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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2000.
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______________ to
_______________.
COMMISSION FILE NUMBER 000-26153
--------------------------------
HIGH SPEED ACCESS CORP.
(Exact name of Registrant as specified in its charter)
DELAWARE 61-1324009
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
4100 EAST MISSISSIPPI AVENUE
DENVER, COLORADO 80246
(Address of principal executive offices, including zip code)
303/256-2000
(Registrant's telephone number, including area code)
FORMER NAME, FORMER ADDRESS, AND FORMER YEAR, IF CHANGED SINCE LAST REPORT:
NOT APPLICABLE
---------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Number of shares of Common Stock outstanding as of May 10, 2000...55,668,025
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Index
<TABLE>
<CAPTION>
Page
<S> <C>
Part I - Financial Information
Item 1 - Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000 (Unaudited) and
December 31, 1999 3
Condensed Consolidated Statements of Operations for the three-months ended
March 31, 2000 and 1999 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the
three-months ended March 31, 2000 and 1999 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 13
Part II - Other Information
Item 1 - Legal Proceedings 23
Item 2 - Changes in Securities and Use of Proceeds 23
Item 3 - Defaults upon Senior Securities 23
Item 4 - Submission of Matters to a Vote of Security Holders 23
Item 5 - Other Information 23
Item 6 - Exhibits and Reports on Form 8-K 24
Signatures
</TABLE>
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Item I - Financial Information
Part 1 - Financial Statements
HIGH SPEED ACCESS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
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(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 55,524 $ 53,310
Short term investments 89,304 125,420
Accounts receivable, net of allowance for doubtful accounts of $103
and $63, respectively 606 393
Prepaid expenses and other current assets 3,966 4,308
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Total current assets 149,400 183,431
Property, equipment and improvements, net 47,955 39,308
Intangible assets, net 3,024 3,300
Deferred distribution agreement costs, net 3,817 4,042
Other assets 666 345
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Total assets $ 204,862 $ 230,426
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,921 $ 10,226
Accrued compensation and related expenses 2,971 3,842
Other current liabilities 6,130 3,916
Long-term debt, current portion 1,921 1,527
Capital lease obligations, current portion 3,344 3,176
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Total current liabilities 26,287 22,687
Long-term debt 4,440 4,035
Capital lease obligations 5,848 7,574
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Total liabilities 36,575 34,296
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Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none
issued and outstanding
Common stock, $.01 par value, 400,000,000 shares authorized, 54,397,042
and 54,276,130 shares issued and outstanding at March 31, 2000 and
December 31, 1999, respectively 544 543
Class A common stock, 100,000,000 shares authorized, none issued
and outstanding
Additional paid-in-capital 619,198 618,823
Deferred compensation (264) (288)
Accumulated deficit (450,534) (422,807)
Accumulated other comprehensive loss (657) (141)
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Total stockholders' equity 168,287 196,130
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Total liabilities and stockholders' equity $ 204,862 $ 230,426
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</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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HIGH SPEED ACCESS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Net revenue $ 1,994 $ 299
Costs and expenses:
Operating 15,946 2,123
Engineering 4,912 1,485
Sales and marketing 6,216 2,038
General and administrative (excluding non-cash compensation expense from stock options) 4,033 1,286
Non-cash compensation expense from stock options 24 1,523
Amortization of distribution agreement costs 225 --
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Total costs and expenses 31,356 8,455
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Loss from operations (29,362) (8,156)
Investment income 2,125 144
Interest expense (490) (25)
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Net loss (27,727) (8,037)
Mandatorily redeemable convertible preferred stock dividends -- (518)
Accretion to redemption value of mandatorily redeemable convertible
preferred stock -- (105,232)
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Net loss available to common stockholders $ (27,727) $ (113,787)
============ ============
Basic and diluted net loss available to common stockholders per share $ (0.51) $ (18.35)
============ ============
Weighted average shares used in computation of basic and diluted net loss
available to common stockholders per share 54,329,031 6,200,000
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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HIGH SPEED ACCESS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (27,727) $ (8,037)
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation and amortization 3,603 897
Non-cash compensation expense from stock options 24 1,523
Amortization of distribution agreement costs 225 --
Changes in operating assets and liabilities excluding the effects of acquisitions:
Accounts receivable (213) (167)
Prepaid expenses and other current assets 342 (197)
Other non-current assets (321) (871)
Accounts payable (1,482) 763
Accrued compensation and related expenses (871) 374
Other current liabilities 2,214 895
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Net cash used in operating activities (24,206) (4,820)
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INVESTING ACTIVITIES
Purchase of short-term investments (65,883) --
Sales and maturities of short-term investments 101,483 --
Purchase of property, equipment and improvements, net of leases (7,912) (5,497)
Purchase of customer base -- (204)
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Net cash provided by (used in) investing activities 27,688 (5,701)
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FINANCING ACTIVITIES
Payments on capital lease obligations (2,443) (11)
Proceeds from long-term debt 1,213 --
Payments on long-term debt (414) (6)
Proceeds from exercise of stock options 376 --
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Net cash used in financing activities (1,268) (17)
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Net change in cash and cash equivalents 2,214 (10,538)
Cash and cash equivalents, beginning of period 53,310 17,888
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Cash and cash equivalents, end of period $ 55,524 $ 7,350
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital leases $ 885 $ 84
Property and equipment purchases payable $ 6,543 $ 1,880
Distribution of Darwin Networks, Inc. subsidiary to shareholders $ -- $ 943
Warrants issued in connection with acquisitions $ -- $ 130
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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Item 1 - Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 - The Company and Basis of Presentation
The Company
High Speed Access Corp. and Subsidiaries (hereinafter referred to as the
Company, we, us, or our) provides high speed Internet access via cable modems to
residential and commercial customers in exurban areas. The Company enters into
long-term exclusive contracts with cable system operators to provide them with a
comprehensive "turnkey" service. That service enables a cable system's customers
to receive high speed Internet access. In exchange for providing the Company
with access to its customers, the Company pays the cable operator a portion of
the monthly fees received from an end user that subscribes to the services.
The Company also offers to our cable partners a partial turnkey solution.
In a partial turnkey solution, the Company delivers fewer services and incur
lower costs than in a full turnkey solution but also earns a smaller percentage
of the subscription revenue or a fixed fee on a per subscriber basis. The
Company's cable partners will typically bill the end user and will remit the
Company's percentage of the revenue or the fixed fee. The Company anticipates
that partial turnkey solutions will become a more significant part of its
business mix.
Basis of Presentation
The unaudited condensed consolidated financial statements included herein
reflect all adjustments, consisting only of normal recurring adjustments, which
in the opinion of management are necessary to fairly present the Company's
financial position, results of operations and cash flows for the periods
presented. Certain information and footnote disclosures normally included in
audited financial information prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the Securities
and Exchange Commission's rules and regulations.
The results of operations for the period ended March 31, 2000 are not
necessarily indicative of the results to be expected for any subsequent quarter
or for the entire fiscal year ended December 31, 2000. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported results of operations during the reporting period.
Actual results could differ from those estimates.
Note 2 - Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities" (SFAS 133), which establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for the Company's
year ending December 31, 2001. As the Company does not currently engage in or
plan to engage in derivatives, or hedging transactions there will be no impact
on the Company's results of operations, financial position or cash flows upon
the adoption of SFAS 133.
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in
Financial Statements". SAB 101 summarizes some of the staff's interpretations of
the application of generally accepted accounting principles to revenue
recognition. All registrants are expected to apply the accounting and disclosure
requirements that are described in SAB 101 no later than the second quarter of
the fiscal year beginning after December 15, 1999. Management of the Company is
currently analyzing the impact of SAB 101 but anticipates that the adoption of
SAB 101 will not have a material effect on the Company's results of operations
or financial position.
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Note 3 - Net Loss Per Share
The Company computes net loss per share under the provisions of SFAS No.
128 "Earnings per Share" (SFAS 128) and SEC Staff Accounting Bulletin No. 98
(SAB 98). Under the provisions of SFAS 128, basic and diluted net loss per share
is computed by dividing the net loss available to common stockholders for the
period by the weighted average number of shares of common stock outstanding
during the period. The calculation of diluted net loss per share excludes
potential common shares if the effect is antidilutive. Basic and diluted net
loss available to common stockholders per share for the quarters ended March 31,
2000 and 1999, were $0.51 and $18.35 based on weighted average shares
outstanding of 54,329,031 and 6,200,000, respectively.
Diluted earnings per share is determined in the same manner as basic
earnings per share except that the number of shares is increased assuming
exercise of dilutive stock options and warrants using the treasury stock method
and assuming conversion of the Company's Preferred Stock. In addition, income or
loss is adjusted for dividends and other transactions relating to preferred
shares for which conversion is assumed. The diluted earnings per share amount
equals basic earnings per share because the Company has a net loss, thus the
impact of the assumed exercise of the stock options and the assumed preferred
stock conversion is antidilutive. Options and issued warrants to purchase
3,864,664 shares of common stock at March 31, 2000 were excluded from the
calculation above because they are antidilutive.
In addition, there is a potential to issue additional warrants pursuant to
the agreements set forth in Note 5. These potential warrants have been excluded
from the calculation above because they are not currently measurable and would
be antidilutive. In the future, the Company also may issue additional stock or
warrants to purchase its common stock in connection with its efforts to expand
the distribution of its services. Stockholders could face additional dilution
from these possible future transactions.
Note 4 - Comprehensive Loss
Comprehensive loss, comprised of net loss before mandatorily redeemable
convertible preferred stock dividends and accretion to redemption value of
mandatorily redeemable convertible preferred stock and net unrealized holding
losses on investments totaled $28.2 million and $8.0 for the three months ended
March 31, 2000 and 1999, respectively.
Note 5 - Distribution Agreements
General
As an inducement to certain cable partners to commit systems to the
Company, the Company issues warrants to purchase its common stock in connection
with network service agreements and other agreements, collectively referred to
as distribution agreements.
The Company values warrants to purchase its common stock using an accepted
options pricing model based on the value of the stock when the warrants are
earned. The Company recognizes an addition to equity for the fair value of any
warrants issued, and recognizes the related expense over the term of the
agreement with the cable system to which the warrants relate, generally four to
five years, in accordance with Emerging Issues Task Force Issue No. 96-18,
"Accounting for Equity Instruments that are Issued to other than Employees for
Acquiring or in Conjunction with Selling, Goods or Services."
As of March 31, 2000, various cable partners had earned 198,744 warrants
under network service agreements. Deferred distribution agreement costs of $3.8
million, net of accumulated amortization of $0.7 million were recorded in
conjunction with these warrants at March 31, 2000. Amortization of distribution
agreement costs of $0.2 million was recognized in the statement of operations
for the quarter ended March 31, 2000. Additional deferred distribution agreement
costs may be recorded and amortized in future periods should the cable partners
earn the right to purchase additional common shares based on the number of homes
passed committed to the Company. At March 31, 2000 there were 8.4 million
additional warrants available to be earned under network service agreements.
Note 6 - Commitments and Contingencies
The Company is not a party to any material legal proceedings. In the
opinion of management, the amount of ultimate liability with respect to any
known actions will not materially affect the financial position of the Company.
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Note 7 - Subsequent Events
In May 2000, Lucent Technologies (Lucent) purchased 1,250,000 shares of the
Company's common stock for $10.0 million. In addition Lucent and the Company
entered into a general agreement whereby Lucent will provide equipment and
services to the Company with an initial purchase commitment by the Company of
$5.0 million.
In May 2000, the Company entered into a network services agreement with
Charter Communications (Charter). Under this agreement, Charter committed to
provide the Company exclusive right to provide network services related to the
delivery of Internet access to homes passed in certain cable systems. The
Company will provide partial turnkey services, including system monitoring and
security as well as call center support. Charter will receive the warrants
described in the following paragraph as an incentive to provide the Company
additional homes passed, although it is not obligated to do so. Charter can
terminate these exclusivity rights, on a system-by-system basis, if the Company
fails to meet performance specifications or otherwise breaches the agreement.
The agreement has an initial term of five years and may be renewed at Charter's
option for additional successive five-year terms.
In connection with the network services agreement, the Company and Charter
entered into an amended and restated warrant to purchase up to 12,000,000 shares
of our common stock at an exercise price of $3.23 per share and terminated two
warrants that had been issued to Charter in November 1998. The new warrant
becomes exercisable at the rate of 1.55 shares for each home passed committed to
us by Charter under the network services agreement entered into by Charter and
us in November 1998. The warrant also becomes exercisable at the rate of .775
shares for each home passed committed to us by Charter under the network
services agreement entered into in May 2000 up to 5,000,000 homes passed and at
a rate of 1.55 shares for each home passed in excess of 5,000,000. Charter also
has the opportunity to earn additional warrants to purchase shares of our common
stock upon any renewal of the May 2000 agreement. Such a renewal warrant will
have an exercise price of $10 per share and will be exercisable to purchase
one-half of a share for each home passed in the systems for which the May 2000
agreement is renewed.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-Q contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Such statements are only predictions, involve risks
and uncertainties, and actual events or results may differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below under the heading
"Risk Factors" as well as those discussed in other filings with the Securities
and Exchange Commission, including the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999.
Overview
We are a leading provider of high speed Internet access via cable modem to
residential and commercial end users in exurban areas. In our full turnkey
solution, we generate revenue primarily from the monthly fees we receive from
end users for our cable modem-based Internet access service and for the
traditional dial-up services we offer as part of our end user acquisition
strategy. In our full turnkey solution we generally bill the end user directly
and pay our cable partners a portion of the monthly fee we receive; in these
instances we report our revenues net of the percentage split we pay to our cable
partners. In some instances we receive a flat fee per subscriber from our cable
partners. For promotional purposes, we often provide new end users with 30 days
of free Internet access when they subscribe to our services. As a result, our
revenue does not reflect new end users until the end of the promotional period.
We also receive revenues from renting cable modems to end users.
We also offer to our cable partners a partial turnkey solution. In a
partial turnkey solution, we deliver fewer services and incur lower costs than
in a full turnkey solution but will also earn a smaller percentage of the
subscription revenue or a fixed fee on a per subscriber basis. Our cable
partners typically will bill the end user and remit to us our percentage of the
revenue or the fixed fee. We anticipate that partial turnkey solutions will
become a more significant part of our business mix. In May 2000, the Company
entered into a network services agreement with Charter in which the Company has
agreed to provide partial turnkey services.
We also provide certain services, primarily engineering services related to
design and installation of data network hardware and software necessary to offer
Internet service via cable modems, on a fee for service basis.
Our revenue from dial up services currently is a significant part of our
total revenue. However, we expect this business mix to shift over time as our
dial-up end users migrate to high speed Internet access as end users generally
become aware of the benefits of high speed Internet access. Moreover, although
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we expect cable modem rentals to be a significant part of our revenue during
the next few years, we expect our cable modem rental income to decline as cable
modems become commercially available at lower costs through retail stores and
as they become standard features of personal computers. However, we will save
the cost of purchasing and installing cable modems for end users. In the future
we expect to earn revenues from the local content we provide and, subject to
our agreement with Vulcan Ventures, Incorporated, ("Vulcan"), from additional
services such as Internet telephony.
Our expenses consist of the following:
o Operating costs, which consist primarily of salaries for help desk and
network operations center employees; telecommunications expenses,
including charges for Internet backbone and telecommunications
circuitry; allocated cost of facilities; costs of installing cable
modems for our end users; and depreciation and maintenance of
equipment. In one-way cable systems, where the end user transmits data
back to the cable headend via a standard telephone line, we must
support the telephone return path from the local telephone company's
central office to the cable headend. Accordingly, we incur greater
telecommunications costs in a one-way system than we incur in a
two-way system. Consequently, the rate at which our cable partners
upgrade their systems to two-way capability will affect our operating
margins. We expect our operating costs to grow significantly as we
roll out services in new systems. We may also incur significant fees
if we cancel our telecommunications contracts in advance of the
expiration of the term of the contract. Many of our operating costs
are relatively fixed in the short term. However, as we add new end
users we hope to be able to spread these costs over a larger revenue
base, and, accordingly, decrease our costs per subscriber and improve
our operating margins.
o Engineering expenses, which consist primarily of salaries and related
costs for network design and installation of the telecommunications
and data network hardware and software; system testing and project
management expenses; the development and support of our information
systems; allocated cost of facilities; and depreciation and
maintenance on the equipment used in our engineering processes. We
expect our engineering expenses to grow significantly as we introduce
our services in new markets and expand our network.
o Sales and marketing expenses, which consist primarily of salaries,
commissions and related personnel expenses and costs associated with
the development of sales and marketing materials, database market
analytics, direct mail and telemarketing. We expect that our sales and
marketing expenses will increase significantly as we pursue our growth
strategy.
o General and administrative expenses, which consist primarily of
salaries for our executive, administrative, finance and human resource
personnel; amortization of goodwill; and fees for professional
services. In order to support our planned expansion, we expect to hire
more legal and accounting personnel.
o Non-cash compensation expense from stock options, which equals the
excess of the fair market value of our stock at the time of grant over
the exercise price of the stock options granted to employees and
directors amortized over the vesting period.
o Amortization of distribution agreement costs, which relates to
warrants issued to cable and strategic partners in connection with
network services and other distribution related agreements,
collectively referred to as distribution agreements. We measure the
cost of warrants issued to cable and strategic partners based on the
fair values of the warrants when earned by those partners. Because the
fair value of the warrant is dependent to a large extent on the price
of our common stock, the cost of warrants earned in the future may
vary significantly. Costs of warrants granted in connection with
distribution agreements are amortized over the term of the underlying
agreement. Warrants not directly associated with long-term
distribution agreements are expensed as earned.
Our operating results have varied on a quarterly basis during our short
operating history and may fluctuate significantly in the future due to a variety
of factors, many of which are outside our control. In addition, the results of
any quarter do not indicate the results to be expected for a full fiscal year.
These factors are set forth generally under the caption "Risk Factors" and
particularly in that section under the heading "Our quarterly operating results
are likely to fluctuate significantly and may be below the expectations of
analysts and investors". As a result of the foregoing factors, our annual or
quarterly results of operations may be below the expectations of public market
analysts or investors, in which case the market price of the common stock could
be materially and adversely affected.
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Results Of Operations For The Quarter Ended March 31, 2000 Compared With The
Quarter Ended March 31, 1999
Revenues
Net revenue consists primarily of net monthly subscription fees for cable
modem based and traditional dial-up Internet services, cable modem rental
income, fees for engineering services provided to cable partners and
installation fees and other up front fees from end users. Total net revenue for
the quarter ended March 31, 2000 was $2.0 million, an increase of $1.7 million
over net revenue of $0.3 million for the first quarter of 1999. For the quarters
ended March 31, 2000 and 1999, cable modem based subscription fees contributed
approximately 49% and 48% of the net revenue, traditional dial up service fees
contributed 20% and 35%, cable modem rental fees contributed 25% and 15%,
engineering services provided to cable partners contributed 3% and 0%, and
other fees from end users contributed 3% and 2%, respectively.
Costs and Expenses
Operating. Operating costs for the quarter ended March 31, 2000 were $15.9
million, an increase of $13.8 million over operating costs of $2.1 million for
the first quarter of 1999. The increase in operating costs resulted primarily
from an increase in personnel and personnel related costs for additional staff
in our network operations centers, help desk and field technical support
departments, an increase in telecommunications expense from the rollout of our
service to new markets, our larger subscriber base, depreciation of capital
equipment from the expansion of our network and the installation of cable modems
for additional subscribers.
Engineering. Engineering expenses for the quarter ended March 31, 2000 were
$4.9 million, an increase of $3.4 million over engineering expenses of $1.5
million for the first quarter of 1999. The increase in engineering expenses
resulted from continued network design, system testing, development and support
of information systems and project management, for the evaluation of new
equipment and possible new product offerings and from personnel and personnel
related costs for additional technical staff to support the installation of
cable headend hardware and software in our cable partners' systems.
Sales and Marketing. Sales and marketing expenses for the quarter ended
March 31, 2000 were $6.2 million, an increase of $4.2 million over sales and
marketing expenses of $2.0 million for the first quarter of 1999. The increase
in sales and marketing expenses resulted primarily from an increase in personnel
and personnel related costs to expand our residential and commercial end user
sales force, new cable partner sales force and telemarketing sales force, as
well as an increase in direct marketing and advertising expenses, as we expanded
into more geographic markets.
General and Administrative. General and administrative expenses, excluding
non-cash compensation expense from stock options and amortization of
distribution agreement costs, were $4.0 million for the quarter ended March 31,
2000, an increase of $2.7 million over general and administrative expenses of
$1.3 million for the first quarter of 1999. The increase in general and
administrative expenses resulted from additional personnel and personnel related
costs as we hired personnel to implement procedures and controls to support our
planned expansion and to administer finance, legal and human resource functions.
Non-cash compensation expense from stock options. Non-cash compensation
expense from stock options for the quarter ended March 31, 2000 was $24,000, a
decrease of $1.5 million from the first quarter of 1999 totaling $1.5 million.
These expenses represent the excess of the fair market value of our common stock
over the exercise price of the stock options granted to employees and directors
amortized over the vesting period. The 1999 expense is principally related to a
$1.5 million charge for 189,875 compensatory options issued to our directors
which vested upon grant.
Amortization of Distribution Agreement Costs. Amortization of
distribution agreement costs for the quarter ended March 31, 2000 was $0.2
million, consisting of the amortization of the value of 198,744 warrants earned
under distribution agreements for commitments of homes passed. There was no
expense of this nature during the first quarter of 1999. We expect to incur
additional material non-cash charges related to further issuances of common
stock purchase warrants to our cable and strategic partners in the future. We
will recognize an addition to equity for the fair value of any warrants issued,
and recognize the related expense over the term of the service agreement with
the cable or strategic partner to which the warrants relate. The amount of any
such charges is not determinable until the related warrants are earned. The use
of warrants in these and similar transactions may increase the volatility of our
earnings in the future.
In May 2000, the Company and Charter entered into an amended and restated
warrant to purchase up to 12,000,000 shares of our common stock at an exercise
price of $3.23 per share and terminated two warrants that had been issued to
Charter in November 1998. The new warrant becomes exercisable at the rate of
1.55 shares for each home passed committed to us by Charter under the network
services agreement entered into by Charter and us in November 1998. The warrant
also becomes exercisable at the rate of .775 shares for each home passed
committed to us by Charter under the network services agreement entered into in
May 2000 up to 5,000,000 homes passed and at a rate of 1.55 shares for
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each home passed in excess of 5,000,000. Charter also has the opportunity to
earn additional warrants to purchase shares of our common stock upon any renewal
of the May 2000 agreement. Such a renewal warrant will have an exercise price of
$10 per share and will be exercisable to purchase one-half of a share for each
home passed in the systems for which the May 2000 agreement is renewed.
Net Investment Income. Net investment income was $1.6 million for the
quarter ended March 31, 2000, compared to net investment income of $0.1 million
for the first quarter of 1999. Net investment income represents interest earned
on cash, cash equivalents and short term investments. The increase in investment
income is the result of interest on investments purchased using the net proceeds
of our initial public offering.
Income Taxes. At December 31, 1999, we had accumulated net operating loss
carryforwards for federal and state tax purposes of approximately $63.6 million,
which will expire beginning in 2018. At December 31, 1999, we had net deferred
tax assets of $26.5 million, relating principally to our accumulated net
operating losses. Our ability to realize the value of our deferred tax assets
depends on our future earnings, if any, the timing and amount of which are
uncertain. We have recorded a valuation allowance for the entire net deferred
tax asset as a result of those uncertainties. Accordingly, we did not record any
income tax benefit for net losses incurred for the year ended December 31, 1999
or for the quarter ended March 31, 2000.
Liquidity and Capital Resources
At March 31, 2000, we had cash and cash equivalents of $55.5 million, and
short term investments of $89.3 million, compared with $53.3 million of cash and
cash equivalents and $125.4 million of short term investments at December 31,
1999. We had significant negative cash flow from operating activities for the
quarter ended March 31, 2000. Cash used in operating activities was $24.2
million for the quarter ended March 31, 2000, caused primarily by a net loss of
$27.7 million offset by depreciation and amortization of $3.6 million.
Cash provided by investing activities was $27.7 million for the quarter
ended March 31, 2000, the result of sales and maturities of short term
investments of $101.5 million offset by purchases of short term investments of
$65.9 million. Also, cash paid for capital expenditures totaled $7.9 million for
the quarter ended March 31, 2000. The principal capital expenditures incurred
during this period were for the purchase of headend data network hardware and
software, billing and customer care systems, cable modems and central network
hardware and software, reflecting our expansion into new markets.
Cash used in financing activities for the quarter ended March 31, 2000 was
$1.3 million, a result of payments on capital lease obligations and long-term
debt of $2.9 million offset by $1.2 million in proceeds from long-term debt and
$0.4 million proceeds from the exercise of stock options.
We expect to experience substantial negative cash flow from operating
activities and negative cash flow from investing activities for at least the
next several years due to continued deployment of our services into new markets
and the enhancement of our network and operations. Our future cash requirements
will depend on a number of factors including:
o The pace of the rollout of our service to our cable partners,
including the impact of substantial capital expenditures and related
operating expenses;
o The rate at which we enter into contracts with cable operators for
additional systems;
o The rate at which end users subscribe to our services;
o Changes in revenue splits with our cable partners;
o Price competition in the Internet and cable industries;
o The mix of services offered by us including whether we provide our
services on a full or partial turnkey basis;
o Capital expenditures and costs related to infrastructure expansion;
o The rate at which our cable partners convert their systems from
one-way to two-way systems;
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o End user turnover rates;
o Our ability to protect our systems from telecommunications failures,
power loss and software-related system failures;
o Changes in our operating expenses including, in particular, personnel
expenses;
o The introduction of new products or services by us or our competitors;
o Our ability to enter into strategic alliances with content providers;
and
o Economic conditions specific to the Internet and cable industries, as
well as general economic and market conditions.
Investment Portfolio. Cash equivalents are highly liquid investments with
insignificant interest rate risk and original maturities of 90 days or less and
are stated at amounts that approximate fair value based on quoted market prices.
Cash equivalents consist principally of investments in interest-bearing money
market accounts with financial institutions and highly liquid investment-grade
debt securities of corporations and the United States government.
Short term investments are classified as available-for-sale and, as a
result, are stated at fair value. Short term investments are principally
comprised of highly liquid debt securities of corporations and the U.S.
government. We record changes in the fair market value of securities held for
short term investment as an equal adjustment to the carrying value and equity.
Loan and Lease Facilities. The Company has $8.0 million in loan facilities
under which $6.7 million has been drawn down at March 31, 2000. Additionally,
the Company has $30.0 million in lease facilities under which $11.6 million has
been used at March 31, 2000.
We expect to incur approximately $45 million of capital expenditures in
2000 principally related to the installation of headend data network hardware
and software, cable modems, central network hardware and software for e-mail,
network monitoring, provisioning, web hosting, billing and customer care systems
and furniture and telephone and computer equipment for a new leased customer
care and corporate headquarters facilities. Actual capital expenditures will be
significantly affected by the rate at which end users subscribe for our cable
modem internet access services, which requires us to purchase a cable modem for
each new end user where we provide full turnkey services, as well as the pace of
the rollout of our systems, which requires us to purchase headend data network
hardware and software. Additionally, the amount of capital expenditures will be
affected by the number of systems deployed under the partial turnkey services
model, where the investment in equipment is significantly less than those
choosing full turnkey services. Since Inception, we have financed our operations
primarily through a combination of private and public sales of equity
securities, capital equipment leases and debt.
In May 2000 we entered into an agreement with Lucent under which we will
purchase equipment and services in connection with our deployment of IP
telephony services. Our minimum commitment under this agreement is $5 million.
In addition, Lucent has agreed to assist us in arranging third party equipment
financing. The development of our business may require significant additional
capital in the future to fund our operations, to finance the substantial
investments in equipment and corporate infrastructure needed for our planned
expansion, to enhance and expand the range of services we offer and to respond
to competitive pressures and perceived opportunities, such as investment,
acquisition and international expansion activities. To date, our cash flow from
operations has been insufficient to cover our expenses and capital needs. We
believe our current cash, cash equivalents and short term investments, together
with the proceeds from unused loan facilities totaling $1.3 million, and $18.4
million of available lease financing through various facilities, as well as
additional loan and lease financing facilities will be sufficient to meet our
working capital requirements, including operating losses, and capital
expenditure requirements into 2001, assuming we achieve our business plan. At
such time, or sooner, if we do not achieve our business plan, we will require
additional equity and/or debt financing. There can be no assurance that
additional financing will be available on terms favorable to us, or at all.
Charter can require any lender with liens on our equipment placed in Charter
head ends to deliver to Charter a non-disturbance agreement as a condition to
such financings. We can offer no assurance that we will be able to obtain
additional secured equipment financing for Charter systems subject to such a
condition or that a potential lender will be able to negotiate acceptable terms
of non-disturbance with Charter. The sale of additional equity or convertible
debt securities may result in additional dilution. If adequate funds are not
available on acceptable terms, we may be forced to curtail our operations.
Moreover, even if we are able to continue our operations, the failure to obtain
additional financing could have a material and adverse effect on our business
and financial results and we may need to delay the deployment of our services.
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Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivatives and Hedging
Activities (SFAS 133), which establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for our year ending
December 31, 2001. As we do not currently engage in or plan to engage in
derivatives, or hedging transactions there will be no impact on our results of
operations, financial position or cash flows upon the adoption of SFAS 133.
On December 3, 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in
Financial Statements. SAB 101 summarizes some of the staff's interpretations of
the application of generally accepted accounting principles to revenue
recognition. All registrants are expected to apply the accounting and disclosure
requirements that are described in SAB 101 no later than the second quarter of
the fiscal year beginning after December 15, 1999. Management of the Company is
currently analyzing the impact of SAB 101 but anticipates that the adoption of
SAB 101 will not have a material effect on the Company's results of operations
or financial position.
Risk Factors
You should carefully consider the following factors and other information
in this Form 10-Q and other filings we make with the Securities and Exchange
Commission before trading in our common stock. If any of the following risks
actually occur, our business and financial results could be materially and
adversely affected. In that case, the trading price of our common stock could
decline and you could lose all or part of your investment.
Risks Related To Our Operations
Our Business Is Difficult To Evaluate Because We Have A Limited Operating
History.
Our predecessor companies began offering services to cable operators in
October 1997. Most of our cable modem deployments occurred within the last
twelve months. We do not consider any of the market in which we operate to be
mature. We have recognized limited revenues since our inception. In addition,
our senior management team and other employees have worked together at our
company for only a short period of time. Consequently, we have a limited
operating history upon which our business can be evaluated.
We Have Not Been Profitable And Expect Future Losses.
Since our founding, we have not been profitable. We have incurred
substantial costs to create and introduce our broadband Internet access
services, to operate these services, and to grow our business. We incurred net
losses of approximately $98.6 million from April 3, 1998 (Inception) through
March 31, 2000. Our limited operating history, the dynamic nature of our
industry and our ambitious growth plans make predicting our operating results,
including operating expenses, difficult.
We expect to incur substantial losses and experience substantial negative
cash flow from operations for at least the next several years as we expand our
business. The principal costs of expanding our business will include:
o Substantial direct and indirect selling, marketing and promotional
costs;
o System operational expenses, including the lease of our Internet
backbone, which has a traffic capacity in excess of our current needs;
o Costs incurred in connection with higher staffing levels to meet our
growth;
o The acquisition and installation of the equipment, software and
telecommunications circuits necessary to enable our cable partners to
offer our services; and
o Costs in connection with acquisitions, divestitures, business
alliances or changing technologies.
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If any of these costs or expenses is not accompanied by an increase in
revenues, then our business and financial results could be materially and
adversely affected.
We Cannot Predict Our Success Because Our Business Model Is Unproven, Has
Changed In The Past And May Continue To Change.
Our success depends on continued growth in the use of the Internet and high
speed access services. Although Internet usage and popularity have grown
rapidly, we cannot be certain that this growth will continue in its present
form, or at all. Critical issues concerning the increased use of the
Internet--including security, reliability, cost, ease of access, ease of
installation and customer acquisition and quality of service--remain unresolved
and are likely to affect the development of the market for our services. We do
not believe any cable-based internet access services currently offered by cable
companies have been profitable. Moreover, many industry analysts believe that
Internet access providers will become increasingly reliant upon advertising,
barter and subscription-based revenues from content due to competitive pressures
to provide low cost or even free Internet access.
The success of our business ultimately will depend upon the acceptance of
our services by end users, who in our comprehensive turnkey service will
purchase or rent a cable modem from us and pay both monthly service and
installation fees. As of March 31, 2000 we deployed our services in only 128
cable systems and we have approximately 26,000 residential cable modem end
users. We began offering our services on a partial turnkey basis in the third
quarter of 1999. As of the March 31, 2000, we had initiated partial turnkey
services in 14 systems. In our partial turnkey solution, we deliver fewer
services and incur lower costs than in a full turnkey solution but will also
earn a smaller percentage of the subscription revenue or a fixed fee on a per
subscriber basis. As a result of our new Network Services Agreement with
Charter, we anticipate that partial turnkey services will become a more
significant part of our business mix. Accordingly, we expect that partial
turnkey services will become a larger portion of our business mix, affecting our
future revenues and profitability per subscriber.
Although our primary service offering is high bandwidth Internet access, we
currently derive a substantial portion of our revenues from standard dial-up
Internet access, which we offer as a feeder for our high speed offerings. We
cannot predict whether demand for our high speed Internet access services will
develop, particularly at the volume or prices we need to become profitable. Nor
can we predict whether we can adequately supply services to satisfy that demand
if it develops. We may also not be able to acquire and install customers quickly
enough to meet demand, and the bandwidth we provide may prove to be inadequate.
We have begun to offer DSL on a limited basis, as a reseller for NorthPoint
Communications. We have conducted several trials of IP Telephony equipment and
services with Charter, and have announced our intent to offer IP Telephony as
additional services for our cable partners to offer their customers. In May 2000
we announced our agreement with Lucent to purchase services and equipment in
connection with our deployment of IP telephony services. Our minimum commitment
under this agreement is $5 million. We currently intend to continue the roll out
of DSL and IP telephony, although we do not know whether these services will
become significant to our business or whether we will continue to offer them at
all. Moreover, we may continue to introduce new services or to make changes to
our product offerings to meet our customer demands or to respond to changes in
our evolving industry. Consequently, our business model is likely to continue to
change.
Our Ability To Attract And Retain End Users Depends On Many Factors We Cannot
Control.
Our ability to increase the number of our end users, and our ability to
retain end users, will depend on a number of factors, many of which are beyond
our control. These factors include:
o Our ability to enter into and retain agreements with cable operators;
o The speed at which we are able to deploy our services, particularly if
we cannot obtain on a timely basis the telecommunications circuitry
necessary to connect our cable headend equipment to our Internet
backbone;
o Our success in marketing our service to new and existing end users;
o Competition, including new entrants advertising free or lower priced
Internet access and/or alternative access technologies;
o Whether our cable partners maintain their cable systems or upgrade
their systems from one-way to two-way service;
o The quality of the customer and technical support we provide; and
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o The quality of the content we offer.
In addition, our service is currently priced at a premium to many other
online services and many end users may not be willing to pay a premium for our
service. Because of these factors, our actual revenues or the rate at which we
will add new end users may differ from past increases, the forecasts of industry
analysts, or a level that meets the expectations of investors.
Our Quarterly Operating Results Are Likely To Fluctuate Significantly And May Be
Below The Expectations Of Analysts And Investors.
Our revenues and expenses, and in particular our quarterly revenues,
expenses and operating results have varied in the past and may fluctuate
significantly in the future due to a variety of factors, many of which are
outside of our control. These factors include:
o The pace of the rollout of our service to our cable partners,
including the impact of substantial capital expenditures and related
operating expenses;
o Whether and the rate at which we enter into contracts with cable
operators for additional systems;
o The rate at which new end users subscribe to our services, the rate at
which these customers are installed and provisioned for service, and
the rate at which we retain these customers net of customers who
disconnect ;
o Changes in revenue splits with our cable partners;
o Price competition in the Internet and cable industries;
o The extent to which we provide partial, rather than full turnkey
access;
o Capital expenditures and costs related to infrastructure expansion;
o The rate at which our cable partners convert their systems from
one-way to two-way systems;
o Our ability to protect our systems from telecommunications failures,
power loss and software-related system failures;
o Changes in our operating expenses including, in particular, personnel
expenses;
o The introduction of new products or services by us or our competitors;
o Our ability to enter into strategic alliances with content providers;
and
o Economic conditions specific to the Internet and cable industries, as
well as general economic and market conditions.
In addition, our operating expenses are based on our expectations of the
future demand for our services and are relatively fixed in the short term. We
may be unable to adjust spending quickly enough to offset any unexpected demand
surge or shortfall in demand. A shortfall in revenues in relation to our
expenses could have a material and adverse effect on our business and financial
results.
The quarter-to-quarter comparisons of our results of operations should not
be relied upon as an indication of future performance. It is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. In that event, the price of our common
stock is likely to fall.
We May Not Be Able To Establish Or Maintain Acceptable Relationships With Cable
Operators.
Our success depends, in part, on our ability to gain access to cable
customers. We gain that access through our agreements with cable operators.
There can be no assurance that we will be able to establish or maintain
relationships with cable operators. Even if we are able to establish and
maintain those relationships, there can be no assurance that we will be able to
do so on terms favorable to us or in the quantities we need to become
profitable. If we fail to form partnerships rapidly with a large number of cable
operators, we can be effectively excluded from providing our services in the
systems owned by those operators. Not only can other cable-based broadband
service providers compete against us for an exclusive contract, the cable
operator may decide to offer cable-based Internet
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services directly without assistance from us or our competitors. Delays in
forming relationships and deploying our cable-based services also create windows
of time for alternative broadband access providers to enter the market and
acquire customers.
Furthermore, in order to rapidly deploy our services within a market, we
typically begin installation of our equipment and related telecommunications
circuits prior to the execution of final documentation. If we are unable to
finalize our contractual relationship with a cable operator, if the exclusive
relationship between us and our cable partners, or between our cable partners
and their cable customers, is impaired, or if we do not become affiliated with a
sufficient number of cable operators, our business and financial results could
be materially and adversely affected.
Our Largest Cable Partner Can Terminate Its Contract With Us.
Our largest cable partner is Charter. Charter is an affiliate of Vulcan,
which owns 37.2% of our outstanding common stock as of March 31, 2000. We have
entered into several agreements with Charter, including two network services
agreements. The first network services agreement was entered into in November
1998 and the second in May 2000. Under both agreements, Charter committed to
provide the Company exclusive rights to provide network services related to the
delivery of Internet access to homes passed in certain cable systems.
Under the May 2000 agreement, the Company will provide partial turnkey
services, including call center support for cable modem customers as well as
network monitoring, troubleshooting and security services. The agreement has an
initial term of five years and may be renewed at Charter's option for
additional successive five-year terms. In a partial turnkey solution, we
deliver fewer services and incur lower costs than in full turnkey solutions,
but will also earn a smaller percentage of the subscription revenue based on a
fixed fee per subscriber. Under the November 1998 agreement the Company has
primarily provided comprehensive turnkey services.
Subject to the provisions of the network service agreements, Charter can
terminate our exclusivity rights, on a system-by-system basis, if we fail to
meet performance specifications or otherwise breach our, agreement. Moreover,
Charter can terminate the November 1998 agreement, for any reason, as long as it
purchases the associated cable headend equipment and modems at book value and
pays us a termination fee based on the net present value of the revenues we
otherwise would earn for the remaining term of the agreement from those end
users subscribing to our services as of the date of termination. There can be no
assurances we will meet the benchmarks related to our customer penetration rates
or that Charter will not decide to terminate either agreement for any other
reason. If Charter were to terminate either agreement, in whole or for any
material system, regardless of any termination fee we may receive, our business
and financial results would be materially and adversely affected.
Our agreements with Vulcan Ventures could constrain our ability to generate
revenues from providing content and future services our end users may demand.
Under our programming content agreement with Vulcan, Vulcan has the right
to require us to carry, on an exclusive basis in all cable systems we serve,
content it designates. Vulcan content may include start-up and related web
pages, electronic programming guides, other multimedia information and telephony
services. We will not share in any revenues Vulcan may earn through the content
or telephony services it provides. We must provide all equipment necessary for
the delivery of Vulcan content, although Vulcan will reimburse us for any costs
we incur in excess of $3,000 per cable headend. Vulcan cannot charge us for any
Vulcan content through November 25, 2008; after that date we will be obligated
to pay Vulcan for this content at the lowest fee charged to any Internet service
provider who subscribes to Vulcan content.
Vulcan has the right to prohibit us from providing content or telephony
services that compete with Vulcan content in Vulcan's discretion and can require
us to remove competing content. Many industry analysts believe that Internet
access will become increasingly reliant upon revenues from content due to
competitive pressures to provide low cost or even free Internet access. If
Vulcan were to require us to remove our content or substitute its telephony
services for any we might provide, we could lose a source of additional revenues
and might not recover all related costs of providing our content or telephony
services. Vulcan's ability to prohibit us from providing content and telephony
services means that Vulcan's interests are not necessarily aligned with those of
our other stockholders.
Our Agreement With Road Runner May Not Benefit Us.
Under our agreement with ServiceCo LLC, the entity that provides Road
Runner's cable Internet access and content aggregation services, we may provide
our services as a Road Runner subcontractor to cable operators that we and Road
Runner jointly designate to
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receive our services. We can offer no assurances that Road Runner will agree to
designate any cable operator systems to receive our services. Two of Road
Runner's strategic partners, Time Warner and Media One Group, are in the process
of being acquired and we cannot predict the effect these acquisitions will have
on our contract or on Road Runner. We may not be able to meet any system
deployment schedule proposed by Road Runner. Even if asked to provide services
to a Road Runner-contracted system, we may be asked to deploy far fewer full
turnkey homes than we originally anticipated. In a partial turnkey solution, we
deliver fewer services and incur lower costs than in a full turnkey solution,
but will also earn a smaller percentage of the subscription revenue. Since the
agreement provides that Road Runner will earn one warrant per home passed in
cable systems designated to receive service regardless of whether we deploy a
partial or full turnkey solution, our stockholders could suffer dilution in
exchange for potentially less profitable homes. Consequently, our agreement with
Road Runner may be of no material benefit to us.
Investors May Suffer Substantial Dilution From Other Transactions.
As an inducement to cause Charter to commit additional systems to us in
connection with network services agreements entered into in November 1998 and
May 2000, we have granted Charter a warrant to purchase up to 12,000,000 shares
of our common stock at an exercise price of $3.23 per share. The warrant becomes
exercisable at the rate of 1.55 shares for each home passed committed to us by
Charter under the November 1998 agreement. The warrant also becomes exercisable
at the rate of .775 shares for each home passed committed to us by Charter under
the network services agreement entered into in May 2000 up to 5,000,000 homes
passed and at a rate of 1.55 shares for each home passed in excess of 5,000,000.
Charter also has the opportunity to earn additional warrants to purchase shares
of our common stock upon any renewal of the May 2000 agreement. Such a renewal
warrant will have an exercise price of $10 per share and will be exercisable to
purchase one-half of a share for each home passed in the systems for which the
May 2000 agreement is renewed.
To the extent that Charter becomes eligible to exercise all or a
significant portion of these warrants, our stockholders will experience
substantial dilution. In addition, we have granted Microsoft a warrant to
purchase 387,500 shares of our common stock at an exercise price of $16.25, with
additional warrants issuable for homes passed above 2,500,000 homes passed
committed to us by Comcast. Our agreement with ServiceCo LLC provides for
granting of warrants to purchase one share of our common stock at a price of $5
per share up to a maximum of 5 million shares. We have issued and may in the
future issue additional stock or warrants to purchase our common stock in
connection with our efforts to expand the distribution of our services.
Stockholders could face additional dilution from these possible future
transactions.
One-way cable systems increase our operating costs and may not provide the
quality necessary to attract customers.
Although our service can operate in one-way cable systems, where data can
be transmitted at high speeds from the cable headend to the end user, the end
user in a one-way system can only transmit data back to the cable headend via a
standard phone line. Because we must support the telephone return component of
the system, we incur higher operating costs in one-way systems. Presently only
one-third of the systems where we are or will soon operate our services are
two-way systems. Over time, however, we expect most, if not all, of our cable
partners to upgrade and or rebuild their plants to provide increased bandwidth
and two-way capabilities. We believe faster uploads and the elimination of phone
line return costs make our service more valuable and may lead to higher customer
penetration rates, which in turn benefits the cable operator through higher
revenue. However, upgrading a cable system can be expensive and time-consuming
for the cable operator. Delays in upgrading one-way cable plants also makes our
services vulnerable to competition from alternative broadband technologies, and
may make our cable partner vulnerable to overbuilds by competitors.
Moreover, we do not require our cable partners to make these upgrades and they
have no legal obligation to do so. Consequently, if our cable partners do not
upgrade to two-way capability at the rate we anticipate, our financial results
may be negatively affected.
We May Have Difficulty Managing Our Growth Plans.
To manage our anticipated growth, we must continue to implement and improve
our operational, financial and management information systems; hire, train and
retain additional qualified personnel; continue to expand and upgrade core
technologies; and effectively manage our relationships with our end users,
suppliers and other third parties. Our expansion could place a significant
strain on our services and support operations, sales and administrative
personnel, and other resources. While we believe that we generally have
adequate controls and procedures in place for our current operations, our
billing software is not adequate to meet our growth plans. We are in the
process of replacing our billing software with an integrated billing and
customer care software system that we believe is capable of meeting our planned
future needs. We could also experience difficulties meeting demand for our
products and services. Additionally, if we are unable to provide training and
support for our products, the implementation process will be longer and
customer satisfaction may be
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lower. Our growth plan may include acquisitions. If we acquire a company, we
could have difficulty assimilating its operations, or assimilating and retaining
its key personnel. In addition if the demand for our service exceeds our ability
to provide our services on a timely basis, we may lose customers. There can be
no assurance that our systems, procedures or controls will be adequate to
support our operations or that our management will be capable of exploiting
fully the market for our products and services. The failure to manage our growth
effectively could have a material adverse effect on our business and financial
results.
The Market For Internet Services Is Highly Competitive.
We face competition from many competitors with significantly greater
financial, sales and marketing resources, larger customer bases, longer
operating histories, greater name recognition and more established relationships
with advertisers, content and application providers and/or other strategic
partners than we have. We expect the level of this competition in cable and DSL
Internet access markets to intensify in the future. We face competition from
both cable modem service providers and from providers of other types of data, IP
telephony and Internet services for end users. Due to this intense competition,
there may be a time-limited market opportunity for our cable-based high speed
access and IP telephony services. There can be no assurance that we will be
successful in achieving widespread acceptance of our services before competitors
offer services similar to our current offerings, which might preclude or delay
purchasing decisions by potential customers.
Our competitors in the cable-based Internet access and IP Telephony markets
are those companies that have developed their own cable-based services and
market those services to cable system operators. Other competitors in the
cable-based Internet access and IP telephony markets are those companies seeking
to establish distribution arrangements with cable system operators in exurban
markets and/or provide one-way system capability. In addition, other cable
system operators have launched their own cable-based Internet services that
could limit the market for our services. Our agreement with Charter and other
operators provides us exclusive rights to provide high speed Internet access to
the customer's personal computer. However, Charter and other online service
providers may deploy TV-based Internet access services through set-top boxes or
other devices. Widespread commercial acceptance of any of these competitors'
products could significantly reduce the potential customer base for our
services, which could have a material adverse effect on our business and
financial results.
We also compete with traditional Internet service providers and other
competing broadband technologies including ISDNs, DSLs, wireless and satellite
data services. Moreover, our competitors include long distance inter-exchange
carriers, regional Bell operating companies and other local exchange carriers.
Many of these carriers are offering diversified packages of telecommunications
services, including Internet access, and could bundle these services together,
putting us at a competitive disadvantage. Widespread commercial acceptance of
any of these competing technologies or competitors' products could significantly
reduce the potential customer base for our services, which could have a material
adverse effect on our business and financial results.
Our Ability To Increase The Capacity And Maintain The Speed Of Our Network Is
Unproven.
We may not be able to increase the transmission capacity of our network to
meet expected end user levels while maintaining superior performance. While peak
downstream data transmission speeds across the cable infrastructure approach 10
Mbps in each 6 megahertz (Mhz) channel, actual downstream data transmission
speeds are almost always significantly slower depending on a variety of factors.
These factors include our intentional throttling of data traffic flowing through
the local network out in order to optimize the use our network capacity and to
sell tiered price-service packages, bandwidth capacity constraints between the
cable headend and the Internet backbone, the type and location of content,
Internet traffic, the number of active end users on a given cable network node,
the number of 6 Mhz channels allocated to us by our cable partner, the
capabilities of the cable modems used and the service quality of the cable
operators' fiber-coax facilities. The actual data delivery speed that an end
user realizes also will depend on the end user's hardware, operating system and
software configurations. There can be no assurance that we will be able to
achieve or maintain a speed of data transmission sufficiently high to enable us
to attract and retain our planned number of end users, especially as the number
of the end users grows. Because end users will share the available capacity on a
cable network node, we may underestimate the capacity we need to provide in
order to maintain peak transmission speeds. A perceived or actual failure to
achieve or maintain sufficiently high speed data transmission could
significantly reduce end user demand for our services or increase costs
associated with customer complaints and have a material adverse effect on our
business and financial results.
Our Network May Be Vulnerable To Security Risks.
Despite our implementation of industry-standard security measures the
networks we operate may be vulnerable to unauthorized access, computer viruses
and other disruptive problems. Internet and online service providers in the past
have experienced, and in the future may experience, interruptions in service as
a result of the accidental or intentional actions of Internet users. Because the
cable infrastructure is a shared medium, it is inherently more vulnerable to
security risks than dedicated telephony technologies such as digital subscriber
lines. Moreover, we have no control over the security measures that our cable
partners and end users adopt.
18
<PAGE> 19
Unauthorized access could also potentially jeopardize the security of
confidential information stored in the computer systems maintained by us and our
end users. These events may result in liability to us or harm to our end users.
Eliminating computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to our end users, which could have
a material adverse effect on our business and financial results. In addition,
the threat of these and other security risks may deter potential end users from
purchasing our services, which could have a material adverse effect on our
business and financial results.
We Will Need Additional Capital In The Future And It May Not Be Available On
Acceptable Terms.
The development of our business will require significant additional capital
in the future to fund our operations, to finance the substantial investments in
equipment and corporate infrastructure needed for our planned expansion, to
enhance and expand the range of services we offer and to respond to competitive
pressures and perceived opportunities, such as investment, acquisition and
international expansion activities. To date, our cash flow from operations has
been insufficient to cover our expenses and capital needs. We believe our
current cash, cash equivalents and short term investments, together with the
proceeds from unused loan facilities totaling $1.3 million, and $18.4 million of
available lease financing through various facilities, as well as additional loan
and lease financing facilities will be sufficient to meet our working capital
requirements, including operating losses, and capital expenditure requirements
into 2001, assuming we achieve our business plan. At such time, or sooner if we
do not achieve our business plan, we will require additional equity and/or debt
financing. There can be no assurance that additional financing will be available
on terms favorable to us, or at all. Charter can require any lender with liens
on our equipment placed in Charter headends to deliver to Charter a
non-disturbance agreement as a condition to such financings. We can offer no
assurance that we will be able to obtain additional secured equipment financing
for Charter systems subject to such a condition or that a potential lender will
be able to negotiate acceptable terms of non-disturbance with Charter. The sale
of additional equity or convertible debt securities may result in additional
dilution. If adequate funds are not available on acceptable terms, we may be
forced to curtail our operations. Moreover, even if we are able to continue our
operations, the failure to obtain additional financing could have a material and
adverse effect on our business and financial results and we may need to delay
the deployment of our services. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
We may become subject to risks of international operations.
We are currently at the early stages of evaluating international expansion
opportunities. If we expand internationally, we would become subject to the
risks of conducting business internationally, including:
o Foreign currency fluctuations, which could result in reduced revenues
or increased operating expenses;
o Inability to locate qualified local partners and suppliers;
o The burdens of complying with a variety of foreign laws and trade
standards;
o Tariffs and trade barriers;
o Difficulty in accounts receivable collection;
o Potentially longer payment cycles;
o Foreign taxes;
o Unexpected changes in regulatory requirements including the regulation
of Internet access; and
o Uncertainty regarding liability for information retrieved and
replicated in foreign countries.
If we expand internationally, we will also be subject to general
geopolitical risks, such as political and economic instability and changes in
diplomatic and trade relationships. There can be no assurance that the risks
associated with our proposed international operations will not materially and
adversely affect our business and financial results.
Risks Related To The Market For High Speed Internet Access
Our Cable Partners Could Sell Their Systems Or Be Acquired.
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<PAGE> 20
In recent years, the cable television industry has undergone substantial
consolidation. If one of our cable partners is acquired by a cable operator that
already has a relationship with one of our competitors or that does not enter
into a contract with us, we could lose the ability to offer our cable modem
access services in the systems formerly served by our cable partner, which could
have a material and adverse effect on our business and financial results. Many
of the cable operators with whom we have contracts operate multiple systems,
thus increasing the risk to us if they are acquired. Moreover, it is common in
the cable industry for operators to swap systems, which could cause us to lose
our contract for a swapped system. Even though many of our contracts obligate
our cable partners to pay us a termination fee if they sell their system to
another operator who does not assume our contract, the potential termination fee
may not be adequate to ensure that the successor operator assumes our contract,
or to compensate us fully for the loss of future business in that system.
Our Cable Partners Could Lose Their Franchises.
Cable television companies operate under franchises granted by local or
state authorities that are subject to renewal and renegotiation from time to
time. A franchise is generally granted for a fixed term ranging from five to 15
years, although in many cases the franchise is terminable if the franchisee
fails to comply with the material provisions of its franchise agreement. No
assurance can be given that the cable operators that have contracts with us will
be able to retain or renew their franchises. The non-renewal or termination of
any of these franchises would result in the termination of our contract with the
applicable cable operator. Moreover, cable television operators are sometimes
subject to overbuilding by competing operators who offer competing video and
Internet access services. Moreover, many direct broadcast satellite (DBS)
operators can compete with cable operators and provide Internet access services
to their subscribers. Any such dilution of our cable operator market base can
adversely affect our potential market base.
Our Market Is Characterized By Rapid Technological Change And Our Services Could
Become Obsolete Or Fail To Gain Market Acceptance.
The market for our services is characterized by rapid technological
advances, evolving industry standards, changes in end user requirements and
frequent new service introductions and enhancements. For example, the North
American cable industry has adopted a set of interface specifications, known as
"DOCSIS," for hardware and software to support cable-based data delivery using
cable modems. Our ability to adapt to rapidly changing technology and industry
standards, such as DOCSIS, and to develop and introduce new and enhanced
products and service offerings will be significant factors in maintaining or
improving our competitive position reducing our costs, and our prospects for
growth. If technologies or standards applicable to our services become obsolete
or fail to gain widespread consumer acceptance, then our business and financial
results will be materially and adversely affected.
We currently anticipate that we will use a significant portion of our
working capital to acquire headend, cable modem and other related capital
equipment. The technology underlying that equipment is continuing to evolve. It
is possible that the equipment we acquire could become obsolete prior to the
time we would otherwise intend to replace it, which could have a material
adverse effect on our business and financial results.
We Depend On A Data Transmission Infrastructure Largely Maintained By Third
Parties Or Subject To Disruption By Events Outside Our Control.
Our success will depend upon the capacity, reliability and security of the
infrastructure used to carry data between our end users and the Internet. A
significant portion of that infrastructure is owned by third parties.
Accordingly, we have no control over its quality and maintenance. For example,
we rely on our cable partners to maintain their cable infrastructures. We also
rely on other third parties to provide a connection from the cable
infrastructure to the Internet. Currently, we have transit agreements with
UUNet, a division of MCI WorldCom, and others to support the exchange of traffic
between our data servers, the cable infrastructure and the Internet. Our
operations also depend on our ability to avoid damages from fires, earthquakes,
floods, power losses, telecommunications failures, network software flaws,
transmission cable cuts, Year 2000 problems and similar events. The occurrence
of any of these events could interrupt our services. The failure of the Internet
backbone, our servers, or any other link in the delivery chain, whether from
operational disruption, natural disaster or otherwise, resulting in an
interruption in our operations could have a material adverse effect on our
business and financial results.
We May Be Held Liable For Defamatory Or Indecent Content, As Well As Information
Retrieved Or Replicated.
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<PAGE> 21
In part, our business involves supplying information and entertainment to
customers over the cable systems of our cable system partners. Accordingly we
face the same types of risks that apply to all businesses that publish or
distribute information, such as potential liability for defamation, libel,
invasion of privacy and similar claims, as well as copyright or trademark
infringement and similar claims. A number of third parties have claimed that
they hold patents covering various forms of online transactions or online
technologies. In addition, our errors and omissions and liability insurance may
not cover potential patent or copyright infringement claims and may not
adequately indemnify us for any liability that may be imposed.
The law relating to the liability of Internet and online service providers
for information carried or disseminated through their networks is unsettled.
There are some federal laws regarding the distribution of obscene or indecent
material over the Internet under which we are subject to potential liability.
These risks are mitigated by two federal laws. One, passed in 1996, immunizes
Internet service providers from liability for defamation and similar claims for
materials the Internet service provider did not create, but merely distributed.
The other, passed in 1998, creates a "safe harbor" from copyright infringement
liability for Internet service providers who comply with its requirements, which
we intend to do. These laws apply only in the United States; if we expand our
operations to other countries, our potential liability under the laws of those
countries could be greater.
We May Become Subject To Burdensome Government Regulation Or "Open Access"
Competition.
We may become subject to burdensome government regulation or "open access"
competition. The part of our business that involves installing and maintaining
the equipment used by cable systems to transmit high speed data in a
computer-accessible format is not regulated, but cable businesses are. Changes
in cable regulations, as they relate to our service, could negatively affect our
business in several ways.
First, while cable operators usually classify our service as a "cable
service," the law is unsettled. A federal appeals court recently declined to
treat Internet services as a cable service subject to FCC regulation under the
Telecommunications Act of 1996. If our service is not considered a cable
service, some local cable franchising authorities, in most cases cities or
counties, might claim that our cable partners need a separate franchise to offer
it. This franchise may not be obtainable on reasonable terms, or at all. Even if
the service is treated as cable service, local franchising authorities may seek
to impose "non-discrimination" or "open access" obligations on our cable
partners as a condition of franchise transfer or renewal. A consortium of
dial-up Internet service providers and large telephone companies are encouraging
local franchising authorities to ban the type of exclusive ISP-cable operator
arrangements that we have with our cable partners that make us the exclusive
supplier of high speed data on the cable systems where our service is offered.
If such arrangements are banned, we could face additional competition from other
Internet access providers using the cable system to connect to their customers,
which could have a material adverse effect on our business and financial
results. Moreover, both AOL-Time Warner and AT&T-Mindspring have announced plans
to open their networks to competing Internet service providers in the coming
years. We cannot predict the degree to which such voluntary or involuntary "open
access", will affect our business.
If our service is not considered a cable service, it might be treated as a
"telecommunications service." This classification could subject our cable
partners, and possibly us, to federal and state regulations as
"telecommunications carriers." This could negatively affect our business in
various ways. For example, if we or our cable partners were classified as
telecommunications common carriers, or otherwise subject to common carrier-like
access and non-discrimination requirements in the provision of our Internet over
cable service, we or they could potentially be subject to burdensome
governmental regulations, including those that regulate the terms, conditions
and prices for Internet connection services and interconnections with the public
switched telephone network, and require that we make contributions to the
universal service support fund. The Internet telephony services over cable plant
(commonly known as "Voice over IP") services that we expect to offer and deploy
may also be regulated as a common carrier telecommunications service. We or our
cable partners might then have to get a "telecommunications franchise" or a
license to operate as a "competitive local exchange carrier" from some states or
localities, which might not be available on reasonable terms, or at all. In
addition, regulatory decisions that make DSL technology services easier for
competing telephone companies to deploy over normal telephone lines and less
expensive for customers to buy, could negatively affect our business. The FCC
issued a line-sharing ruling in December 1999 that allows DSL providers to
simply lease the data spectrum of the customer's local loop from the incumbent
carrier. This may obviate the need for the customers to lease a secondary
DSL-provisioned loop from the incumbent carrier in order to obtain high speed
DSL data service, which in turn could make DSL service a more cost-competitive
alternative to our services. Finally, firms controlling digital broadcast
spectrum have announced plans to utilize a portion of that spectrum to offer
consumers high-bandwidth data delivery via broadcast. We cannot predict when or
whether this service will be offered, but if it is offered it could present
material competition to our services and could materially and adversely affect
our success in the marketplace.
We Depend On Our Key Personnel And May Have Difficulty Attracting And Retaining
The Skilled Employees We Need To Execute Our Growth Plan.
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<PAGE> 22
Our future success depends on the continued service of our key personnel,
especially our Chief Executive Officer ("CEO"). Due to recent change in our
executive management, our Chief Operating Officer, Chief Strategy Officer and
Chief Technology Officer positions are currently open. We do not carry key
person life insurance on most of our personnel. Given our early stage and plans
for rapid expansion, the loss of the services of any of our executive officers
or the loss of the services of other key employees could have a material adverse
effect on our business and financial results. Our future success also depends on
our ability to attract, retain and motivate highly skilled employees,
particularly engineering and technical personnel. Competition for employees in
our industry is intense. We may not be able to retain our key employees or
attract, assimilate or retain other highly qualified employees in the future.
From time to time we have experienced, and we expect to continue to experience
in the future, difficulty in hiring and retaining highly skilled employees.
Risk Related To Trading In Our Stock
Because Of Our Relationship With Vulcan Ventures, New Investors Will Have Little
Influence Over Management Decisions.
Vulcan owns 37.2% of our outstanding stock. Vulcan's affiliate, Charter, also
has a warrant to purchase up to 12,000,000 shares of our common stock at an
exercise price of $3.23 per share. The warrant becomes exercisable at the rate
of 1.55 shares for each home passed committed to us by Charter under the network
services agreement entered into by Charter and us in November 1998. The warrant
also becomes exercisable at the rate of .775 shares for each home passed
committed to us by Charter under the network services agreement entered into in
May 2000 up to 5,000,000 homes passed and at a rate of 1.55 shares for each home
passed in excess of 5,000,000. Charter also has the opportunity to earn
additional warrants to purchase shares of our common stock upon any renewal of
the May 2000 agreement. Such a renewal warrant will have an exercise price of
$10 per share and will be exercisable to purchase one-half of a share for each
home passed in the systems for which the May 2000 agreement is renewed.
Accordingly, Vulcan will be able to significantly influence and possibly
exercise control over most matters requiring approval by our stockholders,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may also have the effect of
delaying or preventing a change in control. In addition, conflicts of interest
may arise as a consequence of Vulcan's control relationship with us, including:
o Conflicts between Vulcan, as our controlling stockholder, and our
other stockholders, whose interests may differ with respect to, among
other things, our strategic direction or significant corporate
transactions,
o conflicts related to corporate opportunities that could be pursued by
us, on the one hand, or by Vulcan, on the other hand, or
o conflicts related to existing or new contractual relationships between
us, on the one hand, and Vulcan and its other affiliates, on the other
hand.
In particular, Vulcan is affiliated with Charter, currently our largest
cable partner. Additionally, Vulcan has the exclusive right to provide or
designate the first page our end users see when they log on to our service and,
if it provides that first page, will be entitled to all of the related revenues.
Moreover, Vulcan can prohibit us from providing content that competes with
content it chooses to provide, and can prohibit us from providing telephony
service if it chooses to provide those services.
The Future Sale Of Shares May Hurt Our Market Price.
A substantial number of shares of our common stock are available for
resale. If our stockholders sell substantial amounts of our common stock in the
public market, the market price of our common stock could fall. These sales also
might make it more difficult for us to sell equity securities in the future at
times and prices that we deem appropriate.
There Has Been No Prior Market For Our Common Stock; Our Stock Price Is Likely
To Be Highly Volatile.
Prior to our initial public offering in June 1999, there was no public
market for our common stock. We cannot predict the extent to which investor
interest in us will lead to the development of an active trading market in our
stock or how liquid that market might become. The stock market has experienced
extreme price and volume fluctuations. In particular, the market prices of the
securities of Internet-related companies have been especially volatile. In the
past, companies that have experienced volatility in the market price of their
stock have been the object of securities class action litigation. If we were the
object of securities class action litigation, it could result in substantial
costs and a diversion of our management's attention and resources.
We Have Anti-Takeover Provisions.
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<PAGE> 23
Certain provisions of our certificate of incorporation, our bylaws and
Delaware law, in addition to the concentration of ownership in Vulcan, could
make it difficult for a third party to acquire us, even if doing so might be
beneficial to our other stockholders.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk is limited to interest rate sensitivity, which
is affected by changes in the general level of U.S. interest rates. Our cash
equivalents are invested with high-quality issuers and limit the amount of
credit exposure to any one issuer. Due to the short-term nature of our cash
equivalents, we believe that we are not subject to any material market risk
exposure.
We do not have any foreign currency hedging or other derivative financial
instruments.
Part II - Other Information
Item 1 - Legal Proceedings.
None.
Item 2 - Changes in Securities and Use of Proceeds.
a. On May 3, 2000, Lucent purchased 1,250,000 shares of the Company's common
stock for $10.0 million. This common stock was sold in reliance on the exemption
from registration provided by section 4(2) of the Securities Act.
b. On June 4, 1999, we completed our initial public offering of Common Stock.
Concurrent with the initial public offering, we sold Common Stock to Cisco
Systems, Com21 and Microsoft under stock purchase agreements. The initial
proceeds to the Company after deducting underwriting discounts and commissions
of $13,081,250 were $199,768,750. Through March 31, 2000 the gross proceeds of
the offering have been applied as follows:
Direct or Indirect payment to others for:
<TABLE>
<S> <C>
Underwriting discounts and commissions $ 13,081,250
Other offering expenses $ 1,828,854
Working Capital $ 53,111,896
</TABLE>
None of such payments were direct or indirect payments to investors or officers
or 10% stockholders of the Company. The remainder of the proceeds is invested
in short term, interest bearing investment grade securities.
Item 3 - Defaults upon Senior Securities.
None.
Item 4 - Submission of Matters to a Vote of Security Holders.
None.
Item 5 - Other Information.
None.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
See attached exhibit index.
(b) Reports on Form 8-K
No such reports were filed during the quarter ended March 31, 2000.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
High Speed Access Corp.
Date May 15, 2000 By /s/ Daniel J. O'Brien
------------------------------ ---------------------------------
Daniel J. O'Brien
President
Date May 15, 2000 By /s/ George Willett
------------------------------ ---------------------------------
George Willett
Chief Financial Officer
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<PAGE> 24
Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------ -------------
<S> <C>
10.1 Network Services Agreement dated May 12, 2000 between Charter
Communications, Inc. and High Speed Access Corp.
10.2 Amended and Restated Securities Purchase Warrant dated May 12, 2000
among charter Communications, Inc., Charter Communications Holding
Company, LLC and High Speed Access Corp.
10.3 Registration Rights Agreement dated May 12, 2000 among Charter
Communications, Inc., Charter Communications Holding Company, LLC and
High Speed Access Corp.
10.4 Stock Purchase Agreement dated as of May 3, 2000 between Lucent
Technology, Inc. and High Speed Access Corp.
10.5 Office Building Lease dated as of February 4, 2000 between Koll-Lsi I,
LLC and High Speed Access Corp.
10.6 Forest Green Corporate Office Park Ormsby I Lease dated as of
February 26, 2000 between Faulkner Hinton/Ormsby I, LLC and High Speed
Access Corp.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
NETWORK SERVICES AGREEMENT
This is a NETWORK SERVICES AGREEMENT ("Agreement"), dated and effective
this 12th day of May, 2000, by and between:
HIGH SPEED ACCESS CORP.
4100 E. MISSISSIPPI AVE., SUITE 1150
DENVER, COLORADO 80246 ("HSA")
and
CHARTER COMMUNICATIONS, INC.
12444 POWERSCOURT DR., SUITE 400
ST. LOUIS, MO 63131 ("CHARTER")
RECITALS
A. Charter owns and operates the radio frequency ("RF") cable
television franchises and related hybrid fiber-coaxial landline distribution
systems ("Cable Systems" or "Systems"), and provides Internet access and related
services to certain cable subscribers (the "Charter Pipeline" service).
B. HSA provides high-speed "data over cable" connectivity and related
services to its customers through various sources, including, without
limitation, cable television plants and systems.
C. Charter wishes to retain HSA to provide to Charter certain
residential Tier 2 and above technical support and NOC support in Charter's
Systems in connection with Charter's deployment of Charter Pipeline upon the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the mutuality, receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree:
1. DEFINITIONS.
1.1 "Additional Committed Network Systems" means Committed Network
Systems that Charter adds to EXHIBIT 3 pursuant to Section 2.4 hereof after the
date of this Agreement and during the Term of this Agreement.
1.2 "Applicable Law" means, with respect to any individual,
partnership, limited liability company, corporation, trust, joint venture or
other entity ("Person"), any statute, law, rule, regulation, directive, treaty,
judgment, order, decree or injunction of any federal, state or local authority
that is applicable to or binding upon such Person or to which such Person is
subject.
<PAGE> 2
1.3 "Cable Subscriber" means a cable TV subscriber or potential cable
TV subscriber residing in a "home passed" (i.e., residence or commercial
establishment) with access to a Committed Network System.
1.4 "Charter" means Charter Communications, Inc., a Delaware
corporation, and its affiliates and direct and indirect subsidiaries, and any
successor company as may result from any merger or other business combination or
reorganization of Charter Communications, Inc..
1.5 "Charter Pipeline" means the Charter- branded Charter Pipeline
on-line Internet access service offered by Charter to Data Subscribers for
display on personal computers. Charter Pipeline shall not include IP telephony
service, or any other services.
1.6 "Charter Single Point of Contact" or "CSPOC" means Steven Silva,
Senior Vice President of Corporate Development and Technology for Charter, or
Jeff Jay, Director of New Product Development for Charter, or their respective
nominees whose identities have been provided to HSA.
1.7 "Committed Network Systems" means those Systems in which Charter is
deploying and/or operating Charter Pipeline and has engaged HSA or will engage
HSA to perform the HSA Network Services on behalf of Charter under this
Agreement, and are listed on EXHIBIT 3 attached hereto or are added to EXHIBIT 3
as Additional Committed Network Systems.
1.8 "Confidential Information" means any and all information emanating
from either HSA's business or Charter's business in any form, including the
terms and conditions of this Agreement, as well as all data, summaries, reports
or information of all kinds, whether oral or written, acquired, devised or
developed in any manner by either party, including without limitation, the
Customer Lists and Charter's billing system data. The term "Confidential
Information" shall not include information that is in the public domain;
information known to the recipient party as of the date of this Agreement as
indicated by the recipient's written records, unless the recipient party agreed
to keep such information in confidence at the time of its receipt; and
information properly obtained hereafter from a source who is not under an
obligation of confidentiality with respect to such information; information
independently developed by the receiving party through persons who have not had,
either directly or indirectly, access or knowledge of such Confidential
Information that can be verified by independent evidence; or information
obligated to be disclosed under law or produced under a court order of competent
jurisdiction or valid administrative or congressional subpoena.
1.9 "Customer Lists" means the lists of Cable Subscribers and related
subscriber and billing system information (i.e., name, address, phone number,
other demographics, cable TV service level selection, etc.).
1.10 "Data Subscriber" or "Active Data Subscriber" or "Charter PC Data
Subscriber" means a residential, personal computer-based data Cable Subscriber
who has subscribed and is provisioned to use Charter Pipeline as of the last day
of any calendar month during the Term, regardless of whether they subscribe to
cable TV service.
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<PAGE> 3
1.11 "First Network Services Agreement" means the Network Services
Agreement, dated November 25, 1998, by and between HSA and Charter
Communications Holding Company, LLC, an affiliate of Charter.
1.12 "HSA Network Services" means the residential Tier 2 and above
technical support and NOC support services attributed to HSA in EXHIBIT 1
attached hereto and, if applicable, the deployment services attributed to HSA in
EXHIBIT 2 attached hereto.
1.13 "HSA Single Point of Contact" or "HSPOC" means Tammy Smith, Vice
President of Affiliate Relations - Charter.
1.14 "Launch Date" means the date on which Charter commences billing
for Charter Pipeline in a Committed Network System.
1.15 "Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, by and between HSA, Charter and Charter
Communications Holding Company, LLC, an affiliate of Charter.
1.16 "Specifications and Standards" means, collectively, the technical
specifications and standards to which Charter's cable plant/head-ends must
adhere in order for Charter Pipeline to be distributed and the facilities to
function.
1.17 "Warrant" means, as the context requires, the Amended Warrant
and/or any Renewal Warrant, or the number of Warrant Shares issued or issuable
under the Amended Warrant and/or any Renewal Warrant.
