<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 13, 1999
REGISTRATION NO. 333-91383
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
WITNESS SYSTEMS, INC.
(Exact name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 23-2518693
(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
---------------------
1105 SANCTUARY PARKWAY
ALPHARETTA, GEORGIA 30004
(770) 754-1900
(Address, including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
---------------------
DAVID B. GOULD
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
WITNESS SYSTEMS, INC.
1105 SANCTUARY PARKWAY
ALPHARETTA, GEORGIA 30004
(770) 754-1900
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
JOHN C. YATES, ESQ. BRYAN E. DAVIS, ESQ.
JEFFREY L. SCHULTE, ESQ. MARC L. HARRISON, ESQ.
VIPANJ B. PATEL, ESQ. ASHLEY E. HUFFT, ESQ.
MORRIS, MANNING & MARTIN, LLP ALSTON & BIRD LLP
1600 ATLANTA FINANCIAL CENTER ONE ATLANTIC CENTER
3343 PEACHTREE ROAD, NE 1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30326-1044 ATLANTA, GEORGIA 30309-3424
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
If any of the securities being registered on this form are offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") please check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $
National Association of Securities Dealers, Inc. fee........
Nasdaq Stock Market listing fee.............................
Accountants' fees and expenses..............................
Legal fees and expenses.....................................
Blue Sky fees and expenses..................................
Transfer Agent's fees and expenses..........................
Printing and engraving expenses.............................
Miscellaneous...............................................
--------
Total Expenses.................................... $
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Amended and Restated Certificate of Incorporation limits personal
liability for breach of the fiduciary duty of our directors to the fullest
extent provided by the Delaware General Corporation Law. Such provisions provide
that no director of Witness Systems shall have personal liability to us or to
our stockholders for monetary damages for breach of fiduciary duty of care or
other duty as a director. However, such provisions shall not eliminate or limit
the liability of a director
- for any breach of the director's duty of loyalty to us or to our
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for voting or assenting to unlawful distributions; or
- for any transaction for which the director derived an improper personal
benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under our bylaws, any
agreement, a vote of our stockholders or otherwise. Our certificate of
incorporation eliminates the personal liability of directors to the fullest
extent permitted by Section 102(b)(7) of the Delaware General Corporation Law
and provides that the registrant shall fully indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person is or was our director or
officer or is or was serving at our request as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under our certificate of incorporation. We are not aware
of any threatened litigation or proceeding that may result in a claim for such
indemnification.
Section of the Underwriting Agreement filed as Exhibit 1.1
hereto also contains provisions pursuant to which certain officers, directors
and controlling persons of the Company may be entitled to be indemnified by the
underwriters named therein.
II-1
<PAGE> 3
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, Witness Systems has issued the securities set
forth below which were not registered under Section 5 of the Securities Act of
1933:
On December 16, 1997, we sold restricted common stock to Mr. Richards for
$108,000 in return for a promissory note. In February 1999, Mr. Richards
resigned from Witness Systems and the amount of the note related to the 156,056
vested shares plus accrued interest was forgiven. The remainder of the note was
cancelled in connection with our repurchase at $0.21 per share of the 360,544
unvested shares.
On March 18, 1997, we issued and sold 3,184,000 shares of series A
preferred stock at a price of $2.145 per share to Battery Investment Partners
IV, LLC, Battery Venture IV, L.P. and John Abraham resulting in net proceeds of
$6.6 million. Immediately before the consummation of this offering, each of the
series A preferred shares will be automatically converted into one share of
common stock.
On September 24, 1998, we issued and sold 1,181,954 shares of series B
preferred stock at a price of $4.65 per share to Battery Investment Partners IV,
LLC, Battery Venture IV, L.P. and John Abraham resulting in net proceeds of $5.5
million. Immediately before the consummation of this offering, each of the
series B preferred shares will be automatically converted into one share of
common stock.
On August 2, 1999, we issued and sold 1,325,028 shares of series C
preferred stock at a price of $6.30 per share to a group of venture capital
firms and an individual investor resulting in net proceeds of $8.3 million.
Immediately before the consummation of this offering, each of the series C
preferred shares will be automatically converted into one share of common stock.
On September 30, 1999, we purchased certain assets from Advanced Integrated
Recorders, Inc. and issued 467,289 shares of common stock to Advanced Integrated
Recorders, Inc. as consideration for the assets.
In March 1999, we issued 488,757 shares of restricted common stock to Mr.
Gould in return for a note receivable of $1.5 million.
On August 2, 1999, we sold 17,000 shares of restricted common stock to each
of the following officers (for a total of 136,000 shares): Mr. Gould, Mr.
Ezrine, Mr. Brown, Mr. Gisby, Mr. Ford, Mr. Gallick, Mr. Livernoche, and Ms.
Treaster. Each officer paid $90,950 for the shares by providing a promissory
note to the company. The principal balance of each promissory note is due in
full on July 31, 2003, with interest of 7% payable in arrears annually. In
addition, on August 2, 1999, we sold 13,553 shares of restricted common stock to
Mr. Abraham for $72,402 in return for a promissory note. The principal balance
of the promissory note is due in full on July 31, 2006, with interest of 6.41%
payable in arrears annually.
The issuance of securities in the transaction described above was deemed to
be exempt from registration under the Securities Act in reliance on Section 4(2)
and Regulation D of the Securities Act.
II-2
<PAGE> 4
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1* -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Articles of Incorporation of the
Registrant.
3.2 -- Amended and Restated Bylaws of the Registrant.
4.1 -- See Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Articles of Incorporation and Amended and Restated
Bylaws of the Registrant defining rights of the holders of
Common Stock of the Registrant.
4.2* -- Specimen Stock Certificate.
5.1* -- Opinion of Morris, Manning & Martin, L.L.P., Counsel to the
Registrant, as to the legality of the shares being
registered.
10.1+ -- Office Lease Agreement between Regency Park West Associates,
L.P. and Witness Systems, Inc., dated April 15, 1997.
10.2 -- Landlord's Consent to Second Sublease, dated June 2, 1999
and Second Sublease Agreement between Regency Park West
Associates, L.P., as Landlord and Witness Systems, Inc., as
Second Sublessee, dated May 28, 1999.
10.3 -- Amended and Restated Stock Incentive Plan of the Registrant.
10.4* -- Form of Stock Option Grant Certificate.
10.5 -- Form of Amendment to Stock Option Grant Certificate between
Registrant and certain of the officers of the Registrant.
10.6 -- Employee Stock Purchase Plan of the Registrant.
10.7+ -- Employment Agreement entered into between David B. Gould and
the Registrant, effective February 2, 1999.
10.8+ -- Promissory Note, dated March 31, 1999, between the
Registrant and David Gould.
10.9+ -- Restricted Stock Award Agreement, dated March 31, 1999,
between the Registrant and David Gould.
10.10+ -- Form of Promissory Note and Subscription Agreement, dated
August 2, 1999, between the Registrant and certain of the
officers of the Registrant.
10.11+ -- Promissory Note and Subscription Agreement, dated August 2,
1999, between the Registrant and John Abraham.
10.12+ -- Form of Stock Repurchase Agreement between the Registrant
and certain shareholders of the Registrant.
10.13+ -- Loan and Security Agreement, dated June 24, 1999 between
Greyrock Capital and the Registrant.
10.14* -- Loan and Security Agreement between Silicon Valley Bank and
the Registration, dated April 22, 1999.
10.15* -- Warrant to Purchase Stock, dated June 29, 1999 between
Greyrock Capital and the Registrant.
10.16* -- Warrant to Purchase Stock, dated April 22, 1999 between
Silicon Valley Bank and the Registrant.
10.17 -- Amended and Restated Registration Rights Agreement, dated as
of August 2, 1999, as amended, among the Registrant and
certain shareholders of the Registrant.
10.18* -- Subsidiary License and Distribution Agreement.
10.19 -- Form of Indemnification Agreement to be entered into between
Registrant and each of its executive officers and directors.
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.20 -- Amendment No. 1 to Employment Agreement entered into between
David B. Gould and the Registrant, dated as of August 4,
1999.
21.1+ -- List of Subsidiaries.
23.1 -- Independent Auditors' Consent and Report on Financial
Statement Schedule of KPMG LLP.
23.2* -- Consent of Morris, Manning & Martin, L.L.P. (included in
Exhibit 5.1).
24.1+ -- Powers of Attorney (included on signature page).
27.1+ -- Financial Data Schedule (for SEC use only).
</TABLE>
- ------------------------------
* To be filed by amendment
+ Previously filed
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(ii) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Alpharetta, State of
Georgia on the 13th day of December, 1999.
WITNESS SYSTEMS, INC.
By: /s/ DAVID B. GOULD
------------------------------------
David B. Gould
Chairman of the Board, President and
Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David B. Gould and Jon W. Ezrine, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and any subsequent registration
statements pursuant to Rule 462 of the Securities Act and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorney-in-fact
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID B. GOULD Chairman of the Board, December 13, 1999
- --------------------------------------------------- President and Chief
David B. Gould Executive Officer (Principal
Executive Officer)
/s/ JON W. EZRINE Chief Financial Officer and December 13, 1999
- --------------------------------------------------- Secretary (Principal
Jon W. Ezrine Financial and Accounting
Officer)
/s/ JAMES W. JUDSON, JR. Director December 13, 1999
- ---------------------------------------------------
James W. Judson, Jr.
/s/ THOMAS J. CROTTY Director December 13, 1999
- ---------------------------------------------------
Thomas J. Crotty
/s/ JOHN ABRAHAM Director December 13, 1999
- ---------------------------------------------------
John Abraham
/s/ JOEL G. KATZ Director December 13, 1999
- ---------------------------------------------------
Joel G. Katz
</TABLE>
II-5
<PAGE> 7
WITNESS SYSTEMS, INC.
SCHEDULE V -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END OF
OF PERIOD EXPENSES EXPENSES DEDUCTIONS PERIOD
---------- ---------- ---------- ---------- ---------
(IN 000'S)
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts:
Year ended December 31, 1996.... $ -- -- -- -- --
Year ended December 31, 1997.... $ -- 100 -- -- 100
Year ended December 31, 1998.... $100 200 -- -- 300
Nine months ended September 30,
1999......................... $300 138 438
</TABLE>
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1* -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Articles of Incorporation of the
Registrant.
3.2 -- Amended and Restated Bylaws of the Registrant.
4.1 -- See Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Articles of Incorporation and Amended and Restated
Bylaws of the Registrant defining rights of the holders of
Common Stock of the Registrant.
4.2* -- Specimen Stock Certificate.
5.1* -- Opinion of Morris, Manning & Martin, L.L.P., Counsel to the
Registrant, as to the legality of the shares being
registered.
10.1+ -- Office Lease Agreement between Regency Park West Associates,
L.P. and Witness Systems, Inc., dated April 15, 1997.
10.2 -- Landlord's Consent to Second Sublease, dated June 2, 1999
and Second Sublease Agreement between Regency Park West
Associates, L.P., as Landlord and Witness Systems, Inc., as
Second Sublessee, dated May 28, 1999.
10.3 -- Amended and Restated Stock Incentive Plan of the Registrant.
10.4* -- Form of Stock Option Grant Certificate.
10.5 -- Form of Amendment to Stock Option Grant Certificate between
Registrant and certain of the officers of the Registrant.
10.6 -- Employee Stock Purchase Plan of the Registrant.
10.7+ -- Employment Agreement entered into between David B. Gould and
the Registrant, effective February 2, 1999.
10.8+ -- Promissory Note, dated March 31, 1999, between the
Registrant and David Gould.
10.9+ -- Restricted Stock Award Agreement, dated March 31, 1999,
between the Registrant and David Gould.
10.10+ -- Form of Promissory Note and Subscription Agreement, dated
August 2, 1999, between the Registrant and certain of the
officers of the Registrant.
10.11+ -- Promissory Note and Subscription Agreement, dated August 2,
1999, between the Registrant and John Abraham.
10.12+ -- Form of Stock Repurchase Agreement between the Registrant
and certain shareholders of the Registrant.
10.13+ -- Loan and Security Agreement, dated June 24, 1999 between
Greyrock Capital and the Registrant.
10.14* -- Loan and Security Agreement between Silicon Valley Bank and
the Registration, dated April 22, 1999.
10.15* -- Warrant to Purchase Stock, dated June 29, 1999 between
Greyrock Capital and the Registrant.
10.16* -- Warrant to Purchase Stock, dated April 22, 1999 between
Silicon Valley Bank and the Registrant.
10.17 -- Amended and Restated Registration Rights Agreement, dated as
of August 2, 1999, as amended, among the Registrant and
certain shareholders of the Registrant.
10.18* -- Subsidiary License and Distribution Agreement.
10.19 -- Form of Indemnification Agreement to be entered into between
Registrant and each of its executive officers and directors.
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.20 -- Amendment No. 1 to Employment Agreement entered into between
David B. Gould and the Registrant, dated as of August 4,
1999.
21.1+ -- List of Subsidiaries.
23.1 -- Independent Auditors' Consent and Report on Financial
Statement Schedule of KPMG LLP.
23.2* -- Consent of Morris, Manning & Martin, L.L.P. (included in
Exhibit 5.1).
24.1+ -- Powers of Attorney (included on signature page).
27.1+ -- Financial Data Schedule (for SEC use only).
</TABLE>
- ------------------------------
* To be filed by amendment
+ Previously Filed
<PAGE> 1
EXHIBIT 3.1
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WITNESS SYSTEMS, INC.
WITNESS SYSTEMS, INC., a corporation organized and existing under the
laws of the State of Delaware, HEREBY CERTIFIES as follows:
1. The name of the corporation is Witness Systems, Inc. (the
"Corporation") and the name under which the corporation was originally
incorporated was "Witness Systems Delaware, Inc." The date of filing of its
original Certificate of Incorporation with the Secretary of State was March 13,
1997.
2. This Fourth Amended and Restated Certificate of Incorporation
restates and integrates and further amends the Certificate of Incorporation as
amended or supplemented heretofore to read in its entirety as follows:
FIRST: The name of the corporation is Witness Systems, Inc.
(the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1209 Orange Street, Corporation Trust
Center, in the City of Wilmington 19801, County of New Castle. The name of the
registered agent of the Corporation at such address is The Corporation Trust
Company.
THIRD: (a) The nature of the business or purposes to be
conducted or promoted by the Corporation is to engage in any lawful business,
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
(b) The private property of the stockholders shall not
be subject to the payment of corporate debts to any extent whatsoever.
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is 66,731,954 shares,
which shall consist of (i) 50,000,000 shares of common stock, at a par value of
one cent ($.01) per share ("Common Stock"), and (ii) 16,731,954 shares of
preferred stock, at a par value of one cent ($.01) per share ("Preferred
Stock"). The following is a description of the limitations and relative rights
of the respective classes of authorized capital stock and a statement of the
designations, preferences, voting powers (or no voting powers), relative,
participating, optional or other special rights and privileges and the
qualifications, limitations and restrictions of the respective classes of
authorized capital stock.
A. PREFERRED STOCK
Of the 16,731,954 shares of authorized Preferred Stock, (i) 4,000,000
shares shall be designated and known as "Series A Convertible Preferred Stock,"
(ii) 1,231,954 shares shall be designated and known as "Series B Convertible
Preferred Stock" and (iii) 1,500,000 shares shall be designated and known as
"Series C Convertible Preferred Stock." The Series A Convertible Preferred
Stock, Series B Convertible
<PAGE> 2
Preferred Stock and Series C Convertible Preferred Stock collectively are
sometimes referred to in this Certificate of Incorporation as the "Convertible
Preferred Stock." The remaining 10,000,000 shares of Preferred Stock shall have
no designations or preferences set forth herein, and the Corporation's Board of
Directors is expressly authorized to provide for the classification and
reclassification of any unissued shares of Preferred Stock, as set forth in
Article Fifth hereof.
1. Voting.
1A. General. Except as may be otherwise provided in this
Certificate of Incorporation or by law, the Convertible Preferred Stock shall
vote together with all other classes and series of stock of the Corporation as
a single class on all actions to be taken by the stockholders of the
Corporation. Each share of Convertible Preferred Stock shall entitle the holder
thereof to such number of votes per share on each such action as shall equal
the number of shares of Common Stock (including fractions of a share) into
which each share of Convertible Preferred Stock is then convertible.
1B. Board Size. Subject to the provisions of paragraph
4.A.1C(b) below, the Corporation shall not, without the written consent or
affirmative vote of the holders of at least a majority in interest of the then
outstanding shares of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) together as a single class, increase
the maximum number of directors constituting the Board of Directors to a number
in excess of seven.
1C. Board Seats.
(a) The holders of Series A Convertible Preferred Stock
and Series B Convertible Preferred Stock, voting together as a single class,
shall be entitled to elect two (2) directors of the Corporation. At any meeting
(or in a written consent in lieu thereof) held for the purpose of electing
directors, the presence in person or by proxy (or the written consent) of the
holders of at least a majority in interest of the then outstanding shares of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
shall constitute a quorum of the Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock for the election of directors to be
elected solely by the holders of such series of the Convertible Preferred
Stock. A vacancy in any directorship elected by the holders of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock shall be
filled only by vote or written consent of the holders of such series of
Convertible Preferred Stock. The directors to be elected by the holders of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock,
voting separately as one class, pursuant to this subsection (a), shall serve
for terms extending from the date of their election and qualification until the
time of the next succeeding annual meeting of stockholders and until their
successors have been elected and qualified.
(b) In addition to the rights specified in paragraph
4.A.1C(a) hereof, the holders of a majority in interest of any series of
Convertible Preferred Stock as to which an Event of Noncompliance (as defined
in paragraph 4.A.9) has occurred or, if an Event of Noncompliance has occurred
simultaneously with respect to more than one series of Convertible Preferred
Stock, the holders of two-thirds in interest of such series, voting together as
a single class (as the case may be, the "Affected Series"), shall have the
exclusive and special right, upon the occurrence of any such Event of
Noncompliance, to elect the smallest number of directors which shall constitute
a majority of the Board of Directors of the Corporation. The special and
exclusive right of the holders of the Affected Series of Convertible Preferred
Stock, voting separately as one class, to elect a majority of the Board of
Directors of the Corporation shall continue until the Event of Noncompliance
which gave rise to such right has been
2
<PAGE> 3
cured by the Corporation, subject to the revesting thereof upon the occurrence
of each and every Event of Noncompliance subsequent thereto in respect of such
Affected Series. With respect to the special and exclusive right of holders of
the Affected Series of Convertible Preferred Stock, voting separately as one
class, to elect a majority of the Board of Directors of the Corporation, the
number of directors constituting the Board of Directors of the Corporation,
shall, if necessary, be increased to provide a sufficient number of vacancies
to permit the holders of the Affected Series of Convertible Preferred Stock to
perfect their rights hereunder. In any election of directors pursuant to this
subsection (b), each holder of shares of the Affected Series of Convertible
Preferred Stock shall be entitled to one vote for each share of the Affected
Series of Convertible Preferred Stock held and no holder of the Affected Series
of Convertible Preferred Stock shall be entitled to cumulate his votes by
giving one candidate more than one vote per share. The special and exclusive
voting right of the holders of the Affected Series of Convertible Preferred
Stock, voting separately as one class, contained in this subsection (b) may be
exercised either at a special meeting of the holders of the Affected Series of
Convertible Preferred Stock called as provided below, or at any annual or
special meeting of the stockholders of the Corporation, or by written consent
of such holders in lieu of a meeting. If at any time any directorship to be
filled by the holders of the Affected Series of Convertible Preferred Stock,
voting separately as one class, pursuant to this subsection (b) has been vacant
for a period of ten days, the Secretary of the Corporation shall, upon the
written request of the holders of record of shares representing at least 25% of
the voting power of the Affected Series of Convertible Preferred Stock then
outstanding, call a special meeting of the holders of the Affected Series of
Convertible Preferred Stock for the purpose of electing a director or directors
to fill such vacancy or vacancies. Such meeting shall be held at the earliest
practicable date at such place as is specified in the By-laws of the
Corporation. If such meeting shall not be called by the Secretary of the
Corporation within ten days after personal service of said written request on
him, then the holders of record of shares representing at least 25% of the
voting power of the Affected Series of Convertible Preferred Stock then
outstanding may designate in writing one of their number to call such meeting
at the expense of the Corporation, and such meeting may be called by such
persons so designated upon the notice required for annual meetings of
stockholders and shall be held at such specified place. Any holder of the
Affected Series of Convertible Preferred Stock so designated shall have access
to the stock books of the Corporation for the purpose of calling a meeting of
the stockholders pursuant to these provisions.
At any meeting held for the purpose of electing directors at which the
holders of the Affected Series of Convertible Preferred Stock shall have the
special and exclusive right, voting separately as one class, to elect directors
as provided in this subjection (b), the presence, in person or by proxy, of the
holders of record of shares representing a majority of the voting power of the
Affected Series of Convertible Preferred Stock then outstanding shall be
required to constitute a quorum of the Affected Series of Convertible Preferred
Stock for such election. At any such meeting or adjournment thereof, the
absence of such a quorum of the Affected Series of Convertible Preferred Stock
shall not prevent the election of directors other than the directors to be
elected by holders of the Affected Series of Convertible Preferred Stock,
voting separately as one class, pursuant to this subsection (b), and the
absence of a quorum for the election of such other directors shall not prevent
the election of the directors to be elected by holders of the Affected Series
of Convertible Preferred Stock, voting separately as one class, pursuant to
this subsection (b), and, in the absence of either or both such quorums, the
holders of record of shares representing a majority of the voting power present
in person or by proxy of the class or classes of stock which lack a quorum
shall have power to adjourn the meeting for the election of directors which
they are entitled to elect from time to time without notice other than
announcement at the meeting.
A vacancy in the directorships to be elected by the holders of the
Affected Series of Convertible Preferred Stock, voting separately as one class,
pursuant to this subsection (b) may be filled only by vote or written consent
in lieu of a meeting of (i) the holders of a majority in interest of the
Affected Series of
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Convertible Preferred Stock, acting separately as one class, or (ii) the
remaining directors elected by the holders of the Affected Series of
Convertible Preferred Stock (or by directors so elected).
2. Dividends
2A. Dividends. The consent of holders of at least a majority
in interest of the then outstanding shares of Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock, voting separately as one class,
and at least a majority in interest of the then outstanding shares of Series C
Convertible Preferred Stock, voting separately as one class, shall be received
by the Corporation, before any dividends (other than dividends payable in
Common Stock) shall be declared and paid upon or set aside for the Common Stock
of the Corporation in any year. All dividends declared upon the Convertible
Preferred Stock shall be declared pro rata per share.
2B. Series A Accruing Dividends. From and after the original
date of issuance of the shares of Series A Convertible Preferred Stock, the
holders of such shares of the Series A Convertible Preferred Stock shall be
entitled to receive, out of funds legally available therefor, when and if
declared by the Board of Directors, dividends at the rate per annum of $0.02145
per share (the "Series A Accruing Dividends"). Series A Accruing Dividends
shall accrue from day to day, whether or not earned or declared, and shall be
cumulative; provided however, that, except as provided in paragraphs 4.A.3, 5
and 6, the Corporation shall be under no obligation to pay such Series A
Accruing Dividends unless so declared by the Board of Directors; and provided
further however, that, for purposes of paragraphs 4.A.3 and 6 hereof, unless
otherwise requested by the holders of a majority in interest of the Series A
Convertible Preferred Stock, subject to paragraph 4.A.4.B. hereof, all Series A
Accruing Dividends shall be paid by providing to such holders a certificate
representing a number of shares of Series A Convertible Preferred Stock equal
to the quotient of all such Series A Accruing Dividends divided by the then
Applicable Conversion Price (as defined in paragraph 4.A.5A below) then in
effect with respect to the Series A Convertible Preferred Stock.
2C. Series B Convertible Preferred Stock. The holders of the
Series B Convertible Preferred Stock shall be entitled to receive, out of funds
legally available therefor, dividends at the same rate as dividends (other than
dividends on the Common Stock paid solely in additional shares of Common Stock)
are paid with respect to the Common Stock (treating each share of Series B
Convertible Preferred Stock as being equal to the number of shares of Common
Stock (including fractions of a share) into which each share of Series B
Convertible Preferred Stock is then convertible).
2D. Series C Convertible Preferred Stock. The holders of the
Series C Convertible Preferred Stock shall be entitled to receive, out of funds
legally available therefor, dividends at the same rate as dividends (other than
dividends on the Common Stock paid solely in additional shares of Common Stock)
are paid with respect to the Common Stock (treating each share of Series C
Convertible Preferred Stock as being equal to the number of shares of Common
Stock (including fractions of a share) into which each share of Series C
Convertible Preferred Stock is then convertible).
3. Liquidation, Dissolution and Winding-up.
3A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
shares of Series C Convertible Preferred Stock shall be paid, before any
payment shall be made to the holders of any stock ranking on liquidation junior
to the Convertible Preferred Stock, including without limitation, shares of
Common Stock, Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, which each shall rank junior in liquidation to the Series C
Convertible Preferred Stock, an amount equal to the Applicable Invested Amount
(as defined
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below) with respect to the Series C Convertible Preferred Stock so held, plus,
in the case of each share, an amount equal to dividends accrued but unpaid
thereon, computed to the date payment thereof is made available. Upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after the payment or setting apart for payment of all preferential
amounts payable to holders of Series C Convertible Preferred Stock pursuant to
the immediately preceding sentence, the holders of the shares of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock shall be
paid, before any payment shall be paid to the holders of any stock ranking on
liquidation junior to the Convertible Preferred Stock, an amount equal to the
Applicable Invested Amount (as defined below) with respect to the series of
Convertible Preferred Stock so held plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon (including with respect to the
Series A Convertible Preferred Stock, the Series A Accruing Dividends),
computed to the date payment thereof is made available. Such amount payable
with respect to one share of a particular series of Convertible Preferred Stock
pursuant to the preceding two sentences is sometimes referred to as the
"Applicable Liquidation Preference Payment" with respect to such series, and
with respect to all shares of Series C Convertible Preferred Stock in the
aggregate is sometimes referred to as the "Series C Liquidation Preference
Payments" and with respect to all shares of Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock in the aggregate is sometimes
referred to as the "Series A and B Liquidation Preference Payments." If, upon
such liquidation, dissolution or winding up of the Corporation, whether
voluntarily or involuntarily, the assets to be distributed among the holders of
shares of Series C Convertible Preferred Stock shall be insufficient to permit
payment to the holders of Series C Convertible Preferred Stock of an aggregate
amount equal to the Series C Liquidation Preference Payments, then the entire
assets of the Corporation to be so distributed shall be distributed ratably
among the holders of Series C Convertible Preferred Stock. If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntarily
or involuntarily, the assets to be distributed among the holders of shares of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
shall be insufficient to permit payment to the holders of such series of
Convertible Preferred Stock of an aggregate amount equal to the Series A and B
Liquidation Preference Payments, then the entire assets of the Corporation to
be so distributed shall be distributed ratably (based on the Applicable
Liquidation Preference Payments payable with respect to each such series of
Convertible Preferred Stock) among the holders of such series of Convertible
Preferred Stock. For purposes hereof, the Series A Convertible Preferred Stock
and Series B Convertible Preferred Stock shall rank on liquidation junior to
the Series C Convertible Preferred Stock, the Series A Convertible Preferred
Stock and the Series B Convertible Preferred Stock shall rank on liquidation
pari passu, and the Common Stock shall rank on liquidation junior to the
Convertible Preferred Stock. The "Applicable Invested Amount" shall mean (i)
with respect to each share of Series A Convertible Preferred Stock, $2.145 per
share; (ii) with respect to each share of Series B Convertible Preferred Stock,
$4.65 per share; and (iii) with respect to each share of Series C Convertible
Preferred Stock, $6.30 per share.
3B. Participation of the Series A Convertible Preferred Stock
and Common Stock. Upon any liquidation, dissolution or winding up of the
Corporation, immediately after the holders of the Convertible Preferred Stock
shall have been paid in full the Convertible Liquidation Preference Payments,
the remaining net assets of the Corporation available for distribution shall be
distributed among the holders of the shares of Series A Convertible Preferred
Stock and Common Stock in an amount per share as would have been payable had
each share of Series A Convertible Preferred Stock been converted to Common
Stock pursuant to paragraph 4.A.5 immediately prior to such liquidation,
dissolution or winding up.
3C. Notice. Written notice of such liquidation, dissolution
or winding up, stating a payment date and the place where said payments shall
be made, shall be given by mail, postage prepaid, or by telex to non-U.S.
residents, not less than 20 days prior to the payment date stated therein, to
the holders
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of record of Convertible Preferred Stock, such notice to be addressed to each
such holder at its address as shown by the records of the Corporation.
3D. Consolidations, Mergers, Etc. The (x) consolidation or
merger of the Corporation into or with any other entity or entities which
results in the exchange of outstanding shares of the Corporation for securities
or other consideration issued or paid or caused to be issued or paid by any
such entity or affiliate thereof (except a consolidation or merger into a
subsidiary or merger in which the Corporation is the surviving Corporation and
the holders of the Corporation's voting stock outstanding immediately prior to
the transaction constitute a majority of the holders of voting stock
outstanding immediately following the transaction), (y) the sale or transfer by
the Corporation of all or substantially all its assets, in one or a series of
related transactions, or (z) the sale or transfer by the Corporation's
stockholders of more than 50% in voting power of the Corporation's capital
stock in one or a series of related transactions (any such transaction, a "Sale
or Merger") shall be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of the provisions of this paragraph 4.A.3,
provided, however, that each holder of Convertible Preferred Stock shall have
the right to elect the benefits of the provisions of paragraph 4.A.5G in lieu
of receiving payment in liquidation, dissolution or winding up of the
Corporation pursuant to this paragraph 4.A.3; provided, further, however, if
the consideration per share receivable by the holders of the Series A
Convertible Preferred Stock upon such merger, consolidation, sale of assets or
sale of stock (as determined in good faith by the Corporation's Board of
Directors) if the provisions of paragraph 4.A.5G were to be applicable (the
"Pro Forma Series A Organic Change Consideration") is equal to or greater than
$8.58 (as adjusted for any stock split, subdivision, reclassification or
similar event), no liquidation, dissolution or winding up of the Corporation
within the meaning of the provisions of this paragraph 4.A.3 shall be deemed to
have occurred and the provisions of paragraph 4.A.5G shall, in fact, apply with
respect to the holders of the Series A Convertible Preferred Stock only;
provided, further, that, in the event that the Pro Forma Series A Organic
Change Consideration is greater than $6.30 but less that $8.58 and, in
connection with the closing of such transaction, any holder of shares of Series
A Convertible Preferred Stock desires to convert any of such shares into shares
of Common Stock pursuant to Section 4.A.5A hereof, then, as a condition to the
effectiveness of any election of such holder so to convert such shares of
Series A Convertible Preferred Stock, such holder shall give the Corporation
written notice of such election and the Corporation shall promptly thereafter
and, in any event, prior to the consummation of such transaction, deliver to
each holder of shares of Series C Convertible Preferred Stock a copy of such
election notice; and, provided, further, that any election by any holder of
shares of Series C Convertible Preferred Stock pursuant to Section 4.A.5A
hereof to convert his or its shares of such stock into shares of Common Stock
made in connection with or anticipation of such transaction prior to receipt of
the foregoing notice from the Company may be revoked at the option of such
holder.
3E. Consideration. In the case of a liquidation, dissolution
or winding up of the Corporation within the meaning of the provisions of this
paragraph 4.A.3. the holders of Convertible Preferred Stock shall be entitled
to receive their respective Applicable Liquidation Preference Payments, in
accordance with the provisions of paragraph 4.A.3, from any funds legally
available for distribution to stockholders, and, in the case of a Sale or
Merger, the holders of Convertible Preferred Stock shall be entitled to receive
their respective Applicable Liquidation Preference Payments, in accordance with
the terms of paragraph 4.A.3, from the net proceeds of the Sale or Merger
(defined for these purposes to mean the proceeds, whether cash, securities or
other property, available for distribution to the stockholders, payable to the
stockholders, or into which shares of stock of the Corporation are to be
converted by reason of the Sale or Merger).
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Any securities or other property other than cash to be
delivered to the holders of Convertible Preferred Stock pursuant to this
paragraph 4.A.3 as a consequence of a Sale or Merger shall be valued as
follows:
(a) if traded on a securities exchange or through
the Nasdaq Stock Market, by averaging the closing prices of
the securities on such exchange over the Relevant Trading
Period (defined below);
(b) if actively traded over-the-counter, by
averaging the closing bid or sale prices (whichever are
applicable) over the Relevant Trading Period; and
(c) if there is no active public market, at the fair
market value thereof, as determined in good faith by the
Board of Directors of the Corporation; provided that the
holders of twenty-five percent (25%) of any series of
Convertible Preferred Stock may seek, and shall be entitled
to, an appraisal with the thirty (30)-day period after
receiving notice of either the proposed or actual Sale or
Merger in accordance with the procedures described in
paragraph 4.A.9B or 4.A.9C prior to distribution of the
proceeds or consideration in such transaction to the holders
of any other capital stock of the Corporation.
As used herein above, the Relevant Trading Period in the context of a
merger or consolidation with another corporation shall mean the
period, if any, designated by the Corporation and the other parties to
such merger or consolidation as the trading period during which the
value of the shares to be received by stockholders of the Corporation
is determined and in the absence of any such period, or, in the case
of any other Sale or Merger , then the twenty (20)-day trading period
ending two (2) days prior to the closing of the Sale or Merger.
Property other than securities, as determined in good faith by the
Board of Directors of the Corporation subject to the right of the
holders of Convertible Preferred Stock to seek an appraisal as
described in paragraph 4.A.3E(i)(c).
In the event the requirements of this paragraph 4.A.3 with respect to
a Sale or Merger are not complied with, the Corporation shall forthwith either:
(i) cause such closing to be postponed until such time as the
requirements of this paragraph 4.A.3 have been complied with, or
(ii) cancel such transaction, in which event the rights,
preferences and privileges of the holders of Convertible Preferred
Stock shall revert to and be the same such rights, preferences and
privileges existing immediately prior to the date of the first notice
referred to in the following paragraph.
The Corporation shall give each holder of Convertible Preferred Stock
written notice of any impending Sale or Merger not later than twenty (20) days
prior to the stockholders' meeting called to approve such transaction. The
notice shall describe the material terms and conditions of the impending Sale
or Merger and the provisions of this paragraph 4.A.3, and the Corporation shall
thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after the
Corporation has given the notice provided for herein or sooner than ten (10)
days after the Corporation has given notice of any material changes provided
for herein; provided, however, that
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such periods may be shortened upon the written consent of the holders of a
majority of the then outstanding shares of Convertible Preferred Stock.
The provisions of paragraph 4.A.3 are in addition to, and not in
limitation, of the restrictions of paragraph 4.A.4.
4. Restrictions.
4A. Series A and Series B Convertible Preferred Stock. At any
time when at least 25% of the shares of the Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock originally issued by the
Corporation are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Certificate of Incorporation, and in addition to any other vote required
by law or the Certificate of Incorporation, without the written consent of the
holders of at least a majority in interest of the then outstanding shares of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
given in writing or by vote at a meeting, consenting or voting (as the case may
be) together as a single class, the Corporation will not:
(1) Consent to any liquidation, dissolution or
winding up of the Corporation or merge or consolidate with or into,
or permit any subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a
consolidation or merger into a subsidiary or merger in which the
Corporation is the surviving Corporation and the holders of the
Corporation's voting stock outstanding immediately prior to the
transaction constitute a majority of the holders of voting stock
outstanding immediately following the transaction);
(2) Sell, abandon, transfer, lease or otherwise
dispose of all or substantially all of its properties or assets;
(3) Increase the number of Reserved Employee Shares
(as defined in paragraph 4.A.9 hereof); or
(4) Purchase or redeem, or set aside any sums for
the purchase or redemption of, or pay any dividend or make any
distribution on, any shares of stock other than the Convertible
Preferred Stock, except for dividends or other distributions payable
on the Common Stock solely in the form of additional shares of Common
Stock.
4.B Series C Convertible Preferred Stock. At any time when at
least 25% of the shares of the Series C Convertible Preferred Stock issued
pursuant to the Series C Purchase Agreement (as defined in paragraph 4.A.9
below) remain outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Certificate of Incorporation, and in addition to any other vote required
by law or the Certificate of Incorporation, without the written consent of the
holders of at least a majority in interest of the then outstanding shares of
Series C Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) together as a separate class, the
Corporation will not:
(1) Consent to any liquidation, dissolution or
winding up of the Corporation or merge or consolidate with or into,
or permit any subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a
consolidation or merger into a subsidiary or merger in which the
Corporation is the surviving Corporation and the holders of
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the Corporation's voting stock outstanding immediately prior to the
transaction constitute a majority of the holders of voting stock
outstanding immediately following the transaction);
(2) Sell, abandon, transfer, lease or otherwise
dispose of all or substantially all of its properties or assets;
(3) Increase the number of Reserved Employee Shares
(as defined in paragraph 4.A.9 hereof);
(4) Purchase or redeem, or set aside any sums for
the purchase or redemption of, or pay any dividend or make any
distribution on, any shares of stock other than the Convertible
Preferred Stock, except for dividends or other distributions payable
on the Common Stock solely in the form of additional shares of Common
Stock;
(5) Effect a material change in the Company's line(s)
of business;
(6) Enter into any material business activities not
contemplated in the Company's Offering Memorandum dated April 26,
1999 provided to the initial purchasers of Series C Convertible
Preferred Stock;
(7) Amend, alter or repeal any provision of its
Certificate of Incorporation or By-laws in a manner adverse to the
Series C Convertible Preferred Stock; or
(8) Create or authorize the creation of any
additional class or series of shares of stock unless the same ranks
junior to the Series C Convertible Preferred Stock as to dividends
and the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, or increase the authorized amount of
Series C Convertible Preferred Stock or increase the authorized
amount of any additional class or series of shares of stock unless
the same ranks junior to the Series C Convertible Preferred Stock as
to dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create or authorize
any obligation or security convertible into shares of Series C
Convertible Preferred Stock or into shares of any other class or
series of stock unless the same ranks junior to the Series C
Convertible Preferred Stock as to dividends and the distribution of
assets on the liquidation, dissolution or winding up of the
Corporation, whether any such creation, authorization or increase
shall be by means of amendment to the Certificate of Incorporation or
by merger, consolidation or otherwise.
4C. Series B Convertible Preferred Stock. At any time when at
least 25% of the shares of the Series B Convertible Preferred Stock issued
pursuant to the Series B Purchase Agreement (as defined in paragraph 4.A.8
below) remain outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Certificate of Incorporation, and in addition to any other vote required
by law or the Certificate of Incorporation, without the written consent of the
holders of at least a majority in interest of the then outstanding shares of
Series B Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) together as a separate class, the
Corporation will not:
(1) Amend, alter or repeal any provision of its
Certificate of Incorporation or By-laws in a manner adverse to the
Series B Convertible Preferred Stock; or
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(2) Create or authorize the creation of any
additional class or series of shares of stock unless the same ranks
junior to the Series B Convertible Preferred Stock as to dividends
and the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, or increase the authorized amount of
Series B Convertible Preferred Stock or increase the authorized
amount of any additional class or series of shares of stock unless
the same ranks junior to the Series B Convertible Preferred Stock as
to dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create or authorize
any obligation or security convertible into shares of Series B
Convertible Preferred Stock or into shares of any other class or
series of stock unless the same ranks junior to the Series B
Convertible Preferred Stock as to dividends and the distribution of
assets on the liquidation, dissolution or winding up of the
Corporation, whether any such creation, authorization or increase
shall be by means of amendment to the Certificate of Incorporation or
by merger, consolidation or otherwise.
4D. Series A Convertible Preferred Stock. At any time when at
least 25% of the shares of the Series A Convertible Preferred Stock issued
pursuant to the Series A Purchase Agreement (as defined in paragraph 4.A.9
below) remain outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Certificate of Incorporation, and in addition to any other vote required
by law or the Certificate of Incorporation, without the written consent of the
holders of at least a majority in interest of the then outstanding shares of
Series A Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) together as a separate class, the
Corporation will not:
(1) Amend, alter or repeal any provision of its
Certificate of Incorporation or By-laws in a manner adverse to the
Series A Convertible Preferred Stock; or
(2) Create or authorize the creation of any
additional class or series of shares of stock unless the same ranks
junior to the Series A Convertible Preferred Stock as to dividends
and the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, or increase the authorized amount of
Series A Convertible Preferred Stock or increase the authorized
amount of any additional class or series of shares of stock unless
the same ranks junior to the Series A Convertible Preferred Stock as
to dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create or authorize
any obligation or security convertible into shares of Series A
Convertible Preferred Stock or into shares of any other class or
series of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to dividends and the distribution of
assets on the liquidation, dissolution or winding up of the
Corporation, whether any such creation, authorization or increase
shall be by means of amendment to the Certificate of Incorporation or
by merger, consolidation or otherwise.
4E. Right of Co-Sale on Redemptions. The Corporation shall
not purchase, redeem or otherwise acquire for value any shares of any class of
its capital stock or cause or permit any employee stock ownership plan,
including any Employee Stock Ownership Plan as defined in Section 4975(e)(7) of
the Internal Revenue Code of 1986, as amended, to purchase shares of any class
of its capital stock, except pursuant to stock option or employee stock
ownership plans or restricted stock agreements, or in exercise of any right of
first refusal of the Corporation upon a proposed transfer that is, in each
case, in existence on the date of the initial issuance of Series C Convertible
Preferred Stock; provided, however, that such restriction shall not apply in
the event that either (i) the holders of Series C Convertible Preferred Stock
are permitted to sell shares of Series C Convertible Preferred Stock in such
purchase, redemption, or acquisition on the same terms and conditions of such
purchase, redemption or acquisition and on the pro rata basis described in
paragraph 4.A.7B with respect to the issuance of New Securities, or (ii) such
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purchase, redemption or acquisition has received the prior affirmative vote or
written consent of the holders of a majority of the total number of shares of
Series C Convertible Preferred Stock outstanding, voting together as a single
class.
5. Conversion. The holders of shares of Convertible Preferred
Stock shall have the following conversion rights:
5A. Right to Convert. Subject to the terms and conditions of
this paragraph 4.A.3D and paragraph 4.A.5, the holder of any share or shares of
Convertible Preferred Stock shall have the right, at its option at any time, to
convert any such shares of Convertible Preferred Stock (except that upon any
liquidation of the Corporation the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amounts
distributable on the Convertible Preferred Stock) into such number of fully
paid and nonassessable shares of Common Stock as is obtained by (i) multiplying
the number of shares of Convertible Preferred Stock so to be converted by the
Applicable Issuance Price (as defined below) with respect to the series of
Convertible Preferred Stock so to be converted and (ii) dividing the result by
the Applicable Conversion Price (as defined below) with respect to the series
of Convertible Preferred Stock so to be converted or, in case an adjustment of
such price has taken place pursuant to the further provisions of this paragraph
4.A.5, then by the Applicable Conversion Price as last adjusted and in effect
at the date any share or shares of such series of Convertible Preferred Stock
are surrendered for conversion. The "Applicable Issuance Price" (i) for each
share of Series A Convertible Preferred Stock shall be $2.145 per share; (ii)
for each share of Series B Convertible Preferred Stock shall be $4.65 per
share; and (iii) for each shares of Series C Convertible Preferred Stock shall
be $6.30 per share. The initial "Applicable Conversion Price" (i) for each
share of Series A Convertible Preferred Stock shall be $2.145 per share; (ii)
for each share of Series B Convertible Preferred Stock shall be $4.65 per
share; and (iii) for each shares of Series C Convertible Preferred Stock shall
be $6.30 per share. Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares of Convertible Preferred Stock into Common Stock and by
surrender of a certificate or certificates for the shares so to be converted to
the Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the
holders of the Convertible Preferred Stock) at any time during its usual
business hours on the date set forth in such notice, together with a statement
of the name or names (with address) in which the certificate or certificates
for shares of Common Stock shall be issued.
5B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph
4.A.5A and surrender of the certificate or certificates for the share or shares
of Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Convertible Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected and the Applicable
Conversion Price with respect to such series of Convertible Preferred Stock
shall be determined as of the close of business on the date on which such
written notice shall have been received by the Corporation and the certificate
or certificates for such share or shares shall have been surrendered as
aforesaid, and at such time the rights of the holder of such share or shares of
Convertible Preferred Stock shall cease, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
5C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Convertible Preferred
Stock into Common Stock and no payment or adjustment
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shall be made upon any conversion on account of any cash dividends on the
Common Stock issued upon such conversion. At the time of each conversion, the
Corporation shall provide to such holder a certificate representing a number of
shares of Common Stock equal to the quotient of all dividends (including Series
A Accruing Dividends) accrued and unpaid on the shares of Convertible Preferred
Stock so surrendered divided by the Applicable Conversion Price with respect to
the series of Convertible Preferred Stock being so converted. In case the
number of shares of Convertible Preferred Stock represented by the certificate
or certificates surrendered pursuant to paragraph 4.A.5A exceeds the number of
shares converted, the Corporation shall, upon such conversion, execute and
deliver to the holder, at the expense of the Corporation, a new certificate or
certificates for the number of shares of Convertible Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted. If any fractional share of Common Stock would, except for the
provisions of the first sentence of this paragraph 4.A.5C, be delivered upon
such conversion, the Corporation, in lieu of delivering such fractional share,
shall pay to the holder surrendering the Convertible Preferred Stock for
conversion an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of the
Corporation.
