated by having
an automated dialing device randomly dial into the Managed
Modem network over meet point billing trunks and calculate
the number of IP sessions established vs. the number of
failures. The formula for calculation is as follows: (#
Successful Attempts / Total Attempts)
- - The CSR will be calculated on a monthly basis. Credits
will be based on the Monthly Average CSR. In the event
that the customer reports the missed SLA within 15 days of -
the of the last day of the previous month, the credits
will be generated for the customer and reflected on the
next invoice.
- - Unsuccessful call attempts caused by outages associated
with maintenance events, customer caused outages or NOTE: CREDITS CANNOT EXCEED
disruptions, the performance of Internet networks CUSTOMER'S TOTAL MRC.
controlled by other companies, or traffic exchange points
which are controlled by other companies shall not be NOTE: CSR SLAS NOT SUPPORTED
included in the calculation of the monthly call success FOR ISDN.
rate.
- - In the event that Level 3 is unable to provide service for
more than 15 consecutive minutes in a given day (a
"Catastrophic Outage"), a one- day credit will be given
for the ports affected. The 15-minute consecutive outage
will be measured from the time that Level 3 Customer
Service is contacted, a trouble ticket is established, and
the time the service has been reestablished. No more than
one daily credit will be given regardless of the outage
time. Catastrophic Outages must be reported to Level 3
within 10 hours of occurrence to receive credit.
- ---------------------------------------------------------------------------------------------------
</TABLE>
(page 1 of 1)
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omitted portions.
<PAGE> 1
EXHIBIT 21.1
LIST OF THE REGISTRANT'S SUBSIDIARIES
1. Universal Access of Virginia, Inc., a Public Service Company under the laws
of the Commonwealth of Virginia.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
reports dated December 10, 1999, July 30, 1999 and October 1, 1999 relating to
the financial statements of Universal Access, Inc., Pacific Crest Networks, Inc.
and Stuff Software, Inc., respectively, all of which appear in such Registration
Statement. We also consent to the references to us under the heading "Experts"
in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Chicago, Illinois
December 15, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<CASH> 844 21,703
<SECURITIES> 0 0
<RECEIVABLES> 703 3,219
<ALLOWANCES> 46 553
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,601 25,126
<PP&E> 266 13,799
<DEPRECIATION> 47 287
<TOTAL-ASSETS> 1,969 40,009
<CURRENT-LIABILITIES> 2,163 11,918
<BONDS> 149 0
939 0
0 35,180
<COMMON> 225 2,170
<OTHER-SE> (1,507) (9,360)
<TOTAL-LIABILITY-AND-EQUITY> 1,969 40,009
<SALES> 0 0
<TOTAL-REVENUES> 1,629 8,583
<CGS> 0 0
<TOTAL-COSTS> 1,256 7,477
<OTHER-EXPENSES> 1,686 10,519
<LOSS-PROVISION> 42 513
<INTEREST-EXPENSE> 27 19
<INCOME-PRETAX> (1,374) (9,059)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,374) 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,374) (9,059)
<EPS-BASIC> (0.05) (0.31)
<EPS-DILUTED> (0.05) (0.31)
</TABLE>