1.18 Other Definitions. The following terms are defined in context in
the paragraphs or Sections indicated:
<TABLE>
<CAPTION>
Capitalized Term Where defined
---------------- -------------
<S> <C>
"Additional Committed Network System Notice" Section 2.4
"Amended Warrant" Section 6.1
"Attainment Measures" Section 2.2.1 of EXHIBIT 2
"ATP" or "Authorization to Proceed" Section 2.5
"Capacity Thresholds" Section M.1 of EXHIBIT 1
"Change" Section 7.2
"Charter Operational Elements" Section 3.1
"Charter Parties" Section 11.1
"Charter Termination Event" Section 13.2
"Claims" Section 11.1
"Conversion Requirements" Section 13.4
"CPI-adjusted" Section 8.4
"CSR" ATTACHMENT 1-A to EXHIBIT 1
"Deployment Estimate" Section 8.3.1
"Deployment Services" Section 2.1 of EXHIBIT 2
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C>
"Deployment TTM Charges" Section 2.1 of EXHIBIT 2
"Expedite Fees" Section N of EXHIBIT 1
"Force Majeure" Section 16
"Head-End Record" Section 2.2 of EXHIBIT 2
"HSA Network Services Charge" Section 6
"HSA Operational Elements" Section 4.1
"HSA Parties" Section 11.3
"HSA Termination Event" Section 13.3
"Initial Term" Section 7.1
"Intellectual Property Laws" Section 14.1.5
"Launch Fee" Section 9.1
"Minimum Thresholds" Section H of EXHIBIT 1
"Miscellaneous TTM Charge" Section M.1. of EXHIBIT 1
"Non-Qualified Call" or "NQC" Section H of EXHIBIT 1
"NQC Charges" Section H of EXHIBIT 1
"NQC Notice Period" Section H of EXHIBIT 1
"Person" Section 1.2
"Proceeding" Section 11.7
"QOS Requirements" Section I.1. of EXHIBIT 1
"Qualified Call" Section H of EXHIBIT 1
"Replacement System" Section 9.2.
"RF" Preamble paragraph A
"Second Anniversary" Section 2.3
"Site Survey" Section 2.2 of EXHIBIT 2
"SPOC" or "SPOCs" Section I of EXHIBIT 1
"Statement" Section 8.5
"Systems" or "Cable Systems" Preamble paragraph A
"Termination Fee" Section 13.5
"Term" Section 7.1
"Ticket" Section H of EXHIBIT 1
"TTM" Section A.1. of EXHIBIT 1
"VAR Support Call" Section L of EXHIBIT 1
"Warrant Shares" Section 13.1.2 2.
</TABLE>
2. EXCLUSIVE RIGHT TO PROVIDE HSA NETWORK SERVICES/AUTHORIZATIONS TO PROCEED.
2.1 Subject to the terms and conditions of this Agreement, Charter
hereby grants and licenses to HSA for the Term, and HSA accepts from Charter for
the Term, the sole and exclusive right and privilege to provide the HSA Network
Services described in EXHIBIT 1 hereto in the Committed Network Systems;
provided, that such right shall not be an exclusive right in any System (i)
previously launched, for which there are existing services as of the date of
this Agreement, (ii) acquired by Charter in the future, for which there are
existing services as of the date of the acquisition of such System, and (iii)
where it is reasonably necessary to comply with any statutes, regulations or
court orders; provided further, that, in the case of clauses (i) and (ii), such
right shall not be an exclusive right only until such time as the
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<PAGE> 5
provider of such existing services no longer provides the services or is
otherwise transitioned out as a provider of such services.
2.2 HSA agrees that, in the geographic areas where HSA and Charter do
business together under this Agreement, it will devote all of its business
activities exclusively as a provider to Charter of the HSA Network Services.
2.3 Charter shall not be required to commit any particular System so
long as Charter commits and releases to HSA (as described in Section 2.5 below)
Systems containing at least (i) an aggregate of 2,000,000 homes passed
(including all homes passed in systems previously committed by Charter to HSA,
other than full turnkey systems) on or prior to May 12, 2001, (ii) an aggregate
of 3,500,000 homes passed (including all homes passed in systems previously
committed by Charter to HSA, other than full turnkey systems) on or prior to May
12, 2002 (the "Second Anniversary"), and (iii) an aggregate of 5,000,000 homes
passed (including all homes passed in systems previously committed by Charter to
HSA, other than full turnkey systems) on or prior to May 12, 2003. Homes passed
in Systems previously committed by Charter to HSA pursuant to prior agreements
or arrangements between Charter and HSA, other than full turnkey systems, may be
included, at Charter's option, for purposes of satisfying the goals set forth in
the preceding sentence.
2.4 During the Term, Charter shall have the right to designate
Additional Committed Network Systems. Such right shall extend to any and all
Cable Systems now owned or hereafter owned, acquired or managed by Charter, and
shall be exercised by written notice from the Charter Single Point of Contact to
the HSA Single Point of Contact (an "Additional Committed Network System
Notice"); provided, that in any Committed Network System or Additional Committed
Network System where services similar to the HSA Network Services are already
being performed by Charter or some other third party, Charter and HSA shall
agree on a case-by-case basis, to the terms and conditions for converting such
System for HSA Network Services, but only to the extent Charter and HSA
determine that there is a conversion process necessary.
2.5 Notwithstanding the foregoing, HSA shall not deploy or perform HSA
Network Services for any Committed Network System unless and until such
Committed Network System has been released to HSA under an "Authorization to
Proceed" or "ATP" signed by the Charter Single Point of Contact as Systems are
certified by Charter as ready to provide personal computer-based data services
to residential customers. Charter will use its best efforts to provide HSA with
a projected list of scheduled Launch Dates for the following year.
2.6 Charter and HSA agree that, upon the execution and delivery of this
Agreement, the Montivallo and Gardendale, Alabama systems shall be placed on
EXHIBIT 3 hereto and deemed for all purposes to be Committed Network Systems
under this Agreement, and that the Additional System Notice and Partial HSAC
Services Supplement, dated April 28, 1999, between HSA and Charter is hereby
revoked and cancelled in all respects without penalty to either party.
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3. GENERAL OBLIGATIONS OF CHARTER. Charter covenants and agrees to:
3.1 perform the services and operational elements described in EXHIBIT
1 and, if applicable, EXHIBIT 2 (the "Charter Operational Elements") in
accordance with industry standards and the terms of this Agreement;
3.2 maintain all connection interfaces of the Charter facilities to the
Committed Network Systems, operate, and maintain and repair its RF-plant/system
(including, without limitation, all coaxial cable, head-end equipment,
connectors, amplifiers, passive devices/splitters, etc.) at its own cost and
expense in accordance with cable plant specifications as prescribed by FCC Part
76 regulations, and repair all line cuts and eliminate signal ingress, egress,
leakage or interruptions in the Committed Network System affecting more than 100
customers that cause variances from such specifications, i.e., to the extent a
service failure is traceable to an RF plant defect or malfunction, Charter will
provide technical personnel within 4 hours or less (or as soon as commercially
practicable) to repair and/or respond to such service failure;
3.3 operate one or more customer support/call centers on a 24 x 7 basis
accessible by toll-free telephone number staffed with an adequate number of
trained representatives to respond to calls and resolve inquiries from Data
Subscribers in the Committed Network Systems regarding Tier 1 troubleshooting
and support as set forth in EXHIBIT 1 (including ATTACHMENT 1-A thereto),
billing and video/RF plant service failures, and escalate Qualified Calls to
HSA;
3.4 operate its billing systems to invoice Data Subscribers and remit
to HSA the HSA Network Service Charges, NQC Charges (if any), Deployment TTM
Charges (if any), and Miscellaneous TTM Charges (if any) as provided in Section
8 and EXHIBIT 1 and, if applicable, EXHIBIT 2; and
3.5 comply with all Applicable Laws.
4. GENERAL OBLIGATIONS OF HSA. HSA covenants and agrees:
4.1 to perform the service and operational elements described in
EXHIBIT 1 and, if applicable, EXHIBIT 2 (the "HSA Operational Elements") on
behalf of Charter in respect of the Committed Network Systems in accordance with
the terms of this Agreement;
4.2 that the HSA Network Services to be performed, the level of
performance thereof and the prices to be charged therefor shall at all times
conform to industry standards and shall be at least comparable to, and remain
competitive with, the type of, performance level of and price of services
provided by other providers of services similar to the HSA Network Services;
4.3 that if HSA offers services comparable to the HSA Network Services
to other parties, it shall extend the same price and terms for such services to
Charter;
4.4 to operate one or more 365 x 24 x 7 customer support/call center(s)
and data centers (NOCs) accessible by toll-free telephone number staffed with an
adequate number of trained
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representatives to accept and resolve Qualified Calls/Tier 2 inquiries from Data
Subscribers, all as more specifically set forth in EXHIBIT 1 (including
ATTACHMENT 1-A thereto); and
4.5 comply with all Applicable Laws.
5. INTELLECTUAL PROPERTY.
5.1 Charter acknowledges that the names and marks "HSA", "HSA Network",
"High Speed Access Network", the "HSA Data Network" and other HSA logos, program
names, trademarks, service marks, domain names, meta tags, programs, manuals,
documentation, codes and other support materials covered by this Agreement or
otherwise used by HSA, are the exclusive property of HSA. Charter has not and
will not acquire any proprietary rights thereto by reason of this Agreement, and
Charter shall have no rights to use such names, marks, logos, variations or
titles except at the times and in a manner expressly approved by HSA.
5.2 HSA acknowledges that the names and marks "Charter," "Charter
Communications," "Wired World," "Charter Pipeline," "Charter Digital,"
"Chartercom.com" and "Charter.net," and other Charter-related logos, programs,
names, trademarks, service marks, domain names, meta tags, programs, manuals,
documentation, codes and other support materials covered by this Agreement or
otherwise used by Charter or its affiliates, are the exclusive property of
Charter or such affiliate. HSA has not and will not acquire any proprietary
rights thereto by reason of this Agreement, and HSA shall have no rights to use
such names, marks, logos, variations or titles except at the times and in a
manner expressly approved by Charter.
6. AMENDMENT TO CLASS A WARRANT AND CLASS B WARRANT.
6.1 Simultaneously with the execution of this Agreement, Charter and
HSA shall enter into an Amended and Restated Securities Purchase Warrant
substantially in the form of EXHIBIT 5 hereto (the "Amended Warrant" that will
amend and restate the Class A Securities Purchase Warrant No. R001, dated
November 25, 1998 and Class B Securities Purchase Warrant No. R001, dated
November 25, 1998.
6.2 The Amended Warrant shall:
6.2.1 subject to approval by HSA's board of directors, provide
for the issuance upon exercise by Charter (to the extent earned) of up to
12,000,000 shares (subject to adjustment) of Common Stock; par value $0.01, of
HSA (the "Warrant Shares"), and entitle Charter to earn and purchase Warrant
Shares in an amount equal to the number of Homes Passed in Committed Network
Systems and Additional Committed Network Systems (i) on a .775 Warrant Share per
every home passed basis at a strike price of Three Dollars and Twenty Three
Cents ($3.23) per share (subject to adjustment) for an aggregate commitment of
up to Five Million (5,000,000) homes passed under this Agreement (without
reference to full turnkey systems committed by Charter to HSA under the First
Network Services Agreement), (ii) on a 1.55 Warrant Share per every home passed
basis at a strike price of Three Dollars and Twenty Three Cents ($3.23) per
share (subject to adjustment) for additional homes passed under this
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Agreement (without reference to full turnkey systems committed by Charter to HSA
under the First Network Services Agreement), and (iii) on a 1.55 Warrant Share
per every home passed basis for homes passed in systems committed by Charter to
HSA under the First Network Services Agreement (without reference to homes
passed under this Agreement);and
6.2.2 provide that Warrants earned under this Agreement shall
vest (i.e., be eligible for exercise) at such time as the applicable home passed
is or becomes part of a Committed Network System under Section 2 of this
Agreement, provided that the Warrants earned under this Agreement may only be
exercised to the extent of homes passed released for deployment under Section
2.5 hereof for HSA Network Services under an ATP (this condition applies only to
Committed Network Systems and not to full turnkey systems under the First
Network Services Agreement).
6.3 Upon any renewal of this Agreement with respect to any or all of
the Committed Network Systems for additional terms of five (5) years (each a
"Renewal Term"), HSA will provide to Charter on the respective renewal date,
additional securities purchase warrants (each a "Renewal Warrant") that will
entitle Charter to earn and purchase Warrant Shares in an amount equal to the
number of homes passed in Committed Network Systems on a one-half (.5) Warrant
Share per every home passed basis at a strike price of Ten Dollars ($10.00) per
share (subject to adjustment). The number of Warrant Shares subject to the
Renewal Warrant shall be determined based upon the number of homes passed
committed to HSA during the initial 5-year term and each 5-year renewal term.
6.4 The Amended Warrant and Renewal Warrants earned under this
Agreement shall be exercisable with respect to the Committed Network Systems
covered under this Agreement for a period of seven and one-half (7 1/2) years
after the date such rights are earned in each instance, and shall not expire
until the right to purchase all Warrant Shares earned have been exercised or are
no longer exercisable.
6.5 As of June 30, 2000, and continuing on a quarterly basis
thereafter, Charter shall deliver, and HSA shall agree to and accept, the
Warrant Receipt (as defined in the Amended Warrant), in accordance with the
terms of the Amended Warrant.
7. TERM OF AGREEMENT; EXPIRATION.
7.1 The term of this Agreement shall commence effective as of the date
set forth in the preamble hereto, and continue for a term of five (5) years (the
"Initial Term" and, together with any Renewal Terms, the "Term"), as long as HSA
provides the HSA Network Services as set forth in this Agreement continuously
throughout the Term, Charter's obligation to pay HSA Network Services Charges
with respect to any particular Committed Network System committed to HSA during
the term shall survive for a period of five (5) years from the date such
Committed Network System is launched. Charter shall have the option to renew
this Agreement for additional successive Renewal Terms on the same terms and
conditions (except for the Launch Fee); provided, that Charter's obligation to
pay HSA Network Services Charges with respect to that Committed Network System
shall also be extended by an additional 5-year period; provided further, that
the HSA Network Services Charges applicable to Committed Network Systems where
Charter received a Launch Fee described in Section 8.1 hereof shall
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be reduced during the Renewal Term such as to become equivalent with the HSA
Network Services Charges applicable to Committed Network Systems described in
Section 8.2 hereof.
7.2 For purposes of Section 7.1 above, (a) if a Committed Network
System is expanded or a System that was not previously committed to HSA is added
to such Committed Network System, or (b) if two or more Committed Network
Systems are combined into one Committed Network System (any of the foregoing, a
"Change"), HSA's obligation to provide the HSA Network Services and Charter's
obligation to pay HSA Network Services Charges shall be extended in accordance
with the following:
(a) in the case of the expansion of a Committed Network System or
the addition of a System that previously was not committed to
HSA, the number of months added to the initial 5-year term
shall be determined based on the following formula:
(AxB)/(B+C), where
A = the number of months expired from the date
of launch under the initial 5-year term
until the date of the Change,
B = the number of Homes Passed added to the
Committed Network System as a result of the
Change, and
C = the number of Homes Passed in the
Committed Network System prior to the
Change; and
(b) in the case of the combination of two or more launched
Committed Network Systems, the number of months added to the
term of the first of such Committed Network Systems to be
launched shall be determined based on the following formula:
(AxB)/(B+C), where
A = the difference in the number of months
expired from the date of launch under the
initial 5-year term until the date of the
Change,
B = the number of Homes Passed in the
Committed Network System launched last, and
C = the number of Homes Passed in the
Committed Network System launched first.
8. FEES FOR SERVICES. During the Term, Charter will compensate HSA for
the HSA Network Services (the "HSA Network Services Charges") as follows:
8.1 With respect to each Committed Network System for which HSA
pays Charter a Launch Fee, Charter shall pay to HSA $7.50 per month per Charter
PC Data Subscriber for the first year
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from the date such Committed Network System is launched, and $8.31 per month
(CPI-adjusted once annually) per Charter PC Data Subscriber for the following
four (4) years thereafter.
8.2 With respect to all other Committed Network Systems, Charter shall
pay to HSA $7.50 per month (CPI-adjusted once annually after the first year) per
Charter PC Data Subscriber for five (5) years from the date such Committed
Network System is launched.
8.3 In addition to the HSA Network Services Charges described in
Sections 8.1 and 8.2 above, which charges HSA warrants will be, throughout the
Term hereof, generally competitive with industry standards for the volume and
scope of services provided, Charter will also compensate HSA for HSA Network
Services that exceed the Minimum Thresholds (i.e., NQC Charges, VAR Support
Calls) as set forth in EXHIBIT 1 hereto:
8.3.1 Any invoiced Deployment Services and Deployment TTM
Charges (which may be billed on a completed or progress basis by HSA) shall be
based upon estimates provided by HSA (i.e., a "Deployment Estimate") and
approved/accepted by Charter (through the respective HSPOC and CSPOC) prior to
performance. HSA's Deployment Estimates will be based upon and are qualified by
the system questionnaire/Head-End Record information furnished by Charter. In
the case where Charter selects HSA to perform Deployment Services prior to
completion and receipt of the Head-End Record, HSA's Deployment Estimate will be
based upon HSA's Site Survey results; and
8.3.2 Any invoiced Miscellaneous TTM Charge (which may be
billed on a completed project or progress basis by HSA) shall be based upon an
estimate provided by HSA and a standard rate card to be developed by HSA and
approved/accepted by Charter (through the respective HSPOC and CSPOC) prior to
performance.
8.4 As used herein, "CPI-adjusted" means that effective as of May 1 of
each calendar year during the Term for which a CPI adjustment is to be made to
HSA Network Services Charges in Sections 8.1 and 8.2 hereof, the HSA Network
Services Charge shall automatically be adjusted in accordance with changes in
the Consumer Price Index, All Urban Consumers, All Items (1982-84 = 100) as
published by the Bureau of Labor Statistics, U.S. Department of Labor (the
"CPI"). The CPI figure for December 31, 1999 is established to be the base index
figure. On or before March 1 of each calendar year during the Term for which a
CPI adjustment is to be made, HSA shall provide Charter with a notice setting
forth the CPI figure for the preceding calendar year (December 31) and the
adjustment to the HSA Network Services Charges, effective as of May 1 of that
year and continuing throughout the next twelve (12) months, which shall be an
increase based on the percentage such CPI for the preceding calendar year has
increased as compared with the base CPI figure. There shall be no adjustment if
such CPI figure is lower than the base CPI figure;
8.5 Within forty-five (45) days following the end of each and every
calendar month during the Term thereof, Charter will deliver to HSA a statement
(a "Statement") showing the computation of (identified by Committed Network
System), and remit a check for, the HSA Network Services Charges, based on the
number of Active Data Subscribers as of the month-end billing cycle and the
books and records maintained by Charter in accordance with generally accepted
accounting principles, consistently applied; provided, that if Charter's beta
extends beyond 60 days in a particular Committed
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Network System, Charter shall commence payment of the HSA Network Service
Charges based on an assumed .3333% per month penetration.
8.6 HSA will remit to Charter an invoice, which shall be reasonably
detailed (and identified by Committed Network System), covering any
discrepancies in HSA Network Services Charges previously paid by Charter,
Miscellaneous TTM Charges, NQC Charges or VAR Support Call charges, or any
agreed to Deployment Services or Deployment TTM Charges. Charter will remit to
HSA a check for the amount of such invoice within forty-five (45) days following
receipt of HSA's invoice. If Charter objects to any invoice delivered by HSA,
Charter must notify HSA in writing within thirty (30) days following receipt
thereof, setting forth in specific detail the basis for Charter's objection and
Charter's proposal for any adjustments to the invoice. HSA and Charter shall
seek in good faith to reach agreement within thirty (30) days following HSA's
receipt of Charter's written notice of objection. If HSA and Charter are unable
to reach agreement within such time period, then a "Big-5" accounting firm, as
agreed upon by HSA and Charter (the "Third Party Accounting Firm"), shall be
engaged to review the invoice and shall make a determination that represents
either agreement with HSA or with Charter, or a compromise between such
positions. The determination of the Third Party Accounting Firm shall be
delivered as soon as practicable following the engagement of the Third Party
Accounting Firm, and shall be final, conclusive and binding upon HSA and
Charter. The non-prevailing party shall pay the fees and expenses of the Third
Party Accounting Firm.
8.7 Subject to twenty (20) business days advance notice, during the
Term hereof and for one year thereafter, each party or its authorized
representatives may, at its own expense, visit the other party's offices during
regular business hours, subject to suitable protections relating to
confidentiality and non-disclosure, to inspect books and records to the extent
necessary to verify fees due hereunder. If any audit of Statements, or invoices
undertaken in accordance with this paragraph discloses a discrepancy, the
audited party shall pay such amount to the auditing party as shall be due them,
and if the audit discloses a ten percent (10%) or greater discrepancy, the
audited party shall also reimburse the auditing party for all costs incurred by
the auditing party in connection with such audit. Such examination shall be
limited to fees payable during the then current calendar year and prior calendar
year. Each party shall have the right to audit the final calendar year of the
Agreement up to one year after the expiration or termination of the Agreement.
9. LAUNCH FEES.
9.1 With respect to each Committed Network System launched or intended
to be launched on or before the Second Anniversary, within forty-five (45) days
of HSA's receipt of an ATP for such Committed Network System, HSA will pay
Charter, at Charter's option (as specified on the ATP), a launch fee (the
"Launch Fee") of $3.00 per home passed by such Committed Network System;
provided, that with respect to the Committed Network Systems in Long Beach and
St. Louis, the aggregate amount of such Launch Fee shall be $1,000,000.00 for
each such Committed Network System.
9.2 Charter shall refund such Launch Fee to HSA with respect to a
particular Committed Network System if (i) such Committed Network System is not
launched by November 30, 2002, or (ii) Charter withdraws such Committed Network
System prior to the expiration of this
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Agreement for any reason other than an HSA Termination Event; provided, however,
that Charter shall not be required to refund any Launch Fee to HSA with respect
to any Committed Network System so withdrawn by Charter if (x) within three (3)
months after the date of such withdrawal, Charter commits to HSA a replacement
System or Systems with a comparable number of homes passed and active Charter PC
Data Subscribers (such System or Systems, a "Replacement System"), (y) in the
case where a Committed Network System is withdrawn by Charter because it has
been acquired by a third party, such third party retains HSA as a provider of
HSA Network Services for that System on terms that are not materially less
favorable to HSA than the terms of Agreement, or (z) Charter pays the
Termination Fee to HSA with respect to such System. HSA shall not be required to
pay a Launch Fee on Replacement Systems.
10. CONFIDENTIAL INFORMATION.
10.1 Each party agrees that it shall not, during or after the Term of
this Agreement, permit the duplication, use, or disclosure of any Confidential
Information to any person (other than an employee, agent, or representative of
the other party who must have such information for the performance of its
obligation hereunder), unless such duplication, use or disclosure is
specifically authorized by the other party in writing. Without limiting the
generality of the foregoing, each party shall (a) not disclose any Confidential
Information to any third person without the express written consent of the other
party; (b) not use, directly, indirectly, or in concert with any other person,
any Confidential Information for any purpose other than the performance of their
obligations under this Agreement; (c) use reasonable diligence, and in no event
less than that degree of care that such party uses in respect to its own
confidential information of like nature, to prevent the unauthorized disclosure
or reproduction of such information. Without limiting the generality of the
foregoing, to the extent that this Agreement permits the copying of Confidential
Information, all such copies shall bear the same confidentiality notices,
legends, and intellectual property rights designations that appear in the
original versions.
10.2 Any party obligated to disclose information under law or to
produce information under a court order of competent jurisdiction or valid
administrative or congressional subpoena shall give notice thereof to the other
party and shall reasonably cooperate with any attempt by the party so notified
to enjoin such disclosure or production of information.
10.3 HSA may for tax, audit and statutory compliance purposes retain a
computer filecopy of Charter's Customer Lists or other accumulated customer care
information until such time as HSA's regular procedures for elimination of such
data would normally delete or destroy such information, provided that HSA shall
maintain the confidentiality of such information and not utilize such
information for its own commercial purposes.
11. INDEMNITIES.
11.1 HSA agrees to indemnify and save harmless Charter and its
officers, directors, employees, agents, representatives, affiliates, successors
and assigns (collectively, the "Charter Parties") from any liabilities,
lawsuits, penalties, claims or demands finally awarded or settled (including the
costs, expenses and reasonable attorneys' fees on account thereof)
(collectively, "Claims") that may be made for injuries, including death to
persons, resulting from (i) HSA's negligent or willful acts or omissions or
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those of persons employed by HSA, or (ii) any equipment owned and employed by
HSA to provide the HSA Network Services so long as the injury was not caused by
the injured person.
11.2 HSA agrees to indemnify and save harmless the Charter Parties from
any Claims arising out of or in connection with HSA's breach (or alleged breach)
of any covenants, warranties or representations made herein.
11.3 Charter agrees to indemnify and save harmless HSA and its
officers, directors, employees, agents, representatives, affiliates, successors
and assigns (collectively, the "HSA Parties"), from any Claims that may be made
for injuries, including death to persons, resulting from (i) Charter's negligent
or willful acts or omissions or those of persons employed by Charter, or (ii)
any equipment owned and employed by Charter to provide Charter Pipeline so long
as the injury was not caused by the injured person.
11.4 Charter agrees to indemnify and save harmless HSA from any Claims
arising from Charter's management, operation and control of Charter Pipeline.
11.4 Charter agrees to indemnify and save harmless the HSA Parties from
any Claims arising out of or in connection with Charter's breach (or alleged
breach) of any covenants, warranties or representations made herein.
11.5 HSA agrees to indemnify and save harmless the Charter Parties from
any Claims arising from HSA's management, operation, control or provision of the
HSA Network Services.
11.6 Any person or entity entitled to indemnification hereunder shall
promptly notify the indemnifying party of any action, suit, proceeding or
investigation ("Proceeding") for which the indemnification is sought, provided
that any failure to so notify the indemnifying party will not relieve the
indemnifying party from any liability or obligation which it may have to any
indemnified party except to the extent of any material prejudice to the
indemnifying party resulting from such failure. If any Proceeding is brought
against an indemnified party, the indemnifying party will be entitled to
participate therein and to assume the defense thereof, with counsel reasonably
satisfactory to the indemnified party, within fifteen (15) days after notice
shall have been given to it by the indemnified party pursuant to the preceding
sentence. Each indemnified party will be obligated to cooperate reasonably with
the indemnifying party, at the expense of the indemnifying party in connection
with such defense and the compromise or settlement of any such Proceeding.
Notwithstanding the foregoing, the indemnified party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii) the
indemnifying party shall not have employed counsel to have charge of the defense
of such action within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party shall have reasonably concluded that
there may be defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the indemnifying party
shall not have the right to direct the defense of such action on behalf of the
indemnified party), in any of which events such fees and expenses shall be borne
by the indemnifying party. Anything in this Section 11 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement or
any claim or
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action effected without its written consent; provided, however, that such
consent shall not be unreasonably withheld.
12. Limitation of Liability and Disclaimer of Warranty.
12.1 NOTWITHSTANDING THE INDEMNITIES SET FORTH IN SECTION 11 ABOVE, AND
EXCEPT FOR CHARTER'S PAYMENT OF THE TERMINATION FEE (IF APPLICABLE) AND EXCEPT
AS OTHERWISE SET FORTH IN SECTION 13 HEREOF, IN NO EVENT SHALL HSA AND CHARTER
BE LIABLE TO ONE ANOTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS ARISING FROM OR RELATED TO THE
BREACH OF THIS AGREEMENT, EVEN IF HSA OR CHARTER HAD BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. CHARTER AND HSA WILL EACH MAINTAIN APPROPRIATE
POLICIES OF INSURANCE STANDARD IN THE INDUSTRY RELATING TO GENERAL LIABILITY,
CASUALTY AND WORKERS COMPENSATION INSURANCE TO COVER THEIR RESPECTIVE EMPLOYEES
AGAINST INJURY TO THEMSELVES OR OTHERS AND CASUALTY ACCIDENTS WHILE WORKING ON
OR IN THE OTHER'S PREMISES/SYSTEMS.
12.2 NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, HSA'S AND
CHARTER'S LIABILITIES TO ONE ANOTHER (EXCEPT FOR THE PAYMENT OF ANY APPLICABLE
TERMINATION FEE AND EXCEPT AS OTHERWISE SET FORTH IN SECTION 13 HEREOF) UNDER
THIS AGREEMENT, WHETHER UNDER CONTRACT LAW, TORT LAW, OR OTHERWISE, SHALL BE
LIMITED TO THE ACTUAL AMOUNT OF DAMAGES (AS LIMITED BY SECTION 11 ABOVE)
INCURRED BY CHARTER OR HSA.
13. TERMINATION EVENTS; EFFECT OF TERMINATION; OTHER.
13.1 Termination Events. The following shall be deemed "Termination
Events":
13.1.1 HSA fails to perform the HSA Network Services with
respect to a particular Committed Network System, or with respect to a material
number of Data Subscribers within a Committed Network System, or fail to comply
with the performance specifications for the HSA Network Services or commits a
material breach of this Agreement, the Amended Warrant or the Registration
Rights Agreement, and has not cured such failure or breach to Charter's
reasonable satisfaction within sixty (60) after Charter has provided HSA with
written notice of such failure or breach;
13.1.2 HSA becomes insolvent, or a petition under any
bankruptcy act shall be filed by or against HSA (which petition shall not have
been dismissed within thirty (30) days thereafter), or HSA executes an
assignment for the benefit of creditors, or a receiver is appointed for HSA or
its assets, or HSA takes advantage of any insolvency or any like statute;
13.1.3 HSA merges with another party or experiences a change
in control. For the purpose of this Section 13.1.3, a "change in control" shall
occur if (i) any Person or any Persons acting together that would constitute a
"group" (a "Group)") for purposes of Section 13(d) of the Securities Exchange
Act of 1934, or any successor provision thereto, together with any Affiliates or
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Related Persons thereof, shall beneficially own (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, or any successor provision
thereto) at least 50% of the aggregate voting power of all classes of voting
stock of HSA, (ii) any Person or Group, together with any Affiliates or Related
Persons thereof, shall succeed in having a sufficient number of its nominees
elected to the board of directors of HSA such that such nominees, when added to
any existing director remaining on the board of directors of HSA after such
election who was a nominee of or is an Affiliate or Related Person of such
Person or Group, will constitute a majority of the board of directors of HSA,
and (iii) the Chief Executive Officer of HSA on the date hereof shall no longer
be employed by HSA in such capacity; provided, that any event described in
clause (i) or (ii) above will not constitute a "change of control" where the
relevant Person or Group, together with any relevant Affiliates or Related
Persons, consists exclusively of HSA, any Affiliate or any Person who is an
officer, director or 10% shareholder of HSA or any Affiliate (or an entity
controlled by any of the foregoing) as of the date of this Agreement. For the
purposes of this definition, (a) the term "Person" shall include an individual,
corporation, partnership, limited liability company, association, trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof, (b) the term "Affiliate" shall mean a Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified, and (c) a
"Related Person" of any Person means any other Person directly or indirectly
owning (1) 5% or more of the outstanding common stock of such Person (or, in the
case of a Person that is not a corporation, 5% or more of the equity interest in
such Person), or (2) 5% or more of the combined voting power of the voting stock
of such Person;
13.1.4 Charter defaults in any material respect in the
performance of any of its obligations hereunder, and has not cured such default
to HSA's reasonable satisfaction within sixty (60) after HSA has provided
Charter with written notice of such default; or
13.1.5 Charter becomes insolvent, or a petition under any
bankruptcy act shall be filed by or against Charter (which petition shall not
have been dismissed within thirty (30) days thereafter), or Charter executes an
assignment for the benefit of creditors, or a receiver is appointed for Charter
or its assets, or Charter takes advantage of any insolvency or any like statute.
13.2 HSA Remedies. In addition to all of HSA's other rights and
remedies at law or equity as limited by Section 12 hereof, HSA has the right to
(i) terminate this Agreement, (ii) renegotiate this Agreement, (iii) refuse to
provide HSA Network Services to, or withdraw HSA Network Services from, a
particular Committed Network System, if there has been a Termination Event as
set forth in Sections 13.1.4 or 13.1.5 hereof (each, a "Charter Termination
Event"). HSA's selection of any one of these remedies shall not preclude HSA
from selecting any other of such remedies for the same or other Charter
Termination Event. In the event that a Charter Termination Event occurs which is
limited to a particular Committed Network System, HSA may exercise the forgoing
rights only with respect to the Committed Network System in question and not
this entire Agreement.
13.3 Charter Remedies. In addition to all of Charter's other rights and
remedies at law or equity as limited by Section 12 hereof, if there has been a
Termination Event as set forth in Sections 13.1.1, 13.1.2 or 13.1.3 hereof
(each, an "HSA Termination Event"), Charter has the right, at its option, to (i)
terminate this Agreement, (ii) renegotiate this Agreement, or (iii) withdraw
such Committed Network
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<PAGE> 16
System or such Data Subscribers, and elect to provide the service directly or
through another provider; provided, that Charter shall not be required to pay
the HSA Network Services Charges with respect to any such Committed Network
System from the date Charter terminates the HSA Network Services with respect to
that Committed Network System, and Charter shall retain the Launch Fee, if any,
and all Warrants under the Amended Warrant and any Renewal Warrants earned prior
to the termination date with respect to such Committed Network System. Charter's
selection of any one of these remedies shall not preclude Charter from selecting
any other of such remedies for the same or other HSA Termination Event. In the
event that an HSA Termination Event occurs which is limited to a particular
Committed Network System, Charter may exercise the forgoing rights only with
respect to the Committed Network System in question and not this entire
Agreement.
13.4 Actions upon Termination. Except as set forth in Section 13.5 to
the contrary, upon any termination or cancellation of this Agreement as to a
particular Committed Network System for any reason whatsoever: (i) such
Committed Network System shall be removed from EXHIBIT 3 and from this
Agreement, (ii) HSA shall comply with the Conversion Requirements (defined
below) with respect to such Committed Network System; and (iv) HSA shall
transfer to Charter all Confidential Information, Customer Lists, and any data
related to or about the Data Subscribers relating to the applicable Committed
Network Systems. As used herein, "Conversion Requirements" means that HSA will
continue to provide the HSA Network Services to Charter (at Charter's cost on a
direct or pass-through basis from HSA) for a period of not less than 160 days
from the termination date, and will work with Charter to transition Data
Subscribers to any services Charter may offer directly or through another
service provider.
13.5 Termination other than for an HSA Termination Event. In the event
Charter, prior to the expiration of this Agreement, terminates this Agreement in
whole or in part with respect to a particular Committed Network System or
withdraws a particular Committed Network System that has been committed to HSA
under an ATP for any reason other than an HSA Termination Event, Charter shall
pay to HSA a termination fee (the "Termination Fee") equal to the number of
Homes Passed in the affected Committed Network Systems times:
(i) $5.00 if termination occurs in months 1-12 from the Launch
Date;
(ii) $4.00 if termination occurs in months 13-24 from the Launch
Date;
(iii) $3.00 if termination occurs in months 25-36 from the Launch
Date;
(iv) $2.00 if termination occurs in months 37-48 from the Launch
Date; or
(v) $1.00 if termination occurs in months 49-60 from the Launch
Date;
provided that Charter shall not be required to pay the Termination Fee with
respect to such Committed Network System if (a) Charter continues to pay to HSA
the HSA Network Services Charges and, within three (3) months after the date of
such withdrawal, commits a Replacement System to HSA, with respect to which HSA
shall provide the HSA Network Services for the balance of the 5-year term of the
withdrawn Committed Network System plus the number of months that elapsed
between the withdrawal of the original Committed Network System and the
commitment of a Replacement System, or (b) a third-party retains HSA as a
provider of services for that Committed Network System on terms that are not
materially less favorable to HSA than the terms of this Agreement; provided
further, that, whether
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<PAGE> 17
Charter pays such Termination Fee or is not required to pay such Termination Fee
under either clause (a) or (b) above, Charter shall retain the Launch Fee, if
any, and any and all Warrants earned under the Amended Warrant and any Renewal
Warrant, with respect to such Committed Network System.
14. REPRESENTATIONS AND WARRANTIES.
14.1 HSA Representations and Warranties. HSA hereby represents and
warrants to Charter as follows:
14.1.1 HSA is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware, and is duly
qualified to do business as a foreign corporation in all jurisdictions in which
it conducts its business, except where the failure to be so qualified would not
have a material adverse effect on its business.
14.1.2 HSA's execution, delivery, and performance of this
Agreement has been duly authorized by all requisite corporate action, and this
Agreement constitutes a legally valid and binding obligation of HSA enforceable
in accordance with its terms, except as may be affected by laws relating to
bankruptcy or insolvency or the application by a court of equitable principles.
14.1.3 HSA's execution, delivery, and performance of this
Agreement shall not violate, conflict with and/or result in a breach or default
under HSA's certificate of incorporation, bylaws or other charter documents, or
any judgment, award, decree, agreement or other instrument to which HSA is a
party.
14.1.4 No approval, authorization, consent, or order or filing
with any court, or governmental or administrative agency or any third party is
required in order for HSA to enter into, deliver, and perform this Agreement and
the transactions contemplated herein.
14.1.5 HSA either owns or has properly licensed all rights
under patent, copyright, trademark, trade secret, and other domestic and foreign
intellectual property laws (collectively, "Intellectual Property Laws") that are
necessary or required to perform the HSA Network Services, including, without
limitation, equipment, software and software licenses that HSA shall use or
shall provide in connection with the HSA Network Services to be performed by HSA
hereunder. HSA's provision and/or operation of the HSA Network Services shall
not violate or infringe any Intellectual Property Laws or violate or infringe
any rights of third parties.
14.2 Charter Representations and Warranties. Charter hereby represents
and warrants to HSA as follows:
14.2.1 Charter is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business as a foreign corporation in
all jurisdictions in which it conducts its business, except where the failure to
be so qualified would not have a material adverse effect on its business.
-17-
<PAGE> 18
14.2.2 Charter's execution, delivery, and performance of this
Agreement has been duly authorized by all requisite corporate action, and this
Agreement constitutes a legally valid and binding obligation of Charter
enforceable in accordance with its terms, except as may be affected by laws
relating to bankruptcy or insolvency or the application by a court of equitable
principles.
14.2.3 Charter's execution, delivery, and performance of this
Agreement shall not violate, conflict with and/or result in a breach or default
under its certificate of incorporation, bylaws or other charter documents, or
any judgment, award, decree, agreement or other instrument to which it is a
party.
14.2.4 No approval, authorization, consent, or order or filing
with any court, or governmental or administrative agency or any third party is
required in order for it to enter into, deliver, and perform this Agreement and
the transactions contemplated herein.
14.2.5 Charter either owns or has properly licensed all rights
under Intellectual Property Laws that are necessary or required to offer and
operate Charter Pipeline, including, without limitation, equipment, software,
software licenses or content that Charter shall use or shall provide in
connection with the Charter Pipeline. Charter's provision and/or operation of
Charter Pipeline shall not violate or infringe any Intellectual Property Laws or
violate or infringe any rights of third parties.
15. INDEPENDENT CONTRACTORS. All work performed by any party in
connection with the HSA Network Services described in this Agreement shall be
performed by such party as an independent contractor and not as the agent,
employee, joint venturer or partner of the other party. All persons furnished by
any party hereto shall be for all purposes be solely such party's employees or
agents and shall not be deemed to be employees of the other party for any
purpose whatsoever. Each party hereto shall furnish, employ and have exclusive
control of all persons to be engaged in performing their respective services
under this Agreement and shall prescribe and control the means and methods of
performing such services by providing adequate and proper supervision. Nothing
contained herein shall be deemed to create a relationship of joint venture,
associates, principal and agent or partnership between the parties hereto and
neither party shall hold itself out of the contrary. Each party is acting as
principal hereunder.
16. FORCE MAJEURE. Neither party shall be responsible for any delay or
failure in performance of any part of this Agreement to the extent that such
delay or failure is caused by fire, flood, explosion, war, lightning, embargo,
government requirement, riots or civil commotion, acts of civil or military
authority, strikes or other labor unrest, shortages of materials or supplies,
power failures/surges, acts or omissions of global internet Access providers or
telecom carriers/utilities, acts of God or other similar causes or contingencies
beyond its reasonable control (i.e., a "Force Majeure"). Such party's
performance of its obligations hereunder shall be suspended during such period;
provided, that such party shall be obligated to use commercially reasonable
efforts to cure any such delay or failure to perform as promptly as possible to
the extent it relates to its portion of the general obligations under this
Agreement; provided, further, that the party invoking the protections herein
stated shall as soon as reasonably
-18-
<PAGE> 19
practicable, give the other party notice of the event and a projection of the
period in which such party expects to effect a cure.
17. ASSIGNMENT. HSA shall not have the right to assign this Agreement
to any Person without the prior written consent of Charter, except that HSA may,
without Charter's consent, assign its rights, but not its obligations, to a
subsidiary of HSA; provided, that no such assignment shall relieve HSA of
liability for its obligations under this Agreement. Charter may assign this
Agreement to any Person, and this Agreement shall be binding and inure to the
benefit of its successors and assigns. Each party shall be permitted to
collaterally assign and grant a security interest in its contract rights arising
under this Agreement to secure financing from its commercial lenders. All
assignments in contravention of this Section 17 shall be null and void and of no
force and effect. Either party shall provide the other party with thirty (30)
days prior written notice of any permitted assignment hereunder.
18. AMENDMENTS, MODIFICATIONS, OR SUPPLEMENTS. The parties may amend,
modify or supplement this Agreement provided that it is done in writing signed
by the authorized representatives of each party and all such changes reference
this Agreement and identify the specific articles or sections to be amended,
modified, or supplemented.
19. NOTICES. All notices, demands, or other communications herein
provided to be given or that may be given by any party to the other shall be
deemed to have been duly given when made in writing and delivered in person, or
upon receipt, if: (a) deposited in the U.S. mail, postage prepaid, certified
mail, return receipt requested; or (b) sent by nationally recognized overnight
courier, and addressed as follows:
Notices to HSA: HIGH SPEED ACCESS CORP.
4100 E. Mississippi Ave., Suite 1150
Denver, CO 80246
Attn: Dan O'Brien, CEO
Phone: 303-256-2000, fax: 303-256-4558
With a copy to: HIGH SPEED ACCESS CORP.
4100 East Mississippi Ave., Suite 1150
Denver, CO 80246
Attn: John G. Hundley, General Counsel
Phone: 502-515-3342, fax: 502-515-3101
-19-
<PAGE> 20
Notices to Charter: CHARTER COMMUNICATIONS, INC.
12444 Powerscourt Dr., Suite 400
St. Louis, MO 63131
Attn: Steven E. Silva
SVP of Technology
Phone: 314-965-0555
Fax: 314-909-0801
With a copy to: CHARTER COMMUNICATIONS, INC.
12444 Powerscourt Dr., Suite 400
St. Louis, MO 63131
Attn: Curt Shaw, Senior Vice President
and General Counsel
Phone: 314-965-0555
Fax: 314-965-8793
or to such address as the parties may provide to each other in writing from time
to time.
20. OBLIGATIONS TO SURVIVE. The parties recognize and agree that the
obligations of the other party under Sections 1, 5, 6, 10, 11, 12, 13, 15 and 17
through 30 of this Agreement shall survive the termination or expiration of this
Agreement.
21. GOVERNING LAW. The validity, construction, interpretation, and
performance of this Agreement shall be governed by and construed in accordance
with the laws (without reference to the conflicts of laws rules) of the State of
Delaware.
22. EQUITABLE RELIEF. HSA acknowledges that the HSA Network Services
set forth herein are of a special, unique and extraordinary character which
gives it a peculiar value, the loss of which may not be adequately or reasonably
compensated by damages in an action at law, and that HSA's failure to perform
its obligations under this Agreement shall cause Charter irreparable injury or
damage. In addition to any other right or remedy given to Charter under this
Agreement or at law or in equity, including injunctive relief, Charter shall, in
the event HSA fails to perform its obligations under this Agreement, be entitled
to specific performance relief.
23. HEADINGS. The headings contained in this Agreement are for
convenience of reference only and are not intended to have any substantive
significance in interpreting this Agreement.
24. WAIVERS. Any waiver by either party of any breach of any term or
condition hereof shall be effective only if in writing and such writing shall
not be deemed to be a waiver of any subsequent or other breach, term or
condition of this Agreement. No failure or delay on the part of any party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.
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<PAGE> 21
25. AUTHORITY; NO CONFLICTING AGREEMENT. The officers signing on behalf
of the parties to this Agreement acknowledge that they have read and understand
this Agreement and hereby warrant that each has full power and authority to
execute this Agreement and bind the respective parties hereto. Each party
further represents that it is not bound by any other agreement that would
prevent full performance of this Agreement.
26. ENTIRE AGREEMENT. This Agreement and the Exhibits and Attachments
hereto (which are incorporated herein by and where reference is made thereto),
together with the Amended Warrant (and any Renewal Warrant) and the Registration
Rights Agreement constitute the entire agreement among the parties hereto with
respect to the HSA Network Services to be provided hereunder, and replaces and
supersedes all prior agreements, written and oral, relating to the subject
matter hereof, between and among the parties to this Agreement.
27. SEVERABILITY. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement.
28. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive the right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
29. EQUAL CONSTRUCTION. This Agreement is negotiated and drafted by
parties equally represented by counsel, and no clause or provision herein should
be construed as having been drafted other than equally by both parties.
30. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which is an original and all of which, taken together, shall constitute a
single instrument.
[THIS SPACE IS INTENTIONALLY BLANK.]
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<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first written above.
HIGH SPEED ACCESS CORP.
By: /s/ High Speed Access Corp.
----------------------------------------
Daniel O'Brien, Chief Executive Officer
CHARTER COMMUNICATIONS, INC.
By: /s/ Charter Communications, Inc.
----------------------------------------
Curtis S. Shaw, Senior Vice President
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<PAGE> 23
EXHIBIT 1
CHARTER/HSA NETWORK SERVICES MODEL
(CHARTER IN-HOUSE SYSTEMS SOLUTION)
A. INTRODUCTION AND MISCELLANEOUS MATTERS.
A.1 Unless otherwise expressly stated herein, this Exhibit 1 covers
only those HSA Network Services that HSA provides in support of
residential-grade, two-way cable modem customers and one-way cable modem
customers existing in Committed Network Systems in St. Louis and Riverside,
prior to their upgrade to two-way cable modems, in exchange for the HSA Network
Services Charges. Charter will not market additional residential, one-way cable
modem service in Committed Network Systems; provided, that if Charter markets
such residential, one-way cable modem service in Committed Network Systems,
Charter will pay to HSA the incremental cost to HSA resulting therefrom plus
20%.
A.2 "Commercial-grade" cable modem services, "off-plant" alternative
access technologies and any 56Kbps dial-up services are not covered by this
Agreement. For the purposes of this Agreement, commercial-grade cable modem
services shall mean cable modem services provided to an account (i) located at
an address that is known to be a business address and utilizing cable modem
services not typically used by residential accounts, (ii) priced by Charter as
commercial-grade cable modem services under Charter's rate card, or (iii) that
could reasonably be determined by the parties to have commercial activity based
on upstream bandwidth utilization.
A.3 Any other services, including any Deployment Services that the
parties may agree to, and other miscellaneous services, shall be charged
separately on a time, travel and materials ("TTM") basis. Except for NQC Charges
and VAR Support Calls, all TTM charges and any other activities and tasks not
specifically covered by this Agreement will be separately negotiated and quoted
and performed pursuant to a SOW/statement of work-purchase orders or Deployment
Estimates signed by respective authorized system managers, and approved at the
corporate level by the HSPOC and CSPOC.
A.4 HSA shall not be obligated to initiate or perform any HSA Network
Services unless Charter has first submitted to HSA a completed Head-End Record
for each Committed Network Systems. Charter is responsible for completing the
Head-End record document prior to installation of the CMTS and any alpha
testing, and for updating such record as required due to changes at the System
level.
B. CHARTER GENERAL OPERATIONAL AGREEMENTS. Charter agrees that it will,
among other things:
B.1. perform the services and operational elements described in the
paragraph D chart below (the "Charter Pipeline Operational Elements") in
accordance with industry standards and the terms of this Agreement;
B.2 commencing on or before August 1, 2000, operate one or more
customer support/call centers on a 24 x 7 basis to respond to calls and resolve
inquiries from Charter PC Data Subscribers in the Committed Network Systems
regarding Tier 1 troubleshooting and support as provided
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<PAGE> 24
below and in this Agreement, billing and video/RF Plant service failures, and
escalate Qualified Calls to HSA;
B.3 operate its billing system to properly track and invoice Charter PC
Data Subscribers, and remit to HSA the Statement, and all HSA Network Services
Charges due, within 45 days following the end of each calendar month during the
Term, and remit to HSA all other ancillary HSA Network Service charges (i.e.,
NQC Charges, VAR Support Calls, etc.) invoiced by HSA within 45 days following
the date of HSA's undisputed invoice.
C. HSA GENERAL OPERATIONS AGREEMENTS. HSA agrees that it will, among other
things:
C.1 perform the services and operational elements described in the
paragraph D chart below (the "HSA Operational Elements") on behalf of Charter in
respect of the Committed Network Systems in accordance with industry standards
and the terms of this Agreement;
C.2 operate one or more 24 x 7 customer support/call center(s) and data
centers (NOCs) accessible by toll-free telephone number staffed with an adequate
number of trained representatives to accept and resolve Qualified Calls/Tier 2
inquiries from Charter PC Data Subscribers; and
C.3 operate a management accounting and billing system that will track
and invoice Charter on a monthly basis for all NQC Charges, VAR Support Calls,
TTM Charges, etc.
D. RESPONSIBILITY CHART. The following chart summarizes the respective
responsibilities of Charter and HSA in provisioning, delivery and support of
residential, two-way and pre-existing one-way Charter Pipeline in Committed
Network Systems. Certain operational elements for Charter Pipeline are discussed
in greater detail following the chart and additional detail regarding Tier 1 v.
Tier 2 support/responsibility guidelines are set forth in ATTACHMENT 1-A. Where
there is a discrepancy between what is summarized in the chart versus what is
summarized in detail following the chart, the detail following the chart shall
govern.
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<PAGE> 25
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
CHARTER PIPELINE
OPERATIONAL ELEMENTS CHARTER HSA NOTES
- ------------------------------------- ------- ------- ---------------------------------------------------------
<S> <C> <C> <C>
Backbone - National and Regional X X Charter orders, installs, maintains and operates its own
dedicated network, or accesses Internet cloud through
Regional National Access Providers
- ---------------------------------------------------------------------------------------------------------------------
Head-End to Backbone Circuits /LAN X Charter orders and manages/monitors installation and
& WAN operates and maintains.
- ---------------------------------------------------------------------------------------------------------------------
Deployment Services: Site Survey, X Charter performs and is responsible for all Deployment
RF and IP design, configuration, Services, unless HSA is engaged to perform these
installation, site coordination, services under separate agreement.
and milestone management
- ---------------------------------------------------------------------------------------------------------------------
DOCSIS CMTS X Charter purchases, installs, operates and maintains,
unless HSA is engaged to perform under separate agreement.
- ---------------------------------------------------------------------------------------------------------------------
At least two 6Mhz Channels, 1 X Charter makes available and maintains RF plant up to FCC
downstream, 1 upstream and Charter performance standards
- ---------------------------------------------------------------------------------------------------------------------
DOCSIS Modems X Charter purchases all modems and is responsible for all
retail sales and installs.
- ---------------------------------------------------------------------------------------------------------------------
Local Sales X Charter rents and equips all local sales offices, and
performs all local sales and coordinates all special
promotions and events.
- ---------------------------------------------------------------------------------------------------------------------
Install CD-ROM X HSA provides Charter with customized install CD ROM
(see below), including User Agreement with Acceptable Use
and Privacy Policies.
- ---------------------------------------------------------------------------------------------------------------------
CD-ROM duplication X Charter makes all needed copies of install CD.
- ---------------------------------------------------------------------------------------------------------------------
CD-ROM updates X HSA provides any required customization or upgrades
to CD-ROM due to periodic changes to Microsoft's
operating system and Internet Explorer.
- ---------------------------------------------------------------------------------------------------------------------
Customer installs X Charter installs an additional cable outlet (if
required), software for Charter Pipeline, an Ethernet
card or USB adapter and the cable modem, and provides
basic customer training. Charter is also responsible
for any in-home servicing of Charter PC Data
Subscribers.
- ---------------------------------------------------------------------------------------------------------------------
Marketing and Customer Acquisition X Charter provides national marketing materials and is
responsible for the reproduction, distribution and
customization of those materials. Charter expects to
achieve 4% annual penetration growth.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-25-
<PAGE> 26
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
CHARTER PIPELINE
OPERATIONAL ELEMENTS CHARTER HSA NOTES
- ------------------------------------- ------- ------- ---------------------------------------------------------
<S> <C> <C> <C>
Cross-Channel Promotion X Charter provides avails.
- ---------------------------------------------------------------------------------------------------------------------
CSR Training for Tier 1 Support X Charter provides training for Tier 1 support. Charter
provides training facilities and equipment.
- ---------------------------------------------------------------------------------------------------------------------
"Train the Trainer" X HSA provides - see below.
- ---------------------------------------------------------------------------------------------------------------------
Pricing X Charter is responsible for all retail pricing decisions.
- ---------------------------------------------------------------------------------------------------------------------
Customer acquisition and set-up X Charter inputs necessary customer data through an
HSA-provided interface for all cable modem, e-mail
and Web Hosting accounts, and the News service
provisioning, and logs end-user assents to End User
Agreement.
- ---------------------------------------------------------------------------------------------------------------------
Tier 1 Customer Care X Charter performs all Tier 1 customer care services,
using local staff and/or a national call center,
including channeling all initial customer calls through
Charter's customer support center, handling all RF
troubleshooting, Charter Pipeline sales and
installation, disconnect, billing, and change in service
calls. Charter routes/escalates Tier 2 calls to HSA
(including IP or PC support) on a 24 X 7 basis.
Charter's CSRs will have the ability to enter REMEDY
trouble tickets and PING cable modems by March 31, 2001.
- ---------------------------------------------------------------------------------------------------------------------
ICON for Pinging Modem and X HSA to provide.
Escalation of Qualified Calls
- ---------------------------------------------------------------------------------------------------------------------
REMEDY license for Tier 1 X Charter acquires, and may choose to acquire from HSA,
and maintains.
- ---------------------------------------------------------------------------------------------------------------------
Tier 2 Customer Care X HSA performs all Tier 2 customer care. HSA accesses
required information from Charter's subscriber database
such as account status through Charter's billing system.
- ---------------------------------------------------------------------------------------------------------------------
Tier 3 Customer Care X X HSA and Charter will consult and agree upon a plan to
resolve Tier 2 matters that cannot be resolved by Tier 2
services. This may require local Charter staff
involvement.
- ---------------------------------------------------------------------------------------------------------------------
Billing, Provisioning and Data X Charter provisions and bills all modem customers.
Subscriber Account Management
- ---------------------------------------------------------------------------------------------------------------------
DST/Cable Data and CSG tunneling X HSA to build an interface to Charter's DST and CSG
interface billing systems
- ---------------------------------------------------------------------------------------------------------------------
Post-Launch CPE/network Charter is responsible for Internet access, end-user
configuration installation process, and installation materials,
including the CD ROM
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-26-
<PAGE> 27
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
CHARTER PIPELINE
OPERATIONAL ELEMENTS CHARTER HSA NOTES
- ------------------------------------- ------- ------- ---------------------------------------------------------
<S> <C> <C> <C>
National/Regional NOCs, Data X X Charter manages all network capacity through tools
Traffic management provided by HSA. Charter is responsible for procurement
and maintenance of additional circuit capacity. HSA
provides backup capacity monitoring and surveillance,
and Tier 2 troubleshooting as discussed below.
- ---------------------------------------------------------------------------------------------------------------------
IP Address Sourcing and Capacity X Charter to provide IP Addresses and is responsible
for insuring adequate capacity.
- ---------------------------------------------------------------------------------------------------------------------
IP Address Routing added to X HSA will remotely input/configure new IPs into
Router(s) routers within 48 hours of notification.
- ---------------------------------------------------------------------------------------------------------------------
National and Local Content and X
Content Management
- ---------------------------------------------------------------------------------------------------------------------
Local Content Ad Sales X
- ---------------------------------------------------------------------------------------------------------------------
E-mail X HSA provides through separate e-mail agreement, which
shall include a 99% system uptime guarantee.
- ---------------------------------------------------------------------------------------------------------------------
News X HSA provides common news feed to Charter servers and
is subject to 99% system uptime guarantee.
- ---------------------------------------------------------------------------------------------------------------------
Local Content Server X Charter purchases, operates and maintains.
- ---------------------------------------------------------------------------------------------------------------------
Collocation/Equipment Floor Space X
- ---------------------------------------------------------------------------------------------------------------------
Passwords Charter and HSA will mutually agree upon a password
management system.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
E. CUSTOMER INSTALLATION CD ROM DISK
HSA will design a CPE System Configuration CD-ROM for RPO Data
Subscribers to facilitate installations in an efficient and repeatable manner.
The software contained on the CD ROM shall address:
o Confirmation of the customer's minimum hardware/software
requirements*
[X] Configuration of the required parameters
[X] Delivery/installation of Internet Explorer
[X] Delivery/installation of Outlook Express mail client
[X] Marketing and sales product materials X| Online tutorial
[X] User agreement
-27-
<PAGE> 28
* MINIMUM REQUIREMENTS ARE DEFINED AS:
Minimum of 110M of free space on a hard drive
Windows 95/98/2000/NT, LINUX, or Macintosh 7.x or
greater operating system
16 Mb of RAM
CD-ROM drive
Ethernet card
The CDs shall be branded for Charter/Charter Pipeline. Charter is
responsible for the reproduction and reproduction cost of the CDs.
HSA will expand the CD-ROM to at least remain current with industry
standard install disks. Any re-mastered CD-ROM shall be made available by HSA
within ninety (90) days of general availability (non-beta) of new releases of
Internet Explorer, Outlook Express, Real Player, MS Player and any other major
plug-in which is used by at least 20% of Internet users.
F. CHANGE MANAGEMENT
Assuming software upgrades can be installed and managed remotely, HSA
shall comply with the following:
o Vendor's General Release of Cable Modem Image/Software release
tested within 60 days, deployed to alpha head-ends within 90
days, and released to all head-ends within 180 days.
o Vendor's General Release of Image for Router, CMTS or Server
tested within 60 days, deployed to alpha head-ends within 90
days, and released to all head-ends within 180 days.
o HSA to maintain database of configuration of each head-end,
including release of software running. Charter is responsible for
submitting the Head-End Record and for updating information to
the database, except for changes effected by HSA (which changes
HSA shall provide notice to Charter regarding).
o HSA will use its best efforts to fix any software that directly
and materially impacts the quality of Charter's service to its
customers in a negative way.
G. CHARTER TIER 1 SUPPORT
Charter is responsible for all marketing, customer acquisition, account
set-up and in-home CPE installation activities. All Charter PC Data Subscribers
requiring technical support must first contact the Charter Help Desk which will
be operated 24 x 7. Charter staff will handle all billing, sales, installation
coordination, change of service, e-mail account maintenance and RF
troubleshooting issues. HSA's Customer Service Center 800/888 transfer number
will be made available only to internal Charter CSR personnel, who will keep it
private/confidential and not give it out to Charter PC Data Subscribers.
-28-
<PAGE> 29
H. CHARTER TIER 1 SERVICE TICKETING
Charter Tier 1 personnel will provide initial troubleshooting on all
customer calls using the support guidelines set forth in ATTACHMENT 1-A. Before
Charter's CSR's may transfer a call to HSA's Tier 2 Customer Care Center (HSA
will provide Charter with a GUI icon for this purpose), Charter's CSRs must
first:
(i) verify that the customer's RF video service is
working;
(ii) verify that the customer's cable modem lights are
flashing (based on the make/model);
(iii) by March 31, 2001 attempt to PING the customer's
modem; and
(iv) by March 31, 2001 open a REMEDY Service Ticket (a
"Ticket") to capture the customer history and
SPECIFIC problem or complaint (e.g., "service isn't
working right" is NOT acceptable) in order to
expedite resolution (Charter will provide its CSRs
with desktop access to the Internet in order to
access and operate REMEDY prior to beta in each
Committed Network System in order to allow for
sufficient CSR training).
If the non-RF problem cannot be resolved after following all escalation
guidelines set forth in ATTACHMENT 1-A, the customer/call (i.e., a "Qualified
Call") may then be transferred to the HSA Customer Support Center. Any
transferred/escalated call that does not meet the foregoing criteria shall be
referred to herein as a "Non-Qualified Call" or "NQC" and is subject to a
charge/fee per NQC in the amount of the incremental cost thereof to HSA plus 20%
(the "NQC Charge"); provided, that HSA will not accrue or levy NQC Charges to
Charter until all transferred calls exceed the Minimum Thresholds and Charter's
SPOC has had at least 5 days advance notice from HSA (the "NQC Notice Period")
that HSA is receiving NQCs from Charter's Tier 1 CSRs, and the level of such
NQCs exceed two percent (2%) of the Minimum Thresholds; provided further, that
the NQC Charge shall only be accrued or levied on NQCs that exceed 2% of the
Minimum Thresholds and were transferred to HSA after the expiration of the NQC
Notice Period. As used herein "Minimum Thresholds" means the following assumed
contact rate per month:
<TABLE>
<CAPTION>
==================================================================================================================
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
LAUNCHES LAUNCHES LAUNCHES LAUNCHES LAUNCHES
==================================================================================================================
<S> <C> <C> <C> <C> <C>
MONTH 1 130.0% 125.0% 70.0% 70.0% 70.0%
MONTH 2 125.0% 120.0% 65.0% 65.0% 65.0%
MONTH 3 120.0% 115.0% 60.0% 60.0% 60.0%
MONTH 4 110.0% 105.0% 50.0% 50.0% 50.0%
MONTH 5 100.0% 95.0% 40.0% 40.0% 40.0%
MONTH 6 90.0% 85.0% 30.0% 30.0% 30.0%
MONTH 7 80.0% 75.0% 30.0% 30.0% 30.0%
</TABLE>
-29-
<PAGE> 30
<TABLE>
<S> <C> <C> <C> <C> <C>
MONTH 8 70.0% 65.0% 27.5% 27.5% 27.5%
MONTH 9 60.0% 55.0% 25.0% 25.0% 25.0%
MONTH 10 50.0% 45.0% 25.0% 25.0% 25.0%
MONTH 11 40.0% 40.0% 25.0% 25.0% 25.0%
MONTH 12 37.5% 35.0% 20.0% 20.0% 20.0%
MONTH 13 35.0% 32.5% 25.0% 19.0% 19.0%
MONTH 14 32.5% 30.0% 25.0% 19.0% 19.0%
MONTH 15 30.0% 27.5% 25.0% 19.0% 19.0%
MONTH 16 27.5% 25.0% 25.0% 19.0% 19.0%
MONTH 17 25.0% 22.5% 20.0% 19.0% 19.0%
MONTH 18 22.5% 20.0% 20.0% 19.0% 19.0%
MONTH 19 20.0% 17.5% 19.0% 19.0% 19.0%
MONTH 20 20.0% 20.0% 19.0% 19.0% 19.0%
MONTH 21 20.0% 19.0% 19.0% 19.0% 19.0%
MONTH 22 20.0% 19.0% 19.0% 19.0% 19.0%
MONTH 23 20.0% 19.0% 19.0% 19.0% 19.0%
MONTH 24 19.0% 19.0% 19.0% 19.0% 19.0%
THEREAFTER 19.0% 19.0% 19.0% 19.0% 19.0%
</TABLE>
I. HSA TIER 2 SUPPORT
Once the foregoing Qualified Call criteria are met, HSA's Customer Call
Center and NOC will then accept transferred customer calls and manage the Ticket
to resolution regardless of the nature of the inquiry or escalation, hand-off,
or other situation status as described in ATTACHMENT 1-A. This includes
remaining the "special point of contact" (or "SPOC") for the customer unless
otherwise requested by the customer or arranged through specific customer
agreements.
If the call is determined to be a NQC, HSA will resolve the problem for
the customer but will return the Service Ticket and activate the NCQ Charge
after the NCQ Notice Period and Minimum Thresholds are exceeded.
-30-
<PAGE> 31
I.1 QOS/REPORTING:
I.1.1 HSA's Tier 2 Call Center/NOC Data Centers (see
discussion below) will provide Ticket resolution services (NET of RF outages,
system sweeps, Non-Qualified Calls, VAR Support Calls and other Force Majeure,
unplanned or uncontrollable events) as follows (the "QOS Requirements") in
accordance with industry averages of performance, and in any event:
(i) on or before December 31, 2000, achieve a 10% or less
abandon rate on Qualified Calls;
(ii) on or before December 31, 2000, achieve a 90% answer
rate on Qualified Calls within 90 seconds;
(iii) resolve 90% of all Tier 2 trouble calls within 24
hours of receipt of Qualified Calls;
(iv) resolve e-mail-only inquiries/problems within 12
hours; and
(v) all trunks busy not to exceed 3% measured on a weekly
basis.
HSA will not be held to the above QOS Requirements if there is a
greater than 10% variance in Charter PC Data Subscriber growth or projected
growth under ATPs in any calendar quarter UNLESS Charter has given HSA notice of
such material changes in deployments at least 3 months in advance.
HSA will report compliance/non-compliance on the foregoing QOS measures
to Charter on a monthly basis, and will provide Charter with weekly unadjusted
call "stats."
I.1.2. Unless otherwise noted, HSA will compile the following
data elements by Systems, region and combined totals (prior to any adjustments)
on a daily basis and will report them to Charter on a weekly basis, effective as
of October 1, 2000:
o Total number of calls received.
o Total number of calls handled by IVRs.
o Total number of calls queued to agents.
o Total number of calls handled by agents.
o Total calls handled by call type, as distributed by the IVR.
o Average speed of answer (excluding calls handled by IVRs),
measured from time queued to an agent.
o Average talk time, which shall be reported by HSA on a monthly
basis.
o Average wrap up time, which shall be reported by HSA on a monthly
basis, but only to the extent HSA is capable of and is generating
such information for itself.
-31-
<PAGE> 32
o Service level percentage based on 90 seconds.
o Total number of calls redirected to systems, but only to the
extent HSA is capable of and is generating such information for
itself.
o Total number of calls abandoned once queued to an agent.
o Average length of abandoned calls, measured from time queued to
an agent.
o All trunks busy exceeding 3% total time.
o Unique caller information summary and detail, which shall be
reported by HSA on a monthly basis, but only to the extent HSA is
capable of and is generating such information for itself.
o Total number of trouble tickets opened.
o Total number of trouble tickets resolved immediately.
o Total number of trouble tickets resolved within 1 to 24 hours.
o Total number of trouble tickets resolved after 24 hours.
HSA and Charter may agree to additional reporting obligations.
Additionally, within 45 days of the availability of e-mail tracking software,
HSA and Charter will agree on e-mail reporting obligations.
HSA will not be required to comply with these QOS Requirements and
reporting obligations with respect to Tier 2 calls from one-way cable modem
customers.
I.2 Training:
HSA will provide the following "train the trainer" training:
(i) Three (3) days at Charter-provided facility/site to
include Internet 101, Internet head-end
engineering/architecture for technical positions, CSR
Tier 1 roles/responsibilities,
escalation/trouble-shooting procedures, and FAQs.
Training materials will be provided as leave-behind
for Charter trainers.
(ii) Two (2) days of training at an HSA-designated
facility, with heavy focus on software application
training for FRED, REMEDY and CNR using the HSA
learning lab. Attendees will spend time in the HSA
Help Desk and NOC, attend a session on Internet
architecture and engineering issues and review
approved process and procedures. HSA will cover
travel expenses for up to 2 attendees per Committed
Network System, PROVIDED travel is booked at least 2
weeks in advance through HSA-approved travel agent.
-32-
<PAGE> 33
J. COMPLIMENTARY ACCOUNTS
HSA will support complimentary HSA Network Services to a number of
Charter PC Data Subscriber accounts equal to one hundred percent (100%) of the
number of Charter employees employed full-time directly by and for such
Committed Network System, at a rate of 25% each quarter after the launch of such
Committed Network System so that, by the first anniversary of such launch, HSA
will be supporting complimentary HSA Network Services to all such persons. Upon
request by HSA, Charter will send to HSA a list of all Charter employees
employed full-time by each Committed Network System; provided, that the number
of such requests by HSA does not exceed four (4) annually. Charter's monthly
statements will detail all comps per Committed Network System and the value
thereof.
K. [RESERVED.]
L. INSTALLATION AND INSTALLATION SUPPORT HELPLINE
Charter is responsible for all CPE/AO installation activity. This
includes all scheduling, training and management of installation capacity. HSA's
Call Center will offer technical support assistance to Charter's PC
technicians/installers/VARs who require such assistance (the "VAR Support Call")
for $40 per call. Charter shall require that all such Tech Install Calls be
routed first through a Charter representative. Any Tech Install Calls escalated
to HSA will be handled by HSA with the Charter representative present on the
call.
M. INTERNET ACCESS/BACKBONE CAPACITY
M.1 CIRCUIT MANAGEMENT
Charter is solely responsible for insuring that capacity is adequate on
its circuits to provide a satisfactory customer experience (speeds, access,
etc.), and must provide HSA with an MOP at least seven (7) days prior to alpha.
Charter and HSA agree that the "Capacity Thresholds" will be when average data
traffic on existing circuit(s) reaches the lesser of (A) 80% during peak time,
and (B) 50% during any 24-hour day, tested in 5 minute increments, in any
particular Committed Network System. HSA will provide immediate written notice
to Charter when any Capacity Threshold has been reached. Charter will also
manage the ordering and physical installation process. If the MRTG (see below)
has indicated that data traffic on circuits in a particular Committed Network
System exceeds the Capacity Thresholds AND the Ticket customer statement data
field reflects complaint as "service is slow" or "operable but downloads are
real slow," etc., then any such transferred calls above and beyond the Minimum
Thresholds set forth in Section H of this Exhibit 1 will be charged to Charter
at HSA's incremental cost plus 20%.
When Charter turns up a new circuit, it will notify HSA in writing.
Upon notification, an HSA engineer will add the routes to the router and
communicate with Charter's backbone provider within 48 hours. All router/routing
changes effected by HSA shall be completed from a remote location. Any changes
to the router that require HSA to perform on-site assistance will be charged
separately on a TTM basis (i.e., a "Miscellaneous TTM Charge").
-33-
<PAGE> 34
M.2 EQUIPMENT - ROUTERS, ETC.
In addition to adequacy of circuits discussed above, Charter is
responsible for insuring that adequate equipment and equipment capacity is
available to support additional circuit capacity. Any changes or upgrades to
head-end equipment are the responsibility of Charter. HSA shall be entitled to
assess a Miscellaneous TTM Charge to Charter if HSA is requested to assist in
monitoring, ordering or upgrading equipment to support additional bandwidth. Any
transferred calls above and beyond the Minimum Thresholds set forth in Section H
of this Exhibit 1 attributable to inadequate head-end equipment capacity are
subject to a charge of HSA's incremental cost plus 20%.
M.3 CAPACITY MANAGEMENT SOFTWARE
HSA will use MRTG software to monitor circuit capacity, and will
configure MRTG to alert Charter when a circuit reaches the Capacity Thresholds.
Charter is responsible for insuring adequate capacity on a timely basis and will
provide required circuit information to HSA. HSA will input data into MRTG
within 48 hours of written notification from Charter for each circuit and
provide Charter web access to view each of its circuits. This information is
available on a real-time basis in 5-minute increments. Special Note: Other than
as provided above with respect to MRTG alerts, it is NOT HSA's responsibility to
manage bandwidth for the Committed Network Systems. While HSA's NOC will provide
manual `backup' bandwidth monitoring, it is not the NOC's responsibility to
notify Charter if bandwidth is inadequate.
N. IP ADDRESS MANAGEMENT
Charter will be responsible for sourcing all IP addresses, and for
monitoring whether sufficient addresses exist. HSA will add new addresses
provided by Charter to the DHCP servers within 48 hours of written notification.
HSA may charge an "Expedite Fee" of $1 per IP address (not per block of IP
addresses) if Charter requests that such IP addresses be entered sooner than 48
hours. HSA will support static IP addresses manually where the customer already
has one, and automatically once the flow-through provisioning is in place. HSA
will also support multiple tiers of speeds once HSA can do so automatically.
O. DATA CENTER SERVICES
HSA's Technical Operations group manages and maintains multiple
"Regional Data Centers." With respect to RPO, RSC personnel are responsible for
fulfilling the following levels of operations:
[X] Proper server operation (provisioning, DNS)
[X] Server sizing and utilization appropriate to services offered
and volumes experienced and anticipated
[X] Operating system administration and maintenance
[X] User partitioning and security management
[X] E-mail account management and administration (to be mutually
agreed to by the parties)
[X] Support of both UNIX and NT systems
[X] Remedy support
-34-
<PAGE> 35
[X] Oracle support
[X] Web hosting
[X] Security
O.1. STANDARD RPO SERVICES
HSA provides Charter with the following services to each Charter PC
Data Subscriber covered under this Agreement from HSA's multiple Regional Data
Centers:
E-mail: HSA will provide E-mail accounts (the terms of which
shall be mutually agreed to by Charter and HSA).
Web Hosting: HSA will provide 10 megabytes of Web hosting space
for personal home pages. HSA may charge more for
additional space (such charger to be mutually agreed
to by Charter and HSA)
News: HSA will provide a common News feed.
Access/Authentication: HSA will provide access and authentication services
for the above-mentioned services and for cable modem
access validation.
O.2 SECURITY
HSA will be responsible for securing data residing in all
HSA-controlled, HSA-monitored, or HSA-configured (or configurations approved by
HSA) devices that support residential Charter Pipeline service in Committed
Network Systems subject to HSA Network Services; provided, that HSA shall not be
required to take non-industry standard actions to secure data residing in or
data flowing through such devices, or data residing in or flowing to and from
Data Subscribers' PCs (by firewall or otherwise) from unlawful intrusion;
provided further, that HSA shall not be responsible for compromises in security
caused directly by the action or inaction of any Charter party. HSA will also
operate and maintain the TACSIS password management system to support such
devices.