5D. Adjustment of Applicable Conversion Price Upon Issuance
of Common Stock. Except as provided in paragraphs 4.A.5E and 5F, if and
whenever the Corporation shall issue or sell, or is, in accordance with
subparagraphs 4.A.5D(1) through 5D(7), deemed to have issued or sold, any
shares of Common Stock for consideration per share less than the Applicable
Conversion Price with respect to a series of Convertible Preferred Stock in
effect immediately prior to the time of such issue or sale (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 4.A.5F), then, forthwith upon such issue or sale, the Applicable
Conversion Price with respect to such series of Convertible Preferred Stock
shall be reduced to the price determined (separately with respect to each
series of Convertible Preferred Series so affected) by dividing (i) an amount
equal to the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing
Applicable Conversion Price with respect to such series of Convertible
Preferred Stock and (b) the consideration, if any, received by the Corporation
upon such issue or sale, by (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale. Notwithstanding anything to
the contrary contained herein, no adjustment shall be made to the Applicable
Conversion Price with respect to any series of Convertible Preferred Stock in
the event of the issuance or sale, or deemed issuance or sale, by the
Corporation of shares of Common Stock at a per share price greater than the
Applicable Conversion Price then in effect with respect to such series of
Convertible Preferred Stock.
For purposes of this paragraph 4.A.5D, the following
subparagraphs 5D(1) to 5D(7) shall also be applicable:
5D(1) Issuance of Rights or Options. In case at
any time the Corporation shall in any manner grant (whether directly
or by assumption in a merger or otherwise) any warrants or other
rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or security convertible into
or exchangeable for Common Stock (such warrants, rights or options
being called "Options" and such convertible or exchangeable stock or
securities being called "Convertible Securities") whether or not such
Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of
such Options, plus the minimum aggregate amount of
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additional consideration payable to the Corporation upon the exercise
of all such Options, plus, in the case of such Options which relate
to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon the conversion or exchange
of all such Convertible Securities issuable upon the exercise of such
Options) shall be less than the Applicable Conversion Price in effect
with respect to any series of Convertible Preferred Stock immediately
prior to the time of the granting of such Options, then the total
maximum number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of
such Options shall be deemed to have been issued for such price per
share as of the date of granting of such Options or the issuance of
such Convertible Securities and thereafter shall be deemed to be
outstanding. Except as otherwise provided in subparagraph 4.A.5D(3),
no adjustment of the Applicable Conversion Price with respect to any
such series of Convertible Preferred Stock shall be made upon the
actual issue of such Common Stock or of such Convertible Securities
upon exercise of such Options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities.
5D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Applicable
Conversion Price in effect with respect to any series of Convertible
Preferred Stock immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share as of the date of
the issue or sale of such Convertible Securities and thereafter shall
be deemed to be outstanding, provided that (a) except as otherwise
provided in subparagraph 4.A.5D(3), no adjustment of the Applicable
Conversion Price with respect to any such series of Convertible
Preferred Stock shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities and
(b) if any such issue or sale of such Convertible Securities is made
upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of the Applicable Conversion Price
for a particular series of Convertible Preferred Stock have been or
are to be made pursuant to other provisions of this paragraph 4.A.5D,
no further adjustment of such Applicable Conversion Price shall be
made by reason of such issue or sale.
5D(3) Change in Option Price or Conversion Rate.
Upon the happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in subparagraph
4.A.5D(1), the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subparagraph 4.A.5D(1) or 5D(2), or the rate at which Convertible
Securities referred to in subparagraph 4.A.5D(1) or 5D(2) are
convertible into or exchangeable for Common Stock shall change at any
time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Applicable
Conversion Price with respect to any such series of Convertible
Preferred Stock in effect at the time of such event shall forthwith
be readjusted to the Applicable Conversion Price which would have
been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may
be, at the time initially
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granted, issued or sold, but only if as a result of such adjustment
the Applicable Conversion Price then in effect hereunder with respect
to such series of Convertible Preferred Stock is thereby reduced; and
on the expiration of any such Option or the termination of any such
right to convert or exchange such Convertible Securities, such
Applicable Conversion Price then in effect hereunder shall forthwith
be increased to the Conversion Price which would have been in effect
at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior
to such expiration or termination, never been issued.
5D(4) Stock Dividends. In case the Corporation
shall declare a dividend or make any other distribution upon any
stock of the Corporation payable in Common Stock (except for the
issue of stock dividends or distributions upon the outstanding Common
Stock for which adjustment is made pursuant to paragraph 4.A.5F),
Options or Convertible Securities, any Common Stock, Options or
Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or
sold without consideration.
5D(5) Consideration for Stock. In case any shares
of Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors
of the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any Options shall be
issued in connection with the issue and sale of other securities of
the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the
parties thereto, such Options shall be deemed to have been issued for
such consideration as determined in good faith by the Board of
Directors of the Corporation.
5D(6) Record Date. In case the Corporation shall
take a record of the holders of its Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities or (ii) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
5D(7) Treasury Shares. 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 Corporation, and the
disposition of any such shares shall be considered an issue or sale
of Common Stock for the purpose of this paragraph 4.A.5D.
5E. Certain Issues of Common Stock Excepted. Anything herein
to the contrary notwithstanding, the Corporation shall not be required to make
any adjustment of the Applicable Conversion Price with respect to any series of
Convertible Preferred Stock in the case of the issuance of (i) shares of Common
Stock issuable upon conversion of either series Convertible Preferred Stock and
(ii) Reserved Employee Shares (as defined in paragraph 4.A.9 hereof).
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<PAGE> 15
5F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Applicable Conversion Price in effect with respect to each of
Convertible Preferred Stock immediately prior to such subdivision shall be
proportionately reduced, and, conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Applicable
Conversion Price in effect with respect to each series of Convertible Preferred
Stock immediately prior to such combination shall be proportionately increased.
5G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as
a condition of such Organic Change, lawful and adequate provisions shall be
made whereby each holder of a share or shares of Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms
and conditions specified herein and in lieu of or in addition to, as the case
may be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Convertible Preferred Stock, 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 such Common Stock equal to
the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case
of a reorganization or reclassification only appropriate provisions shall be
made with respect to the rights and interests of such holder to the end that
the provisions hereof (including without limitation provisions for adjustments
of the Applicable Conversion Price with respect to each series of Convertible
Preferred Stock) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
5H. Notice of Adjustment. Upon any adjustment of the
Applicable Conversion Price with respect to any series of Convertible Preferred
Stock, then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, or by facsimile transmission to
non-U.S. residents, addressed to each holder of shares of Preferred Stock at
the address of such holder as shown on the books of the Corporation, which
notice shall state the Applicable Conversion Price with respect to each such
series resulting from such adjustment, setting forth in reasonable detail the
method upon which such calculation is based.
5I. Other Notices. In case at any time:
(1) the Corporation shall declare any
dividend upon its Common Stock payable in cash or stock or make any
other distribution to the holders of its Common Stock;
(2) the Corporation shall offer for
subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or other rights;
(3) there shall be any capital reorganization
or reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with or into, or a sale of
all or substantially all its assets to, another entity or entities;
or
(4) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the
Corporation;
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then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S.
residents, addressed to each holder of any shares of Convertible Preferred
Stock at the address of such holder as shown on the books of the Corporation,
(a) at least 20 days' prior written notice of the date on which the books of
the Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 20 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend, distribution
or subscription rights, the date on which the holders of Common Stock shall be
entitled thereto and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
5J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Convertible Preferred Stock as
herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants
that it will from time to time take all such action as may be requisite to
assure that the par value per share of the Common Stock is at all times equal
to or less than the Applicable Conversion Price in effect with respect to
either series of Convertible Preferred Stock at the time. The Corporation will
take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon
which the Common Stock may be listed.
5K. No Reissuance of Convertible Preferred Stock. Shares of
Convertible Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.
5L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of the Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Convertible
Preferred Stock which is being converted.
5M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Convertible Preferred Stock or
of any shares of Common Stock issued or issuable upon the conversion of any
shares of Convertible Preferred Stock in any manner which interferes with the
timely conversion of such Convertible Preferred Stock, except as may otherwise
be required to comply with applicable securities laws.
5N. Definition of Common Stock. As used in this paragraph
4.A.5, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, par value $.01 per share, as constituted on the date
of filing of this Certificate of Incorporation, and shall also include any
capital stock of any class of the Corporation thereafter authorized which shall
neither be limited to a fixed sum or percentage of par value in respect of the
rights of the holders thereof to participate in dividends nor
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entitled to a preference in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation; provided
that the shares of Common Stock receivable upon conversion of shares of
Convertible Preferred Stock shall include only shares designated as Common
Stock of the Corporation on the date of filing of this instrument, or in case
of any reorganization or reclassification of the outstanding shares thereof,
the stock, securities or assets provided for in paragraph 4.A.5G.
5O. Mandatory Conversion. All outstanding shares of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock shall
automatically convert to shares of Common Stock if at any time the Corporation
shall effect a firm commitment underwritten public offering of shares of Common
Stock in which (i) the aggregate net proceeds from such offering to the
Corporation shall be at least $10,000,000 and (ii) the price paid by the public
for such shares shall be at least $8.58 (appropriately adjusted to reflect the
occurrence of any event described in paragraph 4.A.5F), effective upon the
closing thereof.
All outstanding shares of Series C Convertible Preferred
Stock shall automatically convert to shares of Common Stock if at any time the
Corporation shall effect a firm commitment underwritten public offering of
shares of Common Stock in which (i) the aggregate net proceeds from such
offering to the Corporation shall be at least $30,000,000 and (ii) the price
paid by the public for such shares shall be at least $12.60 if the public
offering is closed on or prior to the first anniversary of the original date of
issuance of any shares of the Series C Convertible Preferred Stock, and $18.90
thereafter (with each such per share amount appropriately adjusted to reflect
the occurrence of any event described in paragraph 4.A.5F), effective upon the
closing thereof.
5P. Expiration of Designations. Upon conversion of all issued
and outstanding shares of Convertible Preferred Stock pursuant to the terms
herein, those certain rights, designations and preferences of the Convertible
Preferred Stock set forth herein shall automatically terminate and no
additional shares of Convertible Preferred Stock may be issued by the
Corporation. Notwithstanding the foregoing, the Corporation's Board of
Directors is expressly authorized to provide for the classification and
reclassification of any unissued shares of Preferred Stock, as set forth in
Article Fifth hereof.
6. Redemption. The shares of Convertible Preferred Stock shall be
redeemed as follows:
6A. Optional Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Convertible Preferred
Stock. With the approval of the holders of a majority of the then outstanding
shares of Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, taken together as a single class, one or more holders of
shares of Convertible Preferred Stock may, by giving notice (the "Notice") to
the Corporation at any time after September 24, 2003 require the Corporation to
redeem all of the outstanding shares of such series of Convertible Preferred
Stock in two equal installments, with one-half of the shares of Convertible
Preferred Stock redeemed on the Series A and B First Redemption Date (as
defined below), and the remainder redeemed on the first anniversary of the
Series A and B First Redemption Date (the "Series A and B Second Redemption
Date"). Upon receipt of the Notice, the Corporation will so notify all other
persons holding Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock. After receipt of the Notice, the Corporation shall fix the
first date for redemption (the "Series A and B First Redemption Date"),
provided that such Series A and B First Redemption Date shall occur within
sixty (60) days after receipt of the Notice. All holders of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock shall
deliver to the Corporation during regular business hours, at the office of any
transfer agent of the Corporation for shares of such series of Convertible
Preferred Stock, or at the principal office of the Corporation or at such other
place as
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may be designated by the Corporation, the certificate or certificates for the
shares of such series of Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the First
Redemption Date. The Series A and B First Redemption Date and the Series A and
B Second Redemption Date are collectively referred to as the "Series A and B
Redemption Dates."
With the approval of the holders of a majority of the then
outstanding shares of Series C Convertible Preferred Stock, taken together as a
single class, one or more holders of shares of Series C Convertible Preferred
Stock may, by giving notice (the "Series C Notice") to the Corporation at any
time after September 24, 2003 require the Corporation to redeem all of the
outstanding Series C Convertible Preferred Stock in two equal installments,
with one-half of the shares of Series C Convertible Preferred Stock redeemed on
the Series C First Redemption Date (as defined below), and the remainder
redeemed on the first anniversary of the Series C First Redemption Date (the
"Series C Second Redemption Date"). Upon receipt of the Series C Notice, the
Corporation will so notify all other persons holding Series C Convertible
Preferred Stock. After receipt of the Series C Notice, the Corporation shall
fix the first date for redemption (the "Series C First Redemption Date"),
provided that such Series C First Redemption Date shall occur within sixty (60)
days after receipt of the Notice. All holders of Series C Convertible Preferred
Stock shall deliver to the Corporation during regular business hours, at the
office of any transfer agent of the Corporation for shares of such series of
Series C Convertible Preferred Stock, or at the principal office of the
Corporation or at such other place as may be designated by the Corporation, the
certificate or certificates for the shares of such series of Series C
Convertible Preferred Stock, duly endorsed for transfer to the Corporation (if
required by it) on or before the Series C First Redemption Date. The Series C
First Redemption Date and the Series C Second Redemption Date are collectively
referred to as the "Series C Redemption Dates."
Notwithstanding anything stated hereinabove to the contrary,
if any Notice is issued within (either prior or subsequent) thirty (30) days of
the issuance of any Series C Notice, then the date of both such notices, for
all purposes herein, including for purposes of establishing the dates of the
Series A and B Redemption Dates and the Series C Redemption Dates
(collectively, the "Redemption Dates"), shall be deemed the date of the later
of such notices. Upon the issuance of any Notice or Series C Notice, the
Corporation shall promptly notify all holders of record of Convertible
Preferred Stock by mail, postage prepaid or by facsimile transmission to
non-U.S. residents of the issuance (and content) of any such Notice or Series C
Notice.
6B. Redemption Price and Payment. The Series A Convertible
Preferred Stock to be redeemed on the Series A and B Redemption Dates shall be
redeemed by paying for each share in cash an amount equal to the (a) greater of
(x) the then Fair Market Value (as defined in paragraph 4.A9) per share, or (y)
$2.145 per share, plus (b) an amount equal to all dividends (including the
Series A Accruing Dividends) accrued and unpaid on each such share, such amount
being referred to as the "Series A Redemption Price." The Series B Convertible
Preferred Stock to be redeemed on the Series A and B Redemption Dates shall be
redeemed by paying for each share in cash an amount equal to (a) $4.65 per
share, plus (b) an amount equal to all dividends accrued and unpaid on each
such share, such amount being referred to as the "Series B Redemption Price."
The Series C Convertible Preferred Stock to be redeemed on the Series C
Redemption Dates shall be redeemed by paying for each share in cash an amount
equal to (a) the greater of (x) the then Fair Market Value per share or (y)
$6.30 per share (appropriately adjusted to reflect the occurrence of any event
described in paragraph 4.A.5F), plus (b) an amount equal to all dividends
accrued and unpaid on each such share, such amount being referred to as the
"Series C Redemption Price." Such payments shall be made in full on each of the
respective Redemption Dates to the holders entitled thereto.
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6C. Redemption Mechanics. At least 20 but not more than 30
days prior to each Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation by mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, to each holder of record (at the close of
business on the business day next preceding the day on which the Redemption
Notice is given) of shares of the series of Convertible Preferred Stock
notifying such holder of the redemption and specifying the applicable
Redemption Price (Series A Redemption Price, the Series B Redemption Price, or
Series C Redemption Price), the Redemption Date, and the place where said
Series A Redemption Price, Series B Redemption Price, or Series C Redemption
Price, as applicable, shall be payable. The Redemption Notice shall be
addressed to each holder at his address as shown by the records of the
Corporation. From and after the close of business on each Redemption Date,
unless there shall have been a default in the payment of the Series A
Redemption Price, the Series B Redemption Price, or Series C Redemption Price,
as the case may be, all rights of holders of shares of Convertible Preferred
Stock so redeemed (except the right to receive the Series A Redemption Price,
the Series B Redemption Price, or Series C Redemption Price, as the case may
be) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of shares of Convertible Preferred Stock on any
Redemption Date are insufficient to redeem the total number of outstanding
shares of Convertible Preferred Stock to be redeemed on such redemption date,
the holders of shares of Convertible Preferred Stock to be redeemed shall share
ratably in any funds legally available for redemption of such shares according
to the respective amounts which would be payable with respect to the full
number of shares owned by them if all such outstanding shares were redeemed in
full, although the Series C Redemption Price shall in all instances be paid,
prior and in preference to the Series A Redemption Price or the Series B
Redemption Price. The shares of Convertible Preferred Stock not redeemed shall
remain outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series A Redemption
Price, the Series B Redemption Price, or Series C Redemption Price, as the case
may be, in either case at the rate of 15% per annum. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of such shares of Convertible Preferred Stock, such funds will be
used, at the end of the next succeeding fiscal quarter, to redeem the balance
of such shares, or such portion thereof for which funds are then legally
available, on the basis set forth above.
6D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Convertible Preferred Stock redeemed pursuant to this paragraph 4.A.6
or otherwise acquired by the Corporation in any manner whatsoever shall be
canceled and shall not under any circumstances be reissued; and the Corporation
may from time to time take such appropriate corporate action as may be
necessary to reduce accordingly the number of authorized shares of Convertible
Preferred Stock.
7. Preemptive Rights. The holders of Series C Convertible
Preferred Stock shall have the right of first refusal to purchase any New
Securities (as defined in this paragraph 4.A.7) that the Corporation may, from
time to time, propose to sell and issue. This right shall be subject to the
following provisions:
7A. New Securities Defined. "New Securities" shall mean any
(i) shares of Common Stock, (ii) any other equity security of the Corporation,
including without limitation, shares of Convertible Preferred Stock, (iii) any
debt security of the Corporation (other than debt with no equity feature)
including without limitation, any debt security which by its terms is
convertible into or exchangeable for any equity security of the Corporation,
(iv) any security of the Corporation that is a combination of debt and equity,
or (v) any option, warrant or other right to subscribe for, purchase or
otherwise acquire any such equity security or any such debt security of
Corporation; provided that "New Securities" does not include (A) any
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shares of Common Stock issuable upon the conversion of shares of Convertible
Preferred Stock; (B) securities offered to the public pursuant to a
registration statement under the federal Securities Act of 1933, as amended;
(C) securities issued pursuant to the acquisition by the Corporation of another
corporation or other entity by merger, purchase of all or substantially all of
the assets, or any other reorganization whereby the Corporation owns over fifty
percent (50%) of the voting power of such corporation or other entity; (D)
shares of Common Stock or Convertible Preferred Stock issued in connection with
any stock split, stock dividend or recapitalization by the Corporation; (E) any
Reserved Employee Shares; and (F) any warrants to purchase Common Stock issued
in connection with a commercial bank loan or lease with a financial institution
if approved by a majority of the Board of Directors.
7B. In the event the Corporation proposes to undertake an
issuance of New Securities, it shall give each holder of Series C Convertible
Preferred Stock written notice of its intention, describing the type of New
Securities, the price, the closing date of the offering thereof, and the
general terms upon which the Corporation proposes to issue the same. The
Company shall offer to sell to each holder of Series C Convertible Preferred
Stock (a) that portion of the New Securities as the sum of the number of shares
of Common Stock into which the Series C Convertible Preferred Shares then held
by such holder could then be converted in accordance with paragraph 4.A.5A
hereof and the number of shares of Common Stock, if any, that are then held by
such holder, as the case may be, bears to the sum of the total number of shares
of Common Stock into which the Convertible Preferred Stock issued and
outstanding on such date could then be converted and the total number of shares
of Common Stock then issued and outstanding on such date, if any, that are
derived from conversion of the Convertible Preferred Stock (such portion being
referred to hereinafter as the "Basic Amount"), and (b) such additional portion
of the New Securities as such holder of Series C Convertible Preferred Stock
shall indicate it will purchase should the other holders of Series C
Convertible Preferred Stock subscribe for less than their Basic Amounts (the
"Undersubscription Amount"), at a price and on such other terms as shall have
been specified by the Corporation in writing delivered to such holder (the
"Offer"), which Offer by its terms shall remain open and irrevocable for a
period of twenty (20) days from receipt of the offer.
7C. Notice of the intention of each holder of Series C
Convertible Preferred Stock to accept, in whole or in part, any Offer made
pursuant to paragraph 4.A.7B shall be evidenced by a writing signed by such
holder and delivered to the Corporation prior to the end of the 20-day period
of such offer, setting forth such of the holder's Basic Amounts as such holder
elects to purchase and, if such holder shall elect to purchase all of its Basic
Amount, such Undersubscription Amount as such holder shall elect to purchase
(the "Notice of Acceptance"). If the Basic Amounts subscribed for by all
holders of Series C Convertible Preferred Stock are less than the total New
Securities, then each such holder who has set forth Undersubscription Amounts
in its Notice of Acceptance shall be entitled to purchase, in addition to the
Basic Amounts subscribed for, all Undersubscription Amounts it has subscribed
for; provided, however, that should the Undersubscription Amounts subscribed
for exceed the difference between the New Securities and the Basic Amounts
subscribed for (the "Available Undersubscription Amount"), each such holder who
has subscribed for any Undersubscription Amount shall be entitled to purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such holder bears to the total
Undersubscription Amounts subscribed for by all holders of Series C Convertible
Preferred Stock, subject to rounding by the Board of Directors to the extent it
reasonably deems necessary.
7D. In the event that Notices of Acceptance are not given by
the holders of Series C Convertible Preferred Stock in respect of all the New
Securities, the Corporation shall have ninety (90) days from the expiration of
the period set forth in paragraph 4.A.7B to close the sale of all or any part
of
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such New Securities as to which a Notice of Acceptance has not been given by
such holders (the "Refused Securities") to the person or persons specified in
the Offer, but only for cash and otherwise in all respects upon terms and
conditions, including, without limitation, unit price and interest rates, which
are no more favorable, in the aggregate, to such other person or persons or
less favorable to the Corporation than those set forth in the Offer. In the
event the Corporation shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in the
preceding sentence), then each such holder may, at its sole option and in its
sole discretion, reduce the number of, or other units of the New Securities
specified in its respective Notices of Acceptance to an amount which shall be
not less than the amount of the New Securities which such holder elected to
purchase pursuant to paragraph 4.A.7C multiplied by a fraction, (i) the
numerator of which shall be the amount of New Securities which the Corporation
actually proposes to sell, and (ii) the denominator of which shall be the
amount of all Offered Securities. In the event that any holder so elects to
reduce the number or amount of New Securities specified in its respective
Notices of Acceptance, the Corporation may not sell or otherwise dispose of
more than the reduced amount of the New Securities until such securities have
again been offered to the holders of Series C Convertible Preferred Stock in
accordance with paragraph 4.A.7B.
7E. Upon the closing, which shall include full payment to the
Corporation, of the sale to such other person or persons of all or less than
all the Refused Securities, the holders of Series C Convertible Preferred Stock
shall purchase from the Corporation, and the Corporation shall sell to such
holders, the number of New Securities specified in the Notices of Acceptance,
as reduced pursuant to paragraph 4.A.7D if such holders have so elected, upon
the terms and conditions specified in the Offer. The purchase by such holders
of any New Securities is subject in all cases to the preparation, execution and
delivery by the Corporation and such holders of a purchase agreement relating
to such New Securities reasonably satisfactory in form and substance to the
holders and their respective counsel.
7F. Further Sale. In each case, any New Securities not
purchased by the holders of Series C Convertible Preferred Stock or other
person or persons in accordance with this paragraph 4.A.7 may not be sold or
otherwise disposed of until they are again offered to the holders of Series C
Convertible Preferred Stock under the procedures specified in this paragraph
4.A.7.
8. Amendments; Waiver. Except where the vote or written consent
of the holders of a greater number of shares of the Corporation is required by
law or the Certificate of Incorporation, no provision of this Article IV may be
amended, modified or waived without the written consent or affirmative vote of
the holders of at least a majority in interest of the then outstanding shares
of Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have
the following meanings:
9A. The term "Event of Noncompliance," in respect of the
Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock, shall mean the violation or breach by the Corporation of its obligation
to make full payment on any Redemption Date with respect to a Redemption of any
shares of such series of Convertible Preferred Stock pursuant to paragraph
4.A.6 hereof, and the Corporation fails to cure such violation or breach within
ninety (90) days of the giving of notice in writing to any holder or holders of
such series of Convertible Preferred Stock.
The term "Event of Noncompliance," in respect of the Series C
Convertible Preferred Stock, shall mean (i) the failure (V) to redeem the
Series C Convertible Preferred Stock under the conditions and in accordance
with the terms of paragraph 4.A.3, (W) to issue Common Stock in conversion of
the Series C Convertible Preferred Stock as provided in paragraph 4.A.5, (X) to
redeem the Series C Convertible Preferred Stock under the conditions and in
accordance with the terms of paragraph 4.A.6, (Y)
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to honor the preemptive rights granted to holders of Series C Convertible
Preferred Stock in paragraph 4.A.7 or (Z) to comply with the restrictions of
paragraph 4.A.4B, provided any such failure continues for a period of ninety
(90) consecutive days, or (ii) the Corporation suffers the appointment of a
receiver, trustee, custodian, or similar fiduciary, or makes an assignment for
the benefit of creditors, or any petition for an order for relief shall be
filed by or against the Corporation under the United States Bankruptcy Code
(and, if against the Corporation, such proceeding continues for more than
forty-five (45) days).
9B. The term "Fair Market Value" in respect to Series A
Convertible Preferred Stock shall mean an amount equal to the fair market value
of a share of Series A Convertible Preferred Stock (giving effect to the value
of the rights and preferences of such shares as herein provided) determined as
follows: the two representatives of management sitting on the Corporation's
Board of Directors pursuant to Section 5(i) of the Amended and Restated
Stockholders' Agreement dated on or about August 2, 1999, as amended, by and
among the Corporation, certain Holders and certain Investors listed on Schedule
I thereto and the two representatives of the holders of the Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock sitting on
the Corporation's Board of Directors shall endeavor in good faith to agree
unanimously to the fair market value of a share of Series A Convertible
Preferred Stock. If they are unable to do so within sixty (60) days after the
occurrence of an event giving rise to a need to determine that fair market
value, an investment banking firm chosen by a majority of the holders of the
Series A Convertible Preferred Stock and an investment banking firm chosen by
the Corporation shall each calculate such value. In the event the difference
between such valuations is less than 20% of the higher valuation, then the Fair
Market Value shall be deemed to be the average of such two valuations. In the
event that the difference between such valuations is greater than 20% of the
higher valuation, the two investment banking firms shall designate a third
investment banking firm, which shall select from the two valuations the
valuation that such third firm determines to be closer to its own valuation,
and the valuation so selected shall be considered the Fair Market Value. In all
events, the fees and expenses of any such investment banking firms shall be
paid by the Corporation.
9C. The term "Fair Market Value" in respect to Series C
Convertible Preferred Stock shall mean an amount equal to the fair market value
of a share of Series C Convertible Preferred Stock (giving effect to the value
of the rights and preferences of such shares as herein provided) determined as
follows: the two representatives of management sitting on the Corporation's
Board of Directors pursuant to Section 5(i) of the Amended and Restated
Stockholders' Agreement dated on or about August 2, 1999, as amended, by and
among the Corporation, certain Holders and certain Investors listed on Schedule
I thereto and representatives of the holders of a majority of the Series C
Convertible Preferred Stock shall endeavor in good faith to agree unanimously
to the fair market value of a share of Series C Convertible Preferred Stock. If
they are unable to do so within sixty (60) days after the occurrence of an
event giving rise to a need to determine that fair market value, an investment
banking firm chosen by a majority of the holders of the Series C Convertible
Preferred Stock and an investment banking firm chosen by the Corporation shall
each calculate such value. In the event the difference between such valuations
is less than 20% of the higher valuation, then the Fair Market Value shall be
deemed to be the average of such two valuations. In the event that the
difference between such valuations is greater than 20% of the higher valuation,
the two investment banking firms shall designate a third investment banking
firm which shall select from the two valuations the valuation that such third
firm determines to be closer to its own valuation, and the valuation so
selected shall be considered the Fair Market Value. In all events, the fees and
expenses of any such investment banking firms shall be paid by the Corporation.
9D. The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation from time to time for the exercise of
options to purchase Common Stock granted to employees, consultants or
non-employee directors (other than representatives of the holders of
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the Convertible Preferred Stock) of the Corporation, not to exceed in the
aggregate 969,200 shares of Common Stock (appropriately adjusted to reflect an
event described in paragraph 4.A.5F hereof).
9E. The term "Series A Purchase Agreement" shall mean the
Series A Convertible Preferred Stock Purchase Agreement dated as of March 18,
1997 by and among the Corporation and the Purchasers listed in Exhibit 1.01
thereto.
9F. The term "Series B Purchase Agreement" shall mean the
Series B Convertible Preferred Stock Purchase Agreement dated on September 24,
1998 by and among the Corporation and the Purchasers listed in Exhibit 1.01
thereto.
9G. The term "Series C Purchase Agreement" shall mean the
Series C Convertible Preferred Stock Purchase Agreement by and among the
Corporation and the initial purchasers of the Series C Preferred Stock dated on
or about August 2, 1999.
B. COMMON STOCK
B1. Priority. All preferences, voting powers, relative,
participating, optional or other special rights and privileges, and
qualifications, limitations, or restrictions of the Common Stock are expressly
made subject and subordinate to those that may be fixed with respect to any
shares of the Preferred Stock.
B2. Voting Rights. Except as otherwise required by law or this
Certificate of Incorporation, each holder of Common Stock shall have one vote
in respect of each share of stock held by such stockholder of record on the
books of the Corporation for the election of directors and on all matters
submitted to a vote of stockholders of the Corporation. Except as may be
otherwise provided in this Certificate of Incorporation or by law, the Common
Stock shall vote together with all other classes and series of stock of the
Corporation (including the Convertible Preferred Stock) as a single class on
all actions to be taken by the stockholders of the Corporation. The number of
authorized shares of Common Stock may be increased or decreased (but not below
the number of shares thereof then outstanding or reserved for the exercise of
options or warrants or conversion of the Preferred Stock) by the affirmative
vote of the holders of a majority of the stock of the Corporation entitled to
vote, voting together as a single class, irrespective of the provisions of
Section 242(b)(2) of the Delaware General Corporation Law.
B3. Dividends. Subject to the preferential rights of the
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation,
out of the assets of the Corporation which are by law available therefor,
dividends payable either in cash, in property or in shares of capital stock.
FIFTH: The Board of Directors is hereby expressly authorized,
by resolution or resolutions from time to time adopted, to provide, out of the
unissued shares of Preferred Stock, for the issuance of serial Preferred Stock.
Before any shares of any such series are issued, the Board of Directors shall
fix and state, and hereby is expressly empowered to fix, by resolution or
resolutions, the designations, preferences, and relative, participating,
optional or other special rights of the shares of each such series, and the
qualifications, limitations or restrictions thereon, including but not limited
to, determination of any of the following:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof if different from
the par value thereof;
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(b) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so,
the terms of such voting rights, which may be full or limited;
(c) the dividends, if any, payable on such series and at what
rates, whether any such dividends shall be cumulative, and, if so,
from what dates, the conditions and dates upon which such dividends
shall be payable, the preference or relation which such dividends
shall bear to the dividends payable on any shares of stock of any
other class or any other series of this class;
(d) whether the shares of such series shall be subject to
redemption by the corporation, and, if so, prices and other terms and
conditions of such redemption;
(e) the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary
or involuntary liquidation, dissolution or winding up of, or upon any
distribution of the assets of, the corporation;
(f) whether the shares of such series shall be subject to the
operation of a retirement of sinking fund and, if so, the extent to
and manner in which any such retirement of sinking fund shall be
applied to the purchase or redemption of the shares of such series for
retirement or other corporate purposes and other terms and provisions
relative to the operation thereof;
(g) whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any
other series of this class or any other class or classes of securities
and, if so, the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same, and any other
terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of
dividends or the taking of other distributions on, and upon the
purchase, redemption or other acquisition by the corporation of, the
Common Stock or shares of stock of any other class or any other series
of this class;
(i) the conditions or restrictions, if any, upon the creation
of indebtedness of the corporation or upon the issue of any additional
stock, including additional shares of such series or any other series
of this class or of any other class; and
(j) any other powers, preferences and relative,
participating, optional and other special rights and any
qualifications, limitations and restrictions thereof.
The powers, preferences and relative, participating, optional
and other special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding.
All shares of any one series of Preferred Stock shall be identical in
all respects with all other shares of such series, except that shares
of any one series issued at different times may differ as to the date
from which dividends thereof shall be cumulative. The Board of
Directors may increase the number of shares of the Preferred Stock
designated for any existing series by a resolution adding to such
series authorized and unissued shares of the Preferred Stock not
designated for any other series. The Board of Directors may decrease
the number of shares of Preferred Stock designated for any existing
series by a resolution, subtracting from such series unissued shares
of the Preferred Stock designated for
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such series, and the shares so subtracted shall become authorized,
unissued and undesignated shares of the Preferred Stock.
SIXTH: No holder of shares of stock of the Corporation
shall have any preemptive or other right to receive any securities of the
Corporation.
SEVENTH: (a) The business and affairs of the Corporation
shall be managed by and under the direction of the Board of Directors. The
exact number of directors of the Corporation shall be determined from time to
time by a Bylaw or Amendment thereto, provided that the number of directors
shall not be reduced to less than three (3), except that there need be only as
many directors as there are stockholders in the event that the outstanding
shares are held of record by fewer than three (3) stockholders.
(b) Election of directors need not be by written ballot
unless the Bylaws of the Corporation (the "Bylaws") shall so provide.
No holders of Common Stock of the Corporation shall have any rights
to cumulate votes in the election of directors.
(c) Immediately upon the closing, prior to or on September
1, 2000, of a firm commitment underwritten public offering pursuant to
an effective registration statement under the Securities Act of 1933,
as amended, covering the offer and sale of Common Stock for the
account of the Corporation to the public (as such offering is
described in the second paragraph of Article Fourth, Part A, Section
5O), and the automatic conversion of the applicable Preferred into
Common Stock in accordance therewith, this Article Seventh shall be
deemed to have been amended in its entirety, to read as follows:
The business and affairs of the Corporation shall be managed
by and under the direction of the Board of Directors. The
exact number of directors of the Corporation shall be
determined from time to time by a Bylaw or amendment thereto
provided that the number of directors shall not be reduced to
less than three (3), except that there need be only as many
directors as there are stockholders in the event that the
outstanding shares are held of record by fewer than three (3)
stockholders. Elections of directors need not be by written
ballot unless the Bylaws of the Corporation shall so provide.
The Board of Directors shall be divided into three classes to
be known as Class I, Class II and Class III. The Board shall,
by resolution, determine who, among the members of the Board
shall initially serve in each class. Except in the case of
death, resignation, disqualification or removal, each
Director shall serve for a term ending on the date of the
third annual meeting of shareholder following the annual
meeting at which the Director was elected; provided, however,
that each initial Director in Class I shall hold office until
the 2001 annual meeting of shareholders, each initial
Director in Class II shall hold office until the 2002 annual
meeting of shareholders, and each initial Director in Class
III shall hold office until the 2003 annual meeting of
shareholders. In the event of any increase or decrease in the
authorized number of Directors, the newly created or
eliminated directorships resulting from such an increase or
decrease shall be apportioned among the three classes of
Directors; provided, however, that there shall be no
classification of additional Directors elected by the Board
of Directors until the next meeting of shareholders called
for the purposes of electing Directors, at which meeting the
terms of all such additional Directors shall expire, and such
additional Director positions, if they are to be continued,
shall be apportioned amount the classes of
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Directors, and nominees therefor shall be submitted to the
shareholders for their vote.
provided, however, that should no such firm commitment underwritten public
offering close prior to or on September 1, 2000, then the provisions of this
Article Seventh related to classification of the Corporation's Board of
Directors shall be null and void, and of no further force and effect.
EIGHTH: Except as may otherwise be set forth in Article
Seventh above, each director shall serve until his successor is elected and
qualified or until his death, resignation or removal; no decrease in the
authorized number of directors shall shorten the term of any incumbent
director; and additional directors shall not be included in any class, but
shall serve for such term or terms and pursuant to such other provisions as are
specified in the resolution of the Board of Directors establishing such series.
Any stockholder proposals and nominations for the election of a director by a
stockholder shall be delivered to the Corporate Secretary of the Corporation no
less than ninety (90) days nor more than one hundred twenty (120) days in
advance of the first anniversary of the Company's annual meeting held in the
prior year; provided, however, that in the event the Company shall not have had
an annual meeting in the prior year, such notice shall be delivered no less
than ninety (90) days nor more than one hundred twenty (120) days in advance of
May 15 of the current year. Such stockholder nominations must contain (a) as to
each person whom the stockholder proposes to nominate for election or
re-election as a director at the annual meeting: (w) the name, age, business
address and residence address of the proposed nominee, (x) the principal
occupation or employment or the proposed nominee, (y) the class and number of
shares of capital stock of the Corporation which are beneficially owned by the
proposed nominee, and (z) any other information relating to the proposed
nominee that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Rule 14a under the Securities Exchange Act of
1934, as amended; and (b) as to the stockholder giving notice of nominees for
election at the annual meeting, (x) the name and record address of the
stockholder, and (y) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder.
NINTH: Newly created directorships resulting from any
increase in the number of directors, or any vacancies on the Board of Directors
resulting from death, resignation, removal or other causes, shall be filled
solely by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified or until such director's death,
resignation or removal, whichever first occurs.
TENTH: Any director may be removed from office by the
affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%)
of the outstanding shares of voting stock of the Corporation entitled to vote
at an election of directors, provided that such removal is for cause.
ELEVENTH: In furtherance of, and not in limitation of, the
powers conferred by statute, the Board of Directors is expressly authorized to
adopt, amend or repeal the Bylaws of the Corporation or adopt new Bylaws,
without any action on the part of the stockholders. Notwithstanding the
foregoing, the Bylaws may be adopted, rescinded, altered or amended in any
respect by the stockholders of the Corporation, but only by the affirmative
vote of the holders of not less than a 66 2/3% majority of the voting power of
all outstanding shares of voting stock of the Corporation entitled to vote at
an election of directors.
TWELFTH: The Corporation is to have perpetual existence.
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THIRTEENTH: Meetings of stockholders of the Corporation may
be held within or without the State of Delaware, as the Bylaws may provide, and
any action which may be taken at a meeting of the stockholders may be taken
without a meeting if a consent in writing, setting forth the action so to be
taken, is signed by the holders of outstanding stock having not less than a
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted; provided, however, that after the closing, prior to or on September
1, 2000, of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock for the account of the Corporation
to the public (as such offering is described in the second paragraph of Article
Fourth, Part A, Section 5O) stockholders of the Corporation shall take action
by meetings held pursuant to this Certificate and the Bylaws and shall have no
right to take any action by written consent without a meeting. The books of the
Corporation may be kept (subject to any provision of applicable law) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws.
FOURTEENTH: For the purposes of this Certificate of
Incorporation, the terms "affiliate," "associate," "control," "interested
stockholder," "owner," "person" and "voting stock" shall have the meanings set
forth in Section 203(c) of the Delaware General Corporation Law.
FIFTEENTH: The provisions set forth in this Article
Fifteenth and in Articles Fourth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Sixteenth and Seventeenth hereof may not be repealed,
rescinded, altered or amended in any respect, and no other provision or
provisions may be adopted which impair(s) in any respect the operation or
effect of any such provision, except by the affirmative vote of the holders of
a sixty-six and two-thirds percent (66 2/3%) majority of the voting power of
all outstanding shares of voting stock of the Corporation entitled to vote at
an election of directors.
SIXTEENTH: The Corporation reserves the right to adopt,
repeal, rescind, alter or amend in any respect any provision contained in this
Certificate in the manner now or hereafter prescribed by applicable law, and
all rights conferred on stockholders herein are granted subject to this
reservation. Notwithstanding the preceding sentence, the provisions set forth
in Articles Fourth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth,
Fifteenth, Sixteenth and Seventeenth may not be repealed, rescinded, altered or
amended in any respect, and no other provision or provisions may be adopted
which impair(s) in any respect the operation or effect of any such provision,
unless such action is approved as specified in Article Fifteenth hereof.
SEVENTEENTH: To the fullest extent permitted by applicable
law, this Corporation is authorized to provide indemnification of (and
advancement of expenses to) directors, officers, employees and agents (and any
other persons to which Delaware law permits this Corporation to provide
indemnification) through Bylaw provisions, agreements with such agents or other
persons, vote of stockholders or disinterested directors or otherwise, in
excess of the indemnification and advancement otherwise permitted by Section
145 of the Delaware General Corporation Law, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to action
for breach of duty to the Corporation, its stockholders, and others.
No director of the Corporation shall be personally liable to
the Corporation or any stockholder for monetary damages for breach of fiduciary
duty as a director, except for any matter in respect of which such director
shall be liable under Section 174 of the Delaware General Corporation Law or
any amendment thereto or shall be liable by reason that, in addition to any and
all other requirements for such liability, such director (1) shall have
breached the director's duty of loyalty to the Corporation or its
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stockholders, (2) shall have acted in a manner involving intentional misconduct
or a knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law, or (3)
shall have derived an improper personal benefit. If the Delaware General
Corporation Law hereafter is amended to authorize the further elimination or
limitation of the liability of a director, the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Each person who was or is made a party or is threatened to be
made a party to or is in any way involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter a "proceeding"), including any appeal therefrom,
by reason of the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director or officer of the Corporation or a
direct or indirect subsidiary of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another entity or
enterprise, or was a director or officer of a foreign or domestic corporation
which was a predecessor corporation of the Corporation or of another entity or
enterprise at the request of such predecessor corporation, shall be indemnified
and held harmless by the Corporation, and the Corporation shall advance all
expenses incurred by any such person in defense of any such proceeding prior to
its final determination, to the fullest extent authorized by the Delaware
General Corporation Law. In any proceeding against the Corporation to enforce
these rights, such person shall be presumed to be entitled to indemnification
and the Corporation shall have the burden of proving that such person has not
met the standards of conduct for permissible indemnification set forth in the
Delaware General Corporation Law. The rights to indemnification and advancement
of expenses conferred by this Article Seventeenth shall be presumed to have
been relied upon by the directors and officers of the Corporation in serving or
continuing to serve the Corporation and shall be enforceable as contract
rights. Such rights shall not be exclusive of any other rights to which those
seeking indemnification may otherwise be entitled. The Corporation may, upon
written demand presented by a director or office of the Corporation or of a
direct or indirect subsidiary of the Corporation, or by a person serving at the
request of the Corporation as a director or officer of another entity or
enterprise, enter into contracts to provide such persons with specified rights
to indemnification, which contracts may confer rights and protections to the
maximum extent permitted by the Delaware General Corporation Law, as amended
and in effect from time to time.
If a claim under this Article Seventeenth is not paid in full
by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expenses of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce the right to be advanced
expenses incurred in defending any proceeding prior to it final disposition
where the required undertaking, if any, has been tendered to the Corporation)
that the claimant has not met the standards of conduct which make it
permissible under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the claimant shall be
presumed to be entitled to indemnification and the Corporation shall have the
burden of proving that the claimant has not met the standards of conduct for
permissible indemnification set forth in the Delaware General Corporation Law.
If the Delaware General Corporation Law hereafter is amended
to permit the Corporation to provide broader indemnification rights than such
law permitted the Corporation to provide prior to such amendment, the
indemnification rights conferred by this Article Seventeenth shall be broadened
to the fullest extent permitted by the Delaware General Corporation Law, as so
amended.
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The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability.
EIGHTEENTH: No contract or other transaction of the
Corporation with any other person, firm or corporation, or in which this
corporation is interested, shall be affected or invalidated by: (a) the fact
that any one or more of the directors or officers of the Corporation is
interested in or is a director or officer of such other firm or corporation;
or, (b) the fact that any director or officer of the Corporation, individually
or jointly with others, may be a party to or may be interested in any such
contract or transaction, so long as the contract or transaction is authorized,
approved or ratified at a meeting of the Board of Directors by sufficient vote
thereon by directors not interested therein, to which such fact of relationship
or interest has been disclosed, or the contract or transaction has been
approved or ratified by vote or written consent of the stockholders entitled to
vote, to whom such fact of relationship or interest has been disclosed, or so
long as the contract or transaction is fair and reasonable to the Corporation.
Each person who may become a director or officer of the Corporation is hereby
relieved from any liability that might otherwise arise by reason of his
contracting with the Corporation for the benefit of himself or any firm or
corporation in which he may in any way be interested.