Charter is responsible for the physical security of all network devices
and elements not located in HSA facilities. To the extent Charter wishes HSA to
provide additional layers of NOC support and security for commercial-grade
services (such as LAN firewalls, etc.), HSA reserves the right to negotiate and
charge separately for such support.
HSA will be responsible for all costs associated with theft of e-mail
addresses or passwords that are not the fault of Charter; provided, that such
liability shall only apply to direct damages and punitive damages related
thereto, and shall not apply to any other consequential or indirect damages.
Charter and HSA will jointly study and address additional security
concerns such as IP theft/theft of data services, monitoring of excess bandwidth
consumption/service abuse in order to identify and agree upon responsibilities,
methods and procedure to mutually support their respective network elements.
-35-
<PAGE> 36
O.3 NETWORK MONITORING AND MANAGEMENT
O.3.1 HSA's Network Operations Center(s) (NOC) will be staffed
and operational on a 24 x 7 basis. HSA's NOC engineers will constantly monitor
customer and backbone links to identify and respond to outages. HSA's NOC
personnel will be trained to isolate and correct IP connectivity problems and
refer physical/RF outages to appropriate Charter personnel. For complex
problems, senior NOC personnel are available 24 hours a day, 7 days per week.
O.3.2 HSA will comply with the following NOC performance
standards:
o Network reliability goal of 99.95% with respect to two-way cable modem
plants, monthly defined as customer minutes up/total customer minutes
(customer minutes = customers x minutes), effective as of October 1,
2000.
o Any failure impacting all customers will be fixed within 120 minutes
(mean time to repair).
o Any failure impacting more than one System will be fixed within 180
minutes.
o Any failure impacting only one System will be fixed within 240
minutes.
o Any failure impacting part of a system will be fixed within 240
minutes
0.3.3 Charter Advanced Services, Customer Service and
Engineering Teams at the Corporate, Division, Region, Group and System levels
will be notified about any failures, progress reports on failures and expected
repair times as soon as possible but starting no later than:
o 10 minutes after failure for failures impacting all customers;
o 20 minutes for failures impacting more than one System; and
o 30 minutes for failures impacting one System.
Such notice can be given by HSA to the Charter Teams via e-mail.
Progress reports will continue until failure has been repaired. Charter will
provide the list of Team members and contact information at each level to HSA.
Charter must comply with HSA's System Specifications that can only be modified
in writing and agreed to by the heads of Charter's and HSA's corporate
engineering departments.
O.4. NETWORK/SERVICE TICKETING/TROUBLESHOOTING OPERATIONS
HSA will use a Ticket to record and escalate outages from the NOC to
the proper party (either HSA or Charter personnel identified in the Network
Database) for correction. Tickets may originate from the Tier 1/Tier 2 customer
care interface, HSA's Tier 2 customer care function, the field, or directly from
the NOC.
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<PAGE> 37
ATTACHMENT 1-A
TIER 1 -TIER 2 SUPPORT GUIDELINES
This ATTACHMENT 1-A further delineates the customer support provided by
Charter (Tier 1) and HSA (Tier 2) and identifies the responsible party for that
support. For applications not supported by HSA, Charter's Tier 1 Customer
Support Representatives ("CSRs") should refer the customer to the proper vendor.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CUSTOMER ACCOUNT MANAGEMENT CHARTER - TIER I HSA - TIER 2
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PRE-QUALIFY RESIDENCE Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
INSTALLATION APPOINTMENT FOR HSA ONLY Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
INSTALLATION APPOINTMENT FOR HSA AND CATV Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
DISCONNECTION OF HSA SERVICE ONLY Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
DISCONNECTION OF HSA AND CATV SERVICE Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
SCHEDULING FOR A HOME SERVICE VISIT Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
TRANSFER OF SERVICE Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
RELOCATION OF HSA OUTLET WITHIN A RESIDENCE Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
VACATION / SEASONAL DISCONNECT Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
RESCHEDULE APPOINTMENTS Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
CANCEL APPOINTMENTS Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
ANSWERING CUSTOMER LEDGER / BILLING QUESTIONS Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
CABLE MODEM RETURN Tier 1 responsibility Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
E-MAIL SERVICES/TASKS CHARTER - TIER I HSA - TIER 2
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ADD, DELETE, OR CHANGE "MASTER ACCOUNT" Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
E-MAIL PASSWORD CHANGES - MASTER ACCOUNT Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
E-MAIL PASSWORD CHANGES - SUB-ACCOUNTS Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
CHANGE E-MAIL SUB-ACCOUNT PASSWORD Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
PROBLEMS SENDING/RECEIVING E-MAIL Escalate call to HSA - Tier 2 Troubleshoot &
resolve customer's
inability to send
and/or receive
e-mail.
- ----------------------------------------------------------------------------------------------------------------------
ADD, DELETE, OR CHANGE "PRIMARY ACCOUNT" Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
E-MAIL PASSWORD CHANGES - "PRIMARY ACCOUNT" Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
E-MAIL PASSWORD CHANGES - "ADDITIONAL E-MAIL Tier 1, using tools provided by HSA Refer to Tier I
ACCOUNTS"
- ----------------------------------------------------------------------------------------------------------------------
CHANGE "ADDITIONAL E-MAIL ACCOUNT" PASSWORD Tier 1, using tools provided by HSA Refer to Tier I
- ----------------------------------------------------------------------------------------------------------------------
PROBLEMS SENDING/RECEIVING E-MAIL FOR ADDITIONAL Escalate call to HSA - Tier 2 Troubleshoot &
ACCOUNT resolve customer's
additional account's
inability to send
and/or receive
e-mail
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
-37-
<PAGE> 38
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CONNECTIVITY CHARTER - TIER I HSA - TIER 2
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LOSS OF MODEM CONNECTIVITY (I.E., MODEM LED 1. Check if CATV outage or network 1. Ensure Tier I support
LIGHTS BLINKING, CYCLING, OR OFF) problem to determine status of local was provided.
HFC network. 2. Troubleshoot & resolve
2. Verify active account status. customer's inability to
3. Check if coaxial cable drop line connect.
attached to cable modem.
4. Use support tool to check if the modem
MAC address is registered in
appropriate database.
5. Have customer power cycle modem; if no
lights or blinking lights, schedule
home appointment.
6. Escalate to HSA - Tier 2 CSC
- ----------------------------------------------------------------------------------------------------------------------
INTERMITTENT CONNECTIVITY LOSS 1. Troubleshoot local network HFC 1. Ensure Tier I support
connectivity; schedule field tech was provided.
appointment if required. If modem not 2. Troubleshoot & resolve
alive, have customer power cycle customer's intermittent
modem so status lights are both on connectivity trouble.
and steady.
2. If status lights blinking or
off, packet loss occurring,
or modem signal levels
outside of tolerance range,
schedule appointment for
field tech home service
visit.
3. If modem alive, check modem signal on
the support FTP web page (i.e. RX,
TX, dB)
4. Escalate to HSA - Tier 2 CSC
- ----------------------------------------------------------------------------------------------------------------------
STEADY/SOLID (NON-BLINKING LIGHTS) ON MODEM, Escalate to HSA- Tier 2 CSC Troubleshoot & resolve
BUT LOSS OF IP CONNECTIVITY customer's connectivity
trouble.
- ----------------------------------------------------------------------------------------------------------------------
HOSTNAME RESOLUTION TO IP ADDRESS Escalate to HSA- Tier II CSC Troubleshoot & resolve
customer's connectivity
trouble.
- ----------------------------------------------------------------------------------------------------------------------
CUSTOMER HOSTNAME NOT MAPPING TO IP ADDRESS 1. Check customer's account to make sure Troubleshoot & resolve
the hostname is registered. customer's trouble.
2. Escalate to HSA - Tier 2 CSC
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
-38-
<PAGE> 39
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
OTHER CHARTER - TIER I HSA - TIER 2
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NIC Device/Driver Problem Escalate to HSA - Tier 2 CSC Troubleshoot & resolve NIC
card trouble.
- ----------------------------------------------------------------------------------------------------------------------
Browsers Escalate to HSA - Tier I Troubleshoot & resolve
customer's trouble. May
require referral to
appropriate vendor.
- ----------------------------------------------------------------------------------------------------------------------
Supported Operating Systems Escalate to HSA Tier 2 - CSC Troubleshoot & resolve
customer's O/S trouble. May
require referral to
appropriate vendor.
- ----------------------------------------------------------------------------------------------------------------------
Non-supported Operating Systems Educate customer and refer to Educate customer and refer to
appropriate vendor. appropriate vendor.
- ----------------------------------------------------------------------------------------------------------------------
MAC O/S Issue Escalate to HSA Tier 2 - CSC Troubleshoot & resolve
customer's O/S trouble. May
require referral to
appropriate vendor.
- ----------------------------------------------------------------------------------------------------------------------
Personal Home Pages Escalate to HSA Tier 2 - CSC
- ----------------------------------------------------------------------------------------------------------------------
Multiple IP addresses (DHCP) 1. Verify proper billing for Troubleshoot & resolve
multiple IP's. customer's multiple IP address
2. Escalate to HSA Tier 2 - CSC issue.
- ----------------------------------------------------------------------------------------------------------------------
LAN's Refer customer to appropriate vendor Refer customer to appropriate
vendor
- ----------------------------------------------------------------------------------------------------------------------
Hubs Refer customer to appropriate vendor Refer customer to appropriate
vendor
- ----------------------------------------------------------------------------------------------------------------------
Dial Roaming Escalate to HSA Tier 2 - CSC Troubleshoot & resolve
customer's multiple IP address
issue.
- ----------------------------------------------------------------------------------------------------------------------
Online Services & Service Providers Provide basic troubleshooting.
TCP/IP settings to connect via
the HSA network.
- ----------------------------------------------------------------------------------------------------------------------
Other Applications Educate customer and refer to Educate customer and refer to
appropriate vendor. appropriate vendor.
- --------------------------------------------- --------------------------------------- --------------------------------
Gaming Refer customer to Gaming vendor. Refer customer to Gaming vendor
- --------------------------------------------- --------------------------------------- --------------------------------
HSA Policy Questions Refer to HSA Service Assurance Customer Care - Service
department Assurance dept. will provide
direction
- --------------------------------------------- --------------------------------------- --------------------------------
</TABLE>
-39-
<PAGE> 40
The parties agree to modify this table as appropriate to incorporate an
icon-based modem "pinging" procedure to be performed by Charter's Tier 1 Help
Desk CSRs following development of such icon/GUI ping command by HSA.
-40-
<PAGE> 41
EXHIBIT 2
CHARTER/HSA NETWORK SERVICES MODEL
(CHARTER IN-HOUSE SYSTEMS SOLUTION)
DEPLOYMENT SERVICES
2.1 GENERAL
2.1.1 At Charter's request, HSA will provide the following
services (the "Deployment Services") on a TTM basis (the "Deployment TTM
Charges") working directly with Charter personnel who will be responsible for
the overall project management, including the coordination with HSA personnel:
engineering planning, site survey, network evaluation and capacity planning,
customer support, CATV network design, data network design, equipment ordering,
delivery and shipping, head-end installation and alpha and beta testing.
Deployment Services are not included in, and are in addition to, the HSA Network
Services Charges and any Miscellaneous TTM Charges.
2.1.2 HSA offers Deployment Services on an all-or-nothing
basis (but no a la carte) either prior to or following the commencement of
Committed Network System launch activities:
2.1.2.1 Charter may elect to use HSA to perform all of the
Deployment Services in connection with the Launch of a Committed Network System.
If Charter wishes to use HSA, Charter will identify the System and issue an
"Authorization to Proceed" in writing prior to commencement of Launch
activities. The election/Authorization to Proceed cannot be revoked once HSA's
deployment process has begun.
2.1.2.2 If HSA is requested to provide Deployment Services
related to Launch activities already commenced by Charter that were not selected
prior to Launch, that request must be in writing and the time will be charged on
a TTM basis. These requests must be approved by Charter regional management and
the Charter Single Point of Contact.
2.1.3 If HSA is authorized to perform the Deployment Services, HSA will
be responsible for all troubleshooting and on-site technical coordination until
the System is successfully released into revenue.
2.1.4 Because of the highly sensitive dependencies inherent in the
technical launch of high speed data, if Charter elects NOT to engage HSA to
handle Deployment Services for a particular Committed Network System, then (i)
Charter will issue a waiver of responsibility relieving HSA of any ongoing
responsibility for troubleshooting, delays, or service issues stemming from
activities related to the technical launch, and (ii) HSA will provide Charter
with the written technical specifications necessary for HSA to monitor the
system and perform its HSA Network Services, such information to be provided to
Charter within 5 days of the written request or within 20 days prior to alpha.
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<PAGE> 42
2.2 SITE SURVEY
2.2.1 If selected to render Deployment Services, HSA will
perform an engineering inspection of the head-end/RF plant to obtain the
necessary cable system and local information to properly configure the service
(a "Site Survey"). Information related to the cable plant, the head-end
installations and environmental conditions, the channel line-up, signal source
and delivery, the interconnection of hubs, the connection to HSA's network and
services are collected in the process. The on-site portion of this process
varies substantially with the size of the System under analysis. The outcome of
the process is a detailed document that forms the basis for IP Network Design
and RF Network Design (i.e., a complete "Head-End Record"), plus HSA's
proposals, if any, for any upgrades or changes ("Attainment Measures") that may
be necessary for the Committed Network System to conform to system data
requirements. HSA is not responsible for the completion of any Attainment
Measures. If Charter in its discretion refuses to take the Attainment Measures,
then HSA's Deployment Services will cease and HSA shall be reimbursed its
Deployment TTM Charges to date.
2.2.2 All Site Surveys are coordinated by permanent HSA
project planning personnel, and are normally carried out by contractors employed
specifically for this task by HSA. Once the Site Survey is complete, Charter's
Single Point of Contact must approve the final document.
2.2.3 If Charter orders/HSA schedules a Site Survey, and upon
arrival the System is not ready for such Site Survey (OTNs not balanced, swept,
etc.), Charter shall pay/reimburse for all TTM costs associated with such
aborted Site Survey, and any rescheduling expense.
2.3 RF NETWORK DESIGN
2.3.1 HSA will apply fundamental RF network strategies to
design (i) the interconnection of the cable modem service to Charter's cable
plant, relying heavily on the completed site survey documentation to identify
the composition of the downstream (towards the home) and upstream (from the home
to the head-end) CATV networks, and (ii) the cable modem head-end system. This
work will be performed by full-time HSA network engineers.
2.4 IP NETWORK DESIGN
2.4.1 HSA applies its overall IP network strategy to the
head-end infrastructure that interconnects the cable modem equipment to HSA's
network and services, and ultimately the end-user to the Internet. The head-end
equipment includes the following components:
[X] Backbone and/or regional access routers.
[X] Ethernet switches for the interconnection of hubs to the main
head-end, and all other network elements.
[X] File and computer servers used to implement access control
through authentication and authorization, assignment of IP
addresses, domain name resolution, the provision of proxy and
caching services, and other such tasks.
-42-
<PAGE> 43
[X] Remote-access terminal components for management and
maintenance.
[X] Racks and other hardware, UPS systems, cabling, fiber
transceivers, etc.
This work is performed by full-time HSA personnel who are familiar with, and
have been provided with copies of, Charter's local and backbone network
strategies, as well as HSA's practices in providing network services and
connections to the public Internet.
2.4.2 HSA has/will develop a standard set of IP Network
Design/operating procedures, including standards related to caching servers. If
Charter does not select HSA Deployment Services, Charter agrees to conform its
IP Network/Equipment designs within the HSA parameters unless a deviation if
approved by HSA's SPOC.
2.5 EQUIPMENT PURCHASE
2.5.1 HSA is responsible for providing Charter with a complete Bill of
Materials (BOM) as a result of the RF and IP Network Design. Charter will
immediately issue purchase orders to the appropriate vendors and will instruct
these vendors to send the equipment to the designated HSA facility performing
the equipment configuration as described below. It is Charter's responsibility
to inform HSA when the BOM has been processed into Purchase Orders by faxing the
purchase orders and contact information to the HSA location designated to
receive the equipment. It will be Charter's responsibility to track the
equipment purchased and inform HSA's project manager of the expected equipment
arrival date to HSA. If there are any delays as a result of capital approvals or
vendor inventory issues, it is Charter's responsibility to inform HSA of the
delays and a revised launch date will be agreed upon. If Charter decides to
deviate from the BOM provided to them by HSA, either by changing the required
equipment or by not ordering equipment listed on the BOM, a waiver of
responsibility is required from Charter explaining the specific actions taken by
Charter and relieving HSA of all responsibility for delays or lack of equipment
that may adversely affect the technical launch. It will be the responsibility of
Charter to set up a shipping account with a freight company that has been agreed
upon by Charter and HSA so that all shipping charges incurred by Charter
in-house systems, to include equipment and packing slips, can be directly billed
to Charter.
2.5.2 HSA will provide Charter with a complete Bill of Materials (BOM)
as a result of the RF and IP Network Design. Charter will then immediately issue
a purchase order to the appropriate vendors and will instruct these vendors to
send equipment to the designated HSA facility that will perform the equipment
configuration described below. It is Charter's responsibility to inform HSA when
the BOM is processed and to track the equipment purchase and inform HSA's
project manager of the expected equipment arrival date to HSA. If there are any
delays as a result of capital approvals, vendor inventory issues, etc., it is
Charter's responsibility to inform HSA and a revised launch date will be agreed
upon.
2.6 EQUIPMENT CONFIGURATION AND TESTING
2.6.1 HSA personnel will carry out the specific equipment
wiring, configuration, and cabinet installation instructions, and follow
appropriate testing procedures to verify that the equipment to be sent to the
site operates correctly. The process takes place at HSA facilities. Upon receipt
of the equipment from the corresponding vendors, HSA personnel installs it on
the corresponding racks, makes the appropriate power and data connections,
configures the equipment, and performs exhaustive tests to ensure the proper
configuration and operation of all
-43-
<PAGE> 44
the equipment. The fully configured set is then shipped to the appropriate
location for final installation as described in the Site Coordination section
described below.
2.7 HEAD-END INSTALLATION
HSA personnel will perform or hire qualified contractors to perform the
following:
2.7.1 Installation Procedures. Each on-site installation will
require specific steps and verifications as outlined below.
1) Receive and inventory equipment.
HSA will provide a detailed shipping list of equipment for each
site. Installation personnel or contractor must reconcile this
list against received equipment and immediately notify HSA of
any missing or damaged items.
2) Install Racks/Frames
Shipping company personnel will remove the racks/frames from the
special shipping crates and assist with physically moving the
equipment to the final installation location and position.
Installation personnel or contractor must complete installation
by securing the rack/frame in a manner consistent with operator
policy and practices.
3) Connect Power and Grounds
Installation personnel or contractor shall complete all power
connections including:
a) connect the UPS to commercial power
b) connect power management equipment to the UPS
c) connect all individual equipment to the power management
equipment as depicted in installation drawings. Installation
personnel or contractor shall complete grounding/bonding of
racks to operator grounding system. Ground cable shall be #6
or consistent with cable operator requirements, whichever is
greater.
4) Complete Power Test of All Equipment
Installation personnel or contractor shall complete powering
test of all equipment to verify:
a) operability
b) control through power management equipment
c) switch-over to UPS upon loss of commercial power
d) auto-power-up after loss of total power and subsequent
restoration
5) Connect Backbone, Dial-Access and POTS Circuits
Installation personnel or contractor shall complete connection
and testing of backbone (IP) and dial-access circuits, if any,
including:
a) assemble necessary jumpers to reach from telco service
backboard to equipment racks
b) connect circuits to CSU/DSU's and Dial-Access Platforms,
if any, as appropriate
c) after completing physical connections, contact HSAC
Deployment Engineering personnel to coordinate and assist
with circuit testing
d) record circuit id numbers and appropriate connections
-44-
<PAGE> 45
6) Complete Turn-up and Test of IP Equipment Installation
contractor shall contact and assist HSAC Deployment Engineering
to complete turnup and activation of all IP equipment including,
but not limited to, routers, dial-access platforms, switches,
servers, and power management consoles.
7) Complete Turn-up and Test of CMTS Equipment
Installation personnel or contractor shall contact and assist
HSAC Deployment Engineering to complete turnup and activation of
all CMTS equipment including, but not limited to, cable modem
termination system (CMTS) and associated up-converter(s).
8) Connect Forward/Downstream Signal to Cable Plant
Installation personnel or contractor shall connect the output
signal from the CMTS to the downstream combining system of the
cable plant. Frequency allocation and signal levels shall be set
according to Cable Operator's direction.
9) Connect Cable Return/Upstream Signal to Data Equipment:
Installation personnel or contractor shall connect cable plant
upstream returns to the CMTS. Frequency allocation and signal
levels shall be set according to Cable Operator's direction.
10) Complete As-Built Documentation Installation personnel or
contractor shall complete as-built documentation with all
connections, modifications, and installation parameters to
accurately reflect the final installation configuration.
Documentation shall be delivered to HSA Deployment Engineering
and the Charter project manager who shall review completed
head-end installation and as-built documentation and accept
contracted work as complete
2.8 MILESTONE MANAGEMENT
Charter will manage each milestone of the technical deployment to
ensure milestones are accomplished on time and in the proper sequence.
Prior to commencing any Deployment Services, HSA will review the
estimated cost to perform the above activities based on the Site Survey. If
based on the complexity and size of the System, HSA cost will exceed the amounts
quoted above. HSA will issue in writing revised cost estimates. If Charter
accepts the revised quotes, Charter will issue a purchase order for the
Deployment Services at the revised quotes prior to the commencement of any such
services, except the Site Survey.
-45-
<PAGE> 46
EXHIBIT 3
LIST OF COMMITTED NETWORK SYSTEMS
CHARTER PIPELINE
NETWORK SERVICES SYSTEMS
<TABLE>
<CAPTION>
Division Region System Headend State Total Homes
======== ====== ====== ======= ===== ===========
<S> <C> <C> <C> <C> <C>
Eastern Southeast Simpsonville Greycourt SC 73,164
Western Central Maryville Maryville IL 78,295
Eastern Mid-Atlantic Worcester Chicopee MA 51,826
Eastern Mid-Atlantic Worcester Worcester MA 163,289
================================================================================
================================================================================
Western North Central Janesville Mazomaine WI 26,032
Western LA San Luis Obispo San Luis Obispo CA 33,496
Western North Central Wausau Stevens Pt WI 41,012
Western North Central Fond du Lac Sheboygan WI 29,474
Western North Central Fon du Lac Fon du Lac WI 100,197
Eastern SouthEast Lincolnton Hickory NC 23,386
Eastern Gulf States Birmingham Montevallo AL 22,944
Eastern Mid-Atlantic Johnstown Altoona PA 51,030
Eastern SouthEast Hickory Hickory NC 91,068
Eastern SouthEast Lenoir Hickory NC 6,197
Western LA High Desert Victorville CA 46,750
Western North Central Janesville Janesville WI 112,930
Western North Central Clintonville Clintonville WI 25,282
Eastern Mid-Atlantic Parkersburg Parkersburg WV 67,589
Eastern Gulf States Birmingham Gardendale AL 53,029
Eastern Gulf States Birmingham Mtn Brook AL 31,278
Eastern SouthEast Waynesville Waynesville NC 20,422
Eastern Gulf States St. Tammany Slidell LA 64,227
Eastern SouthEast Black Mountain Ashville NC 10,840
Western LA Long Beach Long Beach CA 188,102
Eastern North-East Pepperell Worcester MA 37,763
Eastern Mid-Atlantic Charleston Charleston WV 102,323
Western LA West Sac Davis CA 45,119
Eastern Mid-Atlantic Beckley Beckley WV 52,565
Eastern Gulf States Birmingham Sumiton/Monteval AL 20,389
Eastern North-East Belchertown Chicopee MA 5,640
Western LA Malibu Long Beach CA 24,000
Eastern Gulf States Birmingham Jasper AL 19,894
================================================================================
================================================================================
Eastern Southeast Gainesville Gainesville GA 42,198
Eastern Southeast Athens Athens GA 54,082
Eastern Southeast Asheville Asheville NC 42,115
Eastern Southeast Greenville Spartanburg SC 217,754
Eastern Southeast Gwinnett Gwinnett GA 91,200
Eastern Mid-Atlantic Johnstown Johnstown PA 46,480
Eastern Mid-Atlantic Bedford Bedford VA 11,829
Eastern Mid-Atlantic Radford Radford VA 11,913
Eastern Mid-Atlantic Charleston Milton WV 12,500
Eastern Mid-Atlantic Uniontown Uniontown PA 50,850
Eastern Mid-Atlantic Point Pleasant Point Pleasant WV 18,090
Eastern Mid-Atlantic Oak Hill Oak Hill WV 10,050
Eastern Southeast Boone Boone NC 33,793
Eastern Southeast Simpsonville Anderson SC 28,563
================================================================================
2,390,969
</TABLE>
<PAGE> 47
EXHIBIT 4
FORM OF AMENDED AND RESTATED SECURITIES PURCHASE WARRANT
See attached
-47-
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
SECURITIES PURCHASE WARRANT
TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK
OF
HIGH SPEED ACCESS CORP.
This AMENDED AND RESTATED SECURITIES PURCHASE WARRANT (this "Warrant")
is dated as of this 12th day of May, 2000, by and among:
HIGH SPEED ACCESS CORP.
4100 E. Mississippi Avenue, Suite 1150
Denver, Colorado 80246 ("HSA" or the "Company")
And
CHARTER COMMUNICATIONS, INC.
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri 63131 ("Charter")
And
CHARTER COMMUNICATIONS
HOLDING COMPANY, LLC
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri 63131 ("Charter HoldCo")
RECITALS
WHEREAS, HSA, pursuant to Class A Securities Purchase Warrant
No. R-001, dated November 25, 1998 (the "Original Class A Warrant"), granted
Vulcan Ventures, Incorporated ("Vulcan") the right to purchase up to Three
Million Eight Hundred Seventy Five Thousand (3,875,000) fully paid,
nonassessable shares of Common Stock of HSA, subject to adjustment, under terms
and conditions as more fully explained therein.
WHEREAS, HSA, pursuant to Class B Securities Purchase Warrant
No. R-001, dated November 25, 1998 (the "Original Class B Warrant" and, together
with the Original Class A Warrant, the "Original Warrants"), granted Vulcan the
right to purchase up to Three Million Eight Hundred Seventy Five Thousand
(3,875,000) fully paid, nonassessable shares of Common Stock of HSA, subject to
adjustment, under terms and conditions as more fully explained therein.
WHEREAS, by Assignment, dated April 23, 1999, Vulcan
transferred all of its right, title and interest in and to the Original Warrants
to Charter Investment, Inc., a Delaware corporation (formerly known as Charter
Communications, Inc.) ("CII").
<PAGE> 2
WHEREAS, HSA and CII amended certain provisions of the
Original Warrants pursuant to two separate Amendments, each dated as of April
29, 1999.
WHEREAS, by Assignment, dated November 8, 1999, CII
transferred all of its right, title and interest in and to the Original Warrants
to its Affiliate, Charter HoldCo.
WHEREAS, HSA, Charter and Charter HoldCo desire to further
amend certain provisions of the Original Warrants as set out herein, and to
combine and restate the Original Warrants in their entirety into this Warrant,
which shall be granted in favor of Charter and subject to assignment by Charter
to any Affiliate, including, without limitation, Charter HoldCo.
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree to amend and restate the
Original Warrants as follows:
[THIS SPACE INTENTIONALLY LEFT BLANK.]
2
<PAGE> 3
THIS WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN ACQUIRED IN A TRANSACTION NOT INVOLVING ANY PUBLIC
OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS
WARRANT NOR SUCH SECURITIES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH ACT AND THE
SECURITIES LAWS OF ANY APPLICABLE STATE, THE PROVISIONS OF THIS WARRANT, OR THE
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL, WHICH SHALL BE REASONABLY
SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
Void if Not Exercised during the Applicable Exercise Period
Described Herein
Amended and Restated Warrant No. R-001
1. GRANT OF WARRANT; CONDITIONAL EXERCISE. THIS CERTIFIES that, for
value received, the Holder is entitled, subject to the terms and conditions
hereinafter set forth, to earn on or prior to the applicable Effective Date, and
to purchase from HSA during the applicable Exercise Period, up to Twelve Million
(12,000,000), fully paid, nonassessable shares of Common Stock, $0.01 par value,
of the Company, as adjusted from time to time as provided herein (the "Maximum
Number of Warrant Shares") at the Exercise Price. The aggregate Exercise Price
of this Warrant shall be an aggregate amount not to exceed Thirty Eight Million
Seven Hundred Sixty Thousand Dollars ($38,760,000). Certain of the Warrant
Shares (the "First Warrant Shares") shall be issuable pursuant to the terms and
conditions of, and shall be qualified by and subject to, Section 6 of the
Systems Access Agreement and certain provisions of the First Network Services
Agreement, which are incorporated herein by reference, and certain other Warrant
Shares (the "Second Warrant Shares") shall be issuable pursuant to the terms and
conditions of, and shall be qualified by and subject to, Section 6 of the Second
Network Services Agreement, which is incorporated herein by reference. The
number of Warrant Shares to be received upon exercise of this Warrant and the
price to be paid for each such Warrant Share may be adjusted from time to time
as hereinafter set forth. This Warrant may not be exercised unless accompanied
by a signed Subscription Form in the form attached hereto as Exhibit A.
2. DEFINITIONS. Unless otherwise defined herein, as used in this
Warrant, the following terms shall have the meanings ascribed to them as
follows:
(a) "Additional Committed Network Systems" shall have the
meaning given it in Section 1.1 of the Second Network Services Agreement.
(b) "Affiliate" means, with respect to the Holder, any Person
directly or indirectly controlling, controlled by, or under common control with
the Holder, including, without limitation, Charter HoldCo.
3
<PAGE> 4
(c) "ATP" has the meaning set forth in Section 2.3 of the
Second Network Services Agreement.
(d) "Cable System" shall have the meaning given it in Section
1.2 of the Systems Access Agreement.
(e) "Certificate Register" has the meaning set forth in
Section 16 hereof.
(f) "Charter" shall mean Charter Communications, Inc., a
Delaware corporation, or such successor company as may result from any merger or
other business combination or reorganization of Charter Communications, Inc.
(g) "Charter HoldCo" shall mean Charter Communications Holding
Company, LLC, a Delaware limited liability company, or such successor company as
may result from any merger or other business combination or reorganization of
Charter Communications Holding Company, LLC.
(h) "Common Stock" means the shares of common stock of $0.01
par value that the Company is authorized to issue in accordance with its Amended
and Restated Certificate of Incorporation and all securities into which such
Common Stock is exchanged or converted.
(i) "Company" means HSA, or such successor company as may
result from any merger or other business combination or reorganization of HSA.
(j) "Current Market Price" shall have the meaning set forth in
Section 3(d) hereof.
(k) "Effective Date" means, collectively, the First Effective
Date and the Second Effective Date.
(l) "Exercise Date" shall have the meaning set forth in
Section 3(d) hereof.
(m) "Exercise Period" means, collectively, the First Exercise
Period and the Second Exercise Period.
(n) "Exercise Price" means $3.23 per Warrant Share (adjusted,
if appropriate, pursuant to Section 6 hereof).
(o) "First Committed Network Systems" shall have the meaning
given "Committed Network Systems" in Section 1.4 of the First Network Services
Agreement.
(p) "First Effective Date" means the date any First Warrant
Share becomes automatically issuable in accordance with the provisions hereof
and the Systems Access Agreement and which shall in no event be later than July
31, 2003, unless extended pursuant to Section 6.4 of the Systems Access
Agreement.
(q) "First Exercise Period" means, with respect to any First
Warrant Share, the period beginning on November 25, 1998 and ending on May 25,
2006.
4
<PAGE> 5
(r) "First HSA Services" has the meaning of "HSAC Services"
set forth in Section 1.14 of the First Network Services Agreement.
(s) "First Network Services Agreement" means the Network
Services Agreement, dated November 25, 1998, by and between the Company and
Charter HoldCo.
(t) "First Warrant Shares" has the meaning set forth in
Section 1 hereof.
(u) "Holder" means Charter, or any other Person to whom this
Warrant is transferred in accordance with Section 5 hereof, including, without
limitation, Charter HoldCo.
(v) "Homes Passed" shall have the meaning given it in Section
1.14 of the Systems Access Agreement.
(w) "HSA" shall mean High Speed Access Corp., a Delaware
corporation.
(x) "Maximum Number of Warrant Shares" has the meaning set
forth in Section 1 hereof, as may be increased from time to time pursuant to
Section 3(c) hereof, and as may be adjusted, if appropriate, pursuant to Section
6 hereof.
(y) "Net Issue Exercise" shall have the meaning set forth in
Section 3(d) hereof.
(z) "Office" means the Company's office at 4100 E. Mississippi
Avenue, Suite 1150, Denver, Colorado 80246, or such other office as the Company
may designate by written notice to the Holder.
(aa) "Operators" means Charter, Charter HoldCo and their
direct and indirect subsidiaries.
(bb) "Person" means any person, firm, company, or other
entity.
(cc) "Registration Rights Agreement" means the Registration
Rights Agreement, dated the date hereof, by and between the Company, Charter and
Charter HoldCo.
(dd) "Second Committed Network Systems" shall have the meaning
given "Committed Network Systems" in Section 1.7 of the Second Network Services
Agreement.
(ee) "Second Effective Date" means the date any Second Warrant
Share becomes automatically issuable in accordance with the provisions hereof.
(ff) "Second Exercise Period" means, with respect to any
Second Warrant Share, the period beginning on the Second Effective Date and
ending on the seven and one-half (7 1/2) year anniversary of the Second
Effective Date.
(gg) "Second HSA Services" has the meaning of "HSA Network
Services" set forth in Section 1.12 of the Second Network Services Agreement.
5
<PAGE> 6
(hh) "Second Network Services Agreement" means the Network
Services Agreement dated May 12, 2000, by and between the Company and Charter.
(ii) "Second Warrant Shares" has the meaning set forth in
Section 1 hereof.
(jj) "Secretary" means John G. Hundley or his duly elected and
qualified successor as the Company's Secretary, or any duly elected and
qualified Assistant Secretary of the Company.
(kk) "Securities Act" means the Securities Act of 1933, as
amended, and any successor thereto, as the same shall be in effect from time to
time.
(ll) "Securities Laws" means the Securities Act of 1933, as
amended, or the securities laws of any state, or any similar successor federal
or state statutes and rules and regulations thereunder, all as the same shall be
in effect from time to time.
(mm) "Stock Certificate" means an appropriate certificate
issued in the Holder's name representing the Subscribed Shares.
(nn) "Stock Receipt" means a written receipt, deliverable by
the Company to the Holder pursuant to Section 4 hereof, (a) acknowledging the
Company's receipt of the Exercise Price and the Holder's timely and proper
exercise of this Warrant, and (b) obligating the Company to issue a Stock
Certificate to the Holder within 30 working days after this Warrant's surrender
to the Company.
(oo) "Subscribed Shares" means, collectively, the number of
whole Warrant Shares that the Holder designates on the Subscription Form as
Warrant Shares that the Holder wishes to purchase upon this Warrant's surrender
to the Company, which shall not exceed the Maximum Number of Warrant Shares.
(pp) "Subscription Form" means the subscription form attached
as Exhibit A to this Warrant.
(qq) "Systems Access Agreement" means the Systems Access and
Investment Agreement, dated November 25, 1998, by and among the Company, Vulcan
Ventures, Incorporated and Charter HoldCo.
(rr) "Third Party Accounting Firm" has the meaning set forth
in Section 3(d) hereof.
(ss) "Total Consideration" has the meaning set forth in
Section 6(a)(i)(1) hereof.
(tt) "Transfer Form" means the transfer form attached as
Exhibit B to this Warrant.
6
<PAGE> 7
(uu) "Warrant" means, as the context requires, this Amended
and Restated Securities Purchase Warrant, or the number of Subscribed/Warrant
Shares issued or issuable under this Amended and Restated Securities Purchase
Warrant.
(vv) "Warrant Period" means the period beginning on November
25, 1998 and ending on the last date of the last Exercise Period.
(ww) "Warrant Receipt" means a written receipt delivered by
the Holder to the Company and agreed to and accepted by the Company pursuant to
Section 3(d) hereof, indicating as of the date thereof, on a cumulative basis,
(a) the First Committed Network Systems and/or Second Committed Network Systems
and the date on which they became First Committed Network Systems and/or Second
Committed Network Systems, (b) the total number of Homes Passed in all First
Committed Network Systems, Second Committed Network Systems and/or Additional
Committed Network Systems, (c) the number of Warrants earned and, with respect
to such earned Warrants exercisable for Second Warrant Shares, the applicable
Second Effective Date, and (d) the number of First Warrant Shares and/or Second
Warrant Shares issuable upon exercise of such earned Warrants.
(xx) "Warrant Shares" means, collectively, the First Warrant
Shares and the Second Warrant Shares that this Warrant entitles the Holder to
subscribe for and receive upon the Holder's exercise of this Warrant in
accordance with Section 3 hereof, or, as appropriate if the context requires,
these same shares of Common Stock as they may be issued and outstanding in the
hands of the Holder after exercise of this Warrant.
3. EXERCISE OF WARRANT.
(a) Second Warrant Shares. This Warrant entitles the Holder to
earn, from time-to-time and upon the terms and conditions set forth in this
Warrant, as of the Second Effective Date, and purchase during the Second
Exercise Period, Subscribed Shares in any amount equal to the number of Homes
Passed in Second Committed Network Systems and Additional Committed Network
Systems on either:
(1) a .775 Second Warrant Share per every Home Passed
basis, up to an aggregate of Five Million (5,000,000) Homes Passed
under the Second Network Services Agreement, without reference to Homes
Passed under the First Network Services Agreement; or
(2) a 1.55 Second Warrant Share per every Home Passed
basis, for additional Homes Passed in excess of Five Million
(5,000,000) under the Second Network Services Agreement, without
reference to Homes Passed under the First Network Services Agreement;
in each case in accordance with the Second Network Services Agreement; provided,
however, that Subscribed Shares earned under this Section 3(a) shall not vest
(i.e., be deemed issued to the Holder or eligible for exercise) until such time
as the applicable Home Passed is or becomes part of a Second Committed Network
System under Section 2 of the Second Network Services Agreement; and provided
further, that this Warrant may only be exercised with respect to Subscribed
Shares under this Section 3(a) to the extent of Homes Passed that are released
to
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<PAGE> 8
HSA under Section 2.3 of the Second Network Services Agreement for Second HSA
Services under an ATP.
(b) First Warrant Shares. This Warrant entitles the Holder to
earn, from time-to-time and upon the terms and conditions set forth in this
Warrant, but in no event later than the First Effective Date, and purchase
during the First Exercise Period, Subscribed Shares in any amount equal to the
number of Homes Passed in excess of Seven Hundred Fifty Thousand (750,000) in
First Committed Systems on a 1.55 First Warrant Share per every Home Passed
basis, for Homes Passed under the First Network Services Agreement, without
reference to Homes Passed under the Second Network Services Agreement, in
accordance with the Systems Access Agreement and the First Network Services
Agreement; provided, however, that:
(1) the number of Subscribed Shares issuable under
this Warrant (to the extent of the number of Homes Passed in a First
Committed Network System, on a 1.55 First Warrant Share per Home Passed
basis), will be cancelled and deemed forfeited by the Holder in the
event the Operator withdraws such First Committed Network System under
the First Network Services Agreement for any reason other than pursuant
to Sections 18.1, 18.2, 18.3 and/or 18.6 of such First Network Services
Agreement, except to the extent the Holder or such Operator replaces
the Homes Passed in such withdrawn First Committed Network System with
Homes Passed in another First Committed Network System or additional
First Committed Network Systems; provided further, that Subscribed
Shares issuable under this Warrant will not be cancelled or deemed
forfeited if the Operator terminates any of HSA's exclusive rights to
provision First HSA Services in any First Committed Network Systems as
provided for or permitted under the Systems Access Agreement or the
First Network Services Agreement; and
(2) the inspection and commissioning procedures set
forth in Section 2.3 of the First Network Services Agreement have been
satisfied.
(c) Maximum Number of Warrant Shares. At no time may the
number of Warrant Shares earned pursuant to Sections 3(a) and 3(b) hereof
exceed, in the aggregate, the Maximum Number of Warrant Shares. If the number of
Warrant Shares earned pursuant to Section 3(a) and 3(b) hereof are within Five
Hundred Thousand (500,000) Warrant Shares of reaching the Maximum Number of
Warrant Shares, the Holder, at its option, may require that the Company amend
this Warrant to increase the Maximum Number of Warrant Shares to allow the
Holder to earn more Warrant Shares for commitments of Homes Passed pursuant to
Section 3(a) and 3(b) hereof. The Company hereby undertakes to seek shareholder
approval, if necessary, to amend this Warrant to increase the Maximum Number of
Warrant Shares. If the Company fails to amend this Warrant to increase the
Maximum Number of Warrant Shares at the Holder's request, the Holder will have
no obligation to commit any additional Homes Passed under the Systems Access
Agreement and the First Network Services Agreement, or under the Second Network
Services Agreement, beyond those already committed.
(d) Warrant Receipt. As of June 30, 2000, and continuing on a
quarterly basis thereafter, the Holder shall deliver the Warrant Receipt to the
Company. If the Company objects to the Warrant Receipt so delivered by the
Holder, the Company must notify the Holder in writing within fifteen (15) days
following receipt thereof, setting forth in specific detail the basis
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<PAGE> 9
for the Company's objection and the Company's proposal for any adjustments to
the Warrant Receipt. The Holder and the Company shall seek in good faith to
reach agreement within thirty (30) days following the Holder's receipt of the
Company's written notice of objection. If the Holder and the Company are unable
to reach agreement within such time period, then a "Big-5" accounting firm, as
agreed upon by the Holder and the Company (the "Third Party Accounting Firm"),
shall be engaged to review the Warrant Receipt and shall make a determination
that represents either agreement with the Holder or with the Company, or a
compromise between such positions. The determination of the Third Party
Accounting Firm shall be delivered as soon as practicable following the
engagement of the Third Party Accounting Firm, and shall be final, conclusive
and binding upon the Holder and the Company. The non-prevailing party shall pay
the fees and expenses of the Third Party Accounting Firm. If the Company does
not object to the Warrant Receipt within fifteen (15) days of receipt, the
Warrant Receipt shall be deemed agreed to and accepted by HSA.
(e) Reconciliation. As of May 12, 2005, the parties shall
effect a reconciliation of the total number of Homes Passed in all First
Committed Network Systems under the First Network Services Agreement, the total
number of Homes Passed in all Second Committed Network Systems and Additional
Committed Network Systems under the Second Network Services Agreement, the
number of outstanding Warrants and the number of Warrant Shares theretofore
issued upon exercise of this Warrant. If the parties cannot agree on a
reconciliation, then the Third Party Accounting Firm shall be engaged to resolve
any dispute, as set forth in Section 3(d) hereof.
(1) If such reconciliation reveals that the total
number of Homes Passed in all First Committed Systems under the First
Network Services Agreement (after adding back in Homes Passed in First
Committed Network Systems and additional First Committed Network
Systems withdrawn from the First Network Services Agreement pursuant to
Sections 18.1, 18.2, 18.3 and/or 18.6 thereof), is different than the
total number of all outstanding Warrants representing First Warrant
Shares, then the number of Warrants representing First Warrant Shares
will be adjusted upward or downward, as the case may be. If the number
of unexercised Warrants representing First Warrant Shares then held by
the Holder is insufficient to cover any adjustment downward, then the
Holder shall return to HSA a number of First Warrant Shares necessary
to meet such shortfall, and HSA shall refund to the Holder the Exercise
Price paid by the Holder for such returned First Warrant Shares.
(2) If such reconciliation reveals that the total
number of Homes Passed in all Second Committed Network Systems and
Additional Committed Network Systems under the Second Network Services
Agreement (after adding back in Homes Passed in all Second Committed
Network Systems and Additional Committed Network Systems (i) withdrawn
by the Operator from the Second Network Services Agreement pursuant to
Section 13.3 thereof, or (ii) otherwise withdrawn by the Operator but
for which a Termination Fee has been paid pursuant to Section 13.5
thereof) is different that the total number of all outstanding Warrants
representing Second Warrant Shares, then the number of Warrants
representing Second Warrant Shares will be adjusted upward or downward,
as the case may be. If the number of unexercised Warrants representing
Second Warrant Shares then held by the Holder is insufficient to cover
any adjustment
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<PAGE> 10
downward, then the Holder shall return to HSA a number of Second
Warrant Shares necessary to meet such shortfall, and HSA shall refund
to the Holder the Exercise Price paid by the Holder for such returned
Second Warrant Shares.
(f) Procedures. To exercise this Warrant, an authorized
officer of the Holder shall, during the applicable Exercise Period, on the day
the Holder wishes to exercise this Warrant (the "Exercise Date"):
(1) Complete and certify the Subscription Form by
designating the number of Subscribed Shares to which the Holder is
entitled to exercise and wishes to exercise pursuant to such
Subscription Form and Section 1 hereof (which may be less than or equal
to the Maximum Number of Warrant Shares);
(2) Surrender this Warrant to the Secretary at the
Company's Office, and
(3) Upon the surrender of this Warrant to the
Secretary, deliver to the Secretary at the Company's Office a certified
or cashier's check payable to the Company's order in an amount equal to
(i) the number of Subscribed Shares, times (ii) the Exercise Price.
The Holder may, at its option, in lieu of tendering a certified or cashier's
check as provided in subparagraph (3) above, exercise this Warrant by
submitting, during normal business hours, a duly executed exercise notice marked
to reflect "Net Issue Exercise," and specifying the number of Warrant Shares to
be exercised. Upon a Net Issue Exercise, the Holder shall be entitled to receive
Warrant Shares equal to the value of this Warrant (or the portion thereof being
exercised by Net Issue Exercise) by surrender of this Warrant to the Company
together with notice of such election, in which event the Company shall issue to
the Holder a number of Warrant Shares computed as of the date of surrender of
this Warrant to the Company using the following formula:
X = Y x (A-B)
-------------
A
Where X = the number of Warrant Shares to be issued to Holder;
Y = the number of Warrant Shares purchasable under this
Warrant (at the date of such calculation).
A = the Current Market Price of one share of the
Company's Common Stock (at the date of such
calculation);
B = the Exercise Price (as adjusted to the date of such
calculation).
As used above, "Current Market Price" means, if the Company's Common Stock is
traded on a national securities exchange, the NASDAQ National Market System or
the over-the-counter market, (i) the average of the last reported price over the
five (5) trading days immediately preceding the date of valuation at which the
Common Stock has traded on such national
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<PAGE> 11
securities exchange or the NASDAQ National Market System, or (ii) the average of
the bid and asked prices on the over-the-counter market on the date of
valuation. If the Common Stock is not regularly traded in any market, the
Current Market Price shall be mutually determined by the Board of Directors of
the Company and by the Holder, such determination to be made in good faith and
with due care.
(g) Warrant Shares Exercised. If the Subscription Form is
otherwise silent, the Warrant Shares with the earliest Exercise Period
expiration dates shall be deemed the Subscribed Shares that are the subject of
the exercise.
(h) Holder of Record. Notwithstanding any delay in the actual
issuance of a Stock Certificate or Stock Receipt pursuant to Section 4 hereof,
the Warrant Shares shall be deemed issued for all purposes as of the opening of
business on the Exercise Date, and the Holder shall for all purposes be deemed
to be the holder of record of the Subscribed Shares to which the Stock Receipt
or the Stock Certificate pertains.
4. ISSUANCE OF CERTIFICATE FOR SUBSCRIBED SHARES. Upon the Holder's
exercise of this Warrant in accordance with Section 3 hereof, the Company shall
deliver to the Holder:
(a) If the Subscribed Shares constitutes the Maximum Number of
Warrant Shares (and as the Company chooses), either (1) a Stock Certificate, or
(2) a Stock Receipt.
(b) If the Subscribed Shares constitute less than the Maximum
Number of Warrant Shares (and as the Company chooses), either
(1) a Stock Certificate, together with a new Amended
and Restated Securities Purchase Warrant, containing the same terms and
conditions as this Warrant, evidencing the Holder's continued right to
subscribe (during the applicable Exercise Period) for the remainder of
the Maximum Number of Warrant Shares; or
(2) a Stock Receipt, together with a new Amended and
Restated Securities Purchase Warrant, containing the same terms and
conditions as this Warrant, evidencing the Holder's continued right to
subscribe (during the applicable Exercise Period) for the remainder of
the Maximum Number of Warrant Shares.
5. TRANSFER OF WARRANT.
(a) This Warrant shall be registered on the books of the
Company, which shall be kept at its Office for that purpose, and shall be
transferable in whole or in part, but only on such books, by the Holder (or the
Holder's duly authorized representative) by completing the Transfer Form, and
only in compliance with paragraph (b) below and Section 7 hereof. The Company
may issue appropriate stop orders to its Secretary or transfer agent to prevent
a transfer in violation of this Section 5 and Section 7 hereof.
(b) The Holder may transfer this Warrant to any Person or
Persons at any time during the Warrant Period by completing and signing the
Transfer Form; provided, however, that without the prior written consent of the
Company, this Warrant and all rights hereunder may be transferred only (i) to an
Affiliate, or (ii) in accordance with the requirements of Section 7
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<PAGE> 12
hereof. If at least fifteen (15) working days before the end of the applicable
Exercise Period the Holder completes and signs the Transfer Form and surrenders
this Warrant to the Secretary at the Company's Office, the Company shall, within
ten (10) working days after this Warrant's surrender, issue to the transferee or
transferees identified on the completed Transfer Form one or more new Securities
Purchase Warrants (containing the same terms and conditions as this Warrant)
evidencing the transferee's or transferees' right or rights to subscribe (during
the applicable Exercise Period) for all or part of the Warrant Shares.
6. ANTI-DILUTION.
(a) The number of Warrant Shares and the Exercise Price for
any Subscribed Shares shall be adjusted during the applicable Exercise Period,
but before the Holder's exercise of this Warrant, in the following
circumstances:
(1) Issues of Shares. If the Company shall issue any
of its Common Stock for a consideration per share which is less than
the Exercise Price in effect immediately prior to such issuance (other
than shares issued to employees, officers, directors or consultants of
the Company pursuant to option plans approved by the Board of Directors
of the Company), the Exercise Price shall be reduced to such lower
price. For purposes of this subparagraph (i), the following clauses
shall also be applicable:
(i) Convertible Securities, Options and Rights. If at
any time the Company shall issue or sell any rights, options, warrants
or other securities entitling the holders thereof to purchase Common
Stock or convert such securities into Common Stock at a price per share
(determined by dividing (A) the total amount, if any, received or
receivable by the Company in consideration of the issuance or sale of
such rights, options, warrants or other securities plus the total
amount if any, payable to the Company upon exercise or conversion
thereof (the "Total Consideration") by (B) the number of additional
shares of Common Stock issuable upon exercise or conversion of such
securities) which is less than the Exercise Price in effect on the date
of such issuance or sale, the Exercise Price shall be adjusted as of
the date of such issuance or sale so that the same shall equal the
price determined by dividing (A) the sum of (x) the number of shares of
Common Stock outstanding on the date of such issuance or sale
multiplied by the Exercise Price in effect immediately prior thereto
plus (y) the Total Consideration, by (B) the number of shares of Common
Stock outstanding on the date of such issuance or sale plus the maximum
number of additional shares of Common Stock issuable upon exercise or
conversion of such securities. Simultaneously with all adjustments to
the number and/or kind of securities, property and cash to be issued in
connection with any such issuance, sale or conversion, the Exercise
Price will also be appropriately adjusted so that at all times the
Holder hereof will not pay more than the aggregate purchase price to
exercise this Warrant in full immediately after such adjustment as such
Holder had to pay immediately prior to such adjustment.
(ii) Distributions, Share Dividends and Splits.
(A) In case the Company declares a dividend or
other distribution payable in Common Stock or
subdivides its Common Stock
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<PAGE> 13
into a greater number of shares of Common Stock, the
Exercise Price in effect immediately prior to such
declaration or subdivision shall be proportionately
decreased and the number and kind of Warrant Shares
purchasable upon exercise of this Warrant shall be
adjusted so that the Holders thereof shall be
entitled to receive the kind and number of Warrant
Shares or the other securities of the Company (such
other securities thereafter enjoying the rights of
Warrant Shares) that the Holder would have owned or
have been entitled to receive after the happening of
any of the events described in this paragraph (2) had
the Warrant Shares been issued immediately prior to
the happening of such event or any record date with
respect thereto.
(B) In case the Company shall distribute to the
holders of Common Stock (x) securities, (y) property,
other than cash, or (z) cash, in each case, without
fair payment therefor, then, and in each such case,
the Holder, upon exercise hereof, shall be entitled
to receive such securities, property and cash which
such Holder would have received had such Holder been
the holder of record of the Common Stock, subject,
however, to such Holder agreeing to any conditions to
such distribution as were required of all other
holders of Common Stock in connection with such
distribution.
(C) If the securities to be distributed by the
Company to persons other than Holders of this Warrant
involve rights, warrants, options, or any other form
of convertible securities, and the right to exercise
or convert such securities would expire in accordance
with its terms prior to the exercise of this Warrant,
and without the exchange of any such rights, warrants
or options, then the terms of such securities shall
provide that such exercise or convertibility shall
remain in effect until thirty (30) days after the
date the Holder of this Warrant becomes a holder of
Common Stock pursuant to the exercise thereof.
(D) An adjustment made pursuant to this
paragraph (2) shall become effective (x) immediately
after the record date in the case of a dividend or
distribution, and (y) immediately after the effective
date in the case of a subdivision, combination or
issuance. If, as a result of an adjustment made
pursuant to this paragraph (2), the Holder after
exercise shall become entitled to receive shares of
two or more classes of capital or Common Stock and
any other class of capital stock of the Company, the
Board of Directors of the Company (whose
determination shall be conclusive and shall be
described in a written notice to the Holder promptly
after such adjustment) shall determine the allocation
of the adjusted Exercise Price between or among
shares of such classes of capital stock or Common
Stock and such other classes of capital stock.
(iii) Consideration. In case the Company shall issue
its Common Stock for a consideration wholly or partly other than cash,
the amount of the consideration other
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<PAGE> 14
than cash received by the Company shall be deemed to be the lesser of
(i) the fair market value on the issue date of the Common Stock so
issued by the Company, as determined in good faith by the Board of
Directors of the Company, less any cash consideration, or (ii) the
fair market value of such consideration as determined in good faith by
the Board of Directors of the Company.
(iv) Record Dates. In case the Company shall take a
record of the holders of its Common Stock for the purpose of
determining if the Holder is entitled (i) to receive a dividend or
other distribution payable in Common Stock, or (ii) to subscribe for or
purchase Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the Common Stock issued upon the
declaration of such dividend or the making of such distribution or
deemed to have been issued upon the granting of such right of
subscription or purchase, as the case may be.
(v) Treasury Stock. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company in its treasury, and the
disposition of any such shares so owned or held shall be considered an
issue of Common Stock.
(vi) Minimum Exercise Price. In no case shall the
Exercise Price be less than $0.01 per share.
(2) Stock Combinations. In case the Company shall
combine all of the outstanding Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
(3) Reorganizations. If any capital reorganization or
reclassification of the capital stock of the Company (other than a
combination or merger or sale of assets transaction that does not
result in any reclassification or change of the outstanding shares of
Common Stock) shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful
and adequate provision shall be made whereby the Holder shall
thereafter have the right to receive upon exercise of this Warrant such
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of Common Stock immediately
theretofore issuable upon exercise of this Warrant had such
reclassification, consolidation, merger or sale not taken place; and in
any such case, appropriate provisions shall be made with respect to the
rights and interests of the Holder to the end that the provisions
hereof (including without limitation provisions for adjustment of the
Exercise Price and of the number of Warrant Shares) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger or sale
unless, prior to or simultaneously with the consummation thereof, the
successor company (if other than the Company) resulting from such
consolidation or merger or the company purchasing such assets shall
assume by a written instrument executed and mailed by registered mail,
postage prepaid, or delivered to each registered Holder at the last
address of such Holder appearing on the Certificate Register, the
obligation of such company to deliver to the Holder such shares
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<PAGE> 15
of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to upon exercise of this
Warrant. The provisions of this paragraph (iii) shall similarly apply
to successive consolidations, mergers or sales of assets.
(b) Notice of Adjustment. Upon each adjustment of the Exercise
Price, the Company shall give prompt written notice thereof addressed to the
Holder at the address of such Holder as shown on the Certificate Register, which
notice (1) shall state the new Exercise Price resulting from such adjustment,
(2) shall state the increase or decrease, if any, in the number of Warrant
Shares issuable upon exercise hereof, and (3) shall set forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
(c) No Impairment. The Company will not, by amendment of this
Warrant or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company under this Section 6, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
(d) Notice of Capital Changes.
(1) If at any time:
(i) the Company shall declare any dividend or
distribution (other than a cash dividend) payable to the holders of its
Common Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of Common Stock any additional shares of stock of
any class or other rights;
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another company or business organization;
(iv) there shall be any issuance of securities
convertible into, or rights or warrants to purchase, securities of the
Company; or
(v) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give the
Holder written notice of the date on which a record shall be taken for
such dividend, distribution or subscription rights or for determining
shareholders entitled to vote upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up and of the date when any such transaction shall take
place, as the case may be. Such notice shall also specify the date as
of which the Holder may exercise this Warrant such that the Warrant
Shares of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange the Warrant
Shares for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
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<PAGE> 16
dissolution, liquidation, or winding up, as the case may be. Such
written notice shall be given at least thirty (30) days prior to the
transaction in question and not less than twenty (20) days prior to the
record date in respect thereto.
(2) The adjustment to the number of shares of Common
Stock issuable upon the exercise hereof and the adjustments to the
Exercise Price described in this Section 6 shall be made each time any
event listed in this Section 6 occurs.
(3) If the Company takes any action affecting its
Common Stock after the date hereof, that would be covered by this
Section 6 but for the manner in which such action is taken or
structured, other than an action described in this Section 6, which
would in any way diminish the value of this Warrant or the Warrant
Shares, then there shall be an adjustment as to the Warrant Shares
purchasable therefor and the Exercise Price payable thereunder in such
manner as the Board of Directors of the Company shall in good faith
determine to be equitable under the circumstances.
7. SALE OF WARRANT OR WARRANT SHARES. Neither this Warrant nor the
Warrant Shares have been registered under the Securities Act, or under the
securities laws of any state. Neither this Warrant nor the Warrant Shares may be
sold, transferred, pledged or hypothecated, in the absence of (i) an effective
registration statement for this Warrant or the Warrant Shares, as the case may
be, under the Securities Act, and such registrations or qualifications as may be
necessary under the securities laws of any state, or (ii) an opinion of counsel
reasonably satisfactory to the Company that such registration or qualification
is not required. The Company shall cause any Stock Certificate evidencing all or
any part of the Warrant Shares prior to any such registration or qualification
of Warrant Shares to bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
the securities laws of any state (the "Securities Laws").
These securities may not be offered, sold, transferred,
pledged, or hypothecated in the absence of registration under
applicable Securities Laws, or the availability of an
exemption therefrom. This certificate will not be transferred
on the books of the Company or any transfer agent acting on
behalf of the Company except upon the receipt of an opinion of
counsel, satisfactory to the Company, that the proposed
transfer is exempt from the registration requirements of all
applicable Securities Laws, or the receipt of evidence,
satisfactory to the Company, that the proposed transfer is the
subject of an effective registration statement under all
applicable Securities Laws.
8. REPLACEMENT OF WARRANT. At the request of the Holder and on
production of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, the Company at its expense
will issue in lieu thereof a new Warrant of like tenor.
9. NO VOTING RIGHTS. This Warrant shall not be deemed to confer upon
the Holder any right to vote or to consent to or receive notice as a stockholder
of the Company, as such, in
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<PAGE> 17
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
10. EXPENSES. The Company will pay all expenses and charges payable in
connection with the preparation, issuance and delivery of this Warrant and all
substitute Warrants. The Holder shall pay all taxes (other than issuance taxes,
including documentary stamp taxes, transfer taxes and other governmental
charges, which shall be paid by the Company) in connection with such issuance
and delivery of the Warrants and the Subscribed Shares.
11. RESERVATION OF SHARES. The Company will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock or its authorized and issued Common Stock
held in its treasury, solely for the purpose of enabling it to satisfy any
obligation to issue shares of Common Stock upon exercise of this Warrant, the
Maximum Number of Warrant Shares. The Company covenants that all Warrant Shares
which may be issued upon exercise of this Warrant will, upon issue, be fully
paid, nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issue thereof.
12. INVESTMENT COVENANT. The Holder by its acceptance of this Warrant
covenants that this Warrant is, and the Warrant Shares issued hereunder will be,
acquired for investment purposes, and that the Holder will not distribute this
Warrant or the Warrant Shares in violation of any Securities Laws.
13. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon the exercise hereof. Upon
exercise by any Holder, such Holder shall be entitled to receive the aggregate
full number of shares of Common Stock in which all the Warrant Shares being
subscribed for by such Holder may exercise and in lieu of any fractional share
to which such Holder would otherwise be entitled, an amount in cash equal to
such fractional share multiplied by the Current Market Price shall be paid by
the Company in cash to such holder.
14. COMPUTATIONS. The certificate of any firm of independent public
accountants of nationally recognized standing selected by the Company shall be
conclusive evidence of the correctness of any computation under this Warrant.
15. OWNER OF WARRANT. The Company shall keep a register (the
"Certificate Register") of this Warrant and of its transfer and exchange in
accordance with the provisions of Sections 5 and 7 hereof. The Certificate
Register shall show the names and addresses of the respective Holder(s) and the
date and number of Warrant Shares represented by the Warrants. The Company shall
be entitled to treat the Person in whose name a Warrant is registered as the
absolute owner of such Warrant for all purposes. The Company shall have no duty
to inquire into adverse claims to, or the authenticity of any signature of any
purported holder of, this Warrant.
16. REGISTRATION RIGHTS. The Holder's rights with respect to the
registration and sale of this Warrant and the Warrant Shares are governed by the
Registration Rights Agreement, the
17
<PAGE> 18
terms and conditions of which are incorporated herein by reference. The Company
and the Holder agree that this Warrant and the Warrant Shares, as well as all
other warrants to purchase Common Stock and shares of Common Stock held by the
Holder or by its permitted transferees of such other warrants or shares, shall
be subject to the Registration Rights Agreement.
17. VALIDITY OF SHARES. All Common Stock which may be issued upon
exercise of this Warrant will, upon issuance, be legally and validly issued,
fully paid and non-assessable and free from all taxes, liens and charges with
respect to the issue thereof.
18. MISCELLANEOUS.
(a) Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to the conflict of law principles thereof.
(b) Successors and Assigns. This Warrant shall bind the
Company and its successors and assigns, and shall benefit and bind the Holder
and the Holder's successors and permitted assigns.
(c) Section Headings. The Section headings in this Warrant
have been included solely for ease of reference and shall not be considered in
the interpretation or construction of this Warrant. All references in this
Warrant to "Sections" shall be construed as references to numbered Sections of
this Warrant.
(d) Notices. Any notice or delivery required or permitted by
this Warrant shall be deemed given or made for all purposes of this Warrant when
the notice is in writing, and the notice is delivered (1) by hand, (2) by
facsimile, the receipt of which is confirmed by return facsimile, or (3) by
first class registered mail, return receipt requested, addressed to the intended
recipient at (i) in the Company's case, the Company's Office, or (ii) in the
Holder's case, the Holder's address as set forth in the Company's records or at
such other address as the Holder may designate by written notice to the Company.
(e) Entire Agreement. This Warrant, together with the
Registration Rights Agreement, the Systems Access Agreement, the First Network
Services Agreement and the Second Network Services Agreement, contains the
entire understanding and agreement among the parties hereto with respect to the
Warrants to be issued to the Holder, and supersedes all prior oral or written
understandings and agreements relating thereto, except as otherwise expressly
provided.
(f) Amendment; Waiver. This Warrant cannot be amended,
supplemented or changed, and no provision hereof can be waived, in whole or in
part, except by written instrument making specific reference to this Warrant
signed by the parties hereto. No failure or delay on the part of any party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.
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<PAGE> 19
(g) Severability. If any provision of this Warrant shall be
held to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, this Warrant shall be construed and enforced
as if such illegal, invalid or unenforceable provision had never comprised a
part of this Warrant, and the remaining provisions of this Warrant shall remain
in full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Warrant.
(h) Counterparts. This Warrant may be executed in
counterparts, each of which is an original and all of which, taken together,
shall constitute a single instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
19
<PAGE> 20
IN WITNESS WHEREOF, this Warrant has been executed as of the 12th day
of May, 2000.
HIGH SPEED ACCESS CORP.
By /s/ High Speed Access Corp.
------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CHARTER COMMUNICATIONS, INC.
By /s/ Charter Communications, Inc.
------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CHARTER COMMUNICATIONS
HOLDING COMPANY, LLC
By: CHARTER COMMUNICATIONS, INC.,
its Manager
By /s/ Charter Communications, Inc.
------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
20
<PAGE> 21
EXHIBIT A
SUBSCRIPTION FORM TO BE EXECUTED
UPON EXERCISE OF THE WARRANT
Date:
----------------
To HIGH SPEED ACCESS CORP.:
The undersigned, as the Holder, hereby subscribes, at the price and
upon the other terms and conditions set forth in this Warrant of which this
subscription form is a part, for _________ shares of the common stock, $.01 par
value, of High Speed Access Corp. The undersigned represents, warrants and
covenants that this exercise of this Warrant conforms to the requirements of
Section 3 of this Warrant.
CHARTER COMMUNICATIONS, INC.
By
------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
-------------------------------------
21
<PAGE> 22
EXHIBIT B
TRANSFER FORM
[To be completed and signed only upon transfer of Warrant before exercise.]
For value received, the undersigned hereby transfers this
Warrant entitling the Holder to subscribe for ________________ shares of the
common stock, with $0.01 par value, of High Speed Access Corp. to
_______________________________. The undersigned represents, warrants and
covenants that this transfer conforms to the requirements of Sections 5 and 7 of
the Warrant.
Dated
-----------------
----------------------------------
22
<PAGE> 1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of the 12th day of May, 2000 by and between HIGH SPEED ACCESS
CORP., a Delaware corporation (the "Company"), CHARTER COMMUNICATIONS, INC., a
Delaware corporation ("Charter"), and CHARTER COMMUNICATIONS HOLDING COMPANY,
LLC, a Delaware limited liability company ("Charter HoldCo").
RECITALS
WHEREAS, the Company has agreed to grant to Charter and Charter HoldCo
certain registration rights with respect to the capital stock of the Company
owned by Charter and Charter HoldCo, upon the terms and subject to the
conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending
legally to be bound, agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below.
1.1 "Charter" has the meaning set forth in the first paragraph hereof,
and includes any successor company as may result from any merger or other
business combination or reorganization.
1.2 "Charter HoldCo" has the meaning set forth in the first paragraph
hereof, and includes any successor company as may result from any merger or
other business combination or reorganization.
1.3 "Warrant" shall mean the Amended and Restated Securities Purchase
Warrant, dated May 12, 2000, by and between the Company, Charter and Charter
HoldCo.
1.4 "Common Stock" shall mean the Company's common stock, $0.01 par
value per share, or any capital stock exchanged therefor.
1.5 "Commission" shall mean the federal Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.6 "Company" has the meaning set forth in the first paragraph hereof,
and includes any successor company as may result from any merger or other
business combination or reorganization.
<PAGE> 2
1.7 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.8 "First Network Services Agreement" shall mean the Network Services
Agreement, dated November 25, 1998, by and between the Company and Charter.
1.9 "Holder" shall mean Charter, Charter HoldCo and any holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with Section 8 hereof.
1.10 "Registrable Securities" shall mean (i) any shares of Common Stock
issued to the Holder by the Company, (ii) any shares of Common Stock issuable
upon exercise of warrants held by the Holder, (iii) any shares of Common Stock
or any other capital stock exchanged for Common Stock issued as a dividend or
other distribution with respect to or in exchange for or in replacement of the
shares referenced in (i) or (ii) above, and (iv) all other Common Stock which
the Holder shall have acquired at any time; provided, however, that Registrable
Securities shall not include any shares of Common Stock which have previously
been registered or which have been sold to the public or which have been sold in
a private transaction in which the transferor's rights under this Agreement are
not transferred in accordance with Section 8 hereof.
1.11 The terms "register," "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
1.12 "Registration Expenses" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, and expenses of any regular or special audits incident to or
required by any such registration, but shall not include Selling Expenses.
1.13 "Renewal Warrant" shall mean any warrant issued to the Holder
after the date hereof pursuant to the terms of the Systems Access Agreement and
the First Network Services Agreement or pursuant to the terms of the Second
Network Services Agreement.
1.14 "Rule 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
1.15 "Rule 145" shall mean Rule 145 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
1.16 "Second Network Services Agreement" shall mean the Network
Services Agreement, dated May 12, 2000, by and between the Company and Charter.
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<PAGE> 3
1.17 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.18 "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities by, and fees and disbursements of counsel for, any Holder (other than
the fees and disbursements of counsel included in Registration Expenses).
1.19 "Systems Access Agreement" shall mean the Systems Access and
Investment Agreement, dated November 25, 1998, by and among the Company, Vulcan
Ventures, Incorporated and Charter.
2. COMPANY REGISTRATION.
2.1 Generally. If the Company shall determine to register any of its
Common Stock for its own account or for the account of any other party, other
than a registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, or a registration on any form of
registration statement that does not permit secondary sales, the Company will:
[a] promptly give to the Holder written notice thereof and of the
anticipated effective date of such registration; and
[b] use its best efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), except as
set forth in Section 2.2(b) hereof, and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests made by the Holder and received by the Company within thirty (30)
days after the written notice from the Company described in clause [a]
above is mailed or otherwise delivered by the Company to the Holder in
accordance with this Agreement. Such written request may specify any or
part of a Holder's Registrable Securities.
2.2 Underwriting.
[a] If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holder as a part of the written notice given pursuant to
Section 2.1(a) hereof. In such event, the right of the Holder to
registration pursuant to this Section 2 shall be conditioned upon the
Holder's participation in such underwriting and the inclusion of the
Holder's Registrable Securities in the underwriting to the extent provided
herein. The Holder proposing to distribute its securities through such
underwriting shall (together with the Company and other holders of
securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representatives of the
underwriter or underwriters selected by the Company, including customary
indemnification and contribution agreements.
3
<PAGE> 4
[b] Notwithstanding any other provision of this Section 2, if the
lead representative of the underwriters advises the Company in writing
that marketing factors require a limitation on the number of shares to be
underwritten, the lead representative may (subject to the limitations set
forth below) exclude all Registrable Securities from, or limit the number
of Registrable Securities to be included in, the registration and
underwriting. The Company shall so advise the Holder, and the number of
shares of securities that are entitled to be included in the registration
and underwriting shall be allocated first to the Company for securities
being sold for its own account and thereafter as set forth in Section 10
hereof.
[c] If the Holder or any other person requesting inclusion of their
securities in a registration statement does not agree to the terms of any
such underwriting, the Holder or such person shall be excluded therefrom
by written notice from the Company or the lead representative of the
underwriters. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such
registration. If shares of such other person are so excluded from the
registration, and if the number of shares of Registrable Securities to be
included in such registration was previously reduced as a result of
marketing factors pursuant to Section 2.2(b) hereof, then the Company
shall offer to the Holder and to other persons who have retained rights to
include Registrable Securities in the registration the right to include
additional Registrable Securities in the registration in an aggregate
amount equal to the number of shares of Registrable Securities so
excluded, with such shares of Registrable Securities to be allocated in
accordance with Section 10 hereof.
3. DEMAND REGISTRATION.
3.1 Demand for Registration.
[a] If the Company shall receive from the Holder at any time, or
from time to time, a written request that the Company effect any
registration with respect to all or a part of the Registrable Securities,
the Company will, as soon as practicable, and, in any event, within ninety
(90) days after the Company's receipt of a written request pursuant to
this Section 3.1, use its best efforts to effect such registration
(including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act and
any other governmental requirements or regulations) as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request. The Holder agrees
that it will not request registration of less than 250,000 shares of
Registrable Securities.
[b] The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 3.1:
[i] in any particular jurisdiction in which the Company would
be required to qualify to do business or execute a general consent to
service of process in effecting such registration, qualification, or
compliance, unless the
4
<PAGE> 5
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
[ii] after the Company has initiated two such registrations
pursuant to this Section 3.1 (counting for these purposes only
registrations which have been declared or ordered effective and
pursuant to which Registrable Securities requested by Holders to be
included herein have been sold); and
[iii] during the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of a
registration statement for the account of the Company and ending on a
date ninety (90) days after the effective date thereof.
[c] The registration statement filed pursuant to the request of the
Holder pursuant to this Section 3 may, subject to the provisions of
Section 3.2 and Section 10 hereof, include other securities of the Company
with respect to which registration rights have been granted, and may
include securities of the Company being sold for the account of the
Company. If the Company shall request inclusion in any registration
pursuant to this Section 3 of securities being sold for its own account,
or if other persons shall request inclusion in any registration pursuant
to this Section 3, the Holder shall offer to include such securities in
the underwritten offering and may condition such offer on their acceptance
of the further applicable provisions of this Agreement.
3.2 Postponed Registration. Subject to clauses [i] through [iii] of
Section 3.1(b) hereof, the Company shall file a registration statement to
register the Registrable Securities requested pursuant to this Section 3 as soon
as practicable, but in any event within ninety (90) days after receipt of the
request of the Holder; provided, however, that if (i) in the good faith judgment
of the Board of Directors of the Company, such registration would be seriously
detrimental to the Company, and the Board of Directors of the Company concludes,
as a result, that it is essential to defer the filing of such registration
statement at such time, and (ii) the Company shall furnish to the Holder a
certificate signed by an executive officer of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company for such registration statement to be filed
in the near future and that it is, therefore, essential to defer the filing of
such registration statement, then the Company shall have the right to defer such
filing for a period of not more than ninety (90) days after receipt of the
request of the Holder; provided further, that the Company shall not defer its
obligation in this matter more than once in any 18-month period.
3.3 Underwriting.
[a] In connection with any underwriting effected hereunder, the
Company shall enter into such reasonable agreements (including
underwriting agreements) and make such representations and warranties and
take all such other actions in connection therewith in order to expedite
or facilitate the disposition of the Registrable Securities pursuant to
any applicable registration statement contemplated herein as may
5
<PAGE> 6
be reasonably requested by the Holder in connection with any sale or
resale pursuant to any applicable registration statement.
[b] If the Holder shall request that the registration be in the
form of a firm commitment underwritten offering, the right of any such
Holder to registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
In connection with a firm commitment underwritten offering demanded by the
Holder, the Company shall, upon request of the Holder, furnish to the
Holder and each underwriter, upon the effectiveness of the registration
statement:
[i] a certificate, dated such date, signed on behalf of the
Company by the principal executive officer of the Company, confirming,
as of the date thereof, that any preliminary prospectus or prospectus
that is a part of the registration statement as of their respective
dates do not and will not at any time contain an untrue statement of a
material fact or omit to state a material fact necessary, in light of
the circumstances under which they were made, not misleading;
[ii] an opinion of counsel for the Company covering matters
customarily set forth in an underwriting agreement for firm commitment
underwritten offerings;
[iii] a comfort letter from the Company's independent
accountants, in the customary form and covering matters of the type
customarily covered by comfort letters to underwriters in connection
with firm commitment underwritten offerings; and
[iv] such other documents and certificates as may be reasonably
requested by the Holder or the lead representative of the underwriters
in connection with such firm commitment underwritten offering.
[c] The Holder may elect to include in such underwritten offering
all or a part of the Registrable Securities the Holder holds.
[d] In connection with an underwritten offering hereunder, the
Company shall (together with the Holder and all other persons proposing to
distribute their securities through such underwritten offering) enter into
an underwriting agreement in customary form (including customary
indemnification and contribution provisions) with the lead representative
of the underwriter or underwriters selected for such underwriting by the
Company, which underwriters are reasonably acceptable to the Holder.
[e] Notwithstanding any other provision of this Section 3, if the
lead representative of the underwriters advises the Holder in writing that
marketing factors require a limitation on the number of shares to be
included in such underwritten offering, the number of shares to be
included in the underwritten offering shall be allocated first to
6
<PAGE> 7
the Holder, then to the Company for securities being sold for its own
account, and thereafter as set forth in Section 10 hereof.
[f] If other persons who have requested inclusion in such
registration as provided above do not agree to the terms of any such
underwritten offering, such person shall be excluded therefrom by written
notice from the Company, the lead representative of the underwriters or
the Holder. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such
registration. If shares of such other person are so excluded from the
registration, and if the number of shares of Registrable Securities to be
included in such registration was previously reduced as a result of
marketing factors pursuant to Section 3.3(e) hereof, then the Holder shall
offer to the Company and to other persons who have retained rights to
include Registrable Securities in the registration the right to include
additional Registrable Securities in the registration in an aggregate
amount equal to the number of shares of Registrable Securities so
excluded, with such shares of Registrable Securities to be allocated in
accordance with Section 10 hereof.
4. REGISTRATION EXPENSES. All Registration Expenses incurred in connection
with any registration, qualification or compliance pursuant to Sections 2 and 3
hereof shall be borne by the Company. All Selling Expenses relating to
securities so registered shall be borne by the Company, except that in no event
shall the Company be responsible for payment of the underwriters' discount
and/or selling commissions in connection with the registration of the
Registrable Securities of the Holder.
5. REGISTRATION PROCEDURES.
5.1 In the case of each registration effected by the Company pursuant
to this Agreement, the Company will keep the Holder advised in writing as to the
initiation of each registration and as to the material progress and completion
thereof.
5.2 At its expense, the Company will use its best efforts to:
[a] keep such registration effective for a period of one hundred
eighty (180) days or until the Holder has completed the distribution
described in the registration statement relating thereto; provided,
however, that such 180-day period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities
included in such registration at the request of an underwriter of Common
Stock (or other securities of the Company);
[b] prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus made a part
of such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
[c] furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the
prospectus, as the Holder from time to time may reasonably request;
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<PAGE> 8
[d] cause all such Registrable Securities registered pursuant
hereunto to be listed on each securities exchange, if any, on which
similar securities issued by the Company are then listed and comply with
all applicable blue sky laws to enable the Registrable Securities to be
publicly offered and sold in the states in which such Registrable
Securities will be offered;
[e] provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than
the effective date of such registration;
[f] advise the Holder promptly and, if requested by the Holder,
confirm such advice in writing:
[i] when the prospectus or any prospectus supplement or
post-effective amendment has been filed and, with respect to any
applicable registration statement or any post-effective amendment
thereto, when the same has become effective;
[ii] of any request by the Commission for amendments to the
registration statement or amendments or supplements to the prospectus
or for additional information relating thereto
[iii] of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement under the
Securities Act or of the suspension by any state securities commission
of the qualification of the Registrable Securities for offering or
sale in any jurisdiction or the initiation of any proceeding for any
of the preceding purposes; or
[iv] of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the registration
statement, the prospectus, any amendment or supplement thereto or any
document incorporated by reference therein untrue, or that requires
the making of any additions to or changes in the registration
statement in order to make the statements therein not misleading, or
that requires the making of any additions to or changes in the
prospectus in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the registration statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Registrable Securities under state securities or blue sky laws,
the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
[g] furnish to the Holder, before filing with the Commission,
copies of any registration statement or any prospectus included therein or
any amendments or supplements to any such registration statement or
prospectus (including all documents incorporated by reference after the
initial filing of such registration statement), which
8
<PAGE> 9
documents will be subject to the review and comment of the Holder for a
period of at least three (3) business days, and the Company will not file
any such registration statement or prospectus or any amendment or
supplement to any such registration statement or prospectus (including all
such documents incorporated by reference) to which the Holder shall
reasonably object within three (3) business days after the receipt
thereof. The Holder shall be deemed to have reasonably objected to such
filing if such registration statement, amendment, prospectus or supplement
as applicable, as proposed to be filed, contains a material misstatement
or omission or fails to comply with the applicable requirements of the
Securities Act;
[h] promptly prior to the filing of any document that is to be
incorporated by reference into a registration statement or prospectus,
provide copies of such document to the Holder, make the Company's
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as the Holder may reasonable request;
[i] make available at reasonable times for inspection by the Holder
and any attorney or accountant retained by the Holder, all financial and
other records, pertinent corporate documents of the Company and cause the
Company's officers, directors and employees to supply all information
reasonably requested by the Holder, attorney or accountant in connection
with such registration statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
[j] if requested by the Holder, promptly include in any
registration statement or prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as the Holder may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution," and make
all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such prospectus supplement or post-effective
amendment;
[k] furnish to the Holder upon its reasonable request, without
charge, at least one copy of the registration statement, as first filed
with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
[l] prior to any public offering of Registrable Securities,
cooperate with the Holder and its counsel in connection with the
registration and qualification of the Registrable Securities under the
securities or blue sky laws of such jurisdictions as the Holder may
request and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable registration statement;
provided, however, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits
or to taxation, other than as to matters and transactions relating to the
registration statement, in any jurisdiction where it is not now so
subject;
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<PAGE> 10
[m] use its reasonable best efforts to cause the disposition of the
Registrable Securities covered by the registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
[n] comply with all applicable rules and regulations of the
Commission, and make generally available to the Holder with regard to any
applicable registration statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 under the
Securities Act (which need not be audited) covering a 12-month period
beginning after the effective date of the registration statement (as such
term is defined in paragraph (c) of Rule 158 under the Securities Act);
and
[o] make appropriate officers of the Company available to the
Holder for meetings with prospective purchasers of the Registrable
Securities and prepare and present to potential investors customary "road
show" material in a manner consistent with other new issuances of other
securities similar to the Registrable Securities.
6. INDEMNIFICATION.
6.1 The Company will indemnify the Holder, its officers, directors,
employees, agents and representatives, and each underwriter, if any, and each
person who controls (within the meaning of Section 15 of the Securities Act) the
Holder or any such underwriter, against all expenses, claims, losses, damages,
and liabilities (or actions, proceedings, or settlements in respect thereof),
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular, or other
document (including any related registration statement, notification, or the
like) incident to any such registration, qualification, or compliance, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of the Securities Act or any applicable state
securities laws, or any rules or regulations thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification, or compliance, and will reimburse the
Holder, its officers, directors, employees, agents and representatives, and each
such underwriter, and each such person who controls the Holder and any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability or action, as such expenses are incurred; provided, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability, or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Holder or underwriter and stated to be specifically for use therein. It is
agreed that the indemnity agreement contained in this Section 6.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the written consent of the
Company (which consent shall not be unreasonably withheld). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to the Holder or to any such officer, director, employee, agent,
representative, underwriter or control person.
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<PAGE> 11
6.2 The Holder will, if Registrable Securities held by the Holder are
included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify the Company, its officers, directors,
employees, agents and representatives, and each underwriter, if any, of the
Company's securities covered by such a registration statement, and each person
who controls (within the meaning of Section 15 of the Securities Act) the
Company or any such underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular, or other
document, or any 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 the Company, its officers, directors, employees,
agents and representatives, and each such underwriter, and each such person who
controls the Company and any such underwriter, for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by the Holder and
stated to be specifically for use therein; provided, however, that the
obligations of the Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the written consent of
the Holder (which consent shall not be unreasonably withheld); provided further,
that in no event shall any indemnity obligation under this Section 6.2 exceed
the gross proceeds from the offering received by the Holder with respect to its
sale of Registrable Securities pursuant to the prospectus, less the amount of
any damages that the Holder has otherwise been required to pay by reason of such
untrue statement or alleged untrue statement or omission or alleged omission.
The foregoing indemnity agreement is in addition to any liability which the
Holder may otherwise have to the Company or any such officer, director,
employee, agent, representative, underwriter or control person.
6.3 Promptly after receipt by an indemnified party under Section 6.1 or
6.2 hereof 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 section, notify each party against whom indemnification is to
be sought in writing of the commencement thereof (but the failure to so notify
an indemnifying party shall not relieve the indemnifying party from any
liability which it may have under this Section 6). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties 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 (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available
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to one or all of the indemnifying parties (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the indemnifying parties. Anything in this Section
6.3 to the contrary notwithstanding, an indemnifying party shall not be liable
for any settlement or any claim or action effected without its written consent;
provided, however, that such consent shall not be unreasonably withheld.
6.4 If the indemnification provided for in this Section 6 is for any
reason unavailable to an indemnified party with respect to any loss, liability,
claim, damage, or expense referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party, as a result of such loss,
liability, claim, damage or expense, in such proportion as IS appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions of
the indemnifying party and of the indemnified party. Such 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 to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party, and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission; provided, that in
no event shall contribution by the Holder under this Section 6.4 exceed the
gross proceeds from the offering received by the Holder.
6.5 Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.
7. INFORMATION BY HOLDER. The Holder shall furnish to the Company such
information regarding the Holder and the distribution proposed by the Holder as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification, or compliance
referred to in this Agreement.
8. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted to the Holder by the Company under
Section 2 hereof, or the right to demand that the Company register securities
granted under Section 3 hereof, may be transferred or assigned by the Holder
only to a transferee or assignee of not less than 10,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits, and the like); provided,
however, that the Company is given written notice at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of the transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned; provided
further, that the transferee or assignee of such rights assumes in writing the
obligations of the Holder under this Agreement.
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<PAGE> 13
9. "MARKET STAND-OFF" AGREEMENT.
9.1 If requested by the Company and the lead representative of the
underwriters of Common Stock (or other securities of the Company), neither the
Holder, nor any officer or director of the Company or holder of more than five
percent (5%) of the outstanding capital stock of the Company, shall sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by such person (other than those included in the registration)
during a period of up to ninety (90) days following the effective date of a
registration statement of the Company filed under the Securities Act; provided,
that such agreement shall only apply to the first such registration statement of
the Company that includes securities to be sold on its behalf to the public in
an underwritten offering.
9.2 The obligations described in this Section 9 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Rule 145 transaction on Form S-4 or similar forms that may
be promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said 180-day period.
10. ALLOCATION OF REGISTRATION OPPORTUNITIES. In any circumstance in which
all of the Registrable Securities and/or other shares of Common Stock with
registration rights (the "Other Shares") requested to be included in a
registration on behalf of the Holder and/or other persons cannot be so included
as a result of limitations of the aggregate number of shares of Registrable
Securities and/or Other Shares that may be so included, the number of shares of
Registrable Securities and/or Other Shares that may be so included shall be
allocated among the Holder and/or the other persons requesting inclusion of
shares pro rata on the basis of the number of shares of Registrable Securities
and/or Other Shares that would be held by the Holder and/or the other persons.
If the Holder and/or the other persons do not request inclusion of the maximum
number of shares of Registrable Securities and/or Other Shares allocated to them
pursuant to the above-described procedure, the remaining portion of this
allocation shall be reallocated among the Holder and/or the other persons whose
allocations did not satisfy their requests pro rata on the basis of the number
of shares of Registrable Securities and/or Other Shares that would be held by
the Holder and/or the other persons and this procedure shall be repeated until
all of the shares of Registrable Securities and Other Shares which may be
included in the registration on behalf of the Holder and/or the other persons
have been so allocated. The Company shall not limit the number of Registrable
Securities to be included in a registration pursuant to this Agreement in order
to include shares held by persons with no registration rights.
11. LIMITATIONS ON REGISTRATION OF OTHER SECURITIES. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holder, enter into any agreement with any holder or prospective holder of
any securities of the Company giving such holder or prospective holder any
registration rights the terms of which are as or more favorable than
registration rights granted to the Holder hereunder unless the Company shall
also give such favorable rights to the Holder hereunder.
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<PAGE> 14
12. REPORTING.
12.1 The Company agrees, when required by law, to make and keep public
information available, as those terms are understood and defined in Rule 144, at
all times.
12.2 The Company hereby represents and warrants that all reports and
other documents required to be filed by the Company with the Commission under
the Securities Act and the Exchange Act, as of the date hereof, have been filed.
The Company will use its best efforts to file with the Commission, in a timely
manner, all reports and other documents required to be filed by the Company
under the Securities Act and the Exchange Act after the date hereof.
12.3 The Company will provide written evidence of compliance with
Section 12.1 hereof and the filing of all reports contemplated by Section 12.2
hereof to the Holder promptly upon receipt of a written request for such
evidence from the Holder.
13. TERMINATION OF REGISTRATION RIGHTS. The right of the Holder to request
registration or inclusion in any registration pursuant to Section 2 hereof shall
terminate on the closing of the first Company initiated registered public
offering of Common Stock if all shares of Registrable Securities held or
entitled to be held upon conversion or exercise by the Holder may immediately be
sold under Rule 144 during any 90-day period, or on such date after the closing
of the first Company initiated registered public offering of Common Stock if all
shares of Registrable Securities held or entitled to be held upon conversion or
exercise by the Holder may immediately be sold under Rule 144 during any 90-day
period; provided, however, that the provisions of this Section 13 shall not
apply to the Holder if and when it owns more than five percent (5%) of the
Company's outstanding stock until such time as the Holder owns less than five
percent (5%) of the outstanding stock of the Company.
14. TERMINATION OF PRIOR REGISTRATION RIGHTS. Any registration rights
granted to the Holder prior to the date hereof concerning any Registrable
Securities held by the Holder, whether by written agreement or otherwise, are
hereby terminated and superseded by this Agreement. This Agreement shall be
deemed to amend and restate any such prior agreements granting such registration
rights, but only to the extent of Registrable Securities held by the Holder.
15. MISCELLANEOUS.
15.1 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
15.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
15.3 Entire Agreement; Amendment; Waiver. This Agreement, together
with the Warrant and any Renewal Warrants provided for in connection with the
Systems Access Agreement, the First Network Services Agreement and the Second
Network Services Agreement, constitutes the full and entire understanding and
agreement between the parties with
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<PAGE> 15
regard to the registration rights of the Holder. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except with the
consent of the parties.
15.4 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be mailed by
first class, registered, or certified mail, postage prepaid, or sent via
overnight reputable courier service, or delivered personally or via facsimile
with copy sent by mail as provided above:
If to Charter or
Charter Holdco: Charter Communications, Inc.
12444 Powerscourt Drive
St. Louis, Missouri 63131
Facsimile: (314) 965-8793
Attention: Curtis S. Shaw, Esq.
If to the Company: High Speed Access Corp.
1000 West 10th Street, Suite 210
Louisville, Kentucky 40210
Facsimile: (502) 515-3101
Attention: John G. Hundley, Esq.
or to such other address of which the addressee shall have notified the sender
in writing. Notices mailed in accordance with this Section 15.4 shall be deemed
given (i) if by mail, three (3) days after being mailed, (ii) if by overnight
courier service, one (1) day after being placed in the hands of a representative
of such service and (iii) if by facsimile, on the date of transmission, subject
to sender's receipt of a confirmation copy.
15.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Holder, upon any breach or default of the
Company under this Agreement shall impair any such right, power or remedy of the
Holder, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of the
Holder of any breach or default under this Agreement or any waiver on the part
of the Holder of any provisions or conditions of this Agreement must be made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to the Holder, shall be cumulative and not alternative.
15.6 Rights; Separability. Unless otherwise expressly provided herein,
the Holder's rights hereunder are several rights, not rights jointly held with
any other person who holds securities with registration rights. In case any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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<PAGE> 16
15.7 Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
15.9 Prevailing Party. In the event any legal action or other
proceeding is brought by a party hereto to enforce the terms of this Agreement,
the substantially prevailing party in such action or proceeding will be entitled
to reasonable attorneys', paralegals' and accountants' fees and costs incurred
before and at trial and at all appellate levels, in addition to all awards,
judgements and recoveries of damages obtained.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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<PAGE> 17
IN WITNESS WHEREOF. the parties hereto have executed this Agreement
effective as of the day and year first written above.
HIGH SPEED ACCESS CORP.
By: /s/ High Speed Access Corp.
-----------------------------------
Name:
Title:
CHARTER COMMUNICATIONS, INC.
By: /s/ Charter Communications, Inc.
-----------------------------------
Name:
Title:
CHARTER COMMUNICATIONS
HOLDING COMPANY, LLC
By: CHARTER COMMUNICATIONS, INC.,
its, Manager
By: /s/ Charter Communications, Inc.
-----------------------------------
Name:
Title:
17
<PAGE> 1
EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 3rd day of
May, 2000, by and between HIGH SPEED ACCESS CORP., a Delaware corporation (the
"Company") and LUCENT TECHNOLOGIES INC., a Delaware corporation (the
"Investor").
WHEREAS, the Investor wishes to purchase from the Company,
and the Company wishes to sell to the Investor, 1,250,000 shares of the
Company's Common Stock of an aggregate purchase price of Ten Million Dollars
($10,000,000), on the terms set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Stock. Subject to the terms and conditions of
this Agreement, the Company agrees to sell to the Investor and the Investor
agrees to purchase from the Company 1,250,000 shares of Common Stock from the
Company (the "Stock") at a price per share of Common Stock equal to $8.00, for
an aggregate purchase price equal to Ten Million Dollars ($10,000,000), having
the rights, preferences, privileges and restrictions set forth in the Amended
and Restated Certificate of Incorporation of the Company (the "Restated
Certificate").
1.2 The Closing. The purchase and sale of the Stock shall be held at
the Company's offices within five (5) business days after the satisfaction or
waiver of each of the conditions set forth in Sections 4 and 5 (the "Closing").
At the Closing, the Company will deliver the Stock to the Investor against
payment of the purchase price therefor by check payable to the order of the
Company or by wire transfer.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that:
2.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as now conducted.
2.2 Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder, and the authorization, issuance and delivery of the
Stock has been taken or will be taken prior to the Closing, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and by general principles of equity.
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2.3 Valid Issuance of Stock. The Stock, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed,
will be duly and validly issued, fully paid and nonassessable and, based in
part upon the representations of the Investor in this Agreement, will be issued
in compliance with all applicable federal and state securities laws.
2.4 Litigation. There are no actions, proceedings or investigations
pending or, to the best of Company's knowledge, any basis therefor or threat
thereof, against or affecting the Company, that, either in any case or in the
aggregate, would result in any material adverse change in the business,
financial condition, or results of operations of the Company.
2.5 Properties. To the best of the Company's knowledge (but without
having conducted any special investigation), the Company has (i) good and
marketable title to its properties and assets and has good title to all its
leasehold interests, and (ii) sufficient title, license and/or ownership of all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now
conducted on the date hereof.
2.6 Compliance with Other Documents. The execution and delivery of
this Agreement, consummation of the transactions contemplated hereby, and
compliance with the terms and provisions hereof will not conflict with or
result in a breach of the terms and conditions of, or constitute a default
under the Restated Certificate or Bylaws of the Company or of any contract or
agreement to which the Company is now a party, except where such conflict,
breach or default of any such contract or agreement, either individually or in
the aggregate, would not have a material adverse effect on the Company's
business, financial condition or results of operations.
2.7 SEC Filings. Since June 4, 1999 (the "IPO Date"), the Company has
filed with the Securities and Exchange Commission (the "SEC") all reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) required to be filed under the
Securities Act and the Exchange Act (the "SEC Documents"). As of their
respective dates, the SEC Documents have complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents and, except to the extent that information contained in any
SEC Document has been revised or superseded by a later filed SEC Document, none
of the SEC Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form, as
of their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all
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material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal recurring year-end audit adjustments).
3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants that:
3.1 Authorization. This Agreement constitutes the valid and legally
binding obligation of the Investor, enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and by general principles of equity.
3.2 Investigation. The Investor acknowledges that it has had an
opportunity to discuss the business, affairs and current prospects of the
Company with the Company's executive officers. The Investor further
acknowledges having had access to information about the Company that it has
requested or considers necessary for purposes of purchasing the Stock.
3.3 Accredited Investor. The Investor is an "accredited investor" as
such term is defined in Regulation D adopted by the SEC.
3.4 Purchase Entirely for Own Account. This Agreement is made with the
Investor in reliance upon the Investor's representation to the Company, which
by the Investor's execution of this Agreement the Investor hereby confirms,
that the Stock will be acquired for investment for the Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same.
4. Conditions to the Investor's Obligation at Closing. The obligation of
the Investor to purchase the Stock at the Closing is subject to the fulfillment
to the Investor's satisfaction on or prior to the Closing of the following
conditions:
4.1 Representations and Warranties. The representations and warranties
made by the Company in Section 2 hereof shall be true and correct when made,
and shall be true and correct as of the Closing with the same force and effect
as if they had been made on and as of such date, subject to changes
contemplated by this Agreement.
4.2 Securities Laws. The offer and sale of the Stock to the Investor
pursuant to this Agreement shall be either (i) registered under the Securities
Act, or (ii) exempt from the registration requirements of the Securities Act
and the registration and/or qualification requirements of all applicable state
securities laws.
4.3 Authorizations. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement (including, if applicable, the
3
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expiration of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act")) shall have been duly
obtained and shall be effective on and as of the Closing.
5. Conditions to the Company's Obligations at Closing. The obligation of
the Company to sell the Stock at the Closing is subject to the fulfillment to
the Company's satisfaction on or prior to the Closing of the following
conditions:
5.1 Representations and Warranties. The representations and warranties
of the Investor contained in Section 3 hereof shall be true as of the Closing
with the same force and effect as if they had been made on and as of such date,
subject to changes contemplated by this Agreement.
5.2 Securities Laws. The offer and sale of the Stock to the Investor
pursuant to this Agreement shall be either (i) registered under the Securities
Act, or (ii) exempt from the registration requirements of the Securities Act
and the registration and/or qualification requirements of all applicable state
securities laws.
5.3 Authorizations. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement (including, if applicable, the expiration of any waiting period under
the HSR Act) shall have been duly obtained and shall be effective on and as of
the Closing.
5.4 Payment of Purchase Price. The Investor shall have delivered to
the Company the purchase price for the Stock as set forth in Section 1.2
hereof.
6. Covenants of the Company and the Investor.
6.1 Agreement Not to Transfer.
(a) Prior to the first anniversary of the Closing, the Investor
shall not, directly or indirectly, Transfer or offer to
Transfer, in the aggregate, more than fifty percent (50%) of
the shares of the Stock during any one calendar quarter.
(b) Notwithstanding the foregoing restrictions on Transfer (the
"Transfer Restrictions"), the Transfer Restrictions shall be
ineffective in the event an unrelated third party has
publicly announced and is actively pursuing the purchase of
all or substantially all of the assets or capital stock of
the Company or a merger in which the Company would not be the
surviving corporation; provided, that if such acquisition or
merger is not consummated within sixty days of such public
announcement, the Transfer Restrictions shall be reinstated.
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<PAGE> 5
(c) In order to enforce the Transfer Restrictions, the Company
may impose stop-transfer instructions with respect to the
Stock until the end of the restricted period.
(d) As used in this Agreement, the term "Transfer" shall mean any
sale, transfer, assignment, hypothecation, encumbrance or
other disposition, whether voluntary or involuntary, of
shares of the Stock. In the case of a hypothecation, the
Transfer shall be deemed to occur both at the time of the
initial pledge and at any pledgee's sale or a sale by any
secured creditor or a retention by the secured creditor of
the pledged shares of the Stock in complete or partial
satisfaction of the indebtedness for which the shares of the
Stock are security.
6.2 Market Stand-Off. In addition to the Transfer Restrictions (which
shall in no way be limited by the following), in connection with any secondary
underwritten public offering by the Company of its equity securities pursuant
to an effective registration statement filed under the Securities Act, the
Investor shall not Transfer or offer to Transfer any shares of the Stock
without the prior written consent of the Company and its underwriters. Such
restriction (the "Market Stand-Off") shall be in effect for such period of time
from and after the effective date of the final prospectus for the offering as
may be requested by the Company or such underwriters; provided, however, that
(i) such Market Stand-Off shall not exceed one hundred eighty (180) days, and
(ii) the Investor shall be subject to the Market Stand-Off only if the officers
and directors of the Company are also subject to similar restrictions. In order
to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Stock until the end of the applicable
stand-off period.
6.3 Notice of Intention to Transfer. On or prior to the third
anniversary of the Closing, in the event the Investor plans to Transfer in the
aggregate more than twenty percent (20%) of the shares of the Stock in one or
more transactions during any three (3) month period, the Investor shall use its
best efforts to inform the Company of such intention to Transfer such shares
ten (10) days prior to such Transfer.
6.4 Standstill. The Investor agrees that, prior to the third
anniversary of the IPO Date, unless specifically invited by the Company, the
Investor will not, in any manner, directly or indirectly, effect any
acquisition of Voting Securities (as hereinafter defined), or beneficial
ownership thereof if, immediately after any such acquisition, the Investor
would beneficially own, in the aggregate, Voting Securities representing more
than ten percent (10%) of the outstanding Common Stock of the Company. The
Investor also agrees during such period not to make any public request (or
publicize any request) of the Company (or its directors, officers, employees or
agents), directly or indirectly, to amend or waive any provision of this
Section 6.4 (including this sentence). The Investor also agrees not to form,
join or in any way participate in a "group" (as defined under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or take any other
action, in order to circumvent the provisions of this Section 6.4.
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For purposes of this Agreement, (i) the term "Voting
Securities" shall refer to all securities of the Company entitled to vote
generally for the election of directors, and (ii) the term "beneficial
ownership" shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.
The restrictions set forth in this Section 6.4 shall be
ineffective upon the occurrence of either of the following events: (i) an
unrelated third party has publicly announced and is actively pursuing the
purchase of all or substantially all of the assets or capital stock of the
Company or a merger in which the Company would not be the surviving
corporation; or (ii) an officer of the Company, duly authorized by the
Company's Board of Directors, has informed the Investor in writing of the
Company's potential interest in entering into a sale of all or substantially
all of its assets or stock or a merger in which the Company would not be the
surviving corporation; provided, however, that if such acquisition, merger or
sale is not consummated within sixty days of such public announcement (in the
case of clause (i)) or of such notice in writing (in the case of clause (ii)),
the restrictions set forth in this Section 6.4 shall be reinstated.
6.5 Voting Agreements. For a period ending on the seventh anniversary
of the Closing, the Investor agrees to vote all shares of Voting Securities
owned by it (i) in each election of directors for the entire slate of nominees
recommended by the Company's Board of Directors to the Company's shareholders
and (ii) on all other matters to be voted on by holders of Voting Securities,
unless the Company otherwise consents in writing, in the same proportion as the
votes cast by all other shareholders of the Company entitled to vote on such
matter (other than the Investor). The Investor, as a holder of Voting
Securities, shall be present, in person or by proxy, at all meetings of
shareholders of the Company so that all shares of Voting Securities
beneficially owned by it may be counted for the purpose of determining the
presence of a quorum at such meetings.
The voting agreements set forth in this Section 6.5 shall
terminate immediately if an unrelated third party has publicly announced and is
actively pursuing the purchase of all or substantially all of the assets or
capital stock of the Company or a merger in which the Company would not be the
surviving corporation; provided, however, that if such acquisition, merger or
sale is not consummated within sixty days of such public announcement, the
voting agreements set forth in this Section 6.5 shall be reinstated.
6.6 Hart-Scott-Rodino. The Company and the Investor will assist and
cooperate with each other regarding any filings required under the HSR Act and
any other applicable laws and regulations. The Company and the Investor each
agree to make any HSR Act and other filings promptly upon the other's request.
6.7 Registration of Stock. The Company agrees that, upon request by
the Investor on or after June 3, 2000, it will effect registration of the Stock
in accordance with the provisions contained in Exhibit A attached hereto. The
Investor understands and agrees that (i) the Stock will be characterized as
"restricted securities" under the federal securities laws inasmuch as it is
being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities
may be resold
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without registration under the Securities Act only in certain limited
circumstances, and (ii) each certificate representing the Stock and any other
securities issued in respect of the Stock upon any stock split, stock dividend,
recapitalization, merger or similar event (unless no longer required in the
opinion of counsel for the Company) shall be stamped or otherwise imprinted
with appropriate legends mandated by federal and state securities laws.
7. Miscellaneous.
7.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware without regard to the conflict of law
provisions thereof.
7.2 Survival; Additional Securities. The representations and
warranties set forth in Sections 2 and 3 shall survive until the Closing. The
covenants and agreements set forth in Section 6 shall survive in accordance
with their terms. Any new, substituted or additional securities which are by
reason of any stock split, stock dividend, recapitalization or reorganization
distributed with respect to the Stock ("Stock Distributions") shall be
immediately subject to the covenants and agreements set forth in Section 6 to
the same extent the Stock is at such time covered by such provisions.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Notwithstanding anything to the
contrary contained herein, the covenants set forth in Section 6 shall not be
binding upon any entity (other than an affiliate of the Investor) which
acquires any shares of the Stock or a Stock Distribution in a transaction
permitted hereunder.
7.4 Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties with regard to the subject
matter hereof.
7.5 Notices. Except as otherwise provided, 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 upon receipt
or, if earlier, (i) five (5) days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day
after the day of deposit with Federal Express or similar overnight courier,
freight prepaid, if delivered by overnight courier or (iv) one (1) business day
after the day of facsimile transmission, if delivered by facsimile transmission
with copy by first class mail, postage prepaid, and shall be addressed, (a) if
to the Investor, at the Investor's address set forth below its signature, or at
such other address as the Investor shall have furnished to the Company in
writing, or (b) if to the Company, at its address as set forth below its
signature, or at such other address as the Company shall have furnished to the
Investor in writing.
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7.6 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of the Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only
with the written consent of the Company and the Investor.
7.7 Legal Fees. In the event of any action at law, suit in equity or
arbitration proceeding in relation to this Agreement or the Stock or any Stock
Distribution, the prevailing party shall be paid by the other party a
reasonable sum for the attorneys' fees and expenses incurred by such prevailing
party.
7.8 Expenses. Irrespective of whether the Closing is effected, the
Company and the Investor shall each pay their own costs and expenses incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement.
7.9 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
7.11 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.12 Confidentiality. The parties hereto agree that, except with the
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish, or make accessible to anyone any
confidential information, knowledge, or data concerning or relating to the
business or financial affairs of such other party to which said party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of its obligations hereunder.
7.13 Publicity. Except as required by law, no press release, public
statement, advertisement or similar publicity from any party hereunder with
respect to the participation of the Investor or any affiliate thereof in the
transactions contemplated hereby (or any other matter relating to the Company
and such Investor or its affiliates) shall be issued or made without the prior
consent of the Investor. In the event that such publicity or disclosure is
required by law, the Company shall provide the Investor with prior written
notice of such publicity or disclosure. Notwithstanding the foregoing, the
Company may disclose the Investor's participation as a shareholder of the
Company and the number of shares of common stock the Investor owns pursuant to
the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year herein above first written.
HIGH SPEED ACCESS CORP.
4100 East Mississippi Avenue
Denver, CO 80246
Attn: Dan O'Brien, President
/s/ Daniel J. O'Brien
--------------------------------
By: Daniel J. O'Brien, CEO
LUCENT TECHNOLOGIES INC.
600 Mountain Avenue
Murray Hill, NJ 07974
/s/ Bill Viqueira
--------------------------------------
By: Bill Viqueira
Vice President and Treasurer
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EXHIBIT A
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Exhibit A, capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Stock Purchase Agreement between the Company and the Investor to which
this Exhibit A is attached. In addition, the following terms used herein shall
have the following meanings:
(a) The term "Form S-1" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
(b) The term "Form S-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
(c) The term "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(d) The term "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
1.2 Request for Registration. If the Company shall receive, at any
time after June 3, 2000, a written request from the Investor that the Company
effect a registration on a Form S-3 and any related qualification or compliance
with respect to the Stock, then the Company shall, as expeditiously as
reasonably possible, effect the registration of all, but not less than all,
such Stock on Form S-3 and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all of
the Stock. The Company shall have no obligation to effect any registration of
less than all of the Stock.
(a) Notwithstanding anything to the contrary in this Section 1.2, the
Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.2: (i) if the
Company shall furnish to the Investor a certificate signed by the
President of the Company stating that, in the good faith judgment of
the Board of Directors of the Company, such registration should be
deferred due to material events directly relating to the Company, in
which event the Company shall have the right to defer the filing of
the Form S-3 for a period of not more than 90 days after receipt of
the request of the Investor under this Section 1.2 (provided, however,
that the Company may defer such registration only once); or (ii) in
any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
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(b) If Form S-3 is not available to the Company to effect the
registration of the Stock as contemplated by this Section 1.2, then
(i) the Company shall effect such registration on Form S-1 and (ii) in
such event, all references in this Section 1 to Form S-3 shall be read
as references to Form S-1.
(c) The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 1.2 after
the earlier to occur of the following events: (i) the Company has
effected one registration pursuant to this Section 1.2, and such
registration has been declared or ordered effective and otherwise
satisfies and continues to satisfy the terms and conditions of this
Section 1.2; or (ii) the Company has voluntarily effected the
registration of all of the Stock without having first received a
request for such registration pursuant to this Section 1.2 (a
"Voluntary Registration"), and such Voluntary Registration has been
declared or ordered effective and otherwise satisfies and continues to
satisfy the terms and conditions of this Section 1.2.
1.3 Obligations of the Company. Whenever required under Section 1.2 to
effect the registration on Form S-3 of the Stock, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a Form S-3 with respect to such
Stock and use its best efforts to cause such registration statement to
become effective as soon as reasonably practicable after the mailing
of the request for such registration but in no event later than ninety
(90) days after such mailing. The Company shall keep such registration
statement effective until the earlier of (i) two (2) years after the
Closing, (ii) the distribution of all of the Stock as contemplated in
the registration statement has been completed, and (iii) the date
which all shares of the Stock held by the Investor may immediately be
sold under Rule 144 during any 90-day period.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Investor such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Investor may
reasonably request in order to facilitate the disposition of the
Stock.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested
by the Investor; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any
such states or jurisdictions.
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(e) Notify the Investor covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered
under the Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits 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
then existing.
(f) Cause all such Stock registered pursuant hereunder to be listed on
each securities exchange on which similar securities issued by the
Company are then listed.
(g) Provide a transfer agent and registrar for all of the Stock
registered pursuant hereunder and a CUSIP number for all such Stock,
in each case not later than the effective date of such registration.
1.4 Investor Obligation to Furnish Information. It shall be a
condition precedent to the obligations of the Company to take any action
pursuant hereto with respect to the Stock that the Investor shall furnish to
the Company such information regarding itself, the Stock, and the intended
method of disposition of such securities as shall be required to effect the
registration of such Stock.
1.5 Expenses of Registration. All expenses incurred in connection with
registrations, filings or qualifications pursuant hereto, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company (including
fees and disbursements of counsel for the Company in its capacity as counsel to
the Investor hereunder but excluding the fees and disbursements of any other
counsel for the Investor) shall be borne by the Company; provided, however,
that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant hereto if the registration request is
subsequently withdrawn at the request of the Investor, unless the Investor
agrees to forfeit its right to any demand registration pursuant hereto;
provided further, however, that if at the time of such withdrawal, the Investor
has learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Investor at the time of its
request and has withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the Investor
shall not be required to pay any of such expenses and shall retain its right of
registration pursuant to Section 1.2.
1.6 Indemnification. In the event any Stock is included in a
registration statement under Section 1.2:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Investor, any underwriter (as defined in the Act)
for the Investor and each person, if any, who controls the Investor or
underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation"):
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(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement,
including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto,
(ii) 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, or
(iii) any violation or alleged violation by the Company of
the Act, the 1934 Act, any state securities law or any rule
or regulation promulgated under the Act, the 1934 Act or any
state securities law; and the Company will pay to the
Investor, or such underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection (a)
shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement
is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly
for use in connection with such registration by any such
Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter,
and any controlling person of any such underwriter, against any
losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Act, the
1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Investor
expressly for use in connection with such registration; and each such
Investor will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this
subsection (b), in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection (b) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Investor, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this subsection
(b) exceed the gross proceeds from the offering received by the
Investor.
(c) Promptly after receipt by an indemnified party under this Section
1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 1.6, deliver to the indemnifying party a written notice
of the
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<PAGE> 14
commencement thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party (together
with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding.
The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this Section 1.6, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section 1.6.
(d) If the indemnification provided for in this Section 1.6 is held by
a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in an underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
(f) The obligations of the Company and the Investor under this Section
1.6 shall survive the completion of any offering of the Stock in a
registration statement pursuant hereto, and otherwise.
1.7 Termination. The Company's obligation to register the Stock
pursuant to this agreement shall terminate on the earlier of (i) the second
anniversary of the Closing and (ii) the date on which all shares of the Stock
held by the Investor may immediately be sold under Rule 144 during any 90-day
period.
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EXHIBIT 10.5
OFFICE BUILDING LEASE
This OFFICE BUILDING LEASE ("Lease") is entered into as of the 4th day of
February 2000, by and between KOLL-LSI I, LLC, a Delaware limited liability
company ("Landlord"), and HIGH SPEED ACCESS CORP. , a Delaware corporation
("Tenant").
1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have the
following definitions and meanings:
(a) LANDLORD: KOLL-LSI I, LLC, a Delaware limited liability company .
(b) LANDLORD'S ADDRESS (FOR NOTICES): 1200 Seventeenth Street, Suite 550,
Denver, CO 80202, Attention: Steve Hager, or such other place as Landlord may
from time to time designate by notice to Tenant.
(c) TENANT: HIGH SPEED ACCESS CORP., a Delaware corporation
(d) TENANT'S ADDRESS (FOR NOTICES): Before the Commencement Date:
4100 East Mississippi Avenue, Suite 1150
Denver, CO 80246 Attn: Richard Pulley
After the Commencement Date, to the Premises, Attn: Richard Pulley, or such
other place as Tenant may from time to time designate by notice to Landlord.
(e) DEVELOPMENT: The parcel(s) of real property commonly known as the Jefferson
Corporate Center and located in the City of Littleton (the "City"), County of
Jefferson (the "County"), State of Colorado ("State"), as shown on the site plan
attached hereto as Exhibit "A-I". Tenant acknowledges that Landlord was formed
as a joint venture between Koll Development Company ("Koll") and Land Securities
Investors, Ltd. ("LSI") to own and develop the Premises, but that LSI is the fee
owner of the Development. While it is Koll's and LSI's present intention to form
separate joint venture entities in connection with potential future development
of other sites within the Development, Koll does not own a fee interest in any
of the other sites within the Development.
(f) BUILDING: A three (3) story office building located within the Development,
which Building contains approximately 69,978 Rentable Square Feet (subject to
adjustment as provided in Exhibit "B"), with the street address of 10901 West
Toller Drive, Littleton, Colorado 80127.
(g) PREMISES: Those premises generally shown on the floor plans attached hereto
as Exhibit "A-III", comprising the entirety of the Building, and containing
approximately 69,978 Rentable Square Feet and 67,109 Usable Square Feet (subject
to adjustment as provided in Exhibit "B" and Exhibit "D").
(h) TENANT'S PERCENTAGE: Tenant's percentage of the Building is 100%.
(i) TERM: Five (5) Lease Years and zero (0) Months
(j) ESTIMATED COMMENCEMENT DATE: August 18, 2000
ESTIMATED EXPIRATION DATE: August 17, 2005
(k) COMMENCEMENT DATE: The date on which the Term of this Lease will commence as
determined in accordance with the provisions of Exhibit "C" and as stated on
Exhibit "D".
(l) INITIAL MONTHLY BASE RENT: $92,720.85, subject to adjustment as provided in
Subparagraph 1(m) below and as otherwise provided in this Lease.
(m) ADJUSTMENT TO MONTHLY BASE RENT: Monthly Base Rent will be adjusted in
accordance with the following:
LEASE YEAR OR MONTHS MONTHLY BASE RENT
Months 1-24 $ 92,720.85
Months 25-48 $ 97,677.63
Months 49-60 $100,301.80
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The Monthly Base Rent figures set forth above were calculated based on
the following figures and will be readjusted pursuant to Exhibit B and
reconfirmed as set forth in Exhibit D:
LEASE YEAR OR MONTHS PER SQUARE FOOT RATE
Months 1-24 $15.90
Months 25-48 $16.75
Months 49-60 $17.20
(n) [INTENTIONALLY OMITTED]
(o) SECURITY DEPOSIT: $140,000.00 together with the Letter of Credit as set
forth in the Addendum attached hereto. The Letter of Credit will be delivered by
Tenant to Landlord no later than five (5) business days after mutual execution
of this Lease.
(p) TENANT IMPROVEMENTS: All tenant improvements installed or to be installed by
Landlord or Tenant within the Premises to prepare the Premises for occupancy
pursuant to the terms of the Work Letter Agreement attached hereto as Exhibit
"C".
(q) TENANT IMPROVEMENT ALLOWANCE: $25.00 per Rentable Square Foot of the
Premises, to be applied as provided in the Work Letter Agreement attached hereto
as Exhibit "C".
(r) PERMITTED USE: General office space (which may include in a portion of the
Premises not to exceed 22,000 square feet, for equipment testing, staging a
24-hour, 7-day per week call center help line, and the operation of a computer
network operations center).
(s) PARKING: 315 uncovered employee, visitor and guest parking spaces at no cost
to Tenant during the initial Term of the Lease, subject to the terms and
conditions of Paragraph 32 below and the Rules and Regulations regarding parking
contained in Exhibit "H". Subject to Landlord's construction of the covered
parking spaces (as described in Section 4(c) below) and so long as Tenant leases
the entire Building, the 315 uncovered spaces shall be reserved in Tenant's
favor. Each covered parking space constructed for Tenant's use pursuant to
Section 4(c) below shall correspondingly reduce (one covered space causes a
reduction by one in the allotment of uncovered spaces) the uncovered spaces
committed for Tenant's use hereunder.
(t) BROKER(S): Tenant's Broker - Oliver Real Estate; Landlord's Broker - CB
Richard Ellis, Inc.
(u) GUARANTOR(S): None
(v) INTEREST RATE: shall mean the greater of ten percent (10%) per annum or two
percent (2%) in excess of the prime lending or reference rate of Wells Fargo
Bank N.A. or any successor bank in effect on the twenty-fifth (25th) day of the
calendar month immediately prior to the event giving rise to the Interest Rate
imposition; provided, however, the Interest Rate will in no event exceed the
maximum interest rate permitted to be charged by applicable law.
(w) EXHIBITS: A through J, inclusive, which Exhibits are attached to this Lease
and incorporated herein by this reference. As provided in Paragraph 3 below, a
completed version of Exhibit "D" will be delivered to Tenant after Landlord
delivers possession of the Premises to Tenant.
(x) ADDENDUM PARAGRAPHS: 40 through 45, inclusive, which Addendum Paragraphs are
attached to this Lease and incorporated herein by this reference.
This Paragraph 1 represents a summary of the basic terms and definitions of this
Lease. In the event of any inconsistency between the terms contained in this
Paragraph 1 and any specific provision of this Lease, the terms of the more
specific provision shall prevail.
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<PAGE> 3
2. PREMISES AND COMMON AREAS.
(a) PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises as improved or to be improved with the Tenant Improvements
described in the Work Letter Agreement, a copy of which is attached hereto as
Exhibit "C". Tenant shall have access to the Premises on a twenty-four hour,
seven days per week basis.
(b) MUTUAL COVENANTS. Landlord and Tenant agree that the letting and hiring of
the Premises is upon and subject to the terms, covenants and conditions
contained in this Lease and each party covenants as a material part of the
consideration for this Lease to keep and perform their respective obligations
under this Lease.
(c) TENANT'S USE OF COMMON AREAS.
(i) BUILDING COMMON AREAS. During the Term of this Lease, Tenant shall
have the right to use, subject to the terms of this Lease, the Rules and
Regulations referenced in Paragraph 32 below and all covenants, conditions and
restrictions now or hereafter affecting the Development, the Building's common
entrances, hallways, lobbies, public restrooms on multi-tenant floors,
elevators, stairways and access ways, loading docks, ramps, drives and platforms
and any passageways and service ways thereto, and the common pipes, conduits,
wires and appurtenant equipment within the Building which serve the Premises
(collectively, "Building Common Areas"). So long as Tenant leases the entirety
of the Building, Tenant's use of the Building Common Areas shall only be in
common with Landlord and its respective contractors, invitees, employees and
agents. At such time as Tenant no longer leases the entire Building, then
Tenant's right to use the Building Common Areas shall be in common with Landlord
and all persons, firms and corporations conducting business in the Development
and their respective customers, guests, licensees, invitees, subtenants,
employees and agents (collectively, "Development Occupants"); and
(ii) DEVELOPMENT COMMON AREAS. During the Term of this Lease, Tenant
shall have the nonexclusive right to use in common with Landlord and all
Development Occupants (as defined above), subject to the terms of this Lease,
the Rules and Regulations referenced in Paragraph 32 below and all covenants,
conditions and restrictions now or hereafter affecting the Development, the
following common areas of the Building and/or the Development: The parking
facilities of the Development which serve the Building (subject to the
provisions of Exhibit "H"), loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, landscaped areas, plaza areas,
fountains and similar areas and facilities situated within the Development and
appurtenant to the Building which are not reserved for the exclusive use of any
Development Occupants (collectively, "Development Common Areas"). The Building
Common Areas and the Development Common Areas may hereinafter be collectively
referred to as the "Common Areas."
(d) LANDLORD'S RESERVATION OF RIGHTS. Provided Tenant's use of and access to the
Premises and parking to be provided to Tenant under this Lease is not interfered
with in an unreasonable manner, Landlord reserves for itself and for all other
owner(s) and operator(s) of the Development Common Areas and the balance of the
Development, the right from time to time to: (i) install, use, maintain, repair,
replace and relocate pipes, ducts, conduits, wires and appurtenant meters and
equipment above the ceiling surfaces, below the floor surfaces, within the walls
and in the central core areas of the Building; (ii) make changes to the design
and layout of the Development, including, without limitation, changes to
buildings, driveways, entrances, loading and unloading areas, direction of
traffic, landscaped areas and walkways, and, subject to the parking provisions
contained in Paragraph 32 and Exhibit "H", parking spaces and parking areas; and
(iii) use or close temporarily the Building Common Areas, the Development Common
Areas and/or other portions of the Development while engaged in making
improvements, repairs or alterations to the Building, the Development, or any
portion thereof. Landlord covenants that, so long as Tenant leases all of the
Building, Landlord, in exercising the rights reserved to it under this
subsection, will ensure that Tenant retains at least 315, eight foot wide,
parking spaces.
3. TERM. The term of this Lease ("Term") will be for the period designated in
Subparagraph 1(i), commencing on the Commencement Date, and ending on the last
day of the month in which the expiration of such period occurs, including any
extensions of the Term pursuant to any provision of this Lease or written
agreement of the parties. Each consecutive twelve (12) month period of the Term
of this Lease, commencing on the Commencement Date, will be referred to herein
as a "Lease Year". Landlord's Notice of Lease Term Dates and Tenant's Percentage
("Notice"), in the form of Exhibit "D" attached hereto, will set forth the
Commencement Date, the date upon which the Term of this Lease shall end, the
Rentable Square Feet within the Premises and the Building, and Tenant's
Percentage and will be delivered to Tenant after Landlord delivers possession of
the Premises to Tenant. The Notice will be binding upon Tenant unless Tenant
objects to the Notice in writing within five (5) business days of Tenant's
receipt of the Notice.
4. POSSESSION.
(a) DELIVERY OF POSSESSION. Landlord agrees to deliver possession of the
Premises to Tenant in accordance with the terms of the Work Letter Agreement
attached hereto as Exhibit "C", or, if no Work Letter Agreement is required for
this Lease, then Landlord agrees to deliver possession of the Premises to Tenant
on the Commencement Date in an "as is" condition without representation or
warranty. Notwithstanding the foregoing, Landlord will not be obligated to
deliver possession of the Premises to Tenant (but Tenant will be liable for rent
if Landlord can otherwise deliver the Premises to Tenant) until Landlord has
received
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from Tenant all of the following: (i) a copy of this Lease fully executed by
Tenant; (ii) the Security Deposit and the first installment of Monthly Base
Rent; (iii) executed copies of policies of insurance or certificates thereof as
required under Paragraph 19 of this Lease; (iv) copies of all governmental
permits and authorizations, if any, required in connection with Tenant's
operation of its business within the Premises; and (v) if Tenant is a
corporation, partnership or limited liability company, such evidence of due
formation, valid existence and authority as Landlord may reasonably require,
which may include, without limitation, a certificate of good standing,
certificate of secretary, articles of incorporation, statement of partnership,
or other similar documentation. Notwithstanding the foregoing to the contrary,
if the Premises are not substantially completed on or before October 1, 2000,
Landlord shall reimburse Tenant any holdover rent it shall actually pay to its
existing landlord, as evidenced by paid invoices, as a result of such delay up
to a maximum of $25,000.00 per month, provided that the delay in substantial
completion is not due to Tenant Delays (as defined in the Work Letter attached)
or force majeure events, and Tenant has executed and delivered to Landlord this
Lease by February 10, 2000.
(b) CONDITION OF PREMISES. Prior to the Commencement Date and in accordance with
the Work Letter Agreement attached hereto as Exhibit "C", Landlord and Tenant
will jointly conduct a walk-through inspection of the Premises and will jointly
prepare a punch-list ("Punch-List") of items required to be installed by
Landlord under the Work Letter Agreement which require finishing or correction.
The Punch-List will not include any items of damage to the Premises caused by
Tenant's move-in or early entry, if permitted, which damage will be corrected or
repaired by Landlord, at Tenant's expense or, at Landlord's election, by Tenant,
at Tenant's expense. Other than the items specified in the Punch-List, latent
defects which Tenant must give written notice of objection within six (6) months
after the Commencement Date, and defects with the HVAC system which Tenant must
give written notice of objection within eleven (11) months after the
Commencement Date, by taking possession of the Premises, Tenant will be deemed
to have accepted the Premises in its condition on the date of delivery of
possession and to have acknowledged that the Tenant Improvements have been
installed as required by the Work Letter Agreement and that there are no
additional items needing work or repair. Landlord will cause all items in the
Punch-List to be repaired or corrected within thirty (30) days following the
completion of the Punch-List or as soon as practicable after the completion of
the Punch-List. Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the Premises,
the Building, the Development or any portions thereof or with respect to the
suitability of same for the conduct of Tenant's business and Tenant further
acknowledges that Landlord will have no obligation to construct or complete any
additional buildings or improvements within the Development.
(c) CONDITION OF DEVELOPMENT. The Development shall contain a digital redundant
telecommunications system, including looped fiber optics, and will provide cable
(CATV) to the Building. Electrical power is expected to be high capacity and
Landlord shall use commercially reasonable efforts to link such electrical
service to two separate Public Service Co. substations as and at such time as
connection is commercially viable. Landlord agrees that upon execution of this
Lease, Landlord shall immediately begin, and diligently pursue in a timely
manner, the planning of the next speculative office building within the
Development. Landlord will use commercially reasonable efforts to locate the
next speculative office building on either Site 2 or Site 3 as depicted on
Exhibit "A-I" attached hereto. If Landlord determines, in its commercially
reasonable discretion, that construction of the next speculative office building
is commercially viable, then Landlord will diligently pursue all necessary
approvals to commence construction on such building prior to September 1, 2000.
Landlord will use commercially reasonable efforts to include, as part of its
next speculative office building within the Development, a parking structure
that will provide at least 50 reserved, covered parking spaces.
Landlord will provide Tenant fifty (50) reserved, covered parking
spaces at a rate of Sixty Five Dollars ($65.00) per space per month as set forth
below. Prior to the Commencement Date under this Lease, Landlord will meet with
Tenant to discuss with Tenant its preferences with respect to the following
options for covered parking:
(i) If Landlord determines that a single parking structure
(which will house at least 50 reserved, covered parking spaces) is a
viable component of the next speculative office building within the
Development, and Landlord has obtained all requisite approvals to
construct such a covered parking structure, then Landlord will notify
Tenant of such determination prior to the Commencement Date. Upon
receipt of such notice, Landlord and Tenant will meet to discuss
whether it makes sense for Landlord to construct the covered
structure(s) set forth in subsection (ii) below or to only have
Landlord pursue the construction of the single parking structure
contemplated herein. If Landlord and Tenant elect to forego
construction of the structure(s) set forth in subsection (ii) below,
then Landlord and Tenant must acknowledge such agreement through an
amendment to this Lease and thereafter Landlord will diligently pursue
completion of the single parking structure prior to the October 1,
2001, and Landlord shall have no obligation to construct the covered
parking structures described in subsection (ii) below. Upon completion
of such covered parking structure, Tenant will commit to utilize fifty
(50) reserved, covered spaces in such structure.
(ii) If Landlord and Tenant cannot agree to only pursue
construction of the single parking structure as set forth in subsection
(i) above, then Landlord will use best efforts to construct, prior to
November 1, 2000, a covered parking structure in the southwest corner
of the parking area as depicted on Exhibit "A-II" to provide Tenant
with twenty four (24) reserved, covered parking spaces. Additionally,
Landlord will use best efforts to construct, prior to
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May 1, 2001, within Site #2 (as depicted on Exhibit "A-II" attached
hereto) at a location adjacent to or near the 24-space structure as
reasonably determined by Landlord and Tenant, a supplemental parking
structure (of similar quality and appearance to the 24-space covered
structure) which provides Tenant at least an additional 26 reserved,
covered parking spaces (in addition to the 24 existing spaces noted
above). If Landlord and Tenant cannot agree on the location of the
additional parking structure prior to the Commencement Date (as
memorialized in a signed amendment to this Lease), then Landlord shall
have no obligation to construct such additional parking structure and
Tenant shall have no obligation to rent any additional covered parking
spaces.
Tenant shall have no obligation to take more than fifty (50) reserved,
covered parking spaces. Any covered parking spaces allocated for Tenant's use
shall be at a price of Sixty-Five Dollars ($65.00) per space per month for the
balance of the initial Term of this Lease, and shall correspondingly reduce the
number of uncovered parking spaces allocated for Tenant's use under Section 1(s)
above from a location reasonably determined by Landlord.
5. RENT.
(a) MONTHLY BASE RENT. Tenant agrees to pay Landlord the Monthly Base Rent for
the Premises (subject to adjustment as hereinafter provided) in advance on the
first day of each calendar month during the Term without prior notice or demand,
except that Tenant agrees to pay the Monthly Base Rent for the first month of
the Term directly to Landlord concurrently with Tenant's delivery of the
executed Lease to Landlord. If the Term of this Lease commences or ends on a day
other than the first day of a calendar month, then the rent for such period will
be prorated in the proportion that the number of days this Lease is in effect
during such period bears to the number of days in such month. All rent must be
paid to Landlord, without any deduction or offset, in lawful money of the United
States of America, at the address designated by Landlord or to such other person
or at such other place as Landlord may from time to time designate in writing.
Monthly Base Rent will be adjusted during the Term of this Lease as provided in
Subparagraph 1(m).
(b) ADDITIONAL RENT. All amounts and charges to be paid by Tenant hereunder,
including, without limitation, payments for Operating Expenses, insurance,
repairs and parking, will be considered additional rent for purposes of this
Lease, and the word "rent" as used in this Lease will include all such
additional rent unless the context specifically or clearly implies that only
Monthly Base Rent is intended.
(c) LATE PAYMENTS. Late payments of Monthly Base Rent and/or any item of
additional rent will be subject to interest and a late charge as provided in
Subparagraph 22(f) below.
6. OPERATING EXPENSES.
(a) OPERATING EXPENSES. In addition to Monthly Base Rent, throughout the Term of
this Lease, Tenant agrees to pay Landlord as additional rent in the manner set
forth in Paragraph 6 above, Tenant's Percentage of Operating Expenses as defined
in Exhibit "E" attached hereto.
(b) ESTIMATE STATEMENT. Prior to the Commencement Date and on or about March 1st
of each subsequent calendar year during the Term of this Lease, Landlord will
deliver to Tenant a statement ("Estimate Statement") wherein Landlord will
estimate both the Operating Expenses and Tenant's Percentage of Operating
Expenses for the then current calendar year. Tenant agrees to pay Landlord, as
"Additional Rent", one-twelfth (1/12th) of Tenant's Percentage of Operating
Expenses as set forth in the Estimate Statement each month thereafter, beginning
with the next installment of rent due, until such time as Landlord issues a
revised Estimate Statement or the Estimate Statement for the succeeding calendar
year; except that, concurrently with the regular monthly rent payment next due
following the receipt of each such Estimate Statement, Tenant agrees to pay
Landlord an amount equal to one monthly installment of such difference (less any
applicable Operating Expenses already paid) multiplied by the number of months
from January, in the current calendar year, to the month of such rent payment
next due, all months inclusive. If at any time during the Term of this Lease,
but not more often than quarterly, Landlord reasonably determines that Tenant's
Percentage of Operating Expenses for the current calendar year will be greater
than the amount set forth in the then current Estimate Statement, Landlord may
issue a revised Estimate Statement and Tenant agrees to pay Landlord, within ten
(10) days of receipt of the revised Estimate Statement, the difference between
the amount owed by Tenant under such revised Estimate Statement and the amount
owed by Tenant under the original Estimate Statement for the portion of the then
current calendar year which has expired. Thereafter Tenant agrees to pay
Tenant's Percentage of Operating Expenses based on such revised Estimate
Statement until Tenant receives the next calendar year's Estimate Statement or a
new revised Estimate Statement for the current calendar year.
(c) ACTUAL STATEMENT. By March 1st of each calendar year during the Term of this
Lease (commencing March 1 in the calendar year following the Commencement Date
under the Lease), Landlord will also deliver to Tenant a statement ("Actual
Statement") which states the actual Operating Expenses for the preceding
calendar year. If the Actual Statement reveals that Tenant's Percentage of the
actual Operating Expenses is more than the total Additional Rent paid by Tenant
for Operating
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Expenses on account of the preceding calendar year, Tenant agrees to pay
Landlord the difference in a lump sum within ten (10) days of receipt of the
Actual Statement. If the Actual Statement reveals that Tenant's Percentage of
the actual Operating Expenses is less than the Additional Rent paid by Tenant
for Operating Expenses on account of the preceding calendar year, Landlord will
credit any overpayment toward the next monthly installment(s) of Tenant's
Percentage of the Operating Expenses due under this Lease, or upon Tenant's
written request, Landlord will refund to Tenant the difference.
(d) MISCELLANEOUS. Any delay or failure by Landlord in delivering any Estimate
Statement or Actual Statement pursuant to this Paragraph 6 will not constitute a
waiver of its right to require an increase in rent nor will it relieve Tenant of
its obligations pursuant to this Paragraph 6, except that Tenant will not be
obligated to make any payments based on such Estimate Statement or Actual
Statement until ten (10) days after receipt of such Estimate Statement or Actual
Statement. Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Percentage of the actual
Operating Expenses for the year in which this Lease terminates, Tenant agrees to
promptly pay any increase due over the estimated expenses paid and, conversely,
any overpayment made in the event said expenses decrease shall promptly be
rebated by Landlord to Tenant. Such obligation will be a continuing one which
will survive the expiration or earlier termination of this Lease. Prior to the
expiration or sooner termination of the Lease Term and Landlord's acceptance of
Tenant's surrender of the Premises, Landlord will have the right to estimate the
actual Operating Expenses for the then current Lease Year and to collect from
Tenant prior to Tenant's surrender of the Premises, Tenant's Percentage of the
Operating Expenses over the estimated Operating Expenses paid by Tenant in such
Lease Year.
(e) OPERATING EXPENSE CAP. Notwithstanding anything to the contrary set forth in
this Section 6, for the purposes of calculating Tenant's Percentage of Operating
Expenses, "Controlled Expenses" (as hereinafter defined) shall not exceed the
"Maximum Controlled Expenses" (as hereinafter defined). "Controlled Expenses"
shall mean all Operating Expenses except those attributable to Real Property
Taxes and Assessments, costs of insurance, including, without limitation,
liability insurance, casualty insurance, worker's compensation insurance, and
business interruption insurance, costs of utilities, and costs of compliance
with any laws, rules or regulations. "Maximum Controlled Expenses" shall mean:
(a) for calendar year 2000, the full amount of the actual expenses for
Controlled Expenses as determined in accordance with the foregoing provisions;
(b) for calendar year 2001 and each calendar year thereafter, the prior calendar
year's Maximum Controlled Expenses multiplied by 1.06. The limitations described
above shall be a limitation only on the calculation of Tenant's Percentage of
Operating Expenses and such limitation shall not prohibit Landlord from spending
amounts in excess of such limitations. Landlord may, in accordance with advice
from its accountants and other professionals, reasonably contest any utility
rate increases associated with the Building and/or tax assessments and to apply
for all rebates to which it is entitled so long as it has knowledge thereof. The
costs of all such contests and applications shall be included in Operating
Expenses, however, any penalties or fines in connection with such amounts shall
not be so included. To the extent any rebates or refunds are actually received
by Landlord, they shall be applied to reduce the total Operating Expenses for
the year in which such amounts are received. If any such amounts attributable to
periods during the term hereof are received by Landlord following the expiration
of the term hereof (according to its terms and not as a result of an event of
default, as hereinafter defined), Landlord agrees to forward to Tenant any
amounts to which Tenant is entitled as and when received notwithstanding the
fact that this Lease has so expired, provided Tenant has given to Landlord a
valid forwarding address. Notwithstanding anything herein or in Exhibit "E" to
the contrary, Landlord's administrative fees included within Operating Expenses
and passed through to Tenant shall be capped at a maximum of $1.09 per Rentable
Square Foot through the calendar year 2001. If Tenant desires at its own expense
to review and/or verify any Actual Statement provided herein and the supporting
records and data, Tenant shall cause such review to commence within thirty (30)
days following delivery of the Actual Statement to Tenant and such review shall
be completed within sixty (60) days thereafter. If Tenant does not conduct such
review, then such Actual Statement shall be deemed to be conclusively accepted
by Tenant and Tenant shall have no right thereafter to question or examine the
same. Tenant may not utilize an individual or group hired on a contingency fee
basis to conduct such review of the Actual Statement set forth herein.
(f) PROPERTY TAX CONTEST. Notwithstanding anything set forth in Section 6(e)
above, and provided Tenant is not in default under this Lease and Tenant leases
all of the Building, Tenant may in good faith, by appropriate proceedings,
contest, so long as such contest is diligently pursued, the validity,
applicability or amount of any asserted tax or assessment with respect to the
Building. During such contest, Tenant shall not be deemed in default hereunder
by reason of non-payment of such tax or assessment if, prior to delinquency of
the asserted tax or assessment, Tenant establishes an escrow with and acceptable
to Landlord adequate to cover the payment of such tax or assessment and any
additional sums, as reasonably determined by Landlord needed to cover any
assessed interest, costs and penalties. Tenant shall promptly cause to be paid
any amount adjudged by a court of competent jurisdiction to be due, with all
interest, costs and penalties thereon, promptly after such judgment becomes
final; provided, however, that in any event such taxes, assessments, interest,
costs and penalties shall be paid prior to the date on which the Building or any
property underneath the Building may be sold for delinquent taxes pursuant to
any applicable statute or any writ or order. The aforementioned escrow shall be
returned to Tenant upon settlement of such contest and payment in full of all
amounts determined to be owing thereby.
7. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease, Tenant
will deposit with Landlord the Security Deposit designated in Subparagraph 1(o).
The Security Deposit will be held by Landlord as security for the full and
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faithful performance by Tenant of all of the terms, covenants, and conditions of
this Lease to be kept and performed by Tenant during the Term hereof. If Tenant
fully and faithfully performs its obligations under this Lease, including,
without limitation, surrendering the Premises upon the expiration or sooner
termination of this Lease in compliance with Subparagraph 11(a) below, the
Security Deposit or any balance thereof will be returned to Tenant (or, at
Landlord's option, to the last assignee of Tenant's interest hereunder) within
thirty (30) days following the expiration of the Lease Term or as required under
applicable law, provided that Landlord may retain the Security Deposit until
such time as any outstanding rent or additional rent amount has been determined
and paid in full. The Security Deposit is not, and may not be construed by
Tenant to constitute, rent for the last month or any portion thereof. If Tenant
defaults with respect to any provisions of this Lease including, but not limited
to, the provisions relating to the payment of rent or additional rent, Landlord
may (but will not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any rent or any other sum in default, or for
the payment of any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default or to compensate Landlord for any loss or
damage which Landlord may suffer by reason of Tenant's default. If any portion
of the Security Deposit is so used or applied, Tenant agrees, within ten (10)
days after Landlord's written demand therefor, to deposit cash with Landlord in
an amount sufficient to restore the Security Deposit to its original amount and
Tenant's failure to do so shall constitute a default under this Lease. Landlord
is not required to keep Tenant's Security Deposit separate from its general
funds, and Tenant is not entitled to interest on such Security Deposit. Should
Landlord sell its interest in the Premises during the Term hereof and deposit
with the purchaser thereof the then unappropriated Security Deposit funds, then
the purchaser will take the Premises subject to and assume Landlord's
obligations hereunder with respect to the Security Deposit and Landlord will
thereafter be discharged from any further liability with respect to such
Security Deposit. In addition to the cash Security Deposit set forth above,
Tenant shall deposit with Landlord, as an additional Security Deposit, the
Letter of Credit more specifically described in the Addendum.
8. USE.
(a) TENANT'S USE OF THE PREMISES. The Premises may be used for the use or uses
set forth in Subparagraph 1(r) only, and Tenant will not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Nothing in this Lease will be deemed to give Tenant any exclusive
right to such use in the Building or the Development.
(b) COMPLIANCE. At Tenant's sole cost and expense, Tenant agrees to procure,
maintain and hold available for Landlord's inspection, all governmental licenses
and permits required for the proper and lawful conduct of Tenant's business from
the Premises, if any. Tenant agrees not to use, alter or occupy the Premises or
allow the Premises to be used, altered or occupied in violation of, and Tenant,
at its sole cost and expense, agrees to use and occupy the Premises and cause
the Premises to be used and occupied in compliance with: (i) any and all laws,
statutes, zoning restrictions, ordinances, rules, regulations, orders and
rulings now or hereafter in force and any requirements of any insurer, insurance
authority or duly constituted public authority having jurisdiction over the
Premises, the Building or the Development now or hereafter in force, (ii) the
requirements of the Board of Fire Underwriters and any other similar body, (iii)
the Certificate of Occupancy issued for the Building, and (iv) any recorded
covenants, conditions and restrictions and similar regulatory agreements, if
any, which affect the use, occupation or alteration of the Premises, the
Building and/or the Development. Tenant agrees to comply with the Rules and
Regulations referenced in Paragraph 28 below and attached hereto as Exhibit "H"
as the same may be amended from time-to-time. Tenant agrees not to do or permit
anything to be done in or about the Premises which will in any manner obstruct
or interfere with the rights of other tenants or occupants of the Development,
or injure or unreasonably annoy them, or use or allow the Premises to be used
for any unlawful or unreasonably objectionable purpose. Tenant agrees not to
cause, maintain or permit any nuisance or waste in, on, under or about the
Premises or elsewhere within the Development. Notwithstanding anything contained
in this Lease to the contrary, all transferable development rights related in
any way to the Development are and will remain vested in Landlord, and Tenant
hereby waives any rights thereto.
(c) HAZARDOUS MATERIALS. Except for ordinary and general office supplies
typically used in the ordinary course of business within office buildings, such
as copier toner, liquid paper, glue, ink and common household cleaning materials
(some or all of which may constitute "Hazardous Materials" as defined in this
Lease) which items must be used, stored and disposed of in strict compliance
with all applicable laws, rules and regulations relating to Hazardous Materials,
Tenant agrees not to cause or permit any Hazardous Materials to be brought upon,
stored, used, handled, generated, released or disposed of on, in, under or about
the Premises, the Building, the Common Areas or any other portion of the
Development by Tenant, its agents, employees, subtenants, assignees, licensees,
contractors or invitees (collectively, "Tenant's Parties"), without the prior
written consent of Landlord, which consent Landlord may withhold in its sole and
absolute discretion. Upon the expiration or earlier termination of this Lease,
Tenant agrees to promptly remove from the Premises, the Building and the
Development, at its sole cost and expense, any and all Hazardous Materials,
including any equipment or systems containing Hazardous Materials which are
installed, brought upon, stored, used, generated or released upon, in, under or
about the Premises, the Building and/or the Development or any portion thereof
by Tenant or any of Tenant's Parties. To the fullest extent permitted by law,
Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord
and Landlord's partners, officers, directors, employees, agents, property
manager, successors and assigns (collectively, "Landlord Indemnified Parties")
from and against any and all claims, damages, judgments, suits, causes of
action, losses, liabilities, penalties, fines, expenses and costs (including,
without limitation, clean-up,
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removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees and court costs) which arise or
result from the presence of Hazardous Materials on, in, under or about the
Premises, the Building or any other portion of the Development and which are
caused or permitted by Tenant or any of Tenant's Parties. Tenant agrees to
promptly notify Landlord of any release of Hazardous Materials at the Premises,
the Building or any other portion of the Development which Tenant becomes aware
of during the Term of this Lease, whether caused by Tenant or any other persons
or entities. In the event of any release of Hazardous Materials caused or
permitted by Tenant or any of Tenant's Parties, Landlord shall have the right,
but not the obligation, to cause Tenant to immediately take all steps Landlord
deems necessary or appropriate to remediate such release and prevent any similar
future release to the satisfaction of Landlord and Landlord's mortgagee(s). As
used in this Lease, the term "Hazardous Materials" shall mean and include any
hazardous or toxic materials, substances or wastes as now or hereafter
designated under any law, statute, ordinance, rule, regulation, order or ruling
of any agency of the State, the United States Government or any local
governmental authority, including, without limitation, asbestos, petroleum,
petroleum hydrocarbons and petroleum based products, urea formaldehyde foam
insulation, polychlorinated biphenyls ("PCBs"), and freon and other
chlorofluorocarbons. The provisions of this Subparagraph 8(c) will survive the
expiration or earlier termination of this Lease. To the extent required or
imposed by applicable law, Landlord will: (i) as between Landlord and Tenant, be
solely responsible for the presence of Hazardous Materials on, in, under or
about the Premises and the Development prior to the date of mutual execution of
this Lease; and (ii) be responsible for its use, storage and disposal of
Hazardous Materials in connection with its operation of the Building as
contemplated by this Lease. In case any action or proceeding is brought against
Tenant by reason of any such claims set forth in (i) or (ii) above, Landlord,
upon notice from Tenant and acknowledgment of responsibility under (i) or (ii)
above, agrees to promptly defend the same at Landlord's sole cost and expense by
counsel approved in writing by Tenant, which approval Tenant will not
unreasonably withhold. If Landlord does not acknowledge responsibility as set
forth in the preceding sentence and it is ultimately determined that Landlord is
responsible under (i) or (ii) above, then Landlord will reimburse Tenant for its
reasonable and documented fees and expenses (including legal fees) incurred in
defending against such claims.