NINETEENTH: The Corporation shall have the right, subject to
any express provisions or restrictions contained in the Certificate of
Incorporation or Bylaws of the Corporation, from time to time, to amend this
Certificate of Incorporation or any provision thereof in any manner now or
hereafter provided by law, and all rights and powers of any kind conferred upon
a director or stockholder of the Corporation by the Certificate of
Incorporation or any amendment thereof are conferred subject to such right.
TWENTIETH: This Amended and Restated Certificate of
Incorporation was duly adopted by written consent of the stockholders in
accordance with applicable provisions of Sections 228, 242 and 245 of the
General Corporate Law of the State of Delaware and written notice of the
adoption of this Amended and Restated Certificate of Incorporation has been
given as provided by Section 228 of the General Corporation Law of the State of
Delaware to every stockholder entitled to such notice.
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IN WITNESS WHEREOF, said Witness Systems, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by David B. Gould, its
Chief Executive Officer, this 7th day of December, 1999.
WITNESS SYSTEMS, INC.
/s/ David B. Gould
-------------------------------------------------
David B. Gould, Chief Executive Officer
ATTEST:
/s/ Jon W. Ezrine
- ------------------------------
Jon Ezrine, Secretary
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EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
WITNESS SYSTEMS, INC.
(A DELAWARE CORPORATION)
The following are the Bylaws ("Bylaws") of WITNESS SYSTEMS, INC., a
Delaware corporation (the "Corporation"), effective as of December 3, 1999:
ARTICLE I.
OFFICES
Section 1.1. PRINCIPAL EXECUTIVE OFFICE. The principal executive
office of the Corporation shall be located at 1105 Sanctuary Parkway, Suite 210,
Alpharetta, Georgia 30004 or at such other place as may be designated from time
to time by the Chairman of the Board or the Board of Directors of the
Corporation (the "Board of Directors").
Section 1.2. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 2.1. ANNUAL MEETINGS. The annual meeting of stockholders of
the Corporation shall be held at a date and at such time as the Board of
Directors shall determine. At each annual meeting of stockholders, directors
shall be elected in accordance with the provisions of Section 3.3 hereof and any
other proper business may be transacted.
Section 2.2. SPECIAL MEETINGS. Special meetings of stockholders, for
any purpose or purposes, may be called at any time by a majority of the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President.
Section 2.3. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board of
Directors or, if no such determination is made, at such place as may be
determined by the Chairman of the Board, the Chief Executive Officer or the
President. If no location is so determined, any annual or special meeting shall
be held at the principal executive office of the Corporation.
Section 2.4. NOTICE OF MEETINGS. Written notice of each annual or
special meeting of stockholders stating the date and time when, and the place
where, it is to be held shall be delivered either personally or by mail to
stockholders entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting. The purpose or purposes for
which the meeting is called may, in the case of an annual meeting, and shall, in
the case of a special meeting, also be stated. If mailed, such notice shall be
directed to a stockholder at his address as it shall appear on the stock books
of the Corporation, unless he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case such notice shall be mailed to the address
designated in such request.
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Section 2.5. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board of Directors may determine subject to the requirements of applicable
law and, as to matters not governed by such rules and procedures, as the
chairman of such meeting shall determine. The chairman of any annual or special
meeting of stockholders shall be the Chairman of the Board. The Secretary, or in
the absence of the Secretary, a person designated by the Chairman of the Board,
shall act as secretary of the meeting.
Section 2.6. QUORUM. At any meeting of stockholders of the
Corporation, the presence, in person or by proxy, of the holders of record of a
majority of the shares then issued and outstanding and entitled to vote at the
meeting shall constitute a quorum for the transaction of business; provided,
however, that this Section 2.6 shall not affect any different requirement which
may exist under statute, pursuant to the rights of any authorized class or
series of stock, or under the Certificate of Incorporation of the Corporation,
as amended or restated from time to time (the "Certificate"), for the vote
necessary for the adoption of any measure governed thereby.
In the absence of a quorum, either the Chairman of the Board or the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted that might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.7. VOTES REQUIRED. The affirmative vote of a majority of the
shares present in person or represented by proxy at a duly called meeting of
stockholders of the Corporation, at which a quorum is present and entitled to
vote on the subject matter, shall be sufficient to take or authorize action upon
any matter which may properly come before the meeting, except that the election
of directors shall be by plurality vote, unless the vote of a greater or
different number thereof is required by statute, by the rights of any authorized
class of stock or by the Certificate.
Unless the Certificate or a resolution of the Board of Directors
adopted in connection with the issuance of shares of any class or series of
stock provides for a greater or lesser number of votes per share, or limits or
denies voting rights, each outstanding share of stock, regardless of class or
series, shall be entitled to one (l) vote on each matter submitted to a vote at
a meeting of stockholders.
Section 2.8. PROXIES. A stockholder may vote the shares owned of
record by him either in person or by proxy executed in writing (which shall
include writings sent by telex, telegraph, cable or electronic transmission, on
terms satisfactory to the Corporation) by the stockholder himself or by his duly
authorized attorney-in-fact. No proxy shall be valid after three (3) years from
its date, unless the proxy provides for a longer period. Each proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
and dated, but it need not be sealed, witnessed or acknowledged.
Section 2.9. NO ACTION BY WRITTEN CONSENT. The stockholders of the
Corporation may not take action by written consent without a meeting, but must
take any such actions at a duly called annual or special meeting in accordance
with these Bylaws and the Certificate.
Section 2.10. LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make (or cause to be prepared and made), at least ten (10)
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order and showing the
address of, and the number of shares registered in the name of, each
stockholder. Such list
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shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
duration thereof, and may be inspected by any stockholder who is present.
Section 2.11. INSPECTOR OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint an Inspector of Election to act
at such meeting or at any adjournment or adjournments thereof. If such Inspector
is not so appointed or fail or refuses to act, the chairman of any such meeting
may (and, upon the demand of any stockholder or stockholder's proxy, shall) make
such an appointment. No such Inspector need be a stockholder of the Corporation.
Subject to any provisions of the Certificate of Incorporation, the
Inspector of Election shall determine the number of shares outstanding, the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies; he shall receive
votes, ballots or consents, hear and determine all challenges and questions in
any way arising in connection with the right to vote, count and tabulate all
votes or consents, determine when the polls shall close and determine the
result; and finally, he shall do such acts as may be proper to conduct the
election or vote with fairness to all stockholders. On request, the Inspector
shall make a report in writing to the secretary of the meeting concerning any
challenge, question or other matter as may have been determined by them and
shall execute and deliver to such secretary a certificate of any fact found by
them.
Section 2.12. NOTICE OF STOCKHOLDER ACTION. Any stockholder proposal or
nomination for the election of a director by a stockholder shall be delivered to
the Corporate Secretary of the Corporation no less than ninety (90) days nor
more than one hundred twenty (120) days in advance of the first anniversary of
the Corporation's annual meeting held in the prior year; provided, however, that
in the event the Corporation shall not have had an annual meeting in the prior
year, such notice shall be delivered no less than ninety (90) days nor more than
one hundred twenty (120) days in advance of May 15 of the current year. Such
stockholder nominations must contain (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director at the annual
meeting: (w) the name, age, business address and residence address of the
proposed nominee, (x) the principal occupation or employment or the proposed
nominee, (y) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the proposed nominee, and (z) any other
information relating to the proposed nominee that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Rule 14a under
the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder
giving notice of nominees for election at the annual meeting, (i) the name and
record address of the stockholder, and (ii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the
stockholder.
ARTICLE III.
DIRECTORS
Section 3.1. POWERS. The business and affairs of the Corporation shall
be managed by and be under the direction of the Board of Directors. The Board of
Directors shall exercise all the powers of the Corporation, except those that
are conferred upon or reserved to the stockholders by statute, the Certificate
or these Bylaws.
Section 3.2. NUMBER. The number of directors shall be fixed from time
to time by resolution of the Board of Directors but shall not be less than
three.
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Section 3.3. ELECTION AND TERM OF OFFICE. Each director shall serve
until his successor is elected and qualified or until his death, resignation or
removal, no decrease in the authorized number of directors shall shorten the
term of any incumbent director, and additional directors elected in connection
with rights to elect such additional directors under specified circumstances
which may be granted to the holders of any series of Preferred Stock shall not
be included in any class, but shall serve for such term or terms and pursuant to
such other provisions as are specified in the resolution of the Board of
Directors establishing such series.
Section 3.4. ELECTION OF CHAIRMAN OF THE BOARD. At the organizational
meeting immediately following the annual meeting of stockholders, the directors
shall elect a Chairman of the Board from among the directors who shall hold
office until the corresponding meeting of the Board of Directors in the next
year and until his successor shall have been elected or until his earlier
resignation or removal. Any vacancy in such office may be filled for the
unexpired portion of the term in the same manner by the Board of Directors at
any regular or special meeting.
Section 3.5. REMOVAL. Any director may be removed from office only as
provided in the Certificate of Incorporation.
Section 3.6. VACANCIES AND ADDITIONAL DIRECTORSHIPS. Unless otherwise
provided in the Certificate, vacancies in the Board of Directors resulting from
death, resignation, disqualification, removal, increase in the number of
directorships as provided in Section 3.2 above or other cause shall be filled
solely by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified, or until such director's
earlier removal, death or resignation. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director. Unless otherwise provided in the Certificate, new members of the Board
of Directors shall be nominated by the Chairman of the Board and approved by the
Board of Directors.
Section 3.7. REGULAR AND SPECIAL MEETINGS. Regular meetings of the
Board of Directors may be held without notice at such time and at such place as
shall from time to time be determined by the board. Special meetings of the
board may be called by the Chairman of the Board, the Chief Executive Officer or
the President on twelve (12) hours' notice to each director by phone, fax or
electronic mail; special meetings shall be called by the Chairman of the Board,
the Chief Executive Officer, the President or the Secretary in like manner and
on like notice on the written request of a majority of the Board unless the
Board consists of only one director, in which case special meetings shall be
called by the Chairman of the Board, the Chief Executive Officer, the President
or Secretary in like manner and on like notice on the written request of the
sole director.
Section 3.8. QUORUM. At all meetings of the Board of Directors, a
majority of the fixed number of directors shall constitute a quorum for the
transaction of business, except that if the Board of Directors consists of one
(1) director, then the one director shall constitute a quorum.
In the absence of a quorum, the directors present, by majority vote and
without notice other than by announcement, may adjourn the meeting from time to
time until a quorum shall be present. At any reconvened meeting following such
an adjournment at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
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Section 3.9. VOTES REQUIRED. Except as otherwise provided by
applicable law or by the Certificate of Incorporation, the vote of a majority of
the directors present at a meeting duly held at which a quorum is present shall
be sufficient to pass any measure.
Section 3.10. PLACE AND CONDUCT OF MEETINGS.
Each regular meeting and special meeting of the Board of Directors
shall be held at a location determined as follows: The Board of Directors may
designate any place, within or without the State of Delaware, for the holding of
any meeting. If no such designation is made: (a) any meeting called by a
majority of the directors shall be held at such location, within the county of
the Corporation's principal executive office, as the directors calling the
meeting shall designate; and (b) any other meeting shall be held at such
location, within the county of the Corporation's principal executive office, as
the Chairman of the Board may designate or, in the absence of such designation,
at the Corporation's principal executive office. Subject to the requirements of
applicable law, all regular and special meetings of the Board of Directors shall
be conducted in accordance with such rules and procedures as the Board of
Directors may approve and, as to matters not governed by such rules and
procedures, as the chairman of such meeting shall determine. The chairman of any
regular or special meeting shall be the Chairman of the Board, or, in his
absence, a person designated by the Board of Directors. The Secretary, or, in
the absence of the Secretary, a person designated by the chairman of the
meeting, shall act as secretary of the meeting. Notwithstanding anything in this
Section 3.10 to the contrary, unless otherwise restricted by the Certificate or
these Bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Section 3.11. FEES AND COMPENSATION. Directors shall be paid such
compensation as may be fixed from time to time by resolution of the Board of
Directors: (a) for their usual and contemplated services as directors; (b) for
their services as members of committees appointed by the Board of Directors,
including attendance at committee meetings as well as services which may be
required when committee members must consult with management staff; and (c) for
extraordinary services as directors or as members of committees appointed by the
Board of Directors, over and above those services for which compensation is
fixed pursuant to items (a) and (b) in this Section 3.11. Compensation may be in
the form of an annual retainer fee or a fee for attendance at meetings, or both,
or in such other form or on such basis as the resolutions of the Board of
Directors shall fix. Directors shall be reimbursed for all reasonable expenses
incurred by them in attending meetings of the Board of Directors and committees
appointed by the Board of Directors and in performing compensable extraordinary
services. Nothing contained herein shall be construed to preclude any director
from serving the Corporation in any other capacity, such as an officer, agent,
employee, consultant or otherwise, and receiving compensation therefor.
Section 3.12. COMMITTEES OF THE BOARD OF DIRECTORS. To the full extent
permitted by applicable law, the Board of Directors may from time to time
establish committees, including, but not limited to, the committees set forth in
subsections (a) and (b) of this Section 3.12, standing or special committees and
an executive committee, which shall have such duties and powers as are
authorized by these Bylaws or by the Board of Directors. Committee members, and
the chairman of each committee, shall be appointed by the Board of Directors.
The Chairman of the Board, in conjunction with the several committee chairmen,
if any, shall make recommendations to the Board of Directors for its final
action concerning members to be appointed to the several committees of the Board
of Directors. Any member of any committee may be removed at any time with or
without cause by the Board of Directors. Vacancies which occur on any committee
shall be filled by a resolution of the Board of
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Directors. If any vacancy shall occur in any committee by reason of death,
resignation, disqualification, removal or otherwise, the remaining members of
such committee, so long as a quorum is present, may continue to act until such
vacancy is filled by the Board of Directors. The provisions of Sections 3.7,
3.8, 3.9 and 3.10 of these Bylaws shall apply to any such Committee of the Board
of Directors.
(a) Audit Committee. The Audit Committee shall consist of at
least two non-employee directors appointed by a majority of the whole Board and
is authorized and directed to take all action necessary to safeguard corporate
assets, maintain proper accounting records, direct and monitor the internal
audit function, nominate an external auditor, and review the scope and quality
of the annual statutory audit. The Audit Committee shall present an annual
report to the Corporation's Board detailing any deficiencies or problems in the
financial reporting of the Corporation for the past fiscal year. The Audit
Committee shall also annually present to the Board a plan for the current fiscal
year which corrects any problem areas or deficiencies the Corporation discovered
during the prior fiscal year, details any planned amendments to the internal
audit function, and reviews the effectiveness of the external auditor. The Audit
Committee shall also perform any investigation or review of the financial
reporting of the Corporation that the Board instructs it to undertake from time
to time and upon completion of such investigation or review, deliver a report to
the Board detailing the Audit Committee's findings.
(b) Compensation Committee. The Compensation Committee shall
consist of at least two non-employee directors appointed by the whole Board and
is authorized and directed to take any and all action necessary to set
compensation for the Corporation's executive officers, to review officer
compensation plans and benefit programs, monitor and motivate officer
performance, and based on an annual review of executive compensation programs
and policies of the Corporation's competitors and select other companies who
compete in a labor market for the Corporation's officers, modify or adjust the
officer compensation or benefit plans so as to retain and attract the leadership
talent necessary to successfully maintain and grow the Corporation's business.
In connection with its duties and obligations, the Compensation Committee shall
receive recommendations from the Corporation's Chief Executive Officer
concerning the Corporation's executive officers (other than the Chief Executive
Officer) and may also regularly solicit compensation program design/practice
data from various compensation consultants. The Compensation Committee may use
this information and any other information it gathers when it establishes
compensation for Corporation's executive officers. Unless the Board of Directors
establishes a separate committee to govern the administration of the
Corporation's stock incentive plans, the Compensation Committee shall govern the
foregoing activities.
ARTICLE IV.
OFFICERS
Section 4.1. DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Chairman of the Board, a Chief Executive Officer, a President, a
Treasurer, such Executive Vice Presidents as the Board of Directors deems
appropriate, a Secretary and such other officers as the Board of Directors may
deem appropriate. These officers shall be elected annually by the Board of
Directors at the organizational meeting immediately following the annual meeting
of stockholders, and each such officer shall hold office until the corresponding
meeting of the Board of Directors in the next year and until his successor shall
have been elected and qualified or until his earlier resignation, death or
removal. Any vacancy in any of the above offices may be filled for the unexpired
portion of the term by the Board of Directors at any regular or special meeting.
Section 4.2. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall preside at all meetings of the stockholders and the
Board of Directors and shall have
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such other powers and perform such other duties as may from time to time be
assigned by the Board. Unless otherwise determined by the Board of Directors,
the Chairman shall be the Chief Executive Officer of the Corporation.
Section 4.3. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall see that all orders and resolutions of the Board of Directors are carried
into effect, shall have the power to appoint, set compensation for and remove
such vice presidents, subordinate officers and agents as the business of the
Corporation may require, other than those actually appointed or elected by the
directors, shall have general management of the business of the Corporation, and
shall perform all other duties incident to the office of Chief Executive Officer
and shall have such other powers and perform such other duties as may from time
to time be assigned by the Board.
Section 4.4. PRESIDENT. The President shall be the chief operating
officer of the Corporation. Such individual shall be responsible for the active
management of the business of the Corporation, shall perform such other duties
incident to the office of Chief Operating Officer, and shall have such other
powers and perform such other duties as may from time to time be assigned by the
Chief Executive Officer or the Board. The President shall, in the absence of the
Chief Executive Officer, serve with the power and authority of that office until
such time as the Chief Executive Officer returns to his duties.
Section 4.5. SECRETARY. The Secretary shall attend the meetings of the
shareholders and the Board of Directors and keep minutes of those meetings in
suitable books kept for that purpose. Such individual shall have custody of the
stock books and stock ledgers of the Corporation, shall give, or cause to be
given, all notices as are required by law, or by the Certificate of
Incorporation, or by these Bylaws. The Secretary shall perform such other duties
as may be prescribed by the Board of Directors or by the Chief Executive
Officer, as well as the usual duties incident to the office of Secretary. Any
duty of the Secretary may be performed by the Assistant Secretary elected by the
Board.
Section 4.6. TREASURER. The Treasurer shall be the chief financial
officer of the Corporation and shall have custody of the corporate funds and
securities and shall keep, or cause to be kept, full and accurate accounts of
receipts and disbursements in books kept for that purpose. He shall deposit all
monies, and other valuable effects, in the name and to the credit of the
Corporation, in such depository as the Board of Directors or Chief Executive
Officer shall designate. As directed by the Board of Directors or the Chief
Executive Officer, the Treasurer shall disburse monies of the Corporation,
taking proper vouchers for such disbursements and shall render to the Chief
Executive Officer and the Board of Directors an account of all his transactions
as Treasurer and of the financial condition of the Corporation. In addition, the
Treasurer shall perform all the usual duties incident to the office of
Treasurer. Any duty of the Treasurer may be performed by the Assistant Treasurer
elected by the Board.
Section 4.7. ASSISTANT OFFICERS. The Chief Executive Officer may
appoint one or more assistant secretaries and such other assistant officers as
the business of the Corporation may require, each of whom shall hold office for
such period, have such authority and perform such duties as may be specified
from time to time by the Chief Executive Officer.
Section 4.8. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case
of absence or disability of an officer of the Corporation or for any other
reason that may seem sufficient to the Board of Directors, the Board of
Directors or any officer designated by it, or the Chairman, may, for the time of
the absence or disability, delegate such officer's duties and powers to any
other officer of the Corporation.
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Section 4.9. OFFICERS HOLDING TWO OR MORE OFFICES. The same person may
hold any two (2) or more of the above-mentioned offices.
Section 4.10. COMPENSATION. The Board of Directors shall have the power
to fix the compensation of all officers and employees of the Corporation.
Section 4.11. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors, to the Chief Executive Officer,
or to the Secretary of the Corporation. Any such resignation shall take effect
at the time specified therein unless otherwise determined by the Board of
Directors. The acceptance of a resignation by the Corporation shall not be
necessary to make it effective.
Section 4.12. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by the affirmative vote of a majority of the entire Board
of Directors. Any assistant officer of the Corporation may be removed, with or
without cause, by the Chief Executive Officer or by the Board of Directors.
ARTICLE V.
NOTICES
Section 5.1. NO PERSONAL NOTICE REQUIREMENT. Whenever, under the
provisions of the Delaware General Corporation Law, the Certificate or these
Bylaws, notice is required to be given to any director or stockholder, it shall
not be construed to mean personal notice (except as provided in Article III,
Section 3.7 (as it relates to special meetings of the Board of Directors only)),
but such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telephone, telegram or facsimile.
Section 5.2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the Delaware General Corporation Law, or the
Certificate or these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS
EMPLOYEES AND OTHER CORPORATE AGENTS
Section 6.1. INDEMNIFICATION. The Corporation shall, subject to the
terms of the Certificate and to the fullest extent authorized under the laws of
the State of Delaware, as those laws may be amended and supplemented from time
to time, indemnify any director or officer made, or threatened to be made, a
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of being a director or officer of the Corporation or a
predecessor corporation or, at the Corporation's request, a director or officer
of another corporation. The indemnification provided for in this Article VI
shall: (i) not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
continue as to a person who has ceased to be a director or officer, and (iii)
inure to the benefit of the heirs, executors and administrators of such a
person. The Corporation's obligation to provide indemnification
8
<PAGE> 9
under this Article VI shall be offset to the extent of any other source of
indemnification or any otherwise applicable insurance coverage under a policy
maintained by the Corporation or any other person.
Expenses incurred by a director or officer of the Corporation in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is or was a director or officer of the Corporation (or was serving at
the Corporation's request as a director or officer of another corporation) shall
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized by
relevant sections of the Delaware General Corporation Law. Notwithstanding the
foregoing, the Corporation shall not be required to advance such expenses to a
director or officer who is a party to an action, suit or proceeding brought by
the Corporation and approved by a majority of the Board of Directors of the
Corporation which alleges willful misappropriation of corporate assets by such
director or officer, disclosure of confidential information in violation of the
fiduciary or contractual obligations of such director or officer to the
Corporation, or any other willful and deliberate breach in bad faith of such
duty of the director or officer to the Corporation or its stockholders.
The foregoing provisions of this Article VI shall be deemed to be a
contract between the Corporation and each director or officer who serves in such
capacity at any time while this Bylaw is in effect, and any repeal or
modification hereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or in part
upon any such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the Corporation to indemnify any person, other than a director or officer, made
a party to any action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was an employee or agent of the Corporation.
To assure indemnification under this Article VI of all directors,
officers, employees and agents who are determined by the Corporation or
otherwise to be or to have been "fiduciaries" of any employee benefit plan of
the Corporation which may exist from time to time, Section 145 of the General
Corporation Law of Delaware shall, for the purposes of this Article VI, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including without limitation, any plan of the Corporation
which is governed by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time; the Corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; and excise taxes assessed on a person with respect
to an employee benefit plan pursuant to such Act of Congress shall be deemed
"fines."
Section 6.2. INSURANCE. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on behalf of any
person who is or was an Agent against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
Section 6.3. SAVINGS CLAUSE.
If this Article VI or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee and agent described in
this Article VI as to expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal,
9
<PAGE> 10
administrative or investigative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated, or by any other applicable law.
ARTICLE VII.
STOCK
Section 7.1. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board or a
Vice-Chairman of the Board or the Chief Executive Officer, the President or a
Vice President, together with the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary. Any or all of the signatures on any
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 7.2. TRANSFER OF SHARES. Shares of stock shall be transferable
on the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's transfer
agent, if the Corporation has a transfer agent, or to the Corporation's
registrar, if the Corporation has a registrar, or to the Secretary, if the
Corporation has neither a transfer agent nor a registrar. The Board of Directors
shall have power and authority to make such other rules and regulations
concerning the issue, transfer and registration of certificates of the
Corporation's stock as it may deem expedient.
Section 7.3. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock whose
respective duties the Board of Directors or the Secretary may, from time to
time, define. No certificate of stock shall be valid until countersigned by a
transfer agent, if the Corporation has a transfer agent, or until registered by
a registrar, if the Corporation has a registrar. The duties of transfer agent
and registrar may be combined.
Section 7.4. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
Section 7.5. RECORD DATES. The Board of Directors may fix, in advance,
a date as the record date for the purpose of determining stockholders entitled
to notice of, or to vote at, any meeting of stockholders or any adjournment
thereof, or stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or in order to make a
determination of stockholders for any other proper purpose. Such date in any
case shall be not more than sixty (60) days, and in case of a meeting of
stockholders, not less than ten (10) days, prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, notwithstanding the transfer of any such stock on the
books of the Corporation after any such record date fixed by the Board of
Directors.
10
<PAGE> 11
Section 7.6. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his or her legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 7.7. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VIII.
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE IX.
SEAL
The Board of Directors may adopt a corporate seal having inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE X.
AMENDMENT
These Bylaws may be altered, amended or repealed or new bylaws may be
adopted by the affirmative vote of holders of at least 66 2/3% vote of the
outstanding voting stock of the Corporation. These Bylaws may also be altered,
amended or repealed or new bylaws may be adopted by the Board of Directors, when
such power is conferred upon the Board of Directors by the Certificate of
Incorporation. The foregoing may occur at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal bylaws is conferred upon
the Board of Directors by the Certificate of Incorporation, it shall not divest
or limit the power of the stockholders to adopt, amend or repeal bylaws.
11
<PAGE> 1
EXHIBIT 10.2
LANDLORD'S CONSENT TO SECOND SUBLEASE
June 2, 1999
Charter Behavioral Health Systems, LLC
577 Mulberry Street
P.O. Box 209
Macon, Georgia 31201
Attention: Mr. Bill Terry, Senior Director, General Office Services
RE: (1) Prime Lease:
(A) Landlord: Sanctuary Park Realty Holding Company, a
Delaware corporation
(B) Tenant: TheraTx, Incorporated, a
Delaware corporation n/k/a Vencare Rehab
Services, Inc.
(C) Prime Lease: Lease, dated April 25, 1995, between
Regency Park West Associates, L.P., a
Georgia limited partnership, as "Landlord,"
and Tenant, as "Tenant"; as amended by: (a)
that certain First Amendment to Lease (the
"First Amendment"), dated October 25, 1995,
(b) that certain Second Amendment to Lease
(the "Second Amendment"), dated August 12,
1996, and (c) that certain Third Amendment
to Lease (the "Third Amendment"), dated
March 12, 1997 (the Lease, as amended by the
First Amendment, the Second Amendment and
the Third Amendment, is hereinafter
collectively referred to as the "Lease").
(2) Sublease:
(A) Sublessor: TheraTx, Incorporated, a Delaware
corporation n/k/a Vencare Rehab Services,
Inc.
(B) Sublessee: Charter Behavioral Health
Systems, LLC, a Delaware limited liability
company ("Sublessee")
(C) Sublease: Sublease dated April 30, 1998,
between TheraTx, Incorporated and Charter
Behavioral Health Systems, LLC, a copy of
which is attached hereto as Exhibit "A" and
by this reference made a part hereof.
<PAGE> 2
Page 2
June 2, 1999
Charter Behavorial Health Systems, LLC
(3) Second Sublease:
(A) Second Charter Behavioral Health Systems, LLC, a
Sublessor: Delaware limited liability company
("Second Sublessor")
(B) Second: Witness Systems, Incorporated, a Delaware
Sublessee corporation ("Second Sublessee")
(C) Second: Second Sublease Agreement, dated May 28,
Sublease: 1999, a copy of which is attached hereto as
Exhibit "B" and by this reference made a
part hereof (the "Second Sublease")
- --------------------------------------------------------------------------------
Gentlemen:
Landlord has succeeded to the interest of Regency Park West Associates, L.P., as
"Landlord" under the Prime Lease. In accordance with your request, when and only
when executed below by Landlord and Sublessor, Landlord and Sublessor shall
hereby grant their consent (this "Consent") to the execution and delivery of the
Second Sublease, subject to the following terms and conditions:
1. This Consent shall not be assignable without the express written
consent of Landlord, Sublessor, Sublessee and Second Sublessor.
2. Nothing herein contained:
(a) shall operate as a representation or a warranty by Landlord or
Sublessor; or
(b) shall be deemed or construed to modify, waive, impair or
affect any of the provisions, covenants, agreements, terms or
conditions contained in the Prime Lease and/or the Sublease,
or to waive any present or future breach thereof, or any of
Tenant's obligations under the Prime Lease and/or Sublessee's
obligations under the Sublease, or any right or remedy of
Landlord against Tenant under the Prime Lease and/or
Sublessor's right or remedy against the Sublessee under the
Sublease or otherwise, or to enlarge or increase Landlord's
obligations or Tenant's rights under the Prime Lease or to
enlarge or increase Sublessor's obligations or Sublessee's
rights under the Sublease or otherwise; or
(c) shall create any privity of contract between Second Sublessee
and Landlord and/or Second Sublessee and Sublessor, except as
set forth herein.
3. The Second Sublease is and shall remain subject and subordinate at all
times to all of the provisions, covenants, agreements, terms and
conditions contained in the Prime Lease and the Sublease, and to all
renewals, modifications, replacement and extensions thereof
<PAGE> 3
Page 3
June 2, 1999
Charter Behavorial Health Systems, LLC
acknowledged and consented to, in writing by Landlord, Sublessor,
Second Sublessor and Second Sublessee.
4. Notwithstanding anything to the contrary in the Second Sublease, this
Consent shall not be deemed or construed as a Consent by Landlord
and/or Sublessor to, or as permitting, any other or further leasing or
subleasing by Tenant, Second Sublessor or anyone claiming under or
through Tenant or Second Sublessor (including, without limitation,
Second Sublessee), and no other or further lease or sublease of the
premises demised by the Second Sublease (the "Second Subleased Space")
or any part thereof, or any assignment of the Second Sublease, or a
modification of the Second Sublease, shall be made by Tenant, Second
Sublessor or anyone claiming under or through Tenant, Second Sublessor
(including, without limitation, Second Sublessee), without Landlord's
and Sublessor's prior written consent in each instance as set forth in
the Prime Lease and the Sublease.
5. Nothing contained in this Consent or in the Second Sublease shall be
deemed to create any landlord-tenant or other relationship between
Landlord and Second Sublessee or Sublessor and Second Sublessee. Except
as may be set forth in the Prime Lease and the Sublease, Landlord and
Sublessor shall have no obligation whatsoever under the Second
Sublease.
6. Except to the extent permitted in the Prime Lease and the Sublease,
nothing in this Consent shall be deemed to constitute Landlord's nor
Sublessor's consent to any signage, alterations, installations or
improvements, if any, specified in the Second Sublease. All such
requests for approval shall be submitted to a approved by the Property
Manager, Jones Lang LaSalle Management Services, Inc. All construction
necessary to prepare the Second Subleased Space by Second Subleases is
subject to Landlord's and Sublessor's approval. All such construction
must be designed by architects and engineers approved by Landlord and
Sublessor and performed by contractors and subcontractors approved by
Landlord and Sublessor. All such design and construction must meet all
applicable building, fire and safety codes. Second Sublessor and Second
Sublessee acknowledge that the Second Subleased Space is located on a
floor of the building which is presently designed as a single tenant
floor. Subdivision of such floor into a multi-tenant floor will require
the installation of fire rated walls and other safety and code related
changes. Landlord reserves the right by written notice to Second
Sublessor and Second Sublessee to require the removal of all such
improvements by the Second Sublessor and Second Sublessee at the end of
the term of the Second Sublease.
7. In the event of any inconsistency in the terms and conditions of this
Consent and the terms and conditions of the Second Sublease, the terms
and conditions of this Consent shall govern.
8. Subject to the terms of Section 9 and 10 of this Consent, upon the
expiration or any earlier termination of the term of the Prime Lease or
the Sublease, or in case of the surrender of the Prime Lease by Tenant
to Landlord, or Sublessee to Sublessor, the Second Sublease and its
term shall expire and come to an end as of the effective date of
<PAGE> 4
Page 4
June 2, 1999
Charter Behavorial Health Systems, LLC
such expiration, termination or surrender of the Prime Lease or
Sublease, and Second Sublessee shall vacate the Second Subleased Space
on or before such date. In the event that Second Sublessee fails to
vacate the Second Subleased Space on or before such expiration of the
Second Sublease, Landlord and Sublessor shall be entitled to all the
rights and remedies available to a landlord against a tenant holding
over after the expiration of the term as set forth in the Prime Lease
and/or the Sublease.
9. In the event that the Prime Lease shall expire or terminate during the
term of the Second Sublease for any reason other than condemnation or
destruction by fire or other cause, Landlord may elect, in its sole
discretion, but without any obligation to do so, to continue the Second
Sublease with the same force and effect as if Landlord, as landlord,
and Second Sublessee, as tenant, had entered into a lease as of such
effective date for a term equal to the then unexpired term of the
Second Sublease, and containing the same terms and conditions as those
contained in the Second Sublessee, and Second Sublessee shall attorn to
Landlord and Landlord and Second Sublessee shall have the same rights,
obligations and remedies thereunder as were had by Tenant (as
Sublessor) and Second Sublessee thereunder prior to such effective
date, respectively, except that in no event shall Landlord be: (a)
liable for any act or omission by Tenant or Second Sublessor; (b)
subject to any offsets or defenses which Second Sublessee had or might
have had against Tenant or Second Sublessor; (c) bound by any rent or
additional rent or other payment paid by Second Sublessee to Tenant or
Second Sublessor in advance; or (d) bound by any amendment to the
Second Sublease not consented to in writing by Landlord.
10. In the event that the Sublease shall expire or terminate during the
term of the Second Sublease for any reason other than condemnation or
destruction by fire or other cause, Sublessor may elect, in its sole
discretion, but without any obligation to do so, to continue the Second
Sublease with the same force and effect as if Sublessor, as landlord,
and Second Sublessee, as tenant, had entered into a lease as of such
effective date for a term equal to the then unexpired term of the
Second Sublease and containing the same terms and conditions as those
contained in the Second Sublease, and Second Sublessee shall attorn to
Sublessor and Sublessor and Second Sublessee shall have the same
rights, obligations and remedies thereunder as were had by Sublessee
(as Second Sublessor) and Second Sublessee thereunder prior to such
effective date, respectively, except that in no event shall Sublessor
be: (a) liable for any act or omission by Second Sublessor; (b) subject
to any offsets or defenses which Second Sublessee had or might have had
against Second Sublessor; (c) bound by any rent or additional rent or
other payment paid by Second Sublessee to Second Sublessor in advance;
or (d) bound by any amendment the Second Sublease not consented to in
writing by Sublessor.
11. This Consent is expressly conditioned upon the Second Subleased Space
being used by Second Sublessee solely for the purposes set forth in
Paragraph 5(a) of the Prime Lease and for no other purposes.
12. Prior to Second Sublessee's occupancy of the Second Subleased Space,
Second Sublessor shall submit to Landlord and Sublessor evidence of
insurance certifying Second Sublessee's compliance with applicable
provisions of the Prime Lease.
<PAGE> 5
Page 5
June 2, 1999
Charter Behavorial Health Systems, LLC
13. Second Sublessor agrees to reimburse Landlord and Sublessor for legal
fees and any other costs incurred by Landlord and Sublessor in
connection with its review of the Second Sublease and the giving of
this Consent. Second Sublessee agrees that, prior to taking occupancy
of the Second Subleased Space, it will request that Landlord rekey all
exterior and interior doors in the Second Subleased Space which
currently have locks and will reimburse Landlord for its reasonable,
actual expenses for such rekeying of the Second Subleased Space.
14. Notwithstanding anything to the contrary in the Sublease and Second
Sublease, Tenant shall remain primarily liable to Landlord for any
breaches or liabilities and obligations of "Tenant" under the Prime
Lease and likewise, Sublessee shall remain liable to Sublessor for any
breaches or liabilities and obligations under the Sublease.
15. Second Sublessor and Second Sublessee hereby jointly and severally
agree to indemnify, defend and hold Landlord and Sublessor harmless
from and against any claims made by any broker or finder for a
commission or fee in connection with the Second Sublease.
16. This Consent may be executed in any number of counterparts, any one of
which shall be deemed an original, and all of which shall constitute
one and the same agreement.
17. Upon the return to Landlord of an executed an unaltered original hereof
with the signatures of Tenant, Second Sublessor and Second Sublessee
thereon, Landlord will consider this letter as a request from Second
Sublessor and Second Sublessee for approval of the Second Sublease,
and, if Landlord approves the Second Sublease, it will execute this
Consent where indicated below and this Consent shall, upon delivery to
Sublessor and Second Sublessor, be deemed to be the binding obligation
of each party in respect of all matters herein required on the part of
each such party to be done or performed. This Consent shall not be
effective and Landlord shall not be bound by the terms of this Consent
unless and until this Consent is executed by Landlord and delivered to
Sublessor and Second Sublessor.
Very truly yours,
SANCTUARY PARK REALTY HOLDING
COMPANY, a Delaware corporation
By: [/s/ Illegible]
-----------------------------------
Name: [Illegible]
------------------------------
Title: [Illegible]
------------------------------
Date:
---------------------------------
(Signature Continued on Following Page)
<PAGE> 6
Page 6
June 2, 1999
Charter Behavorial Health Systems, LLC
READ, ACCEPTED AND AGREED TO BY TENANT, SUBLESSEE/SECOND SUBLESSOR, AND SECOND
SUBLESSEE:
TENANT/SUBLESSOR:
THERATX, INCORPORATED,
a Delaware corporation
By: [Illegible]
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
(CORPORATE SEAL)
Date:
---------------------------------
SUBLESSEE/SECOND SUBLESSOR:
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC,
a Delaware limited liability company
By: /s/ Lance Taylor
-----------------------------------
Name: Lance Taylor
------------------------------
Title:
-----------------------------
(CORPORATE SEAL)
Date: 6/2/99
---------------------------------
SECOND SUBLESSEE:
WITNESS SYSTEMS, INCORPORATED,
a Delaware corporation
By: /s/ Jon W. Ezrine
-----------------------------------
Name: Jon W. Ezrine
------------------------------
Title: CFO
-----------------------------
(CORPORATE SEAL)
Date: 6/2/99
---------------------------------
<PAGE> 7
Exhibit "A"
to Landlord's Consent to Second Sublease
Charter
SUBLEASE AGREEMENT
April 30, 1998
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
1. Sublease........................................................................................1
2. Term............................................................................................1
3. Rent............................................................................................2
4. Alterations.....................................................................................4
5. Assignment and Subletting.......................................................................4
6. Brokers.........................................................................................4
7. Sublessee's Additional Obligations..............................................................4
8. Incorporation by Reference......................................................................4
9. Landlord's Consent..............................................................................5
10. Indemnification.................................................................................5
11. Termination; Default; Remedies..................................................................5
12. Miscellaneous...................................................................................5
12.1 Binding Effect.......................................................................5
12.2 Notices..............................................................................5
12.3 Governing Law........................................................................7
12.4 Entire Agreement.....................................................................7
12.5 Counterparts.........................................................................7
</TABLE>
3
<PAGE> 9
LIST OF EXHIBITS
Exhibit A - Drawing showing location of Subleased Premises
Exhibit B - Copy of Lease and all amendments
4
<PAGE> 10
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT ("Sublease") is made and entered into as of the
30th day of April, 1998, by and among: (i) THERATX, INCORPORATED, a Delaware
corporation ("Sublessor"), (ii) CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a
Georgia limited liability company ("Sublessee").
RECITALS:
A. Pursuant to that certain Lease dated as of April 25, 1995, between
Sublessor as the "Tenant", and Landlord's predecessor, Regency Park West
Associates, L.P. ("Regency"), as amended by a First Amendment to Lease dated
October 25, 1995, a Second Amendment to Lease dated August 12, 1996, and a Third
Amendment to Lease dated March 12, 1997 (as amended, the "Lease"), Landlord has
leased to Sublessor certain real property consisting of a total of approximately
107,695 rentable square feet located on the first, third and fourth floors of a
multi-story precast concrete and glass office building (the "Building") situated
at 1105 Sanctuary Parkway in Alpharetta, Georgia (the "Leased Premises").
B. Sublessor desires to sublet a portion of the Leased Premises to
Sublessee, and Sublessee desires to sublet such portion of the Leased Premises
from Sublessor, upon the terms and conditions contained in this Sublease.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. SUBLEASE. Sublessor hereby leases to Sublessee, and Sublessee hereby
leases from Sublessor, that portion of the Leased Premises constituting the
fourth floor of the Building (Lake View I, at Sanctuary Park) consisting of
47,846 rentable square feet (43,695 usable square feet) in the location shown on
the drawing attached hereto and made a part hereof, as Exhibit A, together with
the nonexclusive use of all common areas pertaining thereto (including, but not
limited to Sublessee's proportionate share of all parking space rights of
Sublessor pursuant to the Lease, it being agreed and understood that such spaces
consist of four (4) unreserved and nondesignated spaces for each One Thousand
(1,000) feet of rentable square feet) (all of the foregoing is hereinafter
collectively referred to as the "Subleased Premises").
2. TERM. The initial term (the "Initial Term") of this Sublease shall
commence on June 1, 1998 (the "Commencement Date") and shall continue for a
period of eleven (11) years and six (6) months, ending on November 30, 2009. In
addition, in the event Sublessor does not desire to utilize the Subleased
Premises for its own use following the expiration of the Initial Term, and
providing Sublessee is not then (i.e., as of the date of Sublessor's receipt of
Sublessee's notice of Sublessee's desire to negotiate mutually acceptable terms
and conditions applicable to the renewal of this Sublease) in default or
threatened default, and provided Sublessee has not assigned or sublet all or any
portion of the Subleased Premises, Sublessee shall
<PAGE> 11
have the right to extend this Sublease for an additional term (the "Renewal
Term") (the Initial Term and the Renewal Term are sometimes hereinafter
collectively referred to as the "Term") of five (5) years, commencing on
December 1, 2009, upon written notice to Sublessor given on or before June 1,
2009, upon the same terms and conditions contained herein, except that the Base
Rent during the Renewal Term shall increase as agreed upon by Sublessor and
Sublessee. If Sublessor and Sublessee have not reached an agreement regarding
the amount of the Base Rent during the Renewal Term by July 1, 2009, then this
Sublease shall terminate upon expiration of the Initial Term. Failure of
Sublessee to provide the above described written notice to Sublessor by June 1,
2009 shall be deemed a waiver by Sublessee of its right to extend this Sublease
for the Renewal Term.
3. RENT. Sublessee shall pay base rent ("Base Rent"), in equal monthly
installments in advance, as follows:
<TABLE>
<CAPTION>
Period (Number of Months) Base Rent Monthly Installment
<S> <C> <C>
June 1, 1998 - -0- -0-
November 30, 1998
(six months)
December 1, 1998 - $307,709.55 ($8.575 per $34,189.95 per month
August 31, 1999 rentable square foot)
(nine months)
September 1, 1999 - $273,519.64 ($17.15 per $68,379.91 per month
December 31, 1999 rentable square foot)
(four months)
</TABLE>
Thereafter, commencing on January 1, 2000, and continuing for the
remainder of the Initial Term, the Base Rent (as adjusted) shall be adjusted on
January 1 of each year to an amount equal to the Base Rent (as adjusted) in the
immediately preceding calendar year, adjusted by the percentage increase (if
any) in the "Consumer Price Index" (as hereinafter defined) which occurred over
the twelve (12 ) month period immediately preceding the date of each adjustment
(it being agreed and understood, that if the Consumer Price Index decreases,
there will be no such adjustment, and the Base Rent will remain the same as the
prior year).
The term, "Consumer Price Index" shall be the Consumer Price Index for
All Urban Consumers - U.S. City Average for All Items (1982-84 = 100) of the
Bureau of Labor Statistics of the United States Department of Labor. If the
Consumer price Index published by the Department of Labor, Bureau of Labor
Statistics, is changed so that it affects the calculations achieved hereunder,
the Consumer Price Index shall be converted in accordance with a conversion
factor published by the United States Department of Labor, Bureau of Labor
Statistics. If the Consumer Price Index is discontinued or revised during the
Term of this Sublease, such other government index or computation with which it
is replaced for purposes of the Lease shall be used for purposes of this
Sublease. Notwithstanding the foregoing, in no event
<PAGE> 12
shall the annual effective amount of the Base Rent increase from one calendar
year to the next by more than five percent (5%).
All Base Rent shall be payable in equal monthly installments, on or
before the first (1st) day of each month, in advance. Sublessee shall pay the
sum of One Hundred Thirty Six Thousand Seven Hundred and Sixty Dollars
($136,760.00) to Sublessor, at such time as this Sublease has been fully
executed and Landlord has consented to the same, which amount represents payment
of Base Rent for the months December of 1998 and January, February and March,
1999, of the Initial Term.