9. NOTICES. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by overnight
courier or an express mailing service) or by mail, if sent by registered or
certified mail. Notice shall be deemed delivered (i) on the date given by
personal service; (ii) three (3) days after such notice is sent via certified or
registered mail; or (iii) one (1) day after such notice is sent via recognized
overnight courier and confirmation also delivered by certified or registered
mail. Notices to Tenant shall be sufficient if delivered to Tenant at the
address designated in Subparagraph 1(d) and notices to Landlord shall be
sufficient if delivered to Landlord at the address designated in Subparagraph
1(b). Either party may specify a different address for notice purposes by
written notice to the other, except that the Landlord may in any event use the
Premises as Tenant's address for notice purposes.
10. BROKERS. The parties acknowledge that the broker(s) who negotiated this
Lease are stated in Subparagraph 1(t). Each party represents and warrants to the
other, that, to its knowledge, no other broker, agent or finder (a) negotiated
or was instrumental in negotiating or consummating this Lease on its behalf, and
(b) is or might be entitled to a commission or compensation in connection with
this Lease. Landlord and Tenant each agree to promptly indemnify, protect,
defend and hold harmless the other from and against any and all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and costs (including attorneys' fees and court costs) resulting from
any breach by the indemnifying party of the foregoing representation, including,
without limitation, any claims that may be asserted by any broker, agent or
finder undisclosed by the indemnifying party. The foregoing mutual indemnity
shall survive the expiration or earlier termination of this Lease.
11. SURRENDER; HOLDING OVER.
(a) SURRENDER. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not constitute a merger, and shall, at the
option of Landlord, operate as an assignment to Landlord of any or all subleases
or subtenancies. Upon the expiration or earlier termination of this Lease,
Tenant agrees to peaceably surrender the Premises to Landlord broom clean and in
a state of first-class order, repair and condition, ordinary wear and tear and
casualty damage (if this Lease is terminated as a result thereof pursuant to
Paragraph 20) excepted, with all of Tenant's personal property and Alterations
(as defined in Paragraph 13) removed from the Premises to the extent required
under Paragraph 13 and all damage caused by such removal repaired as required by
Paragraph 13. Prior to the date Tenant is to actually surrender the Premises to
Landlord, Tenant agrees to give Landlord reasonable prior notice of the exact
date Tenant will surrender the Premises so that Landlord and Tenant can schedule
a walk-through of the Premises to review the condition of the Premises and
identify the Alterations and personal property which are to remain upon the
Premises and which items Tenant is to remove, as well as any repairs Tenant is
to make upon surrender of the Premises. The delivery of keys to any employee of
Landlord or to Landlord's agent or any employee thereof alone will not be
sufficient to constitute a termination of this Lease or a surrender of the
Premises.
(b) HOLDING OVER. Tenant will not be permitted to hold over possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, which consent Landlord may withhold in its
sole and absolute discretion. If Tenant holds over after the expiration or
earlier termination of the Term, Landlord may, at its option, treat
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Tenant as a tenant at sufferance only, and such continued occupancy by Tenant
shall be subject to all of the terms, covenants and conditions of this Lease, so
far as applicable, except that the Monthly Base Rent for any such holdover
period shall be equal to the greater of (i) one hundred fifty percent (150%) of
the Monthly Base Rent in effect under this Lease immediately prior to such
holdover, or (ii) the then currently scheduled rental rate for comparable space
in the Building, in either event prorated on a daily basis. Acceptance by
Landlord of rent after such expiration or earlier termination will not result in
a renewal of this Lease. The foregoing provisions of this Paragraph 11 are in
addition to and do not affect Landlord's right of re-entry or any rights of
Landlord under this Lease or as otherwise provided by law. If Tenant fails to
surrender the Premises upon the expiration of this Lease in accordance with the
terms of this Paragraph 11 despite demand to do so by Landlord, Tenant agrees to
promptly indemnify, protect, defend and hold Landlord harmless from all claims,
damages, judgments, suits, causes of action, losses, liabilities, penalties,
fines, expenses and costs (including attorneys' fees and costs), including,
without limitation, costs and expenses incurred by Landlord in returning the
Premises to the condition in which Tenant was to surrender it and claims made by
any succeeding tenant founded on or resulting from Tenant's failure to surrender
the Premises. The provisions of this Subparagraph 11(b) will survive the
expiration or earlier termination of this Lease.
12. TAXES ON TENANT'S PROPERTY. Tenant agrees to pay before delinquency, all
taxes and assessments (real and personal) levied against (a) any personal
property or trade fixtures placed by Tenant in or about the Premises (including
any increase in the assessed value of the Premises based upon the value of any
such personal property or trade fixtures); and (b) any Tenant Improvements or
Alterations in the Premises (whether installed and/or paid for by Landlord or
Tenant) to the extent such items are assessed at a valuation higher than the
valuation at which tenant improvements conforming to Landlord's building
standard tenant improvements are assessed. If any such taxes or assessments are
levied against Landlord or Landlord's property, Landlord may, after written
notice to Tenant (and under proper protest if requested by Tenant) pay such
taxes and assessments, in which event Tenant agrees to reimburse Landlord all
amounts paid by Landlord within ten (10) business days after demand by Landlord;
provided, however, Tenant, at its sole cost and expense, will have the right,
with Landlord's cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes and assessments so paid
under protest.
13. ALTERATIONS. After installation of the initial Tenant Improvements for the
Premises pursuant to Exhibit "C", Tenant may, at its sole cost and expense, make
alterations, additions, improvements and decorations to the Premises
(collectively, "Alterations") subject to and upon the following terms and
conditions:
(a) PROHIBITED ALTERATIONS. Tenant may not make any Alterations which: (i)
affect any area outside the Premises; (ii) affect the Building's structure,
equipment, services or systems, or the proper functioning thereof, or Landlord's
access thereto; (iii) affect the outside appearance, character or use of the
Building or the Building Common Areas; (iv) in the reasonable opinion of
Landlord, lessen the value of the Building; or (v) will violate or require a
change in any occupancy certificate applicable to the Premises.
(b) LANDLORD'S APPROVAL. Before proceeding with any Alterations which are not
prohibited in Subparagraph 13(a) above, Tenant must first obtain Landlord's
written approval of the plans, specifications and working drawings for such
Alterations, which approval Landlord will not unreasonably withhold or delay;
provided, however, Landlord's prior approval will not be required for any such
Alterations which are not prohibited by Subparagraph 13(a) above and which cost
less than Thirty Thousand Dollars ($30,000) in the aggregate as long as (i)
Tenant delivers to Landlord notice and a copy of any final plans, specifications
and working drawings for any such Alterations at least ten (10) days prior to
commencement of the work thereof, and (ii) the other conditions of this
Paragraph 13 are satisfied, including, without limitation, conforming to
Landlord's rules, regulations and insurance requirements which govern
contractors. Landlord's approval of plans, specifications and/or working
drawings for Alterations will not create any responsibility or liability on the
part of Landlord for their completeness, design sufficiency, or compliance with
applicable permits, laws, rules and regulations of governmental agencies or
authorities. In approving any Alterations, Landlord reserves the right to
require Tenant to increase its Security Deposit to provide Landlord with
additional reasonable security for the removal of such Alterations by Tenant as
may be required by this Lease.
(c) CONTRACTORS. Alterations may be made or installed only by contractors and
subcontractors which have been approved by Landlord, which approval Landlord
will not unreasonably withhold or delay; provided, however, Landlord reserves
the right to require that Landlord's contractor for the Building be given the
first opportunity to bid for any Alteration work. Before proceeding with any
Alterations, Tenant agrees to provide Landlord with ten (10) days prior written
notice and Tenant's contractors must obtain and maintain, on behalf of Tenant
and at Tenant's sole cost and expense: (i) all necessary governmental permits
and approvals for the commencement and completion of such Alterations; and (ii)
if requested by Landlord, a completion and lien indemnity bond, or other surety,
reasonably satisfactory to Landlord for such Alterations. Throughout the
performance of any Alterations, Tenant agrees to obtain, or cause its
contractors to obtain, workers compensation insurance and general liability
insurance in compliance with the provisions of Paragraph 19 of this Lease.
(d) MANNER OF PERFORMANCE. All Alterations must be performed: (i) in accordance
with the approved plans, specifications and working drawings; (ii) in a
lien-free and first-class and workmanlike manner; (iii) in compliance with all
applicable permits, laws, statutes, ordinances, rules, regulations, orders and
rulings now or hereafter in effect and imposed by any governmental
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agencies and authorities which assert jurisdiction; (iv) in such a manner so as
not to interfere with the occupancy of any other tenant in the Building, nor
impose any additional expense upon nor delay Landlord in the maintenance and
operation of the Building; and (v) at such times, in such manner, and subject to
such rules and regulations as Landlord may from time to time reasonably
designate.
(e) OWNERSHIP. The Tenant Improvements, including, without limitation, all
affixed sinks, dishwashers, microwave ovens and other fixtures, and all
Alterations (whether or not Landlord's consent to such Alteration was required
under Section 13(b) above) will become the property of Landlord and will remain
upon and be surrendered with the Premises at the end of the Term of this Lease;
provided, however, Landlord may, by written notice delivered to Tenant
concurrently with Landlord's approval of the final working drawings for any
Tenant Improvements, Alterations or Special Items (as defined in Section 5(b) of
the Work Letter Agreement), identify those Tenant Improvments, Alterations
and/or Special Items which Landlord will require Tenant to remove at the end of
the Term of this Lease. Landlord may also require Tenant to remove Alterations
which Landlord did not have the opportunity to approve as provided in this
Paragraph 13. If Landlord requires Tenant to remove any Alterations or Tenant
Improvements, Tenant, at its sole cost and expense, agrees to remove the
identified items on or before the expiration or earlier termination of this
Lease and repair any damage to the Premises caused by such removal (or, at
Landlord's option, Tenant agrees to pay to Landlord all of Landlord's costs of
such removal and repair). Any Special Items required to be removed by Landlord
shall be removed, at Tenant's sole cost and expense, from the Premises within
fifteen (15) days after the expiration or early termination of the Term, and
those portions of the Premises containing such Special Items must be returned to
the base building core and shell condition as reflected in the Plans (as defined
in Section 1A of the Work Letter Agreement). Landlord hereby grants Tenant a
license only to remove such Special Items and to restore such portions of the
Premises housing such Special Items as required herein, and for no other purpose
whatsoever, for a period which expires fifteen (15) days after the expiration or
early termination of the Term. In addition to the foregoing, in the event that
Landlord allows part of the Allowance to be applied toward the cost of certain
Special Items, then Tenant shall pay to Landlord at least twenty (20) days prior
to the expiration or early termination of the Term, that portion of the
Allowance applied by Landlord toward the cost of Special Items. Notwithstanding
the foregoing, Landlord shall have the right during the last nine months of the
Term of this Lease to give written notice to Tenant of certain Special Items
which will remain upon and be surrendered with the Premises (and become the
property of Landlord) at the end of the Term of this Lease, and thereafter
Tenant shall have no obligation to restore the specific portion of the Premises
containing such Special Item in the manner set forth above.
(f) PLAN REVIEW. Tenant agrees to pay Landlord, as additional rent, the
reasonable costs of professional services and costs for Landlord's third party
consultants if utilized by Landlord (but not Landlord's "in-house" personnel)
for review of all plans, specifications and working drawings for any
Alterations, within ten (10) business days after Tenant's receipt of invoices
either from Landlord or such consultants. In addition, Tenant agrees to pay
Landlord, within ten (10) business days after completion of any Alterations, a
fee to cover Landlord's costs of supervising and administering the installation
of such Alterations, in the amount of five percent (5%) of the cost of such
Alterations, but in no event less than Two Hundred Fifty Dollars ($250.00).
(g) PERSONAL PROPERTY. All articles of personal property owned by Tenant or
installed by Tenant at its expense in the Premises (including Tenant's business
and trade fixtures, furniture, movable partitions and equipment [such as
telephones, copy machines, computer terminals, refrigerators and facsimile
machines]) will be and remain the property of Tenant, and must be removed by
Tenant from the Premises, at Tenant's sole cost and expense, on or before the
expiration or earlier termination of this Lease. Tenant agrees to repair any
damage caused by such removal at its cost on or before the expiration or earlier
termination of this Lease.
(h) REMOVAL OF ALTERATIONS. If Tenant fails to remove by the expiration or
earlier termination of this Lease all of its personal property, or any
Alterations identified by Landlord for removal, Landlord may, at its option,
treat such failure as a hold-over pursuant to Subparagraph 11(b) above, and/or
Landlord may (without liability to Tenant for loss thereof) treat such personal
property and/or Alterations as abandoned and, at Tenant's sole cost and expense,
and in addition to Landlord's other rights and remedies under this Lease, at law
or in equity: (a) remove and store such items; and/or (b) upon ten (10) days
prior notice to Tenant, sell, discard or otherwise dispose of all or any such
items at private or public sale for such price as Landlord may obtain or by
other commercially reasonable means. Tenant shall be liable for all costs of
disposition of Tenant's abandoned property and Landlord shall have no liability
to Tenant with respect to any such abandoned property. Landlord agrees to apply
the proceeds of any sale of any such property to any amounts due to Landlord
under this Lease from Tenant (including Landlord's attorneys' fees and other
costs incurred in the removal, storage and/or sale of such items), with any
remainder to be paid to Tenant.
14. REPAIRS.
(a) LANDLORD'S OBLIGATIONS. Landlord agrees to repair and maintain in a
first-class manner the Development Common Areas, Building Common Areas and
structural portions of the Building and the plumbing, heating, ventilating, air
conditioning, elevator and electrical systems installed or furnished by
Landlord, unless such maintenance and repairs are (i) attributable to items
installed in Tenant's Premises which are above standard interior improvements
(such as, for example, custom lighting,
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special HVAC and/or electrical panels or systems, kitchen or restroom facilities
and appliances constructed or installed within Tenant's Premises) or (ii) caused
in part or in whole by the act, neglect or omission of any duty by Tenant, its
agents, servants, employees or invitees, in which case Tenant will pay to
Landlord, as additional rent, the reasonable cost of such maintenance and
repairs. Landlord will not be liable for any failure to make any such repairs or
to perform any maintenance unless such failure shall persist after written
notice of the need of such repairs or maintenance is given to Landlord by Tenant
and expiration of the applicable cure period as set forth in this Lease. Except
as provided in Paragraph 20, Tenant will not be entitled to any abatement of
rent and Landlord will not have any liability by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building or the Premises
or in or to fixtures, appurtenances and equipment therein. Tenant shall have no
right to pursue a cure of any default by Landlord hereunder until Tenant shall
have given Landlord and any beneficiary of a deed of trust or mortgage affecting
the Premises notice of the alleged default and an opportunity to cure same as
set forth under this Lease. Unless otherwise prohibited by Landlord, Tenant will
utilize Landlord's engineer and designated contractor in curing any of the
maintenance and repair obligations set forth above with respect to the Building.
Notwithstanding the foregoing, if Landlord disputes the validity of the alleged
default sought to be cured by Tenant, then Tenant shall have no right to take
steps to cure such default until such dispute is finally resolved (and the
resolution allows Tenant to utilize self-help measures to cure such default).
(b) TENANT'S OBLIGATIONS. Tenant agrees to keep, maintain and preserve the
Premises in first class condition and repair and, when and if needed, at
Tenant's sole cost and expense, to make all repairs to the Premises and every
part thereof. Any such maintenance and repairs will be performed by Landlord's
contractor, or at Landlord's option, by such contractor or contractors as Tenant
may choose from an approved list to be submitted by Landlord. Tenant agrees to
pay all costs and expenses incurred in such maintenance and repair within seven
(7) days after billing by Landlord or such contractor or contractors. Tenant
agrees to cause any mechanics' liens or other liens arising as a result of work
performed by Tenant or at Tenant's direction to be eliminated as provided in
Paragraph 15 below. Except as provided in Subparagraph 14(a) above, Landlord has
no obligation to alter, remodel, improve, repair, decorate or paint the Premises
or any part thereof.
(c) TENANT'S FAILURE TO REPAIR. If Tenant refuses or neglects to repair and
maintain the Premises properly as required hereunder to the reasonable
satisfaction of Landlord, Landlord, at any time following ten (10) days (or such
additional time as may reasonably be afforded Tenant as set forth in this Lease
if Tenant is diligently pursuing such cure) from the date on which Landlord
makes a written demand on Tenant to effect such repair and maintenance, may
enter upon the Premises and make such repairs and/or maintenance, and upon
completion thereof, Tenant agrees to pay to Landlord as additional rent,
Landlord's costs for making such repairs plus an amount not to exceed ten
percent (10%) of such costs for overhead, within ten (10) days of receipt from
Landlord of a written itemized bill therefor. Any amounts not reimbursed by
Tenant within such ten (10) day period will bear interest at the Interest Rate
until paid by Tenant.
15. LIENS. Tenant agrees not to permit any mechanic's, materialmen's or other
liens to be filed against all or any part of the Development, the Building or
the Premises, nor against Tenant's leasehold interest in the Premises, by reason
of or in connection with any repairs, alterations, improvements or other work
contracted for or undertaken by Tenant or any other act or omission of Tenant or
Tenant's agents, employees, contractors, licensees or invitees. At Landlord's
request, Tenant agrees to provide Landlord with enforceable, conditional and
final lien releases (or other evidence reasonably requested by Landlord to
demonstrate protection from liens) from all persons furnishing labor and/or
materials at the Premises. Landlord will have the right at all reasonable times
to post on the Premises and record any notices of non-responsibility which it
deems necessary for protection from such liens. If any such liens are filed,
Tenant will, at its sole cost, promptly cause such liens to be released of
record or bonded so that it no longer affects title to the Development, the
Building or the Premises. If Tenant fails to cause any such liens to be so
released or bonded within ten (10) days after filing thereof, such failure will
be deemed a material breach by Tenant under this Lease without the benefit of
any additional notice or cure period described in Paragraph 22 below, and
Landlord may, without waiving its rights and remedies based on such breach, and
without releasing Tenant from any of its obligations, cause such liens to be
released by any means it shall deem proper, including payment in satisfaction of
the claims giving rise to such liens. Tenant agrees to pay to Landlord within
ten (10) days after receipt of invoice from Landlord, any sum paid by Landlord
to remove such liens, together with interest at the Interest Rate from the date
of such payment by Landlord.
16. ENTRY BY LANDLORD. Landlord and its employees and agents will at all times
have the right to enter the Premises to inspect the same, to supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder, to
show the Premises to prospective purchasers, to post notices of
nonresponsibility, and/or to repair the Premises as permitted or required by
this Lease. In exercising such entry rights, Landlord will endeavor to minimize,
as reasonably practicable, the interference with Tenant's business, and will
provide Tenant with reasonable advance notice of any such entry (except in
emergency situations and in the case of recurring services e.g. janitorial).
Landlord may, in order to carry out such purposes, erect scaffolding and other
necessary structures where reasonably required by the character of the work to
be performed. Landlord will at all times have and retain a key with which to
unlock all doors in the Premises, excluding Tenant's vaults and safes. Landlord
will have the right to use any and all means which Landlord may reasonably deem
proper to open said doors in an emergency in order to obtain entry to the
Premises. Any entry to the Premises obtained by Landlord by any of said means,
or otherwise, will not be construed or deemed to be a forcible or unlawful entry
into the Premises, or an eviction of Tenant from the
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Premises. Landlord will not be liable to Tenant for any damages or losses for
any entry by Landlord. Landlord will show the Premises to prospective tenants
only after August 1, 2004 unless Landlord gets Tenant's approval for such
showing which approval may be verbal.
17. UTILITIES AND SERVICES. Throughout the Term of the Lease, Landlord agrees to
furnish or cause to be furnished to the Premises the utilities and services
described in the Standards for Utilities and Services attached hereto as Exhibit
"F", subject to the conditions and in accordance with the standards set forth
therein. Landlord may require Tenant from time to time to provide Landlord with
a list of Tenant's employees and/or agents which are authorized by Tenant to
subscribe on behalf of Tenant for any additional services which may be provided
by Landlord. Any such additional services will be provided to Tenant at Tenant's
cost. Landlord will not be liable to Tenant for any failure to furnish any of
the foregoing utilities and services if such failure is caused by all or any of
the following: (i) accident, breakage or repairs; (ii) strikes, lockouts or
other labor disturbance or labor dispute of any character; (iii) governmental
regulation, moratorium or other governmental action or inaction; (iv) inability
despite the exercise of reasonable diligence to obtain electricity, water or
fuel; or (v) any other cause beyond Landlord's reasonable control. In addition,
in the event of any stoppage or interruption of services or utilities, Tenant
shall not be entitled to any abatement or reduction of rent (except as expressly
provided in Subparagraphs 20(f) or 21(b) if such failure results from a damage
or taking described therein), no eviction of Tenant will result from such
failure and Tenant will not be relieved from the performance of any covenant or
agreement in this Lease because of such failure. In the event of any failure,
stoppage or interruption thereof, Landlord agrees to diligently attempt to
resume service promptly. If Tenant requires or utilizes more water or electrical
power than is considered reasonable or normal by Landlord, Landlord may at its
option require Tenant to pay, as additional rent, the cost, as fairly determined
by Landlord, incurred by such extraordinary usage and/or Landlord may install
separate meter(s) for the Premises, at Tenant's sole expense, and Tenant agrees
thereafter to pay all charges of the utility providing service and Landlord will
make an appropriate adjustment to Tenant's Operating Expenses calculation to
account for the fact Tenant is directly paying such metered charges, provided
Tenant will remain obligated to pay its proportionate share of Operating
Expenses subject to such adjustment.
18. ASSUMPTION OF RISK AND INDEMNIFICATION.
(a) ASSUMPTION OF RISK. Tenant, as a material part of the consideration to
Landlord, hereby agrees that neither Landlord nor any Landlord Indemnified
Parties (as defined in Subparagraph 8(c) above) will be liable to Tenant for,
and Tenant expressly assumes the risk of and waives any and all claims it may
have against Landlord or any Landlord Indemnified Parties with respect to, (i)
any and all damage to property or injury to persons in, upon or about the
Premises, the Building or the Development resulting from any act or omission
(except for the grossly negligent or intentionally wrongful act or omission) of
Landlord, (ii) any such damage caused by other tenants or persons in or about
the Building or the Development, or caused by quasi-public work, (iii) any
damage to property entrusted to employees of the Building, (iv) any loss of or
damage to property by theft or otherwise, or (v) any injury or damage to persons
or property resulting from any casualty, explosion, falling plaster or other
masonry or glass, steam, gas, electricity, water or rain which may leak from any
part of the Building or any other portion of the Development or from the pipes,
appliances or plumbing works therein or from the roof, street or subsurface or
from any other place, or resulting from dampness. Notwithstanding anything to
the contrary contained in this Lease, neither Landlord nor any Landlord
Indemnified Parties will be liable for consequential damages arising out of any
loss of the use of the Premises or any equipment or facilities therein by Tenant
or any Tenant Parties or for interference with light or other incorporeal
hereditaments. Tenant agrees to give prompt notice to Landlord in case of fire
or accidents in the Premises or the Building, or of defects therein or in the
fixtures or equipment.
(b) INDEMNIFICATION. Tenant will be liable for, and agrees, to the maximum
extent permissible under applicable law, to promptly indemnify, protect, defend
and hold harmless Landlord and all Landlord Indemnified Parties, from and
against, any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs, including attorneys'
fees and court costs (collectively, "Indemnified Claims"), arising or resulting
from (i) any act or omission of Tenant or any Tenant Parties (as defined in
Subparagraph 8(c) above); (ii) the use of the Premises and Common Areas and
conduct of Tenant's business by Tenant or any Tenant Parties, or any other
activity, work or thing done, permitted or suffered by Tenant or any Tenant
Parties, in or about the Premises, the Building or elsewhere within the
Development; and/or (iii) any default by Tenant of any obligations on Tenant's
part to be performed under the terms of this Lease. In case any action or
proceeding is brought against Landlord or any Landlord Indemnified Parties by
reason of any such Indemnified Claims, Tenant, upon notice from Landlord, agrees
to promptly defend the same at Tenant's sole cost and expense by counsel
approved in writing by Landlord, which approval Landlord will not unreasonably
withhold. Subject to Paragraph 19.E below, Landlord agrees to indemnify, defend,
and hold Tenant, its employees, agents, and contractors harmless from all
liability, costs, or expenses, including attorneys' fees, on account of damage
to the person or property of any third party, including any other tenant in the
Building or Development to the extent caused by the acts or omissions of
Landlord, its employees, or agents.
(c) SURVIVAL; NO RELEASE OF INSURERS. Tenant's indemnification obligations under
Subparagraph 18(b) will survive the expiration or earlier termination of this
Lease. Tenant's covenants, agreements and indemnification obligation in
Subparagraphs 18(a)
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and 18(b) above, are not intended to and will not relieve any insurance carrier
of its obligations under policies required to be carried by Tenant pursuant to
the provisions of this Lease.
19. INSURANCE.
(a) TENANT'S INSURANCE. On or before the earlier to occur of (i) the
Commencement Date, or (ii) the date Tenant commences any work of any type in the
Premises pursuant to this Lease (which may be prior to the Commencement Date),
and continuing throughout the entire Term hereof and any other period of
occupancy, Tenant agrees to keep in full force and effect, at its sole cost and
expense, the following insurance:
(i) "All Risks" property insurance including at least the following perils: fire
and extended coverage, smoke damage, vandalism, malicious mischief, sprinkler
leakage (including earthquake sprinkler leakage). This insurance policy must be
upon all property owned by Tenant, for which Tenant is legally liable, or which
is installed at Tenant's expense, and which is located in the Building
including, without limitation, any Tenant Improvements which satisfy the
foregoing qualification and any Alterations, and all furniture, fittings,
installations, fixtures and any other personal property of Tenant, in an amount
not less than the full replacement cost thereof. If there is a dispute as to
full replacement cost, the decision of Landlord or any mortgagee of Landlord
will be presumptive.
(ii) One (1) year insurance coverage for business interruption and loss of
income and extra expense insuring the same perils described in Subparagraph
19(a)(i) above, in such amounts as will reimburse Tenant for any direct or
indirect loss of earnings attributable to any such perils including prevention
of access to the Premises, Tenant's parking areas or the Building as a result of
any such perils.
(iii) Commercial General Liability Insurance or Comprehensive General Liability
Insurance (on an occurrence form) insuring bodily injury, personal injury and
property damage including the following divisions and extensions of coverage:
Premises and Operations; Owners and Contractors protective; blanket contractual
liability (including coverage for Tenant's indemnity obligations under this
Lease); products and completed operations; and liquor liability (if Tenant
serves alcohol on the Premises). Such insurance must have the following minimum
limits of liability: bodily injury, personal injury and property damage -
$2,000,000 each occurrence, $5,000,000 in the aggregate, provided that if
liability coverage is provided by a Commercial General Liability policy the
general aggregate limit shall apply separately and in total to this location
only (per location general aggregate), and provided further, such minimum limits
of liability may be adjusted from year to year to reflect increases in coverages
as recommended by Landlord's insurance carrier as being prudent and commercially
reasonable for tenants of first class office buildings comparable to the
Building, rounded to the nearest five hundred thousand dollars.
(iv) Comprehensive Automobile Liability insuring bodily injury and property
damage arising from all owned, non-owned and hired vehicles, if any, with
minimum limits of liability of $1,000,000 per accident.
(v) Worker's Compensation as required by the laws of the State.
(vi) Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts, and for insurance risks against which, a prudent tenant would protect
itself, but only to the extent coverage for such risks and amounts are available
in the insurance market at commercially acceptable rates. Landlord makes no
representation that the limits of liability required to be carried by Tenant
under the terms of this Lease are adequate to protect Tenant's interests and
Tenant should obtain such additional insurance or increased liability limits as
Tenant deems appropriate.
(b) SUPPLEMENTAL TENANT INSURANCE REQUIREMENTS.
(i) All policies must be in a form reasonably satisfactory to Landlord and
issued by an insurer admitted to do business in the State.
(ii) All policies must be issued by insurers with a policyholder rating of "A"
and a financial rating of "X" in the most recent version of Best's Key Rating
Guide.
(iii) All policies must contain a requirement to notify Landlord (and Landlord's
property manager and any mortgagees or ground lessors of Landlord who are named
as additional insureds, if any) in writing not less than thirty (30) days prior
to any material change, reduction in coverage, cancellation or other termination
thereof. Tenant agrees to deliver to Landlord, as soon as practicable after
placing the required insurance, but in any event within the time frame specified
in Subparagraph 19(a) above, certificate(s) of insurance and/or if required by
Landlord, certified copies of each policy evidencing the existence of such
insurance and Tenant's compliance with the provisions of this Paragraph 19.
Tenant agrees to cause replacement policies or
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certificates to be delivered to Landlord not less than thirty (30) days prior to
the expiration of any such policy or policies. If any such initial or
replacement policies or certificates are not furnished within the time(s)
specified herein, Tenant will be deemed to be in material default under this
Lease without the benefit of any additional notice or cure period provided in
Subparagraph 22(a)(iii) below, and Landlord will have the right, but not the
obligation, to procure such insurance as Landlord deems necessary to protect
Landlord's interests at Tenant's expense. If Landlord obtains any insurance that
is the responsibility of Tenant under this Paragraph 19, Landlord agrees to
deliver to Tenant a written statement setting forth the cost of any such
insurance and showing in reasonable detail the manner in which it has been
computed and Tenant agrees to promptly reimburse Landlord for such costs as
additional rent.
(iv) General Liability and Automobile Liability policies under Subparagraphs
19(a)(iii) and (iv) must name Landlord and Landlord's property manager (and at
Landlord's request, Landlord's mortgagees and ground lessors of which Tenant has
been informed in writing) as additional insureds and must also contain a
provision that the insurance afforded by such policy is primary insurance and
any insurance carried by Landlord and Landlord's property manager or Landlord's
mortgagees or ground lessors, if any, will be excess over and non-contributing
with Tenant's insurance.
(c) TENANT'S USE. Tenant will not keep, use, sell or offer for sale in or upon
the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building or the Development Common Areas. If
Tenant's occupancy or business in, or on, the Premises, whether or not Landlord
has consented to the same, results in any increase in premiums for the insurance
periodically carried by Landlord with respect to the Building or the Development
Common Areas or results in the need for Landlord to maintain special or
additional insurance, Tenant agrees to pay Landlord the cost of any such
increase in premiums or special or additional coverage as additional rent within
ten (10) days after being billed therefor by Landlord. In determining whether
increased premiums are a result of Tenant's use of the Premises, a schedule
issued by the organization computing the insurance rate on the Building, the
Development Common Areas or the Tenant Improvements showing the various
components of such rate, will be conclusive evidence of the several items and
charges which make up such rate. Tenant agrees to promptly comply with all
reasonable requirements of the insurance authority or any present or future
insurer relating to the Premises.
(d) LANDLORD'S POLICIES. Landlord shall at all times during the Term of this
Lease maintain in effect a policy or policies of insurance covering the Building
providing protection against any peril included under insurance practices in the
State of Colorado within the classification "fire and extended coverage"
providing protection to the extent of not less than the full replacement cost of
the Building, together with insurance against vandalism and malicious mischief.
Landlord shall also at all times during the Term of this Lease maintain in
effect public liability insurance adequate to protect against liability for
injury or death in an amount not less than $1,000,000 for injury to, or death
of, one person in any one accident and in an amount not less than $3,000,000 for
injury to or death of more than one person in any one accident and against
liability for damage to property in an amount not less than $500,000 for each
occurrence. Landlord's liability insurance policy shall name Tenant as an
additional insured, as its interest appears.
If any of Landlord's insurance policies are cancelled or cancellation
is threatened or the coverage reduced or threatened to be reduced in any way
because of the use of the Premises or any part thereof by Tenant or any assignee
or subtenant of Tenant or by anyone Tenant permits on the Premises and, if
Tenant fails to remedy the condition giving rise to such cancellation,
threatened cancellation, reduction of coverage, threatened reduction of
coverage, increase in premiums, or threatened increase in premiums, within
forty-eight (48) hours after notice thereof, Tenant will be deemed to be in
material default of this Lease and Landlord may, at its option, either terminate
this Lease or enter upon the Premises and attempt to remedy such condition, and
Tenant shall promptly pay Landlord the reasonable costs of such remedy as
additional rent. If Landlord is unable, or elects not to remedy such condition,
then Landlord will have all of the remedies provided for in this Lease in the
event of a default by Tenant.
(e) WAIVER OF SUBROGATION. Notwithstanding anything to the contrary contained
herein Landlord and Tenant hereby mutually waive and release their respective
rights of recovery against each other their officers, directors, agents and
employees (but not against other third parties) for (i) any loss on its property
capable of being insured against by "all risk" or "multiperil" form insurance
coverage whether carried or not; and (ii) all loss, cost, damage or expense
arising out of or due to any interruption of business (regardless of the cause
therefor), increased or additional costs of operation of business or other costs
or expenses whether similar or dissimilar which are capable of being insured
against under business interruption insurance whether or not carried. Each party
shall apply to their insurers to obtain said waivers and obtain any special
endorsements, if required by their insurer to evidence compliance with the
aforementioned waiver, and shall bear the cost therefor. Tenant shall also
obtain and furnish evidence to Landlord of the waiver by Tenant's worker's
compensation insurance carrier of all rights of recovery by way of subrogation
against Landlord.
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20. DAMAGE OR DESTRUCTION.
(a) PARTIAL DESTRUCTION. If the Premises or the Building are damaged by fire or
other casualty to an extent not exceeding twenty-five percent (25%) of the full
replacement cost thereof, and Landlord's contractor reasonably estimates in a
writing delivered to Landlord and Tenant that the damage thereto may be
repaired, reconstructed or restored to substantially its condition immediately
prior to such damage within one hundred eighty (180) days from the date of such
casualty, and Landlord will receive insurance proceeds sufficient to cover the
costs of such repairs, reconstruction and restoration (including proceeds from
Tenant and/or Tenant's insurance which Tenant is required to deliver to Landlord
pursuant to Subparagraph 20(e) below to cover Tenant's obligation for the costs
of repair, reconstruction and restoration of any portion of the Tenant
Improvements and any Alterations for which Tenant is responsible under this
Lease), then Landlord agrees to commence and proceed diligently with the work of
repair, reconstruction and restoration and this Lease will continue in full
force and effect.
(b) SUBSTANTIAL DESTRUCTION. Any damage or destruction to the Premises or the
Building which Landlord is not obligated to repair pursuant to Subparagraph
20(a) above will be deemed a substantial destruction. In the event of a
substantial destruction, Landlord may elect to either (i) repair, reconstruct
and restore the portion of the Building or the Premises damaged by such
casualty, in which case this Lease will continue in full force and effect,
subject to Tenant's termination right contained in Subparagraph 20(d) below; or
(ii) terminate this Lease effective as of the date which is thirty (30) days
after Tenant's receipt of Landlord's election to so terminate.
(c) NOTICE. Under any of the conditions of Subparagraph 20(a) or (b) above,
Landlord agrees to give written notice to Tenant of its intention to repair or
terminate, as permitted in such paragraphs, within the earlier of sixty (60)
days after the occurrence of such casualty, or ten (10) days after Landlord's
receipt of the estimate from Landlord's contractor (the applicable time period
to be referred to herein as the "Notice Period").
(d) TENANT'S TERMINATION RIGHTS. If Landlord elects to repair, reconstruct and
restore pursuant to Subparagraph 20(b)(i) hereinabove, and if Landlord's
contractor estimates that as a result of such damage, Tenant cannot be given
reasonable use of and access to the Premises within two hundred forty (240) days
after the date of such damage, then Tenant may terminate this Lease effective
upon delivery of written notice to Landlord within ten (10) days after Landlord
delivers notice to Tenant of its election to so repair, reconstruct or restore.
(e) TENANT'S COSTS AND INSURANCE PROCEEDS. In the event of any damage or
destruction of all or any part of the Premises, Tenant agrees to immediately (i)
notify Landlord thereof, and (ii) deliver to Landlord all property insurance
proceeds received by Tenant with respect to any Tenant Improvements installed by
or at the cost of Tenant and any Alterations, but excluding proceeds for
Tenant's furniture, fixtures, equipment and other personal property, whether or
not this Lease is terminated as permitted in this Paragraph 20, and Tenant
hereby assigns to Landlord all rights to receive such insurance proceeds. If,
for any reason (including Tenant's failure to obtain insurance for the full
replacement cost of any Tenant Improvements installed by or at the cost of
Tenant and any Alterations from any and all casualties), Tenant fails to receive
insurance proceeds covering the full replacement cost of any Tenant Improvements
installed by or at the cost of Tenant and any Alterations which are damaged,
Tenant will be deemed to have self-insured the replacement cost of such items,
and upon any damage or destruction thereto, Tenant agrees to immediately pay to
Landlord the full replacement cost of such items, less any insurance proceeds
actually received by Landlord from Landlord's or Tenant's insurance with respect
to such items.
(f) ABATEMENT OF RENT. In the event of any damage, repair, reconstruction and/or
restoration described in this Paragraph 20, rent will be abated or reduced, as
the case may be, from the date of such casualty, in proportion to the degree to
which Tenant's use of the Premises is impaired until such use is restored.
Except for abatement of rent as provided hereinabove, Tenant will not be
entitled to any compensation or damages for loss of, or interference with,
Tenant's business or use or access of all or any part of the Premises or for
lost profits or any other consequential damages of any kind or nature, which
result from any such damage, repair, reconstruction or restoration.
(g) INABILITY TO COMPLETE. Notwithstanding anything to the contrary contained in
this Paragraph 20, if Landlord is obligated or elects to repair, reconstruct
and/or restore the damaged portion of the Building or the Premises pursuant to
Subparagraph 20(a) or 20(b)(i) above, but is delayed from completing such
repair, reconstruction and/or restoration beyond the date which is ninety (90)
days after the date estimated by Landlord's contractor for completion thereof by
reason of any causes (other than delays caused by Tenant, its subtenants,
employees, agents or contractors or delays which are beyond the reasonable
control of Landlord as described in Paragraph 33), then either Landlord or
Tenant may elect to terminate this Lease upon ten (10) days prior written notice
given to the other after the expiration of such ninety (90) day period.
(h) DAMAGE NEAR END OF TERM. Landlord and Tenant shall each have the right to
terminate this Lease if any damage to the Premises occurs during the last twelve
(12) months of the Term of this Lease where Landlord's contractor estimates in a
writing delivered to Landlord and Tenant that the repair, reconstruction or
restoration of such damage cannot be completed within sixty (60) days after the
date of such casualty. If either party desires to terminate this Lease under
this Subparagraph (h),
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it shall provide written notice to the other party of such election within ten
(10) days after receipt of Landlord's contractor's repair estimates.
(i) WAIVER OF TERMINATION RIGHT. Landlord and Tenant agree that the foregoing
provisions of this Paragraph 20 are to govern their respective rights and
obligations in the event of any damage or destruction and supersede and are in
lieu of the provisions of any applicable law, statute, ordinance, rule,
regulation, order or ruling now or hereafter in force which provide remedies for
damage or destruction of leased premises.
(j) TERMINATION. Upon any termination of this Lease under any of the provisions
of this Paragraph 20, the parties will be released without further obligation to
the other from the date possession of the Premises is surrendered to Landlord
except for items which have accrued and are unpaid as of the date of termination
and matters which are to survive any termination of this Lease as provided in
this Lease.
21. EMINENT DOMAIN.
(a) SUBSTANTIAL TAKING. If the whole of the Premises, or such part thereof as
shall substantially interfere with Tenant's use and occupancy of the Premises,
as contemplated by this Lease, is taken for any public or quasi-public purpose
by any lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold to prevent such taking, either party
will have the right to terminate this Lease effective as of the date possession
is required to be surrendered to such authority.
(b) PARTIAL TAKING; ABATEMENT OF RENT. In the event of a taking of a portion of
the Premises which does not substantially interfere with Tenant's use and
occupancy of the Premises, then, neither party will have the right to terminate
this Lease and Landlord will thereafter proceed to make a functional unit of the
remaining portion of the Premises and rent will be abated with respect to the
part of the Premises which Tenant is deprived of on account of such taking.
(c) CONDEMNATION AWARD. In connection with any taking of the Premises or the
Building, Landlord will be entitled to receive the entire amount of any award
which may be made or given in such taking or condemnation, without deduction or
apportionment for any estate or interest of Tenant, it being expressly
understood and agreed by Tenant that no portion of any such award will be
allowed or paid to Tenant for any so-called bonus or excess value of this Lease,
and such bonus or excess value will be the sole property of Landlord. Tenant
agrees not to assert any claim against Landlord or the taking authority for any
compensation because of such taking (including any claim for bonus or excess
value of this Lease); provided, however, if any portion of the Premises is
taken, Tenant (to the extent authorized by law) will have the right to
independently recover from the condemning authority (but not from Landlord) any
compensation as may be separately awarded or recoverable by Tenant for the
taking of Tenant's furniture, fixtures, equipment and other personal property
within the Premises, for Tenant's relocation expenses, and for any loss of
goodwill or other damage to Tenant's business by reason of such taking.
(d) TEMPORARY TAKING. In the event of taking of the Premises or any part thereof
for temporary use, (i) this Lease will remain unaffected thereby and rent will
abate for the duration of the taking in proportion to the extent Tenant's use of
the Premises is interfered with, and (ii) Landlord will be entitled to receive
such portion or portions of any award made for such use provided that if such
taking remains in force at the expiration or earlier termination of this Lease,
Tenant will then pay to Landlord a sum equal to the reasonable cost of
performing Tenant's obligations under Paragraph 11 with respect to surrender of
the Premises and upon such payment Tenant will be excused from such obligations.
For purpose of this Subparagraph 21(d), a temporary taking shall be defined as a
taking for a period of ninety (90) days or less.
22. DEFAULTS AND REMEDIES.
(a) DEFAULTS. The occurrence of any one or more of the following events will be
deemed a default by Tenant:
(i) The abandonment of the Premises by Tenant, which for purposes of this Lease
means any absence by Tenant from the Premises for five (5) business days or
longer while in default of any other provision of this Lease.
(ii) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure continues for a period of three (3) business days after written
notice is received (or deemed delivered pursuant to Paragraph 9 hereof) thereof
from Landlord to Tenant; provided, however, that any such notice will be in lieu
of, and not in addition to, any notice required under applicable law.
(iii) The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in Subparagraph 22(a)(i) or (ii) above, where such
failure continues (where no other period of time is expressly provided) for a
period of ten (10) days after written notice is received (or deemed
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delivered pursuant to Paragraph 9 hereof) thereof from Landlord to Tenant. The
provisions of any such notice will be in lieu of, and not in addition to, any
notice required under applicable law including but not limited to unlawful
detainer actions and any successor statute or similar law). If the nature of
Tenant's default is such that more than ten (10) days are reasonably required
for its cure, then Tenant will not be deemed to be in default if Tenant, with
Landlord's concurrence, commences such cure within such ten (10) day period and
thereafter diligently prosecutes such cure to completion.
(iv) (A) The making by Tenant of any general assignment for the benefit of
creditors; (B) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); (C) 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 thirty (30) days; or (D) 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 thirty (30) days.
(b) LANDLORD'S REMEDIES; TERMINATION. In the event of any default by Tenant, in
addition to any other remedies available to Landlord at law or in equity under
applicable law, Landlord will have the immediate right and option to terminate
this Lease and all rights of Tenant hereunder. If Landlord elects to terminate
this Lease then, to the extent permitted under applicable law, Landlord may
recover from Tenant (i) The worth at the time of award of any unpaid rent which
had 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 rent 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
Term after the time of award exceeds the amount of such rent loss that Tenant
proves could be 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, results therefrom including, but not limited to: attorneys' fees and
costs; brokers' commissions; the costs of refurbishment, alterations, renovation
and repair of the Premises, and removal (including the repair of any damage
caused by such removal) and storage (or disposal) of Tenant's personal property,
equipment, fixtures, Alterations, the Tenant Improvements and any other items
which Tenant is required under this Lease to remove but does not remove, as well
as the unamortized value of any free rent, reduced rent, free parking (provided
Landlord is then currently charging for surface parking within the Development),
reduced rate parking and any Tenant Improvement Allowance or other costs or
economic concessions provided, paid, granted or incurred by Landlord pursuant to
this Lease. The unamortized value of such concessions shall be determined by
taking the total value of such concessions and multiplying such value by a
fraction, the numerator of which is the number of months of the Lease Term not
yet elapsed as of the date on which the Lease is terminated, and the denominator
of which is the total number of months of the Lease Term. As used in
Subparagraphs 22(b)(i) and (ii) above, the "worth at the time of award" is
computed by allowing interest at the Interest Rate. As used in Subparagraph
22(b)(iii) above, the "worth at the time of award" is 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%).
(c) LANDLORD'S REMEDIES; RE-ENTRY RIGHTS. In the event of any default by Tenant,
in addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord will also have the right, with or without terminating
this Lease, to re-enter the Premises and remove all persons and property from
the Premises; such property may be removed and stored in a public warehouse or
elsewhere and/or disposed of at the sole cost and expense of and for the account
of Tenant in accordance with the provisions of Subparagraph 13(h) of this Lease
or any other procedures permitted by applicable law. No re-entry or taking
possession of the Premises by Landlord pursuant to this Subparagraph 22(c) will
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Tenant or unless the termination thereof is decreed
by a court of competent jurisdiction.
(d) LANDLORD'S REMEDIES; RE-LETTING. In the event of the vacation or abandonment
of the Premises by Tenant or in the event that Landlord elects to re-enter the
Premises or takes possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease, Landlord may from time to time, without terminating this
Lease, either recover all rent as it becomes due or relet the Premises or any
part thereof on terms and conditions as Landlord in its sole and absolute
discretion may deem advisable with the right to make alterations and repairs to
the Premises in connection with such reletting. If Landlord elects to relet the
Premises, then rents received by Landlord from such reletting will be applied:
first, to the payment of any indebtedness other than rent due hereunder from
Tenant to Landlord; second, to the payment of any cost of such reletting; third,
to the payment of the cost of any alterations and repairs to the Premises
incurred in connection with such reletting; fourth, to the payment of rent due
and unpaid hereunder; the residue, if any, will be held by Landlord and applied
to payment of future rent as the same may become due and payable hereunder.
Should that portion of such rents received from such reletting during any month,
which is applied to the payment of rent hereunder, be less than the rent payable
during that month by Tenant hereunder, then Tenant agrees to pay such deficiency
to Landlord immediately upon demand therefor by Landlord. Such deficiency will
be calculated and paid monthly. Landlord will use reasonable efforts to mitigate
its damages.
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(e) LANDLORD'S REMEDIES; PERFORMANCE FOR TENANT. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease are to be performed
by Tenant at Tenant's sole cost and expense and without any abatement of rent.
If Tenant fails to pay any sum of money owed to any party other than Landlord,
for which it is liable under this Lease, or if Tenant fails to perform any other
act on its part to be performed hereunder, and such failure continues for ten
(10) days after notice thereof by Landlord, Landlord may, without waiving or
releasing Tenant from its obligations, but shall not be obligated to, make any
such payment or perform any such other act to be made or performed by Tenant.
Tenant agrees to reimburse Landlord upon demand for all sums so paid by Landlord
and all necessary incidental costs, together with interest thereon at the
Interest Rate, from the date of such payment by Landlord until reimbursed by
Tenant. This remedy shall be in addition to any other right or remedy of
Landlord set forth in this Paragraph 22.
(f) LATE PAYMENT. If Tenant fails to pay any installment of rent within five (5)
days of when due or if Tenant fails to make any other payment for which Tenant
is obligated under this Lease within five (5) days of when due, such late amount
will accrue interest at the Interest Rate and Tenant agrees to pay Landlord as
additional rent such interest on such amount from the date such amount becomes
due until such amount is paid. In addition, Tenant agrees to pay to Landlord
concurrently with such late payment amount, as additional rent, a late charge
equal to ten percent (10%) of the amount due to compensate Landlord for the
extra costs Landlord will incur as a result of such late payment. The parties
agree that (i) it would be impractical and extremely difficult to fix the actual
damage Landlord will suffer in the event of Tenant's late payment, (ii) such
interest and late charge represents a fair and reasonable estimate of the
detriment that Landlord will suffer by reason of late payment by Tenant, and
(iii) the payment of interest and late charges are distinct and separate in that
the payment of interest is to compensate Landlord for the use of Landlord's
money by Tenant, while the payment of late charges is to compensate Landlord for
Landlord's processing, administrative and other costs incurred by Landlord as a
result of Tenant's delinquent payments. Acceptance of any such interest and late
charge will not constitute a waiver of the Tenant's default with respect to the
overdue amount, or prevent Landlord from exercising any of the other rights and
remedies available to Landlord. If Tenant incurs a late charge more than three
(3) times in any period of twelve (12) months during the Lease Term, then,
notwithstanding that Tenant cures the late payments for which such late charges
are imposed, Landlord will have the right to require Tenant thereafter to pay
all installments of Monthly Base Rent quarterly in advance throughout the
remainder of the Lease Term.
(g) RIGHTS AND REMEDIES CUMULATIVE. All rights, options and remedies of Landlord
contained in this Lease will be construed and held to be cumulative, and no one
of them will be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law or in equity, whether or not stated in this Lease. Nothing in
this Paragraph 22 will be deemed to limit or otherwise affect Tenant's
indemnification of Landlord pursuant to any provision of this Lease.
23. LANDLORD'S DEFAULT. Landlord will not be in default in the performance of
any obligation required to be performed by Landlord under this Lease unless
Landlord fails to perform such obligation within fifteen (15) days after the
receipt of written notice from Tenant specifying in detail Landlord's failure to
perform; provided however, that if the nature of Landlord's obligation is such
that more than fifteen (15) days are required for performance, then Landlord
will not be deemed in default if it commences such performance within such
fifteen (15) day period and thereafter diligently pursues the same to
completion. Upon any default by Landlord, Tenant may exercise any of its rights
provided at law or in equity, subject to the limitations on liability set forth
in Paragraph 35 of this Lease.
24. ASSIGNMENT AND SUBLETTING.
(a) RESTRICTION ON TRANSFER. Except as expressly provided in this Paragraph 24,
Tenant will not, either voluntarily or by operation of law, assign or encumber
this Lease or any interest herein or sublet the Premises or any part thereof, or
permit the use or occupancy of the Premises by any party other than Tenant (any
such assignment, encumbrance, sublease or the like will sometimes be referred to
as a "Transfer"), without the prior written consent of Landlord, which consent
Landlord will not unreasonably withhold.
(b) CORPORATE AND PARTNERSHIP TRANSFERS. For purposes of this Paragraph 24, if
Tenant is a corporation, partnership or other entity, any transfer, assignment,
encumbrance or hypothecation of twenty-five percent (25%) or more (individually
or in the aggregate) of any stock or other ownership interest in such entity,
and/or any transfer, assignment, hypothecation or encumbrance of any controlling
ownership or voting interest in such entity, will be deemed a Transfer and will
be subject to all of the restrictions and provisions contained in this Paragraph
24. Notwithstanding the foregoing, the immediately preceding sentence will not
apply to any transfers of stock of Tenant if Tenant is a publicly-held
corporation and such stock is transferred publicly over a recognized security
exchange or over-the-counter market.
(c) PERMITTED CONTROLLED TRANSFERS. Notwithstanding the provisions of this
Paragraph 24 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof ("Permitted Transfer"), without Landlord's
consent and without extending any sublease termination option to Landlord, to
any parent, subsidiary or affiliate corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from a
merger or consolidation
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with Tenant, or to any person or entity which acquires all the assets of
Tenant's business as a going concern, provided that: (i) at least twenty (20)
days prior to such assignment or sublease, Tenant delivers to Landlord the
financial statements and other financial and background information of the
assignee or sublessee described in Subparagraph 24(d) below; (ii) if an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease (or if a sublease, the sublessee of a portion of the Premises or Term
assumes, in full, the obligations of Tenant with respect to such portion); (iii)
the financial net worth of the assignee or sublessee as of the time of the
proposed assignment or sublease equals or exceeds that of Tenant as of the date
of execution of this Lease: (iv) Tenant remains fully liable under this Lease;
and (v) the use of the Premises under Paragraph 8 remains unchanged.
(d) TRANSFER NOTICE. If Tenant desires to effect a Transfer, then at least
thirty (30) days prior to the date when Tenant desires the Transfer to be
effective (the "Transfer Date"), Tenant agrees to give Landlord a notice (the
"Transfer Notice"), stating the name, address and business of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as
"Transferee"), reasonable information (including references) concerning the
character, ownership, and financial condition of the proposed Transferee, the
Transfer Date, any ownership or commercial relationship between Tenant and the
proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require. If Landlord reasonably requests additional detail, the
Transfer Notice will not be deemed to have been received until Landlord receives
such additional detail, and Landlord may withhold consent to any Transfer until
such information is provided to it.
(e) LANDLORD'S OPTIONS. Within fifteen (15) days of Landlord's receipt of any
Transfer Notice, and any additional information requested by Landlord concerning
the proposed Transferee's financial responsibility, Landlord will elect to do
one of the following (i) consent to the proposed Transfer; (ii) refuse such
consent, which refusal shall be on reasonable grounds including, without
limitation, those set forth in Subparagraph 24(f) below; or (iii) terminate this
Lease as to all or such portion of the Premises which is proposed to be sublet
or assigned and recapture all or such portion of the Premises for reletting by
Landlord.
(f) REASONABLE DISAPPROVAL. Landlord and Tenant hereby acknowledge that
Landlord's disapproval of any proposed Transfer pursuant to Subparagraph 24(e)
will be deemed reasonably withheld if based upon any reasonable factor,
including, without limitation, any or all of the following factors: (i) if the
Building is less than eighty percent (80%) occupied, if the net effective rent
payable by the Transferee (adjusted on a rentable square foot basis) is less
than the net effective rent then being quoted by Landlord for new leases in the
Building for comparable size space for a comparable period of time; (ii) the
proposed Transferee is a governmental entity; (iii) the portion of the Premises
to be sublet or assigned is irregular in shape with inadequate means of ingress
and egress; (iv) the use of the Premises by the Transferee (A) is not permitted
by the use provisions in Paragraph 8 hereof, (B) violates any exclusive use
granted by Landlord to another tenant in the Building, or (C) otherwise poses a
risk of increased liability to Landlord; (v) the Transfer would likely result in
a significant and inappropriate increase in the use of the parking areas or
Development Common Areas by the Transferee's employees or visitors, and/or
significantly increase the demand upon utilities and services to be provided by
Landlord to the Premises; or (vi) the Transferee does not have the financial
capability to fulfill the obligations imposed by the Transfer and this Lease.
(g) ADDITIONAL CONDITIONS. A condition to Landlord's consent to any Transfer of
this Lease will be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, sublease, transfer or hypothecation, and, in the case
of an assignment, the delivery to Landlord of an agreement executed by the
Transferee in form and substance reasonably satisfactory to Landlord, whereby
the Transferee assumes and agrees to be bound by all of the terms and provisions
of this Lease and to perform all of the obligations of Tenant hereunder. As a
condition for granting its consent to any assignment or sublease, Landlord may
require that the assignee or sublessee remit directly to Landlord on a monthly
basis, all monies due to Tenant by said assignee or sublessee. As a condition to
Landlord's consent to any sublease, such sublease must provide that it is
subject and subordinate to this Lease and to all mortgages; that Landlord may
enforce the provisions of the sublease, including collection of rent; that in
the event of termination of this Lease for any reason, including without
limitation a voluntary surrender by Tenant, or in the event of any reentry or
repossession of the Premises by Landlord, Landlord may, at its option, either
(i) terminate the sublease, or (ii) take over all of the right, title and
interest of Tenant, as sublessor, under such sublease, in which case such
sublessee will attorn to Landlord, but that nevertheless Landlord will not (1)
be liable for any previous act or omission of Tenant under such sublease, (2) be
subject to any defense or offset previously accrued in favor of the sublessee
against Tenant, or (3) be bound by any previous modification of any sublease
made without Landlord's written consent, or by any previous prepayment by
sublessee of more than one month's rent.
(h) EXCESS RENT. If Landlord consents to any assignment of this Lease, Tenant
agrees to pay to Landlord, as additional rent, one-half of all sums and other
consideration payable to and for the benefit of Tenant by the assignee on
account of the assignment, as and when such sums and other consideration are due
and payable by the assignee to or for the benefit of Tenant (or, if Landlord so
requires, and without any release of Tenant's liability for the same, Tenant
agrees to instruct the assignee to pay such sums and other consideration
directly to Landlord). If for any sublease, Tenant receives rent or other
consideration, either initially or over the term of the sublease, in excess of
the rent fairly allocable to the portion of the Premises which is
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subleased based on square footage, Tenant agrees to pay to Landlord as
additional rent one-half of the excess of each such payment of rent or other
consideration received by Tenant promptly after its receipt. In calculating
excess rent or other consideration which may be payable to Landlord under this
paragraph, Tenant will be entitled to deduct commercially reasonable third party
brokerage commissions, tenant improvement allowance and attorneys' fees
reasonably and actually expended by Tenant in connection with such assignment or
subletting if acceptable written evidence of such expenditures is provided to
Landlord.
(i) TERMINATION RIGHTS. If Tenant requests Landlord's consent to any assignment
or subletting of all or a portion of the Premises, Landlord will have the right,
as provided in Subparagraph 24(e), to terminate this Lease as to all or such
portion of the Premises which is proposed to be sublet or assigned effective as
of the date Tenant proposes to sublet or assign all or less than all of the
Premises. Landlord's right to terminate this Lease as to less than all of the
Premises proposed to be sublet or assigned will not terminate as to any future
additional subletting or assignment as a result of Landlord's consent to a
subletting of less than all of the Premises or Landlord's failure to exercise
its termination right with respect to any subletting or assignment. Landlord
will exercise such termination right, if at all, by giving written notice to
Tenant within thirty (30) days of receipt by Landlord of the financial
responsibility information required by this Paragraph 24. Tenant understands and
acknowledges that the option, as provided in this Paragraph 24, to terminate
this Lease as to all or such portion of the Premises which is proposed to be
sublet or assigned rather than approve the subletting or assignment of all or a
portion of the Premises, is a material inducement for Landlord's agreeing to
lease the Premises to Tenant upon the terms and conditions herein set forth. In
the event of any such termination with respect to less than all of the Premises,
the cost of segregating the recaptured space from the balance of the Premises
will be paid by Tenant and Tenant's future monetary obligations under this Lease
will be reduced proportionately on a square footage basis to correspond to the
balance of the Premises which Tenant continues to lease.
(j) NO RELEASE. No Transfer will release Tenant of Tenant's obligations under
this Lease or alter the primary liability of Tenant to pay the rent and to
perform all other obligations to be performed by Tenant hereunder. Landlord may
require that any Transferee remit directly to Landlord on a monthly basis, all
monies due Tenant by said Transferee. However, the acceptance of rent by
Landlord from any other person will not be deemed to be a waiver by Landlord of
any provision hereof. Consent by Landlord to one Transfer will not be deemed
consent to any subsequent Transfer. In the event of default by any Transferee of
Tenant or any successor of Tenant in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against such Transferee or successor. Landlord may consent to
subsequent assignments of this Lease or sublettings or amendments or
modifications to this Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto
and any such actions will not relieve Tenant of liability under this Lease.
(k) ADMINISTRATIVE AND ATTORNEYS' FEES. If Tenant effects a Transfer or requests
the consent of Landlord to any Transfer (whether or not such Transfer is
consummated), then, upon demand, Tenant agrees to pay Landlord a non-refundable
administrative fee of Two Hundred Fifty Dollars ($250.00), plus any reasonable
attorneys' and paralegal fees incurred by Landlord in connection with such
Transfer or request for consent (whether attributable to Landlord's in-house
attorneys or paralegals or otherwise) not to exceed One Hundred Dollars
($100.00) for each one thousand (1,000) rentable square feet of area contained
within the Premises or portion thereof to be assigned or sublet. Acceptance of
the Two Hundred Fifty Dollar ($250.00) administrative fee and/or reimbursement
of Landlord's attorneys' and paralegal fees will in no event obligate Landlord
to consent to any proposed Transfer.
25. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee or beneficiary with a deed of trust
encumbering the Building and/or the Development, or any lessor of a ground or
underlying lease with respect to the Building, this Lease will be subject and
subordinate at all times to: (i) all ground leases or underlying leases which
may now exist or hereafter be executed affecting the Building; and (ii) the lien
of any mortgage or deed of trust which may now exist or hereafter be executed
for which the Building, the Development or any leases thereof, or Landlord's
interest and estate in any of said items, is specified as security.
Notwithstanding the foregoing, Landlord reserves the right to subordinate any
such ground leases or underlying leases or any such liens to this Lease. If any
such ground lease or underlying lease terminates for any reason or any such
mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure
is made for any reason, at the election of Landlord's successor in interest,
Tenant agrees to attorn to and become the tenant of such successor in which
event Tenant's right to possession of the Premises will not be disturbed as long
as Tenant is not in default under this Lease. Tenant hereby waives its rights
under any law which gives or purports to give Tenant any right to terminate or
otherwise adversely affect this Lease and the obligations of Tenant hereunder in
the event of any such foreclosure proceeding or sale. Tenant covenants and
agrees to execute and deliver, upon demand by Landlord and in the form
reasonably required by Landlord, any additional documents evidencing the
priority or subordination of this Lease and Tenant's attornment agreement with
respect to any such ground lease or underlying leases or the lien of any such
mortgage or deed of trust; provided such document also acknowledges that so long
as Tenant is not in default under this Lease, Tenants right of use and
possession in the Premises will not be disturbed. If Tenant fails to sign and
return any such documents within ten (10) days of receipt, Tenant will be in
default hereunder. Landlord will provide to Tenant a
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non-disturbance agreement from the current lender for the Premises substantially
in the form attached hereto as Exhibit J within ten (10) business days after
mutual execution of the Lease.
26. ESTOPPEL CERTIFICATE.
(a) TENANT'S OBLIGATIONS. Within ten (10) days following any written request
which Landlord may make from time to time, Tenant agrees to execute and deliver
to Landlord a statement, in a form substantially similar to the form of Exhibit
"G" attached hereto or as may reasonably be required by Landlord's lender,
certifying: (i) the date of commencement of this Lease; (ii) the fact that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect, and stating the date
and nature of such modifications); (iii) the date to which the rent and other
sums payable under this Lease have been paid; (iv) to Tenant's knowledge after
reasonable inquiry, that there are no current defaults under this Lease by
either Landlord or Tenant except as specified in Tenant's statement; and (v)
such other matters reasonably requested by Landlord. Landlord and Tenant intend
that any statement delivered pursuant to this Paragraph 26 may be relied upon by
any mortgagee, beneficiary, purchaser or prospective purchaser of the Building
or any interest therein.
(b) TENANT'S FAILURE TO DELIVER. Tenant's failure to deliver such statement
within such time will be conclusive upon Tenant (i) that this Lease is in full
force and effect, without modification except as may be represented by Landlord,
(ii) that there are no uncured defaults in Landlord's performance, and (iii)
that not more than one (1) month's rent has been paid in advance. Without
limiting the foregoing, if Tenant fails to deliver any such statement within
such ten (10) day period, Landlord may deliver to Tenant an additional request
for such statement and Tenant's failure to deliver such statement to Landlord
within ten (10) days after delivery of such additional request will constitute a
default under this Lease. Tenant agrees to indemnify and protect Landlord from
and against any and all claims, damages, losses, liabilities and expenses
(including attorneys' fees and costs) attributable to any failure by Tenant to
timely deliver any such estoppel certificate to Landlord as required by this
Paragraph 26.
27. [INTENTIONALLY OMITTED]
28. RULES AND REGULATIONS. Tenant agrees to faithfully observe and comply with
the "Rules and Regulations," a copy of which is attached hereto and incorporated
herein by this reference as Exhibit "H", and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord. Landlord will not be responsible to Tenant for the
violation or non-performance by any other tenant or occupant of the Building of
any of the Rules and Regulations.
29. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.
(a) MODIFICATIONS. If, in connection with Landlord's obtaining or entering into
any financing or ground lease for any portion of the Building or the
Development, the lender or ground lessor requests modifications to this Lease,
Tenant, within ten (10) days after request therefor, agrees to execute an
amendment to this Lease incorporating such modifications, provided such
modifications are reasonable and do not increase the obligations of Tenant under
this Lease or adversely affect the leasehold estate created by this Lease.
(b) CURE RIGHTS. In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage covering the Premises or ground lessor of Landlord whose
address has been furnished to Tenant, and Tenant agrees to offer such
beneficiary, mortgagee or ground lessor a reasonable opportunity to cure the
default (including with respect to any such beneficiary or mortgagee, time to
obtain possession of the Premises, subject to this Lease and Tenant's rights
hereunder, by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure).
30. DEFINITION OF LANDLORD. The term "Landlord," as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, means and
includes only the owner or owners, at the time in question, of the fee title of
the Premises or the lessees under any ground lease, if any. In the event of any
transfer, assignment or other conveyance or transfers of any such title (other
than a transfer for security purposes only), Landlord herein named (and in case
of any subsequent transfers or conveyances, the then grantor) will be
automatically relieved from and after the date of such transfer, assignment or
conveyance of all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, so long as the transferee assumes in writing all such covenants and
obligations of Landlord arising after the date of such transfer. Landlord and
Landlord's transferees and assignees have the absolute right to transfer all or
any portion of their respective title and interest in the Development, the
Building, the Premises and/or this Lease without the consent of Tenant, and such
transfer or subsequent transfer will not be deemed a violation on Landlord's
part of any of the terms and conditions of this Lease.
31. WAIVER. The waiver by either party of any breach of any term, covenant or
condition herein contained will not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor will
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any custom or practice which may develop between the parties in the
administration of the terms hereof be deemed a waiver of or in any way affect
the right of either party to insist upon performance in strict accordance with
said terms. The subsequent acceptance of rent or any other payment hereunder by
Landlord will 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 by
Landlord of a lesser sum than the basic rent and additional rent or other sum
then due will be deemed to be other than on account of the earliest installment
of such rent or other amount due, nor will any endorsement or statement on any
check or any letter accompanying any check 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 installment or other amount or pursue any
other remedy provided in this Lease. The consent or approval of Landlord to or
of any act by Tenant requiring Landlord's consent or approval will not be deemed
to waive or render unnecessary Landlord's consent or approval to or of any
subsequent similar acts by Tenant.
32. PARKING.
(a) GRANT OF PARKING RIGHTS. So long as this Lease is in effect and provided
Tenant is not in default hereunder, Landlord grants to Tenant and Tenant's
Authorized Users (as defined below) a license to use the number of parking
spaces designated in Subparagraph 1(s) subject to the terms and conditions of
this Paragraph 32 and the Rules and Regulations regarding parking contained in
Exhibit "H" attached hereto. Except as otherwise expressly set forth in
Subparagraph 1(s), as consideration for the use of such parking spaces, Tenant
agrees to pay to Landlord or, at Landlord's election, directly to Landlord's
parking operator, as additional rent under this Lease, the prevailing parking
rate for each such parking space as established by Landlord in its sole and
absolute discretion from time to time. Tenant agrees that all parking charges
will be payable on a monthly basis concurrently with each monthly payment of
Monthly Base Rent. Tenant agrees to submit to Landlord or, at Landlord's
election, directly to Landlord's parking operator with a copy to Landlord,
written notice in a form reasonably specified by Landlord containing the names,
home and office addresses and telephone numbers of those persons who are
authorized by Tenant to use Tenant's parking spaces on a monthly basis
("Tenant's Authorized Users") and shall use its best efforts to identify each
vehicle of Tenant's Authorized Users by make, model and license number. Tenant
agrees to deliver such notice prior to the beginning of the Term of this Lease
and to periodically update such notice as well as upon specific request by
Landlord or Landlord's parking operator to reflect changes to Tenant's
Authorized Users or their vehicles.
(b) USE OF PARKING SPACES. Tenant will not use or allow any of Tenant's
Authorized Users to use any parking spaces which have been specifically assigned
by Landlord to other tenants or occupants or for other uses such as visitor
parking or which have been designated by any governmental entity as being
restricted to certain uses. Tenant will not be entitled to increase or reduce
its parking privileges applicable to the Premises during the Term of the Lease
except as follows: If at any time Tenant desires to increase or reduce the
number of parking spaces allocated to it under the terms of this Lease, Tenant
must notify Landlord in writing of such desire and Landlord will have the right,
in its sole and absolute discretion, to either (a) approve such requested
increase in the number of parking spaces allocated to Tenant (with an
appropriate increase to the additional rent payable by Tenant for such
additional spaces based on the then prevailing parking rates), (b) approve such
requested decrease in the number of parking spaces allocated to Tenant (with an
appropriate reduction in the additional rent payable by Tenant for such
eliminated parking spaces based on the then prevailing parking rates), or (c)
disapprove such requested increase or decrease in the number of parking spaces
allocated to Tenant. Promptly following receipt of Tenant's written request,
Landlord will provide Tenant with written notice of its decision including a
statement of any adjustments to the additional rent payable by Tenant for
parking under the Lease, if applicable.
(c) GENERAL PROVISIONS. Except as otherwise expressly set forth in Subparagraph
1(s) and 32(a), Landlord reserves the right to set and increase monthly fees
and/or daily and hourly rates for parking privileges from time to time during
the Term of the Lease. Landlord may assign any unreserved and unassigned parking
spaces and/or make all or any portion of such spaces reserved, if Landlord
reasonably determines that it is necessary for orderly and efficient parking or
for any other reasonable reason. Failure to pay the rent for any particular
parking spaces or failure to comply with any terms and conditions of this Lease
applicable to parking may be treated by Landlord as a default under this Lease
and, in addition to all other remedies available to Landlord under the Lease, at
law or in equity, Landlord may elect to recapture such parking spaces for the
balance of the Term of this Lease if Tenant does not cure such failure within
the applicable cure period set forth in Paragraph 22 of this Lease. In such
event, Tenant and Tenant's Authorized Users will be deemed visitors for purposes
of parking space use and will be entitled to use only those parking areas
specifically designated for visitor parking subject to all provisions of this
Lease applicable to such visitor parking use. Except in connection with an
assignment or sublease expressly permitted under the terms of this Lease,
Tenant's parking rights and privileges described herein are personal to Tenant
and may not be assigned or transferred, or otherwise conveyed, without
Landlord's prior written consent, which consent Landlord may withhold in its
sole and absolute discretion. In any event, under no circumstances may Tenant's
parking rights and privileges be transferred, assigned or otherwise conveyed
separate and apart from Tenant's interest in this Lease.
(d) COOPERATION WITH TRAFFIC MITIGATION MEASURES. Tenant agrees to use its
reasonable, good faith efforts to cooperate in traffic mitigation programs which
may be undertaken by Landlord independently, or in cooperation with local
municipalities
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or governmental agencies or other property owners in the vicinity of the
Building. Such programs may include, but will not be limited to, carpools,
vanpools and other ride sharing programs, public and private transit, flexible
work hours, preferential assigned parking programs and programs to coordinate
tenants within the Development with existing or proposed traffic mitigation
programs.
(e) PARKING RULES AND REGULATIONS. Tenant and Tenant's Authorized Users shall
comply with all rules and regulations regarding parking set forth in Exhibit "H"
attached hereto and Tenant agrees to cause its employees, subtenants, assignees,
contractors, suppliers, customers and invitees to comply with such rules and
regulations. Landlord reserves the right from time to time to modify and/or
adopt such other reasonable and non-discriminatory rules and regulations for the
parking facilities as it deems reasonably necessary for the operation of the
parking facilities.
33. FORCE MAJEURE. If either Landlord or Tenant is delayed, hindered in or
prevented from the performance of any act required under this Lease by reason of
strikes, lock-outs, labor troubles, inability to procure standard materials,
failure of power, restrictive governmental laws, regulations or orders or
governmental action or inaction (including failure, refusal or delay in issuing
permits, approvals and/or authorizations which is not the result of the action
or inaction of the party claiming such delay), riots, civil unrest or
insurrection, war, fire, earthquake, flood or other natural disaster, unusual
and unforeseeable delay which results from an interruption of any public
utilities (e.g., electricity, gas, water, telephone) or other unusual and
unforeseeable delay not within the reasonable control of the party delayed in
performing work or doing acts required under the provisions of this Lease, then
performance of such act will be excused for the period of the delay and the
period for the performance of any such act will be extended for a period
equivalent to the period of such delay. The provisions of this Paragraph 33 will
not operate to excuse Tenant from prompt payment of rent or any other payments
required under the provisions of this Lease.
34. SIGNS. Landlord will designate the location on the exterior of the Building
for up to two Tenant identification signs. Tenant agrees to have Landlord
install and maintain Tenant's identification signs in such designated locations
in accordance with this Paragraph 34 at Tenant's sole cost and expense. Tenant
has no right to install Tenant identification signs in any other location in, on
or about the Premises or the Development except as expressly authorized below.
The size, design, color and other physical aspects of any and all permitted
sign(s) will be subject to (i) Landlord's reasonable written approval prior to
installation, (ii) any covenants, conditions or restrictions governing the
Premises, and (iii) any applicable municipal or governmental permits and
approvals. Landlord acknowledges that illuminated signs on the Building are
allowed under current laws applicable to the Jefferson Corporate Center, and
Tenant, so long as it leases the entire Building, shall be allowed to erect and
maintain, at its sole cost and expense, the maximum size and number of signs
allowed by applicable laws, rules and regulations on the exterior of the
Building. Landlord, at Tenant's sole cost and expense, shall reasonably
cooperate in any application for approval or consent (or modification of any
prior consent or approval) of any applicable governmental entity in connection
with Tenant's signage rights hereunder. Tenant will be solely responsible for
all costs for installation, maintenance, repair and removal of any Tenant
identification sign(s). If Tenant fails to remove Tenant's sign(s) upon
termination of this Lease and repair any damage caused by such removal, Landlord
may do so at Tenant's sole cost and expense. Tenant agrees to reimburse Landlord
for all costs incurred by Landlord to effect any installation, maintenance or
removal on Tenant's account, which amount will be deemed additional rent, and
may include, without limitation, all sums disbursed, incurred or deposited by
Landlord including Landlord's costs, expenses and actual attorneys' fees with
interest thereon at the Interest Rate from the date of Landlord's demand until
paid by Tenant. Any sign rights granted to Tenant under this Lease are personal
to Tenant and may not be assigned, transferred or otherwise conveyed to any
assignee or subtenant of Tenant without Landlord's prior written consent, which
consent Landlord may withhold in its reasonable discretion. Landlord agrees to
use commercially reasonable efforts to preserve Tenant's signage visibility from
C-470 when selecting future locations and elevations for other buildings in the
Development. Nevertheless, Landlord will not be obligated to develop Sites 7, 9
or 10 as depicted on Exhibit "A-I" prior to developing Sites 2 through 5. In the
event Landlord or LSI, during the initial Term of this Lease, develops a
speculative office building (expressly excluding a build-to-suit project) on
Sites 4 or 5 as depicted on Exhibit "A-I" attached hereto, then Tenant shall
have the right to utilize for the balance of the Term of this Lease up to
one-third of a two-sided, stone pylon monument sign at a location near C-470
which is acceptable to Landlord, Tenant and any governmental entity with
jurisdiction over such location. If Landlord completes construction of a
speculative office building (expressly excluding a build-to-suit project) on
Sites 4 or 5 within the first three Lease Years of the initial Term, then
Landlord shall bear the cost to construct and install the monument sign. If
Landlord completes construction of a speculative office building (expressly
excluding a build-to-suit project) on Sites 4 or 5 within the fourth or fifth
Lease Years of the initial Term, then the cost to construct and install the
monument sign shall be equally split with Tenant. Notwithstanding any of the
foregoing, all costs of lettering and design with respect to Tenant's lettering
and logo on such sign (and the cost to affix such lettering and logo onto such
sign) shall be at Tenant's sole cost and expense. Tenant shall have no rights
with respect to the monument sign if development of a speculative office
building (expressly excluding a build-to-suit project) on Sites 4 or 5 is
completed after the initial Term of this Lease. Additionally, if Tenant leases
over 50% of the square footage of any building (speculative, build-to-suit or
otherwise) constructed on Sites 4 or 5, and Tenant has the right to utilize any
exterior signage rights on such building, then Tenant shall have no rights with
respect to the monument sign referenced above and Tenant, at its sole cost and
expense, will thereafter remove all of its lettering and logos from such
monument sign.
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35. LIMITATION ON LIABILITY. In consideration of the benefits accruing
hereunder, Tenant on behalf of itself and all successors and assigns of Tenant
covenants and agrees that, in the event of any actual or alleged failure, breach
or default hereunder by Landlord: (a) Tenant's recourse against Landlord for
monetary damages will be limited to Landlord's interest in the Building
including, subject to the prior rights of any Mortgagee, Landlord's interest in
the rents of the Building and any insurance proceeds payable to Landlord; (b)
Except as may be necessary to secure jurisdiction of the partnership or company,
no partner or member of Landlord shall be sued or named as a party in any suit
or action and no service of process shall be made against any partner or member
of Landlord; (c) No partner or member of Landlord shall be required to answer or
otherwise plead to any service of process; (d) No judgment will be taken against
any partner or member of Landlord and any judgment taken against any partner or
member of Landlord may be vacated and set aside at any time after the fact; (e)
No writ of execution will be levied against the assets of any partner or member
of Landlord; (f) The obligations under this Lease do not constitute personal
obligations of the individual members, partners, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual members, partners, directors, officers or shareholders of Landlord or
any of their personal assets for satisfaction of any liability in respect to
this Lease; and (g) These covenants and agreements are enforceable both by
Landlord and also by any partner or member of Landlord.
36. FINANCIAL STATEMENTS. Prior to the execution of this Lease by Landlord and
at any time during the Term of this Lease upon ten (10) days prior written
notice from Landlord, Tenant agrees to provide Landlord with a current financial
statement for Tenant and any guarantors of Tenant and financial statements for
the two (2) years prior to the current financial statement year for Tenant and
any guarantors of Tenant. Such statements are to be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, audited by an independent certified public accountant.
37. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon Tenant
paying the rent required under this Lease and paying all other charges and
performing all of the covenants and provisions on Tenant's part to be observed
and performed under this Lease, Tenant shall peaceably and quietly have, hold
and enjoy the Premises in accordance with this Lease without hindrance or
molestation by Landlord or its employees or agents.
38. MISCELLANEOUS.
(a) CONFLICT OF LAWS. This Lease shall be governed by and construed solely
pursuant to the laws of the State, without giving effect to choice of law
principles thereunder.
(b) SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
(c) PROFESSIONAL FEES AND COSTS. If either Landlord or Tenant should bring suit
against the other with respect to this Lease, then all costs and expenses,
including without limitation, actual professional fees and costs such as
appraisers', accountants' and attorneys' fees and costs, incurred by the party
which prevails in such action, whether by final judgment or out of court
settlement, 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. As used herein, attorneys' fees and costs shall include, without
limitation, attorneys' fees, costs and expenses incurred in connection with any
(i) postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy,
and debtor and third party examination; (iv) discovery; and (v) bankruptcy
litigation.
(d) TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular. Words used in any gender include
other genders. The paragraph headings of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof.
(e) TIME. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a material factor.
(f) PRIOR AGREEMENT; AMENDMENTS. This Lease constitutes and is intended by the
parties to be a final, complete and exclusive statement of their entire
agreement with respect to the subject matter of this Lease. This Lease
supersedes any and all prior and contemporaneous agreements and understandings
of any kind relating to the subject matter of this Lease. There are no other
agreements, understandings, representations, warranties, or statements, either
oral or in written form, concerning the subject matter of this Lease. No
alteration, modification, amendment or interpretation of this Lease shall be
binding on the parties unless contained in a writing which is signed by both
parties.
24
<PAGE> 25
(g) SEPARABILITY. The provisions of this Lease shall be considered separable
such that if any provision or part of this Lease is ever held to be invalid,
void or illegal under any law or ruling, all remaining provisions of this Lease
shall remain in full force and effect to the maximum extent permitted by law.
(h) RECORDING. Neither Landlord nor Tenant shall record this Lease nor a short
form memorandum thereof without the consent of the other.
(i) COUNTERPARTS. This Lease may be executed in one or more counterparts, each
of which shall constitute an original and all of which shall be one and the same
agreement.
(j) NONDISCLOSURE OF LEASE TERMS. Each party acknowledges and agrees that the
terms of this Lease are confidential and constitute proprietary information.
Disclosure of the terms could adversely affect the ability of each party to
compete in the marketplace. Accordingly, each party agrees that neither it nor
its members, partners, officers, directors, employees, agents and attorneys
shall intentionally and voluntarily disclose the terms and conditions of this
Lease to: (i) any newspaper or other publication; (ii) any other tenant or
apparent prospective tenant of the Building or other portion of the Development;
(iii) any competitor of Tenant; or (iv) any real estate agent either directly or
indirectly without the prior written consent of the other party; provided,
however, that Tenant may disclose the terms to prospective subtenants,
prospective assignees, prospective lenders and its auditors and Landlord may
disclose the terms to prospective lenders, prospective purchasers and its
auditors.
(k) NON-DISCRIMINATION. Tenant acknowledges and agrees that there shall be no
discrimination against, or segregation of, any person, group of persons, or
entity on the basis of race, color, creed, religion, age, sex, marital status,
national origin, or ancestry in the leasing, subleasing, transferring,
assignment, occupancy, tenure, use, or enjoyment of the Premises, or any portion
thereof.
39. EXECUTION OF LEASE.
(a) JOINT AND SEVERAL OBLIGATIONS. If more than one person executes this Lease
as Tenant, their execution of this Lease will constitute their covenant and
agreement that (i) each of them is jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed and performed by Tenant, and
(ii) the term "Tenant" as used in this Lease means and includes each of them
jointly and severally. The act of or notice from, or notice or refund to, or the
signature of any one or more of them, with respect to the tenancy of this Lease,
including, but not limited to, any renewal, extension, expiration, termination
or modification of this Lease, will be binding upon each and all of the persons
executing this Lease as Tenant with the same force and effect as if each and all
of them had so acted or so given or received such notice or refund or so signed.
(b) TENANT AS CORPORATION OR PARTNERSHIP. If Tenant executes this Lease as a
corporation or partnership, then Tenant and the persons executing this Lease on
behalf of Tenant represent and warrant that such entity is duly qualified and in
good standing to do business in Colorado and that the individuals executing this
Lease on Tenant's behalf are duly authorized to execute and deliver this Lease
on its behalf, and in the case of a corporation, in accordance with a duly
adopted resolution of the board of directors of Tenant, a copy of which is to be
delivered to Landlord on execution hereof, if requested by Landlord, and in
accordance with the by-laws of Tenant, and, in the case of a partnership, in
accordance with the partnership agreement and the most current amendments
thereto, if any, copies of which are to be delivered to Landlord on execution
hereof, if requested by Landlord, and that this Lease is binding upon Tenant in
accordance with its terms.
(c) EXAMINATION OF LEASE. Submission of this instrument by Landlord to Tenant
for examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by
their duly authorized representatives as of the date first above written.
<TABLE>
<S> <C>
TENANT: LANDLORD:
HIGH SPEED ACCESS CORP., KOLL-LSI I, LLC, a Delaware limited liability company
a Delaware corporation
By: KDC-OC, LLC, a Delaware limited liability
By: /s/ High Speed Access Corp. company, its Co-Manager
---------------------------
By: Koll Development Company, LLC, a Delaware
Print Name: limited liability company, its Sole Member
---------------------
By: /s/ Koll Development Company, LLC
Print Title: --------------------------------------------
--------------------
Name:
--------------
By:
----------------------------- Title:
------------
Print Name:
---------------------
Print Title:
-------------------- By: Land Securities Investors, Ltd., a Colorado limited
partnership, its Co-Manager
By: Sunset Management Services, Inc., a Colorado
corporation, its General Partner
By: /s/ Sunset Management Services, Inc.
--------------------------------------------
Name:
--------------
Title:
------------
</TABLE>
26
<PAGE> 27
ADDENDUM TO LEASE
This ADDENDUM is attached to, made a part of, incorporated
into and amends and supplements that certain Office Building Lease dated
February 4, 2000 (the "Lease"), by and between KOLL-LSI I, LLC, A DELAWARE
LIMITED LIABILITY COMPANY ("Landlord"), and HIGH SPEED ACCESS CORP., A DELAWARE
CORPORATION ("Tenant"). Landlord and Tenant agree that, notwithstanding anything
contained in the Lease to the contrary, the provisions set forth in this
Addendum will be deemed to be a part of the Lease and will supersede any
contrary provision in the Lease and shall prevail and control for all purposes.
All references in the Lease and this Addendum to the defined term "Lease" are to
be construed to mean the Lease as amended and supplemented by this Addendum.
Terms which are not defined in this Addendum have the meanings given to them in
the Lease. The paragraphs below are numbered consecutively with those in the
Lease.
40. OPTIONS TO EXTEND. As additional consideration for the covenants of Tenant
hereunder, Landlord hereby grants unto Tenant two options (each an "Option") to
extend the Term of the Lease for two (2) additional terms of five (5) years
(each an "Option Term"). The Option shall apply to all of the space currently
under Lease at the time such Option is exercised and shall be on the following
terms and conditions:
A. Written notice (each "Tenant's Notice") of Tenant's interest in
exercising the applicable Option shall be given to Landlord (i) as to the first
Option Term, no earlier than twelve (12) months and no later than nine (9)
months prior to the expiration of the initial Term of the Lease; and (ii) as to
the second Option Term, no earlier than twelve (12) months and no later than
nine (9) months prior to the expiration of the first Option Term. Not later than
thirty (30) days after receiving Tenant's Notice, Landlord shall give to Tenant
notice of the rental rate applicable during the applicable Option Term, in
accordance with subparagraph E below ("Landlord's Notice").
B. Tenant shall have fifteen (15) days following Tenant's receipt of
Landlord's Notice within which to exercise the then applicable Option by
delivering written notice of such exercise to Landlord under the rental rate set
forth in Landlord's Notice. If Tenant timely exercises the then applicable
Option, the Lease shall be deemed extended and thereafter the parties shall
execute an amendment to the Lease setting forth the terms of the extension.
C. Unless Landlord is timely notified by Tenant in accordance with
subparagraphs A and B above, it shall be conclusively deemed that Tenant does
not desire to exercise an Option, and the Lease shall expire in accordance with
its terms, at the end of the initial Term of the Lease (or the first Option
Term, as applicable).
D. Tenant's right to exercise an Option shall be conditioned on: (i)
Tenant's not being in default under the Lease at the time of exercise of the
then applicable Option or at the time of the commencement of the applicable
Option Term; and (ii) Tenant's not having subleased more than twenty-five
percent (25%) of the Premises or assigned its interest under the Lease as of the
commencement of the applicable Option Term or having vacated more than
twenty-five percent (25%) of the Premises.
E. The Options granted hereunder shall be upon the terms and conditions
contained in the Lease except that there shall be no further option to extend
the term of the Lease beyond the second Option Term and except that the rental
to be paid by Tenant to Landlord during each such Option Term shall be the
comparable renewal rate for comparable renewal space in first-class office
buildings in the Jefferson Corporate Center as of the date of Landlord's Notice,
but in no event shall the rental rate be less than the rent (including Base
Rent, Tenant's Percentage of Operating Expenses) which Tenant is paying
immediately prior to the commencement of the then applicable Option Term.
F. After exercise of the second Option above described, there shall be
no further rights on the part of Tenant to extend the term of the Lease.
41. LETTER OF CREDIT. Tenant shall provide to Landlord, no later than five (5)
business days after mutual execution of this Lease, a clean, unconditional,
irrevocable letter of credit from a lending institution reasonably acceptable to
Landlord in the form attached hereto as Exhibit "I" (the "Letter of Credit") as
a guaranty and security for the performance of Tenant's obligations under this
Lease on the following terms and conditions:
A. It is understood and agreed that the Letter of Credit, or a
renewal or substitute therefor approved by Landlord, shall be kept in effect
from the date of execution of this Lease through the date that is thirty-six
months after the Commencement Date (the "LC Termination Date") in the form
attached hereto as Exhibit "I" or in form otherwise approved by Landlord. The
initial Letter of Credit shall be in the amount of $225,000.00 and shall
increase to $750,000.00 on May 1, 2000 (the "LC Maximum"). Eighteen (18) months
following the Commencement Date, if the Letter of Credit has not been presented
for payment in accordance with this paragraph, the LC Maximum shall be decreased
by $375,000.00 (resulting in the Letter of
<PAGE> 28
Credit in the amount of $375,000.00); if the Letter of Credit has not been
presented for payment in accordance with this paragraph thirty-six (36) months
following the Commencement Date, the LC Maximum shall be reduced by an
additional $375,000.00 (resulting in a Letter of Credit in the amount of $0.00).
The foregoing reductions shall not be applicable if and so long as Tenant is the
subject of a proceeding under any provision of federal or state law relating to
insolvency, bankruptcy, or reorganization at the time. If the Letter of Credit
would otherwise expire prior to the LC Termination Date, Tenant shall present
Landlord with an extension or renewal of the initial Letter of Credit, or a
substitute Letter of Credit in the same form as Exhibit "I" in the then required
amount no later than ten (10) business days prior to the expiration date of such
initial Letter of Credit, from a lending institution subject to Landlord's
reasonable approval; such extension, renewal or substitute Letter of Credit
shall be effective no later than the day prior to the expiration of the initial
Letter of Credit and shall continue in effect for not less than the period
ending with the LC Termination Date and shall be in the amount provided above.
Tenant agrees that in an event of default by Tenant, Landlord shall have a right
to present the Letter of Credit (or the renewal, extension or substitute) for
payment, with amounts received to be held and applied in accordance with
subparagraph B below. Any failure of Tenant to provide Landlord with an
extension, renewal or substitute Letter of Credit, as required hereunder, shall
be deemed an event of default under the Lease and Landlord shall have a right to
present the Letter of Credit in accordance with the foregoing provision. If the
Letter of Credit has not been presented for payment in accordance with this
Section on or before the LC Termination Date, Landlord shall return the Letter
of Credit to Tenant within ten (10) days after the LC Termination Date. Tenant
agrees that in the event of any transfer or mortgage, Landlord shall have the
right to transfer the Letter of Credit or substitute to the transferee or
mortgagee (and Tenant shall pay any costs or fees charged by the issuer to
permit such transfer), and if the Letter of Credit has been transferred, Tenant
shall look solely to such transferee for the return of the Letter of Credit (or
substitute). Landlord shall give written notice to Tenant of transfer of
Landlord's interest resulting in transfer of the Letter of Credit. Landlord
shall deliver the then-current effective Letter of Credit to Tenant upon receipt
of any conforming renewal or substitute Letter of Credit provided in accordance
with this Paragraph and cooperate with the issuing bank to effect the release of
such then-current effective Letter of Credit.
B. If an event of default occurs or this Lease is terminated,
Landlord may use, apply or retain all or any portion of the amounts received
under the Letter of Credit, if any, for the payment of any rent or other charge
in default or for the payment of any other sum to which Landlord may become
obligated by reason of Tenant's default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby . Sixty (60) days following the
later of the expiration of the Lease or Tenant's vacation of the Premises, any
amounts drawn upon the Letter of Credit that are not applied for payment of
amounts in accordance with the foregoing provision shall be returned to Tenant,
without payment of interest.
C. Landlord and Tenant agree that the annual fees charged by
the lending institution issuing the Letter of Credit (or any renewal, extension,
or substitute therefor) shall be paid by Tenant.
42. GOLF MEMBERSHIP. Landlord agrees to pay on behalf of Tenant a one-time
initiation fee for one (1) Corporate Plus golf membership ("Membership") at Deer
Creek Golf Club at Meadow Ranch (which total price shall not exceed $13,000)
effective on the Commencement Date of the Lease. To the extent such membership
is assignable, Tenant hereby covenants and agrees to assign to Landlord the
Membership upon an event of default, the expiration or other early termination
of this Lease. This provision shall expressly survive the termination of the
Lease.
43. RIGHT OF FIRST REFUSAL. Landlord hereby grants to Tenant during the initial
Term of this Lease a right of refusal (the "Right of Refusal") to lease any
space in the next speculative office building to be constructed by Landlord in
the Jefferson Corporate Center (the "Refusal Space") on the following basis:
A. Tenant shall have five (5) business days after being
notified by Landlord, in writing, of Landlord's desire to accept an offer to
lease all or any part of the Refusal Space to a third party (which notice is
hereinafter referred to as "Landlord's Notice") within which to notify Landlord,
in writing, if Tenant desires to lease such space for the balance of the Term of
this Lease. Landlord's Notice shall include the economic terms and conditions of
such contemplated lease transaction with the third party. Tenant must exercise
the Right of Refusal with respect to all of the Refusal Space offered to Tenant
under the specific proposal and may not elect to lease only a portion thereof.
B. If Tenant elects to lease any portion of the Refusal Space
offered within the later of the first twelve (12) months of the initial Term, or
within six (6) months after the Refusal Space becomes "Available" (as such term
is hereafter defined), then such Refusal Space shall be leased to Tenant for the
balance of the Term of this Lease (the initial Term as extended pursuant to this
Lease), with the Base Rent calculated at the same rate per rentable square foot
as set forth herein, with Tenant's Percentage of Operating Expenses equitably
adjusted in light of the relative square footage of the speculative building
occupied by Tenant, and with the tenant improvement allowance equitably adjusted
in light of the balance of the Term remaining, but otherwise such space shall
generally be on the terms and conditions of this Lease. If Tenant exercises it's
Right of Refusal after the later of the first twelve (12) months of the initial
Term, or six (6) months after the Refusal Space becomes Available, then the Base
Rent and other terms of such occupancy shall be as set forth in Landlord's
Notice, and Landlord and Tenant shall execute either an amendment to this Lease
or a separate lease for the speculative office building to memorialize the basic
terms set forth
<PAGE> 29
in Landlord's Notice. For purposes of this Section 43, the term "Available"
shall mean the date on which Landlord actually breaks ground on construction of
the next speculative office building in the Jefferson Corporate Center.
C. If Tenant does not notify Landlord within such five (5)
business day period, it shall be conclusively presumed that Tenant does not
desire to exercise its Right of Refusal with respect to the Refusal Space
offered, and Landlord shall be free to lease such space to a third party. The
rights granted Tenant herein shall continue only so long as there is no uncured
event of default hereunder by Tenant. In the event of an assignment of the Lease
or a subletting or vacation of more than 25% of the Premises, Tenant's rights
under this Paragraph are null and void. Notwithstanding the foregoing, the right
granted in this section is personal to Tenant, is not assignable and may not be
exercised by any sublessee or assignee of Tenant, regardless of whether the
sublessee or assignee has been approved by Landlord.
44. RIGHT OF OFFER. Landlord hereby grants to Tenant during the Term of this
Lease (the initial Term as actually extended by Tenant pursuant to any extension
rights granted Tenant herein) a continuing right to offer to lease any space
that may become available for lease from time-to-time in the next speculative
office building contemplated for construction by Landlord in the Jefferson
Corporate Center (the "Offer Space"). Tenant shall have such right with respect
to the Offer Space on the following basis:
A. Landlord agrees to notify Tenant as soon as the Offer Space is
available for leasing by Tenant ("Landlord's Offer Notice"). Landlord
shall also forward to Tenant with Landlord's Offer Notice any marketing
or promotional materials, if any, Landlord has prepared with respect to
the Offer Space. Tenant shall have ten (10) days after receipt of any
such notice within which to notify Landlord if Tenant desires to lease
the Offer Space, or the portion so offered, for the balance of the Term
of Tenant's Lease hereunder (or such longer term as agreed to by
Landlord and Tenant). If Tenant does not so notify Landlord within the
ten (10) day period, it shall be conclusively deemed that Tenant does
not desire to lease such space, Landlord shall be free to lease the
Offer Space to anyone whom it desires (at a reasonable rate) and Tenant
shall have no further rights with respect to such space until such
space next becomes available for leasing to the public. Tenant's
ongoing Right of Offer hereunder is hereby made expressly prior to all
options and rights of extension, expansion, first offer and refusal in
favor of other tenants in the speculative building who occupy less than
5,000 rentable square feet of space in the speculative building.
Tenant's ongoing Right of Offer hereunder is hereby made subject and
subordinate to all options and rights of extension, expansion, first
offer and refusal in favor of other tenants in the speculative building
who occupy more than 5,000 rentable square feet of space in the
speculative building.
B. Landlord's Offer Notice shall set forth the following alternative
terms applicable to the Offer Space: (i) the lease term, rental rate,
operating expense ratio, parking allocations, tenant finish allowance,
and all leasing concessions that Landlord intends to offer to a third
party for lease of the Offer Space; and (ii) the rental rate, operating
expense ratio and tenant finish allowance that Landlord is willing to
make available to Tenant assuming that the term as to the Offer Space
shall be coterminous with the balance of the Term under the Lease.
Tenant's responsive notice, as referred to above, shall include
Tenant's election of either (i) or (ii), with all other terms of the
Lease being applicable to such Offer Space if Tenant exercises Tenant's
right hereunder.
C. The rights granted Tenant herein shall continue only so long as
there is no event of default hereunder by Tenant. In the event of an
assignment of the Lease or a subletting or vacation of more than 25% of
the Premises, Tenant's rights under this Paragraph are null and void.
Notwithstanding the foregoing, the rights granted in this section are
personal to Tenant, are not assignable and may not be exercised by any
sublessee or assignee of Tenant, regardless of whether the sublessee or
assignee has been approved by Landlord. If Tenant elects to add the
Offer Space to the Lease, Tenant will accept such space in its "as is"
condition without any remodeling work or fix-up work being performed by
Landlord, except as may be provided in Landlord's Offer Notice.
45. HEADQUARTERS PARCEL. Landlord and Tenant hereby acknowledge and agree that
Tenant may choose to locate its corporate headquarters within the Jefferson
Corporate Center and Tenant wants Landlord to designate an approximately 6 - 8
acre site (the "Headquarters Parcel") owned by Landlord within the Jefferson
Corporate Center for Landlord to construct Tenant's build-to-suit headquarters
building if Tenant elects to locate its headquarters in the Jefferson Corporate
Center in the future. The current designation of the Headquarters Parcel is
depicted as Site 5 on Exhibit "A-I" attached hereto. Landlord hereby grants
Tenant the following rights with respect to the Headquarters Parcel:
A. If during the initial Term of the Lease, Landlord intends
to develop the Headquarters Parcel (e.g. for a build to suit project for a third
party or as a speculative office building), then Landlord shall deliver written
notice to Tenant of such contemplated development of the Headquarters Parcel.
Tenant shall have thirty (30) days after receipt of such notice to negotiate an
agreement with Landlord (the form, terms and conditions of such agreement to be
mutually acceptable to both Landlord and Tenant) for Landlord to develop the
Headquarters Parcel for Tenant's use thereof.
<PAGE> 30
B. If Landlord and Tenant have not executed an agreement (in
form and content satisfactory to each) within the thirty (30) day period, then
Tenant shall be deemed to have waived the rights set forth herein with respect
to the that specific Headquarters Parcel, but Landlord agrees to select another
mutually agreed upon site within the Jefferson Corporate Center for Tenant's
proposed headquarters and Tenant and Landlord will execute an amendment to the
Lease evidencing such alternative headquarters location. In the event Tenant
waives or is deemed to have waived its rights under this Paragraph or the
initial Term has expired, thereafter, at the request of Landlord, Tenant shall
deliver a certificate to Landlord acknowledging such waiver or, if applicable,
that such right is no longer effective.
C. The rights granted Tenant herein shall continue only so
long as there is no uncured event of default hereunder by Tenant. The rights
granted in this section are personal to Tenant, are not assignable and may not
be exercised by any sublessee or assignee of Tenant, regardless of whether the
sublessee or assignee has been approved by Landlord.
<PAGE> 31
MASTER SITE PLAN FOR THE DEVELOPMENT
[To be supplied]
EXHIBIT "A-I"
<PAGE> 32
SITE PLAN FOR THE PREMISES AND PARKING AREA
[To be supplied]
EXHIBIT "A-II"
<PAGE> 33
FLOOR PLANS FOR THE BUILDING
[To be supplied]
EXHIBIT "A-III"
<PAGE> 34
RENTABLE SQUARE FEET AND USABLE SQUARE FEET
The term "Rentable Square Feet" as used in the Lease will be deemed to
include the "Rentable Area" of the Premises determined in accordance with the
Method for Measuring Floor Area in Office Buildings, ANSI Z65.1-1996 as attached
hereto as Schedule 1 to this Exhibit B (the "BOMA Standard"). Upon substantial
completion of the Building, Landlord and Tenant's architect shall calculate the
Rentable Area in the Premises pursuant to the BOMA Standard set forth herein.
Upon field confirmation of the Rentable Area in the Premises as set forth in the
BOMA Standard, Landlord and Tenant will execute the Notice and Confirmation of
Lease Terms in the form attached to this Lease as Exhibit D setting forth, among
other items, the Rentable Area in the Building and Premises, the Monthly Base
Rent and the Tenant Improvement Allowance. Upon field confirmation of the
Rentable Area as set forth herein and execution of the Notice and Confirmation
of Lease Terms, the Rentable Area, Monthly Base Rent, and Tenant Improvement
Allowance figures set forth in the Notice and Confirmation of Lease Terms shall
be agreed numbers and shall remain fixed for the balance of the Term.
Notwithstanding the foregoing, Tenant's Percentage as shown in Paragraph 1 of
the Lease is agreed to be as set forth in Subparagraph 1(g) of the Lease.
EXHIBIT "B"
<PAGE> 35
WORK LETTER AGREEMENT
This WORK LETTER AGREEMENT ("Work Letter Agreement") is entered into as of the
4th day of February 2000, by and between KOLL-LSI I, LLC ("Landlord"), and HIGH
SPEED ACCESS CORP. ("Tenant").
R E C I T A L S :
A. Concurrently with the execution of this Work Letter Agreement, Landlord and
Tenant have entered into a lease (the "Lease") covering certain premises (the
"Premises") more particularly described in Exhibit "A" attached to the Lease.
All terms not defined herein have the same meaning as set forth in the Lease. To
the extent applicable, the provisions of the Lease are incorporated herein by
this reference.
B. In order to induce Tenant to enter into the Lease and in consideration of the
mutual covenants hereinafter contained, Landlord and Tenant agree as follows:
NOW WHEREFORE, in consideration of the foregoing and other good and valuable
consideration, the parties hereby acknowledge and agree as follows:
1. LANDLORD'S WORK AND TENANT IMPROVEMENTS.
A. LANDLORD'S WORK. Landlord, at its sole cost and expense (i.e. not
deducted from the Tenant Improvement Allowance), shall construct the Building in
a good and workmanlike manner and substantially in accordance with plans (the
"Plans") dated June 30, 1999, and prepared by MOA Architects ("Landlord's
Work"). The Plans will not be modified without Tenant's reasonable prior written
consent, which consent may be given in the field during construction based on
discussions between the Contractor and Tenant's architect. Landlord shall
perform Landlord's Work in compliance with all applicable laws, rules and
regulations. In addition to the foregoing, Landlord's Work shall include the
following items:
o Landlord agrees to construct a concrete pad outside the Building in a location
reasonably acceptable to both Landlord and Tenant for Tenant's back up generator
together with two (2) four inch conduits from the concrete pad to the Building.
o Landlord agrees to provide cable (CATV) to the Building. All distribution
shall be at Tenant's sole cost and expense.
o Landlord will provide capacity for electric current to the Premises of at
least 5 watts per square foot in the Premises (exclusive of lighting fixtures
and HVAC) for normal office and business machines which operate on standard 110
voltage.
B. TENANT IMPROVEMENTS. As used in the Lease and this Work Letter
Agreement, the term "Tenant Improvements" or "Tenant Improvement Work" means
those items of general tenant improvement construction shown on the Final Plans
(described in Paragraph 4 below), more particularly described in Paragraph 5
below.
2. WORK SCHEDULE. Attached hereto as Schedule 1 to this Exhibit C is the
schedule ("Work Schedule") which sets forth the timetable for the planning and
completion of the installation of the Tenant Improvements and the Commencement
Date of the Lease. The Work Schedule sets forth each of the various items of
work to be done or approval to be given by Landlord and Tenant in connection
with the completion of the Tenant Improvements. All plans and drawings required
by this Work Letter Agreement and all work performed pursuant thereto are to be
prepared and performed in accordance with the Work Schedule. Landlord may, from
time to time during construction of the Tenant Improvements, modify the Work
Schedule by written notice describing the change as Landlord reasonably deems
appropriate. If Tenant fails to approve the Work Schedule, as it may be modified
after discussions between Landlord and Tenant within five (5) business days
after the date the Work Schedule is first received by Tenant, the Work Schedule
shall be deemed to be approved by Tenant as submitted. Unless the Work Schedule
sets forth a different time schedule for Landlord to review and respond to any
item required to be submitted by Tenant to Landlord
EXHIBIT "C"
-----------
Page 1
<PAGE> 36
hereunder, Landlord will respond to any Tenant submittal under this Work Letter
within five (5) business days after receipt of such item from Tenant.
3. CONSTRUCTION REPRESENTATIVES. Landlord hereby appoints the following
person(s) as Landlord's representative ("Landlord's Representative") to act for
Landlord in all matters covered by this Work Letter Agreement: Rob Gilmore with
Alan Fishman as a backup if Rob is not available.
Tenant hereby appoints the following person(s) as Tenant's representative
("Tenant's Representative") to act for Tenant in all matters covered by this
Work Letter Agreement: Richard Pulley.
All communications with respect to the matters covered by this Work Letter
Agreement are to made to Landlord's Representative or Tenant's Representative,
as the case may be, in writing in compliance with the notice provisions of the
Lease. Either party may change its representative under this Work Letter
Agreement at any time by written notice to the other party in compliance with
the notice provisions of the Lease.
4. TENANT IMPROVEMENT PLANS.
(a) PREPARATION OF SPACE PLANS. In accordance with the Work Schedule, Tenant
agrees to meet with its architect and/or space planner for the purpose of
promptly preparing preliminary space plans for the layout of Premises ("Space
Plans"). The Space Plans are to be sufficient to convey the architectural design
of the Premises and layout of the Tenant Improvements therein and are to be
submitted to Landlord in accordance with the Work Schedule for Landlord's
approval. If Landlord reasonably disapproves any aspect of the Space Plans,
Landlord will advise Tenant in writing of such disapproval and the reasons
therefor in accordance with the Work Schedule. Tenant will then submit to
Landlord for Landlord's approval, in accordance with the Work Schedule, a
redesign of the Space Plans incorporating the revisions reasonably required by
Landlord. Tenant agrees to use is best efforts to have the Space Plans finalized
and delivered to Landlord no later than February 10, 2000.
(b) PREPARATION OF FINAL PLANS. Based on the approved Space Plans, and in
accordance with the Work Schedule, Tenant's architect will prepare complete
architectural plans, drawings and specifications and complete engineered
mechanical, structural and electrical working drawings for all of the Tenant
Improvements for the Premises (collectively, the "Final Plans"). The Final Plans
will show: (a) the subdivision (including partitions and walls), layout,
lighting, finish and decoration work (including carpeting and other floor
coverings) for the Premises; (b) all internal and external communications and
utility facilities which will require conduiting or other improvements from the
base Building shell work and/or within common areas; and (c) all other
specifications for the Tenant Improvements. The Final Plans will be submitted to
Landlord no later than March 3, 2000, for its review, comment and/or approval.
If Landlord disapproves any aspect of the Final Plans based only on failure to
comply with applicable code requirements or any material inconsistency with the
Space Plans, Landlord's Work or the base building drawings, Landlord will advise
Tenant in writing of such disapproval and the reasons therefor within the time
frame set forth in the Work Schedule. In accordance with the Work Schedule,
Tenant will then cause its architect to redesign the Final Plans incorporating
the revisions requested by Landlord. Landlord and Tenant will follow this
process until Landlord signs the Final Plans to confirm its approval of the
Final Plans. Because Tenant's architect is preparing the Space Plan and Final
Plans, any delay in the preparation or approval of the Space Plan and/or Final
Plans (unless caused solely by Landlord's failure to timely respond as required
hereunder) shall be deemed Tenant Delay as set forth in Section 9 below.
(c) REQUIREMENTS OF TENANT'S FINAL PLANS. Tenant's Final Plans will include
locations and complete dimensions, and the Tenant Improvements, as shown on the
Final Plans, will: (i) be compatible with the Building shell and with the
design, construction and equipment of the Building; (ii) if not comprised of the
Building standards set forth in the written description thereof (the
"Standards"), then compatible with and of at least equal quality as the
Standards and approved by Landlord; (iii) comply with all applicable laws,
ordinances, rules and regulations of all governmental authorities having
jurisdiction, and all applicable insurance regulations; (iv) not require
Building service beyond the level normally provided to other office tenants and
will not overload the Building floors; and (v) be of a nature and quality
consistent with the overall objectives of Landlord for the Building, as
determined by Landlord acting reasonably, but which decision shall be made in
its sole and absolute discretion.
(d) SUBMITTAL OF FINAL PLANS. Once approved by Landlord and Tenant, Tenant's
architect will submit the Final Plans to the appropriate governmental agencies
for plan checking and the issuance of a building permit. Tenant's architect,
with
EXHIBIT "C"
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Landlord's reasonable approval, will make any changes to the Final Plans which
are requested by the applicable governmental authorities to obtain the building
permit. After approval of the Final Plans no further changes may be made without
the reasonable prior written approval of both Landlord and Tenant, and then only
after agreement by Tenant to pay any excess costs resulting from the design
and/or construction of such changes. Tenant hereby acknowledges that any such
changes will be subject to the terms of Paragraph 10 below.
(e) CHANGES TO SHELL OF BUILDING. If the Final Plans or any amendment thereof or
supplement thereto shall require changes in the Building shell (except for those
items of Landlord's Work set forth in Paragraph 1A above) , the increased cost
of the Building shell work caused by such changes will be paid for by Tenant or
charged against the "Allowance" described in Paragraph 5 below, and the
corresponding time delay will constitute Tenant Delay as defined in Section 9
below.
(f) WORK COST ESTIMATE AND STATEMENT. Prior to the commencement of construction
of any of the Tenant Improvements shown on the Final Plans, Landlord will submit
to Tenant a written estimate of the cost to complete the Tenant Improvement
Work, which written estimate will be based on the Final Plans taking into
account any modifications which may be required to reflect changes in the Final
Plans required by the City or County in which the Premises are located (the
"Work Cost Estimate"). Landlord will use reasonable efforts to ensure it
receives competitive bids for the Tenant Improvement Work. Tenant will either
approve the Work Cost Estimate or disapprove specific items and submit to
Landlord revisions to the Final Plans to reflect deletions of and/or
substitutions for such disapproved items. Submission and approval of the Work
Cost Estimate will proceed in accordance with the Work Schedule. Upon Tenant's
approval of the Work Cost Estimate (such approved Work Cost Estimate to be
hereinafter known as the "Work Cost Statement"), Landlord will have the right to
purchase materials and to commence the construction of the items included in the
Work Cost Statement pursuant to Paragraph 6 hereof. If the total costs reflected
in the Work Cost Statement exceed the Allowance described in Paragraph 5 below,
Tenant agrees to pay such excess, as additional rent, within five (5) business
days after Tenant's approval of the Work Cost Estimate. Throughout the course of
construction, any differences between the estimated Work Cost in the Work Cost
Statement and the actual Work Cost will be determined by Landlord and
appropriate adjustments and payments by Landlord or Tenant, as the case may be,
will be made within five (5) business days thereafter.
5. PAYMENT FOR THE TENANT IMPROVEMENTS.
(a) ALLOWANCE. Landlord hereby grants to Tenant a tenant improvement allowance
of $25.00 per Rentable Square Foot of the Premises (the "Allowance"). The
Allowance is to be used only for:
(i) Payment of the cost of preparing the Space Plans and the Final Plans,
including mechanical, electrical, plumbing and structural drawings and of all
other aspects necessary to complete the Final Plans, which amount will not
exceed $1.50 per rentable square foot in the Premises. The Allowance will not be
used for the payment of extraordinary design work not consistent with the scope
of the Standards (i.e., above-standard design work) or for payments to any other
consultants, designers or architects other than Landlord's architect and/or
Tenant's architect.
(ii) The payment of plan check, permit and license fees relating to construction
of the Tenant Improvements.
(iii) To the extent not provided by Landlord as a part of Landlord's Work, as
defined in Section 1 above, construction of the Tenant Improvements, including,
without limitation, the following:
(aa) Installation within the Premises of all partitioning, doors, floor
coverings, ceilings, wall coverings and painting, millwork and similar
items;
(bb) All electrical wiring, lighting fixtures, outlets and switches,
and other electrical work necessary for the Premises;
(cc) The furnishing and installation of all duct work, terminal boxes,
diffusers and accessories necessary for the heating, ventilation and
air conditioning systems within the Premises, including the cost of
meter and key control for after-hour air conditioning;
EXHIBIT "C"
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(dd) Any additional improvements to the Premises required for Tenant's
use of the Premises including, but not limited to, odor control,
special heating, ventilation and air conditioning, noise or vibration
control or other special systems or improvements;
(ee) All fire and life safety control systems such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and
accessories, necessary for the Premises;
(ff) All plumbing, fixtures, pipes and accessories necessary for the
Premises;
(gg) Testing and inspection costs; and
(hh) Fees for Landlord's tenant improvement coordinator in the amount
of three percent (3%) of the actual Work Cost, and fees for the
contractor including, but not limited to, fees and costs attributable
to general conditions.
(iv) All other costs to be expended by Landlord in the construction of the
Tenant Improvements.
(b) EXCESS COSTS. The cost of each item referenced in Paragraph 5(a) above
(except for Landlord's Work) shall be charged against the Allowance. If the Work
Cost exceeds the Allowance, Tenant agrees to pay to Landlord such excess
including fees for the contractor and Landlord's standard three percent (3%) fee
for the tenant improvement coordinator associated with the supervision of such
excess work prior to the commencement of construction within five (5) business
days after invoice therefor (less any sums previously paid by Tenant for such
excess pursuant to the Work Cost Estimate). In no event will the Allowance be
used to pay for Tenant's furniture, artifacts, equipment, telephone systems or
any other item of personal property which is not affixed to the Premises, or for
any non-standard tenant improvements, which includes, but is not limited to,
raised floor computer rooms, labs, rooms with above-standard HVAC distribution,
and any other improvement that cannot be reused by 90% of the tenants in the
market, as reasonably determined by Landlord (hereafter "Special Items"). If
Tenant does not utilize all of the Allowance due to the inclusion of numerous
Special Items as part of the Tenant Improvements, then Landlord will meet with
Tenant, in a good faith manner, to discuss the possibility of receiving a credit
against the unused portion of the Allowance to be applied against the cost of
the Special Items.
(c) CHANGES. If, after the Final Plans have been prepared and the Work Cost
Statement has been established, Tenant requires any changes or substitutions to
the Final Plans, any additional costs related thereto including fees for the
contractor and Landlord's standard three percent (3%) fee for the tenant
improvement coordinator associated with the supervision of such changes or
substitutions are to be paid by Tenant to Landlord prior to the commencement of
construction of the Tenant Improvements. Any changes to the Final Plans will be
approved by Landlord and Tenant in the manner set forth in Paragraph 4 above and
will, if necessary, require the Work Cost Statement to be revised and agreed
upon between Landlord and Tenant in the manner set forth in Subparagraph 4(f)
above. Landlord will have the right to decline Tenant's request for a change to
the Final Plans if such changes are inconsistent with the provisions of
Paragraph 4 above, or if the change would unreasonably delay construction of the
Tenant Improvements and the Commencement Date of the Lease.
(d) GOVERNMENTAL COST INCREASES. If increases in the cost of the Tenant
Improvements as set forth in the Work Cost Statement are due to requirements of
any governmental agency, Tenant agrees to pay Landlord the amount of such
increase including fees for the contractor and Landlord's standard five percent
(5%) fee for the tenant improvement coordinator associated with the supervision
of such additional work within five (5) days of Landlord's written notice;
provided, however, that Landlord will first apply toward any such increase any
remaining balance of the Allowance.
(e) UNUSED ALLOWANCE AMOUNTS. Any unused portion of the Allowance upon
completion of the Tenant Improvements will not be refunded to Tenant or be
available to Tenant as a credit against any obligations of Tenant under the
Lease unless Tenant has paid for excess costs as described in Subparagraphs
5(b), 5(c) or 5(d), in which case the unused Allowance may be applied toward
such excess cost amounts and paid to Tenant.
6. CONSTRUCTION OF TENANT IMPROVEMENTS. Until Landlord approves the Final Plans
and Tenant approves Work Cost Statement pursuant to the process set forth above,
Landlord will be under no obligation to cause the construction of any of the
Tenant Improvements. Following Tenant's approval of the Work Cost Statement
described in
EXHIBIT "C"
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Subparagraph 4(f) above and upon Tenant's payment of the total amount by which
such Work Cost Statement exceeds the Allowance, if any, Landlord's contractor
will commence and diligently proceed with the construction of the Tenant
Improvements, subject to Tenant Delays (as described above and in Paragraph 9
below) and Force Majeure Delays (as described in Paragraph 10 below).
7. FREIGHT/CONSTRUCTION ELEVATOR. Landlord will, if appropriate and necessary,
make the freight/construction elevator reasonably available to Tenant in
connection with initial decorating, furnishing and moving into the Premises.
Tenant agrees to pay for any after-hours staffing of the freight/construction
elevator, if needed.
8. COMMENCEMENT DATE AND SUBSTANTIAL COMPLETION.
(a) COMMENCEMENT DATE. The Term of the Lease will commence on the date (the
"Commencement Date") which is the earlier of: (i) the date Tenant moves into the
Premises to commence operation of its business in all or any portion of the
Premises (excluding occupancy by Tenant to fixture the Premises); or (ii) the
date the Tenant Improvements have been "substantially completed" (as defined
below); provided, however, that if substantial completion of the Tenant
Improvements is delayed as a result of any Tenant Delays described in Paragraph
9 below, then the Commencement Date as would otherwise have been established
pursuant to this Subparagraph 8(a)(ii) will be accelerated by the number of days
of such Tenant Delays. Notwithstanding any earlier Commencement Date, in no
event shall Tenant be obligated to pay Rent prior to August 1, 2000; provided
Tenant shall not be able to occupy the Premises (except to fixture the Premises)
for the conduct of Tenant's business prior to August 1, 2000.
(b) SUBSTANTIAL COMPLETION; PUNCH-LIST. For purposes of Subparagraph 8(a)(ii)
above, the Tenant Improvements will be deemed to be "substantially completed"
when Landlord's contractor certifies in writing to Landlord and Tenant that
Landlord: (a) is able to provide Tenant with reasonable access to the Premises;
(b) has substantially performed all of the Tenant Improvement Work required to
be performed by Landlord under this Work Letter Agreement, other than decoration
and minor "punch-list" type items and adjustments which do not materially
interfere with Tenant's access to or use of the Premises; and (c) has obtained a
temporary certificate of occupancy or other required equivalent approval from
the local governmental authority permitting occupancy of the Premises. Within
ten (10) days after receipt of such certificate from Landlord's contractor,
Tenant will conduct a walk-through inspection of the Premises with Landlord and
provide to Landlord a written punch-list specifying those decoration and other
punch-list items which require completion, which items Landlord will thereafter
diligently complete.
(c) DELIVERY OF POSSESSION. Landlord agrees to deliver possession of the
Premises to Tenant when the Tenant Improvements have been substantially
completed in accordance with Subparagraph (b) above. The parties estimate that
Landlord will deliver possession of the Premises to Tenant and the Term of this
Lease will commence on or before the estimated commencement date set forth in
the Work Schedule delivered to Tenant pursuant to Paragraph 2 above (the
"Projected Commencement Date"). Landlord agrees to use its commercially
reasonable efforts to cause the Premises to be substantially completed on or
before the Projected Commencement Date. Tenant agrees that if Landlord is unable
to deliver possession of the Premises to Tenant on or prior to the Projected
Commencement Date, the Lease will not be void or voidable, nor will Landlord be
liable to Tenant for any loss or damage resulting therefrom, but if such late
delivery is due to Landlord's fault or due to any Force Majeure Delay(s), then,
as Tenant's sole remedy, the Commencement Date and the Expiration Date of the
Term will be extended one (1) day for each day Landlord is delayed in delivering
possession of the Premises to Tenant. In the event that Landlord has not
delivered possession of the Premises to Tenant on or before December 31, 2000,
then Tenant shall have the right to terminate this Lease by delivering written
notice of termination within five (5) business days thereafter. If Tenant fails
to timely deliver the termination notice, then Tenant shall be deemed to have
waived its termination right granted herein. The December 31, 2000 date shall be
extended one day for each corresponding day of Force Majeure Delay and Tenant
Delay.
9. TENANT DELAYS. For purposes of this Work Letter Agreement, "Tenant Delays"
means any delay in the completion of the Tenant Improvements resulting from any
or all of the following: (a) Tenant's failure to timely perform any of its
obligations pursuant to this Work Letter Agreement, including any failure to
complete, on or before the due date therefor, any action item which is Tenant's
responsibility pursuant to the Work Schedule delivered by Landlord to Tenant
pursuant to this Work Letter Agreement; (b) Tenant's changes to Space Plans or
Final Plans after Landlord's approval thereof; (c) Tenant's request for
materials, finishes, or installations which are not reasonably available or
which are incompatible with the Standards; (d) any delay of Tenant in making
payment to Landlord for Tenant's share of the Work Cost; or (e) any other act or
failure to act
EXHIBIT "C"
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by Tenant, Tenant's employees, agents, architects, independent contractors,
consultants and/or any other person performing or required to perform services
on behalf of Tenant. Landlord will give Tenant written notice at such time(s)
that Landlord determines there is a Tenant Delay.
10. FORCE MAJEURE DELAYS. For purposes of this Work Letter, "Force Majeure
Delays" means any actual delay in the construction of the Tenant Improvements,
which is beyond the reasonable control of Landlord or Tenant, as the case may
be, as described in Paragraph 33 of the Lease.
IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this Work
Letter Agreement to be duly executed by their duly authorized representatives as
of the date of the Lease.
<TABLE>
<S> <C>
TENANT: LANDLORD:
HIGH SPEED ACCESS CORP., KOLL-LSI I, LLC, a Delaware limited liability company
a Delaware corporation
By: KDC-OC, LLC, a Delaware limited liability
By: company, its Co-Manager
---------------------------
By: Koll Development Company, LLC, a Delaware
Print Name: limited liability company, its Sole Member
---------------------
By:
Print Title: ----------------
--------------------
Name:
--------------
By:
----------------------------- Title:
------------
Print Name:
---------------------
Print Title:
-------------------- By: Land Securities Investors, Ltd., a Colorado limited
partnership, its Co-Manager
By: Sunset Management Services, Inc., a Colorado
corporation, its General Partner
By:
----------------
Name:
--------------
Title:
------------
</TABLE>
EXHIBIT "C"
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EXHIBIT "C"
-----------
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<PAGE> 42
1
WORK SCHEDULE
[Attached]
SCHEDULE "1"
to
EXHIBIT "C"
<PAGE> 43
1
NOTICE AND CONFIRMATION OF LEASE TERMS
To:
Date:
Re: Lease dated _________________, 19__ (the "Lease"), between KOLL-LSI I, LLC,
a Delaware limited liability company "Landlord", and "HIGH SPEED ACCESS
CORP. Tenant, concerning those specific premises more particularly
described in the Lease (the "Premises").
To Whom It May Concern:
In accordance with the subject Lease, we wish to advise and/or confirm as
follows:
1. That the Premises have been accepted by the Tenant as being substantially
complete in accordance with the subject Lease and that there is no known or
readily identifiable deficiency in construction except as may be indicated on
the "Punch-List" prepared by Landlord and Tenant, a copy of which is attached
hereto.
2. That the Tenant has possession of the subject Premises and acknowledges that
under the provisions of the Lease the Commencement Date is
_____________________, and the Term of the Lease will expire on _______________.
3. That in accordance with the Lease, rent commenced to accrue on ___________.
4. If the Commencement Date of the Lease is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter will be for the full amount of the monthly installment as provided
for in the Lease.
5. Rent is due and payable in advance on the first day of each and every month
during the Term of the Lease. Your rent checks should be made payable to
________________ at the following address: ___________________________.
6. The number of Rentable Square Feet within the Premises is _________ square
feet as determined by Landlord and Tenant's architect in accordance with the
terms of the Lease.
7. The number of Rentable Square Feet within the Building is ___________ square
feet as determined by Landlord and Tenant's architect in accordance with the
terms of the Lease.
8. As a result of the confirmation of the Rentable Area in the Building and the
Premises as set forth in Exhibit B to the Lease, the Monthly Base Rent pursuant
to Section 1(l) of the Lease is __________________________ and the Tenant
Improvement Allowance is __________________________ which Tenant Improvement
Allowance has been paid in full by Landlord.
EXHIBIT "D"
<PAGE> 44
2
LANDLORD:
KOLL-LSI I, LLC, a Delaware limited liability company
By: KDC-OC, LLC, a Delaware limited liability
company, its Co-Manager
By: Koll Development Company, LLC, a Delaware
limited liability company, its Sole Member
By:
----------------
Name:
--------------
Title:
------------
By: Land Securities Investors, Ltd., a Colorado limited
partnership, its Co-Manager
By: Sunset Management Services, Inc., a Colorado
corporation, its General Partner
By:
----------------
Name:
--------------
Title:
------------
SAMPLE ONLY
[NOT FOR EXECUTION]
EXHIBIT "D"
<PAGE> 45
1
DEFINITION OF OPERATING EXPENSES
1. ITEMS INCLUDED IN OPERATING EXPENSES. The term "Operating Expenses" as used
in the Lease to which this Exhibit "E" is attached means: all costs and expenses
of operation and maintenance of the Building the Building Common Areas and a pro
rata share of the Development Common Areas (as such terms are defined in the
Lease), as determined by standard accounting practices, calculated assuming the
Building is ninety-five percent (95%) occupied, including the following costs by
way of illustration but not limitation, but excluding those items specifically
set forth in Paragraph 3 below:
(a) Real Property Taxes and Assessments (as defined in Paragraph 2 below) and
any taxes or assessments imposed in lieu thereof;
(b) any and all assessments imposed with respect to the Building pursuant to any
covenants, conditions and restrictions affecting the Development, the Common
Areas or the Building;
(c) water and sewer charges and the costs of electricity, heating, ventilating,
air conditioning and other utilities;
(d) utilities surcharges and any other costs, levies or assessments resulting
from statutes or regulations promulgated by any government or quasi-government
authority in connection with the use, occupancy or alteration of the Building or
the Premises or the parking facilities serving the Building or the Premises;
(e) costs of insurance obtained by Landlord, which Landlord will bid out at
least once every three years in an attempt to keep premiums competitive;
(f) waste disposal and janitorial services;
(g) labor;
(h) costs incurred in the management of the Building, including, without
limitation: (i) supplies, (ii) wages and salaries (and payroll taxes and similar
governmental charges related thereto) of employees used in the management,
operation and maintenance of the Building, (iii) Building management office
rental, supplies, equipment and related operating expenses, and (iv) a
management/administrative fee determined as a percentage of the annual gross
revenues of the Building exclusive of the proceeds of financing or a sale of the
Building and an administrative fee for the management of the Development Common
Area determined as a percentage of Development Common Area Operating Expenses;
(i) supplies, materials, equipment and tools including rental of personal
property used for maintenance;
(j) repair and maintenance of the elevators and the structural portions of the
Building, including the plumbing, heating, ventilating, air-conditioning and
electrical systems installed or furnished by Landlord;
(k) maintenance, costs and upkeep of all parking and Development Common Areas;
(l) depreciation on a straight line basis and rental of personal property used
in maintenance;
(m) amortization on a straight line basis over the useful life [together with
interest at the Interest Rate on the unamortized balance] of all capitalized
expenditures which are: (i) reasonably intended to produce a reduction in
operating charges or energy consumption; or (ii) required under any governmental
law or regulation that was not applicable to the Building at the time it was
originally constructed; or (iii) for replacement of any Building equipment
needed to operate the Building at the same quality levels as prior to the
replacement which resulted, in Landlord's sole but reasonable opinion, from
Tenant's intensive use of the Premises;
(n) costs and expenses of gardening and landscaping;
EXHIBIT "E"
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2
(o) maintenance of signs (other than signs of tenants of the Building);
(p) personal property taxes levied on or attributable to personal property used
in connection with the Building or the Common Areas;
(q) reasonable accounting, audit, verification, legal and other consulting fees;
and
(r) costs and expenses of repairs, resurfacing, repairing, maintenance,
painting, lighting, cleaning, refuse removal, security and similar items,
including appropriate reserves.
When calculating Operating Expenses for purposes of establishing Tenant's
Operating Expense Allowance, Operating Expenses shall not include Real Property
Taxes and Assessments attributable to special assessments, charges, costs, or
fees or due to modifications or changes in governmental laws or regulations
including, but not limited to, the institution of a split tax roll, and shall
exclude market-wide labor-rate increases due to extraordinary circumstances
including, but not limited to, boycotts and strikes and utility increases due to
extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages.
2. REAL PROPERTY TAXES AND ASSESSMENTS. The term "Real Property Taxes and
Assessments", as used in this Exhibit "E", means: any form of assessment,
license fee, license tax, business license fee, commercial rental tax, levy,
charge, improvement bond, tax or similar imposition imposed by any authority
having the direct power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
or special assessment district thereof, as against any legal or equitable
interest of Landlord in the Premises, Building, Common Areas or the Development
(as such terms are defined in the Lease), adjusted to reflect an assumption that
the Building is fully assessed for real property tax purposes as a completed
building ready for occupancy, including the following by way of illustration but
not limitation:
(a) any tax on Landlord's "right" to rent or "right" to other income from the
Premises or as against Landlord's business of leasing the Premises;
(b) any assessment, tax, fee, levy or charge 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 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. It is the intention of
Tenant and Landlord that all such new and increased assessments, taxes, fees,
levies and charges be included within the definition of "real property taxes"
for the purposes of this Lease;
(c) any assessment, tax, fee, levy or charge allocable to or measured by the
area of the Premises or other premises in the Building or the rent payable by
Tenant hereunder or other tenants of the Building, including, without
limitation, any gross receipts tax or excise tax levied by state, city or
federal government, or any political subdivision thereof, with respect to the
receipt of such rent, or upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof but not on Landlord's other
operations;
(d) 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; and/or
(e) any assessment, tax, fee, levy or charge by any governmental agency related
to any transportation plan, fund or system (including assessment districts)
instituted within the geographic area of which the Building is a part.
Notwithstanding the foregoing, if at any time after the Commencement Date, the
amount of Real Property Taxes and Assessments decreases, then for purposes of
all subsequent Lease Years, including the Lease Year in which such decrease in
Real Property Taxes and Assessments occurs, Tenant's Operating Expense Allowance
shall be decreased by an amount equal to such decrease in Real Property Taxes
and Assessments.
EXHIBIT "E"
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3
3. ITEMS EXCLUDED FROM OPERATING EXPENSES. Notwithstanding the provisions of
Paragraphs 1 and 2 above to the contrary, "Operating Expenses" will not include:
(a) Landlord's federal, state or local income, franchise, inheritance or estate
taxes;
(b) any ground lease rental;
(c) costs incurred by Landlord for the repair of damage to the Building to the
extent that Landlord is reimbursed by insurance or condemnation proceeds or by
tenants, warrantors or other third persons;
(d) depreciation, amortization and interest payments, except as specifically
provided herein, 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;
(e) brokerage commissions, finders' fees, attorneys' fees, space planning costs
and other costs incurred by Landlord in leasing or attempting to lease space in
the Building;
(f) costs of a capital nature, including, without limitation, capital
improvements, capital replacements, capital repairs, capital equipment and
capital tools, all as determined in accordance with standard accounting
practices; provided, however, the capital expenditures set forth in Subparagraph
1(m) above will in any event be included in the definition of Operating
Expenses;
(g) interest, principal, points and fees on debt or amortization on any
mortgage, deed of trust or other debt encumbering the Building or the
Development;
(h) costs, including permit, license and inspection costs, incurred with respect
to the installation of tenant improvements for tenants in the Building
(including the original Tenant Improvements for the Premises), or incurred in
renovating or otherwise improving, decorating, painting or redecorating space
for tenants or other occupants of the Building, including space planning and
interior design costs and fees;
(i) attorneys' fees and other costs and expenses incurred in connection with
negotiations or disputes with present or prospective tenants or other occupants
of the Building; provided, however, that Operating Expenses will include those
attorneys' fees and other costs and expenses incurred in connection with
negotiations, disputes or claims relating to items of Operating Expenses,
enforcement of rules and regulations of the Building, and such other matters
relating to the maintenance of standards required of Landlord under the Lease;
(j) except for the administrative/management fees described in Subparagraph 1(h)
above, costs of Landlord's general corporate overhead;
(k) all items and services for which Tenant or any other tenant in the Building
is to reimburse Landlord (other than through operating expense pass-through
provisions);
(l) electric power costs for which any tenant directly contracts with the local
public service company;
(m) costs arising from Landlord's charitable or political contributions;
(n) transfer tax in connection with a sale of the Building; and
(o) costs arising from repair of defects in the original construction of the
Building.
EXHIBIT "E"
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<PAGE> 48
1
STANDARDS FOR UTILITIES AND SERVICES
The following standards for utilities and services are in effect. Landlord
reserves the right to adopt nondiscriminatory modifications and additions
hereto.
Subject to the terms and conditions of the Lease and provided Tenant remains in
occupancy of the Premises, Landlord will provide or make available the following
utilities and services:
1. Provide non-attended automatic elevator facilities Monday through Friday,
except holidays, from 8 a.m. to 6 p.m., and have one elevator available for
Tenant's use at all other times.
2. On Monday through Friday, except holidays, from 8 a.m. to 6 p.m. and on
Saturday from 8 a.m. to 12 Noon (and other times for a reasonable additional
charge to be fixed by Landlord), ventilate the Premises and furnish air
conditioning or heating on such days and hours, when in the reasonable judgment
of Landlord it may be required for the comfortable occupancy of the Premises.
The air conditioning system achieves maximum cooling when the window coverings
are extended to the full length of the window opening and adjusted to a 45o
angle upwards. Tenant acknowledges and agrees that Landlord will not be
responsible for room temperatures if Tenant does not (i) keep all window
coverings in the Premises extended to the full length of the window opening and
adjusted to a 45o angle upwards whenever the system is in operation; and (ii)
abide by all reasonable regulations and requirements which Landlord may
prescribe for the proper function and protection of said air conditioning
system. Tenant agrees not to connect any apparatus, device, conduit or pipe to
the chilled and hot water air conditioning supply lines of the Building without
Landlord's reasonable prior written approval. Tenant further agrees that neither
Tenant nor its servants, employees, agents, visitors, licensees or contractors
shall at any time enter the mechanical installations or facilities of the
Building or the Development or adjust, tamper with, touch or otherwise in any
manner affect said installations or facilities. The cost of maintenance and
service calls to adjust and regulate the air conditioning system will be charged
to Tenant if the need for maintenance work results from either Tenant's
adjustment of room thermostats or Tenant's failure to comply with its
obligations under this Exhibit, including keeping window coverings extended to
the full length of the window opening and adjusted to a 45o angle upwards. Such
work will be charged at hourly rates equal to then-current journeyman's wages
for air conditioning mechanics. Landlord acknowledges that the HVAC system for
the Building will allow for separate zone control based on separate 1,000 square
foot zones.
3. Landlord will make available to the Premises, 24 hours per day, seven days a
week, electric current as required by the Building standard office lighting and
fractional horsepower office business machines including copiers, personal
computers and word processing equipment in an amount not to exceed five (5)
watts per square foot per normal business day (exclusive of the lighting
fixtures and HVAC unit). Tenant agrees, should its electrical installation or
electrical consumption be in excess of the aforesaid quantity or extend beyond
normal business hours, to reimburse Landlord monthly for the measured
consumption at the average cost per kilowatt hour charged to the Building during
the period. If a separate meter is not installed at Tenant's cost, such excess
cost will be established by an estimate agreed upon by Landlord and Tenant, and
if the parties fail to agree, such cost will be established by an independent
licensed engineer selected in Landlord's reasonable discretion, whose fee shall
be shared equally by Landlord and Tenant. Tenant agrees not to use any apparatus
or device in, upon or about the Premises (other than standard office business
machines, personal computers and word processing equipment) which may in any way
increase the amount of such services usually furnished or supplied to said
Premises, and Tenant further agrees not to connect any apparatus or device with
wires, conduits or pipes, or other means by which such services are supplied,
for the purpose of using additional or unusual amounts of such services without
the written consent of Landlord. Should Tenant use the same to excess, the
refusal on the part of Tenant to pay upon demand of Landlord the amount
established by Landlord for such excess charge will constitute a breach of the
obligation to pay rent under this Lease and will entitle Landlord to the rights
therein granted for such breach. Tenant's use of electric current will never
exceed the capacity of the feeders to the Building, or the risers or wiring
installation and Tenants will not install or use or permit the installation or
use of any computer or electronic data processing equipment in the Premises
(except standard office business machines, personal computers and word
processing equipment) without the prior written consent of Landlord.
4. Water will be available in public areas for drinking and lavatory purposes
only, but if Tenant requires, uses or consumes water for any purpose in addition
to ordinary drinking and lavatory purposes, of which fact Tenant constitutes
Landlord to be the sole judge, Landlord may install a water meter and thereby
measure Tenant's water consumption for all purposes. Tenant agrees to pay
Landlord for the cost of the meter and the cost of the installation thereof and
throughout the duration of Tenant's occupancy Tenant will keep said meter and
installation equipment in good working order and repair at Tenant's own cost and
expense, in default of which Landlord may cause such meter and equipment to be
replaced or repaired and collect the cost thereof
EXHIBIT "F"
<PAGE> 49
2
from Tenant. Tenant agrees to pay for water consumed, as shown on such meter, as
and when bills are rendered, and on default in making such payment, Landlord may
pay such charges and collect the same from Tenant. Any such costs or expenses
incurred, or payments made by Landlord for any of the reasons or purposes
hereinabove stated will be deemed to be additional rent payable by Tenant and
collectible by Landlord as such.
5. Landlord will provide janitor service to the Premises, provided the same are
used exclusively as offices, and are kept reasonably in order by Tenant, and
unless otherwise agreed to by Landlord and Tenant no one other than persons
approved by Landlord shall be permitted to enter the Premises for such purposes.
If the Premises are not used exclusively as offices, they will be kept clean and
in order by Tenant, at Tenant's expense, and to the satisfaction of Landlord,
and by persons approved by Landlord. Tenant agrees to pay to Landlord the cost
of removal of any of Tenant's refuse and rubbish to the extent that the same
exceeds the refuse and rubbish usually attendant upon the use of the Premises as
offices.
6. Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air conditioning and electrical systems, when necessary, by reason
of accident or emergency or for repairs, alterations or improvements, when in
the judgment of Landlord such actions are desirable or necessary to be made,
until said repairs, alterations or improvements shall have been completed, and
Landlord will have no responsibility or liability for failure to supply elevator
facilities, plumbing, ventilating, air conditioning or electric service, when
prevented from so doing by strike or accident or by any cause beyond Landlord's
reasonable control, or by laws, rules, orders, ordinances, directions,
regulations or by reason of the requirements of any federal, state, county or
municipal authority or failure of gas, oil or other suitable fuel supply or
inability by exercise of reasonable diligence to obtain gas, oil or other
suitable fuel supply. It is expressly understood and agreed that any covenants
on Landlord's part to furnish any services pursuant to any of the terms,
covenants, conditions, provisions or agreements of this Lease, or to perform any
act or thing for the benefit of Tenant, will not be deemed breached if Landlord
is unable to furnish or perform the same by virtue of a strike or labor trouble
or any other cause whatsoever beyond Landlord's control.
EXHIBIT "F"
<PAGE> 50
1
ESTOPPEL CERTIFICATE
The undersigned, ________________________________________________ ("Tenant"),
hereby certifies to ______________________________________________ , as follows:
1. Attached hereto is a true, correct and complete copy of that certain lease
dated December ____, 1999, between KOLL-LSI I, LLC, a Delaware limited liability
company ("Landlord") and HIGH SPEED ACCESS CORP., a __________ ("Tenant") (the
"Lease"), regarding the premises located at ____________________________________
(the "Premises"). The Lease is now in full force and effect and has not been
amended, modified or supplemented, except as set forth in Paragraph 4 below.
2. The Term of the Lease commenced on ________________________________________,
19____ .
3. The Term of the Lease will expire on ___________________________________ ,
19_______.
4. The Lease has: (Initial one)
( ___________________________________________________________ ) not been
amended, modified, supplemented, extended, renewed or assigned.
( ___________________________________________________________ ) not been
amended, modified, supplemented, extended, renewed or assigned by the following
described terms or agreements, copies of which are attached hereto:
______________________________________________________________________________
______________________________________________________________________________
5. Tenant has accepted and is now in possession of the Premises.
6. Tenant and Landlord acknowledge that Landlord's interest in the Lease will be
assigned to and that no modification, adjustment, revision or cancellation of
the Lease or amendments thereto shall be effective unless written consent of
__________________________________________________ is obtained, and that until
further notice, payments under the Lease may continue as heretofore.
7. The amount of Monthly Base Rent is $ ________________________________ .
8. The amount of Security Deposit (if any) is $ __________________________ . No
other security deposits have been made except as follows:
______________________________________________________________________________.
9. Tenant is paying the full lease rental which has been paid in full as of the
date hereof. No rent or other charges under the Lease have been paid for more
than thirty (30) days in advance of its due date except as follows:
______________________________________________________________________________.
10. All work required to be performed by Landlord under the Lease has been
completed except as follows: _____________________________________.
11. There are no defaults on the part of the Landlord or Tenant under the Lease
except as follows: ____________________________________.
EXHIBIT "G"
<PAGE> 51
2
12. Neither Landlord nor Tenant has any defense as to its obligations under the
Lease and claims no set-off or counterclaim against the other party except as
follows: ______________________________.
13. Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies other than as
provided in the Lease except as follows: _______________________________.
All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified.
The foregoing certification is made with the knowledge that ___________________
is relying upon the representations herein made in funding a loan to Landlord
in purchasing the Premises.
EXHIBIT "G"
<PAGE> 52
3
IN WITNESS WHEREOF, this certificate has been duly executed and delivered by the
authorized officers of the undersigned as of __________________________________,
19 ___.
TENANT:
,
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a
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By:
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Print Name: SAMPLE ONLY
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Title: [NOT FOR EXECUTION]
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By:
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Print Name:
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Title:
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EXHIBIT "G"
<PAGE> 53
1
RULES AND REGULATIONS
A. GENERAL RULES AND REGULATIONS. The following rules and regulations govern the
use of the Building and the Development Common Areas. Tenant will be bound by
such rules and regulations and agrees to cause Tenant's Authorized Users, its
employees, subtenants, assignees, contractors, suppliers, customers and invitees
to observe the same.
1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice may be installed or displayed on any part of the outside or inside of the
Building or the Development without the prior written consent of Landlord.
Landlord will have the right to remove, at Tenant's expense and without notice,
any sign installed or displayed in violation of this rule. All approved signs or
lettering on doors and walls are to be printed, painted, affixed or inscribed at
the expense of Tenant and under the direction of Landlord by a person or company
designated or approved by Landlord.
2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises, or placed on any windowsill, which is
visible from the exterior of the Premises, Tenant will immediately discontinue
such use. Tenant agrees not to place anything against or near glass partitions
or doors or windows which may appear unsightly from outside the Premises
including from within any interior Common Areas.
3. Tenant will not obstruct any sidewalks, halls, passages, exits, entrances,
elevators, escalators, or stairways of the Development. The halls, passages,
exits, entrances, elevators and stairways are not open to the general public,
but are open, subject to reasonable regulations, to Tenant's business invitees.
Landlord will in all cases retain the right to control and prevent access
thereto of all persons whose presence in the reasonable judgment of Landlord
would be prejudicial to the safety, character, reputation and interest of the
Development and its tenants, provided that nothing herein contained will be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of its business, unless such persons are engaged in
illegal or unlawful activities. No tenant and no employee or invitee of any
tenant will go upon the roof of the Building, except Tenant's engineer and/or
contractor for maintenance and repair of the satellite dish.
4. Tenant will not obtain for use on the Premises ice, drinking water, food,
food vendors, beverage, towel or other similar services or accept barbering or
bootblacking service upon the Premises, except at such reasonable hours and
under such reasonable regulations as may be fixed by Landlord. Landlord
expressly reserves the right to absolutely prohibit solicitation, canvassing,
distribution of handbills or any other written material, peddling, sales and
displays of products, goods and wares in all portions of the Development except
as may be expressly permitted under the Lease. Landlord reserves the right to
restrict and regulate the use of the common areas of the Development and
Building by invitees of tenants providing services to tenants on a periodic or
daily basis including food and beverage vendors. Such restrictions may include
limitations on time, place, manner and duration of access to a tenant's premises
for such purposes. Without limiting the foregoing, Landlord may require that
such parties use service elevators, halls, passageways and stairways for such
purposes to preserve access within the Building for tenants and the general
public.
5. Landlord reserves the right to require tenants to periodically provide
Landlord with a written list of any and all business invitees which periodically
or regularly provide goods and services to such tenants at the premises.
Landlord reserves the right to preclude all vendors from entering or conducting
business within the Building and the Development if such vendors are not listed
on a tenant's list of requested vendors.
6. Landlord reserves the right to exclude from the Building between the hours of
6 p.m. and 8 a.m. the following business day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal holidays,
any person unless that person is known to the person or employee in charge of
the Building or has a pass or is properly identified. Tenant will be responsible
for all persons for whom it requests passes and will be liable to Landlord for
all acts of such persons. Landlord will not be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person.
Landlord reserves the right to prevent access to the Building in case of
invasion, mob, riot, public excitement or other commotion by closing the doors
or by other appropriate action.
EXHIBIT "H"
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2
7. The directory of the Building or the Development will be provided exclusively
for the display of the name and location of tenants only and Landlord reserves
the right to exclude any other names therefrom.
8. All cleaning and janitorial services for the Development and the Premises
will be provided exclusively through Landlord, and except with the written
consent of Landlord, no person or persons other than those approved by Landlord
will be employed by Tenant or permitted to enter the Development for the purpose
of cleaning the same. Tenant will not cause any unnecessary labor by
carelessness or indifference to the good order and cleanliness of the Premises.
9. Landlord will furnish Tenant, free of charge, with two keys to each entry
door lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and Tenant
shall not alter any lock or install any new additional lock or bolt on any door
of the Premises. Tenant, upon the termination of its tenancy, will deliver to
Landlord the keys to all doors which have been furnished to Tenant, and in the
event of loss of any keys so furnished, will pay Landlord therefor.
10. If Tenant requires telegraphic, telephonic, burglar alarm, satellite dishes,
antennae or similar services, it will first obtain Landlord's approval, and
comply with, Landlord's reasonable rules and requirements applicable to such
services, which may include separate licensing by, and fees paid to, Landlord.
Landlord will not charge Tenant a fee in excess of $1,200 per month for use of
such roof space per satellite dish.