In addition to the Base Rent, upon receipt of a written invoice from
Sublessor, Sublessee shall also pay, as and when due, to either Sublessor or to
such party as such amount shall be owed, Sublessee's Share (as that term is
hereinafter defined) of any and all increases over the "Base Amount" required to
be paid by Sublessor, as Tenant's Share under the terms of the Lease, including,
without limitation, all operating expenses, insurances, taxes utilities and
other charges (the "Operating Expenses"). For purposes of this Sublease, the
"Base Amount" shall mean the amount of Operating Expenses of the Building for
the calendar year 1997, and the term, "Additional Rent", shall mean, in addition
to the definition ascribed to that term in the Lease, Sublessee's Share of (i)
the increase (if any) in Landlord's Operating Expenses for the calendar year
1998 as compared with the calendar year 1997 (i.e., the Base Amount, as defined
herein), and (ii) Landlord's estimated increase in operating expenses for the
then current calendar year as compared with the previous calendar year. The
Additional Rent shall be estimated each year, beginning January 1, 1999, and
paid in equal monthly installments, in accordance with, and consistent with, the
Lease. The Additional Rent shall be reconciled by Sublessor at the end of each
calendar year, and Sublessee shall pay to Sublessor the amount of any
deficiency, or Sublessor shall reimburse Sublessee for any overpayment, as the
case may be, in accordance with, and consistent with, the Lease. Sublessee's
Share shall be defined as a fraction, the numerator of which shall be the then
current rentable area of the Subleased Premises (i.e., 47,846 rentable square
feet) and the denominator of which shall be 107,695 rentable square feet (i.e.,
the size of Sublessor's premises under the Lease). Thus 44.43% is defined as
Sublessee's Share, and Sublessee shall be obligated to pay 44.43% of Tenant's
Share, as that term is defined in the Lease.
Sublessor agrees that it will cooperate with Sublessee, and assist
Sublessee as reasonably requested, in obtaining access to Landlord's books and
records for the purpose of verifying the Operating Expenses, pursuant to, and in
accordance with, Section 3(f) of the Lease.
If any payment of Base Rent or other sum due thereunder from Sublessee
to Sublessor remains unpaid for a period of five (5) days after such amount is
due, the amount of such unpaid Base Rent or other payment shall be increased by
a late charge to be paid to Sublessor by Sublessee in an amount equal to five
percent (5%) of the amount of the delinquent Base Rent or other payment.
4. ALTERATIONS. By the execution of this Sublease, Sublessee
acknowledges that it has examined and knows the condition of the Subleased
Premises, and that Sublessee accepts the Subleased Premises in its "as is, where
is" condition, with all faults. Any and all alterations to the Subleased
Premises shall be in accordance with Section 7 of the Lease.
<PAGE> 13
Sublessor agrees that the audio/video equipment, the large tables
located in the Board Room, and Health Center equipment shall remain in the
Subleased Premises and be included as a part thereof. Sublessee acknowledges and
agrees that it is accepting all of the equipment described in the preceding
sentence in its "as is, where is" condition, with all faults, and Sublessee
further acknowledges the Sublessor makes no warranties or representations
whatsoever with respect to the foregoing equipment (other than warranty of
title).
5. ASSIGNMENT AND SUBLETTING. Sublessee shall not assign, transfer or
further sublease all or any part of its interest in the Subleased Premises
without the consent of both Landlord and Sublessor. The parties acknowledge and
agree that Landlord's and Sublessor's consent to any such Subletting or
assignment shall be in accordance with Section 10 of the Lease, and with the
Section 15 of Exhibit F to the Lease.
6. BROKERS. The parties acknowledge and agree that Jack Anderson &
Associates ("Anderson") represents Sublessee in connection with this Sublease
and Carter & Associates, LLC ("Carter") represents Sublessor in connection with
this Sublease.
Sublessor agrees that it shall pay Carter a real estate commission
equal to one and one-half times (1-1/2) the first full monthly payment of Base
Rent due under this Sublease, plus six percent (6%) of all Base Rent due under
this Sublease during the Initial Term. Sublessor shall pay fifty percent (50%)
of the foregoing commission to Carter, within thirty (30) days following
execution and delivery of this Sublease by Sublessor and Sublessee and receipt
of Landlord's consent to sublease, and Sublessor shall pay the remaining fifty
percent (50%) of such commission on the Commencement Date. Carter shall then pay
within five (5) business days, two-thirds of such commissions actually received
from Sublessor to Anderson and Carter shall be entitled to retain one-third of
such commissions. Sublessee shall not be liable or responsible for payment of
any commissions payable under the Sublease.
7. SUBLESSEE'S ADDITIONAL OBLIGATIONS. With respect to the Subleased
Premises, after and incurred from the Commencement Date and throughout the Term,
Sublessee shall be responsible for payment and/or performance(s) as applicable
of all utility and service charges, maintenance, and Tenant's indemnification
and insurance obligations pursuant to the Lease.
8. INCORPORATION BY REFERENCE. The sublease of the Subleased Premises
by Sublessor to Sublessee shall be controlled by the Lease, a copy of which is
attached hereto and made a part hereof, and incorporated herein by this
reference, as Exhibit B. After and incurred from the Commencement Date
throughout the Term, Sublessee agrees to abide by and perform each and every
obligation of Tenant under the Lease with respect to the Subleased Premises. The
sublease by Sublessor to Sublessee shall be governed by this Sublease; provided,
however, that in the event of a conflict between the Lease and this Sublease,
the Lease shall control.
9. [Omitted].
10. INDEMNIFICATION. Sublessee agrees that from and after the
Commencement Date and throughout the Term, it will indemnify Sublessor and hold
Sublessor and Landlord harmless from and against any and all claims, actions,
damages, liabilities, losses and expenses
<PAGE> 14
(including reasonable attorney's fees) in connection with the loss of life,
personal injury, and/or damage to property arising from or out of any occurrence
in, upon or at the Subleased Premises, or the occupancy or use by Sublessee of
the Subleased Premises, its agents, contractors, employees, wholly or in partly
by any act or omission of Sublease, its agents, contractors, employees,
servants, or concessionaires. Sublessor agrees that from and after the
Commencement Date and throughout the Term, it will indemnify Sublessee and hold
Sublessee harmless from and against any and all claims, actions, damages,
liability, losses and expenses (including reasonable attorney's fees) in
connection with the loss of life, personal injury, and/or damage to the property
arising from or out of any acts or omissions occurring prior to the Commencement
Date and any acts of omission of Sublessor or its agents, employees, successors
or assigns, relating to the Lease or this Sublease.
11. TERMINATION; DEFAULT; REMEDIES. In the event Landlord terminates
the occupancy rights of Sublessor under the Lease, the right of Sublessee to
occupy the Subleased Premises shall also cease and terminate, and this Sublease
shall be null and void. In addition, in the event Sublessee shall fail to pay
any installment of Base Rent or other sums of money payable to Sublessor within
five (5) days after the same is due and payable under this Sublease, or in the
event Sublessee shall breach or fail to comply with any other covenants or
provisions of this Sublease or the Lease on its part to be performed, and such
failure continues for a period of twenty (20) days after Sublessor's written
notice thereof to Sublessee, Sublessor shall have the right to terminate this
Sublease and to bring an action against Sublessee for damages occasioned by such
breach or default, including, but not limited to, reasonable attorney's fees
12. MISCELLANEOUS.
12.1 BINDING EFFECT. All of the terms, conditions, covenants,
stipulations and agreements to be performed by any of the parties hereto shall
be binding upon their respective heirs, successors, legal representatives and
assigns. The parties hereto warrant that they have the express authority to bind
the respective parties to this Sublease.
12.2 NOTICES. All notices, mailing and communications relative
to this Sublease shall be in writing and shall be either personally delivered
and receipted, or delivered by registered U.S. mail, postage prepaid, return
receipt requested, in either event delivered and addressed to the parties as
follows (all notices shall be deemed "received" on the date upon which receipt
is acknowledged in writing, either personally or by return receipt):
If to the Sublessor: TheraTx, Incorporated
3300 Aegon Center
400 West Market Street
Louisville, KY 40202
Attention: Jill L. Force, Esq., Vencor, Inc.
Phone: 502/596-7360
Fax: 502/596-4075
<PAGE> 15
cc: Tandy C. Patrick, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, KY 40202
Direct Phone: 502/587-3512
Fax: 502/540-2114
If to the Sublessee: Charter Behavioral Health Systems, LLC
Suite 1400
3414 National City Tower
Atlanta, GA 30326
Attention: Mr. Lance Taylor
Direct Phone: 404/814-5616
Fax: 404/869-5506
cc: Mark Ford, Esq.
Vice President & General Counsel
Charter Behavioral Health Systems, LLC
Suite 900
3414 Peachtree Road, NE
Atlanta, GA 30326
Phone: 404/814-5730
Fax: 404/814-5795
cc: Dale Hughes, Esq.
Dow, Lohnes & Albertson
Suite 1600
One Ravinia Drive
Atlanta, GA 30346
Phone: 770/901-8805
Fax: 770/901-8874
If to Landlord: Sanctuary Park Realty Holding Company
c/o J.P. Morgan Investment Management, Inc.
522 Fifth Avenue
New York, NY 10036
Attn: Ms. Anne S. Pfeiffer
Any party may change its address for receiving notices and communications by
giving the other appropriate written notice thereof.
12.3 GOVERNING LAW. The provisions of this Sublease shall be construed,
enforced and governed in all respects by the laws of the State of Georgia.
12.4 ENTIRE AGREEMENT. This Sublease, together with the exhibits
attached hereto, constitutes the complete and entire understanding and agreement
between the parties
<PAGE> 16
hereto with regard to all matters involved in this transaction and supersedes
any and all prior or contemporaneous agreements, whether written or oral.
12.5 COUNTERPARTS. This Sublease may contain more than one
counterpart of the signature page and this Sublease may be executed by affixing
the signatures of each party to one of such counterpart signature pages; all of
such counterpart signature pages shall be read as though one, and they shall
have the same force and effect as though all of the signers had signed a single
signature page.
IN TESTIMONY WHEREOF, WITNESS the signatures of the parties hereto as
of the day, month and year first written above.
CHARTER BEHAVIORAL HEALTH SYSTEMS,
LLC
By: /s/ Lance Taylor
-----------------------------
Title: CFO
-----------------------------
("Sublessee")
<PAGE> 17
EXHIBIT A
[Attach drawing showing location of Subleased Premises]
[Architectural Drawing of Office Space - 4th Floor]
<PAGE> 18
EXHIBIT B
[Attach copy of Lease and all Amendments]
<PAGE> 19
OFFICE LEASE AGREEMENT
THERATX, INC.
<PAGE> 20
REGENCY PARK WEST
OFFICE LEASE AGREEMENT
TABLE OF CONTENTS
1. Leased Premises
2. Term and Possession
3. Monthly Rental
4. Security Deposit
5. Occupancy and Use
6. Compliance with Laws
7. Alterations
8. Repair
9. Liens
10. Assignment and Subletting
11. Insurance and Indemnification
12. Waiver of Subrogation
13. Services and Utilities
14. Estoppel Certificate
15. Holding Over
16. Subordination
17. Re-Entry by Landlord
18. Insolvency or Bankruptcy
19. Default and Remedies
20. Damage by Fire or Other Casualty
21. Condemnation
22. Sale by Landlord
23. Right of Landlord to Perform
24. Surrender of Premises
25. Waiver
26. Parking
27. Notices
28. Certain Rights Reserved to Landlord
<PAGE> 21
29. Abandonment
30. Successors
31. Attorneys' Fees
32. Corporate Authority
33. Mortgagee Approvals
34. Landlord's Lien
35. Quiet Enjoyment
36. Limitation of Landlord's Liability and
Exculpation of Partners
37. Right to Relocate
38. Disclaimer of Creation of Partnership or
Joint Venture
39. Lease Effective Date
40. Rules and Regulations
41. No Brokers
42. Recording
43. Miscellaneous
44. Special Stipulations
EXHIBITS
A Floor Plan
B Legal Description
B-1 Conceptual Plan
C Leased Premises Improvement Agreement
D Estoppel Certificate
E Rules and Regulations
F Special Stipulations
G Non-Disturbance and Attornment Agreement
<PAGE> 22
OFFICE LEASE AGREEMENT
THIS LEASE is made as of this 25th day of April, 1995, between REGENCY
PARK WEST ASSOCIATES, L.P., a Georgia limited partnership (hereinafter called
"Landlord"), and THERATX, INCORPORATED, a Delaware corporation (hereinafter
called "Tenant").
WITNESSETH:
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
those premises thereinafter called "Premises" or "Leased Premises") shown on
Exhibit "A" attached hereto and made a part hereof, being located on the upper
two floors of a multi-story precast concrete and glass office building (the
"Building") constructed on a parcel of land (the "Property") described on
Exhibit "B" attached hereto and made a part hereof.
1. LEASED PREMISES
Net Usable Area of Leased Premises: 73,059 sq. ft.
Net Rentable Area of Leased Premises: 80,000 sq. ft.
Suite Number 400
2. TERM AND POSSESSION
(a) The term of this Office Lease (the "Term" or "Lease Term") shall be
for two hundred forty (240) months (or until sooner terminated as herein
provided), beginning on the "Commencement Date"( as hereinafter defined), except
that if the Commencement Date is other than the first day of a calendar month,
the Term shall be extended for the remainder of the final calendar month
thereof.
(b) The "Commencement Date" shall be (i) July 1, 1996; or (ii) such
later date upon which the improvements in the Leased Premises have been
substantially completed in accordance with the plans and specifications therefor
(other than minor punch list items and any work which cannot be completed on
such date provided such incompletion will not substantially interfere with
Tenant's use of the Leased Premises) and a temporary certificate of occupancy
has been issued by the City of Alpharetta, Georgia, provided, however, the
Commencement Date and the payment of rent hereunder shall be accelerated by the
number of days of any delay resulting from Tenant's request(s) for materials,
finishes or installations, other than provided for in the plans agreed upon by
the parties in accordance with the Leased Premises Improvement Agreement
("Exhibit "C" hereto), which causes Landlord to be delayed in delivering the
Leased Premises.
(c) Landlord agrees to perform the "Improvement Work" to the Premises
as provided in the Leased Premises Improvement Agreement (Exhibit "C" hereto)
with diligence, subject to events and delays due to causes beyond its reasonable
control. Landlord agrees that the Leased Premises and the Building shall at the
Commencement Date comply with applicable building codes and the Americans With
Disabilities Act (42 U.S.C. Section 1201. et sq.) The Leased
<PAGE> 23
Premises shall be deemed substantially completed and possession delivered when
Landlord has substantially completed the work to be constructed or installed
pursuant to the provisions of said Leased Premises Improvement Agreement,
subject only to the completion of items on Landlord's punch list (and exclusive
of the installation of all telephone and other communications facilities and
equipment and other finish work to be performed by or for Tenant).
(d) The taking of possession by Tenant shall (subject to any
limitations set forth in the Leased Premises Improvement Agreement) be deemed
conclusively to establish that the Leased Premises have been completed in
accordance with the plans and specifications and are in good and satisfactory
condition as of the date when possession was so taken, latent defects excepted.
3. MONTHLY RENTAL
(a) Tenant shall pay to Landlord, commencing on the Commencement Date
and continuing throughout the Lease Term, initial Monthly Rental of One Hundred
Eight Thousand Four Hundred Sixty-Six and 66/100 Dollars ($108,466.66), said
Monthly Rental (hereinafter also referred to as "Base Rental") being computed by
multiplying "Net Usable Area" (as defined hereafter) by a factor of 1.095 (or,
for multi-tenant floors, by a factor of 1.15), (ii) then further multiplying the
product thereof by Sixteen and 27/100 Dollars ($16.27) per square foot, and then
(iii) dividing the resulting product thereof by 12. Said Monthly Rental shall be
due and payable in equal installments as of the first day of each month during
every year of the Term hereof in lawful money of the United States, without
deduction or offset whatsoever to Landlord or to such other firm or person as
Landlord may from time to time designate in writing. Said rental is subject to
adjustment as provided hereinbelow, provided that in no event shall Monthly
Rental be at any time less than the original base Monthly Rental stated
hereinabove. If this Lease commences on a day other than the first day of a
calendar month, the Monthly Rental for the fractional month shall be
appropriately prorated. Landlord and Tenant agree that Tenant has paid in full
in advance the Monthly Rental for the initial month of the Lease Term and that
full receipt thereof is acknowledged by Landlord.
(b) Tenant recognizes that late payment of any rent or other sum due
hereunder from Tenant to Landlord will result in administrative expense to
Landlord, the extent of which additional expense is extremely difficult and
economically impracticable to ascertain. Tenant therefore agrees that if rent or
any other payment due hereunder from Tenant to Landlord remains unpaid ten (10)
days after said amount is due, the amount of such unpaid rent or other payment
shall be increased by a late charge to be paid Landlord by Tenant in an amount
equal to five percent (5%) of the amount of the delinquent rent or other
payment. The amount of the late charge to be paid to Landlord by Tenant for any
month shall be computed on the aggregate amount of delinquent rents and other
payments, including all accrued late charges then outstanding. Tenant agrees
that such amount is a reasonable estimate of the loss and expense to be suffered
by Landlord as a result of such late payment by Tenant and may be charged by
Landlord to defray such loss and expense. The provisions of this Paragraph shall
not relieve Tenant of the obligation to pay rent or other payments on or before
the date on which they are due: nor do the terms of this Paragraph in any way
affect Landlord's remedies pursuant to
<PAGE> 24
Paragraph 19 of this Lease or otherwise at law in the event said rent or other
payment is unpaid after the date due.
(c) "Net Usable Area" is (i) in the case of a single tenancy floor, all
space measured from the inside surface of the outer wall of the Building to the
inside surface of the opposite outer wall, excluding only the areas ("Service
Areas") within the outside walls used for building stairs, fire towers, elevator
shaft flues, vents, pipe shafts, vertical ducts, restrooms, mechanical room,
electrical/telephone room and custodial room, but including any such areas which
are for the specific use of the Tenant such as (but no limited to) special
stairs or elevators, dedicated computer telephone and communications equipment
rooms and (ii) in the case of a multi-tenancy floor, all space excluding those
Service Areas as defined in (i) hereinabove, if any, within the inside surface
of the outer wall of the Building enclosing the tenant occupied portion of the
floor and measured to the midpoint of the walls separating areas leased by or
held for lease to other tenants or from areas devoted to corridors, elevator
lobbies, restrooms and other similar facilities for the use of all tenants on
the particular floor.
No deductions from Net Usable Area are made for columns
necessary to the Building. The Net Usable Area in the Leased Premises and in the
Building have been calculated on the basis of the foregoing definition and are
hereby stipulated above as to the Leased Premises, whether the same should be
more or less as a result of minor variations resulting from actual construction
and completion of the Leased Premises for occupancy so long as such work is done
substantially in accordance with the approved plans.
(d) Commencing July 1, 1997, then on January 1, 1998 and on each
January 1 thereafter during the Lease Term (or as soon thereafter as
practicable), the Monthly Rental specified in this Lease shall be increased by
taking that portion of the Monthly Rental which is not a part of the Operating
Expenses of the Building and multiplying said amount by fifty percent (50%) of
the percentage increase in the Consumer Price Index (the "Index" or "CPT") which
occurred over the yearly period (or in the case of the second such adjustment
only, the six month period) between the applicable month of the calendar year
immediately preceding the calendar year as to which the adjustment is being made
and the applicable month of that year (except that in the case of the second
adjustment only, fifty percent (50%) of the percentage increase in said Index
occurring between the end of June, 1997 and the end of December, 1997). The
increase in Monthly Rental as determined above for each given calendar year or
other period shall be accumulated over the Lease Term, and the cumulative annual
additions to Monthly Rental shall be added to the initial Base Rent figure set
out above to determine, for each succeeding calendar year, the annual increase
in Monthly Rental. (See the further explanation and formula set out at Paragraph
19 of the Special Stipulations, Exhibit "F"). If the Monthly Rental cannot be
calculated by the end of any calendar year because of the unavailability of the
then current Index, Tenant shall continue to pay the then existing Monthly
Rental and the Landlord shall prepare as soon as practicable (but in no event
later than April 1 of each successive calendar year) a statement reflecting the
increase in Monthly Rental for the calendar year in question. Within ten (10)
days following receipt of Landlord's statement. Tenant shall also pay any
amounts due from Tenant because of such adjustments for months in which Tenant
would have paid a greater Monthly Rental had such figure been calculated
earlier. If Tenant's payments have been in excess of the increased Monthly
Rental due, Tenant shall be provided a
<PAGE> 25
credit for such excess amount applied to the next installment of Monthly Rental
due by Tenant; provided that, in no event shall Monthly Rentals ever be less
than Initial Monthly Rental.
(e) "Consumer Price Index" shall be the Consumer Price Index for All
Urban Consumers - U.S. City Average for All Items (1982-84 = 100) of the Bureau
of Labor Statistics of the United States Department of Labor. If the Consumer
Price Index published by the Department of Labor, Bureau of Labor Statistics is
changed so that it affects the calculations achieved hereunder the Consumer
Price Index shall be converted in accordance with a conversion factor published
by the United States Department of Labor, Bureau of Labor Statistics. If the
Consumer Price Index is discontinued or revised during the Term of this Lease,
such other government index or computation with which it is replaced or which it
most closely resembles shall be used in order to obtain substantially the same
result as would have been obtained if the Consumer Price Index had not been
discontinued or revised. If the Consumer Price Index is discontinued and no
government index or computation then replaces or closely resembles the same,
Landlord and Tenant shall in good faith agree upon a suitable substitute.
(f) "Operating Expenses of the Building" shall mean all expenses of
every kind, both fixed and viable and including, without limitation any and all
federal, state and local taxes (except income taxes), fees and assessments now
or hereafter existing, as are incurred with respect to the ownership,
management, operation, or maintenance of the Building, all as recorded on an
accrual basis and in accordance with accepted principles of sound management and
accounting practices applicable to first-class office building complexes.
"Tenant's proportionate share of the Operating Expenses of the Building"
(hereinafter "Tenant's Share") shall mean for any period the amount in excess of
Five Dollars ($5.00) per rentable square foot of the Leased Premises determined
by multiplying the Operating Expenses of the Building for such period by a
fraction, the numerator of which shall be the then current Net Rentable Area of
the Leased Premises, and the denominator of which shall be 177,800 square feet,
which is represented by Landlord to be the total rentable area of the Building.
Provided, however, in no event shall operating expenses include: (A) the cost of
any service, e.g., electricity that Landlord sells to tenants and for which
Landlord is entitled to be reimbursed by such tenants; (B) leasing commissions,
attorney fees and other costs and expenses incurred in connection with
negotiations or disputes with tenants or other occupants of the Building or
prospective tenants; (C) the cost of any work or service performed for any
specific tenant of the Building (as distinguished from work or services
performed generally for all tenants); (D) management fees in excess of four
percent (4%) of gross annual collections for the Building; (E) any other
interest or amortization of debt except as specified in the Agreement; (F)
compensation paid to clerks or attendants in concessions or newsstands; (G) any
cost or expense for which Landlord is separately reimbursed or for which
Landlord receives a credit from any other party; or (H) any costs, fines or
penalties incurred due to violations by Landlord of any governmental rule or
authority.
Commencing July 1, 1997, then on January 1, 1998 and on or
about each January 1 thereafter (or as soon thereafter as practicable). Landlord
shall provide Tenant with statements of estimated Operating Expenses for the
calendar year (or, in the case of the second such adjustment only, the six month
period) just ended and the projected Operating Expenses for the current calendar
year or other period and Tenant shall pay as "additional rent" Tenant's Share of
the projected increase therein from the prior year or period to the current year
or period. One-
<PAGE> 26
twelfth (1/12) of such projected increase (or, in the case of the second such
adjustment only, one-sixth (1/6) of such projected increase) in Operating
Expenses shall be payable by Tenant monthly in advance. If Landlord has not
furnished Tenant with Landlord's projected Operating Expenses for the then
current year by January 1 (or, in the case of the first such adjustment only, by
July 1, 1997) Tenant shall continue to pay any additional rent on the basis of
the prior year's or period's projected Operating Expenses until the month after
the current year's or period's projected Operating Expenses have been provided
by Landlord. Landlord shall, within one hundred twenty (120) days (or as soon
thereafter as practicable) after the close of each calendar year or period,
provide Tenant an unaudited statement of such year's actual Operating Expenses
compared to the actual initial Operating Expenses. If actual Operating Expenses
are greater than the projected Operating Expenses, Tenant shall pay Landlord,
within thirty (30) days of such statement's receipt, Tenant's Share of the
difference thereof. If such year's or period's projected Operating Expenses are
greater than actual Operating Expenses, Landlord shall credit Tenant with
Tenant's Share of the difference between projected Operating Expenses and the
greater of actual Operating Expenses or initial Operating Expenses. If such
year's actual Operating Expenses are less than the actual Operating Expenses for
the previous year, Tenant's Monthly Rental shall be correspondingly reduced. In
no event, however, shall the Five Dollar ($5.00) factor mentioned hereinabove
ever be reduced or the Monthly Rental be less than Initial Monthly Rental. (See
the formula set out at Paragraph 20 of the Special Stipulations, Exhibit "F").
Landlord shall make Landlord's books and records available to Tenant during
normal business hours and upon reasonable notice by Tenant for review by Tenant:
the cost of said review shall be borne by Tenant unless the actual Operating
Expenses as reported by Landlord are found to have been overstated by an amount
in excess of five percent (5%) in which event the cost of such review shall be
borne by Landlord.
4. SECURITY DEPOSIT [OMITTED]
5. OCCUPANCY AND USE
(a) Tenant shall use and occupy the Premises for general office
purposes and for no other use or purpose without the prior written consent of
Landlord.
(b) Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or injure or annoy them, nor shall Tenant
use or allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purposes or for any business use or purpose reasonably deemed to
be disreputable or inconsistent with the operation of a first class office
building: nor shall Tenant cause or maintain or permit any nuisance or breach of
the peace, in or about the Premises. Tenant shall not commit or suffer the
commission of any waste in, on, or about the Premises.
6. COMPLIANCE WITH LAWS
Tenant shall be solely responsible for and shall pay promptly and
before delinquent all federal, state, city county and other taxes, license fees
and assessments due or coming due during or after the Term of this Lease against
Tenant. Tenant's interest in this Lease or Tenant's personal property or
intangibles owned, placed in or generated in, upon or about the Premises by
<PAGE> 27
Tenant. Tenant shall not use the Premises in a manner which will in any way
conflict with any law, statute, ordinance, or governmental rule or regulation
now in force or which may hereafter be enacted or promulgated. Tenant shall not
do or permit anything to be done on or about the Premises or bring or keep
anything therein which will any way increase the rate of any insurance upon the
Building or any of its contents or cause a cancellation of said insurance or
otherwise affect said insurance in any manner. Tenant shall at its sole cost and
expense promptly comply with all laws, statutes, ordinances, recommendations,
rules and regulations and requirements of governmental, public or private
authorities and agencies, which are now in force or which may hereafter be in
force and with the requirements of any board of fire underwriters or other
similar body now or hereafter constituted as may apply in relation to or
affecting the condition, use or occupancy of the Premises, including without
limitation the Occupational Safety and Health Act, (29 U.S.C. Section 651, et
seq., as amended) and the Americans With Disabilities Act (42 U.S.C. Section
12101, et seq., as amended). Upon demand, Tenant shall pay to Landlord as
additional rent, to be added to any installment of rent thereafter becoming due,
any cost incurred by Landlord in curing any default or meeting any obligation of
Tenant under this Paragraph and Landlord shall have the same remedies for a
default in payment of such sums as for a default in the payment of rent.
7. ALTERATIONS
Tenant shall not make or suffer to be made any alterations, additions,
changes or improvements in, on, or to the Premises or any part thereof without
the prior written consent of Landlord; and any such alterations, additions,
changes or improvements in, on, or to said Premises, except for Tenant's movable
furniture and equipment shall immediately become Landlord's property and, at the
end of the Term hereof, shall remain on the Premises without compensation to
Tenant unless Tenant elects to remove same, in which event Tenant shall do so,
and also restore the Premises to its pre-existing condition at Tenant's sole
cost and expense. In the event Landlord consents to the making of any such
alterations, additions, changes or improvements by Tenant, the same shall be
made by Tenant, at Tenant's sole cost and expense in accordance with all
applicable laws, statutes, ordinances, rules and regulations public and private
and all requirements of Landlord's and Tenant's insurance policies, and in
accordance with plans and specifications approved by Landlord (such approval not
be unreasonably withheld, delayed or conditioned). Any contractor or person
selected by Tenant to make the same and all subcontractors must first be
approved in writing by Landlord or, at Landlord's opinion, the alteration,
addition or improvement shall be made by Landlord for Tenant's account and
Tenant shall reimburse Landlord for the cost thereof upon demand; provided, that
should Landlord elect to perform for Tenant's account, the cost thereof to
Tenant shall be competitive with any preferred estimate previously obtained by
Tenant and provided to Landlord for such alteration, addition or improvements.
Upon the expiration or sooner termination of the Term herein provided, Tenant
may opt to remove any improvements or alteration at Tenant's sole cost and
expense and Tenant shall forthwith and with all due diligence, at its sole cost
and expense, thereupon repair and restore the Premises to their original
condition.
8. REPAIR
By taking possession of the Premises, Tenant accepts the Premises as
being in the condition in which Landlord is obligated to deliver them and
otherwise in good order, condition
<PAGE> 28
and repair, latent defects excepted. Tenant shall, at all times during the Term
hereof at Tenant's sole cost and expense, keep the Premises and every part
thereof in good order, condition and repair, excepting ordinary wear and tear,
damage thereto by fire, earthquake, act of God or the elements. Tenant shall
upon the expiration or sooner termination of the Term hereof, unless Landlord
demands otherwise as in this Paragraph provided, surrender to Landlord the
Premises and all repairs, changes, alterations, additions and improvements
thereto in the same condition as when received, or when first installed,
ordinary wear and tear, damage by fire, earthquake, act of God, or the elements
excepted. It is hereby understood and agreed that Landlord has no obligation to
alter, remodel, improve, repair, decorate or paint the Premises or any part
thereof except as specified in Exhibit "C" attached hereto and made a part
hereof and that no representations respecting the condition of the Premises or
the Building have been made by Landlord to Tenant, except as specifically herein
set forth.
9. LIENS
Tenant shall keep the Premises free from any liens arising out of work
performed, material furnished, or obligations incurred by Tenant. In the event
that Tenant shall not, within thirty (30) days following the imposition of any
such lien, cause the same to be released of record by payment or posting of a
proper bond. Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All such sums paid by Landlord and all expenses
incurred by it in connection therewith shall be considered additional rent and
shall be payable to Landlord by Tenant on demand and with interest at the rate
per annum of four percent higher than the prime commercial lending rate from
time to time of SunTrust Bank in Atlanta, Georgia; provided, however, that if
such rate exceeds the maximum rate permitted by law the maximum lawful rate
shall apply; the interest rate so determined is hereinafter called the "Agreed
Interest Rate." Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Building, and any other party having an interest therein from mechanics' and
materialmen's liens, and Tenant shall give to Landlord at least five (5)
business days prior written notice of commencement of any construction on the
Premises.
10. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not sell, assign, encumber or otherwise transfer by
operation of law or otherwise this Lease or any interest herein, sublet the
Premises or any portion thereof, or suffer any other person to occupy or use the
Premises or any portion thereof, without the prior written consent of Landlord
as provided for herein, not shall Tenant permit any lien to be placed on
Tenant's interest by operation of law; provided that Landlord's consent to
assignment or subletting shall not unreasonably be withheld, delayed or
conditioned. Tenant shall (i) by written notice, advise Landlord of its desire
from and after a stated date (which shall not be less than thirty (30) days or
more than ninety (90) days after the date of Tenant's notice) to assign this
Lease or to sublet the Premises or any portion thereof for any part of the Term
hereof; said notice by Tenant shall state the name and address of the proposed
assignee or subtenant and Tenant shall deliver to Landlord a true and complete
copy of the proposed sublease with said notice; and (ii) supply Landlord with
such information, financial statements, verifications and related
<PAGE> 29
materials as Landlord may request or desire to evaluate the written request to
sublet or assign. Within ten (10) business days after Landlord's receipt from
Tenant of all the items specified in the immediately preceding sentence.
Landlord shall have the right, exercisable in its sole discretion to consent to
the proposed subletting or assignment or to disapprove the proposed subletting
or assignment. Tenant shall, at Tenant's own cost and expense, discharge in full
any outstanding commission obligation on the part of the Landlord with respect
to this Lease any commissions which may be due and owing as a result of any
proposed assignment or subletting.
(b) Any subletting or assignment hereunder by Tenant shall not result
in Tenant's being released or discharged from any liability under this Lease. As
a condition to Landlord's prior written consent as provided for in this
Paragraph, the assignee or subtenant shall agree in writing to comply with and
be bound by all of the terms, covenants, conditions, provisions and agreements
of this Lease, and Tenant shall deliver to Landlord promptly after execution, an
executed copy of each sublease or assignment and an agreement of said compliance
by each subtenant or assignee.
(c) Tenant shall reimburse Landlord, within ten (10) days from receipt
of Landlord's invoice, all Landlord's administrative costs and expenses,
including legal fees for reviewing and processing any requests for Landlord's
consent made by Tenant with respect to the subject matter of this Paragraph.
(d) Landlord's consent to any sale, assignment encumbrance, subletting,
occupation, lien or other transfer shall not release Tenant from any of Tenant's
obligations hereunder or be deemed to be a consent to any such subsequent
occurrence. Any sale, assignment, encumbrance, subletting, occupation, lien or
other transfer of this Lease which does not comply with the provisions of this
Paragraph shall be void.
11. INSURANCE AND INDEMNIFICATION
(a) Landlord shall not be liable to Tenant and Tenant hereby waives all
claims against Landlord for any injury or damage to any person or property in or
about the Leased Premises by or from any cause whatsoever, without limiting the
generality of the foregoing, whether caused by water leakage of any character
from the roof, walls, basement, or other portion of the Premises or the
Building, or caused by gas, fire or explosion of the Building or the Office Park
of which it is a part or any part thereof, except as caused by Landlord's
negligence or willful misconduct, as to which Landlord shall indemnify, save and
hold Tenant harmless.
(b) Tenant shall hold Landlord harmless from and defend the Landlord
against any and all claims or liability for any injury or damage to any person
or property whatsoever: (i) occurring in, on, or about the Premises or any part
thereof; (ii) occurring in, on, or about any facilities (including, without
limitation, elevators, stairways, passageways or hallways), the use of which
Tenant may have in conjunction with other tenants of the Building, when such
injury or damage shall be caused in part or in whole by the act, neglect, fault
of, or omission of any duty with respect to the same by Tenant, its agents,
servants, employees or invitees. Tenant further agrees to indemnify and save
harmless Landlord against and from any and all claims by or on behalf of any
work or thing whatsoever done by Tenant in or about or from transactions of
Tenant concerning the Premises and will further indemnify and save Landlord
harmless against
<PAGE> 30
and from any and all claims arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the part of Tenant to
be performed pursuant to the terms of this Lease, or arising from any act or
negligence of Tenant, or any of its agents, contractors, servants, employees and
licensees and from and against all cost, counsel fees, expenses and liabilities
incurred in connection with any such claim or action or proceeding brought
thereon. Furthermore, in case any action or proceeding be brought against
Landlord by reason of any claims or liability for which Tenant must indemnify
Landlord hereunder. Tenant agrees to defend such action or proceeding at
Tenant's sole expense by counsel reasonably satisfactory to Landlord. The
provisions of this Lease with respect to any claims or liability occurring prior
to expiration or termination of this Lease shall survive any such expiration or
termination.
(c) Tenant agrees to purchase at its own expense and to keep in force
during the term of this Lease a policy or policies of workers' compensation and
commercial general liability insurance, including personal injury and property
damage with contractual liability endorsement in the amount of at least One
Million Five Hundred Thousand Dollars ($1,500,000.00), to be adjusted annually
as Landlord and Tenant may agree, each acting reasonably, combined single limit
per occurrence for personal injuries or deaths of persons occurring in or about
the Premises. Said policies shall: (i) name Landlord as an additional insured
and insure Landlord's contingent liability under this Lease (except for the
workers' compensation policy, which shall instead include waiver of subrogation
endorsement in favor of Landlord); (ii) be issued by an insurance company which
is acceptable to Landlord and licensed to do business in the State of Georgia;
and (iii) provide that said insurance shall not be cancelled unless thirty (30)
days' prior written notice shall have been given to Landlord. Said policy or
policies or certificates thereof shall be delivered to Landlord by Tenant upon
commencement of the Term of this Lease and upon each renewal of said insurance.
(d) Landlord agrees to purchase at its own expense and to maintain
throughout the Lease Term a policy or policies of commercial property and
casualty insurance covering the full insurable value of the Building.
12. WAIVER OF SUBORDINATION
Each of Landlord and Tenant hereby release the other from any and all
liability or responsibility to the other or to anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of insurance covering
such property, even if such loss or damage shall have been caused by fault or
negligence of the other party, or by anyone for whom such party may be
responsible; provided, however, that this release shall be applicable and in
force and effect only to such extent that such releases shall be lawful at that
time and in any event only with respect to loss or damage occurring during such
time as the releasor's policies of insurance shall contain a clause or
endorsement to the effect that any such release shall not adversely affect or
impair said policies or prejudice the right of the releasor to coverage
thereunder, and then only to the extent of the insurance proceeds payable under
such policies. Landlord and Tenant each hereby covenant and agree to cause their
respective insurance carriers to include in their policies such a clause or
endorsement.
<PAGE> 31
13. SERVICE AND UTILITIES
(a) Landlord shall maintain the public and common areas of the
Building, including lobbies, stairs, elevators, escalators, parking facilities,
loading docks and areas, corridors and restrooms, the windows of the Building,
the mechanical, plumbing and electrical equipment serving the Building and the
structure itself in reasonably good order and condition except for damage
occasioned by the act of Tenant, which damage shall be repaired by Landlord at
Tenant's expense. In the event Tenant requires or needs to have one or more
separate systems of either heating, ventilating, air-conditioning or other
similar systems over and above that provided by Landlord, the installation,
care, expense and maintenance of each such system shall be borne by and paid for
by Tenant.
(b) Subject to the provisions elsewhere herein contained and to the
Rules and Regulations of the Building, Landlord agrees to furnish to the
Premises during ordinary business hours of generally recognized business days to
be determined by Landlord (but exclusive in any event of Sundays and legal
holidays), electrical service, heart and air-conditioning required in Landlord's
judgment for the comfortable use and occupation of the Premises, janitorial
services during the times and in the manner that such services are, in
Landlord's judgment, customarily furnished in comparable office buildings in the
immediate market area, and elevator service.
(c) Landlord shall provide additional or after-hours heating or
air-conditioning at Tenant's reasonable request. Tenant shall pay to Landlord a
reasonable charge for such services as determined from time to time by Landlord.
Tenant agrees to keep and cause to be kept closed all window coverings, if any,
when necessary because of the sun's position, and Tenant also agrees at all
times to cooperate fully with Landlord and to abide by all rules, regulations
and requirements which Landlord may prescribe for the proper functioning and
protection of lighting, heating, ventilating, and air-conditioning systems and
to comply with all laws, ordinances and regulations respecting the conservation
of energy. In the event heat-generating machines, excess lighting or equipment
used in the Premises affect the temperature normally maintained by the
air-conditioning units in the Premises, Tenant shall pay to Landlord upon demand
by Landlord, all costs incurred by Landlord in excess of the ordinary costs of
maintaining the normal temperature of the Premises. Landlord agrees to furnish
to the Leased Premises electricity for general office purposes and hot and cold
water for lavatory and drinking purposes, subject to the provisions in
Subparagraph 13(d) below, Landlord shall in no event be liable for any
interruption or failure of utility services on the Premise, but Landlord will
exercise commercially reasonable efforts to furnish uninterrupted service.
(d) Tenant will not without the written consent of Landlord use any
apparatus or device in the Premises, including without limitation, electronic
data processing machines, punch card machines, and machines using excess
lighting or electrical current which will in any way increase the amount of
electricity or water usually furnished or supplied for use of the Premises as
general office space; nor will Tenant without Landlord's prior written consent
connect with electrical current, except through existing electrical outlets in
the Premises, or water pipes in the Premises, any apparatus or device for the
purpose of using electrical current or water, provided that Tenant may rely upon
any such consents or approvals by Landlord as satisfying all obligations of
Tenant hereunder. If Tenant in Landlord's judgment shall require water or
electrical current or any other resource in excess of that usually furnished or
supplied for use of
<PAGE> 32
the Premises as general office space (it being understood that such an excess
may result from the number of fixtures, apparatus and devices in use, the nature
of such fixtures, apparatus and devices, the hours of use, or any combination of
such factors). Tenant shall first procure the consent of Landlord which Landlord
may refuse in the use thereof, and Landlord may cause a special meter to be
installed in the Premises in order to measure the amount of water, electrical
current or other resource consumed for any such other use. The cost of any such
meters and of installation, maintenance, and repair thereof shall be paid for by
Tenant and Tenant agrees to pay Landlord promptly upon demand by Landlord for
all such water, electrical current or other resource consumed, as shown by said
meters, at the rates charged by the local public utility furnishing the same,
plus any additional expense incurred in keeping account of the water, electrical
current or other resource so consumed. Landlord shall not be in default
hereunder or be liable for any damages directly or indirectly resulting from,
nor shall the rental herein reserved by reason of: (i) the installation, use or
interruption of use of any equipment in connection with the furnishing of any of
the foregoing utilities and service; (ii) failure to furnish or delay in
furnishing any such utilities or services when such failure or delay is caused
by acts of God or the elements, labor disturbances of any character, any other
accidents or other conditions beyond the reasonable control of Landlord, or by
the making of repairs or improvements to the Premises or to the Building; (iii)
the limitation, curtailment, rationing or restriction on use of water,
electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Premises or the Building. Furthermore, Landlord shall be
entitled to cooperate voluntarily in a reasonable manner with the efforts of
national, state and local governmental agencies or utilities suppliers in
reducing or other resources consumption.
(e) Any sums being payable under this Paragraph shall be considered
additional rent and shall be added to the next installment of rent thereafter
becoming due and Landlord shall have the same remedies for a default in payment
of such sums as for a default in the payment of rent.
(f) Tenant shall not provide any janitorial services without Landlord's
written consent and then only through a janitorial contractor or employees at
all times satisfactory to and under supervision of Landlord. Any such services
provided by Tenant shall be at Tenant's sole expense, risk and responsibility.
14. ESTOPPEL CERTIFICATE
Within ten (10) days following any written request which Landlord may
make from time to time, Tenant shall execute and deliver to Landlord in
recordable form an Estoppel Certificate substantially attached hereto as Exhibit
"D" and made a part hereof, indicated thereon any exceptions thereto which may
exist at that time. Failure of Tenant to execute and deliver such certificate
shall constitute an acceptance of the Premises and acknowledgment by Tenant that
the statements included in Exhibit "D" are true and correct without exception.
Landlord and Tenant intend that any statement delivered pursuant to this
Paragraph may be relied upon by Landlord or by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Building or any interest therein, or
by anyone to whom Landlord may provide said certificate.
<PAGE> 33
15. HOLDING OVER
Tenant will, at the termination of this Lease by lapse of time or
otherwise, yield up immediate possession to Landlord. If Tenant retains
possession of the Leased Premises or any part thereof after such termination,
then Landlord may, at its option, serve written notice upon Tenant that such
holding over constitutes: (i) creation of a month to month tenancy, upon the
terms and conditions set forth in this Lease; or (ii) creation of a tenancy at
sufferance, in any case upon the terms and conditions set forth in this Lease;
provided, however, that the Monthly Rental (or daily rental under (ii)) shall,
in addition to all other sums which are to be paid by Tenant hereunder, whether
or not as additional rent, be equal to one hundred fifty percent (150%) of the
rental being paid monthly to Landlord under this Lease immediately prior to such
termination (prorated in the case of (ii) on the basis of a 365 day year for
each day Tenant remains in possession). If no such notice is served, then a
tenancy at sufferance shall be deemed to be created at the rent in the preceding
sentence. Tenant shall also pay to Landlord, as additional rent due and payable,
all damages sustained by Landlord resulting from retention of possession by
Tenant, including the loss of any proposed subsequent tenant for any portion of
the Leased Premises. In any such events, Tenant shall vacate the Leased Premises
and deliver full possession to Landlord upon the giving to Tenant by Landlord of
ten (10) days' written notice and demand therefor. The provisions of this
Paragraph shall not constitute a waiver by Landlord of any right of re-entry as
herein set forth, nor shall receipt of any rent or any other act in apparent
affirmance of the tenancy operate as a waiver of the right to terminate this
Lease for a breach of any of the terms, covenants, or obligations herein on
Tenant's part to e performed by Tenant, or of any other right of Landlord.
16. SUBORDINATION
Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, this Lease shall be subject
and subordinate at all times to: (a) all ground leases or underlying leases
which may now exist or hereafter be executed affecting the Building or the
Property upon which the Building is situated or both; and (b) the lien or
interest of any mortgage or deed to secure debt which may now exist or hereafter
be executed in any amount for which said Building, Property, ground leases or
underlying leases, or Landlord's interest or estate in any of said items is
specified as security. Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated to this Lease any such ground
leases or underlying leases or any such liens or interests of mortgages or deeds
to secure debt. In the event that any ground lease or underlying lease is
terminated for any reason or any mortgage or deed to secure debt is preclosed or
a conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the tenant of the
successor in interest in Landlord at the option of such successor in interest.