11. Freight elevator(s) will be available for use by all tenants in the
Building, subject to such reasonable scheduling as Landlord, in its sole and
absolute discretion, deems appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord. Tenant's initial move in and
subsequent deliveries of bulky items, such as furniture, safes and similar items
will, unless otherwise agreed in writing by Landlord, be made during the hours
of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. Deliveries during normal
office hours shall be limited to normal office supplies and other small items.
No deliveries will be made which impede or interfere with other tenants or the
operation of the Building.
12. Tenant will 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. Landlord will have the right to reasonably prescribe the weight,
size and position of all safes, heavy equipment, files, materials, furniture or
other property brought into the Building. Heavy objects will, if considered
necessary by Landlord, stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight, which platforms will be provided at
Tenant's expense. Business machines and mechanical equipment belonging to
Tenant, which cause noise or vibration that may be transmitted to the structure
of the Building or to any space therein to such a degree as to be objectionable
to any tenants in the Building or Landlord, are to be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devises
sufficient to eliminate noise or vibration. Tenant will be responsible for all
structural engineering required to determine structural load, as well as the
expense thereof. The persons employed to move such equipment in or out of the
Building must be reasonably acceptable to Landlord. Landlord will not be
responsible for loss of, or damage to, any such equipment or other property from
any cause, and all damage done to the Building by maintaining or moving such
equipment or other property will be repaired at the expense of Tenant.
13. Tenant will not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited quantities
necessary for the operation or maintenance of office equipment. Tenant will not
use or permit to be used in the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors or vibrations, nor will Tenant bring into or keep in or about the Premises
any birds or animals.
14. Tenant will not use any method of heating or air conditioning other than
that supplied by Landlord without Landlord's prior written consent.
15. Tenant will 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 to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice, and
will refrain from attempting to adjust controls. Tenant will keep corridor doors
closed, and shall keep all window coverings pulled down.
EXHIBIT "H"
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Page 2
<PAGE> 55
3
16. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
Without the prior written consent of Landlord, which Landlord may deny with or
without cause, Tenant will not use the name, photograph or likeness of the
Building or the Development in connection with or in promoting or advertising
the business of Tenant except as Tenant's address.
17. Tenant will close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and lighting or gas before Tenant
and its employees leave the Premises. Tenant will be responsible for any damage
or injuries sustained by other tenants or occupants of the Building or by
Landlord for noncompliance with this rule.
18. The toilet rooms, toilets, urinals, wash bowls and other apparatus will 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 any violation of this rule will
be borne by the tenant who, or whose employees or invitees, break this rule.
Cleaning of equipment of any type is prohibited.
19. Tenant will not sell, or permit the sale at retail of newspapers, magazines,
periodicals, theater tickets or any other goods or merchandise to the general
public in or on the Premises. Tenant will not use the Premises for any business
or activity other than that specifically provided for in this Lease. Tenant will
not conduct, nor permit to be conducted, either voluntarily or involuntarily,
any auction upon the Premises without first having obtained Landlord's prior
written consent, which consent Landlord may withhold in its sole and absolute
discretion.
20. Tenant will not install any radio or television antenna, loudspeaker,
satellite dishes or other devices on the roof(s) or exterior walls of the
Building or the Development without Landlord's prior written consent. Tenant
will not interfere with radio or television broadcasting or reception from or in
the Development or elsewhere.
21. Except for the ordinary hanging of pictures and wall decorations, Tenant
will not mark, drive nails, screw or drill into the partitions, woodwork or
plaster or in any way deface the Premises or any part thereof, except in
accordance with the provisions of the Lease pertaining to alterations. Landlord
reserves the right to direct electricians as to where and how telephone and
telegraph wires are to be introduced to the Premises. Tenant will not cut or
bore holes for wires. Tenant will not affix any floor covering to the floor of
the Premises in any manner except as approved by Landlord. Tenant shall repair
any damage resulting from noncompliance with this rule.
22. [intentionally omitted]
23. Landlord reserves the right to exclude or expel from the Development any
person who, in Landlord's judgment, is intoxicated or under the influence of
liquor or drugs or who is in violation of any of the Rules and Regulations of
the Building.
24. Tenant will store all its trash and garbage within its Premises or in other
facilities provided by Landlord. Tenant will not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued from time to time by
Landlord.
25. The Premises will not be used for lodging or for the storage of merchandise
held for sale to the general public, or for lodging or for manufacturing of any
kind, nor shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking will be done or permitted on the Premises without Landlord's
consent, except the use by Tenant of Underwriters' Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages shall be permitted,
and the use of a microwave oven for employees use will be permitted, provided
that such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.
26. Neither Tenant nor any of its employees, agents, customers and invitees may
use in any space or in the public halls of the Building or the Development any
hand truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant will not bring any
other vehicles of any kind into the Building.
EXHIBIT "H"
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Page 3
<PAGE> 56
4
27. Tenant agrees to comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
29. To the extent Landlord reasonably deems it necessary to exercise exclusive
control over any portions of the Common Areas for the mutual benefit of the
tenants in the Building or the Development, Landlord may do so subject to
reasonable, non-discriminatory additional rules and regulations.
30. Landlord may prohibit smoking in the Building and may require Tenant and any
of its employees, agents, clients, customers, invitees and guests who desire to
smoke, to smoke within designated smoking areas within the Development.
31. Tenant's requirements will be attended to only upon appropriate application
to Landlord's asset management office for the Development by an authorized
individual of Tenant. Employees of Landlord will not perform any work or do
anything outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.
32. These Rules and Regulations are in addition to, and will not be construed to
in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of the Lease. Landlord may waive any one or more of
these Rules and Regulations for the benefit of Tenant or any other tenant, but
no such waiver by Landlord will be construed as a waiver of such Rules and
Regulations in favor of Tenant or any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules and Regulations against any or all of the
tenants of the Development.
33. Landlord reserves the right to make such other and reasonable and
non-discriminatory Rules and Regulations as, in its judgment, may from time to
time be needed for safety and security, for care and cleanliness of the
Development and for the preservation of good order therein. Tenant agrees to
abide by all such Rules and Regulations herein above stated and any additional
reasonable and non-discriminatory rules and regulations which are adopted.
Tenant is responsible for the observance of all of the foregoing rules by
Tenant's employees, agents, clients, customers, invitees and guests.
B. PARKING RULES AND REGULATIONS. The following rules and regulations govern the
use of the parking facilities which serve the Building. Tenant will be bound by
such rules and regulations and agrees to cause its employees, subtenants,
assignees, contractors, suppliers, customers and invitees to observe the same:
1. Tenant will not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant's employees, subtenants, customers or invitees to be loaded,
unloaded or parked in areas other than those designated by Landlord for such
activities. No vehicles are to be left in the parking areas overnight and no
vehicles are to be parked in the parking areas other than normally sized
passenger automobiles, motorcycles and pick-up trucks. No extended term storage
of vehicles is permitted.
2. Vehicles must be parked entirely within painted stall lines of a single
parking stall.
3. All directional signs and arrows must be observed.
4. The speed limit within all parking areas shall be five (5) miles per hour.
5. Parking is prohibited: (a) in areas not striped for parking; (b) in aisles or
on ramps; (c) where "no parking" signs are posted; (d) in cross-hatched areas;
and (e) in such other areas as may be designated from time to time by Landlord
or Landlord's parking operator.
6. Landlord reserves the right, without cost or liability to Landlord, to tow
any vehicle if such vehicle's audio theft alarm system remains engaged for an
unreasonable period of time.
EXHIBIT "H"
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<PAGE> 57
5
7. Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited.
8. Landlord may refuse to permit any person to park in the parking facilities
who violates these rules with unreasonable frequency, and any violation of these
rules shall subject the violator's car to removal, at such car owner's expense.
Tenant agrees to use its best efforts to acquaint its employees, subtenants,
assignees, contractors, suppliers, customers and invitees with these parking
provisions, rules and regulations.
9. Parking stickers, access cards, or any other device or form of identification
supplied by Landlord as a condition of use of the parking facilities shall
remain the property of Landlord. Parking identification devices, if utilized by
Landlord, must be displayed as requested and may not be mutilated in any manner.
The serial number of the parking identification device may not be obliterated.
Parking identification devices, if any, are not transferable and any device in
the possession of an unauthorized holder will be void. Landlord reserves the
right to refuse the sale of monthly stickers or other parking identification
devices to Tenant or any of its agents, employees or representatives who
willfully refuse to comply with these rules and regulations and all unposted
city, state or federal ordinances, laws or agreements.
10. Loss or theft of parking identification devices or access cards must be
reported to the management office in the Development immediately, and a lost or
stolen report must be filed by the Tenant or user of such parking identification
device or access card at the time. Landlord has the right to exclude any vehicle
from the parking facilities that does not have a parking identification device
or valid access card. Any parking identification device or access card which is
reported lost or stolen and which is subsequently found in the possession of an
unauthorized person will be confiscated and the illegal holder will be subject
to prosecution.
11. All damage or loss claimed to be the responsibility of Landlord must be
reported, itemized in writing and delivered to the management office located
within the Development within ten (10) business days after any claimed damage or
loss occurs. Any claim not so made is waived. Landlord is not responsible for
damage by water or fire, or for the acts or omissions of others, or for articles
left in vehicles. In any event, the total liability of Landlord, if any, is
limited to Two Hundred Fifty Dollars ($250.00) for all damages or loss to any
car. Landlord is not responsible for loss of use.
12. The parking operators, managers or attendants are not authorized to make or
allow any exceptions to these rules and regulations, without the express written
consent of Landlord. Any exceptions to these rules and regulations made by the
parking operators, managers or attendants without the express written consent of
Landlord will not be deemed to have been approved by Landlord.
13. Landlord reserves the right, without cost or liability to Landlord, to tow
any vehicles which are used or parked in violation of these rules and
regulations.
14. Landlord reserves the right from time to time to modify and/or adopt such
other reasonable and non-discriminatory rules and regulations for the parking
facilities as it deems reasonably necessary for the operation of the parking
facilities.
EXHIBIT "H"
-----------
Page 5
<PAGE> 58
6
EXHIBIT I TO LEASE
FORM OF LETTER OF CREDIT
_______________, 1999
Koll-LSI I, LLC
RE: Letter of Credit No. ___________
Gentlemen:
We hereby issue in your favor, at the request and for the account of HIGH
SPEED ACCESS CORP., a , our irrevocable Letter of Credit in the
amount of $750,000.00 which is available against presentation of your sight
draft. The draft must be accompanied by:
1. This Letter of Credit No. _____________; and
2. A notarized certification signed as Authorized Signatory on behalf of
Koll-LSI I, LLC, or an officer (or member if a limited liability company)
or its transferee or assignee, stating essentially as follows:
"The undersigned Beneficiary is the owner of the property
described in the Office Lease dated between Koll-LSI I, LLC, a Colorado
limited liability company, as Landlord, and HIGH SPEED ACCESS CORP., a
Delaware corporation, as Tenant (the "Lease"). The amount requested by
the draft accompanying this statement is the amount to which
Beneficiary is entitled under the terms of the Lease as a result of an
Event of Default under the Lease and Beneficiary requests payment of
the enclosed draft under the enclosed Letter of Credit."
This Letter of Credit shall be subject to the Special Conditions set
forth on Schedule 1 to Exhibit I, such schedule being considered a part hereof
and incorporated herein by reference.
We hereby agree that all drafts drawn under and in compliance with the
terms of this credit shall meet with honor upon presentation and delivery of
documents on or before 5:00 p.m., Denver time, ____________________, as
specified to the drawee, it being a condition of this Letter of Credit that it
shall be automatically extended for periods of at least one year from the
present and each future expiration date unless, at least sixty (60) days prior
to the relevant expiration date, we notify you, by certified mail, return
receipt requested, that we elect not to extend this Letter of Credit for any
additional period.
[BANK]
By:
EXHIBIT "I"
<PAGE> 59
7
Title:
EXHIBIT "I"
<PAGE> 60
8
Schedule 1 to Exhibit I
To Letter of Credit No. ______________
The Letter of Credit shall be governed by the following Special
Conditions:
1. This Letter of Credit shall be governed by and construed in
accordance with the laws of the State of Colorado, including specifically, but
not limited to, C.R.S. Sections 4-5-101, et seq., entitled Uniform Commercial
Code -- Letters of Credit, as amended. The provisions of Uniform Customs and
Practice for Documentary Credits, I.C.C. Publication No. 500, 1983 Revision,
290, effective October 1, 1975, shall not be applicable to this Letter of
Credit.
2. Issuer agrees that it may not defer honor beyond the close of the
first banking day after presentment of a sight draft drawn hereunder and
accompanying documents.
3. This Letter of Credit shall be transferable and assignable, without
charge, to any person or entity who is the successor or assignee of
Beneficiary's interest under the Lease entered into on or about ,
between Koll LSI I, LLC, a Delaware limited liability company, as Landlord, and
HIGH SPEED ACCESS CORP., a . Such transfer shall be accomplished
by providing [BANK] with the appropriate transfer form and the original letter
of credit for endorsement; provided, however, that such transfer shall not be
subject to the approval of [BANK].
EXHIBIT "I"
<PAGE> 61
1
EXHIBIT J TO LEASE
FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Instrument Prepared
By and After Recording
To Be Returned To:
Daniel Kohn, Esq.
Duane, Morris & Heckscher L.L.P.
227 West Monroe Avenue
Suite 3400
Chicago, Illinois 60606
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement
("AGREEMENT") is made as of this _____ day of __________________, 2000, by and
between HIGH SPEED ACCESS CORP., a Delaware corporation ("TENANT"), and CORUS
BANK, N.A. ("LENDER"), in Chicago, Illinois.
R E C I T A L S
A. Lender is the owner and holder of that certain Second Deed of Trust,
Security Agreement and Financing Statement dated as of January 15, 2000,
recorded with the Jefferson County Recorder's Office on January 19, 2000, as
Document No. F1006014 (the "DEED OF TRUST"), covering the land and building
commonly known as 10901 West Toller Drive, Littleton, Colorado 80127, and
legally described in EXHIBIT "A" attached hereto and incorporated herein (the
"PROPERTY"). The Deed of Trust and any and all other documents or instruments
related thereto, and all renewals, amendments, supplements, restatements,
extensions, and modifications thereof and thereto, are hereinafter collectively
referred to as the "LOAN DOCUMENTS".
B. Tenant is the lessee of certain premises (the "DEMISED PREMISES")
constituting all of the Property, including all of the three (3) story office
building located thereon, such Demised Premises having a common address of 10901
West Toller Drive, Littleton, Colorado 80127, under and pursuant to provisions
of a certain Office Building Lease dated ________________, between Koll-LSI I,
LLC, a Delaware limited liability company ("LANDLORD"), and Tenant (said Lease
as the same may be hereafter modified, amended or extended from time to time is
hereinafter collectively referred to as the "LEASE").
C. Lender has required the execution of this Agreement as a condition
of making such deed of trust loan to Landlord.
A G R E E M E N T
For good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. SUBORDINATION. The parties hereby agree that the Lease is and shall
at all times be subject and subordinate in all respects to the lien of the Deed
of Trust, to all indebtedness and obligations secured thereby, and to all
renewals, modifications, extensions, substitutions, rearrangements and
replacements thereof.
2. NON-DISTURBANCE. Lender agrees that, subject to the terms and
conditions of this Agreement, if any action or proceeding is commenced by Lender
or at Lender's behest for the foreclosure of the Deed of Trust or the sale of
the Property or other realization under the Loan Documents, whether by
foreclosure, deed in lieu of foreclosure, power of sale, or in any other
proceedings made or brought to enforce the rights of Lender, or by any successor
to Lender, Tenant shall not be named as a party therein (unless required by law
to properly foreclose upon the Deed of Trust), and the sale of the Property in
any such action or
EXHIBIT "J"
1
<PAGE> 62
2
proceeding and the exercise by Lender of any such action or proceeding and at
the time of its other rights under the Deed of Trust shall be made subject to
all rights of Tenant under the Lease, provided that at the time of any such
action or proceeding and at the time of any such sale or exercise of any such
other rights, Tenant shall not be declared in default, and no event shall have
occurred which with the giving of notice or passage of time or both could result
in a default, under any of the terms, covenants or conditions of the Lease on
Tenant's part to be observed or performed.
3. ATTORNMENT. If the interests of the Landlord in the Property and
under the Lease or any portion thereof are acquired by Lender, whether by
purchase and sale, foreclosure, deed in lieu of foreclosure, power of sale, or
in any other proceeding made or brought to enforce the rights of Lender, or by
any successor to Lender, including without limitation any purchaser at a
foreclosure sale, Tenant shall be bound to Lender, its successors and assigns
under all of the terms, covenants and conditions of the Lease for the balance of
the term thereof, with the same force and effect as if they were named as
landlord under the Lease, and Tenant does hereby attorn to Lender, its
successors and assigns as its landlord, said attornment to be effective and
self-operative immediately upon Lender's or its successor's or assign's
succeeding to the interests of the Landlord in the Property and under the Lease,
without the execution of any other or further instruments on the part of any
party hereto. Tenant covenants and agrees from time to time to do all acts and
to execute all instruments as may reasonably be requested by Lender for the
purposes of fully carrying out and effectuating the purpose and intent of this
Agreement, whether by filing with any public office or agency or otherwise.
4. LIMITATION ON LENDER'S LIABILITY. If Lender succeeds to the
interests of Landlord in the Property and under the Lease, Lender shall
thereupon be bound to Tenant under all of the terms, covenants and conditions of
the Lease, and Tenant shall, from and after Lender's succession to the interests
of Landlord, have the same rights and remedies against Lender for breach of the
Lease that Tenant would have had under the Lease against Landlord if Lender had
not succeeded to the interests of Landlord; provided, however, that Lender shall
not be: (a) liable for any act or omission of any prior landlord (including
without limitation Landlord); (b) subject to any offsets or defenses which
Tenant might have against any prior landlord (including without limitation
Landlord); (c) bound by any surrender, cancellation, agreement or modification
of the Lease made without the prior written consent of Lender; or (d) bound to
return Tenant's security deposit, if any, until such deposit has come into
Lender's (or such successor's) actual possession and Tenant would be entitled to
such security deposit under the Lease. Lender shall be bound by Tenant's payment
of no more than one (1) month's rent in advance under the Lease unless otherwise
approved by Lender.
5. NO MODIFICATION. Tenant agrees that during the term of the Lease or
any extension thereof, Tenant will not enter into any amendment or modification
of the Lease and will not cancel or surrender the Lease without in any such
instance Lender's prior written consent.
6. NO MERGER. Unless Lender shall otherwise expressly agree in writing,
fee title to the Property and the leasehold estate created by the Lease shall
not merge but shall remain separate and distinct, notwithstanding the union of
said estates either in Landlord, in Tenant or in any third party, by purchase,
assignment or in any other matter.
7. REPRESENTATIONS AND WARRANTIES. Tenant hereby represents and
warrants to Lender that 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 with respect to Tenant.
8. NOTICE TO LENDER. Tenant shall give Lender copies of all written
notices and other written communications given by the Tenant to the Landlord
relating to (a) defaults on the part of the Landlord under the Lease, (b) any
violations of any ordinances, statutes, laws, rules, codes, regulations or
requirements of any governmental agency having jurisdiction over the Property,
and (c) any proposed or actual assignment or subletting of all or any portion of
the Demised Premises. Prior to pursuing any remedy available to Tenant under the
Lease, at law or in equity which Tenant may have as a result of any failure of
Landlord to perform or observe any covenant, condition, provision or obligation
to be performed or observed by Landlord under the Lease (any such failure
hereunder referred to as a "LANDLORD'S DEFAULT"), Tenant shall provide Lender
with a notice of Landlord's Default (the "TENANT'S NOTICE"), which notice may be
sent concurrently with any similar notice to Landlord, specifying the nature
thereof and the remedy which Tenant will elect under the terms of the Lease or
otherwise. Lender shall have thirty (30) days from the date of Tenant's Notice
(or such lesser time if an emergency exists), or such greater time period as
available to Landlord under the Lease, within which to commence to cure
Landlord's Default and diligently proceed to complete such cure at all times
thereafter. Tenant shall not pursue any remedy available to it as a result of
any Landlord's Default unless Lender fails to commence within the time period
set forth above or thereafter fails to diligently pursue a cure of any
Landlord's Default.
EXHIBIT "J"
2
<PAGE> 63
3
9. ACCESS. Notwithstanding the provisions of the Lease, if Tenant shall
not have provided Lender with access to the Demised Premises, and if access is
required to remedy such default, the period of time set forth in the Lease in
which to remedy same shall not commence until such access is provided to Lender.
10. NOTICES. Notices shall be in writing and shall be given by personal
delivery, telecopier, followed by U.S. mail, overnight courier, or by mail
addressed as set forth below. Notice by personal delivery shall be deemed
effective upon the delivery of such notice to the party for whom it is intended
at the recipient's address. Notice by telecopier shall be deemed given when
confirmation has been received. Notice by overnight courier shall be deemed
effective twenty-four (24) hours after deposit with a commercial courier or
delivery service for overnight delivery within the United States, or on the
second (2nd) business day after deposit with an international second day
delivery service (as applicable). Notice by mail shall be made by certified or
registered mail, return receipt requested, postage prepaid, properly stamped,
sealed and addressed, and shall be deemed effective on the second (2nd) business
day after deposit in the United States mail. Either party may give notice of any
change of address in accordance with the notice procedures described herein.
TO TENANT: High Speed Access Corp.
------------------------------
With a copy to:
------------------------------
------------------------------
TO LENDER: Corus Bank, N.A.
10 South Riverside Plaza
Chicago, Illinois 60606
Attention: James Dow
With a copy to: Duane, Morris & Heckscher L.L.P.
227 West Monroe Avenue, Suite 3400
Chicago, Illinois 60606
Attention: Daniel Kohn, Esq.
and to: Corus Bank, N.A.
3959 North Lincoln Avenue
Chicago, Illinois 60613
Attention: Joel Solomon, Esq.
11. INTERPRETATION. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited or
invalid under such law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of said
document.
12. GOVERNING LAW; LITIGATION. The creation, perfection, priority and
enforcement of the lien created by this Agreement shall be governed by and
constructed in accordance with the laws of the State of Colorado and in all
other respects this Agreement shall be governed by the internal laws of the
State of Illinois without regard to principles of conflicts of laws. TO THE
EXTENT PERMITTED BY LAW, TENANT HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND ANY FEDERAL COURT
SITTING IN CHICAGO, ILLINOIS, OR, AT THE SOLE OPTION OF LENDER, IN ANY OTHER
COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER
EXHIBIT "J"
3
<PAGE> 64
4
JURISDICTION OVER THE MATTER IN CONTROVERSY, FOR THE PURPOSE OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF LENDER OR TENANT, AND TENANT FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY CERTIFIED MAIL POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. TENANT HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
13. JURY WAIVER. TO THE MAXIMUM EXTENT PERMITTED BY LAW, TENANT AND
LENDER EACH HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION,
CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO
THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
DEALINGS OF TENANT AND LENDER WITH RESPECT TO THIS AGREEMENT, OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, TENANT AND LENDER EACH HEREBY AGREES THAT ANY SUCH
ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING SHALL BE DECIDED BY A COURT
TRIAL WITHOUT A JURY AND THAT TENANT OR LENDER MAY FILE A COPY OF THIS EXECUTED
AGREEMENT WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF
TENANT AND LENDER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
14. MISCELLANEOUS. This Agreement may not be amended or modified except
by an agreement in writing signed by the party to be charged. If any action or
proceeding is brought by any party against any other party arising from or
related to this Agreement or the Lease, the prevailing party shall be entitled
to recover its reasonable costs and attorneys' fees. This Agreement shall inure
to the benefit of and be binding upon the parties hereto, their heirs,
representatives, successors and assigns. Time is of the essence. This document
represents the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, representations and
covenants.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TENANT:
HIGH SPEED ACCESS CORP., a Delaware corporation
By:
--------------------------------------------
Its:
-------------------------------------------
Duly Authorized
LENDER:
CORUS BANK, N.A.
By:
--------------------------------------------
Its:
-------------------------------------------
Duly Authorized
STATE OF ___________ )
EXHIBIT "J"
4
<PAGE> 65
5
) SS.
COUNTY OF _________ )
I, _______________________________, a Notary Public in and for said
County in the State aforesaid, do hereby certify that
______________________________________, ______________ of High Speed Access
Corp., a Delaware corporation, personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that he/she signed and delivered such instrument
as his/her own free and voluntary act and as the free and voluntary act of said
corporation, for the uses and purposes set forth therein set forth.
Given under my hand and notarial seal this ____ day of
________________, 2000.
-------------------------------------
Notary Public
STATE OF ILLINOIS )
) SS.
COUNTY OF _________ )
I, __________________________, a Notary Public in and for said County
in the State aforesaid, do hereby certify that __________________________, the
____________________________ of CORUS BANK, N.A. (the "BANK"), who is personally
known to me to be the same person whose name is subscribed to the foregoing
instrument as such __________________, appeared before me this day in person and
acknowledged that he/she signed and delivered the said instrument as his/her own
free and voluntary act and as the free and voluntary act of said Bank, for the
uses and purposes therein set forth.
Given under my hand and notarial seal this ____ day of ______________,
2000.
-------------------------------------
Notary Public
EXHIBIT "J"
5
<PAGE> 1
EXHIBIT 10.6
FOREST GREEN CORPORATE OFFICE PARK
ORMSBY I
OFFICE BUILDING LEASE
BY AND BETWEEN
FAULKNER HINTON/ORMSBY I LLC
A KENTUCKY LIMITED LIABILITY CORPORATION
("LESSOR")
AND
HIGH SPEED ACCESS CORP.
A DELAWARE CORPORATION
("LESSEE")
DATED FEBRUARY 26, 2000
<PAGE> 2
TABLE OF CONTENTS
OFFICE BUILDING LEASE
------------------
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I - BASIC LEASE PROVISIONS AND LEASE OF PREMISES..................................... 1
ARTICLE II - TERM AND POSSESSION............................................................... 3
ARTICLE III - RENT.............................................................................. 4
ARTICLE IV - SECURITY DEPOSIT.................................................................. 6
ARTICLE V - OCCUPANCY AND USE................................................................. 7
ARTICLE VI - UTILITIES AND OTHER BUILDING SERVICES............................................. 7
ARTICLE VII - REPAIRS, MAINTENANCE, ALTERATIONS,
IMPROVEMENTS AND FIXTURES......................................................... 8
ARTICLE VIII - FIRE OR OTHER CASUALTY INSURANCE.................................................. 9
ARTICLE IX - EMINENT DOMAIN................................................................... 10
ARTICLE X - LIENS............................................................................ 10
ARTICLE XI - RENTAL, PERSONAL PROPERTY AND OTHER TAXES........................................ 10
ARTICLE XII - ASSIGNMENT AND SUBLETTING........................................................ 10
ARTICLE XIII - SUBORDINATION, NON-DISTURBANCE & ATTORNMENT.......................................11
ARTICLE XIV - ABANDONMENT.......................................................................11
ARTICLE XV - DEFAULTS AND REMEDIES............................................................ 11
ARTICLE XVI - LETTER OF CREDIT................................................................. 12
ARTICLE XVII - HAZARDOUS SUBSTANCES............................................................. 12
ARTICLE XVIII - NOTICE AND PLACE OF PAYMENT...................................................... 13
ARTICLE XIX - MISCELLANEOUS GENERAL PROVISIONS................................................. 13
EXHIBIT A - SITE PLAN
EXHIBIT B - LEGAL DESCRIPTION
EXHIBIT C - FLOOR PLAN OF PREMISES
EXHIBIT D - DESCRIPTION OF LESSOR'S WORK
EXHIBIT E - GREENWAYS PLAN
EXHIBIT F - LEASEHOLD IMPROVEMENTS
EXHIBIT G - ACCEPTANCE OF PREMISES AMENDMENT
EXHIBIT H - RULES AND REGULATION
EXHIBIT I - SUBORDINATION, NON-DISTURBANCE & ATTORNMENT AGREEMENT
</TABLE>
<PAGE> 3
FOREST GREEN CORPORATE OFFICE PARK
ORMSBY I
LEASE
BETWEEN
FAULKNER HINTON/ORMSBY I, LLC, LESSOR
AND
HIGH SPEED ACCESS CORP., LESSEE
This Lease is entered into and made this 26th day of February, 2000, by and
Faulkner Hinton/Ormsby I, LLC, a Kentucky Limited Liability Corporation herein
called "Lessor", and High Speed Access Corp., a Delaware Corporation, herein
called "Lessee".
WITNESSETH
WHEREAS Lessor is desirous of leasing the Premises, more fully described
hereinafter, to Lessee; and
WHEREAS Lessee is desirous of leasing the Premises, more fully described
hereinafter, from Lessor; and
WHEREAS both parties to this Lease have fully reviewed, understand and
accept all provisions of this Lease; and
WHEREAS, for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
BASIC LEASE PROVISIONS AND LEASE OF PREMISES
1.01 BASIC LEASE PROVISIONS. The basic terms of this Lease are known as the
"Basic Lease Provisions," which are set forth below:
<TABLE>
<S> <C>
A. Project Name and Address: Ormsby I
Forest Green Corporate Office Park
Hurstbourne Parkway
Louisville, Kentucky 40223
Premises Location: 1st Floor, Suite 100
2nd Floor, Suite 200
3rd Floor, Suite 300
4th Floor, Suite 405
B. Total Rentable Area in the Building: 150,642 Rentable Square Feet
Total Rentable Area of the Premises: Suite 100 - 22,593 Rentable Square Feet
Suite 200 - 24,924 Rentable Square Feet
Suite 300 - 25,828 Rentable Square Feet
Suite 405 - 10,321 Rentable Square Feet
Total - 83,666 Rentable Square Feet
Pro Rata Occupancy: 55.54%
C. Initial Term of the Lease shall be: Seven (7) Years beginning September 1, 2000, subject to
Article II, Paragraph 2.01
Rent Commencement Dates: June 1, 2000 for Suite 100 and Suite 200; July 1, 2000 for
Suite 300; and September 1, 2000 for Suite 405, all subject
to Article II, Paragraph 2.01
Expiration Date: August 31, 2007 for all Premises, subject to Article II,
Paragraph 2.01
D. Initial Base Rent: $16.96 per Rentable Square Foot
$1,418,975.36 per Annum or $118,247.95 per Month
Subject to Article II Paragraph 2.02 & Article III Paragraph
3.01
</TABLE>
Page 1 of 15
<PAGE> 4
<TABLE>
<S> <C>
Operating Expense Stop: $3.21 per Rentable Square Foot
$268,567.86 per Annum
Net Rent Base: $13.75 per Rentable Square Foot
$1,150,407.50 per Annum
E. Letter of Credit: $1,645,256.15 for the first year, reducing by $411,314.04
each year thereafter
F. Security Deposit: $354,743.85 for the Initial Term and $118,247.95 for the
Renewal Term
G. Acceptance Date: On or before March 1, 2000
H. Addresses for Notices and Payments: TO LESSOR:
Faulkner Hinton/Ormsby I, LLC
c/o Faulkner Hinton & Associates, Inc.
P.O. Box 8060
Louisville, Kentucky 40257-8060
- or by hand -
3991 Dutchmans Lane, Suite 400
Louisville, Kentucky 40207
TO LESSEE:
High Speed Access Corp.
4100 E. Mississippi Avenue, Suite 1150
Denver, Colorado 80246
Attn: Rich Pulley
with a copy to:
John Hundley, Esq.
High Speed Access Corp.
1000 W. Ormsby Avenue
Louisville, Kentucky 40210
I. Renewal Term: One seven (7) year renewal. (See First Addendum to Lease)
J. Ground Level Premises: Suite G125 containing 16,117 Rentable Square Feet. (See
Second Addendum to Lease)
K. Roof Level Premises: 250 usable square feet. (See Third Addendum to Lease)
</TABLE>
- INTENTIONALLY LEFT BLANK -
Lessor:
----
Page 2 of 15
Forest Green/Ormsby I Lease Lessee:
<PAGE> 5
1.02 LEASE OF PREMISES. Lessor, in consideration of the rents and
covenants hereinafter set forth, does hereby demise, let and lease to
Lessee, and Lessee does hereby hire, take and lease from Lessor, on the
terms and conditions hereinafter set forth, the Premises described in
Paragraph 1.03, to have and to hold the same, with all appurtenances,
unto the Lessee for the term hereinafter specified.
1.03 DESCRIPTION OF BUILDING, PREMISES AND COMMON AREAS. This Lease and
the provisions contained herein define all rights of Lessee in and to
the Building, Common Area, and Premises.
A. THE BUILDING. The Building, known as Ormsby I, which shall house the
Premises leased to Lessee, is one of two office buildings located in
the Forest Green Corporate Office Park (the "Property"). The Forest
Green Corporate Office park is situated on Hurstbourne Parkway at
Dorsey Lane in Louisville, Kentucky. The Building consists of a six
story general office building, parking area and other related
improvements, all located generally as shown on the Site Plan attached
hereto as Exhibit A. The approximate number of Rentable Square Feet in
the Building as specified in Article I, Paragraph 1.01 of the Basic
Lease Provisions. Any reference in this Lease to the term 'Building'
shall include any office building, the Common Areas (as hereinafter
defined) and the land described in the Legal Description attached
hereto as Exhibit B, unless the context requires otherwise.
B. THE PREMISES. The Premises shall be the demised areas within the
Building outlined on the floor plan(s) attached hereto as Exhibit C.
The approximate Rentable Square Feet of the Premises shall be as
specified in Article I, Paragraph 1.01, subject to correction upon
execution of the Acceptance of Premises Amendment. The Rentable Square
Feet of both the Building and the Premises shall be evidenced by a
certificate from an architect mutually acceptable to the parties. The
method of determining Rentable Square Feet of the Premises and Rentable
Square Feet of the Building shall be ANSI/BOMA Z65.1-1996. The Premises
are known or are to be known by the suite number(s) specified in
Article I, Paragraph 1.01 of the Basic Lease Provisions.
C. THE COMMON AREAS. The Common Areas refers to the areas of the
Building and the land which are designated for use in common by all
lessees of the Building and their respective employees, agents,
customers, invitees and others, and includes, by way of illustration
and not limitation, entrances and exits, hallways and stairwells,
elevators, rest rooms, side-walks, driveways, parking areas, landscaped
areas, courtyards and any other areas as may be designated at any time
by Lessor as part of the Common Areas of the Building. The Lessee, its
employees, agents, customers, guests, and invitees, shall have a
nonexclusive right to use and enjoy the Common Areas. Lessor may at any
time close temporarily any Common Areas to make repairs or changes
therein or to effect construction, repairs or changes within the
Building and may do such other acts in and to the Common Areas as in
Lessor's judgement may be desirable to improve the convenience thereof.
1.04 THE GREENWAYS AREA. The term Greenways Area refers to the areas
identified as Greenways on that Plat of record in Plat Book 44, Page
16, in the office of the Clerk of Jefferson County, Commonwealth of
Kentucky, as such plat is modified from time to time. The Greenways
Area is currently as approximately indicated in Exhibit E. Lessor
shall, during the term of this Lease, delegate to Lessee, its
employees, agents, customers, guests, and invitees, Lessor's
nonexclusive right, resulting from Lessor's status as the owner of the
Building, to use and enjoy the Greenways Areas. Lessee, including its
employees, agents, customers, guests, and invitees, hereby agree to
abide by any and all rules and regulations the Forest Green Development
Association, Inc. a Kentucky not-for-profit corporation, its successors
or assign, may impose on Lessor.
1.05 CHANGE IN PLANS. Notwithstanding any plan or specification
provided for in this Lease, Lessor reserves the right to make minor
changes or revisions to the Site Plan, to change or modify and add to
or subtract from the size and dimension of the Building or any part
thereof, the number, location and dimensions of buildings, any
designated parking spaces, the number of floors in any building, the
location, size and number of tenants' spaces, and the size, shape,
location and arrangement of Common Areas, and to design and decorate
any portion of the Building as Lessor desires. In the event the size of
the Building is altered, modified or changed, the Rentable Area of the
Building and Lessee's Pro Rata Occupancy as specified herein shall be
adjusted to reflect the new area measurements, however, the Rentable
Area of the Premises shall not materially change. The Building, Common
Areas, and Site Plan are subject to minor change without notice, do not
grant any easement rights to Lessee, do not obligate Lessor to
construct any buildings shown other than the Building in which the
Premises are located and are not to be construed as containing any
representations or agreements by Lessor. In no event shall Lessor
reduce the parking ratio below five (5) parking spaces for every 1,000
usable square feet on floors 1 through 6 of the Building and the Future
Building.
1.06 APPLICABLE LAWS. Lessor shall construct and maintain the Building,
Premises, and Common Areas in compliance with all applicable local,
state, and federal codes, regulations and ordinances, including the
Americans with Disabilities Act of 1990. The Building has been designed
and constructed for a digital redundant telecommunications system,
including a conduit for looped fiber optics and cable (CATV) to the
Building with electrical service from a loop supplied by two separate
substations. Upon receipt, Lessor shall provide Lessee with a copy of
the Certificate of Occupancy evidencing compliance with said applicable
local, state, and federal codes, regulations and ordinances.
ARTICLE II
TERM AND POSSESSION
2.01 COMMENCEMENT AND EXPIRATION. The Term of this Lease shall be seven
(7) years but rent shall commence on the respective Rent Commencement
Dates shown in Article I, Paragraph 1.01 of the Basic Lease Provisions
or such earlier dates as Lessee takes possession and commences
beneficial use of the respective Premises. The Rent Commencement Dates
may be extended by Lessee by providing notice to Lessor, for
governmental approval and construction delays of the Premises beyond
Lessee's control, including, but not limited to: acts of God, labor
strikes, and delays caused by Lessor. In the event the Premises are not
ready for occupancy on the respective Rent Commencement Dates, this
Lease shall remain in effect. The initial term thereof shall begin on
September 1, 2000 unless the Premises are not ready on that date
because such delay was caused by one of the reasons set forth above. If
the Lease commences on any day other than the first day of a calendar
month, the term of the Lease shall be extended by that part of one
month necessary to cause the expiration of the term to be on the last
day of a calendar month.
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 6
2.02 CONSTRUCTION OF LESSOR'S WORK AND LESSEE'S WORK. Lessor will
perform or cause to be performed the work described on Exhibit D on or
before March 31, 2000 and shall furnish Lessee with a Certificate of
Occupancy on or before April 14, 2000. Lessee shall perform or cause to
be performed the Leasehold Improvements as set forth on Exhibit F
attached hereto. Each party shall perform such work, subject to events
and delays beyond its control for which neither party will be liable to
the other party in any way. Lessor will tender the Premises to Lessee
by providing ten (10) days notice of the day on which its work will be
completed. Before Lessee takes possession of the Premises, Lessor and
Lessee shall execute an Acceptance of Premises Amendment, in a similar
form as attached hereto as Exhibit G, which, besides affixing and
confirming the respective Commencement Dates, Expiration Date, Rentable
Square Feet, and Initial Base Rent, will contain acknowledgments that
subject to latent defects and seasonal HVAC matters of the Base
Building described in Exhibit D, Lessee has accepted the Premises in
their then present condition, and that the Premises are satisfactory in
all respects except for minor "punch list" items agreed to in writing
by Lessor and Lessee, which Lessor will promptly remedy. If Lessee
takes possession of the Premises, Lessee shall be deemed to have
accepted the Premises subject to latent defects and seasonal HVAC
matters of the Base Building described in Exhibit D, even though the
Acceptance of Premises may not have been executed.
2.03 SURRENDER OF THE PREMISES. Upon the Expiration Date or earlier
termination of this Lease or upon default or breach of this Lease by
Lessee, Lessee shall immediately surrender the Premises and all access
keys to the Premises to Lessor, together with all alterations,
improvements and other property as provided elsewhere herein, in
broom-clean condition and in good order, condition and repair, except
for ordinary wear and tear and such damage as Lessee is not obligated
to repair; failing this, Lessor may restore the Premises to such
condition and replace the access keys not returned, at Lessee's
expense, and Lessee shall immediately reimburse Lessor upon demand.
Upon such expiration or termination, Lessee shall have the right to
remove its property (as described in Article VII, Paragraph 7.04).
Lessee shall promptly repair any damage caused by any such removal, and
shall restore the Premises to the condition existing prior to the
installation of the items so removed.
2.04 HOLDING OVER. If Lessee shall hold over after the expiration of
the term of this Lease, it shall be deemed to be occupying the Premises
as a Lessee from month to month, which tenancy may be terminated as
provided by law. Lessee agrees that holding over beyond the term of
this Lease shall cause irreparable damage to Lessor and that it will be
impossible to estimate or determine the damage that will be suffered by
Lessor in such an event. Therefore during such tenancy, Lessee agrees
to pay to Lessor one and a quarter times (125% of) the Base Rent which
was payable in the month immediately preceding the month in which the
expiration or termination occurs and to be otherwise bound by all of
the terms, covenants and conditions contained in this Lease. If Lessee
fails to surrender the Premises upon the termination of this Lease,
Lessee shall indemnify and hold Lessor harmless from loss or liability
resulting from such failure from whatever source.
ARTICLE III
RENT
3.01 BASE RENT. Lessee shall pay to Lessor as Base Rent for the
Premises the annual sum specified in Article I, Paragraph 1.01 of the
Basic Lease Provisions, payable in consecutive monthly installments, in
advance, on or before the first day of each and every calendar month
during the term of this Lease without demand, notice or offset;
provided, however, that if the Commencement Date shall be a day other
than the first day of a calendar month, the Base Rent installment for
such first fractional month shall be prorated on the basis of the
number of days during the month this Lease was in effect in relation to
the total number of days in such month. The Initial Base Rent herein is
acknowledged to be based on the estimated Rentable Square Feet of the
Premises and shall be confirmed in the Acceptance of Premises Amendment
after the construction of the Premises. The Prepaid Rent as specified
in Article I, Paragraph 1.01, shall be applied towards the first
monthly installment of the Base Rent. Lessee's Initial Net Rent Base as
specified in Article I, Paragraph 1.01, Item D of the Basic Lease
Provisions is subject to annual adjustments at the end of each Lease
Year (as hereinafter defined) to reflect a two percent (2%) increase.
Commencing the second Lease Year, Lessee shall pay as additional rent
to Lessor an amount determined by multiplying the Net Rent by 1.02. The
resulting Net Rent amount, plus the Operating Expense Stop, will be the
Base Rent for the second Lease Year. For each Lease Year thereafter,
the Net Rent computation will be the same. As used in this Paragraph,
the term "Lease Year" shall mean each succeeding twelve months
commencing with the first day of the initial term hereof; provided,
however, that if the date on which the Lease term commences is other
than the first day of the calendar month, then the first Lease Year
shall commence on the date of the month following the commencement of
the Lease term and end on the last day of the twelfth full calendar
month occurring thereafter.
3.02 ADDITIONAL RENT.
A. OPERATING EXPENSE ADJUSTMENT:
1. Definitions: (a) "Building Operating Expenses" shall mean
the amount of any and all of Lessor's actual and direct costs, expenses and
disbursements of any kind and nature, incurred in connection with the
management, operation, maintenance and repair of the Building, including the
Common Areas, or any improvements situated on the property for a particular
calendar year or portion thereof, as determined by Lessor based upon generally
accepted accounting principles applied in a consistent manner, together with all
additional actual and direct costs, expenses and disbursements with respect to
the management, operation and maintenance of the Building which Lessor
determines that it would have paid during such year if the Building had been
ninety-five percent (95%) occupied. Building Operating Expenses include by way
of illustration but not limitation: all general real estate taxes, payments in
lieu of real estate taxes, and all special assessments levied against the
Building (hereinafter called "real estate taxes"); costs and expenses of
contesting the validity or amount of real estate taxes; insurance premiums on
insurance coverage which is required to be carried by Lessor or which Lessor may
elect to carry at Lessor's reasonable discretion; water, sewer, electrical and
other utility charges for the Common Areas of the Building, and utility charges
for the Premises which are not separately metered; service and other charges
paid in connection with the operation and maintenance of the elevators, the
heating, ventilation and air-conditioning systems; association fees; cleaning
and other janitorial services; tools and supplies; repair costs; landscape
maintenance; parking lot maintenance; snow removal; security services; license,
permit and inspection fees; management fees; auditing fees; wages and related
employee benefits payable for the maintenance and operation of the Building;
and, in general, all other costs and expenses which would generally be regarded
as operating and maintenance costs and expenses. There shall also be included in
the Building Operating Expenses the cost or portion thereof reasonably allocable
to any capital improvement made to the Building by Lessor after
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 7
the date of this Lease which (i) improves the operating efficiency of any system
within the Building and thereby reduces Building Operating Expenses (but only to
the extent of actual savings), or (ii) is required under any governmental law or
regulation that was not applicable to the Building at the time it was
constructed, or (iii) is installed pursuant to Paragraph 3.02, with such cost
being amortized over such period of time and in such manner as Lessor shall
reasonably determine, together with interest on such cost or the unamortized
balance thereof. Building Operating Expenses shall not include: (i) expenses for
painting, redecorating or other work which Lessor performs for any lessee in the
Building; (ii) expenses for repairs or other work occasioned by fire, windstorm
or other insurable casualty; (iii) expenses incurred in leasing or procuring new
lessees, including leasing commissions, leasehold improvements, tenant
allowances, moving allowances, other inducements, advertising and promotion
activities; (iv) legal expenses incurred in enforcing the terms of any lease;
(v) interest or amortization payments on any mortgage or mortgages; (vi)
penalties for late payment of real estate taxes; (vii) amounts for net income,
stock, transfer, franchise, gift and estate taxes; (viii) all costs for which
Lessee or any other lessee in the Building is being charged other than pursuant
to Operating Expenses Adjustment clauses; (ix) the cost of any electric current
furnished to any portion of the Premises (it being understood that Lessee shall
pay for its own electricity) as well as the cost of electricity or other
services to other lessees beyond normal office consumption during normal
business hours; (x) the cost of correcting defects in the construction of the
Building or its operating systems (including any structural repairs or warranty
work); (xi) the cost of any repair or restoration made by Lessor because of
casualty or condemnation; (xii) the cost of any items for which Lessor is to be
reimbursed by insurance, third parties or other lessees; (xiii) the cost of any
capital items except as expressly allowed in this Paragraph; (xiv) all
administrative and management services (except for the cost of the on-site
manager and his direct expenses) in excess of four percent (4%) of the annual
Base Rent (less the Real Estate Taxes and Insurance components) from lessees of
the Building; (xv) the cost of any items which are not included in Operating
Expenses for any other lessee in the Building; and (xvi) the cost of general
office cleaning (it being understood that Lessee shall provide its own cleaning
and janitorial supplies for floors 1 through 3). Furthermore, Lessee shall be
liable for seventy-five percent (75%) of the total trash removal and HVAC
supplies, maintenance and repairs. (b) "Pro Rata Occupancy" shall mean the
percentage specified in Article I, Paragraph 1.01 of the Basic Lease Provisions
subject to amendment by the Acceptance of Premises Amendment. The method of
determining Pro Rata Occupancy shall be to divide Lessee's Rentable Square Feet
of the Premises (not including any Ground Level or Roof Level Premises) by the
Total Rentable Area of the Building (not including any Ground Level or Roof
Level Premises).
2. PAYMENT OBLIGATIONS. If in any calendar year or partial
calendar year during the term hereof, the Building Operating Expenses adjusted
for Lessee's Pro Rata Occupancy should exceed the Operating Expense Stop in the
amount specified in Article 1, Paragraph 1.01, then Lessee shall pay as
Additional Rental for that year or partial calendar year its pro rata portion of
these Building Operating Expenses in excess of the amount Operating Expense Stop
(the "Operating Expense Adjustment"). Such pro rata portion to be calculated by
multiplying the Building Operating Expenses in excess of the Operating Expense
Stop for the Premises by Lessee's Pro Rata Occupancy. A statement showing the
Building Operating Expenses and Lessee's proportionate share thereof shall be
delivered by Lessor to Lessee within one hundred twenty (120) days after the end
of any calendar year together with reasonably detailed back-up information
supporting each item. Within thirty (30) days after delivery by Lessor to Lessee
of such statement, Lessee shall pay to Lessor the Operating Expense Adjustment,
which shall be deemed Additional Rent under this Lease. Lessor represents and
warrants to Lessee that the Operating Expense Stop in Paragraph 1.01D is
Lessor's best estimate of the actual Building Operating Expenses for the first
year of Lessee's occupancy. Any Building Operating Expenses in excess of ten
percent (10%) of that Operating Expense Stop shall be added to the estimated
Operating Expense Stop and the resultant Operating Expense Stop shall be used
for the remainder of the Lease term in any calculations to arrive at Lessee's
liability for Building Operating Expenses.
3. SUCCEEDING YEAR OPERATING EXPENSES. Within one hundred
twenty (120) days after the end of any calendar year (subsequent to the initial
calendar year), Lessor shall advise Lessee of the estimated amount of the
increase, if any, in Operating Expenses over Lessee's Operating Expense Stop as
defined herein, for the upcoming calendar year and Lessee shall pay to Lessor,
Lessee's share of such estimated increase in equal monthly installments on the
first day of each month during that calendar year together with the Base Rent.
Lessor shall ascertain and advise Lessee of Lessee's share of the amount of any
increase in Operating Expenses for the preceding year and any additional sum
owed by Lessee to Lessor shall be paid to Lessor within thirty (30) days
following the receipt of Lessor's notice thereof. Should any excess have been
paid by Lessee to Lessor for the preceding year, Lessor shall apply the excess
toward sums due for the next following calendar year. In no event shall the
provisions of this paragraph reduce the rent below the Base Rent. Lessor shall
use its best efforts to keep Building Operating Expenses as low as possible
consistent with the operation of a first class office building. At the written
request of Lessee, Lessor shall, at least once every three (3) years, bid out
the insurance contracts. Lessee shall not be liable in any way for more than a
three percent (3%) annual increase in any item which is not an Uncontrollable
Expense. "Uncontrollable Expenses" shall mean those expenses that are subject to
increases, which are outside of Lessor's control, including, but not limited to,
any increase in expenses relating to utility rates, collectively bargained union
wages, government mandated minimum wages, waste disposal regulations, snow
removal, insurance, HVAC regulations, and real estate taxes.
4. MULTIPLE BUILDINGS. Upon the completion of the second
planned building as indicated on Exhibit A, Lessor shall have the option to
combine the Building Operating Expenses, as defined herein, of the two buildings
for the purposes of calculating the Operating Expense Adjustment, if combining
the Building Operating Expenses results in a lower operating expense for Lessee
on a per Rentable Square Foot basis. Lessor shall recalculate and provide
written notice to Lessee of the adjusted the Total Rentable Area to include both
buildings and Lessee's adjusted Pro Rata Occupancy. The process, as defined
herein, to calculate Lessee's Operating Expense Adjustment shall remain
unchanged.
5. REDUCTIONS TO THE OPERATING EXPENSE ADJUSTMENT. As a result
of Lessee's permitted 24 hour, 7 day use, Lessor reserves the right to reduce or
eliminate those services that exclusively serve the Premises if such can be
provided by Lessee directly. The associated expense of those services shall be
excluded from the Building Operating Expenses and the Operating Expense Stop
shall be adjusted to reflect this modification to the Operating Expense
Adjustment calculation as defined herein.
B. IMPROVED OPERATING EFFICIENCY. If, at any time after the
Commencement Date, Lessor shall install a labor or energy saving device or other
equipment, which improves the operating efficiency of any system within the
Building (such as an energy management computer system) and thereby reduces
Building Operating Expenses or utilities to operate the Building, or limits
future increases in Building Operating Expenses or utility costs, then Lessor
may add to Building Operating Expenses an annual amortization allowance based
upon the costs of such equipment, plus interest on the unamortized balance
thereof, amortized in equal installments over such period as determined by
generally accepted accounting principles; provided, however, that the amount of
such annual amortization allowance and interest shall not exceed the annual
savings in costs or expenses attributable to such installed device or equipment,
and in no event shall such amortization allowance increase the sum of Building
Operating Expense over what it would have been if such labor or energy saving
device or other equipment had not been installed.
Lessor:
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Page 5 of 15
Forest Green/Ormsby I Lease Lessee:
<PAGE> 8
C. RIGHT TO REVIEW. Lessee shall have the right to review supporting
data for any portion of a Building Operating Expense Adjustment. In order for
Lessee to exercise its right under this Paragraph: (i) Lessee shall, within
thirty (30) days after any such Building Operating Expense Adjustment is sent,
deliver a written notice to Lessor exercising its right to review; (ii) Lessee
shall specify in the notice the portions of the Building Operating Expense
Adjustment that are claimed to be incorrect; and (iii) Lessee shall have paid
all undisputed amounts due from Lessee to Lessor as specified in the Building
Operating Expense Adjustment notice. In no event shall Lessee be entitled to
withhold, deduct, or offset any monetary obligation of Lessee to Lessor under
the Lease pending the completion of and regardless of the results of any review
of records under this Paragraph. The right of Lessee under this Paragraph may
only be exercised once for any Building Operating Expense Adjustment Notice.
Lessee shall provide fifteen (15) days notice of its desire to review the
records which said review shall be conducted at the main office of Lessor during
normal business hours. Such records shall be made available for inspection only
and may not be mechanically reproduced. Any review to be conducted under this
Paragraph shall be at the sole expense of Lessee (unless Lessor has overcharged
Lessee by three percent or more, in which case Lessor shall pay all costs of
such review) and shall be conducted by an independent firm or certified public
accountants. Lessee acknowledges and agrees that any records reviewed under this
Paragraph constitute confidential information of Lessor, which shall not be
disclosed to anyone other than the accountants performing the review and those
authorized employees and agents of Lessee. Lessee shall have fifteen (15) days
to complete such review of records and submit any objections or findings to
Lessor. Any errors disclosed by the review of the records under this Paragraph
shall be promptly corrected, provided that Lessor shall have the right to cause
another review of the records to be made by an independent firm of certified
public accounts. In the event that the results of the review of records reveal
that Lessee has overpaid any obligation for a preceding period, that amount of
such overpayment shall be credited against Lessee's subsequent Building
Operating Expense installment obligation or refunded to Lessee if the term has
expired. In the event that such results show that Lessee has underpaid its
obligations for a preceding period, the amount of such underpayment shall be
paid by Lessee to Lessor with the next succeeding Building Operating Expense
installment obligation. Lessor shall be permitted at the end of each calendar
year to destroy or otherwise dispose of its records, except in regard to a
dispute which said records shall be retained until such dispute is fully
resolved. Notwithstanding the above, in no event shall Lessor dispose of any
records less than twenty-four (24) months old.
3.03 DEFINITION OF RENT. The Base Rent, Additional Rent, and any other amounts
of money to be paid by Lessee to Lessor pursuant to the provisions of this
Lease, including any sums due under any and all Exhibits attached hereto,
whether or not such payments are denominated Rent or Additional Rent and whether
or not they are to be periodic or recurring, shall be deemed Rent or Additional
Rent for purposes of this Lease; and any failure to pay any of the same as
provided in this Lease shall entitle Lessor to exercise all of the rights and
remedies afforded hereby or by law for the collection and enforcement of
Lessee's obligation to pay Rent. Lessee's obligation to pay any such Rent or
Additional Rent pursuant to the provisions of this Lease shall survive the
expiration or other termination of this Lease and the surrender of possession of
the Premises after any hold-over period.
3.04 SERVICE CHARGE. If any payment due Lessor under this Lease has not been
received by Lessor within five (5) days after the same has become due, a service
charge equal to the lesser of Five Hundred Dollars ($500) or five percent (5%)
of the amount of the payment so overdue shall be charged, and an additional like
amount may be charged on the first day of each calendar month thereafter until
the delinquent payment has been paid in full, as reimbursement to Lessor for the
estimated additional administrative expense incurred. In the event any payment
as called for in this Lease is returned to Lessor for reason of insufficient
funds in Lessee's account or other reason for non-payment of Lessee's payment by
Lessee's depository, Lessee shall be subject to a $25.00 processing fee plus any
applicable service charge as described above. No payment by Lessee or receipt by
Lessor of a lesser amount than any payment of Rent or Additional Rent due shall
be deemed to be other than on account of the amount due, and no endorsement or
statement on any check or payment of Rent or Additional Rent shall be deemed an
accord and satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such installment or
payment of Rent or Additional Rent, or pursue an other remedies available to
Lessor.
3.05 REAL ESTATE TAX. Lessor shall pay all real estate taxes and assessments on
the Building prior to delinquency. Lessee shall have the right, on Lessor's
behalf, to challenge the assessed valuation of the Building with the appropriate
taxing authorities at any time after execution of this Lease so long as Lessee
notifies Lessor in advance of such negotiations and makes a reasonable effort to
allow Lessor's participation. In the event that Lessee desires to contest an
increase, Lessor shall join in such context with Lessee, and the cost thereof
shall be a Building Operating Expense.
ARTICLE IV
SECURITY DEPOSIT
4.01 SECURITY DEPOSIT. As security for the performance and observance by Lessee
of all of its obligations under the terms, condition and covenants of this
Lease, Lessee has deposited with Lessor the sum specified in Article I,
Paragraph 1.01 of the Basic Lease Provisions, which sum shall be held by Lessor
as a security deposit during the term of this Lease. If Lessee performs and
observes all of the terms, conditions and covenants of this Lease which are
required to be performed and observed by it, Lessor shall return the security
deposit, or balance thereof then held by Lessor, without interest, to Lessee
within thirty (30) days after the Expiration Date or after Lessee surrenders
possession of the Premises, whichever is later. In the event of a default by
Lessee in the payment of rent or the performance or observance of any of the
other terms, conditions or covenants of this Lease which has not been cured
within the applicable cure period, then Lessor may, at its option and without
further notice, apply all or any part of the security deposit in payment of such
rent or to cure any other such default; and if Lessor does so, Lessee shall,
upon request, deposit with Lessor the amount so applied so that Lessor will have
on hand at all times during the term of this Lease the full amount of the
security deposit. Lessor shall be required to hold the security deposit as a
separate non-interest bearing account at Firstar Bank, NA for the term of
Lessor's loan on the Premises with Firstar Bank. If Lessee is in default under
this Lease more than two (2) times within any twelve (12) month period,
irrespective of whether or not such default is cured, then, without limiting
Lessor's other rights and remedies provided for in this Lease or at law or
equity, the Security Deposit shall automatically be increased by an amount equal
to the greater of: (i) an amount equal to the original Security Deposit, or (ii)
the amount of one (1) month's Base Rent, which shall be paid by Lessee to Lessor
forthwith on demand.
4.02 TRANSFER. In the event of a sale or lease of the Building of which the
Premises are a part, Lessor shall have the right to transfer the security
deposit to its purchaser or lessee, and Lessor shall thereupon be released by
Lessee from all responsibility for the return of such security deposit; and
Lessee agrees to look solely to the new purchaser or lessee for the return of
such deposit. In the event of an assignment of this Lease by Lessee, the
security deposit shall be deemed to be held by Lessor as a deposit made by the
assignee, and Lessor shall have no further responsibility of such deposit to the
assignor.
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 9
ARTICLE V
OCCUPANCY AND USE
5.01 USE OF PREMISES. Lessee shall use and occupy the Premises for general
office space, computer network operations center, equipment testing and staging,
a 24-hour 7-day per week call center help line, a training facility and uses
ancillary to the foregoing and for no other purpose. Lessee shall not use or
occupy the Premises in violation of law or of the Certificate of Use or
Occupancy issued for the Building of which the Premises are a part, and shall
immediately discontinue any use of the Premises which is declared by either any
governmental authority having jurisdiction or the Lessor to be a violation of
any law, code, regulation or a violation of said Certificate of Use or
Occupancy. Lessee shall comply with any direction of any governmental authority
having jurisdiction which shall, by reason of the nature of Lessee's use or
occupancy of the Premises, impose any duty upon Lessee or Lessor with respect to
the Premises or with respect to the use or occupation thereof. Lessee shall not
do nor permit to be done anything which will invalidate or increase the cost of
any fire and extended coverage insurance policy covering the Building and/or
property located therein, and shall comply with all rules, orders, regulations
and requirements of the appropriate Fire Rating Bureau or any other organization
performing a similar function. Lessee shall promptly upon demand reimburse
Lessor for any additional premium charged for such policy by reason of Lessee's
failure to comply with the provisions of this paragraph. Lessee shall not do or
permit anything to be done in, on or about the Premises which would in any way
obstruct or interfere with the rights of other lessees or occupants of the
Building, or use or allow the Premises to be used for any immoral, unlawful or
objectionable purpose, nor shall Lessee maintain or permit any nuisance or
commit any waste in, on or about the Premises.
5.02 COMPLIANCE WITH BUILDING RULES AND REGULATIONS. Rules and regulations
governing the use and occupancy of the Premises and all other leased space in
the Building have been adopted by Lessor for the mutual benefit and protection
of all the lessees in the Building. Lessee shall comply with and conform to the
rules and regulations currently in effect, which are set forth on a schedule
attached hereto, made a part hereof and marked Exhibit H. Lessor shall have the
right to amend such rules and regulations or to make new rules and regulations
from time to time in any reasonable manner. Any such amendments to the rules and
regulations shall be set forth in writing and shall be given to Lessee, who
shall thereafter comply with and conform to the same. All such rules and
regulations shall be applied and enforced uniformly as to all lessees in the
Building.
5.03 FLOOR LOADS. Lessee shall not overload the floors of the Premises beyond
their designed weight-bearing capacity which Lessor has determined to be fifty
(50) pounds per square foot live load for office space (excluding the twenty
(20) pound per square foot live load allowance for partitions) and seventy (70)
pounds per square foot live load for open space. Lessor reserves the right to
direct the positioning of all heavy equipment, furniture and fixtures which
Lessee desires to place in the Premises so as to distribute properly the weight
thereof. Lessor may require the removal of any equipment or furniture which
exceeds the weight limits of the Building.
5.04 SIGNS. Lessee shall not inscribe, paint, affix or display any signs,
advertisements or notices on, in or around the Building, or in the windows
thereof, except for such Lessee identification information as Lessor permits to
be included or shown on or adjacent to the Lessee access door(s) to the Premises
on multi-tenant floors or, on the Building directory. On floors occupied
exclusively by Lessee, Lessee, at its sole discretion, shall be permitted to
install signage in the common areas, including the elevator lobby. On the first
floor, Lessee shall be permitted to install reasonable non-building standard
signage suitable for a multi-tenant building, with Lessor's prior approval.
Lessor shall furnish and install, at its expense up to $10,000, a monument type
sign on the Property with Lessee's name and logo in a style and location
reasonably acceptable to Lessee. Lessor shall approve the material, design,
location, size and content of the monument type sign which shall be consistent
with the other monument type signs located or to be located within the Forest
Green Mixed Use Development. This provision shall not limit or prohibit Lessor
from installing other monument type signs on the Property for identification or
that contain the names of other lessees located within the Building but no such
signs shall be larger or more visible than Lessee's sign. During the term of
this Lease, Lessor shall not permit any other lessee of the Building to install
any identification sign on the exterior of the Building.
5.05 ACCESS TO AND INSPECTION OF THE PREMISES. After reasonable prior notice to
Lessee (except in the case of emergency), Lessor, its employees, agents and any
mortgagee of the Building shall have the right to enter any part of the Premises
during normal business hours for the purpose of examining or inspecting the
same, showing the same to prospective purchasers or mortgagees (and during the
last eighteen months of the term if the Lessee has not exercised its renewal
option, lessees)and for making such repairs, alterations or improvements to the
Premises or the Building as Lessor may deem necessary or desirable. If
representatives of Lessee shall not be present to open and permit such entry
into the Premises at any time when such entry is necessary or required herein,
Lessor and its employees and agents may enter the Premises by means of a master
key or otherwise. Lessor shall incur no liability to Lessee for such entry nor
shall such entry constitute an eviction of Lessee or a termination of this Lease
or entitle the Lessee to any abatement of rent therefor.
5.06 QUIET ENJOYMENT. Except as provided in Article XV hereof to the extent that
it may be applicable, if and so long as Lessee pays the prescribed rent and
performs and observes all of the terms, conditions, covenants and obligations of
this Lease required to be performed or observed by it hereunder, Lessee shall at
all times during the term hereof have the peaceful and quiet enjoyment,
possession, occupancy and use of the Premises without any interference from
Lessor or any person.
ARTICLE VI
UTILITIES AND OTHER BUILDING SERVICES
6.01 SERVICES TO BE PROVIDED. Except as otherwise set forth in this Lease,
Lessor shall furnish Lessee with utilities, elevator facilities, heating,
ventilation, air conditioning, restroom facilities, drinking water, janitorial
service, window cleaning, and other building services, as provided in the Rules
and Regulations, to the extent considered by Lessor to be reasonably necessary
for Lessee's comfortable use and occupancy of the Premises for its use or as may
be required by law or directed by governmental authority. In the event Lessee
requires or utilizes more services or utilities, other than Lessee's separately
metered utilities, than is considered reasonable or normal by Lessor, Lessor may
reasonably determine and require Lessee to pay as Additional Rent, the cost
incurred as a result of such additional service or usage. Services shall be
billed separately to Lessee and are to be paid monthly to Lessor at the same
time the monthly installment of Base Rent is due. Services include the
replacement of all lamps at a cost established from time to time by Lessor.
Lessee shall not contract or employ any person(s) to provide any services found
in the Lease and the Rules and Regulations without prior written approval of
Lessor which shall not be unreasonably withheld. Lessee shall be responsible for
contracting for janitorial services for the Premises.
6.02 ADDITIONAL SERVICES. If Lessee requests any other utilities or building
services in addition to those identified above, or
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 10
utilizes any of the above utilities or Building services in frequency, scope,
quality or quantities substantially greater than the standard set by Lessor for
the Building, then Lessor shall use reasonable efforts to attempt to furnish
Lessee with such additional utilities or Building services. Lessor shall impose
a reasonable charge for such additional utilities or Building services, which
shall be paid monthly by Lessee at the same time the monthly installment of Base
Rent is due.
6.03 SPECIAL EQUIPMENT. Lessee shall obtain Lessor's written consent (not to be
unreasonably withheld) prior to installing or connecting any lights, machines or
equipment, including but not limited to computers which would materially affect
the normal operation, or exceed the designed capacity of (in excess of four (4)
volt/amps per usable square foot), the Building's electrical or heating and
air-conditioning systems. If Lessor determines that any such equipment is in any
way incompatible with the Building's electrical or heating and air-conditioning
systems, then Lessor shall have the right, as a condition to granting its
consent, shall require Lessee to make such modifications to the equipment to be
installed or connected or to make any modification to the Building's electrical
or heating and air conditioning systems, as Lessor considers to be necessary.
All costs expended by Lessor to install, or removed upon termination of the
Lease, any such machinery or equipment or to make any such modifications, and
any such additional costs of operation and maintenance occasioned thereby, shall
be borne by Lessee, who shall, upon demand, reimburse Lessor for the same as
Additional Rent.
6.04 INTERRUPTION OF SERVICES. Lessee understands, acknowledges and agrees that
any one or more of the utilities or other Building services identified in
Article VI may be interrupted by reason of accident, emergency or other causes
beyond Lessor's control, or may be discontinued or diminished temporarily by
Lessor or other persons until certain repairs, alterations or improvements can
be made; that Lessor does not represent or warrant the uninterrupted
availability of such utilities or Building services; and, that any such
interruption shall not be deemed an eviction or disturbance of Lessee's right to
possession, occupancy or use of the Premises or any part thereof or render
Lessor liable to Lessee for damages by abatement of rent or otherwise or relieve
Lessee from the obligation to perform its covenants under this Lease unless such
interruption persists for more than forty-eight (48) hours, in which event rent
shall abate.
6.05 PARKING. Lessor shall provide Lessee with ten (10) marked reserved parking
spaces in the area shown on Exhibit A. Lessor shall have no greater
responsibility to monitor or police said reserved parking spaces that it does
with respect to any other reserved parking in the Forest Green Corporate Office
Park. At Lessee's request, Lessor agrees to consider constructing covered
parking for tenants in the Building in the area farthest from Hurstbourne
Parkway so long as Lessee commits to lease such spaces at a mutually acceptable
rate per space for the balance of the Lease.
6.06 COMPUTER/COMMUNICATIONS ROOM. Lessee shall be permitted to install
supplemental air conditioning in the computer/communications room of the
Premises, at its sole cost and expense. The condenser for this supplemental HVAC
shall be installed outside the Building, which Lessor shall grant access to for
repair and maintenance of the condenser unit. Lessee shall be responsible for
the maintenance and repair of the supplemental air conditioning.
6.07 UTILITIES. The Premises, including the computer/communications room,
lighting, receptacles, HVAC and supplemental air conditioning shall be
sub-metered for electrical consumption. The cost of such submetering equipment
shall be borne by Lessor. Lessor shall read the sub-meter monthly and invoice
Lessee for the electrical usage. The calculation shall be based on Lessor's
actual electrical consumption charge and demand charge divided by the total
kilowatt hour (KWH) consumed ("Rate per KWH") for the Building multiplied by
Lessee's KWH consumption.
6.08 SECURITY SYSTEM. Lessee shall be permitted to utilize the Building's
security system to control entry and egress to every portion of Lessee's
Premises, within the limitations and capabilities of the Building's security
system. Lessee shall be responsible for the cost of the installation of any
equipment and wiring for the connection, and maintenance and repair to the
Building's security system. Lessor shall issue and modify access cards based
upon Lessor's security procedures at the time.
ARTICLE VII
REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES
7.01 REPAIR AND MAINTENANCE OF BUILDING. Lessor shall keep and maintain the
Building in good order, condition and repair, including the roof, exterior walls
and windows, foundations, Common Areas, and the electrical, elevator, plumbing,
heating, ventilation and air-conditioning systems serving the Premises and other
parts of the Building. The cost of all such repairs by Lessor shall be included
as part of the Building Operating Expenses, except for those made to any
electrical, plumbing, heating, ventilation and air-conditioning components which
have been installed in the Premises pursuant to Article VI, Paragraph 6.03, and
except for those made necessary by the negligence, misuse or default of Lessee,
its employees, agents, customers, or invitees, in which event they shall be
borne by Lessee, who shall be separately billed and shall reimburse Lessor, upon
demand, for the same as Additional Rent.
7.02 REPAIR AND MAINTENANCE OF PREMISES. Lessee shall, at Lessee's expense, keep
and maintain the Premises in a neat, clean and tenantable condition and good
repair, except for ordinary wear and tear. Lessee agrees to make all repairs
necessitated by the negligence or deliberate act of Lessee, its employees,
agents, or invitees, and to make all other repairs not specifically required to
be made by Lessor under the provisions of the foregoing paragraph. Lessee shall
be billed separately for the cost of all such repairs and maintenance and shall
reimburse Lessor for the same as Additional Rent; provided, however, that the
cost of the services specified in Paragraph 6.01 may at Lessor's discretion be
billed directly to Lessee or included by Lessor as part of Building Operating
Expenses.
7.03 ALTERATIONS OR IMPROVEMENTS. Lessee may make, or permit to be made,
alterations or improvements to the Premises, but only if Lessee obtains the
prior written consent of Lessor thereto which shall not be unreasonably
withheld. If Lessor allows Lessee to make any such alterations or improvements,
Lessee shall make the same in accordance with all applicable laws and building
codes, in a good and workmanlike manner and in quality equal to or better than
the original construction of the Building and shall comply with such
requirements as Lessor considers necessary or desirable, including without
limitation requirements as to the manner in which and the times at which such
work shall be done and the contractor or subcontractors to be selected to
perform such work. Lessee shall promptly pay all costs attributable to such
alterations and improvements and shall indemnify Lessor against any mechanics'
liens or other liens or claims filed or asserted as a result thereof, as
provided in Article X; and shall also indemnify Lessor against any costs or
expenses which may be incurred as a result thereof, including cleaning and waste
removal; and shall also indemnify Lessor against any costs or expenses which may
be incurred as a result of building code violations attributable to such work.
Lessee shall promptly repair any damage to the Premises or the Building caused
by any such alterations or improvements. Any alterations or improvements to the
Premises, except movable office furniture and equipment and trade fixtures,
shall become a part of the Building and the property of Lessor and shall not be
removed by Lessee.
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 11
7.04 TRADE FIXTURES. Any trade fixtures installed on the Premises by Lessee at
its own expense, such as movable partitions, counters, shelving,
data/communication cabling and the like, shall (unless otherwise approved by
Lessor) be removed on the Expiration Date or earlier termination of the Lease
provided that Lessee is not then in default. Lessee shall bear the cost of such
removal and repairs at its own expense any and all damage to the Premises
resulting from such removal. If Lessee fails to remove any and all such trade
fixtures from the Premises on the Expiration Date or earlier termination of this
Lease, all such trade fixtures shall become the property of Lessor unless Lessor
elects to require their removal, in which case Lessee shall promptly remove same
and restore the Premises to their prior condition, except for ordinary wear and
tear.
ARTICLE VIII
FIRE OR OTHER CASUALTY INSURANCE
8.01 REPAIRABLE DESTRUCTION OF PREMISES. If the Premises are damaged or
destroyed, in whole or in part, at any time during the term of this Lease by
fire or other casualty, the Lessor with due diligence will repair and rebuild
the same so that after such work of repairing and rebuilding has been completed,
the Premises shall be substantially the same as that prior to such damage. If
such repair is not completed within six (6) months, Lessee shall have the right
to terminate this Lease. Any provisions contained in this paragraph or in this
Lease requiring repairs, rebuilding, restoration or reconstruction or providing
for the use of insurance proceeds for any purpose shall be subject to the rights
of the mortgagee of Lessor.