Tenant agrees to execute such subordination, non-disturbance and attornment
agreements as the holder of any mortgage or deed to secure debt may reasonably
require. Tenant covenants and agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents
evidencing the priority or subordination of this Lease with respect to any
tenant of the successor in interest to Landlord at the option of such successor
in interest. Tenant's obligation to subordinate and attorn may reasonably be
conditioned upon an agreement of non-disturbance by any such successor in
interest to Landlord, but shall not otherwise be conditioned or withheld.
<PAGE> 34
17. RE-ENTRY BY LANDLORD
Landlord reserves and shall at all times have the right to re-enter the
Premises to inspect the same, to supply janitor service and any other service
provided by Landlord to Tenant hereunder, to show said Premises to prospective
purchasers, mortgagees or tenants, to post notices of nonresponsibility, and to
alter, improve, or repair the Premises and any portion of the Building of which
the Premises are a part or to which access is conveniently made through the
Premises, without abatement of rent, and may for that purpose erect, use, and
maintain scaffolding, pipes, conduits, and other necessary structures in and
through the Premises where reasonably required by the character of the work to
be performed, provided that entrance to the Premises shall not be blocked
thereby, and further provided that Landlord shall provide Tenant twenty-four
(24) hours prior notice of entry except in cases of emergency or the making of
repairs requested by Tenant, and that the business of Tenant shall not be
interfered with unreasonably. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with tenant's business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby, provided that Landlord hall indemnify, save and hold harmless Tenant
for any liability, to Tenant or third parties, for damage to person or property
caused by Landlord's entry, except when acting in response to emergency. For
each of the aforesaid purposes, Landlord shall at all times have and retain a
key with which to unlock all of the doors, in, upon, and about the Premises, and
Landlord shall have the right to use any and all means which Landlord may deem
necessary or property to open said doors in an emergency, in order to obtain
entry to any portion of the Premises, and any entry to the Premises, or portions
thereof obtained by Landlord by any of aid means, or otherwise, shall not under
any circumstances be construed or deemed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or any eviction, actual or constructive,
of Tenant from the Premises or any portions thereof. Landlord shall also have
the right at any time, without the same constituting an actual or constructive
eviction and without incurring any liability to Tenant therefor, to change the
arrangement and/or location of entrances or passageways, doors and doorways, and
corridors, elevators, stairs, toilets, parking facilities, loading docks and
areas, delivery and pick-up areas or other public parts of the Building and to
change the name, number or designation by which the Building is commonly known.
18. INSOLVENCY OR BANKRUPTCY
The appointment of a receiver to take possession of all or
substantially all of the assets of Tenant, or an assignment by Tenant for the
benefit of creditors or any action taken or suffered by Tenant under any
insolvency bankruptcy, or reorganization act, shall at Landlord's option
constitute a breach of this Lease by Tenant. Upon the happening of any such
event or at any time thereafter, this Lease shall terminate after written notice
of termination from Landlord to Tenant. In no event shall this Lease be assigned
or assignable by operation of law or by voluntary or involuntary bankruptcy
proceedings or otherwise and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, or
reorganization proceedings.
<PAGE> 35
19. DEFAULT AND REMEDIES
(a) The following events shall be deemed to be events of default by
Tenant under this Lease:
(1) Tenant shall fail to pay when or before due any sum of money,
in whole or in part, becoming due to be paid to Landlord
hereunder whether such sum be any installment of the rent
herein reserved, any other amount treated as additional rent
hereunder, or any other payment or reimbursement to Landlord
required herein, whether or not treated as additional rent
hereunder, and such failure shall continue for a period of ten
(10) days from the date such payment was due; or
(2) Tenant shall fail to comply with any term, provision or
covenant of this Lease other than by failing to pay when or
before due any sum of money becoming due to be paid to
Landlord hereunder, and shall not cure such failure within
thirty (30) days (except immediately and forthwith, if the
default involves a hazardous condition) after written notice
thereof to Tenant, except that should completion of such cure
not be possible within such thirty (30) day period. Tenant
shall have ninety (90) days to effect same so long as Tenant
has within such thirty (30) day period commenced cure and
pursues same with due and continuous diligence; or
(3) Tenant shall fail to vacate the leased premises immediately
and forthwith upon termination of this Lease, by lapse of time
or otherwise, or upon termination of Tenant's right to
possession only; or
(4) If, in spite of the provisions hereof, the interest of Tenant
shall be levied upon under execution or be attached by process
of law, or Tenant shall fail to contest diligently the
validity of any lien or claimed lien upon the Leased Premises
and give sufficient security to Landlord to insure payment
thereof and such default shall continue for ten (10) days
after written notice thereof to Tenant.
(b) Upon the occurrence of any such events of default described in
subparagraph (a) above or elsewhere in this Lease, Landlord shall have the
option, at its election, to terminate this Lease or to terminate Tenant's right
to possession only, without terminating this Lease and to pursue any one or more
of the following remedies without any further notice or demand whatsoever,
provided that, upon any termination of this Lease or upon any termination of
Tenant's right to possession without termination of this Lease. Tenant shall in
either event surrender possession and vacate the leased Premises immediately
upon the expiration of five (5) days next following the giving by Landlord to
Tenant of written notice demanding same and deliver possession thereof to
Landlord, and Tenant hereby grants to Landlord full and free license to enter
into and upon the Leased Premises in such event with or without process of law
and to repossess Landlord of the Leased Premises and to expel or remove Tenant
and any others who may be occupying or within the Leased Premises and to remove
any and all property therefrom without being deemed in any manner guilty of
trespass, eviction or forcible entry or
<PAGE> 36
detainer and without incurring any liability for any damage resulting therefrom.
Tenant hereby waiving any right to claim damage for such re-entry and expulsion
and without relinquishing any right given to Landlord hereunder or by operation
of law:
(1) Upon termination of this Lease, Landlord shall be entitled to
recover as damages, all rent, including any amount treated as
additional rent hereunder, and other sums due and payable by
Tenant on the date of termination, plus the sum of: (i) an
amount equal to the then present value of the rent, including
any amounts treated as additional rent hereunder, and other
sums provided herein to be paid by Tenant for the residue of
the stated Term hereof, less the fair rental value of the
Leased Premises for such residue (taking into account the time
and expense necessary to obtain a replacement tenant or
tenants, including expenses hereinafter described in
subparagraph (b)(2) hereinbelow relating to recover of the
Leased Premises, preparation for reletting itself, and (ii)
the cost of performing any other covenants which otherwise
would have been performed by Tenant; or
(2) Alternatively to the remedy provided in subparagraph (b)(1)
hereinabove, upon any termination of Tenant's right to
possession only without termination of this Lease, Landlord
may, at Landlord's option enter into the Leased Premises,
remove Tenant's signs and other evidences of tenancy and take
and hold possession thereof as provided in subparagraph (b)(1)
above, without such entry and possession terminating the Lease
or releasing Tenant, in whole or in part, from any obligation,
including Tenant's obligation to pay the rent, including any
amounts treated as additional rent hereunder for the full
Term; and Landlord shall then or thereafter use commercially
reasonable efforts to sublet the Premises or any part thereof,
on such occasions and terms as may be determined in Landlord's
sole discretion and, in such event, if the consideration
collected by Landlord upon any such reletting plus any sums
previously collected from Tenant are not sufficient to pay the
full amount of all rent, including any amounts treated as
additional rent hereunder and other sums reserved in this
Lease for the remaining Term hereof, together with the costs
of repairs, alterations, additions, redecorating, and
Landlord's expenses of reletting and the collection of the
rent accruing therefrom (including attorneys' fees and
broker's commissions). Tenant shall pay to Landlord the amount
of such deficiency upon demand and Tenant agrees that Landlord
may file suit to recover any sums falling due under this
subparagraph from time to time.
(3) In either of the events set forth in subparagraphs (b)(1) and
(b)(2) hereinabove, Landlord may, but need not, relet or
sublet the premises or any part thereof, as the case may be,
for such rent and upon such terms as Landlord in its sole
discretion shall determine including the right to relet the
Premises for a greater or lesser than that remaining under
this Lease, the right to relet the Leased Premises as a part
of a larger area, and the
<PAGE> 37
right to change the character and use made of the Leased
Premises) and Landlord shall not be required to accept any
tenant offered by Tenant or to observe any instructions given
by Tenant about such reletting. In any such case, Landlord may
make repairs, alterations and additions in or to the Leased
Premises and redecorate the same to the extent Landlord deems
necessary or desirable and Tenant shall, upon demand, pay the
cost thereof, together with Landlord's expenses for reletting
including, without limitation any broker's commission incurred
by Landlord.
(c) Should Landlord, acting reasonably and in good faith, determine
that Tenant is not acting within a commercially reasonable time to maintain,
repair or replace anything for which Tenant is responsible hereunder, Landlord
may, in Landlord's option, upon Tenant's continued failure to so maintain,
repair or replace after twenty (20) days notice from Landlord, enter into and
upon the Leased Premises, with or without process of law and correct the same,
without being deemed in any manner guilty of trespass, eviction or forcible
entry and detainer and without incurring any liability for any damage resulting
therefrom; and Tenant agrees to reimburse Landlord on demand additional rent for
any expenses which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease.
(d) Any and all property which may be removed from the Leased premises
by Landlord pursuant to the authority of this Lease or of law, to which Tenant
is or may be entitled may be handled removed and stored as the case may be, by
or at the direction of Landlord at the risk cost and expense of Tenant, and
Landlord shall in no event be responsible for the value, preservation or
safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all
expenses incurred in such removal and all storage charges against such property
so long as the same shall be in Landlord's possession or under Landlord's
control. Any such property of Tenant not retaken by Tenant from storage within
thirty (30) days after removal from the Leased Premises shall, at Landlord's
option, be deemed conveyed by Tenant to landlord under this Lease as by a bill
of sale without further payment or credit by Landlord to Tenant.
(e) In exercising any of the remedies set forth in this Lease with
respect to entry or re-entry of the Leased Premises, Landlord shall not be
civilly or otherwise liable to Tenant for any damage to Tenant's property unless
same is solely caused by the intentional or wanton, willful and reckless conduct
of Landlord.
(f) Pursuit by Landlord of any of the foregoing remedies shall not,
except as set forth in the alternative in the case of those remedies provided in
subparagraphs (b)(1) and (b)(2) hereinabove, preclude pursuit of any of the
other remedies herein provided or any other remedies provided by law or
available in equity (all such remedies being cumulative), nor shall pursuit of
any remedy herein provided constitute a forfeiture or waiver of any rent due to
Landlord hereunder or of any damages accruing to Landlord by reason of the
violation of any of the terms, provisions and covenants herein contained. No act
or thing done by Landlord or its agents during the Term hereby granted shall be
deemed a termination of this Lease or an acceptance of the surrender of the
Leased Premises, and no agreement to terminate this Lease or accept a surrender
of said Premises shall be valid unless in writing signed by Landlord. No waiver
by Landlord of any violation or breach of any of the terms, provisions and
covenants herein contained shall be deemed or construed to constitute a waiver
of any other violation or breach of
<PAGE> 38
any of the terms, provisions and covenants herein contained. Landlord's
acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such
default, or as accord and satisfaction of any liability of Tenant unless
Landlord expressly so notifies Tenant in writing. Forbearance by Landlord in
enforcing one or more of the remedies herein provided upon any event of default
shall not be deemed or construed to constitute a waiver of such default or of
landlord's right to enforce any such remedies with respect to such default or
any subsequent default. If on account of any breach or default by Tenant in
Tenant's obligations under the terms and conditions of this Lease, it shall
become necessary or appropriate for Landlord to employ or consult with any
attorney concerning or to enforce or defend any of Landlord's rights or remedies
hereunder. Tenant agrees to pay all reasonable attorneys' fees so incurred, said
attorneys' fees being deemed additional rent due hereunder upon the next date
the payment by Tenant of rent or any installment thereof is due.
(g) Without limiting the foregoing:
(i) Service of process upon Tenant may be had by serving
any registered agent or any officer or director of
Tenant at or upon the Leased Premises and Landlord or
anyone acting therefor shall at all times have the
right to enter, seek out and locate any appropriate
person for such purpose;
(ii) Service of process upon Landlord may be had by
serving any registered agent or partner of Landlord,
or any person actin therefor, at Landlord's offices
in the Building or elsewhere;
(iii) Provided, however, neither Landlord nor Tenant hereby
waive the right to serve each other with process by
any other lawful means;
(iv) Landlord and Tenant expressly waive any right to
trial by jury; and
(v) To the extent permitted by existing or future law of
the State of Georgia, Tenant expressly waives any and
all rights of redemption granted by or under any
existing or future laws if Tenant is evicted or
dispossessed for any cause or if Landlord obtains
possession of the Premises due to Tenant's default
hereunder or otherwise.
20. DAMAGE BY FIRE OR OTHER CASUALTY
(a) If the Building, Improvements, or Leased Premises are rendered
partially or wholly untenantable by fire or other casualty, at any time prior to
the end of the fifteenth (15th) year next following the Commencement Date,
Landlord shall reasonably proceed to rebuild, repair and or materially restore
same and Tenant shall thereupon reoccupy the Premises for the remainder of the
Term of the Lease.
(b) If such untenantability occurs by fire or other casualty occurring
between the end of the ten (10th) year next following the Commencement Date of
the Lease and the end of the fifteenth (15th) year next following same, the Term
for the Lease shall then be extended from the date of Tenant's reoccupancy for a
time sufficient to extend the remaining portion of the Term to
<PAGE> 39
a period of ten (10) years next following the date of Tenant's reoccupancy.
During the period of time the Term of the Lease is thereby extended past what
would have been the expiration date of the original Term. Tenant's Monthly
Rental shall be equal to the prevailing competitive market rental rate
appertaining as to similar commercial office buildings in the Alpharetta,
Georgia, area as of the expiration date of the original Term. As used herein,
the phase "prevailing competitive market rental rate" shall mean the rental rate
(projected from the date of the expiration of the original Term) which Tenant
would expect to pay and Landlord would expect to receive under Leases for space
at comparable size and quality to the Premises and as provided for in, and on
terms and conditions comparable to this Lease covering premises similar to the
Premises. If Landlord and Tenant have not reached agreement and executed an
amendment to this Lease setting forth such agreement on or before the date three
(3) months following the expiration of the original Term, then within ten (10)
days after that date each party shall appoint and employ, at its cost, a real
estate appraiser who shall be a member of the American Institute of Real Estate
Appraisers (MAI) with at least ten (10) years of full-time commercial appraisal
and real estate marketing experience in metropolitan Atlanta, Georgia to
appraise and establish the "prevailing competitive market rental rate." The two
appraisers, thus appointed, shall meet promptly and attempt to agree upon and
designate a third appraiser meeting the qualifications set forth above within
ten (10) days after the date of the appointment of the last two appraisers. If
they are unable to agree on the third appraiser, either of the parties, after
giving five (5) days notice to the other, may apply to a judge of the United
States District Court for the district in which the Premises are located for the
selection of a third appraiser meeting the qualifications stated above. Each of
the parties shall bear one-half of the cost of appointment of the third
appraiser and of the third appraiser's fee. Within thirty (30) after the
selection of the third appraiser, a majority of the appraiser shall agree upon
the "prevailing competitive market rental rate." If a majority of the appraisers
are unable to agree within the stipulated time, then each appraiser shall render
his separate appraisal within such time, and the three appraisals shall be
averaged in order to establish such rate; provided however, if the low appraisal
and/or the high are more than ten percent (10%) lower and or higher than the
middle appraisal, the low appraisals and/or the high appraisal shall be
disregarded. If only one appraisal is disregarded, the remaining two appraisals
shall be averaged in order to establish such rate. If both the low appraisal and
the high appraisal are disregarded, the middle appraisal shall establish the
rate. During the period of time between Tenant's reoccupancy and the date the
"prevailing competitive market rental rate" is established, Tenant will continue
to pay Monthly Rental at the rate that appertained at the time the fire or other
casualty occurred.
(c) If the Building, Improvements, or Leased Premises are rendered
partially or wholly untenantable by fire or other casualty at a time when less
than five (5) years remain in the Lease Term, and if such damage, in Landlord's
reasonable estimation, cannot be materially restored within one hundred-fifty
(150) days of such damage, then either Tenant or Landlord may, at its option,
terminate this lease as of the date of such fire or casualty by written notice
to the other within sixty (60) days of such fire or casualty. For purposes
hereof, the Building, Improvements, or Leased Premises shall be deemed
"materially restored" if they are in such condition as would not prevent or
materially interfere with Tenant's use of the Leased premises for the purpose
for which the Premises were being used at the time of such fire or casualty.
(d) If this Lease is not terminated pursuant to this Paragraph, then
Landlord shall proceed with all due diligence to rebuild, repair and/or
materially restore the Building,
<PAGE> 40
Improvements or Leased Premises, as the case may be, and thereafter to return
same as near to the condition in which same existed prior to the casualty as is
reasonably feasible under all the circumstances.
(e) If this Lease shall be terminated pursuant to this Paragraph, the
Term of this Lease shall end on the date of such damage as if that date had been
originally fixed in this Lease for the expiration of the Term hereof. If this
Lease shall not be terminated pursuant to this paragraph and if the Leased
Premises is untenantable in whole or in part following such damage, the Monthly
Rental payable during the period in which the Leased Premises is untenantable
shall be reduced to such extent, if any, as may be fair and reasonable under all
of the circumstances.
(f) In no event shall Landlord be required to rebuild, repair or
replace any part of the partitions, fixtures, additions or other improvements
which may have been placed in or about the Leased Premises by Tenant. Any
insurance which may be carried by Landlord or Tenant against loss or damage to
the Building or the Leased Premises shall be for the sole benefit of the party
carrying such insurance and under its sole control.
(g) In the event of any damage or destruction to the Building, the
Leased Premises or the Property by any peril covered by the provisions of this
Paragraph. Tenant shall, upon notice from Landlord, remove forthwith, at its
sole cost and expense such portion or all of the property belonging to Tenant or
his licenses from such portion or all of the Building or the Leased Premises as
Landlord shall request and Tenant hereby indemnifies and holds Landlord harmless
from any loss, liability, costs, and expenses, including attorneys' fees,
arising out of any claim of damage or injury as a result of any alleged failure
to properly secure the Leased Premises prior to such removal.
21. CONDEMNATION
(a) If any substantial part of the Building, Improvements, available
parking area or Leased Premises should be taken for any public or quasi-public
use under governmental law, ordinance or regulation, or by right of eminent
domain, or by private purchase in lieu thereof, and the taking would prevent or
materially interfere with the use of the Building or the Leased Premises for the
purpose for which it is then being used, this Lease shall terminate on the date
title vests in the taking authority in the same manner as if the date of such
taking were the date originally fixed in this Lease for the expiration of the
Term hereof. Any decrease in available parking spaces, as provided for in
Paragraph 26 below, a ratio of 3.75 cars per 1,000 rentable square feet of the
Premises shall be deemed to materially interfere with the use by Tenant of the
Building and the Premises.
(b) If part of the Building, Improvements, or Leased Premises shall be
taken for any public or quasi-public use under any governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and this Lease is not terminated as provided in subparagraph (a) above,
this Lease shall not terminate but the rent payable hereunder during the
unexpired portion of the Term of this Lease shall be reduced to such extent, if
any, as may be fair and reasonable under all of the circumstances and Landlord
shall undertake to restore the Building, Improvements and Leased Premises to a
condition suitable for Tenant's use, as near to the condition thereof
immediately prior to such taking as is reasonably feasible under all
<PAGE> 41
circumstances. In no event, however, shall Landlord be required under this Lease
to incur any expenses in excess of available proceeds from any taking
contemplated hereby for the purposes of restoring the Building or the Premises
after any such taking.
(c) Tenant shall not share in any condemnation award or payment in lieu
thereof or in any award for damages resulting from any grade change of streets
outside the Office Park of which the Building is a part, the same being hereby
assigned to Landlord by Tenant; provided, however, that Tenant may separately
claim and receive from the condemning authority, if legally payable,
compensation for Tenant's removal and relocation costs, for Tenant's loss of
business and/or business interruption, and for any other cost, loss, damage or
expense suffered by Tenant.
(d) Notwithstanding anything to the contrary contained in this
Paragraph, if the temporary use or occupancy of any part of the Premises shall
be taken or appropriated under power of eminent domain during the Term of this
Lease, this Lease shall be and remain unaffected by such taking or appropriation
and Tenant shall continue to pay in full all rent payable hereunder by Tenant
during the Term of this Lease: in the event of any such temporary appropriation
or taking, Tenant shall be entitled to receive that portion of any award which
represents compensation for the use or occupancy of the Premises during the term
of this Lease, and Landlord shall be entitled to receive that portion of any
award which represents the cost of restoration of the Premises and the use and
occupancy of the Premises after the end of the Term of this Lease.
(e) Notwithstanding anything to the contrary contained in this
paragraph 21 or elsewhere in this Lease, in the event of any condemnation,
Landlord shall be entitled to receive its entire award without deduction
therefrom for any estate vested in Tenant by the Lease, but Tenant shall have
the right to make a separate claim with the condemning authority for, and to
receive therefrom: (i) any moving expenses incurred by Tenant as a result of
such condemnation; (ii) any costs incurred or paid by Tenant in connection with
any alteration or improvement made by Tenant to the Premises; (iii) the value of
any of Tenant's property taken; and (iv) any other separate claim which Tenant
may hereafter be permitted to make under applicable law provided, however, that
such other separate claim shall not reduce or adversely affect the amount of the
Landlord's award.
22. SALE BY LANDLORD
In the event of a sale, conveyance or assignment by Landlord of all or
any portion of the Building or Landlord's interest therein, or in or of the
Leased Premises, or if the Building or the Leased Premises comes under the
control of a mortgagee, ground lessor or similar party, the same shall operate
to release Landlord from any future liability upon any of the covenants or
conditions, express or implied, herein contained in favor of Tenant, and in such
event Tenant agrees to look solely to the responsibility of the successor in
interest of Landlord in and to this Lease, and to recognize such successors as
new Landlord or to attorn thereto and execute, at this Landlord's request, an
attornment agreement therewith.
<PAGE> 42
23. RIGHT OF LANDLORD TO PERFORM
All covenants and agreements to be performed by the Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent. If the Tenant shall fail to pay any
sum of money or incur any expense, other than rent, required to be paid by
Tenant hereunder, whether or not such failure constitutes a breach of this
Lease, and such failure shall continue for twenty (20) days after notice thereof
by the Landlord, then Landlord may, but shall not be obligated to do so, and
without waiving or releasing the Tenant from any obligations of the Tenant, make
any such payment or incur any such expense or perform any such act on the
Tenant's part to be made or performed as in this Lease required to be adopted by
Tenant. All sums so paid by the Landlord and as necessary incidental costs
together with interest thereon at the rate of one and one-half percent (1 1/2%)
per month, which is eighteen percent (18%) per annum, from the date of such
payment by the Landlord, shall payable as additional rent to the Landlord on
demand, and the Tenant covenants to pay any such sums and the Landlord shall
have, in addition to any other right or remedy of the Landlord, the same rights
and remedies in the event of nonpayment thereof by the Tenant as in the case of
default by the Tenant in the payment of rent.
24. SURRENDER OF PREMISES
(a) Unless Tenant shall, at least one hundred-eighty (180) days
before the last day of the Term hereof, give to Landlord a written notice of any
desire to remain in occupancy of the Premises after that date, Landlord shall
presume an intention by Tenant to surrender the Premises on that date. Nothing
contained herein or in the failure of Tenant to give such notice shall be
construed as an extension of the Term hereof or as consent of Landlord to any
holding over by Tenant.
(b) At the end of the Term or any renewal thereof or other sooner
termination of this Lease, the Tenant will peaceably deliver up to the Landlord
possession of the Premises in the same condition as received, ordinary wear and
tear, damage by fire, earthquake, act of God, or the elements alone excepted. So
long as Tenant is not in default hereunder, Tenant may, upon the termination of
this Lease remove all movable furniture and equipment belonging to Tenant, at
Tenant's sole cost, title to same remaining in Tenant until such termination,
repairing any damage caused by such removal. Upon request by Landlord, unless
otherwise then or previously agreed to in writing by Landlord, Tenant shall
remove, at Tenant's sole cost, all movable furniture and equipment belonging to
Tenant and repair any damage resulting from such removal. Property not so
removed by the last day of the Term shall be deemed abandoned by Tenant, and
title to the same shall thereupon pass to Landlord.
(c) The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof shall, at the option of Landlord, terminate all or
any existing subleases or subtenancies, or may, at the option of Landlord,
operate as an assignment to Landlord of any or all such subleases or
subtenancies.
<PAGE> 43
25. WAIVER
If either Landlord or Tenant waives the performance of any term,
covenant or condition contained in this Lease, such waiver shall not be deemed
to be a waiver of any subsequent breach of the same or any other term, covenant
or condition contained herein. Furthermore, the acceptance of rent by Landlord
shall not constitute a waiver of any preceding breach at the time Landlord
accepted such rent. Failure by Landlord to enforce any of the terms, covenants
or conditions of this Lease for any length of time shall not be deemed to waive
or to decrease the right of Landlord to insist thereafter upon strict
performance by Tenant. Waiver by Landlord or Tenant of any term, covenant or
condition contained in this Lease may only be made by a writing, shall be
effective only with respect to the subject matter stated therein, and only for
such time and to such extent as provided therein.
26. PARKING
Landlord shall provide, for the non-assigned use of Tenant, up to the
greater of (a) 320 parking spaces or (b) four (4) spaces per 1,000 net rentable
area of the Leased Premises. Said spaces shall not be reserved or otherwise
designated.
27. NOTICES
Each notice required or permitted to be given under this Lease shall be
sent by hand delivery or by depositing it with the United States Postal Service
or the official successor thereto, certified or registered mail, return receipt
requested, with adequate postage prepaid, addressed to the appropriate party as
hereinafter provided. Each such notice shall be effective upon being hand
delivered or deposited with the United States Postal Service, as the case may
be, but the time period in which a response to any such notice must be given or
any action taken with respect thereto shall commence to run from the date of
receipt of the notice by the addressee thereof, as evidenced by the deliver
record of the messenger or courier service or by the return receipt of the
United States Postal Service, as the case may be. Rejection or other refusal by
the addressee to accept or the inability of the messenger or courier service, or
the United States Postal Service, to deliver because of a changed address of
which no notice was given, shall in any case be deemed to be the receipt of the
notice sent. The addresses of Landlord and Tenant are as follows:
Landlord: Regency Park West Associates
2929 Lenox Road
Atlanta, Georgia 30324
With copy to: GE Capital
One Georgia Center
600 West Peachtree Street, Suite 800
Atlanta Georgia 30308
Attn: Mr. Julio Perez
<PAGE> 44
<TABLE>
<S> <C> <C>
Tenant: TheraTx, Incorporated
400 Northridge Road, Suite 400 From and after July 1, 1997
Atlanta, Georgia 30350 "At the Premises"
Attn: Mr. B. Wayne Clark,
Vice President-Administrative Services
</TABLE>
Any party shall have the right from time to time to change the address
to which notices to it shall be sent and to specify up to two additional
addresses to which copies of notices to it shall be sent by giving to the other
party or parties at least thirty (30) days prior notice of the changed address
or additional addresses.
28. CERTAIN RIGHTS RESERVED TO LANDLORD
Landlord reserves and may exercise the following rights without
affecting Tenant's obligations hereunder:
(a) To change the name of the Building;
(b) To designate all sources furnishing sign painting and
lettering; and, while obtaining competitive pricing from multiple sources for
same, to also designate all sources for towels, valet service and toilet
supplies, lamps and bulbs used in the Leased Premises:
(c) To retain at all times pass keys to the Leased Premises
(d) To grant to anyone the exclusive right to conduct any
particular business or undertaking in the Building;
(e) To close the Building after regular work hours and on legal
holidays subject, however to Tenant's right to admittance, under such reasonable
regulations as Landlord may prescribe from time to time, which may include by
way of example but not of limitation, that persons entering or leaving the
Building identify themselves to a watchman by registration or otherwise and that
said persons establish their right to enter or leave the Building; and
(f) To take any and all measures, including inspections, repairs,
alterations, decorations, additions and improvements to the Leased Premises or
the Building and identification and admittance procedures for access to the
Buildings as may be necessary or desirable for the safety, protection,
preservation or security of the Leased Premises or the Building or Landlord's
interest, or as maybe necessary or desirable in the operation of the Building.
Landlord may enter upon the Leased Premises and may reasonably exercise
any or all of the foregoing rights hereby reserved without being deemed guilty
of an eviction or disturbance of Tenant's use or possession without being liable
in any manner to the Tenant and without abatement of rent or affecting any of
the Tenant's obligations hereunder.
<PAGE> 45
29. ABANDONMENT
Tenant shall not vacate or abandon the Premises at any time during the
Term, and if Tenant shall abandon, vacate, or surrender said Premises or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the Premises shall, at the option of Landlord, be deemed to
be abandoned and title thereto shall, at the option of Landlord, thereupon pass
to Landlord.
30. SUCCESSORS
Subject to the provisions of paragraph 10 hereof, the terms, covenants,
and conditions contained herein shall be binding upon and inure to the benefit
of the heirs, successors, executors, administrators and assigns of the parties
hereto.
31. ATTORNEYS' FEES
In the event that any action or proceedings is brought to enforce any
term, covenant or condition of this Lease on the part of Landlord or Tenant, the
prevailing party shall be entitled to reasonable attorneys' fees to be fixed by
the court in such action or proceeding.
32. CORPORATE AUTHORITY
If Tenant signs as a corporation, each of the persons executing this
Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly
authorized and existing corporation, that Tenant has and is qualified to do
business in Georgia, that the corporation has full right and authority to enter
into this Lease, and that each and every one of the persons signing on behalf of
the corporation are authorized to do so. Upon Landlord's request, Tenant shall
provide Landlord with evidence reasonably satisfactory to Landlord confirming
the foregoing covenants and warranties.
33. MORTGAGEE APPROVALS
Any approvals or consents of Landlord required under any provisions of
this Lease shall not be deemed to have been unreasonably withheld if any
mortgagee (which shall include the holder of any deed to secure debt) of the
Premises. Building or Property or any portion thereof shall refuse or withhold
its approval or consent thereto. Any requirement of Landlord pursuant to this
Lease which is imposed pursuant to the direction of any such mortgagee shall be
deemed to have been reasonably imposed by Landlord if made in good faith.
34. LANDLORD'S LIEN
In addition to any statutory lien for rent in Landlord's favor,
Landlord shall have and Tenant hereby grants to Landlord a continuing security
interest for all rentals and other sums of money becoming due hereunder from
Tenant upon all goods, wares, equipment, fixtures, furniture, inventory,
accounts, contract rights, chattel paper and other personal property of Tenant
situated on the Leased Premises, and such property shall not be removed
therefrom
<PAGE> 46
without the consent of Landlord until all arrearage in rent as well as
any and all other sums of money then due to Landlord hereunder shall first have
been paid and discharged. In the event of a default under this Lease, Landlord
shall have, in addition to any other remedies provided herein or by law, all
rights and remedies under the Uniform Commercial Code, including without
limitation the right to sell the property described in this Paragraph at public
or private sale upon providing the notice called for by the Uniform Commercial
Code, or if none is so supplied by memorandum there of at Landlord's discretion.
Tenant further agrees that this Lease shall constitute a security agreement and
further agrees to execute for recordation, simultaneously with execution of this
Lease or at such other time designated by Landlord at its sole discretion, such
financing statements and other instruments deemed necessary or desirable in the
sole discretion of Landlord to perfect the security interest hereby created. Any
statutory lien for rent is not hereby waived the express contractual lien herein
granted being in addition and supplementary thereto.
35. QUIET ENJOYMENT
Landlord represents and warrants that it has full right and authority
to enter into this Lease and that Tenant while paying the Rentals and performing
its other covenants and agreements herein set forth, shall peaceably, and
quietly have hold and enjoy the Leased Premises for the Term hereof without
hindrance or molestation from Landlord subject to the terms and provisions of
this Lease. In the event this Lease is a sublease, then Tenant agrees to take
the Leased Premises subject to the provisions of the prior leases. Landlord
shall not be liable for any interference or disturbance by other tenants or
third persons, nor shall Tenant be released from any of the obligations of this
Lease because of such interference or disturbance: provided, Landlord shall
enforce all Rules and Regulations of the Building even-handedly upon all Tenants
of the Building.
36. LIMITATION OF LANDLORD'S LIABILITY AND EXCULPATION OF PARTNERS
In no event shall Landlord's liability for breach of this Lease exceed
the amount of rent then remaining unpaid for the then current Term (exclusive of
any renewal periods which have not then actually commenced). This provision is
not intended to be a measure or agreed amount of Landlord's liability with
respect to any particular breach, and shall not be utilized by any court or
otherwise for the purpose of determining any liability of Landlord hereunder,
except only as a maximum amount not to be exceeded in any event. Furthermore,
any liability of Landlord hereunder shall be enforceable only for and out of the
interest of Landlord in the Building. Anything to the contrary contained in this
Lease notwithstanding there shall in no event be any personal or derivative
liability with respect to arising from or related in any manner to the terms,
covenants, conditions and provisions of this Lease or their application, sought
or enforced against any persons, firms, or other entities who constitute the
partners of the Landlord, and Tenant hereby exculpates each and all partners of
Landlord from any and all liability arising from or relating to this Lease and
its provisions or from Landlord's status as such hereunder. Tenant shall,
subject to the rights of any ground lessor, mortgagee or holder of any security
interest, look solely to the interest of Landlord, its successors and assigns,
in the Building for the satisfaction of each and every remedy, if any, of Tenant
as against Landlord herein, including
<PAGE> 47
default by Landlord hereunder, and shall in no event have or seek such
satisfaction out of the separate issues of, or from any partner of Landlord.
37. RIGHT TO RELOCATE [OMITTED]
38. DISCLAIMER OF CREATION OF PARTNERSHIP OR JOINT VENTURE
This Lease shall not be deemed to create or constitute a partnership or
joint venture of and between Landlord and Tenant for any purpose, nor is
Landlord to be deemed for any purpose a master, servant, employer, employee,
principal or agent of Tenant.
39. LEASE EFFECTIVE DATE
Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for lease, and is not effective
as a lease or otherwise until execution by both Landlord and Tenant.
40. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the Rules and
Regulations printed on Exhibit "E" annexed to this Lease and all reasonable
additions thereto as are from time to time now or hereafter at any time put into
effect by Landlord. Landlord shall not be responsible for the nonperformance by
any other tenant or occupant of the Building or Office Park of any obligation
under said Rules and Regulations, but shall apply and enforce same uniformly as
to all Tenants.
41. NO BROKERS
Tenant represents and warrants to Landlord, that except for Richard
Bowers & Company no broker, agent commission salesman or other person has
represented Tenant in the negotiations for and procurement of this Lease and
that, except for the commission payable to the said Richard Bowers & Company, no
commission, fee or compensation of any kind is due and payable in connection
herewith to any person or entity. Tenant and Landlord hereby acknowledge and
agree that the commission payable to the said Richard Bowers & Company in
connection with the Lease is the sole responsibility of Landlord, and that said
commission shall be paid by Landlord to the said Richard Bowers & Company in
accordance with the terms of a separate agreement. Tenant and Landlord also
acknowledge that American Resurgens Management Corp. has acted as agent for
Landlord in this transaction and is to be compensated for its services in
connection therewith in accordance with a separate agreement with Landlord.
American Resurgens Management Corp. has not acted as agent for Tenant in this
transaction.
42. RECORDING
Neither this Lease, nor any memorandum hereof, shall be recorded by
Tenant without Landlord's prior written consent to such recording, which shall
not be unreasonably withheld as to a Memorandum of Lease.
<PAGE> 48
43. MISCELLANEOUS
(a) The paragraph numbers and Paragraph headings herein, and
designations of subparagraphs, are for convenience of reference only and shall
in no way define, increase, limit or describe the scope or intent of any
provision of this Lease, which shall be construed without reference thereto.
(b) If this Lease is signed by more than one person, or if Tenant
is a partnership, joint venture or other business organization the members of
which are subject to personal liability, the obligations and liability of each
such person or member hereunder shall be joint and several.
(c) The term "Landlord" in this Lease shall include Landlord and
its successors and assigns.
(d) The term "Tenant" or any pronoun used in place thereof shall
indicate and include the masculine, feminine or neuter genders, the singular or
plural number, individuals, firms or corporation, and each of their respective
successors, executors, administrators and permitted assigns, according to the
context hereof.
(e) "Office Park" means the business park owned by Lessor and
comprising approximately 150 acres located situate to Rock Mill Road in Land
Lots 592, 605, 606 and 639 of the 1st District, 2nd Section, Alpharetta, Fulton
County, Georgia, all as more particularly described in EXHIBIT "B" attached
hereto and by this reference made a part hereof.
(f) "Common Areas" means those portions of the Office Park lying
outside the Building which are designated as "common areas" for the use,
enjoyment and benefit of all owners or tenants of property located within the
Office Park and their lessees, sublessees and invitees.
(g) Time is of the essence of this Lease and each and all of its
provisions.
(h) This Lease shall in all respects be governed by and construed
under the laws of the State of Georgia.
(i) Tenant shall have no right to hold back, offset or otherwise
fail to pay any rent, including additional rent, due or any other charges
assessed under any provision of this Lease, for or on account of any claim or
counterclaim alleged against Landlord, save and except pursuant to an order
issued with prior notice to Landlord and after a hearing by a court of record of
competent jurisdiction in the State of Georgia.
(j) This Lease, together with its Exhibits and riders, if any,
contains all the agreements of the parties hereto and supersedes any previous
negotiations or agreements, whether oral or written. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits.
(k) This Lease may not be modified except by a written instrument
executed by all the parties hereto or their successors and assigns.
<PAGE> 49
(l) All obligations of Tenant hereunder not fully performed as of
the expiration or earlier termination of the Term of this Lease shall survive
the expiration or earlier termination of the Term hereof.
(m) If, for any reason whatsoever, any clause, phrase, provision
or portion of this Lease, or the application thereof to any person or
circumstance, shall be or become invalid, unenforceable or ineffective, such
event shall not affect, impair or render invalid, unenforceable or ineffective
the remainder of this Lease or any other clause, phrase, provision or portion
hereof, nor shall it affect the application of any clause, phrase, provision,
provision or portion hereof to other persons or circumstances. It is also the
intention of the parties to this Lease that in lieu of each such clause, phrase,
provision or portion of this Lease that is or may become invalid, unenforceable
or ineffective, there be added as a part of this Lease a clause, phrase,
provision or portion as like and similar in terms to such invalid, unenforceable
or ineffective clause, phrase, provision or portion as may be valid, enforceable
and effective.
(n) Whenever a period of time is herein prescribed for action to
be taken by Landlord or Tenant, the party so charged shall not be liable or
responsible for, and there shall be excluded from the computation of any such
period of time, any delays due to causes of any kind whatsoever including,
without limitation, acts or events of force majeure, which are beyond the
control of that party. The period for performance of any such delayed action by
the party so charged shall be extended for a period equivalent to the period of
such delay.
(o) Notwithstanding any other provisions of this Lease to the
contrary, if the Commencement Date hereof shall not have occurred before the
twentieth (20th) anniversary of the date hereof, this Lease shall be null and
void and neither party shall have any liability or obligation to the other
hereunder. The purpose and intent of this provision is to avoid the application
of the Rule Against Perpetuities to this Lease.
44. SPECIAL STIPULATIONS.
Additional provisions of this Lease are set forth in the Special
Stipulations attached hereto and made a part hereof as EXHIBIT "F". In the event
of a conflict between the preceding provisions of this Lease and the provisions
of the Special Stipulations EXHIBIT "F", the provisions of the Special
Stipulations shall control.
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Lease under
their hands and seals the day and year first above written, each warranting to
the other that it has the authority to do so and the capacity to bind the
respective entities identified as Landlord and Tenant hereunder.
LANDLORD:
Regency Part West Associates, L.P., a Georgia
Limited Partnership
By: American Resurgens Management Corp.,
a Georgia Corporation
As General Partner
WITNESS/ATTEST:
[Illegible] By: [Illegible]
- ------------------------- --------------------------------------------
Its:
-------------------------------------------
(CORPORATE SEAL)
TENANT:
TheraTx, Incorporated,
A Delaware Corporation
By: [Illegible]
--------------------------------------------
Its:
-------------------------------------------
(CORPORATE SEAL)
APPROVED:
General Electric Real Estate
Equities, Inc.
By: [Illegible]
---------------------------
<PAGE> 51
EXHIBIT "A"
LEASED PREMISES FLOOR PLAN
TO BE PROVIDED
(PER SPECIAL STIPULATION # 18, EXHIBIT "F")
<PAGE> 52
EXHIBIT "B"
OFFICE PARK LEGAL DESCRIPTION
TO BE PROVIDED
(PER SPECIAL STIPULATION #17, EXHIBIT "F")
<PAGE> 53
EXHIBIT "B-1"
<PAGE> 54
CONCEPTUAL PLAN FOR GE CAPITAL AND AMERICAN RESURGENS MANAGEMENT CORP.
SMALLWOOD, REYNOLDS, STEWART, STEWART & ASSOCIATES, INC. ARCHITECTS
[ARCHITECTURAL DESCRIPTION OF OFFICE PARK]
<PAGE> 55
EXHIBIT "C"
LEASED PREMISES IMPROVEMENT AGREEMENT
In consideration of Tenant's execution of the Lease to which this Agreement
forms an Exhibit, and for the mutual considerations hereinafter recited,
Landlord shall provide to the Premises and Tenant shall receive, accept and
provide the following:
SECTION (A) - ARCHITECTURAL, ENGINEERING AND OTHER SERVICES:
(1) Landlord shall provide Tenant with an allowance of Seventy Three
Thousand Fifty-Nine Dollars ($73,059.00), equivalent to One Dollar
($1.00) per useable square foot of the Leased Premises, for use by
Tenant in obtaining architectural and engineering services prior and
incident to construction of Tenant Improvements therein. Tenant, at its
sole cost and expense and through Landlord's designated Architect
and/or Engineer, shall then cause to be prepared Plans and
Specifications for Tenant's Premises as follows:
(a) Detailed architectural drawings and specifications for
Tenant's partition plan, reflected ceiling plan, power,
communication, and telephone plan (location of data and
telephone outlets with pull boxes only), electrical outlets,
finish plan, elevations, details and sections;
(b) Mechanical, electrical, plumbing and lighting plans and
specifications where necessary for installation to Base
Building heating and air conditioning systems. (Landlord shall
provide the Architectural and Mechanical services with respect
to completing the improvements outlined in Section B).
(2) Landlord and Tenant hereby agree that time is of the essence and that
the following sequence and schedule shall be strictly adhered to with
respect to the design and
<PAGE> 56
development of Construction Documents and the ultimate construction of
Improvements to Tenant's Premises:
(a) Tenant shall select a coordinator who provides Architect with
information for development of initial space plan within
twelve (12) weeks from execution of Lease.
(b) Architect shall then prepare initial space plan within four
(4) weeks of receipt of Tenant information;
(c) Upon receipt of space plan, Tenant's coordinator, as required,
shall provide additional information for development of
schematic pricing drawings, in not later than two (2) weeks;
(d) Architect shall then prepare schematic pricing drawings and
specifications within two (2) weeks from receipt of
information provided for in (2) (c) above;
(e) Landlord, or its designated agent shall prepare a cost
estimate based upon the drawings referred to in (2) (d) above
within two (2) weeks of receipt of schematic pricing drawings;
(f) Tenant reviews and approves or adjusts the schematic pricing
drawings and the cost estimate, as outlined in (2) (d) and (2)
(e) above, and provides Landlord all remaining information
needed to develop final Plans and Specifications by no later
than one week thereafter;
(g) Landlord, based upon all information previously provided and
approved by Tenant, authorizes Architect to prepare final
Plans and Specifications within four (4) further weeks;
<PAGE> 57
(h) Tenant reviews and signs off on the final Plans and
Specifications prepared in accordance with (2) (g) above
within one (1) week;
Upon receipt from Tenant of the approved final Plans and Specifications
referred to in (2) (h) above, Landlord shall obtain a minimum of three
(3) competitive bids and select a contractor, who shall substantially
complete Tenant's Premises by June 30, 1996. Landlord shall provide
Tenant with a Tenant Improvement Allowance of One Million One Hundred
Twenty Thousand Dollars ($1,120,000.00) equivalent to Fourteen Dollars
($14.00) per rentable square foot of the Leased Premises. Should the
cost of all improvements to Tenant's Premises exceed Tenant's
Improvements Allowance, Tenant shall pay Landlord such excess costs
prior to the time payment of any sum including same is due to be made
by Landlord to the contractor under the contract for improvements. Said
excess costs shall be deemed Additional Rent under the Lease. Failure
by Tenant to pay any sums when due will constitute a failure to pay
rent when due and be, at Landlord's option, an event of default by
Tenant under the Lease. Any contractor-initiated change order must be
reviewed an approved by Landlord and Tenant, which review and approval
will not be unreasonably withheld. Should cost of improvements to
Tenant be less than the Tenant Improvement Allowance, Tenant may apply
the remainder thereof to the cost of future Tenant improvements to
expansion areas.