8.02 IRREPARABLE DESTRUCTION OF PREMISES. If the Building shall be damaged or
destroyed to such an extent that Lessor in its discretion, determines the
Building to be irreparably destroyed, Lessor shall give the Lessee notice of
such determination within thirty (30) days after the date of such damage or
destruction. In the event of irreparable destruction, this Lease shall
automatically terminate as of the date of such destruction, and the Lessor shall
not be obligated to repair or rebuild. Any provisions contained in this
paragraph or in this Lease requiring repairs, rebuilding, restoration or
reconstruction or providing for the use of insurance proceeds for any purpose
shall be subject to the rights of the mortgagee of Lessor.
8.03 RENTAL ABATEMENT DURING RECONSTRUCTION. In the event of any damage or
destruction of the Premises or Building to the extent that the Premises shall
have been rendered unfit for use for Lessee's business purposes, there shall be
an abatement of rent corresponding to the time during which, and the extent to
which, the Premises may not be used by the Lessee for its business purposes. The
abatement of rent will terminate on the day that the Lessor has completed its
repair of the Premises and tenders possession of the Premises to the Lessee.
8.04 LESSOR'S DAMAGE OBLIGATIONS. No damages, compensations, setoffs or claims
shall be payable by Lessor for inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Premises or of the
Building required to be made by Lessor under the provisions of this Article
VIII, but this Paragraph shall not be construed to limit the abatement of
Lessee's rent in accordance with Paragraph 8.03 above. Lessor covenants with
Lessee that it shall use its best efforts to effect all such repairs promptly
and in such manner as not unreasonably to interfere with Lessee's occupancy.
8.05 INDEMNIFICATION. Lessee shall assume the risk of, be responsible for, have
the obligation to insure against, and indemnify Lessor and hold it harmless from
any and all liability for any loss, damage, injury or death to person or
property occurring in the Premises, regardless of cause, except for that caused
by the sole negligence of Lessor and its employees, agents, customers and
invitees; and, Lessee hereby releases Lessor from any and all liability for the
same. Lessee's obligation to indemnify Lessor hereunder shall include the duty
to defend against any claims asserted by reason of such loss, damage or injury
and to pay any judgments, settlements, costs, fees and expenses incurred in
connection therewith. Notwithstanding Lessor's obligations hereunder, Lessee
shall bear the sole risk of any loss of or damage to any personal property
(including but not limited to, any furniture, machinery, equipment, goods or
supplies) of Lessee or which Lessee may have on the Premises or any trade
fixtures installed by or paid for by Lessee on the Premises or any additional
improvements which Lessee may construct on the Premises; and, Lessor shall not
be liable for any such loss or damage, regardless of cause, except the sole
negligence of Lessor, its employees or agents. Lessor shall not be liable for
any injury to or death of any person or any loss of or damage to property
sustained by Lessee, or by any other person(s) whatsoever, which may be caused
by the Building or the Premises or any appurtenances thereto or thereof being
out of repair, or by the bursting or leakage of any water, gas, sewer, or steam
pipes, or by theft or by any act or neglect of any Lessee or occupant of the
Building, or of any other person, or by any other cause of whatsoever nature,
unless caused by the negligence of Lessor or its officers, agents or employees.
8.06 LESSEE'S INSURANCE. Lessee, in order to enable it to meet its obligation to
insure against the liabilities specified in this Lease, shall at all times
during the term of this Lease carry, at its own expense, one or more policies of
general public liability and property damage insurance, issued by one or more
insurance companies acceptable to Lessor, with the following minimum coverage:
<TABLE>
<S> <C> <C> <C>
A. Worker's Compensation - Minimum Statutory Amount
B. Comprehensive General Liability Insurance, - Not less than $1,000,000
including Blanket Contractual Liability, Combined Single Limit for
Broad Form Property Damage, Personal Injury, both Bodily Injury and
Completed Operations, Products Liability, Fire Damage Property Damage
C. Fire and Extended Coverage, Vandalism and - Full cost of replacement of
Malicious Mischief, and Sprinkler Leakage Insurance Lessee's Property & Fixtures
</TABLE>
Comprehensive General Liability Insurance policies shall name Lessor,
and its managing agent (currently Faulkner Hinton & Associates), as additional
insureds and shall provide that they may not be canceled on less than thirty
(30) days prior written notice to Lessor. Lessee shall furnish Lessor annually
with a copy of all certificates evidencing such insurance. Should Lessee fail to
carry such insurance and/or furnish Lessor with a copy of all such certificates
after a request to do so, Lessor shall have the right to obtain such insurance
and collect the cost thereof from Lessee as Additional Rent or, at Lessor's
discretion, to evict Lessee and all its business operations from the Premises,
without liability to Lessor. Lessor shall have the right, exercisable in its
sole judgment at any time by giving prior written notice thereof to Lessee, to
require Lessee to; (i) increase the limit and coverage amount of any insurance
Lessee is required to maintain pursuant to this Article to an amount that Lessor
or mortgagee, in its sole judgment, deem sufficient,
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 12
or (ii) purchase other insurance and/or endorsements in such amounts or types as
Lessor or mortgagee may require from time to time.
8.07 LESSOR'S INDEMNIFICATION. Lessor shall assume the risk of, be responsible
for, have the obligation to insure against and indemnify Lessee and hold it
harmless from any and all liability for any loss, damage or injury to person or
property (other than Lessee's property as provided in Paragraph 8.05) occurring
in, on or about the Building (except inside the Premises) and the Common Areas,
regardless of cause, except for that caused by the negligence of Lessee and its
employees, agents, customers and invitees. Lessor's obligation to indemnify
Lessee hereunder shall include the duty to defend against any claims asserted by
reason of such loss, damage or injury and to pay any judgments, settlements,
costs, fees and expenses incurred in connection therewith.
8.08 LESSOR'S INSURANCE. Lessor shall be responsible for insuring and shall at
all times during the term of this Lease carry, at its own expense, a policy of
insurance which insures the Building, including the Premises, against loss or
damage by fire or other casualty (namely, the perils against which insurance is
afforded by the standard insurance policy and extended coverage endorsement) for
the full replacement cost thereof; provided, however, that Lessor shall not be
responsible for and shall not be obligated to insure against any loss or damage
to any trade fixtures or personal property installed by or paid for by Lessee on
the Premises or any additional improvements which Lessee may construct on the
Premises, as provided in Paragraph 8.05. Lessor shall also carry comprehensive
general liability insurance naming Lessee as an additional insured in an amount
not less than $1,000,000.
8.09 WAIVER OF SUBROGATION. Lessor and Lessee hereby release each other and each
other's employees, agents, customers and invitees from any and all liability for
any loss, damage or injury to person or property occurring in, on or about or to
the Premises, the Building, improvements to the Building or personal property
within the Building by reason of fire or other casualty which could be insured
against under a standard fire and extended coverage insurance policy, regardless
of cause, including the negligence of Lessor or Lessee and their employees,
agents, customers and invitees. Each party to this Lease shall obtain from its
respective insurance company a consent to this mutual waiver of
subrogation/release, so as to prevent the invalidation of insurance coverage by
reason of this mutual waiver of subrogation/release, and shall provide the other
party a copy of any such consent.
ARTICLE IX
EMINENT DOMAIN
9.01 EMINENT DOMAIN. In the event the Building, or any portion thereof
necessary, in the sole opinion of Lessor, to the continued efficient and/or
economically feasible use of the Building shall be taken or condemned in whole
or in part for public purposes, or sold to a condemning authority to prevent
taking, then the term of this Lease shall, at the option of the Lessor,
forthwith cease and terminate. All compensation awarded for such taking or
conveyance shall be the property of Lessor without any deduction therefrom for
any present or future estate of Lessee, and Lessee hereby assigns to Lessor all
its right, title and interest in and to any such award. All compensation awarded
is subject to the rights of the Lessor's mortgagee. However, Lessee shall have
the right to recover from such authority, but not from Lessor, such compensation
as may be awarded to Lessee on account of moving and relocation expenses and
depreciation to and removal of Lessee's trade fixtures and personal property as
long as such award does not diminish the award to Lessor.
ARTICLE X
LIENS
10.01 LIENS. Lessee will keep the Premises and Building free and clear of all
mechanics' and materialmen's liens and other liens on account of work done for
Lessee or persons claiming under it. Should any such lien be filed against the
Premises and/or the Building, and not removed within thirty (30) days of notice
from Lessor to Lessee, Lessor may, without further notice to Lessee, elect to
obtain the release of each lien and any sums expended by Lessor shall be
immediately repaid to Lessor by Lessee together with interest at the rate of
eighteen percent (18%) per annum. Should Lessee elect to dispute the amount
required to release such lien or the quality of service provided by the
contractor who placed the lien, Lessee shall have the right to provide a bond,
against such lien in form and content reasonably acceptable to Lessor.
10.02 WAIVER OF LANDLORD'S LIEN. At Lessee's request, Lessor agrees to waive its
statutory lien on Lessee's personal property so as to facilitate Lessee's
financing and equipment leasing.
ARTICLE XI
RENTAL, PERSONAL PROPERTY AND OTHER TAXES
11.01 TAXES. Lessee shall pay before delinquency any and all taxes, assessments,
fees or charges, including any sales, gross income, rental, business occupation
or other taxes, levied or imposed upon Lessee's business operations in the
Premises and any personal property or similar taxes levied or imposed upon
Lessee's trade fixtures, leasehold improvements or personal property located
within the Premises. In the event any such taxes, assessments, fees or charges
are charged to the account of, or levied or imposed upon the property of,
Lessor, Lessee shall reimburse Lessor for the same as Additional Rent.
Notwithstanding the foregoing, Lessee shall have the right to contest in good
faith any such item and to defer payment, if permitted by applicable law, until
after Lessee's liability therefore is finally determined.
ARTICLE XII
ASSIGNMENT AND SUBLETTING
12.01 ASSIGNMENT AND SUBLETTING. Lessee may assign or transfer this Lease or
sublet the Premises or any part thereof but only after it has obtained ten (10)
days prior written consent of Lessor, which said consent shall not be
unreasonably withheld, conditioned or delayed. In the event of any such
assignment or subletting, Lessee shall nevertheless at all times remain fully
responsible and liable for the payment of rent and the performance and
observance of all of Lessee's other obligations under the terms, conditions and
covenants of this Lease. No assignment or subletting of the Premises or any part
thereof shall be binding upon Lessor unless such assignee or sublessee shall
deliver an instrument reasonably satisfactory to Lessor (in recordable form, if
requested) containing an agreement of assumption of all of Lessee's obligations
under this Lease. Upon the occurrence of an event of default, if all or any part
of the Premises are then assigned or sublet, Lessor, in addition to any other
remedies provided by this Lease or by law, may, at its option, collect directly
from the assignee or sublessee all rent becoming due to Lessor by reason of the
assignment or subletting. Any collection by Lessor from the assignee or
sublessee shall not be construed to constitute a novation or release of Lessee
from the further
Lessor:
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Forest Green/Ormsby I Lease Lessee:
<PAGE> 13
performance of its obligations under this Lease. In the event Lessor consents to
Lessee assigning or subletting all or a portion of the Premises, any rent paid
to Lessee as the result of such subletting, which rent is in excess of the rent
then being paid by Lessee, shall be shared equally with Lessor as Additional
Rent. In the event Lessor consents to Lessee assigning or subletting all or a
portion of the Premises, both the Lessee and the sublessee shall be held
responsible under all the terms and conditions of this Lease including but not
limited to the rules and regulations.
ARTICLE XIII
SUBORDINATION, NON-DISTURBANCE & ATTORNMENT
13.01 SUBORDINATION. Lessor shall have the right to subordinate this Lease to
any mortgage presently existing or hereafter placed upon the Building by so
declaring in such mortgage; and, the recording of any such mortgage shall make
it prior and superior to this Lease regardless of the date of execution or
recording of either document. Lessee shall, at Lessor's request, execute and
deliver to Lessor, without cost, any instrument, similar in form to Exhibit I,
which may be deemed necessary or desirable by Lessor to confirm the
subordination of this Lease; and, if Lessee fails or refuses to do so, Lessor
may execute such instrument in the name and as the act of Lessee.
Notwithstanding the foregoing, no default by Lessor under any such mortgage
shall affect Lessee's rights hereunder so long as Lessee is not in default under
this Lease. Lessee shall, in the event any proceedings are brought forth for
foreclosure of any such mortgage, attorn to the purchaser upon any such
foreclosure and recognize such purchaser as the Lessor under this Lease. Lessor
shall furnish Lessee with a Subordination, Non-Disturbance and Attornment
Agreement in the form of Exhibit I executed by Lessor's existing lender within
ten (10) days from the date of Tenant's execution thereof.
ARTICLE XIV
ABANDONMENT
14.01 ABANDONMENT. Lessee shall not vacate or abandon the first floor portion of
the Premises at any time during the term of this Lease; and if Lessee shall
abandon, vacate or surrender such portion of the Premises, or be dispossessed by
process of law, or otherwise, any personal property belonging to Lessee and left
on that Premises shall be deemed to be abandoned, at the option of Lessor,
except such property as may be mortgaged by Lessee. Failure of Lessee to occupy
or use that portion of the Premises for a period of thirty (30) days or longer
shall constitute abandonment by Lessee.
ARTICLE XV
DEFAULTS AND REMEDIES
15.01 DEFAULTS BY LESSEE. The occurrence of any one or more of the following
events shall be a default and breach of this Lease by Lessee:
A. Lessee shall fail to pay any monthly installment of either Base
Rent, Additional Rent or any other obligations within ten (10) days after
receipt of notice from Lessor that the same is due and payable. No further
notice shall be required for default in payment.
B. Lessee shall fail to perform or observe any material term,
condition, covenant or obligation, other than the payment of rent, required to
be performed or observed by it under this Lease for a period of thirty (30) days
after notice thereof from Lessor; provided, however, that if the term,
condition, covenant or obligations to be performed by Lessee is of such nature
that the same cannot reasonably be performed within such thirty-day period, such
default shall be deemed to have been cured if Lessee commences such performance
within said thirty-day period, thereafter diligently undertakes to complete the
same, and informs Lessor, in writing, of Lessee's progress in completing same on
a month-to-month basis.
C. A trustee or receiver shall be appointed to take possession of
substantially all of Lessee's assets in, on or about the Premises or of Lessee's
interest in this Lease (and Lessee does not regain possession within sixty (60)
days after such appointment); Lessee makes an assignment for the benefit of
creditors; substantially all of Lessee's assets in, on or about the Premises or
Lessee's interest in this Lease are attached or levied upon under execution (and
Lessee does not discharge the same within sixty (60) days thereafter); or, a
petition in bankruptcy, insolvency, or for reorganization or arrangement is
filed by or against Lessee pursuant to any federal or state statute (and, with
respect to any such petition filed against it, Lessee fails to secure a stay or
discharge thereof within sixty (60) days after the filing of the same).
D. Lessee abandons or vacates the first floor portion of the Premises.
15.02 REMEDIES OF LESSOR. Upon the occurrence of any event of default set forth
in Paragraph 15.01, Lessor shall have the following rights and remedies, in
addition to those allowed by law or equity, any one or more of which may be
exercised without further notice to or demand upon Lessee:
A. Lessor may apply the security deposit and/or re-enter the Premises
and cure any default of Lessee, in which event Lessee shall, upon demand,
reimburse Lessor as Additional Rent for any reasonable costs and expenses which
Lessor may incur to cure such default; and, Lessor shall not be liable to Lessee
for any loss or damage which Lessee may sustain by reason of Lessor's action. In
the event the Lessor should consult with or employ the services of legal counsel
or bring suit against Lessee for any default or enforcement of any terms of this
Lease, Lessee shall be liable for all such attorney's fees and litigation costs
incurred by Lessor and the same shall be recoverable against Lessee in addition
to all other amounts that Lessor may recover.
B. Lessor may terminate this Lease as of the date of such default. Upon
termination, Lessee or any party leasing the Premises through the Lessee, shall
immediately surrender the Premises to Lessor. Lessor may re-enter the Premises
and dispossess Lessee or any other occupants of the Premises by force, summary
proceedings, ejectment or otherwise, and may remove their effects, without
prejudice to any other remedy which Lessor may have for possession or arrearage
in rent. In addition, Lessor may declare all past, present and future rent
payments under this Lease to be immediately due and payable. Lessor may re-let
all or part of the Premises to another party on terms and conditions which may
vary from the terms of this Lease. Lessee shall be obligated to pay to Lessor
the difference between the rent provided for in any such subsequent lease and
the rent provided for in this Lease. No matter which remedy Lessor chooses in
its sole discretion Lessee shall be liable for all costs and expenses caused by
Lessee's default and Lessor's re-entry and re-letting, including but not limited
to, all repairs, improvements, broker's and attorneys' fees.
Lessor:
----
Page 11 of 15
Forest Green/Ormsby I Lease Lessee:
<PAGE> 14
C. Lessor may sue for injunctive relief to recover damages for any loss
resulting from the breach.
15.03 DEFAULT BY LESSOR AND REMEDIES OF LESSEE. It shall be a default
and breach of this Lease by Lessor if it shall fail to perform or observe any
term, condition, covenant or obligation required to be performed or observed by
it under this Lease for a period of thirty (30) days after notice thereof from
Lessee; provided, however, that if the term, condition, covenant or obligation
to be performed by Lessor is of such a nature that the same cannot reasonably be
performed within such thirty-day period, such default shall be deemed to have
been cured if Lessor commences such performance within said thirty-day period
and thereafter diligently undertakes to complete the same. Upon the occurrence
of any such default, Lessee may sue for injunctive relief or to recover damages
for any loss resulting from the breach, but Lessee shall not be entitled to
terminate this Lease or withhold or abate any rent due hereunder. If Lessor
shall be in default under this Lease, and if Lessee shall, as a consequence
thereof, recover a money judgment against Lessor, Lessee agrees that it shall
look solely to Lessor's right, title and interest in and to the Building for the
collection of such judgment; and Lessee further agrees that no other assets of
Lessor shall be subject to levy, execution or other process for the satisfaction
of Lessee's judgment and that Lessor shall not be liable for any deficiency.
15.04 NON-WAIVER OF DEFAULTS. The failure or delay by either party
hereto to enforce or exercise at any time any of the rights or remedies or other
provisions of this Lease shall not be construed to be a waiver thereof, nor
affect the validity of any part of this Lease or the right of either party
thereafter to enforce each and every such right or remedy or other provision. No
waiver of any default and breach of this Lease shall be held to be a waiver of
any other default and breach. The receipt by Lessor of less than the full rent
due shall not be construed to be other than a payment on account of rent then
due, nor shall any statement on Lessee's check or any letter accompanying
Lessee's check be deemed an accord and satisfaction, and Lessor may accept such
payment without prejudice to Lessor's right to recover the balance of the rent
due or to pursue any other remedies provided in this Lease. No act or omission
by Lessor or its employees or agents during the term of this Lease shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
such a surrender shall be valid unless in writing and signed by Lessor.
ARTICLE XVI
LETTER OF CREDIT
16.01 Lessee shall provide to Lessor, prior to receiving any portion of
the Tenant Improvement Allowance but in no event later than March 30, 2000, an
unconditional, irrevocable letter of credit ("Letter of Credit") from a lending
institution reasonably acceptable to Lessor as a guaranty and security for the
performance of Lessee's obligations under this Lease on the following terms and
conditions:
(A) The Letter of Credit shall be kept in effect from the
date of issuance through the date that is 48 months
after the Commencement Date (the "LC Termination
Date"). The Letter of Credit shall be in the amount
of One Million Six Hundred Forty Five Thousand Two
Hundred Fifty Six Dollars and Fifteen Cents
($1,645,256.15) and shall automatically decrease by
Four Hundred Eleven Thousand Three Hundred Fourteen
Dollars and Four Cents ($411,314.04) each year.
Lessee agrees that if it has not cured a default
within the applicable cure period following notice
from Lessor, then Lessor shall have a right to
present the Letter of Credit for payment, with
amounts received to be held and applied in accordance
with Subparagraph (B) below. If the Letter of Credit
has not been presented for payment in accordance with
this section on or before the LC Termination Date,
Lessor shall return the Letter of Credit to Lessee
within ten (10) days after the LC Termination Date.
Lessee agrees that in the event of any transfer or
mortgage, Lessor shall have the right to transfer the
Letter of Credit to the transferee or mortgagee.
Lessor shall deliver the then current effective
Letter of Credit to Lessee upon receipt of any
conforming substitute Letter of Credit provided in
accordance with this paragraph and cooperate with the
issuing bank to effect the release of such then
current effective Letter of Credit.
(B) If a default occurs which has not been cured within
the period following notice as provided for in this
Lease, Lessor may use, apply or retain the amount
received under the Letter of Credit for the payment
of any rent or other charge in default or to
compensate Lessor for any loss or damage which Lessor
may suffer thereby.
ARTICLE XVII
HAZARDOUS SUBSTANCES
17.01 HAZARDOUS WASTE. Lessee warrants and represents to Lessor that
Lessee will comply with all federal, state and local environmental laws, rules,
regulations and statutes applicable to Lessee's use and occupancy of the
Premises during the term of this Lease. Lessee shall not cause or permit any
Hazardous Material (as hereinafter defined) to be brought upon, kept, or used in
or about the Premises by Lessee, its agents, employees, contractors or invitees,
except for such Hazardous Material as is necessary to Lessee's business provided
that Lessee has notified Lessor it will be bringing upon, keeping or using such
Hazardous Material on or about the Premises. Any Hazardous Material permitted on
the Premises as provided in this Article, and all containers therefor, shall be
used, kept, stored, and disposed of in a manner that complies with all federal,
state and local laws or regulations applicable to this Hazardous Material.
Lessee shall not discharge, leak, or emit, or permit to be discharged, leaked,
or emitted, any material into the atmosphere, ground, sewer system, or any body
of water, if that material (as is reasonably determined by the Lessor, or any
governmental authority) does or may pollute or contaminate the same, or may
adversely affect (a) the health, welfare, or safety of persons, whether located
on the Premises or elsewhere, or (b) the condition, use, or enjoyment of the
Building or any other real or personal property. As used herein, the term
"Hazardous Material" means (a) a "hazardous waste" as defined by the Resource
Conservation a Recovery Act of 1976, as amended from time to time, and
regulation promulgated thereunder; (b) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations promulgated thereunder; (c)
any oil, petroleum products, and their by-products; and (d) any substance that
is or becomes regulated by any federal, state, or local governmental authority.
17.02 LESSEE'S RESPONSIBILITY. Lessee hereby agrees that it shall be
fully liable for all costs and expenses related to the use, storage, and
disposal of Hazardous Material kept on the Premises by the Lessee, and the
Lessee shall give immediate notice
Lessor:
----
Page 12 of 15
Forest Green/Ormsby I Lease Lessee:
<PAGE> 15
to the Lessor of any violation or potential violation of the provisions of this
Section. Lessee shall defend, indemnify and hold harmless Lessor and its Agents,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs, or expenses (including, without limitation,
attorneys' and consultants' fees, court costs, and litigation expenses) of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of or in any way related to (a) the presence, disposal, release, or threatened
release of any such Hazardous Material that is on, from, or affecting the soil,
water, vegetation, building, personal property, persons, animals, or otherwise;
(b) any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to that Hazardous Material; (c) any lawsuit
brought or threatened, settlement reached, or government order relating to that
Hazardous Material; or (d) any violation of any laws applicable thereto. The
provisions of this Article shall be in addition to any other obligations and
liabilities Lessee may have to Lessor at law or equity and shall survive the
transactions contemplated herein and shall survive termination of this Lease.
17.03 PROPERTY CONDITION. As of the date of this Lease, Lessor is not
aware of any Hazardous Material on the Property. Lessor warrants and represents
to Lessee that Lessor has complied and will comply with all federal, state and
local environmental laws, rules, regulations and statutes applicable to Property
and Building during the term of this Lease and shall indemnify and hold Lessee
harmless from any failure to do so.
ARTICLE XVIII
NOTICE AND PLACE OF PAYMENT
18.01 NOTICES. Any notice required or permitted to be given under this
Lease or by law shall be deemed to have been given if reduced to writing and
delivered in person or mailed by Registered or Certified mail, postage prepaid,
or delivered by private carrier, to the party who is to receive such notice at
the address specified in Article I, Paragraph 1.01 of the Basic Lease
Provisions, when so mailed, the notice shall be deemed to have been given as of
three (3) business days after the date it was mailed. The address specified in
Article I, Paragraph 1.01 of the Basic Lease Provisions may be changed by
providing written notice to the other party.
18.02 PLACE OF PAYMENT. All rent and other payments required to be made
by Lessee to Lessor shall be delivered or mailed to Lessor's managing agent at
the address specified in Article 1, Paragraph 1.01 in the Basic Lease Provisions
or any other address Lessor may specify from time to time by written notice
given to Lessee.
ARTICLE XIX
MISCELLANEOUS GENERAL PROVISIONS
19.01 ROOF RIGHTS. Except as otherwise provided in this Lease, Lessor
shall have the exclusive right to use all or any portion of the roof of the
Building for any purpose. This Lease does not grant any rights to light, view
and/or air over the Premises or property.
19.02 NAME OF BUILDING. Lessor shall have the right to change the name
of the Building during the period of time in which Lessee occupies any portion
of said Building under this Lease or any extension thereof and shall have no
obligation for any loss or damage to Lessee by reason thereof; provided,
however, the Building shall not be named for or on behalf of any tenant who
leases less square feet in the Building than Lessee. Notice of such change shall
be in writing to Lessee as soon as the decision to change the name of the
Building has been made.
19.03 COMMON FACILITIES AND PARKING. Lessee shall have the nonexclusive
right, in common with others, to the use of common entrances, lobbies,
elevators, ramps, parking, drives, stairs and similar access and serviceways and
other common facilities in and adjacent to the Building, subject to such rules
and regulations as may be adopted by the Lessor.
19.04 CONDUCT. Lessee shall not conduct its practice or business, or
advertise in any manner which violates local, state and federal laws or
regulations.
19.05 ESTOPPEL CERTIFICATE. Each party shall, within ten (10) days
following receipt of a written request from the other, execute, acknowledge and
deliver to the requesting party or to any lender, purchaser or prospective
lender or purchaser designated by the requesting party a written statement
certifying (i) that this Lease is the only lease between the parties and is in
full force and effect and unmodified (or, if modified, stating the nature of
such modification); (ii) the date to which rent has been paid; and, (iii) that
there are not, to the party's knowledge, any uncured defaults (or specifying
such defaults if any are claimed). Any such statement may be relied upon by any
prospective purchaser or mortgagee. A party's failure to deliver such statement
within such period shall be conclusive upon such party that this Lease is in
full force and effect and unmodified, and that there are no uncured defaults in
the requesting party's performance hereunder. Furthermore, if the party should
fail to deliver such statement within fifteen (15) days from receipt, it shall
pay a penalty fee in the amount of twenty-five dollars ($25.00) per day
beginning on the sixteenth (16th) day from receipt of such statement and
continuing thereafter until the day the requesting party receives such statement
fully executed by the other party.
19.06 RECORDING OF MEMORANDUM OF LEASE. If requested by either party, a
Memorandum of Lease containing the information required by Kentucky law, or any
other information determined to be pertinent by Lessor concerning this Lease
shall be prepared and executed by both parties and filed for record. Recording
costs will be at the expense of the requesting party.
19.07 NO BROKER. Lessee represents and warrants to Lessor that it has
not engaged any broker, finder or other person, other than ReMax Commercial
Brokers, who will be entitled to any commission or fee with respect to the
negotiation, execution or delivery of this Lease or any assignment, sublease or
renewal thereof and shall indemnify Lessor against any loss, cost, liability or
expenses legally imposed by Lessor as a result of any claim asserted by any such
broker, finder or other person on the basis of any arrangements or agreements
made or alleged to have been made by or on behalf of Lessee. Lessor agrees to
pay ReMax Commercial
Lessor:
----
Page 13 of 15
Forest Green/Ormsby I Lease Lessee:
<PAGE> 16
Brokers a commission of four percent of the net rent due under the Lease for
years 1 through 5 and two percent for years 6 through 7, with one-half payable
on March 15, 2000 and the other half when Lessee occupies the Premises.
19.08 ACTS OF GOD. In any case where either party hereto is required to
do any act, delays caused by or resulting from Acts of God, war, civil
commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather
or other causes beyond such party's reasonable control shall not be counted in
determining the time during which work shall be completed, whether such time be
designated by a fixed date, a fixed time or a "reasonable time," and such time
shall be deed to be extended by the period of such delay.
19.09 GOVERNING LAW. This Lease is being executed and delivered by
Lessor in the Commonwealth of Kentucky and shall be construed and enforced in
accordance with the laws of that state.
19.10 COMPLETE AGREEMENT, AMENDMENTS. This Lease, including all
Exhibits, riders and Addenda, constitutes the entire agreement between the
parties hereto; it supersedes all previous understandings between the parties,
if any, and no oral or implied representation or understandings shall vary its
terms; and, it may not be amended except by a written instrument executed by
both parties hereto.
19.11 SUCCESSORS AND ASSIGNS. This Lease and the respective rights and
obligations of the parties hereto shall inure to the benefit of and be binding
upon the successors and assigns of the parties hereto as well as the parties
themselves; provided, however, that Lessor, its successors and assigns shall be
liable for and obligated to perform Lessor's covenants under this Lease only
during and in respect of their successive periods of ownership during the term
of this Lease.
19.12 SEVERABILITY OF INVALID PROVISIONS. If any provision of this
Lease shall be held to be invalid, void or unenforceable, the remaining
provisions hereof shall not be affected or impaired, and such remaining
provisions shall remain in full force and effect.
19.13 DEFINITION OF THE RELATIONSHIP BETWEEN THE PARTIES. Lessor shall
not, by virtue of the execution of this Lease or the leasing of the Premises to
lessee, become or be deemed a partner of or joint venturer with Lessee in the
conduct of Lessee's business on the Premises or otherwise.
19.14 CERTAIN WORDS, GENDER AND HEADINGS. As used in this Lease, the
word "person" shall mean and include, where appropriate an individual,
corporation, partnership or other entity; the plural shall be substituted for
the singular and the singular for the plural, where appropriate; and words of
any gender shall include any other gender. The topical headings of the several
paragraphs of this Lease are inserted only as a matter of convenience and
reference and do not affect, define, limit or describe the scope or intent of
this Lease.
19.15 CORPORATE AUTHORITY. If Lessee executes this Lease as a
corporation, each of the persons executing this Lease on behalf of Lessee does
hereby personally covenant and warrant that Lessee is a duly authorized and
existing corporation, that Lessee has and is qualified to do business in
Kentucky, that the corporation has full right and authority to enter into this
Lease and that each person signing on behalf of the corporation was authorized
to do so.
19.16 EXAMINATION OF LEASE. The submission of this lease form by Lessor
for examination does not constitute an offer to lease or a reservation of an
option to lease. In addition, Lessor and Lessee acknowledge that neither of them
shall be bound by the representations, promises or preliminary negotiations with
respect to the Demised Premises made by their respective employees or agents. It
is their intention that neither party by legally bound in any way until this
Lease has been fully executed by both Lessee and Lessor.
19.17 ACCEPTANCE. The offer to lease set forth in this Lease must be
accepted by Lessee by the delivery of fully signed duplicate originals hereof to
Lessor by no later than the date and time specified in Article 1, Paragraph
1.01, otherwise this offer may, at Lessor's sole option, be terminated and be of
no further force or effect.
19.18 ADDITIONAL PROVISIONS. Additional provisions of this Lease, if
any, are set forth in the three (3) Addenda to Lease attached hereto and made a
part hereof.
SIGNATURE PAGE FOLLOWS
Lessor:
----
Page 14 of 15
Forest Green/Ormsby I Lease Lessee:
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first written above.
LESSEE: High Speed Access Corp.
a Delaware Corporation
By: /s/ High Speed Access Corp.
--------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Title:
-----------------------------------
LESSOR: Faulkner Hinton/Ormsby I, LLC
a Kentucky Limited Liability Corporation
By: /s/ Faulkner Hinton/Ormsby I, LLC
--------------------------------------
Fred Faulkner, Member
<PAGE> 18
EXHIBIT A
-----------------
SITE PLAN
Lessor:
----
Forest Green/Ormsby I Lease Lessee:
<PAGE> 19
EXHIBIT B
-----------------
LEGAL DESCRIPTION
Lot 9, as identified on the Record Plat of Forest Green Section 3,
prepared by Sabak, Wilson & Lingo, Inc., dated August 9, 1999, recorded August
10, 1999, of record in Plat and Subdivision Book 45, Page 72, further of record
in Deed Book 7297, Page 874, in the Office of the Clerk of Jefferson County,
Kentucky.
TOGETHER WITH permanent ingress, egress, access, utility, water and
sewer easements over and across Lot 3 and Lot 4 as shown on the Plat of record
in Plat and Subdivision Book 45, Page 72; and together with those easements
created in those certain instruments of record in Deed Book 7297, Page 874, and
in Deed Book 7307, Page 312, all in the Office aforesaid.
BEING all of the property acquired by Faulkner Hinton/Ormsby I, LLC by
Deed of record in Deed Book 7307, Page 315, in the Office aforesaid.
Also being a portion of the property acquired by Faulkner Hinton/Forest
Green-Land, LLC by Deed of record in Deed Book 6884, Page 927, in the Office
aforesaid.
Lessor:
----
Forest Green/Ormsby I Lease Lessee:
<PAGE> 20
EXHIBIT C
-----------------
FLOOR PLAN OF PREMISES
Lessor:
----
Forest Green/Ormsby I Lease Lessee:
<PAGE> 21
EXHIBIT D
-----------------
DESCRIPTION OF LESSOR'S WORK
Fire Protection Lessor provides base sprinkler system
including all distribution of mains,
laterals and upright heads. Lessee provides
for sprinkler distribution to ceiling
system.
HVAC Lessor provides central duct completely
around core from floor package unit. Lessee
provides for branch duct work from central
duct, VAV boxes, FPT boxes, to diffusers in
ceiling and controls to BAS. Design
standards for floors 1 through 6 provide for
interior conditions of 78 degrees dry bulb
when outside conditions are 93 degrees dry
bulb and 76 degrees wet bulb, and winter
interior conditions of 68 degrees when
outside conditions are 5 degrees. System is
designed for heat load not-to-exceed 3.0
watts (lighting and power) of electricity
per square foot and occupancy based on one
(1) person for every 100 square feet.
Electrical On floors 1 through 6 Lessor provides two
(2) 120/208-200 amp electrical panel (for
receptacles) and one (1) 277/480 - 60 amp
electrical (for lighting). On the Ground
Level Lessor provides one (1) 120/208-100
amp panel (in which Lessee may have its pro
rata share of circuits) and one (1)
277/480-225 amp panel (in which Lessee may
have 15 spare circuits). Lessee provides for
power from electrical panels (located in
electrical closer on each floor) to
Premises. System capacity prorated for
partial floors and system designed of 4
volt/amps per usable square foot on floors 1
through 6. Lessor provides all electrical
subpanels and metering equipment required to
measure Lessee's electrical consumption in
all of the Premises leased to Lessee.
Restrooms Lessor finishes restrooms on each floor to
Building standard. Includes the following:
6"x6" ceramic floor tile, wall coverings,
drywall ceilings, recessed can light
fixtures, full length mirror above sinks,
Corian countertop, drywall partitions with
louvered doors, motion activated water
fixtures, and stainless steel dispensers.
Elevator Lobbies Lessor finishes elevator lobby on each of
floors 1 through 6 to Building standard.
Includes the following: drywall ceiling with
soffits, recessed can light fixtures,
carpet, and wall covering. On the Ground
Level Lessor finishes the elevator lobby
with drywall, ceiling with soffets, recessed
can light fixtures, VCT floor covering and
painted walls.
Corridors Lessor finishes corridors on multi-tenant
floors (4th floor and 1st floor). Includes
the following: 2'x2' acoustical ceiling,
wall coverings, 2'x4' 18 cell parabolic
light fixtures, carpet, and 9' solid core
birch doors with hollow metal frame.
Lessor finishes corridors on Ground Level
with 2' x 4' ceiling tiles, VCT floor
covering, painted walls, acrylic light
fixtures
Lessor:
----
Forest Green/Ormsby I Lease Lessee:
<PAGE> 22
and 9' solid core birch doors with hollow
metal frame.
Security Lessor furnishes:
o Proximity Card Readers -
1. 20" read range
2. Readers located at each lobby
and all elevators
3. Anti-pass back protection
4. Anti-tail gating protection
o Access/Egress Control -
1. Restricted keyway (cylinder)
system on all doors
2. All exterior doors controlled
via locking mechanism
3. All stairwell doors controlled
via locking mechanism
4. All elevators computer
controlled
5. Emergency delay/alarm releases
on all egress routes
6. All exterior and stairwell
building doors monitored for
ajar/open condition
o System Parameters -
1. Partitioned data based option
available (at $3,500 cost to
Tenant)
2. Full range of reporting
options for tenants
3. System automatically pages
Building Management for
security breach
4. Numerous Floor Level Groups
available
5. Numerous Reader Groups
available
6. Numerous time schedule groups
available
7. System fails in safe/secure
mode
o CCTV System -
1. Discrete cameras located in
main lobbies, exits and
loading dock
2. Time-lapse recorder and
monitor in Building Management
Office
Generator Lessor will furnish a two-inch gas pipe for
Lessee's use to hook-up an emergency
generator. Lessor will provide a concrete
pad with suitable screening in a designated
area adjacent to Lessee's Ground Level
Premises and will also provide suitable
areas for outside condensers for
supplemental HVAC. Lessee will provide the
generator and is responsible for hook-up
with Louisville Gas and Electric Company.
Lower Level Lessor will finish the training/conference
center with Building standard finishes.
Lessor:
----
Forest Green/Ormsby I Lease Lessee:
<PAGE> 23
EXHIBIT E
-----------------
GREENWAYS PLAN
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 24
EXHIBIT F
------------------------
LEASEHOLD IMPROVEMENTS
In addition to the mutual covenants contained in the Lease, Lessor and
Lessee mutually agree as follows:
1. Plans and Specifications for the Premises
a. Lessor shall cooperate with Lessee's designated architect and engineer
to develop the plans and specifications for the Premises (the "Space
Plans"). Lessee, at Lessee's expense, shall provide the following Space
Plans: (i) architectural; (ii) electrical; (iii) plumbing; (iv) HVAC;
and (iv) structural, if any.
b. Lessee and Lessor agree to cooperate to facilitate the completion of
the Space Plans within thirty (30) days of February 25, 2000 (after the
contingency period). Lessee agrees to provide Lessor a progress set of
Space Plans weekly, and Lessor shall provide weekly comments to Lessee.
Lessor shall retain the right to require modifications to the Space
Plans that affect structural, mechanical, electrical, plumbing,
Building operation systems, or other specifications provided for
herein. Upon completion of the Space Plans, Lessor and Lessee shall
execute four (4) sets of Lessee's final Space Plans, which shall be
deemed the Approved Space Plans for construction.
c. Lessee's requirements for HVAC, electrical, plumbing and floor load in
excess of Building Standard or Building design criteria, shall be
prepared by Lessee's engineer at Lessee's expense and shall be subject
to the approval of Lessor as provided for in the Lease. The extent to
which any of the Lessee's Space Plans or requirements for HVAC,
electrical, or plumbing exceed the Building's design standards, in the
reasonable determination of Lessor, the installation cost incurred and
the operating cost shall be paid by Lessee. At Lessor's determination,
Lessor may require the mechanical systems to be returned to the
original Building design and specification at the termination date of
the Lease.
d. Lessee's obligation for the payment of rent under the Lease shall
commence on the earlier of the dates specified in Section 1.01 or the
dates Lessee conducts business therein, except payment of Rent shall be
delayed day for day past the scheduled date if Lessee is delayed in
substantially completing said work as a result of: (i) Lessor's failure
to approve subject to referred revisions or modification, Lessee's
Space Plans within eight (8) business days of receipt; (ii) Lessor's
delay in providing Lessee with the allowance described below; (iii)
Lessor's Work (described on Exhibit D) is delayed; or (iv) Lessor's
failure to cooperate with Lessee's architect and contractor performing
such work.
2. Leasehold Improvements.
a. Lessor shall pay in accordance with Lessor's construction loan draw
process (provided, however, no retainage shall be required) on a
monthly basis to Lessee all amounts incurred by Lessee in performing
its work to ready the Premises for occupancy, up to a maximum sum of
One Million Five Hundred One Thousand Twenty Dollars and zero cents
($1,501,020). Lessee shall submit its requests to Lessor on or before
the first day of each month and Lessor shall make payment to Lessee on
or before the fifteenth (15th) day of each month. In no event shall
Lessee be required to advance any of its funds toward tenant
improvements until it has received the full $1,501,020 allowance.
Lessee shall be responsible for any additional construction costs over
the above allowance.
b. Lessor hereby grants to Lessee, the right to have Lessee's contractors
provide materials and perform improvements to the Premises.
Improvements to be performed by Lessee shall not proceed without
Lessor's prior written approval (which shall not be unreasonably
withheld or delayed) of the following: (i) Lessee's contractor(s) and
any subcontractors, (ii) a Certificate of Insurance naming Lessor as
additional insured, to insure that each contractor(s) has liability,
property damage, and workmen's compensation insurance, (iii) detailed
plans and specifications for such work, (iv) copies of a valid building
permit or other permits or licenses when and where required, and (v) a
copy of Lessee's contract with the Contractor. Lessor shall have the
right to designate contractors or subcontractors providing any roof
penetration, sprinkler, HVAC, electrical or plumbing work. Lessee shall
provide reasonable evidence in the form of an unconditional lien
waiver(s) that the contractor(s) providing the materials and/or
performing the work have been paid in full.
c. Lessor shall have no responsibility to supervise Lessee's contractor,
except for monitoring work directly affecting building systems and
common areas. Lessee shall be responsible for all costs required for
additional clean-up in common areas, damage to common areas, and
after-hours work for connection to building systems or causes
disruption to other lessees. Lessee shall reimburse Lessor for any
extra expense incurred by Lessor by reason of faulty work performed by
lessee or its contractors, by reason of inadequate cleanup or waste
removal, or common area damage.
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 25
EXHIBIT G
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EXAMPLE OF THE
ACCEPTANCE OF PREMISES AMENDMENT
As per Article II, Section 2.01 and 2.02, below is an example of the form to be
executed by Lessor and Lessee prior to delivery of possession of the Premises to
Lessee.
ACCEPTANCE OF PREMISES
AMENDMENT
This Amendment to the Lease entered into this day of _______, 2000 by
and between ___________________________ ("Lessor") and ("Lessee") shall
amend and/or confirm the terms of the Lease between Lessor and Lessee
for certain office space located in _______________________.
LESSOR and LESSEE hereby AGREE as follows:
1. Except for those items shown on the attached "punch list",
which Lessor will remedy within 30 days hereof, Lessor has
fully completed the construction work required under the terms
of the Lease and Exhibit D attached thereto.
2. The Premises are tenantable. The Lessor has no further
obligation for construction (except as specified above) and
Lessee acknowledges that both the Building and the Premises
are satisfactory in all respects except for minor punch list
items, latent defects and HVAC seasonal variations for the
Base Building.
3. The Rentable Area of the Premises (Article I, Paragraph 1.01,
Item B) is hereby agreed to be ____________ Rentable Square
Feet.
4. The Commencement Date of the Lease (Article I, Paragraph 1.01,
Item C) is hereby agreed to be ____________________, 2000 for
Suite 100; ___________, 2000 for Suite 200; ___________, 2000
for Suite 300; ________, 2000 for Suite 405; and __________,
2000 for the Suite G125.
5. The Expiration Date of the Lease (Article I, Paragraph 1.01,
Item C) is hereby agreed to be __________________, 2007.
6. The Initial Base Rent of the Lease (Article I, Paragraph 1.01,
Item D) is hereby agreed to be __________ per month or
__________ per annum.
7. The Operating Expense Stop and Net Rent of the Lease (Article
I, Paragraph 1.01, Item D) for Suites 100, 200, 300 and 405 is
hereby agreed to be ___________ per annum and ______________
per annum, respectively.
8. The Ground Level Premises (Second Addendum to Lease) is hereby
agreed to be _____________________ Rentable Square Feet. The
Net Rent for Suite G125 is hereby agreed to be
__________________ per month or __________________ per annum.
9. The total rent for the Premises on the Roof (Third Addendum to
Lease) is hereby agreed to be ______________________ per month
or ___________________________ per annum.
Except as modified herein, all terms and conditions of the Lease and
all addenda are hereby ratified and acknowledged to be unchanged and
shall remain in full force and effect. In the event of any conflict
between the terms and conditions of the Lease and the terms and
conditions of this Amendment, this Amendment shall govern and control.
LESSEE:
By:
LESSOR:
----------------------------------
By:
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 26
EXHIBIT H
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RULES AND REGULATIONS
1. Standard hours of operation shall be between the hours of 7:30 a.m. and 6:00
p.m. on Monday through Friday and 9:00 a.m. to 1:00 p.m. on Saturday of each
week except on recognized holidays. The recognized holidays include: New Years
Day, January 1st; Memorial Day, observed; 4th of July, July 4th; Labor Day,
observed; Thanksgiving Day, observed; Christmas, December 25th. Any change to
said hours shall be communicated in advance to Lessee by Lessor. Notwithstanding
the foregoing, Lessee shall have access to the Building at all hours for its
operations.
2. Any sign, lettering or design of Lessee which is visible from the Common
Areas of the Building shall be subject to prior approval by Lessor and shall
conform to the uniform pattern of identification signs for lessees in the
Building as prescribed by Lessor. Lessor shall furnish to Lessee guidelines
relating to signs in the Common Areas of the Building. Lessor shall provide one
set of suite address numbers to be applied to the entrance door of the Premises.
All approved signs or lettering shall be at the expense of the Lessee by a
vendor approved by Lessor. Lessee shall not inscribe or affix any sign,
lettering or design visible from the exterior of the Premises or Building.
Lessor may remove such materials without any liability, and may charge the
expense incurred by such removal to Lessee.
3. The Building is opened to the public during the standard hours of operations
established by Lessor and outlined herein. Lessor will furnish Lessee with a
reasonable number of keys to each entrance door lock of the Premises, two (2)
keys to any interior door lock, if any, and a reasonable number of Building keys
for entry to the Building after hours. Lessor will have the right to collect a
reasonable charge for additional keys or locks requested by Lessee after
occupancy. Each lessee, upon termination of its tenancy, will deliver to Lessor
all keys, which were furnished by Lessor for the Premises and Building, or any
other areas of the Building. If a computerized security system is utilized for
after-hours access, security access cards shall be substituted for keys. Lessee
shall not alter, change, replace, or re-key and lock or install new lock or a
door knocker on any door of the Premises. Lessor, its agents or employees, will
retain a master key to all door locks on the Premises. Any new door locks
required by Lessee or any change of keying of existing locks will be installed
or rekeyed by Lessor following Lessee's written request to Lessor and shall be
at Lessee's expense. All new locks and re-keyed locks will remain operable by
Lessor's master key.
4. A directory of the Building tenants shall be provided for the display of the
name and location of Lessee and such reasonable number of the principal officers
and employees of Lessees as Lessor in its sole discretion may approve. Lessor
shall not in any event be obligated to furnish more than one (1) directory strip
for each 2,000 square feet of rentable area in the Premises. Any additional
names, which Lessee desires to place in such directory, must first be approved
by Lessor, and if so approved, shall be at Lessee's expense.
5. Lessee shall not bring into or remove furniture, freight, supplies,
merchandise or other property, not carried by hand, (hereinafter the
"Equipment") through the lobby or entrances at anytime, without the prior
consent of Lessor. Any Equipment to be brought into or removed from the Building
shall be through the freight/loading dock entrance during normal hours of
operation. The designated freight elevator shall be used to transport the
Equipment and the freight elevators use shall be shared among all lessees.
Passenger elevators shall not be used to transport Equipment without the prior
consent of Lessor. After-hours moving, into or out of the Building, shall
require: (i) Lessor's prior consent; (ii) a minimum of seventy-two (72) hours
advance notice of the move; and (iii) shall be conducted pursuant to such
procedures and manner as Lessor may require for after-hours moving of Equipment,
as may be determined by Lessor from time to time. The persons or company
employed to move Lessee's Equipment in or out of the Building must be accepted
by Lessor. The moving company must be a locally recognized professional mover,
whose primary business is the performing of relocation services, and must be
bonded and fully insured. A certificate or other verification of such insurance
must be received and approved by Lessor prior to the start of any moving
operations. Insurance must be sufficient, in Lessor's sole opinion, to cover all
personal liability, theft, or damage to the Building, including without
limitation, floor coverings, doors, walls, elevators, stairs, foliage, and
landscaping. Special care must be taken to prevent damage to foliage and
landscaping during adverse weather. All items not capable of being carried by
hand shall utilize hand trucks equipped with soft rubber tires and rubber side
guards. Lessee shall consult with Lessor and shall take all necessary protective
measures required for walls, wall corners and floors. Lessor, at Lessee's
expense, will be responsible for providing Building security during all
after-hours moving operations, and will be liable for all losses and damages
sustained by any party as a result of the failure to supply adequate security.
Lessor will have the right to prescribe the weight, size, and position of all
Equipment, including materials, safes, file cabinets, furniture, or other
property, brought into the Building. Lessor will not be responsible for loss of
or damage to any Lessee's property from any cause and all damage done to the
Premises or Building by Lessee's moving will be repaired at the expense of
Lessee. Lessor reserves the right to inspect all such property to be brought
into the Building and to exclude from the Building all such property which
violates any of these rules and regulations. Supplies, goods, materials,
packages, furniture, and all other items of every kind delivered to or taken
from the Premises will be delivered or removed through the route designated by
Lessor. If an after-hours security staff is employed at the Building, removal of
hand carried items from the Building must be accompanied by a "Property Removal
Pass" made available from Lessor during normal business hours.
6. Lessee shall notify and consult with Lessor, in advance, for all
installations and removal of telephone, electrical service, cabling and other
functions requiring access to the Common Areas of the Building or to be attached
to the Building's mechanical, plumbing, or electrical services. Lessee, its
contractors or vendors, shall adhere to such requirements imposed by Lessor. Any
repair of damage or extra cleaning resulting from said installation or removal
shall be performed at Lessee's expense. All cable and wiring installed above the
ceiling, including the Premises, shall be plenum rated. Lessee shall utilize the
cable trays in the Common Areas and label the cables with Lessee's name at all
penetrations. Lessee shall remove all telephone, intercom, music, television and
computer wiring installed by Lessee from the Premises by the Expiration Date of
the Lease unless otherwise approved by Lessor.
7. Lessee shall not will be permitted to place or install any object (including,
without limitation, radio and television antenna, loudspeakers, sound
amplifiers, microwave dishes, solar devices, or similar devices) on the exterior
of the Building or on the roof of the Building.
8. Each Lessee will store all of its trash and garbage within its Premises. No
material will be placed in the trash boxes or receptacles which is of such
nature that it may not be disposed of in an ordinary and customary manner shall
not be in violation of any law or ordinance governing such disposal. All garbage
and refuse disposal will be made only through entryway and elevators
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 27
provided for such purposes and at such times as Lessor may designate. Removal of
any furniture or furnishings, large equipment, packing crates, and packing
materials, and boxes will be the responsibility of each Lessee, and such items
may not be disposed of in the Building trash receptacles, nor will they be
removed by the Building's janitorial service, except at Lessor's sole option and
at the Lessee's expense. No furniture, appliances, equipment, or flammable
products of any type may be disposed of in the Building trash receptacles.
Lessee shall mark all boxes and trash not in waste containers "TRASH" for
removal by the janitorial staff. Lessee shall at its expense to comply with all
present and future regulations regarding the collection, sorting, separation,
and recycling of waste products, garbage, and trash. Each separately sorted
category of wastes products shall be placed in separate receptacles approved by
Lessor. Lessee shall pay all costs, fines, and penalties that may be imposed by
reason of Lessee's failure to comply with this provision.
9. Lessee shall not allow curtains, draperies, blinds, shutters, shades,
screens, or other coverings, hangings, or decorations will be attached to, hung,
or placed in, or used in connection with any window of the Building or the
Premises unless approved in writing by Lessor. Lessee shall not place any door
mat or similar obstruction in a Building Common Area. The sashes, sash doors,
skylights, windows, heating, ventilating, and air conditioning vents and doors
that reflect or admit light and air into the halls, passageways, or other public
places in the Building will not be covered or obstructed by any Lessee. Lessee
shall not allow showcases, vending machines, or other articles to be put in
front of or affixed to any part of the exterior of the Building, nor placed in
the public halls, corridors, or vestibules without the prior written consent of
Lessor.
10. No Lessee and no employee or invitee of any Lessee will go upon the roof of
the Building without the prior permission of Lessor and accompanied by
maintenance personnel of Lessor.
11. Smoking is not permitted in the Common Areas of the Building including, but
not limited to, lobbies, common hallways, restrooms, vending areas, stairwells,
elevators, conference rooms, or directly outside near the lobby entrances.
Lessee shall be permitted to smoke only in designated smoking areas, established
by Lessor, outside of the Building.
12. The Common Area heating and air conditioning systems shall be operated from
time to time as designated by Lessor consistent with the standard hours of
operation. If Lessee requires heating and air conditioning services within the
Premises, Lessor shall provide the additional services at the then applicable
rates.
13. Lessor shall replace light tubes and lamps for typical lighting fixtures, at
Lessee's expense, if requested by Lessee.
14. No Lessee will employ any person or persons other than the cleaning service
of Lessor for the purpose of cleaning the Premises, unless otherwise agreed by
Lessor in writing. Except with the written consent of Lessor, no person or
persons other than those approved by the Lessor will be permitted to enter the
Building for the purpose of cleaning. No Lessee will cause any unnecessary labor
by reason of such Lessee's carelessness or indifference in the preservation of
good order and cleanliness. If Lessee's actions result in any increased expense
for any required cleaning, Lessor reserves the right to assess Lessee for such
expenses. Janitorial service will not be furnished on nights to individual
offices within the Premises which are occupied after business hours on those
nights.
15. The requirements or requests of the Lessee will be attended to only upon
application by written, personal, or telephone notice at the office of the
Building. Employees of Lessor will not perform any work or do anything outside
of their regular duties unless by instruction from Lessor. If Lessor's employees
are made available to assist Lessee, Lessee shall pay Lessor for their services
at the then applicable hourly rates. Lessor's employees are not required to
admit any person, Lessee or otherwise, to any space without specific instruction
from the Lessor. Lessee agrees to obtain Lessor's prior approval for access to
any Building mechanical, telephone or electrical rooms, and after-hours access
by Lessee's contractors.
16. Canvassing, peddling, soliciting, and distribution of handbills or any other
written materials in the Building are strictly prohibited, and each Lessee will
cooperate to prevent same. Tenant agrees to cooperate to prevent such activity;
however, Lessor in its sole discretion may allow the occasional distribution of
handbills through the Building janitorial service. Lessee, its employees,
agents, customers and invitees shall not loiter or solicit in the Common Areas,
nor shall Lessee distribute any handbills or other advertising on or about the
Building.
17. Lessee and its employees shall park their vehicles only in those portions of
the parking areas, if any, designated for that purpose by Lessor. Lessor shall
designate a marked visitor parking in close proximity to the main entrance to
the Building for use by the visitors and guests of all lessees of the Building.
Lessor reserves the right to limit visitor parking time by posting the
requirements at the visitor parking spaces. Visitor, loading, delivery, fire
lanes, ingress and egress areas shall not be utilized for parking by Lessee.
Lessor reserves the right to remove vehicles, at Lessee's expense, for any
violation of this provision. Lessee and its employees shall obey all posted
speed limits, and traffic signs and markings, and park vehicles completely
within the marked parking stalls.
18. Lessor shall deliver to Lessee any copies of the rules and regulations or
notices as provided by the Forest Green Development Association, Inc. (the
"Association") in regards to the Greenways Area. Lessee, its employees,
customers, and invitees shall adhere to the rules and regulations of the
Association and in no way violate Lessor's membership with the Association.
19. The sidewalks, halls, passages, exits, entrances, retail areas, elevators,
escalators, and stairways of the Building will not be obstructed by any lessees
or used by any lessee for any purpose other than for ingress to and egress from
their respective Premises. The halls, passages, exits, entrances, elevators,
escalators, and stairwells are not for the general public, and Lessor will in
all cases retain the right to control and prevent access to them by all persons
whose presence, in the judgment of Lessor, would be prejudicial to the safety,
character, reputation, and interests of the Building and its lessees; however,
such access will be permitted to persons with whom any Lessee normally deals in
the ordinary course of its business, unless such persons are engaged in illegal
activities.
20. Lessor reserves the right to exclude or expel from the Building any person
who, in the judgment of the Lessor, is under the influence of liquor or drugs,
is disturbing other tenants in any way, or who shall in any manner do any act of
violence or violate any of the rules and regulations of the Building.
21. No Lessee will permit the Premises to be used for lodging or sleeping or for
any immoral or illegal purpose. No Lessee will use or permit the use of the
Premises in any manner which involves the unusual risk of injury to any person.
No cooking will be done or permitted by any Lessee on the Premises, except in
area of the Premises which are specially constructed for cooking, and
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 28
except that use by the Lessee of Underwriters' Laboratory - approved microwave
equipment or equipment for brewing coffee, tea, hot chocolate, and similar
beverages will be permitted so long as such use is in accordance with all
applicable federal, state, and city laws, codes, ordinances, rules, and
regulations.
22. The toilet rooms, toilets, urinals, wash bowls, and other plumbing fixtures
will not be used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags, or other foreign substances will
be thrown in them. All damages resulting from any misuse of the fixtures will be
borne by the Lessee who, or whose servants, employees, agents, visitors, or
licensees, have caused the damage.
23. Lessee shall not in any way mar or deface any part of the Premises, the
Building, or any parts thereof or fixtures therein. Lessee agrees, at its
expense, to repair, paint, replaster or otherwise restore to the condition
existing at the Commencement Date any damage caused by the violation of this
rule, ordinary wear and tear excepted. Without the prior written consent of
Lessor, no Lessee will lay linoleum, or other similar floor covering. In those
portions of the Premises in which carpet or vinyl floor covering has been
provided directly or indirectly by Lessor, Lessee will at its own expense
install and maintain pads to protect the carpet under all furniture having
casters other than carpet casters. Lessee shall periodically shampoo the carpet
to maintain a neat and clean appearance. Upon request, Lessor can provide this
carpet cleaning service at the then applicable rates or Lessee, after notice to
Lessor and subject to Lessor's requirements, may elect to use a contractor to
perform this service after normal business hours. Lessee shall be responsible
for the periodic "touch-up" of paint within the Premises to maintain a neat and
clean appearance.
25. Lessee will ensure that the doors of the Premises are closed and locked and
that all water faucets, water apparatus, and utilities are carefully and
entirely shut off before Lessee or Lessee's employees leave the Premises, so as
to prevent waste or damage, and for any default or carelessness in this regard
Lessee will make good all injuries sustained by other lessees or occupants of
the Building or Lessor. On multiple-tenancy floors, all lessees will keep the
doors to the Building corridors closed at all times except for ingress and
egress.
26. Lessee agrees that Lessor shall not be responsible for lost or stolen
personal property, money or jewelry from the Premises or Building regardless of
whether such loss occurs when the area is locked against entry or not.
27. Lessor may from time to time adopt appropriate systems and procedures for
the security or safety of the Building, Lessee, and any persons occupying or
entering the Building, or using any equipment in the Building. Lessee will
comply with such systems and procedures. Lessee shall specifically comply with
the Building life safety program established by Lessor, including without
limitation fire drills, training programs and fire warden staffing procedures,
and shall exercise all reasonable efforts to cause all Lessee's employees,
invitees and guests to comply with such program. Lessee shall supply to Lessor
the name, address and phone number of individuals who should be contacted in an
emergency, as well as of individuals requiring special assistance in an
emergency. Lessee authorizes Lessor to relinquish said information to the Police
Department and Fire Department in case of an emergency.
28. All persons entering or leaving the Building after standard hours of
operation including Saturday, Sunday, and holidays will comply with such
off-hours security regulations as Lessor may establish and modify from time to
time. Lessor reserves the right to limit or restrict access to the Building
during such time periods. Lessor may utilize an outside agency to control access
to the Building after-hours. Lessor does not assume any responsibility from, and
shall not be liable for, any damage resulting for an error in regard to any
identification of Lessee or its employees and from admission to, or exclusion
form, the Building by such outside agency.
29. No Lessee will use or keep in the Premises or the Building any kerosene,
gasoline, or flammable or combustible or explosive fluid or material or chemical
substance other than limited quantities reasonably necessary for the operation
or maintenance of office equipment or limited quantities of cleaning fluids and
solvents required in normal operation of the Premises. Without Lessor's prior
written approval, no Lessee will use any method of heating or air conditioning
other than that supplied by Lessor. No Lessee will use or 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 Lessor or other occupants of the Building by reason of noise,
odors, or vibrations, or interference in any way with other lessees or those
having business in the Building.
30. Lessor will have the right to prohibit any advertising of the business,
profession or activities by Lessee, which in Lessor's reasonable opinion, tends
to impair the reputation of the Building or its desirability as a Building for
offices, and upon written notice from Lessor, Lessee will discontinue such
advertising. Lessee shall not use the name of the Building for any purpose other
than that of a business address of Lessee, and shall not use any picture or
likeness of the Building in any circulars, notices, advertisements or
correspondence without Lessor's express written consent. Any violation of this
rule may be restrained by injunction.
31. Lessee will not bring or keep any animals, except service animals for
persons with a disability, or birds into the Building. In the event a service
animal is required regularly in the Premises, Lessee shall so advise Lessor.
32. Lessee will not permit bicycles or other vehicles inside or on the sidewalks
outside the Building except in areas designated from time to time by Lessor for
such purposes.
33. Whenever Lessee submits to Lessor any plan, agreement, or other document for
the Lessor's consent or approval after the Commencement Date, Lessee agrees to
pay Lessor as Additional Rent, on demand, a processing fee in the sum equal to
the reasonable fee of the architect, engineer, or attorney employed by Lessor to
review the plan, agreement, or document.
34. No act or thing done or omitted to be done by Lessor or Lessor's agent
during the term of the Lease in connection with the enforcement of these Rules
and Regulations will constitute an eviction by Lessor of any lessee nor will it
be deemed an acceptance of surrender of the Premises by any lessee. No agreement
to accept such termination or surrender will be valid unless in a writing signed
by Lessor. The delivery of keys to any employee or agent of Lessor will not
operate as a termination of the Lease or a surrender of the Premises unless such
delivery of keys is done in connection with a written instrument executed by
Lessor approving the termination or surrender.
35. Lessee agrees that it shall not willfully do or omit to do any act or thing
which shall discriminate or segregate upon the basis of race, color, sex, creed,
or national origin in the use and occupancy or in any subleasing or subletting
in the Premises.
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 29
36. Lessor agrees that these Rules and Regulations shall be enforced against all
lessees in a nondiscriminatory manner. Lessee shall be deemed to have read these
rules and to have agreed to abide by them as a condition of its occupancy of the
Premises.
37. Lessor reserves the right to rescind any of these rules and regulations and
to make such other and further rules and regulations, which shall be consistent
with the Lease, as in its judgement may from time to time be needed or desirable
for the care of the Premises, Common Areas, and the Building. Such rules and
regulations, when made and upon advance written notice to Lessee, shall be
binding upon Lessor and Lessee in the like manner as if originally set forth
herein.
38. If any part of the Premises is used for the preparation and/or sale of food,
including without limitation the operation of a restaurant, snack shop, or
cafeteria, the following apply: (i) Lessee shall provide its own garbage
containers and waste removal service for the disposal of food scraps, oil,
grease, and other such refuse, at Lessee's expense. Garbage containers shall be
leak tight and of a type that do not permit or attract insects, bugs or rodents;
(ii) Lessee shall store soiled or dirty linen in approved fire rated metal
containers with self-closing fusible link covers; (iii) The plumbing and other
facilities within or serving the Premises shall not be used for any purposes
other than that for which they were constructed, and no foreign substances of
any kind shall be thrown therein including any such substance as prohibited by
the County Sewer District. The expense of any breakage, stoppage, or damage
resulting from a violation of this provision shall be borne by Lessee. Grease
traps are required, which shall not be less than monthly. Lessee shall provide
documentation in a form suitable to Lessor indicating that pest control service
is being performed. If it shall be necessary for Lessor to supplement or provide
said pest control services, such work shall be performed and charged to Lessee
as "Additional Rent."
END OF EXHIBIT
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 30
EXHIBIT I
------------------------
SUBORDINATION, NON-DISTURBANCE & ATTORNMENT
SUBORDINATION, NON-DISTURBANCE
& ATTORNMENT AGREEMENT
THIS AGREEMENT, made effective as of the ___ day of _____, 2000, by and
between __________________________________, with its principal offices at
_____________________________ ("Tenant") and ______________________, a national
banking association, whose mailing address is ________________________, and/or
its participants, successors or assigns ("Lender").
WITNESSETH
WHEREAS, by Lease dated ________________ (hereinafter referred to as the
"Lease"), _________________________ ("Landlord") leased and rented to Tenant the
real property commonly known as ________________________, a legal description of
which is attached hereto as Exhibit A ( the "Property" ); and
WHEREAS, ________________ ("Landlord") has obtained or will
obtain a loan from Lender secured by, among other things, a
mortgage on the Property (the "Mortgage"), and as a condition
to making such loan, it was agreed between Landlord and Lender
that Landlord would obtain from Tenant certain written
agreements; and
WHEREAS, Tenant and Lender desire hereby to establish certain
rights, safeguards, obligations and priorities with respect to
their respective interests by means of the following
agreement.
NOW THEREFORE, for and in consideration of the premises and of the mutual
covenants and promises herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Tenant and Lender agree as follows:
1. The Lease and the rights of Tenant thereunder are and shall be
subject and subordinate to the lien of the Mortgage and to all
of the terms, conditions and provisions thereof, to all
advances made or to be made thereunder, to the full extent of
the principal sum, interest thereon and other amounts from
time to time secured thereby, and to any renewal,
substitution, extension, modification or replacement thereof,
including any increase in the indebtedness secured thereby or
any supplements thereto. In the event that Lender or any other
person (the Lender, any other such person and their
successors and assigns being referred to herein as the
"Purchaser") acquires title to the Property pursuant to the
exercise of any remedy provided for in the Mortgage or by
reason of the acceptance of a deed in lieu of foreclosure,
Tenant covenants and agrees to attorn to and recognize and be
bound to Purchaser as its new Landlord, and subject to the
other terms, provisions and conditions of this Agreement, the
Lease shall continue in full force and a effect as a direct
Lease between Tenant and Purchaser.
2. So long as the Lease is in full force and effect and Tenant
shall not be in default under any provision of the Lease or
this Agreement, and no event occurred which has continued to
exist for a period of time (after notice, if any, required by
the Lease) as would entitle Landlord to terminate the Lease or
would cause without further action by Landlord the termination
of the Lease, or would entitle Landlord to dispossess the
Tenant thereunder:
a. the right of possession of Tenant to the Property shall not be
terminated or disturbed by any steps or proceedings taken by Lender in the
exercise of any of its rights under the Mortgage;
b. the Lease shall not be terminated or affected by said exercise of any
remedy provided for in Mortgage, and Lender hereby covenants that any sale by it
of the Property pursuant to the exercise of any rights and remedies under the
Mortgage or otherwise, shall be made subject to the Lease and the rights of
Tenant thereunder.
3. In no event shall Lender or any other Purchaser be:
a. liable for any act or commission of any prior landlord;
b. liable for the return of any security deposit which has not
been delivered to the Purchaser;
c. subject to any offsets or defenses which the Tenant might
have against any prior landlord;
d. bound by any payment of rent or additional rent which the
Tenant might have paid to any prior landlord for more than the
current month (other than payments of estimated Operating
Expenses).
4. Tenant agrees to give prompt written notice to Lender of any
default by the Landlord under the Lease which would entitle
Tenant to cancel the Lease or abate the rent payable
thereunder, and agrees that notwithstanding any provision of
Lease, no notice of cancellation thereof shall be effective
unless Lender has received the notice aforesaid and has failed
within 30 days of the date of receipt thereof to cure, or if
the default cannot be cured within 30 days, has failed to
commence and to pursue diligently the cure of the Landlord's
default which gave rise to such right of cancellation of
abatement. Tenant further agrees to give such notices to any
successor-in-interest of Lender, provided that such
successor-in-interest shall have given written notice to
Tenant of its acquisition of Lender's interest in the Mortgage
and designated the address to which such notices are to be
sent.
5. Tenant acknowledges that the Landlord has executed and
delivered or will execute and deliver to Lender an Assignment
of Rents and Leases conveying the rentals under the Lease as
additional security for said loan, and Tenant hereby expressly
consents to and recognizes such Assignment, and agrees to pay
the rent to Lender or its nominee whenever Lender claims or
requests the rent under the terms of said assignment.
6. Tenant agrees that it will not, without the prior written
consent of Lender, do any of the following, and any such
purported action without such consent shall be void as against
Lender;
a. make a prepayment in excess of one month of base rent
thereunder; or
b. subordinate or permit subordination of the Lease to any
lien subordinate to the Mortgage; or
c. make or enter into any amendment or modification or
termination of the Lease.
d. assign or sublease without Lender's consent (which shall
not be withheld if to one of equal or greater
creditworthiness) and which shall not be unreasonably
Lessor:
Forest Green/Ormsby I Lease Lessee:
<PAGE> 31
withheld so long as a Subordination, Non-Disturbance
& Attornment Agreement in this form is executed by
the assignee or sublessee.
7. Tenant agrees to certify in writing to Lender, upon request,
whether or not any default on the part Landlord exists under
the Lease and the nature of any such default. Tenant states
that as of the date, the Lease is in full force and effect
without modification, a copy of said Lease being attached
hereto. Tenant further states as follows;
a. Tenant is the tenant under the Lease for
space in the above-referenced Property
demising approximately _____________
rentable square feet of space (the
"Premises"). The monthly base rent presently
is $_________________ per month.
b. Tenant has accepted possession of the
Premises pursuant to the Lease. The term
commenced on ______________________. The
termination date of the Lease term,
excluding renewals and extensions, is
_____________. Tenant (has) (does not have)
the right to extend or renew the Lease for
__________(__) __________(___) year
period(s).
c. Any improvements required by the terms of
the Lease to be made by Landlord, and/or any
subsequent Landlord, have been completed to
the satisfaction of Tenant in all respects,
and the Landlord or subsequent Landlords
have fulfilled all of their duties under the
Lease.
d. The Lease has not been assigned,
modified, supplemented of amended in any way
by Tenant, except as described on the
attached sheet (if any). The Lease
constitutes the entire agreement between the
parties and there are no other agreements
concerning the Premises, and Tenant is not
entitled to receive any concession or
benefit (rental or otherwise) or other
similar compensation in connection with
renting the Premises other than as set forth
in the Lease.
e. The Lease is valid and in full force and
effect, and, to the best of Tenant's
knowledge, no party thereto, their
successors or assigns is presently in
default thereunder. Tenant has no defense,
set-off or counterclaim against Landlord
arising out of the Lease or in any way
relating thereto, and no event had occurred
and no condition exists, which with the
giving of notice or the passage of time, or
both, will constitute a default under the
Lease.
f. No rent or other sum payable under the
Lease has been paid more than one month in
advance.
g. The amount of the security deposit, if
any, to secure Tenant's performance under
the Lease is $___________________.
8. The foregoing provisions shall be self-operative and effective
without the execution of any further instruments on the part
of either party hereto. However, Tenant agrees to execute and
deliver to Lender or to any person to whom Tenant herein
agrees to attorn such other instruments as either shall
request in order to effect said provisions.
9. The agreements herein contained shall be binding upon and
shall inure to the benefit of the parties hereto, their
respective successors, successors-in-interest and assigns,
and, without limiting such, the agreements of Lender shall
specifically be binding upon any purchaser of the Property at
foreclosure or otherwise.
10. This Agreement may not be modified other than by an agreement
in writing signed by the parties hereto or their respective
successors-in-interest.
11. This Agreement may be signed in counterparts.
12. If any term or provision of this Agreement shall to any extent
be held invalid or unenforceable, the remaining terms and
provisions hereof shall not be affected thereby, but each term
and provision hereof shall be valid and enforceable to the
fullest extent permitted by law.
13. All notices, statements and other communications to be given
under the terms of this agreement shall be in writing and
delivered by hand against written receipt or sent by certified
mail, return receipt requested, postage prepaid and addressed
as provided in the first paragraph of this Agreement, or at
such other address as from time to time designated by the
party receiving the notice.
IN WITNESS WHEREOF, Tenant and Lender have caused this instrument to be
executed as of the day and year first above written.
TENANT:
By:
- ----------------------- Name:
Witness Its:
- -----------------------
Witness
LENDER:
By:
- ---------------------- Name:
Witness Its:
- ----------------------
Witness
LANDLORD:
By:
- ---------------------- Name:
Witness Its:
- ----------------------
Witness
Lessor:
Forest Green/Ormsby I Lease Lessee:
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 55,524
<SECURITIES> 89,304
<RECEIVABLES> 709
<ALLOWANCES> 103
<INVENTORY> 0
<CURRENT-ASSETS> 149,400
<PP&E> 58,250
<DEPRECIATION> 10,295
<TOTAL-ASSETS> 204,862
<CURRENT-LIABILITIES> 26,287
<BONDS> 4,440
0
0
<COMMON> 544
<OTHER-SE> 167,743
<TOTAL-LIABILITY-AND-EQUITY> 204,862
<SALES> 0
<TOTAL-REVENUES> 1,994
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,356
<LOSS-PROVISION> 40
<INTEREST-EXPENSE> 490
<INCOME-PRETAX> (27,727)
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> (27,727)
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