(3) Should Tenant, subsequent to commencement of construction of
Improvements to its Premises, modify the Plans and Specifications in
any way, Tenant shall pay all additional costs thereby incurred by
Landlord plus a fee of twenty-one percent (21%) of the additional cost
for Landlord's cost of coordination, supervision, supervision and
overhead
<PAGE> 58
resulting from the revisions to said Plans and Specifications,
excluding any additional architectural and/or engineering fees. All
revised or additional Plans and Specifications are subject to
landlord's prior review and written approval. Should any revisions or
additions to the original Plans and Specifications result in a delay of
substantial completion of the Premises, Tenant agrees that such shall
constitute a "Tenant Delay".
SECTION (B) LANDLORD'S IMPROVEMENTS:
Preliminary to completion of construction of the Tenant
Improvement Work provided for elsewhere in this Agreement, the
following improvements to the Premises (herein called "Base Building
Work") shall have been or be completed by Landlord at its expense:
(1) Perimeter walls and core walls completed, taped and
bedded, ready for paint finish;
(2) Floor - Unfinished concrete slab floor at the interior of
the Leased Premises ready to receive carpeting or other
floor covering;
(3) Building Standard 110-volt power supplied to the building
core, together with building standard power grid
installed in ceiling;
(4) Men's and women's restroom facilities;
(5) Sprinkler riser and main loop;
(6) Building standard voice communication speakers, exit
lights, fire extinguishers and cabinets within common
areas, including the core area;
(7) 2' X 2' ceiling grid system installed throughout with
2' X 2' ceiling tiles stacked on the floors;
<PAGE> 59
(8) Perimeter HVAC system installed from mixing boxes including
ductwork and perimeter slot diffusers;
(9) Building standard sprinkler distribution from main loop to
sprinkler heads, and building standard chrome semi-recessed
sprinkler heads;
(11) Thin line (1") aluminum horizontal blinds to cover all
exterior windows.
(12) Electrical Service - Provision of up to 3.5 watts (but no more
than 3.5 watts) per usable square foot of the Leased Premises.
This service shall provide power for lighting fixtures, base
and floor outlets and/or miscellaneous equipment. All
additional electrical service exceeding 3.5 watts per usable
square foot shall be separately connected and metered at the
power source. Tenant shall pay for any and all costs to
submeter and all excess power as metered on a monthly basis;
(13) Heating, Ventilating and Air Conditioning Engineering and
installation of the base building HVAC system to provide cool
and warm air exterior zones supplied through slot diffusers in
accordance with the following specifications:
Summer Conditions
Inside Temperature Outside Temperature
------------------ -------------------
75 d.F dry bulb 92 d.F dry bulb
50% relative humidity 78 wet bulb
Winter Conditions
Inside Temperature Outside Temperature
------------------ -------------------
72 d.F dry bulb 14 d.F dry bulb
<PAGE> 60
Any relocation of sprinklers or additions of sprinklers will
be at Tenant's cost.
All remaining preparation of the Leased Premises shall be
considered as Tenant's Work, to be completed at Tenant's sole expense.
SECTION (C) - GENERAL PROVISIONS:
(1) Landlord will permit Tenant and its agent to enter the Premises prior
to the date specified as the Commencement Date of the Term of the
Lease, allowing Tenant to perform through its own contractors (to be
first approved by Landlord) such other work and decorations as Tenant
may desire at the same time that Landlord's contractors are working in
the Premises. The foregoing license to enter prior to the Commencement
Date of the Lease Term, however, is conditioned upon Tenant's workmen
and mechanics working in harmony with and not interfering with the
labor employed by Landlord, Landlord's mechanics or contractors or by
any other Tenant(s) or their contractors, and not impeding or
interfering with the Landlord's work or the process thereof. Such
access shall at times be subject to the control and restrictions of the
Landlord. Such entry shall be deemed to be under all of the terms,
covenants, provisions and conditions of the Lease except Landlord shall
not be liable in any way for any injury, loss or damage which may occur
to any of Tenant's decorations or installations made prior to the
Commencement Date of the Term of the Lease, the making of any of same
being done solely at Tenant's risk.
(2) Workers' compensation and public liability insurance for bodily injury
and property damage, all in required amounts and with company's name
and on forms satisfactory to Landlord, shall be provided and at all
times maintained by Tenant's contractors engaged
<PAGE> 61
in the performance of the work, and before proceeding with the work,
certificates of such insurance shall be furnished to Landlord.
(3) If Tenant's contractors or anyone employed by Tenant shall cause a
delay in completing Tenant's alterations, Tenant agrees that such delay
will constitute a "Tenant Delay."
(4) Should Landlord be unable to complete the work as scheduled as a result
of a "Tenant Delay", Tenant shall pay to Landlord, as Additional Rent,
one (1) day's base rent computed in accordance with the Lease for each
calendar day of "Tenant Delay", as liquidated damages and not as a
penalty, it being agreed that Landlord's damages and not as a penalty,
it being agreed that Landlord's damages for such delay would be
otherwise difficult to determine. Said Additional Rent will be due
within thirty (3) days of Tenant's receipt of Landlord's notice
therefore.
(5) Landlord, upon prior notice to Tenant, reserves the right to make
reasonable substitutions of equal or better quality and value for
building standard materials in the event of unavailability of materials
or due to field conditions.
(6) Tenant and Landlord acknowledge, by execution in their respective
spaces provided hereinbelow for that purpose; that the foregoing
correctly set forth all the obligations of Landlord and Tenant with
respect thereto are hereby extinguished and merged into this Agreement;
and that each has full authority and consent to bind the respective
contracting parties.
<PAGE> 62
IN WITNESS WHEREOF, the parties have executed this Leased
Premises Improvement Agreement this 25 day of October, 1995.
LANDLORD:
REGENCY PARK WEST ASSOCIATES
A Georgia General Partnership
By: AMERICAN RESURGENS
MANAGEMENT CORP.,
A Georgia Corporation
WITNESS/ATTEST:
[Illegible] By: /s/ James L. McMahan (L.S.)
- ------------------------- --------------------------------------
James L. McMahan
Its: Chairman
(Corporate Seal)
TENANT:
THERATX, INC.
A Delaware Corporation
By: /s/ John A. Bardis (L.S.)
--------------------------------------
Its: Pres. & CEO
-------------------------------------
(Corporate Seal)
APPROVED:
GENERAL ELECTRIC REAL
ESTATE EQUITIES, INC.
By: [Illegible]
--------------------
<PAGE> 63
EXHIBIT "D"
ESTOPPEL CERTIFICATE
(Lender's Name)
Gentlemen:
The undersigned, as Tenant under that certain lease (the "Lease") dated
__________, 19__, made with ______________________________, as Landlord (the
"Landlord"), does hereby agree and certify:
1. That the copy of the Lease attached hereto as Exhibit "A" is a true and
complete copy of the Lease, and there are no amendments, modifications or
extensions of or to the Lease except as set forth immediately below:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
2. That the term of the Lease commenced or began on __________, 19__, and the
Lease is now in full force and effect.
3. That its Leased Premises at the above location have been completed in
accordance with the terms of the Lease, that it has accepted possession of said
premises, that it now occupies the same and that Tenant is paying full lease
rental.
4. That it began paying rent on __________, 19__, and that, save only as may be
required by the terms of the Lease, no rental has been paid in advance, nor has
the undersigned deposited any sums with the Landlord as security except as set
forth immediately below:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
5. That there exist no defenses or offsets to enforcement of the Lease by the
Landlord and, so far as is known to the undersigned, the Landlord is not, as of
the date hereof, in default in the performance of the Lease, nor has the
Landlord committed any breach thereof, nor has any event occurred which, with
the passage of time or the giving of notice, or both, would constitute a default
or breach by the Landlord.
The undersigned acknowledges that you are relying on the above representations
of the undersigned in (advancing funds to purchase the existing first mortgage
loan covering the
<PAGE> 64
building in which the Leased Premises are located)/(purchasing the building in
which the Leased Premises are located) and does hereby warrant and affirm to and
for your benefit, and that of your successors and assigns, that each of the
foregoing representations is true, correct and complete as of the date hereof.
DATED:
------------------------------
TENANT:
------------------------------
By:
----------------------------------
Its:
---------------------------------
<PAGE> 65
EXHIBIT "E"
RULES AND REGULATIONS
1. Sidewalks, courts, ramps, parking facilities, loading docks
and areas, driveways, delivery, drop-off and pick-up areas, bus stops, halls,
passages, exits, entrances, elevators, escalators, stairways of the Building and
throughout the Common Area and other areas and improvements provided by Landlord
for the general use of tenants, their employees, visitors, invitees and
licensees, shall not be covered or obstructed by Tenant or used by it for any
purpose other than for ingress and egress from the Leased Premises, the Building
or the Common Area, as applicable. The walls, partitions, windows and doors that
reflect or admit light into passageways or into any other part of the Building
shall not be covered or obstructed. The halls, courts, parking facilities,
loading docks and areas, driveways, delivery, drop-off and pick-up areas,
passages, exits, entrances, elevators, escalators and stairways are not for the
use of the general public and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence, in the
judgment of Landlord, may be prejudicial to the safety, character, reputation
and interests of the Common Area, the Building and its tenants; provided that
nothing herein contained shall be construed to prevent such access to persons
with whom any tenant normally deals in the ordinary course of such tenant's
business unless such persons are engaged in illegal or immoral activities.
Tenant, and its employees, visitors, invitees or licensees of any tenant, shall
not go upon the roof of the Building, except as previously authorized by
Landlord.
2. No sign, placard, picture, name, notice, decoration or
advertisement visible horizontally or vertically from the exterior of Leased
Premises shall be inscribed, painted, affixed, installed or otherwise displayed
by any tenant either on its Premises or any interior or exterior part of the
Building without the prior written consent of Landlord, and only then at the
sole cost and expense of Tenant. Landlord shall have the right to remove any
such sign, placard, picture, name, notice, decoration or advertisement without
notice to and at the sole cost and expense of tenant.
(a) If Landlord shall have given such consent to Tenant at any
time, whether before or after the execution of a lease, such
consent shall in no way operate as a waiver or release of any
of the provisions hereof or of such lease, and shall be deemed
to relate only to the particular sign, placard, picture, name,
notice, decoration or advertisement so consented to by
Landlord and shall not be construed as dispensing with the
necessity of obtaining the specific written consent of
Landlord with respect to any other such sign, placard,
picture, name, notice, decoration or advertisement.
(b) All approved signs or lettering on doors and walls shall be
printed, painted, affixed and inscribed at the sole expense or
Tenant by a person previously approved in writing by Landlord.
3. The directory of the Building will be provided exclusively for
the display of the name and location of tenants only, in such manner and
arrangement as may be from time
<PAGE> 66
to time determined by Landlord, and Landlord reserves the right to exclude any
other names therefrom.
4. No curtains, draperies, blinds, shutters, shades, screens or
other coverings, awnings, hangings or decorations shall be attached to, hung or
placed in, or used in connection with, any window or door on any premises
without the prior written consent of Landlord. In any event with the prior
written consent of Landlord, all such items shall be installed inside of
Landlord's standard window covering and shall in no way be visible from the
exterior of the Building. No articles shall be placed or kept on the windowsills
so as to be visible from the exterior of the Building. No articles shall be
placed against glass partitions or doors which might appear unsightly from
outside Tenant's Premises.
5. Landlord reserves the right to exclude from the Building
between the hours of 6:00 p.m. and 6:00 a.m. and at all hours on Saturdays,
Sundays and holidays all persons other than Tenant or its accompanied guests.
Tenant shall be responsible for all persons whom it allows to enter the Building
and shall be liable to Landlord for all acts of such persons.
(a) Landlord shall in no case be liable for damages or for error
with regard to the admission to or exclusion from the Building
of any person.
(b) During the continuance of any invasion, mob, riot, public
excitement or other circumstances rendering such action
advisable in Landlord's opinion, Landlord reserves the right
to prevent access to the Building by closing the doors, or
otherwise, for the safety of tenants and protection of the
Building and property in the Building.
6. Tenant shall not employ any person or persons other than the
janitor of Landlord for the purpose of cleaning Premises unless otherwise agreed
to by Landlord in writing. Except with the written consent of Landlord no person
or persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning same. Tenant shall not cause any
unnecessary labor by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness of Tenant's Premises. Landlord shall
in no way be responsible to any tenant for any loss of property on the Premises,
however occurring, or for any damage done to the effects of any tenant by the
Landlord's janitor or any other employee or any other person.
7. Tenant shall not obtain or maintain for use on its Premises
coin-operated vending machines or accept barbering or bootblacking services in
its Premises except from persons authorized by Landlord.
8. Tenant shall see that all doors of its Premises are closed and
securely locked and must observe strict care and caution that all water faucets
or water apparatus are entirely shut off before the tenant or its employees
leave such Premises, and that all utilities shall likewise be carefully shut off
so as to prevent waste or damage, and for any default or carelessness the tenant
shall make good all injuries sustained by other tenants or occupants of the
<PAGE> 67
Building. On multiple tenancy floors, all Tenants shall keep the door or doors
to the Building corridors closed at all times except for ingress and egress.
9. Tenant shall not waste electricity, water or air-conditioning
and agrees to cooperate fully with Landlord to assure the most effective
operation of the Building's mechanical systems, and shall refrain from
attempting to adjust any controls.
10. No additional locks or bolts of any kind shall be placed on
any door in the building or the Premises and no lock on any door therein shall
be changed or altered in any respect. Landlord shall furnish two keys for each
lock on doors in the Premises and shall, on Tenant's request and at Tenant's
expense, provide additional duplicate keys.
11. The toilet-rooms, toilets, urinals, wash bowls, water
apparatus, and other plumbing facilities shall not be used any purpose other
than for those for which they were constructed or installed. All plumbing lines
shall be kept open and no sweepings, rubbish, chemical, or other unsuitable or
foreign substances of any kind shall be thrown or placed therein or in any of
the toilets, urinals, wash bowls, water apparatus or other plumbing facilities.
The expense of any breakage, stoppage or damage resulting from violation(s) of
this rule by Tenant or Tenant's agents, employees, invitee, licensees or
visitors, shall be borne by Tenant and shall be paid to Landlord immediately
upon Landlord's demand. No restrooms in the Common Areas shall be used as
smoking areas, clothes changing facilities, or lounging or meeting areas.
Furthermore, no bathing (other than the washing of hands and face) shall be done
in the restrooms, and no hair dryers, shavers (electric or manual) or other
appliances shall be used in the restrooms at any time. Tenant shall not allow or
permit its agents, employees, invitee, licensees or visitors to congregate in
the restrooms for any reason or to otherwise violate the above provisions of
this Rule 11.
12. Tenant shall not use, keep, store or permit in its Premises or
the Building any: (a) ether, naptha, phosphorous, benzol, gasoline, benzine,
petroleum, crude or refined earth or coal oils, kerosene or camphene, other than
in limited quantities necessary for the operation or maintenance of office
equipment; (b) any other flammable, combustible, explosive gas or material of
any kind; or (c) any other fluid, gas or material of any kind having an
offensive odor, unless previously obtaining written consent of the Landlord.
Tenant shall use no method of heating or air-conditioning other than that
supplied by Landlord.
13. No odors or vapors shall be caused or permitted to emanate
from the Premises. Tenant shall not use, keep, store or permit to be used or
kept in its Premises any foul or noxious gas or substance or permit or suffer
such 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 and/or
vibrations or interfere in any way with other tenants or those having business
therein, nor shall any live animals or birds other than seeing eye dogs be
brought or kept in or about the Premises or the Building.
14. Tenant shall not use, permit or suffer the use of the Premises
or the Building or the Common Areas of the office park for living, sleeping or
lodging; shall not do any cooking or conduct any restaurant, luncheonette, or
cafeteria business for the sale or service of
<PAGE> 68
food or beverages to persons other than its own employees and guests (in which
event only equipment approved by Underwriters' Laboratory shall be used or
installed); and shall not permit the delivery of food or beverage to the
Premises, except by such persons delivering the same as shall be approved by
Landlord and only under regulations fixed by Landlord.
15. Except with the prior written consent of Landlord, Tenant
shall not sell, permit the sale, at retail, of newspapers, magazines,
periodicals, theatre tickets or any other goods or merchandise in or on any
Premises, nor shall tenant carry on, or permit or allow any employee or other
person to carry on, the business of stenography, typewriting or any similar
business in or from any Premises for the service or accommodation of occupants
of any other portion of the Building, nor shall the Premises of Tenant be used
for the storage of merchandise or for manufacturing of any kind, or the business
of a public barber shop, beauty parlor, or bootblacking parlor nor shall the
Premises of Tenant be used for any improper, immoral or objectionable purpose,
or any business activity other than that specifically provided for in Tenant's
Lease.
16. If Tenant requires telegraphic, telephonic, burglar alarm or
similar services, it shall first obtain, and comply with, Landlord's instruction
in their installation. Landlord will direct electricians as to where and how
telephone, telegraph and electrical wires are to be introduced or installed. No
boring or cutting for wires will be allowed without the prior written consent of
Landlord. The location of burgular alarms, telephones, call boxes or other
office equipment affixed to all Premises shall be subject to the written
approval of Landlord.
17. Tenant shall not install any radio or television antenna,
loudspeaker or any other device on the exterior walls or the roof of the
Building. Tenant shall not use or permit operation of any musical or
sound-producing instruments or devices which may be heard outside the Premises,
or interfere with radio or television broadcasting or reception from or in the
Building or elsewhere. No signaling, telegraphic or telephonic instruments or
devices, no other wires, instruments or devices, shall be installed in
connection with the Premises without the prior written approval of Landlord.
Such installations, and the boring or cutting for wires, shall be made at the
sole cost and expense of Tenant and under the control and direction of Landlord.
Landlord retains in all cases the right to require (i) the installation and use
of such electrical protecting devices the prevent the transmission of excessive
currents of electricity into or through the Building, (ii) the changing of wires
and of their installation and arrangement underground or otherwise as Landlord
may direct, and (iii) compliance on the part of all using or seeking access to
such wires with such rules as Landlord may establish relating thereto. All such
wires used by Tenant must be clearly tagged at the Building, with (i) the number
of the Premises to which said wires lead, (ii) the purpose for which wires are
used, and (iii) the name of the company operating same.
18. Tenant shall lay no linoleum, tile, carpet or any other floor
covering so that the same shall be affixed to the floor of its Premises in any
manner except as approved in writing by Landlord. The expense of repairing any
damage resulting from a violation of this rule or the removal of any floor
covering shall be borne by Tenant if it or its contractors, employees or
invitees, shall have caused the damage.
<PAGE> 69
19. No furniture, freight, equipment, materials, supplies,
packages, merchandise or other property will be received in the Building or
carried upon or down the elevators except between such hours and in such
elevators as shall be designated by Landlord. Landlord shall have the right to
prescribe the weight, size and position of all safes, furniture, files,
bookcases or other heavy equipment brought into the Building. Safes or other
heavy objects shall, if considered necessary by Landlord, stand on wood strips
of such thickness as determined by Landlord to be necessary to properly
distribute the weight thereof. Landlord will not be responsible for loss of or
damage to any such safe, equipment or property from any cause, and all damage
done to the Building by moving or maintaining any such safe, equipment or other
property shall be repaired at the expense of Tenant.
20. 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
Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The persons employed by Tenant to
move such equipment in or out of the Building must be acceptable by Landlord.
21. Tenant shall not place a load upon any floor of the Premises
which exceeds the load per square foot which such floor was designed to carry
and which is allowed by law. Tenant shall not mark, or drive nails, screws or
drill into, the partitions, woodwork or plaster or in any way deface such
Premises or any part thereof.
22. Tenant shall not install, maintain or operate upon the
Premises any vending machine without the written consent of the Landlord.
23. There shall not be used in the Premises, or in the public
areas of the Building, by Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material-handling
equipment as Landlord may approve. No other vehicles of any kind shall be
brought by Tenant into or kept in or about the Premises.
24. Tenant shall store all its trash and garbage within the
interior of its Premises. No materials shall be placed in the trash boxes or
receptacles if such material is of such nature that it may not be disposed of in
the ordinary and customary manner of removing and disposing of trash and garbage
in this area without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entryways and
elevators provided for such purposes and at such times as Landlord may
designate.
25. Canvassing, soliciting, distributing of handbills or any other
written material, and peddling in the Building or in the Common Areas or in the
Office Park, are prohibited and each tenant shall cooperate to prevent the same.
Tenant shall not make room-to-room or telephonic solicitation of business from
other tenants in the Building.
26. Landlord reserves the right to exclude or expel from the
Building, the Common Areas and/or the Office Park any person who, in Landlord's
judgment, is or may be
<PAGE> 70
intoxicated or under the influence of liquor or drugs or who is or may be in
violation of any of the Rules and Regulations of the Building.
27. Landlord shall have the right to prohibit any advertising by
Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability for offices, and upon written notice from Landlord.
Tenant will refrain from or discontinue such advertising. No Tenant shall use
the name of the Building in connection with or in prompting or advertising the
business of said Tenant except for the purpose of identifying said Tenant's
address.
28. Tenant shall comply with all conservation, safety, fire
protection and evacuation procedures and regulations established by Landlord and
by any and all governmental agencies.
29. 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.
30. The requirements of Tenant will be attended to only upon
application at the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties except upon special instructions from Landlord, and no employees of
Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
31. All wallpaper or vinyl fabric materials which any tenant may
install on painted walls shall be applied with a strippable adhesive. The use of
nonstrippable adhesives will cause damage to the walls when materials are
removed, and repairs made necessary thereby shall be made by Landlord at
Tenant's expense.
32. Tenant shall provide and maintain hard surface protective mats
under all desk chairs which are equipped with casters to avoid excessive wear
and tear to carpeting. If Tenant fails to provide such mats, the cost of carpet
repair or replacement made necessary by such excessive wear and tear shall be
charged to and paid for by Tenant.
33. Tenant will refer all contractors, contractors'
representatives and installation technicians rendering any service to Tenant to
Landlord for Landlord's supervision, approval, and control before performance of
any contractual service. This provision shall apply to all work performed in the
Building, including installations of telephones, telegraph equipment, electrical
devices and attachments and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment or any other physical portions of
the Building.
34. Tenant shall give prompt notice to Landlord of any accidents
to or defects in plumbing, electrical facilities or fixtures, air conditioning
equipment, heating apparatus, or to any part or appurtenance of the Premises.
<PAGE> 71
35. Only workmen employed, designated or approved by Landlord may
be employed for repairs, installations, alterations, painting, material moving,
and other similar work that may be done on the Premises.
36. Tenant shall not use the Premises, the Building or the Office
Park or permit any of same to be used for photographs, multilith or multigraph
reproductions except in connection with its own business and only with
Landlord's prior approval.
37. Smoking is prohibited at all times in all interior lobbies,
hallways, corridors, elevators, restrooms and other interior public areas of the
Building and of all Buildings in the Office Park. Tenant shall so advise its
employees and invitees and cooperate with Landlord in the enforcement of this
policy. Within the Premises, Tenant shall enforce the Fulton County Clean Indoor
Air Ordinance of May 20, 1993, as same may be from time to time amended or
modified.
38. Tenant may utilize the Building's freight elevator only with
prior permission of Landlord's property manager and then upon such conditions
and at such times are designated thereby.
39. The consumption of food or beverage and the playing of radios,
tape recorders, records, or any other electronic playing devices is strictly
prohibited in all lobbies and other public areas of the Building.
40. Landlord reserves and shall have the right to make and adopt,
from time to time, such other and further reasonable rules and regulations, and
such amendments, modifications, supplements and additions to these Rules and
Regulations, and to revoke or rescind the same, as in Landlord's sole reasonable
judgment may be needed for the safety, security, care and cleanliness of the
Building, the Common Areas and the Office Park and for the occupancy of the
Building or for preservation of good order therein.
41. These Rules and Regulations are in addition to, and shall not
be construed to in any way modify, alter or amend, in whole or in part, the
terms, covenants, agreements and conditions of any lease of Premises in the
Building.
42. All tenants of the Building, as well as their respective
employees, agents, clients, customers, guests, invitees and licensees, shall
abide by and be responsible for the observance of all of these Rules and
Regulations, and such additional rules and regulations as are hereafter adopted
by Landlord.
43. Notwithstanding anything to the contrary in these Rules and
Regulations, all approvals needed of Landlord must be in writing. Landlord may
waive any one or more of these Rules and Regulations for the benefit of any
particular tenant or tenants, but no such waiver by Landlord shall be construed
as a waiver of such Rules and Regulations in favor of any other tenant or
tenants, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against that tenant or any or all tenants of the Building.
<PAGE> 72
EXHIBIT "F"
SPECIAL STIPULATIONS
1. Early Access to Premises by Tenant. Tenant will have access, at no cost
to Tenant, to the Premises to install equipment and furnishings during
the period three (3) weeks prior to the Commencement Date. At such
time, the Premises shall be in condition to permit the installation of
phone lines, equipment and furniture (subject to Fulton County Fire
Marshall's requirements).
2. Tenant Improvement Allowance. Landlord will provide a Tenant
Improvement Allowance, to be computed, expanded and applied in
accordance with a Leased Premises Improvement Agreement attached to the
Lease as Exhibit "C", slab-to-slab, of Fourteen Dollars ($14.00) per
rentable square foot of the Premises. Additionally, Landlord will
provide ceiling grid and slot diffusers in place, with ceiling tiles
stacked on the floors of the Premises. Any unused portion of the Tenant
Improvement Allowance may be used for tenant improvements in future
expansion areas.
3. Space Planning, Architectural and Engineering. Landlord shall provide
Tenant with an allowance of One Dollar ($1.00) per square foot of net
usable area ($73,059.00) for the preparation of final floor plans and
construction documents based on building standard finishes.
4. Option to Expand. For a period of twelve (12) months after the
Commencement Date, Tenant shall have the right to expand the Premises
by up to 20,000 square feet of net rentable area. The rental and other
charges under the Lease (on a per square foot basis) shall be
applicable to said expansion space and all other terms of the Lease
shall be applicable to said expansion space; provided, however, that
the term of the Lease as to any such expansion space shall expire or
otherwise terminate with the term of the Lease applicable to Tenant's
original Leased Premises. The option space shall be contiguous to
Tenant's original Leased Premises.
5. Right of First Offer. Upon the expiration of any other lease between
Landlord and any other tenant in the Building, Tenant shall have the
Right of First Offer to expand its facilities into any area as to which
such other lease is expiring, provided Tenant provides written notice
of exercising this Right of First Offer within thirty (30) days of
written notice from Landlord.
6. Tenant Day Care Facility. Tenant, at its sole cost and expense, shall
have the right to construct and operate a day care facility for primary
use by children of its employees within Tenant's Leased Premises;
provided that no more than twenty-five percent (25%) of the children
kept therein will be other than employee dependents. Tenant shall
assume all responsibility and liability for the operation of such a
facility, including playground, and shall indemnify, save and hold
harmless Landlord of and from all liability therefor. Landlord agrees
to designate a portion of the grounds adjacent to the office building
as a playground area for the children being cared for in Tenant's day
care center. Landlord agrees to enter into no agreement with any other
tenant which would prohibit or limit Tenant's ability to own and
operate such a day care facility.
<PAGE> 73
7. Tenant's Physical Fitness Center. Tenant, at its sole cost and expense,
shall have the right to create a physical fitness center within its
Leased Premises. All responsibility and liability for the operation of
such a facility shall be borne by Tenant. Landlord agrees to contribute
to Tenant up to Ten Thousand Dollars ($10,000), to be expended by
Tenant solely to furnish machines and equipment to be used in the
physical fitness center.
8. Vehicular Access. Landlord shall complete construction, at least three
(3) weeks prior to the Commencement Date, of vehicular access to both
Rockmill and Old Roswell Roads.
9. Tenant's Employee Deli/Dining Facility. Tenant shall have the right to
create within its Leased Premises an employee dining facility for the
exclusive use of Tenant's employees. The cost of such facility shall be
borne entirely by Tenant, who shall assume all responsibility and
liability for the operation of such facility.
10. Building, Premises and Parking Access. Tenant will have twenty-four
(24) hours per day, seven (7) days per week, fifty-two (52) weeks per
year, access to its Premises, the Building and exterior parking
facilities. The building will contain four (4) elevators, one of which
will be designated as a dual use elevator for both freight and
passenger service. The use of the freight elevator will require prior
notice to the Building's management.
11. Security and Life Safety. The Building's security and life safety
system shall consist of a computerized card activated access control
system for twenty-four (24) hour, seven days a week entry into the
Building. In addition, Landlord or Office Park manager shall provide a
roving security patrol for surveillance in the Office Park from 6 P.M.
Monday through Friday and twenty-four (24) hours a day on weekends and
holidays.
12. Graphics and Exterior Signage. Tenant identification will be available
on the Building's lobby directory and at the Tenant's Premises primary
entrance. In addition, Landlord will provide Tenant an exterior
Building monument sign for Tenant's exclusive use, which sign shall
contain Tenant's corporate colors and logo and shall at all times be
larger than and not in proximity to any sign provided for any other
Tenant of the Building.
13. On-Site Management. Landlord will manage the Building with an on-site
management staff to be located within the Office Park.
14. Recreational Amenities. Landlord will construct walking/jogging trails
in the vicinity of the natural lake within the Office Park, for use by
tenants within the Office Park, and will also provide in the vicinity
of the lake, picnic tables and seating for outdoor eating. So long as
the privilege is not abused, Tenant's employees shall also have the
privilege of fishing in the natural lake. Landlord shall also
construct, at its expense, a softball diamond within the Office Park.
15. Tenant's Right to Sublease Premises. Notwithstanding the provisions of
Paragraph 10 of the Lease, Landlord's written consent to subletting or
assignment of all or part of the Premises shall not be unreasonably
withheld or delayed. Further, no consent of Landlord shall be required
for occupancy of the Premises by any subsidiary, affiliate, or related
entity of Tenant.
<PAGE> 74
16. Heating, Ventilation & Air Conditioning. Notwithstanding the provisions
of Paragraph 13 of the Lease, Landlord shall provide heating,
ventilation, and air conditioning services to the Premises from 8:00
A.M. to 7:00 P.M. on weekdays and 8:00 A.M. to 2:00 P.M. on Saturdays.
After hours heating, ventilating and air conditioning will be provided
by Landlord to Tenant upon request on a floor-by-floor basis at a cost
of Fifty Dollars ($50.00) per hour per air handler unit per floor, such
amount to be adjusted annually in accordance with Paragraph 19 herein.
17. Legal Description of Property. Within sixty (60) days of the date of
this Lease, Landlord will obtain a complete survey of the boundaries of
the Property and will then develop therefrom a full metes and bounds
legal description of same that will thereafter become Exhibit "B" to
this Lease. The location therein of the Building to be constructed by
Landlord is shown on the "Conceptual Plan" attached as the first page
of Exhibit "B-1" to this Lease, wherein the Building is depicted as
"Pod 1-Office Building."
18. Floor Plan of Leased Premises. Within one hundred twenty (120) days of
the date of this Lease, Landlord will obtain, from an architect
licensed as such in the State of Georgia, a floor plan(s) depicting the
outline of the Leased Premises, which floor plan shall then become
Exhibit "A" to this Lease.
19. Further Explanation of CPI Adjustments. In elaboration of the
provisions of Paragraph 3(d), the initial CPI adjustment shall be made
as of July 1, 1997, which is one year after the Commencement Date of
the Lease. A second CPI adjustment will be made six months thereafter,
as of January 1, 1998. Thereafter, all CPI adjustments shall be made at
twelve-month intervals, on an annual basis, effective as of January 1
of each succeeding year following 1998. All CPI adjustments will be
made as to only that portion of Base Monthly Rental which is other than
initial Operating Expenses of the Building (as that figure increases
from time to time throughout the Lease Term due to the making of prior
CPI adjustments).
By way of illustration, the initial amount of the Base Monthly Rental
which represents Operating Expenses of the Building is Five Dollars ($5.00) per
rentable square foot; the initial Monthly Base Rental is Sixteen and 27/100
Dollars ($16.27) per rentable square foot; and the portion of initial Monthly
Base Rental which is exclusive of Initial Operating Expenses of the Building is
therefore Eleven and 27/100 Dollars ($11.27) per rentable square foot.
Thus, by way of further illustration only, and assuming that the CPI at
the Lease Commencement Date is four hundred (400), and increases to four hundred
ten (410) by the end of the month immediately preceding the date of the first
escalation computation, the escalation would be computed, and would be, as
follows:
[$16.27-$5.00 = $11.27] x .5 [410-400 10
------- ----
400 400 = .025%]
$11.27 x .0125% = .0125% = $0.14 (Escalation for CPI at Beginning of
Second Year of Lease Term)
<PAGE> 75
$11.27 + $.14 = $11.41 (Escalated Portion of Monthly Base Rental for
Second Year of Lease Term)
20. Explanation of Operating Expense Escalation. In elaboration of the
provisions of Paragraph 3(f) of the Lease, that portion of initial
Monthly Base Rental representing Operating Expenses of the Building
(initially $5.00 per rentable square foot or $864,000.00) shall be
escalated, first, for the year next following the Commencement Date and
expiring June 30, 1997; then for the six month period running from July
1, 1997 to and through December 31, 1997, being effective January 1,
1998; and, thereafter, on an annual basis as of the first day of each
calendar year succeeding 1998.
The amount of the escalation shall be Tenant's proportionate share of
the actual amount of increase in Operating Expenses of the Building from period
to period. Thus, by way of illustration only, if during the course of the
initial year of the Lease Term the Operating Expenses of the Building increase
from one year to the next by Fifty Thousand Dollars ($50,000.00), and since
Tenant's Leased Premises will initially compromise 46.3% of the total rentable
area of the Building, then this component of Monthly Base Rental would be
escalated One Thousand Nine Hundred Twenty-Nine and 01/100 Dollars ($1,929.01),
effective July 1, 1997, and would be computed as follows:
Operating Expense $914,000
Base Rental ($5.00) $864,000
--------
Increase $ 50,000 x [ 80,000 RSF
------------
172,800 RSF = .462963 or 46.2963%]
= $23,148.15 - 12 = $1,929.01 per month (ESCALATION FOR OPERATING
EXPENSE INCREASE FOR SECOND
YEAR OF LEASE TERM)
<PAGE> 76
EXHIBIT "G"
STATE OF GEORGIA
COUNTY OF FULTON
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the _____ day of April,
1995, by and among GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Lender"), THERATX, INCORPORATED, a Delaware corporation ("Tenant") and REGENCY
PARK WEST ASSOCIATES, L. P., a Georgia limited partnership ("Landlord").
W I T N E S S E T H:
WHEREAS, Lender has made to Landlord a loan secured by that certain
Deed to Secure Debt recorded in Deed Book _____ at Page _____ in the Fulton
County, Georgia, Records (the "Deed of Trust/Mortgage") conveying the property
described therein (the "Property");
WHEREAS, Landlord and Tenant made and entered into that certain Lease
(the "Lease"), dated the _____ day of April, 1995, with respect to certain
premises therein described (the "Leased Premises"); and
WHEREAS, the parties hereto desire to enter into this Subordination,
Non-Disturbance and Attornment Agreement;
NOW, THEREFORE, for Ten and 00/100 Dollars ($10.00) and other good and
valuable consideration, the receipt and, sufficiency of which are hereby
acknowledged, Lender, Tenant and Landlord hereby covenant and agree as follows:
1. SUBORDINATION. Tenant has subordinated and does hereby
subordinate the Lease, together with any and all rights, title, interest,
estates, options, liens and charges created thereby, to the Deed of
Trust/Mortgage, any and all advances made or secured thereunder, and any and all
renewals, modifications, consolidations, replacements, extension, transfers and
assignments thereof. The Dead of Trust/Mortgage shall be superior to the rights,
title, interest and estate of Tenant in and to the Leased Premises by virtue of
the Lease. The Deed of Trust/Mortgage may be amended from time to time without
the consent of Tenant.
2. NON-DISTURBANCE AGREEMENT. As long as there is no "event of
default" (as defined in the Lease) on the part of Tenant, Tenant's rights under
the Lease and its possession of the Leased Premises will not be interfered with
or disturbed by Lender during the term of the Lease (except in accordance with
the terms of the Lease) following acquisition of title to the property (a) by
Lender or any purchaser by reason of foreclosure of the Deed of Trust/Mortgage
or other proceedings to enforce the rights of the owner and holder of the Deed
of Trust/Mortgage or (b) by Lender or its designee pursuant to acceptance of a
deed in lieu of foreclosure or (c) by any other method (in any case, a "Transfer
of Ownership").
<PAGE> 77
3. ATTORNMENT AGREEMENT. If a Transfer or Ownership occurs,
Lender and Tenant will be bound to each other, as Landlord and Tenant,
respectively, under all of the terms and conditions of the Lease for the
remainder of the term thereof, including any renewal or extension term, and
Tenant will attorn to Lender as its landlord, such attornment to be effective
and self-operative, without the execution of any other instruments on the part
of either party to this Agreement, to the extent of the then remaining balance
of the term of the Lease, including any extensions or renewals, shall be as are
now set forth in the Lease, subject to Paragraph 4 hereof. As used in this
Paragraph and in the subsequent provisions hereof, whenever the Agreement
allows, the term "Lender" will also include a purchaser of the Property at a
foreclosure sale.
4. LENDER'S LIABILITY. If Lender shall succeed to the interests
of Landlord under the Lease, Lender shall be bound to Tenant under all the terms
of the Lease, and Tenant shall have, from the time of Lender's succession to the
interest of Landlord under the Lease, the same remedies against Lender that it
would have had under the Lease against Landlord, but for the succession of
Lender to the interests of Landlord. In the event of such succession, Lender
shall not be:
4.1. liable for any act or omission of any prior landlord
under the Lease (including Landlord); or
4.2. subject to any offsets or defenses which Tenant might
have had against any prior landlord under the lease (including Landlord); or
4.3. bound by any rent or other charges which Tenant might
have paid in advance or above its current obligation to any prior landlord under
the same Lease (including Landlord): or
4.4. bound by any agreement or modification of the Lease
made without Lender's consent, which consent shall not be unreasonably withheld.
5. NOTICE OF DEFAULT BY LANDLORD. Tenant agrees to give to Lender
the same notice of any default by Landlord under the Lease that it gives to
Landlord. 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 Deed of
Trust/Mortgage and designated the address to which such notices are to be sent.
Tenant further agrees that Lender shall have a reasonable time (not less than
thirty (30) days) to cure any such default in the event Landlord fails to cure
such default within the grace period, if any, allowed under the Lease, and to
accept all payments made or acts done by Lender on behalf of Landlord within
said reasonable time as though the same had been timely done and performed by
Landlord so that such acts or payments shall cure such default. For purposes
hereof, Lender's address is:
General Electric Capital Corporation
9040 Roswell Road, Suite 680
Atlanta, Georgia 30350
Attention: Regional Manager
<PAGE> 78
or such other address as Lender may designate to Tenant by giving
written notice to Tenant at the address set forth in the Lease, or to such other
address as Tenant may in writing designate.
6. ENTIRE AGREEMENT. This Agreement contains the entire agreement
of the parties and i it may not be modified orally or in any other manner other
than by agreement in writing signed by the parties hereto or their respective
successors in interest.
7. PROVISIONS BINDING. This Agreement shall inure to the benefit
of and be binding upon the Tenant, and its successors and assigns, it being
expressly understood that all references herein to Tenant shall be deemed to
include not only Tenant, but also its successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LENDER:
GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation
By: /s/ Fernando A. Nasmyth
---------------------------------------
Fernando A. Nasmyth,
Authorized Signatory
[CORPORATE SEAL]
TENANT:
THERATX, INCORPORATED, a Delaware
Corporation
By: /s/ John A. Bardis
---------------------------------------
CEO & President
[CORPORATE SEAL]
<PAGE> 79
LANDLORD:
REGENCY PARK WEST ASSOCIATES, L.P., a
Georgia Limited Partnership
By: AMERICAN RESURGENS MANAGEMENT CORP.,
a Georgia Corporation
As General Partner
By: [Illegible]
--------------------------------------
Its: [Illegible]
---------------------------------
[CORPORATE SEAL]
APPROVED:
GENERAL ELECTRIC REAL ESTATE
EQUITIES, INC., a Delaware Corporation
By: [Illegible]
-------------------------------------
Its: Vice President
[CORPORATE SEAL]
<PAGE> 80
Exhibit "B"
to Landlord's Consent to Second Sublease
-------------------------------
SECOND SUBLEASE AGREEMENT
-------------------------------
May 28, 1999
<PAGE> 81
LIST OF EXHIBITS
Exhibit A - Consent Form from Landlord
Exhibit B - Consent form from TheraTX
Exhibit C - Drawing showing location of Second Subleased Premises
Exhibit D - Copy of Lease and all Amendments
Exhibit E - Copy of Subleased and all Amendments
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. Sublease...........................................................1
2. Term...............................................................2
3. Rent...............................................................2
4. Alterations........................................................3
5. Assignment and Subletting..........................................4
6. Brokers............................................................4
7. Obligations of the Parties.........................................4
8. Incorporation by Reference.........................................5
9. Indemnification....................................................5
10. Termination; Default; Remedies.....................................5
11. Charter Certification..............................................6
12. Miscellaneous......................................................6
12.1 Binding Effect............................................6
12.2 Notices...................................................7
12.3 Governing Law.............................................7
12.4 Entire Agreement..........................................7
12.5 Consent...................................................7
12.6 Counterparts..............................................7
12.7 Quiet Enjoyment...........................................7
12.8 Authority.................................................8
</TABLE>
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<PAGE> 83
SECOND SUBLEASE AGREEMENT
THIS SECOND SUBLEASE AGREEMENT ("Second Sublease") is made and entered
into as of the 28th day of May, 199, by and among: (i) Charter Behavioral Health
Systems, LLC, a Delaware limited liability company ("Charter"), and (ii) Witness
Systems, Incorporated, a Delaware Corporation ("Witness").
RECITALS:
A. Pursuant to that certain Lease dated as of April 25, 1995,
between TheraTx, Incorporated ("TheraTx") and Regency Park West Associates, L.P.
("Regency"), as amended by a First Amendment to Lease dated October 25, 1995, a
Second Amendment to Lease dated August 12, 1996, and a Third Amendment to Lease
dated March 12, 1997 (together, the "Lease"), Regency leased to TheraTx certain
real property consisting of a total of approximately 107,695 rentable square
feet located on the first, third and fourth floors of a multistory precast
concrete and glass office building (the "Building") situated at 1105 Sanctuary
Parkway in Alpharetta, Georgia (the "Leased Premises").
B. Sanctuary Park Realty Holding Company ("Landlord") is the
successor in interest to Regency as landlord.
C. Pursuant to that certain Sublease Agreement dated as of April
30, 1998, between Charter and TheraTx, TheraTx subleased to Charter certain of
the Lease Premises consisting of 47,846 rentable square feet (43,695 usable
square feet) in the location shown in Exhibit A to the Sublease Agreement
together with the nonexclusive use of all common areas pertaining thereto as
described in the Sublease Agreement (collectively, the "Subleased Premises").
D. Charter desires to sublet a portion of the Subleased Premises
to Witness, and Witness desires to sublet such portion of the Subleased Premises
from Charter, upon the terms and conditions contained in this Second Sublease.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties hereto hereby
agree as follows:
1. SUBLEASE. Charter hereby leases to Witness, and Witness hereby
leases from Charter, that portion of the Subleased Premises on the fourth floor
of the Building (Lake View I, at Sanctuary Park) consisting of 11,835 rentable
square feet (10,808 usable square feet in the location shown on the drawing
attached hereto and made a part hereof, at Exhibit A, together with the
nonexclusive use of all common areas pertaining thereto (including, but not
limited to Witness' proportionate share of all parking space rights of Charter
pursuant to the Lease, it being agreed and understood that such spaces consist
of four (4) unreserved and nondesignated spaces for each One Thousand (1,000)
feet of rentable square feet) (all of the foregoing is hereinafter collectively
referred to as the "Second Subleased Premises").
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2. TERM. The initial term (the "Initial Term") of this Second
Sublease shall commence on July 1, 1999 (the "Commencement Date") and shall
continue for a period of three (3) years, ending on June 30, 2002. In addition,
in the event Charter does not desire to utilize the Second Subleased Premises
for its own use following the expiration of the Initial Term, and providing
Witness is not then (i.e., as of the date of Charter's receipt of Witness'
notice of Witness' desire to negotiate mutually acceptable terms and conditions
applicable to the renewal of this Sublease) in default or threatened default,
and provided Witness has not assigned or sublet all or any portion of the Second
Subleased Premises, Witness shall have the right to extend this Second Sublease
for an additional term (the "Renewal Term") (the Initial Term and the Renewal
Term are sometimes hereinafter collectively referred to as the "Term") of five
(5) years, commencing on July 1, 2002, upon written notice to Charter given on
or before February 1, 2002, upon the same terms and conditions contained herein,
except that the "Base Rent" as hereinafter defined during the Renewal Term shall
increase as agreed upon by Charter and Witness. If Charter and Witness have not
reached an agreement regarding the amount of the Base Rent during the Renewal
Term by March 1, 2002, then this Second Sublease shall terminate upon expiration
of the Initial Term. Failure of Witness to provide the above described written
notice to Charter by February 1, 2002 shall be deemed a waiver by Witness of its
right to extend this Second Sublease for the Renewal Term.
3. RENT. Witness shall pay base rent ("Base Rent") in equal
monthly installments in advance, as follows:
July 1, 1999 121,308.72 ($20.50 per $20,218.12 per month
December 31, 1999 rentable square foot)
(Six months)
Thereafter, commencing on January 1, 2000, and continuing for the
remainder of the Initial Term, the Base Rent (as adjusted) shall be adjusted on
January 1 of each year to an amount equal to the Base Rent (as adjusted) in the
immediately preceding calendar year, adjusted by the percentage increase (if
any) in the "Consumer Price Index" (as hereinafter defined) which occurred over
the twelve (12) month period immediately preceding the date of each adjustment
(it being agreed and understood, that if the Consumer Price Index decreases,
there will be no such adjustment, and the Base Rent will remain the same as the
prior year).
The term, "Consumer Price Index" shall be the Consumer Price Index for
All Urban Consumers - U.S. City Average for All Items (1982-84 = 100) of the
Bureau of Labor Statistics of the United States Department of Labor. If the
Consumer Price Index published by the Department of Labor, Bureau of Labor
Statistics, is changed so that it affects the calculations achieved hereunder,
the Consumer Price Index shall be converted in accordance with a conversion
factor published by the United States Department of Labor, Bureau of Labor
Statistics. If the Consumer price Index is discontinued or revised during the
Term of the Second Sublease, such other government index or computation with
which it is replaced for purposes of the Lease or the Sublease shall be used for
purposes of this Second Sublease. Notwithstanding the foregoing, in
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no event shall the annual effective amount of the Base Rent increase from one
calendar year to the next by more than five percent (5%).
All Base Rent shall be payable in equal monthly installments, on or
before the first (1st) day of each month, in advance. witness shall pay the sum
of Forty Thousand Four Hundred Thirty-Six and 24/100 Dollars ($40,436.24) to the
Charter, at such time as this Second Sublease has been fully executed and
Landlord and TheraTx have consented to the same, which amount represents payment
of Base Rent for the months July and August of 1999, of the Initial Term.
In addition to the Base Rent, upon receipt of a written invoice from
Charter, Witness shall also pay, as and when due, to either Charter or to such
party as such amount shall be owed, Witness' Share (as that term is hereinafter
defined) of any and all increases over the "Base Amount" required to be paid by
Charter, as Charter's Share under the terms of the Sublease, including, without
limitation, all operating expenses, insurances, taxes, utilities and other
charges (the "Operating Expenses"). For purposes of this Sublease, the "Base
Amount" shall mean the amount of Operating Expenses of the Building for the
calendar year 1997, and the term, "Additional Rent" shall mean, in addition to
the definition ascribed to that term in the Lease or Sublease, Witness' Share of
(i) the increase (if any) in Landlord's Operating Expenses for the calendar year
2000 as compared with the calendar year 1999 (i.e., the Base Amount, as defined
herein), and (ii) Landlord's estimated increase in operating expenses for the
then current calendar year as compared with the previous calendar year. The
Additional Rent shall be estimated each year, beginning January 1, 2000, and
paid in equal monthly installments, in accordance with, and consistent with, the
Lease and the Sublease. The Additional Rent shall be reconciled by Charter at
the end of each calendar year, and Witness shall pay to Charter the amount of
any deficiency, or Charter shall reimburse Witness for any overpayment, as the
case may be in accordance with, and consistent with, the Lease and the Sublease.
Witness' Share shall be defined as a fraction, the numerator of which shall be
the then current rentable area of the Second Subleased Premises (i.e., 11,835
rentable square feet) and the denominator of which shall be 47,846 rentable
square feet (i.e., the size of the Witness Premises under the Lease). Thus
24.73% is defined as the Witness' Share, and Witness shall be obligated to pay
24.73% of Charter's Share, as that term is defined in the Sublease.
Charter agrees that it will cooperate with Witness, and assist Witness
as reasonably requested, in obtaining access to Landlord's and Witness's books
and records for the purpose of verifying the Operating Expenses, pursuant to,
and in accordance with, Section 3(f) of the Lease and Section 3 of the Sublease.
If any payment of Base Rent or other sum due hereunder from Witness to
Charter remains unpaid for a period of five (5) business days after such amount
is due, the amount of such unpaid Base Rent or other payment shall be increased
by a late charge to be paid to Charter by Witness in an amount equal to five
percent (5%) of the amount of the delinquent Base Rent or other payment.
4. ALTERATIONS. By the execution of this Second Sublease, Witness
acknowledges that it has examined and knows the condition of the Second
Subleased Premises,
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<PAGE> 86
and that Witness accepts the Second Subleased Premises in its "as is, where is"
condition, with all faults. Any and all alterations t the Second Subleased
Premises shall be in accordance with Section 7 of the Lease and Section 4 of the
Sublease.
5. ASSIGNMENT AND SUBLETTING. Witness shall not assign, transfer
or further sublease all or any part of its interest in the Second Subleased
Premises without the consent of Landlord, TheraTx, and Charter. The parties
acknowledge and agree that Landlord's Witness', and Charter's consent to any
such subletting or assignment shall be in accordance with Section 10 of the
Lease, with the Section 15 of Exhibit F to the Lease, and with Section 5 of the
Sublease.
6. BROKERS. The parties acknowledge and agree that Tishman Real
Estate Services ("Tishman") represents Witness in connection with this Second
Sublease, and Jack Anderson & Associates ("Anderson") represents Charter in
connection with this Second Sublease.
Charter agrees that it shall pay Anderson a real estate commission
equal to one and one-half times (1-1/2) the first full monthly payment of Base
Rent due under this Second Sublease, plus six percent (6%)of all Base Rent due
under this Second Sublease during the Initial Term. Charter shall pay fifty
percent (50%) of the foregoing commission to Anderson, within thirty (30) days
following execution and delivery of this Second Sublease by Charter and Witness
and receipt of Landlord's and TheraTx's consents to sublease, and Charter shall
pay the remaining fifty percent (50%) of such commission on the Commencement
Date. Anderson shall then pay within five (5) business days, two-thirds of such
commissions actually received from Charter to Tishman and Anderson shall be
entitled to retain one-third of such commissions. Witness shall not be liable or
responsible for payment of an commissions payable under the Second Sublease.
Each party represents and warrants to the other that it has not had
dealings with any real estate broker, finder or other person with respect to
this Second Sublease except for Tishman and Anderson (collectively referred to
herein as the "Brokers"). Each party agrees to indemnify, defend and hold the
other harmless from and against all claims for broker's commissions or finder's
fees in breach of the foregoing representation and warranty.
7. OBLIGATIONS OF THE PARTIES.
Witness. With respect to the Second Subleased Premises, after and
incurred from the Commencement Date and throughout the Term, Witness shall be
responsible for payment and/or performance(s) as applicable of all utility and
service charges, maintenance, and Charter's indemnification and insurance
obligations pursuant to the Lease.
Charter. Charter shall not do or permit to be done anything which would
constitute a violation or breach of any of the terms, conditions or provisions
of the Sublease as it applies to the Subleased Premises or which would cause the
Sublease, as it applies to the Premises, to be terminated or forfeited by virtue
of any risks of termination or forfeiture reserved by or vested in TheraTx or
Landlord.
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<PAGE> 87
8. INCORPORATION BY REFERENCE. The sublease of the Second
Subleased Premises by Charter to Witness shall be controlled by the Lease, a
copy of which is attached hereto and made a part hereof, and incorporated herein
by this reference, as Exhibit D, and the Sublease, a copy of which is attached
hereto and made a part hereof, and incorporated herein by this reference, as
Exhibit D. After and incurred from the Commencement Date throughout the Term of
the Second Sublease. Witness agrees to abide by and perform each and every
obligation of Charter under the Sublease with respect to the Second Subleased
Premises. The Sublease by Charter to Witness shall be governed by this Second
Sublease; provided, however, that in the event of a conflict between the
Sublease and this Second Sublease, the Sublease shall control.
9. INDEMNIFICATION. Witness agrees that from and after the
Commencement Date and throughout the Term, it will indemnify Charter and hold
Charter, Witness, and Landlord harmless from and against any and all claims,
actions, damages, liability, losses and expenses (including reasonable
attorney's fees actually incurred) in connection with the loss of life, personal
injury, and/or damage to property arising from or out of any occurrence in, upon
or at the Second Subleased Premises, or the occupancy or use by Witness of the
Second Subleased Premises or any part thereof where occasioned wholly or in
partly by any act or omission of Witness, its agents, contractors, employees,
servants, or concessionaires. Charter agrees that from and after the
Commencement Date and throughout the Term, it will indemnify Witness and hold
Witness harmless from and against any and all claims, actions, damages,
liability, losses and expenses (including reasonable attorney's fees actually
incurred) in connection with the loss of life, personal injury, and/or damage to
property arising from or out of any acts or omissions occurring prior to the
Commencement Date and any acts of omission of Charter or its agents, employees,
successors or assigns, relating to the Lease, the Sublease, or this Second
Sublease.
10. TERMINATION; DEFAULT; REMEDIES. In the event Landlord
terminates the occupancy rights of TheraTx under the Lease, or TheraTx
terminates the occupancy rights of Charter under the Sublease, the right of
Witness to occupy the Second Subleased Premises shall also cease and terminate,
and this Second Sublease shall be null and void. In addition, in the event
Witness shall fail to pay any installment of Base Rent or other sums of money
payable to Charter within five (5) days after the same is due and payable under
this Second Sublease, or in the event Witness shall breach or fail to comply
with any other covenants or provisions of this Second Sublease, the Sublease, or
the Lease on its part to be performed and such failure continues for a period of
twenty (20 days after Charter's written notice thereof to Witness, Charter shall
have the right to terminate this Second Sublease and to bring an action against
Witness for damages occasioned by such breach or default, including, but not
limited to, reasonable attorney's fees.
If Charter fails to perform any of its obligations under the Sublease
or hereunder for a period of ten (10) days after the receipt of written notice
from Witness or TheraTx, as the case may be, in the event of a payment default
or for a period of thirty (30) days after receipt of written notice from Witness
or TheraTx, as the case may be, to Charter specifying a non-monetary default and
demanding Charter's cure thereof, Witness may, at is option, pay or perform such
obligations and Witness' reasonable cost of performance shall be paid to Witness
by Charter upon demand. In the event Charter does not reimburse Witness for the
reasonable cost of Witness' performance
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<PAGE> 88
on behalf of Charter, Witness may offset against charges thereafter coming due
under this Second Sublease, the amounts due Witness from Charter as a result of
Witness' substitute performance.
11. CHARTER CERTIFICATION. Charter hereby certifies that:
(a) Annexed hereto as Exhibit E is a true and correct
copy of the Sublease Agreement; there are no other amendments or modifications
to the Sublease Agreement.
(b) The Sublease is in full force and effect and, neither
Charter nor TheraTx is in default under the Sublease and no event has occurred
and no condition exists which, with the giving of notice or with the passage of
time, or both, will constitute a default under the terms of the Sublease.
12. MISCELLANEOUS.
12.1 Binding Effect. All of the terms, conditions.
covenants, stipulations and agreements to be performed by any of the parties
hereto shall be binding upon their respective heirs, successors, legal
representatives and assigns. The parties hereto warrant that they have the
express authority to bind the respective parties to this Second Sublease.
12.2 Notices. All notices, mailings and communications
relative to this Second Sublease shall be in writing and shall be either
personally delivered and receipted, or delivered by registered U.S. mail,
postage prepaid, return receipt requested, or by overnight courier, in any event
delivered and addressed to the parties as follows (all notices shall be deemed
"received" on the date upon which receipt is acknowledged in writing, either
personally or by return receipt):
If to Charter: Charter Behavioral Health Systems, LLC
577 Mulberry St
P. O. Box 209
Macon, Ga 31298
Attention: Mr. Bill Terry
Direct Phone: 912-751-2234
Fax: 912-751-2909
cc: Linda Gemind, Esq.
Charter Behavioral Health Systems, LLC
1105 Sanctuary Parkway
Suite 400
Alpharetta, Ga 30004
Phone: 678-297-4947
Fax: 678-297-4870
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<PAGE> 89
If to Witness: John Ezrine
Chief Financial Officer
Witness Systems Inc.
1105 Sanctuary Parkway
Suite 200
Alpharetta, Ga 30004
Phone: 770-754-1905
Fax: 770-754-1889
If to TheraTx: TheraTx, Incorporated
3300 Aegon Center
400 West Market Street
Louisville, KY 40202
Attention: Jill L. Force, Esq., Vencor, Inc.
Phone: 502-596-7360
Fax: 502-596-4075
If to Landlord: Sanctuary Park Realty Holding Company
c/o J.P. Morgan Investment Management, Inc.
522 Fifth Avenue
New York, NY 10036
Attn: Mr. Akram S. Busaidy
Any party may change its address for receiving notices and communications by
giving the other appropriate written notice thereof.
12.3 Governing Law. The provisions of the Second Sublease shall be
construed, enforced and governed in all respect by the laws of the State of
Georgia.
12.4 Entire Agreement. This Second Sublease, together with the
exhibits attached hereto, constitutes the complete and entire understanding and
agreement between the parties hereto with regard to all matters involved in this
transaction and supersedes any and all prior or contemporaneous agreements,
whether written or oral.
12.5 Consent. This Second Sublease shall not become operative until
and unless TheraTx and Landlord shall each execute and deliver a written consent
to this Second Sublease within thirty (30) days from the date of this Second
Sublease.
12.6 Counterparts. This Second Sublease may contain more than one
counterpart of the signature page and this Second Sublease may be executed by
affixing the signature of each party to one of such counterpart signature pages;
all of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
12.7 Quiet Enjoyment. Charter represents and warrants that it has
full right and authority to enter into this Second Sublease and that Witness,
while paying the Rent and performing Witness' other covenants and agreements
herein set forth, shall peaceably and quietly
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<PAGE> 90
have, hold and enjoy the Second Subleased Premises for the Second Sublease Term
without hindrance or molestation from Charter, its agents, contractor or
employee, or persons claiming by, through or under Charter, subject to the terms
and provisions of this Second Sublease.
12.8 Authority. If either party signs as a corporation, execution
hereof shall constitute a representation and warranty by such party to the other
that such party is a duly organized and existing corporation, that such party
has been and is qualified to do business in the State of Georgia and in good
standing with the State of Georgia, that the corporation has full right and
authority to enter into this Second Sublease, and that all persons signing on
behalf of the corporation were authorized to do so by appropriate corporate
action. If either party signs as a partnership, trust, or other legal entity,
execution hereof shall constitute a representation and warranty by such party to
the other that such party has complied with all applicable laws, rules, and
governmental regulations relative to such party's right to do business in the
State of Georgia, that such entity has the full right and authority to enter
into this Second Sublease, and that all persons signing on behalf of such entity
were authorized to do so by any and all necessary or appropriate partnership,
trust, or other legal entity action.
IN TESTIMONY WHEREOF, WITNESS the signatures of the parties hereto as
of the day, month and year first written above.
Charter Behavioral Health Systems, LLC
By: /s/ Kim Everett
------------------------------------------
Title: CHO
----------------------------------------
("Charter")
Witness Systems Incorporated
By: /s/ Jon W. Ezrine
------------------------------------------
Title: CFO
----------------------------------------
("Witness")
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<PAGE> 91
EXHIBIT A
Consent form from Landlord
[Document not attached]
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<PAGE> 92
EXHIBIT B
Consent form from TheraTx
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<PAGE> 93
TheraTx, Incorporated ("TheraTx") hereby certifies that:
(A) Annexed hereto as Exhibit D is a true and correct copy of the
Lease, as amended, and there are no other amendments or modifications to the
Lease.
(B) The Lease is in full force and effect and TheraTx is not in
default under the Lease and no event has occurred and no condition exists which,
with the giving of notice or with the passage of time, or both, will constitute
a default under the terms of the Lease.
(C) If TheraTx fails to perform any of its obligations under the
Lease for a period of ten (10) days after the receipt of written notice from
Regency in the event of a property default or for a period of thirty (30) days
after receipt of written notice from Regency specifying a non-monetary default
and demanding cure thereof, Witness may, at its option, pay or perform such
obligations and Witness' reasonable cost of performance shall be paid to Witness
by TheraTx upon demand.
(D) TheraTx shall not do or permit to be done anything which would
constitute a violation or breach of any of the terms, conditions or provisions
of the Sublease as it applies to the Subleased Premises or which would cause the
Sublease, as it applies to the subleased Premises, to be terminated or forfeited
by virtue of any risks of termination or forfeiture reserved by or vested in
Regency.
THERATX, INCORPORATED
BY:
------------------------------
TITLE:
----------------------------
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<PAGE> 94
EXHIBIT C
Drawing showing location of Second Subleased Premises
MULTI - TENANT CORRIDOR PLAN
FOR
CHARTER BEHAVIORAL HEALTH SYSTEM
[Architectural Drawing Premises]
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<PAGE> 95
EXHIBIT D
OFFICE LEASE AGREEMENT
THERSTX, INC.
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<PAGE> 96
OFFICE LEASE AGREEMENT
THIS LEASE, is made as of this 25th day of April, 1995, between REGENCY
PARK WEST ASSOCIATES, L.P., a Georgia limited partnership (hereinafter called
"Landlord"), and THERATX, INCORPORATED, a Delaware corporation (hereinafter
called "Tenant").
W I T N E S S E T H:
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
those premises (thereinafter called "Premises" or "Leased Premises") shown on
Exhibit "A" attached hereto and made a part hereof, being located on the upper
two floors of a multi-story precast concrete and glass office building (the
"Building") constructed on a parcel of land (the "Property") described on
Exhibit "B" attached hereto and made a part hereof.
1. LEASED PREMISES
Net Usable Area of Leased Premises: 73,059 sq. ft.
Net Rentable Area of Leased Premises: 80,000 sq. ft.
Suite Number: 400
2. TERM AND POSSESSION
(a) The term of this Office Lease (the "Term" or "Lease Term")
shall be for two hundred forty (240) months (or until sooner terminated as
herein provided), beginning on the "Commencement Date" (as hereinafter defined),
except that if the Commencement Date is other than the first day of a calendar
month, the Term shall be extended for the remainder of the final calendar month
thereof.
(b) The "Commencement Date" shall be (i) July 1, 1996; or (ii)
such later date upon which the improvements in the Leased premises have been
substantially completed in accordance with the plans and specification therefor
(other than minor punch list items and any work which cannot be completed on
such date provided such incompletion will not substantially interfere with
Tenant's use of the Leased Premises) and a temporary certificate of occupancy
has been issued by the City of Alpharetta, Georgia, provided, however, the
Commencement Date and the payment of rent hereunder shall be accelerated by the
number of days of any delay resulting from Tenant's request(s) for materials,
finishes or installations, other than provided for in the plans agreed upon by
the parties in accordance with the Leased Premises Improvement Agreement
("Exhibit "C" hereto), which causes landlord to be delayed in delivering the
Leased Premises.
(c) landlord agrees to perform the "Improvement Work" to the
Premises as provided in the Leased Premises Improvement Agreement (Exhibit "C"
hereto) with diligence, subject to events and delays due to causes beyond its
reasonable control. Landlord agrees that the Leased Premises and the Building
shall at the Commencement Date comply with applicable building
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codes and the Americans With Disabilities Act (42 U.S.C. Sections 12101. et.
seq.). The Leased Premises shall be deemed substantially completed and
possession delivered when Landlord has substantially completed the work to be
constructed or installed pursuant to the provisions of said Leased Premises
Improvement Agreement, subject only to the completion of items on Landlord's
punch list (and exclusive of the installation of all telephone and other
communications facilities and equipment and other finish work to be performed by
or for Tenant).
(d) The taking of possession by Tenant shall (subject to any
limitations set forth in the Leased Premises Improvement Agreement) be deemed
conclusively to establish that the Leased Premises have been completed in
accordance with the plans and specifications and are in good and satisfactory
condition as of the date when possession was so taken, latent defects excepted.
3. MONTHLY RENTAL
(a) Tenant shall pay to Landlord, commencing on the Commencement
Date and continuing throughout the Lease Term, initial Monthly Rental of One
Hundred Eight Thousand Four Hundred Sixty-Six and 66/100 Dollars ($108,466.66),
said monthly Rental (hereinafter also referred to as "Base Rental") being
computed by multiplying "Net Usable Area") (as defined hereafter) by a factor of
1.095 (or, for multi-tenant floors, by a factor of 1.15), (ii) then further
multiplying the product thereof by Sixteen and 27/100 Dollars ($16.27) per
square foot, and then (iii) dividing the resulting product thereof by 12. Said
Monthly Rental shall be due and payable in equal installments as of the first
day of each month during every year of the Term hereof in lawful money of the
United States, without deduction or offset whatsoever, to Landlord or to such
other firm or person as Landlord may from time to time designate in writing.
Said Rental is subject to adjustment as provided hereinbelow, provided that in
no event shall Monthly Rental be at any time less than the original base Monthly
Rental stated hereinabove. If this Lease commences on a day other than the first
day of a calendar month, the Monthly Rental for the fractional month shall be
appropriate prorated. Landlord and Tenant agree that Tenant has paid in full in
advance the Monthly Rental for the initial month of the Lease Term, and that
full receipt thereof is acknowledged by Landlord.
(b) Tenant recognizes that late payment of any rent or other sum
due hereunder from Tenant to landlord will result in administrative expense to
landlord, the extent of which additional expense is extremely difficult and
economically impracticable to ascertain. Tenant therefore agrees that if rent or
any other payment due hereunder from Tenant to Landlord remains unpaid ten (10)
days after said amount is due, the amount of such unpaid rent or other payment
shall be increased by a late charge to be paid Landlord by Tenant in an amount
equal to five percent (5%) of the amount on the delinquent rent or other
payment. The amount of the late charge to be paid to Landlord by Tenant for any
month shall be computed on the aggregate amount of delinquent rents and other
payments, including all accrued late charges then outstanding. Tenant agrees
that such amount is a reasonable estimate of the loss and expense to be suffered
by Landlord as a result of such late payment by Tenant and may be charged by
Landlord to defray such loss and expense. The provisions of this Paragraph shall
not relieve Tenant of the obligation to pay rent or other payments on or before
the date on which they are due; nor do the terms of this Paragraph in
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any way affect Landlord's remedies pursuant to Paragraph 19 of this Lease or
otherwise at law in the event said rent or other payment is unpaid after the
date due.
(c) "Net Usable Area" is (i) in the case of a single tenancy
floor, all space measured from the inside surface of the outer wall of the
Building to the inside surface of the opposite outer wall, excluding only the
areas ("Service Area") within the outside walls used for building stairs, fire
towers, elevator shafts flues, vents, pipe shafts, vertical ducts, restrooms,
mechanical room, electrical/telephone room and custodial room, but including any
such areas which are for communications equipment rooms, and (ii) in the case of
a multi-tenancy floor, all space, excluding those Service Areas as defined in
(i) hereinabove, if any, within the inside surface of the outerwall of the
Building enclosing the tenant occupied portion of the floor and measured to the
midpoint of the walls separating areas leased by or held for lease to other
tenants or from areas devoted to corridors, elevator lobbies, restrooms and
other similar facilities for the use of all tenants on the particular floor.
No deductions from Net Usable Area are made for columns necessary to
the Building. The Net Usable Area in the Leased Premises and in the Building
have been calculated on the basis of the foregoing definition and are hereby
stipulated above as to the Leased Premises, whether the same should be more or
less as a result of minor variations resulting from actual construction and
completion of the Leased Premises for occupancy so long as such work is done
substantially in accordance with the approved plans.
(d) Commencing July 1, 1997, then on January 1, 1998 and on each
January 1 thereafter during the Lease Term or as soon thereafter as practicable,
the Monthly Rental specified in this Lease shall able increased by taking that
portion of the Monthly Rental which is not a part of the Operating Expenses of
the Building and multiplying said amount by fifty percent (50%) of the
percentage increase in the Consumer Price Index (the "Index" or "CPI") which
occurred over the early period (or, in the case of the second such adjustment
only, the six month period) between the applicable month of the calendar year
immediately preceding the calendar year as to which the adjustment is being made
and the applicable month of that year (except that in the case of the second
adjustment only, fifty percent (50%) of the percentage increase in said Index
occurring between the end of June, 1997 and the end of December, 1997). The
increase in Monthly Rental as determined above for each given calendar year or
other period shall be accumulated over the Lease Term, and the cumulative annual
additions to Monthly Rental shall be added to the Initial Base Rent figure set
out above to determine, for each succeeding calendar year, the annual increase
in Monthly Rental (See the further explanation and formula set out at Paragraph
19 of the Special Stipulations, Exhibit "F"). If the Monthly Rental cannot be
calculated by the end of any calendar year because of the unavailability of the
ten current index, Tenant shall continue to pay the then existing Monthly
Rental, and Landlord shall prepare as soon as practicable (but in no event later
than April 1 of each successive calendar year) a statement reflecting the
increase in Monthly Rental for the calendar year in question. within ten (10)
days following receipt of Landlord's statement, Tenant shall also pay any
amounts due from Tenant because of such adjustments for months in which Tenant
would have paid a greater Monthly Rental had such figure been calculated
earlier. If Tenant's payments have been in excess of the increased Monthly
Rental due, Tenant shall be provided a credit for such excess amount applied
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to the next installment of Monthly Rental due by Tenant; provided that, in no
event shall Monthly Rentals ever be less than Initial Monthly Rental.
(e) "Consumer Price Index" shall be the Consumer Price Index for
All Urban Consumers - U.S. City Average for All Items (1982-84 = 100) of the
Bureau of Labor Statistics of the United States Department of Labor. If the
Consumer Price index published by the Department of Labor, Bureau of Labor
Statistics, is changed so that it affects the calculations achieved hereunder,
the Consumer Price Index shall be converted in accordance with a conversion
factor published by the United States Department of Labor, Bureau of Lab
Statistics. If the Consumer Price Index is discontinued or revised during the
Term of this Lease, such other government index or computation with which it is
replaced or which is most closely resembles shall be used in order to obtain
substantially the same results as would have been obtained if the Consumer Price
Index had not been discontinued or revised. If the Consumer Price Index is
discontinued and no government index or computation then replaces or closely
resembles the same, Landlord and Tenant shall in good faith agree upon a
suitable substitute.
(f) "Operating Expenses of the Building" shall mean all expenses
of every kind, both fixed and variable and including, without limitation, any
and all federal, state and local taxes (except income taxes), fees and
assessments now or hereafter existing, as are incurred with respect to the
ownership, management, operation, or maintenance of the Building, all as
recorded on an accrual basis and in accordance with accepted principles of sound
management and accounting practices applicable to first-class office building
complexes. "Tenant's proportionate share of the Operating Expenses of the
Building" (hereinafter "Tenant's Share") shall mean, for any period, the amount
in excess of Five Dollars ($5.00) per rentable square foot of the Leased
Premises determined by multiplying the Operating Expenses of the Building for
such period by a fraction, the numerator of which shall be the then current Net
Rentable Area of the Leased Premises, and the denominator of which shall be
172,800 square feet, which is represented by Landlord to be the total rentable
area of the Building. Provided, however in no event shall operating expenses
include: (A) the cost of any service, e.g., electricity, that Landlord sells to
tenants and for which Landlord is entitled to be reimbursed by such tenants: (B)
leasing commissions, attorney fees and other costs and expenses incurred in
connection with negotiations or disputes with tenants or other occupants of the
Building or prospective tenants: (C) the cost of any work or service performed
for any specific tenant of the Building (as distinguished from work or services
performed generally for all tenants): (D) management fees in excess of four
percent (4%) of gross annual collections for the Building: (E) any other
interest or amortization of debt except as specified in the Agreement; (F)
compensation paid to clerks or attendants in concessions or newsstands: (G) any
cost or expense for which Landlord is separately reimbursed or to which Landlord
receives a credit from any other party; or (H) any costs, fines or penalties
incurred due to violations to landlord of any governmental rule or authority.
Commencing July 1, 1997, then on January 1, 1998 and on or about each
January 1 thereafter, (or as soon thereafter as practicable), Landlord shall
provide Tenant with statements of estimated Operating Expenses for the calendar
year (or, in the case of the second such adjustment only, the six month period)
just ended and the projected Operating Expenses for the current calendar year or
other period, and Tenant shall pay as "additional rent" Tenant's Share of the
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projected increase thereon from the prior year or period to the current year or
period . One-twelfth (1/12th) of such projected increase (or, in the case of the
second such adjustment only, one-sixth (1/6th) of such projected increase in
Operating Expenses shall be payable to Tenant monthly in advance. If Landlord
has not furnished Tenant with Landlord's projected Operating Expenses for the
then current year by January 1, (or, in the case of the first such adjustment
only, by July 1, 1997) Tenant shall continue to pay any additional rent on the
basis of the prior year's or period's projected Operating Expenses until the
month after the current year's or period's projected Operating Expenses have
been provided by Landlord. Landlord shall, within one hundred twenty (12) days
(or as son thereafter as practicable) after the close of each calendar year or
period, provide Tenant an unaudited statement of such year's actual Operating
Expenses compared to the actual initial Operating Expenses. If actual Operating
Expenses are greater than the projected Operating Expenses. Tenant shall pay
Landlord, within thirty 930) days of such statement's receipt, Tenant's Share of
the difference thereof. If such year's or period's projected Operating Expenses
are greater than actual Operating Expenses. Landlord shall credit Tenant with
Tenant's Share of the difference between projected Operating Expenses and the
greater of actual Operating Expenses or initial Operating Expenses. If such
year's actual Operating Expenses are less than the actual Operating Expenses for
the previous year. Tenant's Monthly Rental shall be correspondingly reduced. In
no event, however, shall the Five Dollar ($5.00) factor mentioned hereinabove
ever be reduced, or the Monthly Rental be less than Initial Monthly Rental. (See
the formula set out a paragraph 20 of the Special Stipulations, Exhibit "F")
Landlord shall make Landlord's books and records available to Tenant, during
normal business hours and upon reasonable notice by Tenant for review by Tenant;
the cost of said review shall be born by Tenant unless the actual Operating
Expenses as reported by Landlord are found to have been overstated by an amount
in excess of five percent (5%), in which event the cost of such review shall be
borne by Landlord.
4. SECURITY DEPOSIT [OMITTED]
5. OCCUPANCY AND USE
(a) Tenant shall use and occupy the Premises for general office
purposes and for no other use or purpose without the prior written consent of
Landlord.
(b) Tenant shall not do or permit anything to be done in or about
the Premises which will in anyway obstruct or interfere with the rights of other
tenants or occupants of the Building or injure or annoy them; nor shall Tenant
use or allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purposes or for any business, use or purpose reasonably deemed to
be disreputable or inconsistent with the operation of a first class office
building nor shall Tenant cause or maintain or permit any nuisance or breach of
the peace, in, on, or about the Premises. Tenant shall not commit or suffer the
commission of any waste in, on, or about the Premises.
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6. COMPLIANCE WITH LAWS
Tenant shall be solely responsible for, and shall pay promptly and
before delinquent, all federal, state, city, county, and other taxes, license
fees and assessments due or coming due during or after the Term of this lease
against Tenant. Tenant's interest in this Lease or Tenant's personal property or
intangibles owned, placed in or generated in, upon, or about the Premises by
Tenant. Tenant shall not use the Premises in a manner which will in any conflict
with any law, statute, ordinance, or governmental rule or regulation now in
force or which may hereafter be enacted or promulgated. Tenant shall not do or
permit anything to be done on or about the Premises or bring or keep anything
therein which will in any way increase the rate of any insurance upon the
Building or any of its contents or cause a cancellation of said insurance or
otherwise affect said insurance in any manner. Tenant shall at its sole cost and
expense promptly comply with all laws, statutes, ordinances, recommendations,
rules, regulations and requirements of governmental, public or private
authorities and agencies, which are now in force or which may hereafter be in
force and with the requirements of any board of fire underwriters or other
similar body now or hereafter constituted as may apply in relation to or
affecting the condition, use, or occupancy of the Premises, including without
limitation the occupational Safety and Health Act (29 U.S.C. Sections 651,et.
seq. as amended) and the Americans With Disabilities Act (42 U.S.C. Sections
12101, et seq. as amended). Upon demand, Tenant shall pay to Landlord as
additional rent, to be added to any installment of rent thereafter becoming due,
any cost incurred by Landlord in curing any default or meeting any obligation of
Tenant under this Paragraph, and Landlord shall have the same remedies for a
default in payment of such sums as for a default in the payment of rent.
7. ALTERATIONS
Tenant shall not make or suffer to be made any alterations, additions,
changes or improvements in, on, or to the Premises or any part thereof without
the prior written consent of Landlord; and any such alterations, additions,
changes, or improvements in, on or to said Premises except for Tenant's movable
furniture and equipment, shall immediately become Landlord's property and, at
the end of the Term hereof, shall remain on the Premises without compensation to
Tenant, unless Tenant elects to remove same, in which event Tenant shall do so,
and also restore the Premises to its pre-existing condition at Tenant's sole
cost and expense. In the event Landlord consents to the making of any such
alterations, additions, changes or improvements by Tenant, the same shall be
made by Tenant, at Tenant's sole cost and expense, in accordance with all
applicable laws, statutes, ordinances, rules and regulations public and private,
and all requirements of landlord's and Tenant's insurance policies, and in
accordance with plans and specifications approved by Landlord (such approval not
to be unreasonably withheld, delayed or conditioned). Any contractor or person
selected by Tenant to make the same, and all subcontractors, must first be
approved in writing by Landlord, or at Landlord's option, the alteration,
addition or improvement shall be made by Landlord for Tenant's account and
Tenant shall reimburse Landlord for the cost thereof upon demand; provided, that
should Landlord elect to perform to Tenant's account, the cost thereof to Tenant
shall be competitive with any preferred estimate previously obtained by Tenant
and provided to Landlord for such alteration, addition or improvement. Upon the
expiration or sooner termination of the Term herein provided, Tenant
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may opt to remove any improvement or alteration at Tenant's sole cost and
expense, and Tenant shall forthwith and with all due diligence, at its sole cost
and expense, thereupon repair and restore the Premises to their original
condition.
8. REPAIR
By taking possession of the Premises, Tenant accepts the Premises as
being in the condition in which Landlord is obligated to deliver them and
otherwise in good order, condition, and repair, latent defects excepted. Tenant
shall, at all times during the Term hereof at tenant's sole cost and expense
keep the Premises and every part thereof in good order, condition and repair,
excepting ordinary wear and tear, damages thereto by fire, earthquake, act of
God or the elements. Tenant shall upon the expiration or sooner termination of
the Term hereof, unless Landlord demands otherwise as in this paragraph
provided, surrender to landlord the Premises and all repairs, changes,
alterations, additions and improvements thereto in the same condition as when
received, or when first installed, ordinary wear and tear, damage by fire,
earthquake, act of God, or the elements excepted. It is hereby understood and
agreed that Landlord has no obligation to alter, remodel, improve, repair,
decorate, or paint the Premises or any part thereof except as specified in
Exhibit "C" attached hereto and made a part hereof, and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant, except as specifically herein set forth.
9. LIENS
Tenant shall keep the Premises free from any liens arising out of work
performed, material furnished, or obligations incurred by Tenant. In the event
that Tenant shall not, within thirty 930) days following the imposition of any
such lien, cause the same to be released of record by payment or posting of a
proper bond. Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All such sums paid by Landlord and all expenses
incurred by it in connection therewith shall be considered additional rent and
shall be payable to Landlord by Tenant on demand and with interest at the rate
per annum of four percent higher than the prime commercial lending rate from
time to time of Sun Trust bank in Atlanta, Georgia; provided, however, that if
such rate exceeds the maximum rate permitted by law the maximum lawful rate
shall apply; the interest rate so determined is hereinafter called the "Agreed
Interest Rate." Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Building, and any other party having an interest therein, from mechanics and
materialmen's liens, and Tenant shall give to Landlord at least five (5)
business days prior written notice of commencement of any construction on the
Premises.
10. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not sell, assign, encumber or otherwise transfer by
operation of law or otherwise this Lease or any interest herein, sublet the
Premises or any portion thereof, or suffer
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any other person to occupy or use the Premises or any portion thereof, without
the prior written consent of Landlord as provided for herein, nor shall Tenant
permit any lien to be placed on Tenant's interest by operation of law; provided
that Landlord's consent to assignment or subletting shall not unreasonably be
withheld, delayed or conditioned. Tenant shall (i) by written notice, advise
Landlord of its desire from and after a stated date (which shall not be less
than thirty (30) days or more than ninety (90) days after the date of Tenant's
notice) to assign this Lease or to sublet the Premises or any portion thereof
for any part of the Term hereof; said notice by Tenant shall state the name and
address of the proposed assignee or subtenant and Tenant shall deliver to
Landlord a true and complete copy of the proposed sublease with said notice; and
(ii) supply Landlord with such information, financial statements, verifications
and related materials as Landlord may request or desire to evaluate the written
request to sublet or assign. Within ten (10) business days after Landlord's
receipt from Tenant of all the items specified in the immediately preceding
sentence. Landlord shall have the right, exercisable in its sole discretion, to
consent to the proposed subletting or assignment or to disapprove the proposed
subletting or assignment. Tenant shall, at Tenant's own cost and expense
discharge in full any outstanding commission obligation on the part of the
Landlord with respect to this Lease, and any commission which may be due and
owing as a result of any proposed assignment or subletting.
(b) Any subletting or assignment hereunder by Tenant shall not
results in Tenant's being released or discharged from any liability under this
Lease. As a condition to Landlord's prior written consent as provided for in
this paragraph the assignee or subtenant shall agree in writing to comply with
and be bound by all of the terms, covenants, conditions, provisions and
agreements of this Lease, and Tenant shall deliver to Landlord promptly after
execution an executed copy of each sublease or assignment and an agreement of
said compliance by each subtenant or assignee.
(c) Tenant shall reimburse Landlord with ten (10) days from
receipt of Landlord's invoice, all Landlord's administrative costs and expenses,
including legal fees, for reviewing and processing any requests for Landlord's
consent made by Tenant with respect to the subject matter of this Paragraph.
(d) Landlord's consent to any sale, assignment, encumbrance,
subletting, occupation, lien or other transfer shall not release Tenant from any
of Tenant's obligations hereunder or be deemed to be a consent to any such
subsequent occurrence. Any sale, assignment, encumbrance, subletting,
occupation, lien or other transfer of this Lease which does not comply with the
provisions of this Paragraph shall be void.
11. INSURANCE AND INDEMNIFICATION
(a) Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury or damage to any person or
property in or about the Leased Premises by or from any cause whatsoever,
without limiting the generality of the foregoing whether caused by gas, fire or
explosion of the Building or the Office Park of which it is a part or any part
thereof, except as caused by Landlord's negligence or willful misconduct as to
which landlord shall indemnify, save and hold Tenant harmless.
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(b) Tenant shall hold Landlord harmless form and defend the Landlord
against any and all claims or liability for any injury or damage to any person
or property whatsoever; (i) occurring in on or about the Premises or any part
thereof; (ii) occurring in on or about any facilities (including, without
limitation, elevators, stairways, passageways or hallways), the use of which
Tenant may have in conjunction with other tenants of the Building, when such
injury or damage shall be caused in part or in whole by the act, neglect, fault
of or omission of any duty with respect to the same by Tenant, its agents,
servants, employees, or invitees. Tenant further agrees to indemnify and save
harmless Landlord against and from any and all claims by or on behalf of any
work or thing whatsoever done by Tenant in or about or from transactions of
Tenant concerning the Premises, and will further indemnify and save landlord
harmless against and from any and all claims arising from any breach or default
on the part of Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this Lease or arising
from any act or negligence of Tenant, or any of its agents, contractors,
servants, employees and licensees and from and against all cost counsel fees
expenses and liabilities incurred in connection with any such claim or action or
proceeding brought thereon. Furthermore, in case any action or proceeding be
brought against Landlord by reason of any claims or liability for which Tenant
must indemnify Landlord hereunder. Tenant agrees to defend such action or
proceeding at Tenant's sole expense by counsel reasonably satisfactory to
landlord. The provisions of this lease with respect to any claims or liability
occurring prior to expiration or termination of this Lease shall survive any
such expiration or termination.
(c) Tenant agrees to purchase agrees to purchase at its own expense and
to keep in force during the term of this lease a policy or policies of workers'
compensation and commercial general liability insurance including personal
injury and property damage, with contractual liability endorsement in the amount
of at least One Million Five Hundred Thousand Dollars ($1,500,000.00) to be
adjusted annually as Landlord and Tenant may agree each acting reasonably
combined single limit per occurrence for personal injuries or deaths of persons
occurring in or about the Premises. Said policies shall (i) name landlord as an
additional insured and insure Landlord's contingent liability under this Lease
(except for the workers' compensation policy, which shall instead include waiver
of subrogation endorsement in favor of Landlord); (ii) be issued by an insurance
company which is acceptable to landlord and licensed to do business in the State
of Georgia and (iii) provide that said insurance shall not be cancelled unless
thirty (30) days' prior written notice shall have been given to Landlord. Said
policy or policies or certificates thereof shall be delivered to Landlord by
Tenant upon commencement of the Term of this Lease and upon each renewal of said
insurance.
(d) Landlord agrees to purchase at its own expense and to maintain
throughout the Lease Term a policy or policies of commercial property and
casualty insurance covering the full insurable value of the Building.
12. WAIVER OF SUBROGATION
Each of Landlord and Tenant hereby release the other from any and all
liability or responsibility to the other or to anyone claiming through or under
them by way of subrogation or
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otherwise for any loss or damage to property caused by fire or any other perils
insured in policies of insurance covering such property even if such loss or
damage shall have been caused by fault or negligence of the other party, or by
anyone for whom such party may be responsible; provided, however, that this
release shall be applicable and in force and effect only to such extent that
such releases shall be lawful at that time and in any event only with respect to
loss or damage occurring during such time as the releasor's policies of
insurance shall contain a clause or endorsement to the effect that any such
release shall not adversely affect or impair said policies or prejudice the
right of the releasor to coverage thereunder and then only to the extent of the
insurance proceeds payable under such policies. Landlord and Tenant each hereby
covenant and agree to cause their respective insurance carriers to include in
their policies such a clause or endorsement.
13. SERVICES AND UTILITIES
(a) Landlord shall maintain the public and common areas of the
Building, including lobbies, stairs, elevators, escalators, parking facilities,
loading docks and areas, corridors and restrooms, the windows in the Building,
the mechanical plumbing and electrical equipment serving the Building and the
structure itself in reasonably good order and condition except for damage
occasioned by the act of Tenant which damage shall be repaired by Landlord at
Tenant's expense. In the event Tenant requires or needs to have one or more
separate systems of either heating ventilating air-conditioning or other similar
systems over and above that provided by Landlord the installation care expense
and maintenance of each such system shall be borne by and paid for by Tenant.
(b) Subject to the provisions elsewhere herein contained and to the
Rules and Regulations of the Building, Landlord agrees to furnish to the
Premises during ordinary business hours of generally recognized business days to
be conditioning required in Landlord's judgment for the comfortable use and
occupation of the Premises, janitorial services during the times and in the
manner that such services are, in Landlord's judgment customarily furnished in
comparable office buildings in the immediate market area and elevator service.
(c) Landlord shall provide additional or after-hours heating or
air-conditioning, at Tenant's reasonable request Tenant shall pay to Landlord a
reasonable charge for such services as determined from time to time by Landlord
Tenant agrees to keep and cause to be kept closed all window coverings, if any,
when necessary because of the sun's position and Tenant also agrees at all times
to cooperate fully with Landlord and to abide by all rules, regulations and
requirements which Landlord may prescribe for the proper functioning and
protection of lighting, heating, ventilating and air-conditioning systems and to
comply with all laws, ordinances and regulations respecting the conservation of
energy. In the event heat-generating machines excess lighting or equipment used
in the Premises affect the temperature normally maintained by the
air-conditioning units in the Premises. Tenant shall pay to Landlord, upon
demand by Landlord all costs incurred by Landlord in excess of the ordinary
costs of maintaining the normal temperature of the Premises. Landlord agrees to
furnish to the Leased premises electricity for general office purposes and hot
and cold water for a lavatory and drinking purposes, subject to the provisions
of subparagraph 13(d) below. Landlord shall in no event be liable for any
interruption or failure of
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utility services on the Premises but Landlord will exercise commercially
reasonable efforts to furnish uninterrupted service.
(d) Tenant will not without the written consent of Landlord use any
apparatus or device in the Premises including without limitation electronic data
processing machines, punch card machines, and machines using excess lighting or
electrical current which will in any way increase the amount of electricity or
water usually furnished or supplied for use of the Premises as general office
space: nor will Tenant without landlord's prior written consent connect with
electrical current except through existing electrical outlets in the Premises or
water pipes in the Premises any apparatus or device for the purpose of using
electrical current or water provided that Tenant may rely upon any such consents
or approvals by Landlord as satisfying all obligations of Tenant hereunder. If
Tenant in Landlord's judgment shall require water or electrical current or any
other resource in excess of that usually furnished or supplied for use of the
Premises as general office space (it being understood that such an excess may
result from the number of fixtures, apparatus and devices in use, the nature of
such fixtures, apparatus and devices, the hours of use or any combination of
such factors). Tenant shall first procure the consent of Landlord which landlord
may refuse to the use of thereof, and Landlord may cause a special meter to be
installed in the Premises in order to measure the amount of water, electrical
current or other resource consumed for any such other use. The cost of any such
meters and of installation, maintenance, and repair thereof shall be paid for by
Tenant and Tenant agrees to pay Landlord promptly upon demand by Landlord for
all such water, electrical current or other resource consumed as shown by said
meters at the rates charged by the local public utility furnishing the same plus
any additional expense incurred in keeping account of the water, electrical
current or other resource so consumed Landlord shall not be in default hereunder
or be liable for any damages directly or indirectly resulting from nor shall the
rental herein reserved by abated by reason of (i) the installation, use or
interruption of use of any equipment in connection with the furnishing of any of
the foregoing utilities and service (ii) failure to furnish or delay in
furnishing any such utilities or services when such failure or delay is caused
by acts of God or the elements, labor disturbances of any character, any other
accidents or other conditions beyond the reasonable control of Landlord, or by
the making of repairs or improvements to the Premises or to the Building; (iii)
the limitation, curtailment, rationing or restriction on use of water,
electricity gas or any other form of energy or any other service or utility
whatsoever serving the Premises or the Building. Furthermore, Landlord shall be
entitled to cooperate voluntarily in a reasonable manner with the efforts of
national, state or local governmental agencies or utilities suppliers in
reducing energy or other resources consumption.
(e) Any sums being payable under this Paragraph shall be considered
additional rent and shall be added to the next installment of rent thereafter
becoming due and Landlord shall have the same remedies for a default in payment
of such sums as for a default in the payment of rent.
(f) Tenant shall not provide any janitorial services without Landlord's
written consent and then only through a janitorial contractor or employees at
all times satisfactory to and under supervision of Landlord. Any such services
provided by Tenant shall be at Tenant's sole expense, risk and responsibility.
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14. ESTOPPEL CERTIFICATE
Within ten (10) days following any written request which Landlord may
make from time to time. Tenant shall execute and deliver to Landlord in
recordable form and Estoppel Certificate substantially as attached hereto as
Exhibit "D" and made a part hereof, indicating thereon any exceptions thereto
which may exist at that time. Failure of Tenant to execute and deliver such
certificate shall constitute an acceptance of the Premises and acknowledgment by
Tenant that the statements included in Exhibit "D" are true and correct without
exception. Landlord and Tenant intend that any statement delivered pursuant to
the paragraph may be relied upon by Landlord or by any mortgages, beneficiary
purchaser or prospective purchaser of the Building or any interest therein, or
by anyone to whom Landlord may provide said certificate.
15. HOLDING OVER
Tenant will at the termination of this Lease by lapse of time or
otherwise yield up immediate possession to Landlord. If Tenant retains
possession of the Leased Premises or any part thereof after such termination,
then Landlord may, at its option, serve written notice upon Tenant that such
holding over constitutes: (i) creation of a month to month tenancy, upon the
terms and conditions set forth in this lease; or (ii) creation of a tenancy at
sufferance in any case upon the terms and conditions set forth in this Lease;
provided, however, that the Monthly Rental for daily rental under (iii) shall,
in addition to all sums which are to be paid by Tenant hereunder, whether or not
as additional rent be equal to one hundred fifty percent (150%) of the rental
being paid monthly to Landlord under this Lease immediately prior to such
termination (prorated in the case of (ii) on the basis of a 365 day year for
each day Tenant remains in possession). If no such notice is served, then a
tenancy at sufferance shall be deemed to be created at the rent in the
proceeding sentence. Tenant shall also pay to Landlord, as additional rent due
and payable, all damages sustained by Landlord resulting from retention of
possession by Tenant, including the loss of any proposed subsequent tenant for
any portion of the Leased Premises. In any such events, Tenant shall vacate the
Leased Premises and deliver full possession to Landlord upon the giving to
Tenant by Landlord of ten (10) days' written notice and demand therefor. The
provisions of this Paragraph shall not constitute a waiver by Landlord of any
right of re-entry as herein set forth nor shall receipt of any rent or any other
act in apparent affirmance of the tenancy operate as a waiver of the right to
terminate this lease for a breach of any of the terms, covenants, or obligations
herein on Tenant's part to be performed by Tenant or of any other right of
Landlord.
16. SUBORDINATION
Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, this Lease shall be subject
and subordinate at all times to: (a) all ground leases or underlying leases
which may now exist or hereafter be executed affecting the Building or the
Property upon which the Building is situated or both; and (b) the lien or
interest of any mortgage or deed to secure debt which may now exist or hereafter
be executed in any amount for which said Building, Property, ground leases or
underlying leases, or Landlord's interest or estate in any of said items is
specified as security. Notwithstanding the foregoing, Landlord shall
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have the right to subordinate or cause to be subordinated to this Lease any such
ground leases or underlying leases or any such liens or interests of mortgages
or deeds to secure debt. In the event that any ground lease or underlying lease
is terminated for any reason or any mortgage or deed to secure debt is
foreclosed or a conveyance in lieu of foreclosure is made for any reason. Tenant
shall, notwithstanding any subordination, attorn to and become the tenant of the
successor in interest to Landlord at the option of such successor in interest.
Tenant agrees to execute such subordination, non-disturbance and attornment
agreements as the holder of any mortgage or deed to secure debt may reasonably
require. Tenant covenants and agrees to execute and deliver, upon demand by
landlord and in the form requested by Landlord, any additional documents
evidencing the priority or subordination of this lease with respect to any
tenant of the successor in interest to landlord at the option of such successor
in interest. Tenant's obligation to subordinate and attorn may reasonably be
conditioned upon an agreement of non-disturbance by any such successor in
interest to landlord but shall not otherwise be conditioned or withheld.
17. RE-ENTRY BY LANDLORD
Landlord reserves and shall at all times have the right to re-enter the
Premises to inspect the same, to supply janitor service and any other service
provided by Landlord to Tenant hereunder, to show said Premises to prospective
purchasers, mortgagees or tenants to post notices of nonresponsibility, and to
alter, improve, or repair the Premises and any portion of the Building of which
the Premises are a part or to which access is conveniently made through the
Premises without abatement of rent, and may for that purpose erect, use and
maintain scaffolding, pipes, conduits and other necessary structures in and
through the Premises where reasonably required by the character of the work to
be performed, provided that entrance to the Premises shall not be blocked
thereby, and further provided that Landlord shall provide Tenant twenty-four
(24) hours prior notice of entry except in cases of emergency or the making of
repairs requested by Tenant, and that the business of Tenant shall not be
interfered with unreasonably. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby, provided that Landlord shall indemnify, save and hold harmless Tenant
for any liability to Tenant or third parties for damage to person or property
caused by Landlord's entry, except when acting in response to emergency. For
each of the aforesaid purposes. Landlord shall all times have and retain a key
with which to unlock all of the doors in upon and about the premises and
Landlord shall have the right to use any and all means which Landlord may deem
necessary or proper to open said doors in an emergency, in order to obtain entry
to any portion of the premises, and any entry to the premises, or portions
thereof obtained by Landlord by any of said means, or otherwise shall not under
any circumstances be construed or deemed to be a forcible or unlawful entry into
or a detainer of the Premises or any eviction actual or constructive of Tenant
from the Premises or any portions thereof. Landlord shall also have the right at
any time, without the same constituting an actual or constructive eviction and
without incurring any liability Tenant therefor to change the arrangement and/or
location of entrances or passageways, doors and doorways, and corridors,
elevators, stairs, toilets, parking facilities, loading docks and areas,
delivery and pick-up areas or other public parts of the Building and to change
the name, number, or designation by which the Building is commonly known.
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18. INSOLVENCY OR BANKRUPTCY
The appointment of a receiver to take possession of all or
substantially all of the assets of Tenant, or an assignment by Tenant for the
benefit of creditors, or any action taken or suffered by Tenant under any
insolvency bankruptcy, or reorganization act shall at Landlord's option
constitute a breach of this Lease by Tenant. Upon the happening of any such
event or at any time thereafter, this Lease shall terminate after written notice
of termination from landlord to Tenant. In no event shall this Lease be assigned
or assignable by operation of law or by voluntary or involuntary bankruptcy
proceedings or otherwise an in no event shall this lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, or
reorganization proceedings.
19. DEFAULT AND REMEDIES
(a) The following events shall be deemed to be events of default by
Tenant under this Lease:
(1) Tenant shall fail to pay when or before due any sum of
money in whole or in part becoming due to be paid to Landlord hereunder whether
such sum be any installment of the rent herein reserved any other treated as
additional rent hereunder or any other payment or reimbursement to Landlord
required herein whether or not treated as additional rent hereunder and such
failure shall continue for a period of ten (10) days from the date such payment
was due; or
(2) Tenant shall fail to comply with any term, provision or
covenant of this Lease other than by failing to pay when or before due any sum
of money becoming due to be paid to Landlord hereunder and shall not cure such
failure within thirty (30) days (except immediately and forthwith if the default
involves a hazardous condition) after written notice thereof to Tenant except
that should completion of such cure not be possible within such thirty (30) day
period Tenant shall have ninety (90) days to effect same so long as Tenant has
within such thirty (30) day period commenced cure and pursues same with due and
continuous diligence; or
(3) Tenant shall fail to vacate the Leased Premises
immediately and forthwith upon termination of this Lease by lapse of time or
otherwise or upon termination of Tenant's right to possession only; or
(4) If in spite of the provisions hereof, the interest of
Tenant shall be levied upon under execution or be attached by process of law or
Tenant shall fail to contest diligently the validity of any lien or claimed lien
upon the Leased Premises and give sufficient security to Landlord to insure
payment thereof and such default shall continue for ten (10) days after written
notice thereof to Tenant.
(b) Upon the occurrence of any such events of default described in
subparagraph (a) above or elsewhere in this Lease, Landlord shall have the
option, at its election, to terminate this lease or to terminate Tenant's right
to possession only, without terminating this lease and to
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pursue any one or more of the following remedies without any further notice or
demand whatsoever, provided that, upon any termination of this Lease or upon any
termination of Tenant's right to possession without termination of this Lease.
Tenant shall in either event surrender possession and vacate the leased Premises
immediately upon the expiration of five (5) days next following the giving by
Landlord to Tenant of written notice demanding same and deliver possession
thereof to landlord, and tenant hereby grants to Landlord full and free license
to enter into and upon the Leased Premises in such event with or without process
of law and to repossess Landlord of the Leased Premises and to expel or remove
Tenant and any others who may be occupying or within the Leased Premises and to
remove any and all property therefrom without being deemed in any manner guilty
of trespass, eviction or forcible entry or detainer and without incurring any
liability for any damage resulting therefrom. Tenant hereby waiving any right to
claim damage for such re-entry and expulsion and without relinquishing any right
given to Landlord hereunder or by operation of law:
(1) Upon termination of this Lease, Landlord shall be entitled
to recover as damages all rent including any amount treated as additional rent
hereunder and other sums due and payable by Tenant on the date of termination,
plus the sum of: (i) an amount equal to the then present value of the rent
including any amounts treated as additional rent hereunder and other sums
provided herein to be paid by Tenant for the residue of the stated Term hereof
less the fair rental value of the Leased Premises for such residue (taking into
account the time and expense necessary to obtain a replacement tenant or
tenants, including expenses hereinafter described in subparagraph (b)(2)
hereinbelow relating to recover of the Leased Premises, preparation for
reletting and for reletting itself, and (ii) the cost of performing any other
covenants which otherwise would have been performed by Tenant; or
(2) Alternatively to the remedy provided in subparagraph
(b)(1) hereinabove, upon any termination of Tenant's right to possession only
without termination of this Lease, Landlord may at Landlord's option enter into
the Leased Premises remove Tenant's signs and other evidences of tenancy and
take and hold possession thereof as provided in subparagraph (b)(1) above,
without such entry and possession terminating the Lease or releasing Tenant in
whole or in part, from any obligation, including Tenant's obligation to pay the
rent, including any amounts treated as additional rent hereunder for the full
Term: and Landlord shall then or thereafter use commercially reasonable efforts
to sublet the Premises or any part thereof, on such occasions and terms as may
be determined in Landlord's sole discretion and, in such event, if the
consideration collected by Landlord upon any such reletting plus any sums
previously collected from Tenant are not sufficient to pay the full amount of
all rent, including any amounts treated as additional rent hereunder and other
sums reserved in this Lease for the remaining Term hereof together with the
costs of repairs, alterations, additions, redecorating, and Landlord's expenses
of reletting and the collection of the rent accruing therefrom (including
attorneys' fees and broker's commissions). Tenant shall pay to Landlord the
amount of such deficiency upon demand and Tenant agrees that Landlord may file
suit to recover any sums falling due under this subparagraph from time to time.
(3) In either of the events set forth in subparagraphs (b)(1)
and (b)(2) hereinabove, Landlord may, but need not, relet or sublet the premises
or any part thereof, as the
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case may be, for such rent and upon such terms as Landlord in its sole
discretion shall determine including the right to relet the Premises for a
greater or lesser than that remaining under this Lease, the right to relet the
Leased Premises as a part of a larger area, and the right to change the
character and use made of the Leased Premises and Landlord shall not be required
to accept any tenant offered by Tenant or to observe any instructions given by
Tenant about such reletting. In any such case, Landlord may make repairs,
alterations and additions in or to the Leased Premises and redecorate the same
to the extent Landlord deems necessary or desirable and Tenant shall, upon
demand, pay the cost thereof, together with Landlord's expenses for reletting
including, without limitation any broker's commission incurred by Landlord.
(c) Should Landlord, acting reasonably and in good faith, determine
that Tenant is not acting within a commercially reasonable time to maintain,
repair or replace anything for which Tenant is responsible hereunder, Landlord
may, in Landlord's option, upon Tenant's continued failure to so maintain,
repair or replace after twenty (20) days notice from Landlord, enter into and
upon the Leased Premises, with or without process of law and correct the same,
without being deemed in any manner guilty of trespass, eviction or forcible
entry and detainer and without incurring any liability for any damage resulting
therefrom; and Tenant agrees to reimburse Landlord on demand additional rent for
any expenses which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease.
(d) Any and all property which may be removed from the Leased premises
by Landlord pursuant to the authority of this Lease or of law, to which Tenant
is or may be entitled may be handled removed and stored, as the case may be, by
or at the direction of Landlord at the risk, cost and expense of Tenant, and
Landlord shall in no event be responsible for the value, preservation or
safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all
expenses incurred in such removal and all storage charges against such property
so long as the same shall be in Landlord's possession or under Landlord's
control. Any such property of Tenant not retaken by Tenant from storage within
thirty (30) days after removal from the Leased Premises shall, at Landlord's
option, be deemed conveyed by Tenant to landlord under this Lease as by a bill
of sale without further payment or credit by Landlord to Tenant.
(e) In exercising any of the remedies set forth in this Lease with
respect to entry or reentry of the Leased Premises, Landlord shall not be
civilly or otherwise liable to Tenant for any damage to Tenant's property unless
same is solely caused by the intentional or wanton, willful and reckless conduct
of Landlord.
(f) Pursuit by Landlord of any of the foregoing remedies shall not,
except as set forth in the alternative in the case of those remedies provided in
subparagraphs (b)(1) and (b)(2) hereinabove, preclude pursuit of any of the
other remedies herein provided or any other remedies provided by law or
available in equity (all such remedies being cumulative), nor shall pursuit of
any remedy herein provided constitute a forfeiture or waiver of any rent due to
Landlord hereunder or of any damages accruing to landlord by reason of the
violation of any of the terms, provisions and covenants herein contained. No act
or thing done by Landlord or its agents during the Term hereby granted shall be
deemed a termination of this Lease or an acceptance of the surrender of the
Leased premises, and no agreement to terminate this Lease or accept a surrender
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of said premises shall be valid unless in writing signed by Landlord. No waiver
by Landlord of any violation or breach of any of the terms, provisions and
covenants herein contained shall be deemed or construed to constitute a waiver
of any other violation or breach of any of the terms, provisions and covenants
herein contained. Landlord's acceptance of the payment of rental or other
payments hereunder after the occurrence of an event of default shall not be
construed as a waiver of such default, or as accord and satisfaction of any
liability of Tenant unless Landlord expressly so notifies Tenant in writing.
Forbearance by Landlord in enforcing one or more of the remedies herein provided
upon any event of default shall not be deemed or construed to constitute a
waiver of such default or of landlord's right to enforce any such remedies with
respect to such default or any subsequent default. If, on account of any breach
or default by Tenant in Tenant's obligations under the terms and conditions, of
this Lease, it shall become necessary or appropriate for Landlord to employ or
consult with any attorney concerning or to enforce or defend any of Landlord's
rights or remedies hereunder. Tenant agrees to pay all reasonable attorneys'
fees so incurred said attorneys' fees being deemed additional rent due hereunder
upon the next date the payment by Tenant of rent or any installment thereof is
due.
(g) Without limiting the foregoing:
(i) Service of process upon Tenant may be had by serving any
registered agent or any officer of director of Tenant at or upon the Leased
Premises and Landlord or anyone acting therefor shall at all times have the
right to enter seek out and locate any appropriate person for such purpose;
(ii) Service of process upon Landlord may be had by serving
any registered agent or partner of Landlord, or any person acting therefor, at
Landlord's offices in the Building or elsewhere;
(iii) Provided, however, neither Landlord nor Tenant hereby
waive the right to serve each other with process by any other lawful means:
(iv) Landlord and Tenant expressly waive any right to trial
by jury; and
(v) To the extent permitted by existing or future law of the
State of Georgia. Tenant expressly waives any and all rights of redemption
granted by or under any existing or future laws if Tenant is evicted or
dispossessed for any cause or if Landlord obtains possession of the Premises due
to Tenant's default hereunder or otherwise.
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20. DAMAGE BY FIRE OR OTHER CASUALTY
(a) If the Building, Improvements, or Leased Premises are rendered
partially or wholly untenable by fire or other casualty, at any time prior to
the end of the fifteenth (15th) year next following the Commencement Date,
Landlord shall reasonably proceed to rebuild, repair and or materially restore
same and Tenant shall thereupon reoccupy the Premises for the remainder of the
Term of the Lease.
(b) If such untenantability occurs by fire or other casualty occurring
between the end of the ten (10th) year next following the Commencement Date of
the Lease and the end of the fifteenth (15th) year next following same, the Term
for the Lease shall then be extended from the date of Tenant's reoccupancy for a
time sufficient to extend the remaining portion of the Term to a period of ten
(10) years next following the date of Tenant's reoccupancy. During the period of
time the Term of the Lease is thereby extended past what would have been the
expiration date of the original Term. Tenant Monthly Rental shall be equal to
the prevailing competitive market rental rate appertaining as to similar
commercial office buildings in the Alpharetta, Georgia, area as of the
expiration date of the original Term. As used herein, the phase "prevailing
competitive market rental rate" shall mean the rental rate (projected from the
date of the expiration of the original Term) which Tenant would expect to pay
and Landlord would expect to receive under Leases for space at comparable size
and quality to the Premises and as provided for in, and on terms and conditions
comparable to this Lease covering premises similar to the Premises. If Landlord
and Tenant have not reached agreement and executed an amendment to this Lease
setting forth such agreement on or before the date three (3) months following
the expiration of the original Term, then within ten (10) days after that date
each party shall appoint and employ, at its cost, a real estate appraiser who
shall be a member of the American Institute of Real Estate Appraisers (MAI) with
at least ten (10) years of full-time commercial appraisal and real estate
marketing experience in metropolitan Atlanta, Georgia to appraise and establish
the "prevailing competitive market rental rate." The two appraisers, thus
appointed, shall meet promptly and attempt to agree upon and designate a third
appraiser meeting the qualifications set forth above within ten (10) days after
the date of the appointment of the last two appraisers. If they are unable to
agree on the third appraiser, either of the parties, after giving five (5) days
notice to the other, may apply to a judge of the United States District Court
for the district in which the Premises are located for the selection of a third
appraiser meeting the qualifications stated above. Each of the parties shall
bear one-half of the cost of appointment of the third appraiser and of the third
appraiser's fee. Within thirty (30) after the selection of the third appraiser,
a majority of the appraiser shall agree upon the "prevailing competitive market
rental rate." If a majority of the appraisers are unable to agree within the
stipulated time, then each appraiser shall render his separate appraisal within
such time, and the three appraisals shall be averaged in order to establish such
rate; provided however, if the low appraisal and/or the high are more than ten
percent (10%) lower and or higher than the middle appraisal, the low appraisals
and/or the high appraisal shall be disregarded. If only one appraisal is
disregarded, the remaining two appraisals shall be averaged in order to
establish such rate. If both the low appraisal and the high appraisal are
disregarded, the middle appraisal shall establish the rate. During the period of
time between Tenant's reoccupancy and the date the "prevailing competitive
market rental rate" is established, Tenant will
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continue to pay Monthly Rental at the rate that appertained at the time the fire
or other casualty occurred.
(c) If the Building, Improvements, or Leased Premises are rendered
partially or wholly untenantable by fire or other casualty at a time when less
than five (5) years remain in the Lease Term, and if such damage, in Landlord's
reasonable estimation, cannot be materially restored within one hundred-fifty
(150) days of such damage, then either Tenant or Landlord may, at its option,
terminate this lease as of the date of such fire or casualty by written notice
to the other within sixty (60) days of such fire or casualty. For purposes
hereof, the Building, Improvements, or Leased premises shall be deemed
"materially restored" if they are in such condition as would not prevent or
materially interfere with Tenant's use of the Leased premises for the purpose
for which the Premises were being used at the time of such fire or casualty.
(d) If this Lease is not terminated pursuant to this Paragraph, then
Landlord shall proceed with all due diligence to rebuild, repair and/or
materially restore the Building, Improvements or Leased Premises, as the case
may be and thereafter to return same as near to the condition in which same
existed prior to the casualty as is reasonably feasible under all the
circumstances.
(e) If this Lease shall be terminated pursuant to this Paragraph, the
Term of this Lease shall end on the date of such damage as if that date had been
originally fixed in this Lease for the expiration of the Term hereof. If this
lease shall not be terminated pursuant to this paragraph and if the Leased
premises is untenantable in whole or in part following such damage, the Monthly
Rental payable during the period in which the Leased Premises is untenantable
shall be reduced to such extent, if any, as may be fair and reasonable under all
of the circumstances.
(f) In no event shall Landlord be required to rebuild, repair or
replace any part of the partitions, fixtures, additions or other improvements
which may have been placed in or about the Leased Premises by Tenant. Any
insurance which may be carried by Landlord or Tenant against loss or damage to
the Building or the Leased Premises shall be for the sole benefit of the party
carrying such insurance and under its sole control.
(g) In the event of any damage or destruction to the Building, the
Leased Premises or the Property by any peril covered by the provisions of this
Paragraph. Tenant shall, upon notice from Landlord, remove forthwith, at its
sole cost and expense such portion or all of the property belonging to Tenant or
his licensees from such portion or all of the Building or the leased premises as
Landlord shall request and Tenant hereby indemnifies and holds Landlord harmless
from any loss, liability, costs, and expenses, including attorneys' fees,
arising out of any claim of damage or injury as a result of any alleged failure
to properly secure the Leased Premises prior to such removal.
21. CONDEMNATION
(a) If any substantial part of the Building, Improvements, available
parking area or Leased Premises should be taken for any public or quasi-public
use under governmental law,
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ordinance or regulation or by right of eminent domain or by private purchase in
lieu thereof and the taking would prevent or materially interfere with the use
of the Building or the Leased premises for the purpose for which it is then
being used, this Lease shall terminate on the date title vests in the taking
authority in the same manner as if the date of such taking were the date
originally fixed in this Lease for the expiration of the Term hereof. Any
decrease in available parking spaces, as provided for in Paragraph 26 below a
ration of 3.75 cars per 1,000 rentable square feet of the Premises shall be
deemed to materially interfere with the use by Tenant of the Building and the
Premises.
(b) If part of the Building Improvements, or Leased Premises shall be
taken for any public or quasi-public use under any governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and this Lease is not terminated as provided in subparagraph (a) above,
this Lease shall not terminate but the rent payable hereunder during the
unexpired portion of the Term of this Lease shall be reduced to such extent, if
any as may be fair and reasonable under all of the circumstances and Landlord
shall undertake to restore the Building Improvements and Leased Premises to a
condition suitable for Tenant's use as near to the condition thereof immediately
prior to such taking as is reasonably feasible under all circumstances. In no
event, however, shall Landlord be required under this Lease to incur any
expenses in excess of available proceeds from any taking contemplated hereby for
the purposes of restoring the Building or the Premises after any such taking.
(c) Tenant shall not share in any condemnation award or payment in lieu
thereof or in any award for damages resulting from any grade change of streets
outside the Office Park of which the Building is a part, the same being hereby
assigned to Landlord by Tenant; provided, however, that Tenant may separately
claim and receive from the condemning authority, if legally payable,
compensation for Tenant's removal and relocation costs for Tenant's loss of
business and/or business interruption, and for any other cost, loss, damage or
expense suffered by Tenant.
(d) Notwithstanding anything to the contrary contained in this
Paragraph, if the temporary use of occupancy of any part of the Premises shall
be taken or appropriate under power of eminent domain during the Term of this
Lease, this Lease shall be and remain unaffected by such taking or appropriation
and Tenant shall continue to pay in full all rent payable hereunder by Tenant
during the Term of this Lease; in the event of any such temporary appropriation
or taking, Tenant shall be entitled to receive that portion of any award which
represents compensation for the use or occupancy of the Premises during the Term
of this lease and Landlord shall be entitled to receive that portion of any
award which represents the costs of restoration of the Premises and the use and
occupancy of the Premises after the end of the Term of this Lease.
(e) Notwithstanding anything to the contrary contained in this
Paragraph 21 or elsewhere in this Lease in the event of any condemnation,
Landlord shall be entitled to receive its entire award without deduction
therefrom for any estate vested in Tenant by the Lease, but Tenant shall have
the right to make a separate claim with the condemning authority for, and to
receive therefrom: (i) any moving expenses incurred by Tenant as a result of
such condemnation, (ii) any costs incurred or paid by Tenant in connection with
any alteration or improvement made by Tenant to the Premises; (iii) the value of
any of Tenant's property taken; and (iv) any other
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separate claim which Tenant may hereafter be permitted to make under applicable
law provided, however, that such other separate claim shall not reduce or
adversely affect the amount of the Landlord's award.
22. SALE BY LANDLORD
In the event of a sale, conveyance or assignment by Landlord of all or
any portion of the Building or Landlord's interest therein, or in or of the
Leased Premises, or if the Building or the Leased Premises comes under the
control of a mortgagee, ground lessor or similar party, the same shall operate
to release Landlord from any future liability upon any of the covenants or
conditions, express or implied, herein contained in favor of Tenant, and in such
event Tenant agrees to look solely to the responsibility of the successor in
interest of Landlord in and to this Lease and to recognize such successors as
new Landlord or to attorn thereto and execute at this Landlord's request, an
attornment agreement therewith.
23. RIGHT OF LANDLORD TO PERFORM
All covenants and agreements to be performed by the Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent. If the Tenant shall fail to pay any
sum of money or incur any expense, other than rent, required to be paid by
Tenant hereunder, whether or not such failure constitutes a breach of this
Lease, and such failure shall continue for twenty (20) days after notice thereof
by the Landlord, then Landlord may, but shall not be obligated to do so, and
without waiving or releasing the Tenant from any obligations of the Tenant make
any such payment or incur any such expense or perform any such act on the
Tenant's part to be made or performed as in this Lease required to be adopted by
Tenant. All sums so paid by the Landlord and as necessary incidental costs
together with interest thereon at the rate of one and one-half percent (1 1/2%)
per month, which is eighteen percent (18%) per annum, from the date of such
payment by the Landlord, shall be payable as additional rent to the Landlord on
demand, and the Tenant covenants to pay any such sums, and the Landlord shall
have, in addition to any other right or remedy of the Landlord, the same rights
and remedies in the event of nonpayment thereof by the Tenant as in the case of
default by the Tenant in the payment of rent.
24. SURRENDER OF PREMISES
(a) Unless Tenant shall, at least one hundred-eighty (180) days before
the last day of the Term hereof, give to Landlord a written notice of any desire
to remain in occupancy of the Premises after that date. Landlord shall presume
an intention by Tenant to surrender the Premises on that date. Nothing contained
herein or in the failure of Tenant to give such notice shall be construed as an
extension of the Term hereof or as consent of Landlord to any holding over by
Tenant.
(b) At the end of the Term or any renewal thereof or another sooner
termination of this Lease, the Tenant will peaceably deliver up to the Landlord
possession of the Premises in the same condition as received, ordinary wear and
tear, damage by fire, earthquake, act of God or the
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elements alone excepted. So long as Tenant is not in default hereunder, Tenant
may upon the termination of this Lease remove all movable furniture and
equipment belonging to Tenant at Tenant's sole cost, title to same remaining in
Tenant until such termination, repairing any damage caused y such removal. Upon
requests by Landlord, unless otherwise then or previously agreed to in writing
by landlord, Tenant shall remove at Tenant's sole cost, all movable furniture
and equipment belonging to Tenant and repair any damage resulting from such
removal. Property not so removed by the last day of the Term shall be deemed
abandoned by Tenant and title to the same shall thereupon pass to Landlord.
(c) The voluntary or other surrender of this Lease by Tenant or a
mutual cancellation thereof shall, as the option of Landlord terminate all or
any existing subleases or subtenancies or may at the option of Landlord operate
as an assignment to Landlord of any or all such subleases or subtenancies.
25. WAIVER
If either Landlord or Tenant waives the performance of any term,
covenant or condition contained in this Lease, such waiver shall not be deemed
to be a waiver of any subsequent breach of the same or any other term, covenant
or condition contained herein. Furthermore, the acceptance of rent by Landlord
shall not constitute a waiver of any preceding breach by Tenant of any term,
covenant or condition of this Lease, regardless of Landlord's knowledge of such
preceding breach at the time landlord accepted such rent. Failure by Landlord to
enforce any of the terms, covenants or conditions of this Lease for any length
of time shall not be deemed to waive or to decrease the right of Landlord to
insist thereafter upon strict performance by Tenant. Waiver by Landlord or
Tenant of any term, covenant or condition contained in this lease may only be
made by a writing, shall be effective only with respect to the subject manner
stated therein, and only for such time and to such extent as provided therein.
26. PARKING
Landlord shall provide for the non-assigned use of Tenant up to the
greater of (a) 320 parking spaces or (b) four (4) spaces per 1,000 net rentable
area of the Leased Premises. Said spaces shall not be reserved or otherwise
designated.
27. NOTICES
Each notice required or permitted to be given under this Lease shall be
sent by hand delivery or by depositing it with the United States Postal Service
or the official successor thereto, certified or registered mail, return receipt
requested with adequate postage prepaid, addressed to the appropriate party as
hereinafter provided. Each such notice shall be effective upon being hand
delivered or deposited with the United States Postal Service, as the case may
be, but the time period in which a response to any such notice must be given or
any action taken with respect thereto shall commence to run from the date of
receipt of the notice by the address thereof, as evidenced by the delivery
record of the messenger or courier service or by the return receipt of the
United States Postal Service, as the case may be Rejection or other refusal by
the addressee to
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accept or the inability of the messenger or courier service or the United States
Postal Service to deliver because of a changed address of which no notice was
given, shall in any case be deemed to be the receipt of the notice sent. The
addresses of Landlord and Tenant are as follows:
<TABLE>
<CAPTION>
<S> <C>
Landlord: Regency Park West Associate
2929 Lenox Road
Atlanta, Georgia 30324
With a copy to: GE Capital
One Georgia Center
600 West Peachtree Street; Suite 800
Atlanta, Georgia 30308
Attn: Mr. Julio Perez
Tenant: TheraTx, Incorporated From and after July 1, 1997
400 Northridge Road "At the Premises"
Suite 400
Atlanta, Georgia 30350
Attn: Mr. B. Wayne Clark, Vice President-Administrative Services
</TABLE>
Any party shall have the right from time to time to change the address
to which notices to it shall be sent and to specify up to two additional
addresses to which copies of notices to it shall be sent by giving to the other
party or parties at least thirty (30) days prior notice of the changed address
or additional addresses.
28. CERTAIN RIGHTS RESERVED TO LANDLORD
Landlord reserves and may exercise the following rights without
affecting Tenant's obligations hereunder:
(a) To change the name of the Building;
(b) To designate all sources furnishing sign painting and lettering;
and, while obtaining competitive pricing from multiple sources for same, to also
designate all sources for towels, valet service and toilet supplies, lamps and
bulbs used in the Leased Premises;
(c) To retain at all times pass keys to the Leased Premises;
(d) To grant to anyone the exclusive right to conduct any particular
business or undertaking in the Building;
(e) To close the Building after regular work hours and on legal
holidays subject, however to Tenant's right to admittance, under such reasonable
regulations as Landlord may prescribe from time to time, which may include by
way of example but not of limitation, that
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persons entering or leaving the Building identify themselves to a watchmen by
registration or otherwise and that said persons establish their right to enter
or leave the Building; and
(f) To take any and all measures, including inspections, repairs,
alterations, decorations, additions and improvements to the Leased Premises or
the Building and identification and admittance procedures for access to the
Building as may be necessary or desirable for the safety, protection,
preservation or security of the Leased Premises or the Building or Landlord's
interest or as may be necessary or desirable in the operation of the Building.
Landlord may enter upon the Leased Premises and may reasonably exercise
any or all of the foregoing rights hereby reserved without being deemed guilty
of an eviction or disturbance of Tenant's use of possession and without being
liable in any manner to the Tenant and without abatement of rent or affecting
any of the Tenant's obligations
29. ABANDONMENT
Tenant shall not vacate or abandon the Premises at any time during the
Term, and if Tenant shall abandon, vacate, or surrender said Premises or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the Premises shall, at the option of Landlord be deemed to be
abandoned and title thereto shall, at the option of Landlord, thereupon pass to
Landlord.
30. SUCCESSORS
Subject to the provisions of Paragraph 10 hereof, the terms, covenants,
and conditions contained herein shall be binding upon and inure to the benefit
of the heirs, successors, executors, administrators and assigns of the parties
hereto.
31. ATTORNEYS' FEES
In the event that any action or proceeding is brought to enforce any
term, covenant or condition of this Lease on the part of Landlord or Tenant, the
prevailing party shall be entitled to reasonable attorneys' fees to be fixed by
the court in such action or proceeding.
32. CORPORATE AUTHORITY
If Tenant signs as a corporation, each of the persons executing this
Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly
authorized and existing corporation that Tenant has and is qualified to do
business in Georgia, that the corporation has full right and authority to enter
into this Lease, and that each and every one of the persons signing on behalf of
the corporation are authorized to do so. Upon Landlord's request, Tenant shall
provide Landlord with evidence reasonably satisfactory to Landlord confirming
the foregoing covenants and warranties.
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33. MORTGAGEE APPROVALS
Any approvals or consents of Landlord required under any provisions of
this Lease shall not be deemed to have been unreasonably withheld if any
mortgagee (which shall include the holder of any deed to secure debt) of the
Premises. Building or Property or any portion thereof shall refuse or withhold
its approval or consent thereto. Any requirement of Landlord pursuant to this
Lease which is imposed pursuant to the direction of any such mortgagee shall be
deemed to have been reasonably imposed by Landlord if made in good faith.
34. LANDLORD'S LIEN
In addition to any statutory lien for rent in Landlord's favor,
Landlord shall have and Tenant thereby grants to Landlord a continuing security
interest for all rentals and other sums of money becoming due hereunder from
Tenant, upon all goods, wares, equipment, fixtures, furniture, inventory,
accounts, contract rights, chattel paper and other personal property of Tenant
situated on the Leased Premises, and such property shall not be removed
therefrom without the consent of Landlord until all arrearage in rent as well as
any and all other sums of money then due to Landlord hereunder shall first have
been paid and discharged. In the event of a default under this Lease, Landlord
shall have, in addition to any other remedies provided herein or by law, all
rights and remedies under the Uniform Commercial Code, including without
limitation the right to sell the property described in this Paragraph at public
or private sale upon providing the notice called for by the Uniform Commercial
Code, or if none is so supplied by providing five (5) days' written notice to
Tenant. Tenant hereby agrees that Landlord may record this Lease or a memorandum
thereof at Landlord's discretion. Tenant further agrees that this lease shall
constitute a security agreement and further agrees to execute for recordation,
simultaneously with execution of this Lease or at such other time designated by
Landlord at its sole discretion, such financing statements and other instruments
deemed necessary or desirable in the sole discretion of Landlord to perfect the
security interest hereby created. Any statutory lien for rent is not hereby
waived, the express contractual lien herein granted being in addition and
supplementary thereto.
35. QUIET ENJOYMENT
Landlord represents and warrants that it has full right and authority
to enter into this Lease and that Tenant, while paying the Rentals and
performing its other covenants and agreements herein set forth, shall peaceably
and quietly have, hold and enjoy the Leased Premises for the Term hereof without
hindrance or molestation from Landlord subject to the terms and provisions of
this Lease. In the event this Lease is a sublease, then Tenant agrees to take
the Leased Premises subject to the provisions of the prior leases. Landlord
shall not be liable for any interference or disturbance by other tenants or
third persons, nor shall Tenant be released from any of the obligations of this
Lease because of such interference or disturbance; provided, Landlord shall
enforce all Rules and Regulations of the Building even-handedly upon all Tenants
of the Building.
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36. LIMITATION OF LANDLORD'S LIABILITY AND EXCULPATION OF PARTNERS
In no event shall Landlord's liability for breach of this Lease exceed
the amount of rent then remaining unpaid for the then current Term (exclusive of
any renewal periods which have not then actually commenced). This provision is
not intended to be a measure or agreed amount of Landlord's liability with
respect to any particular breach, and shall not be utilized by any court or
otherwise for the purpose of determining any liability of Landlord hereunder,
except only as a maximum amount not to be exceeded in any event. Furthermore,
any liability of Landlord hereunder shall be enforceable only for and out of the
interest of Landlord in the Building. Anything to the contrary contained in this
Lease notwithstanding there shall in no event be any personal or derivative
liability with respect to, arising from or related in any manner to the terms,
covenants, conditions and provisions of this Lease or their application, south
or enforced against any persons, firms or other entities who constitute the
partners of Landlord, and Tenant hereby exculpates each and all partners of
Landlord from any and all liability arising from or relating to this Lease and
its provisions or from Landlord's status as such hereunder. Tenant shall,
subject to the rights of any ground lessor, mortgagee or holder of any security
interest, look solely to the interest of Landlord, its successors and assigns,
in the Building for the satisfaction of each and every remedy, if any, of Tenant
as against Landlord herein, including default by Landlord hereunder, and shall
in no event have or seek such satisfaction out of the separate assets of, or
from, any partner of Landlord.
37. RIGHT TO RELOCATE [OMITTED]
38. DISCLAIMER OF CREATION OF PARTNERSHIP OR JOINT VENTURE
This Lease shall not be deemed to create or constitute a partnership or
joint venture of and between Landlord and Tenant for any purpose: nor is
Landlord to be deemed for any purpose as master, servant, employer, employee,
principal or agent of Tenant.
39. LEASE EFFECTIVE DATE
Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for lease, and is not effective
as a lease or otherwise until execution by both Landlord and Tenant.
40. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the Rules and
Regulations printed on Exhibit "E" annexed to this Lease and all reasonable
additions thereto as are from time to time now or hereafter at any time put into
effect by Landlord. Landlord shall not be responsible for the nonperformance by
any other tenant or occupant of the Building or Office Park of any obligation
under said Rules and Regulations, but shall apply and enforce same uniformly as
to all Tenants.
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41. NO BROKERS
Tenant represents and warrants to Landlord that, except for Richard
Bowers & Company no broker, agent, commission salesman or other person has
represented Tenant in the negotiations for and procurement of this Lease and
that, except for the commission payable in connection herewith to any person or
entity. Tenant and Landlord hereby acknowledge and agree that the commission
payable to the said Richard Bowers & Company in connection with the Lease is the
sole responsibility of Landlord, and that said commission shall be paid by
Landlord to the said Richard Bowers & Company in accordance with the terms of a
separate agreement. Tenant and Landlord also acknowledge that American Resurgens
Management Corp. has acted as agent for Landlord in this transaction and is to
be compensated for its services in connection therewith in accordance with a
separate agreement with Landlord. American Resurgens Management Corp. has not
acted as agent for Tenant in this transaction.
42. RECORDING
Neither this Lease, nor any memorandum hereof, shall be recorded by
Tenant without Landlord's prior written consent to such recording, which shall
not be unreasonably withheld as to a Memorandum of Lease.
43. MISCELLANEOUS
(a) The Paragraph numbers and Paragraph headings herein, and
designations of subparagraphs, are for convenience of reference only and shall
in no way define, increase, limit, or describe the scope or intent of any
provision of this Lease, which shall be construed without reference thereto.
(b) If this Lease is signed by more than one person, or if Tenant is a
partnership, joint venture, or other business organization the members of which
are subject to personal liability, the obligations and liability of each such
person or member hereunder shall be joint and several.
(c) The term "Landlord" in this Lease shall include Landlord and its
successors and assigns.
(d) The term "Tenant" or any pronoun used in place thereof shall
indicate and include the masculine, feminine or neuter genders, the singular or
plural number, individuals, firms or corporations, and each of their respective
successors, executors, administrators, and permitted assigns, according to the
context hereof.
(e) "Office Park" means the business park owned by Lessor and
comprising approximately 150 acres located situate to Rock Mill Road in Land
Lots 592, 605, 606 and 639 of the 1st District, 2nd Section, Alpharetta, Fulton
County, Georgia, all as more particularly described in Exhibit "B" attached
hereto and by this reference made a part hereof.
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<PAGE> 123
(f) "Common Areas" means those portions of the Office Park lying
outside the Building which are designated as "common areas" for the use,
enjoyment and benefit of all owners or tenants of property located within the
Office Park and their lessees, sublessees and invitees.
(g) Time is of the essence of this Lease and each and all of its
provisions.
(h) This Lease shall in all respects be governed by and construed under
the laws of the State of Georgia.
(i) Tenant shall have no right to hold back, offset or otherwise fail
to pay any rent, including additional rent, due to any other charges assessed
under any provision of this Lease, for or on account of any claim or
counterclaim alleged against Landlord, save and except pursuant to an order
issued with prior notice to Landlord and after a hearing by a court of record of
competent jurisdiction in the State of Georgia.
(j) This Lease, together with its Exhibits and riders, if any, contains
all the agreements of the parties hereto and supersedes any previous
negotiations or agreements, whether oral or written. There have been no
representatives made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits.
(k) This Lease may not be modified except by a written instrument
executed by all the parties hereto or their successors and assigns.
(l) All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the Term of this Lease shall survive the
expiration or earlier termination of the Term hereof.
(m) If, for any reason whatsoever, any clause, phrase, provision or
portion of this Lease, or the application thereof to any person or
circumstances, shall be or become invalid, unenforceable or ineffective, such
event shall not affect, impair or render invalid, unenforceable or ineffective
the remainder of this Lease or any other clause, phrase, provision or portion
hereof, nor shall it affect the application of any clause, phrase, provision or
portion hereof to other persons or circumstances. It is also the intention of
the parties to this Lease that in lieu of each such clause, phrase, provision or
portion of this Lease that is or may become invalid, unenforceable or
ineffective, there be added as a part of this Lease a clause, phrase, provision
or portion as like and similar in terms to such invalid, unenforceable or
ineffective clause, phrase, provision or portion as may be valid, enforceable
and effective.
(n) Whenever a period of time is herein prescribed for action to be
taken by Landlord or Tenant, the party so charged shall not be liable or
responsible for, and there shall be excluded from the computation of any such
period of time, any delays due to causes of any kind whatsoever including,
without limitation, acts or events of force majeure, which are beyond the
control of that party. The period for performance of any such delayed action by
the party so charged shall be extended for a period equivalent to the period of
such delay.
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(o) Notwithstanding any other provisions of this Lease to the contrary,
if the Commencement Date hereof shall not have occurred before the twentieth
(20th) anniversary of the date hereof, this Lease shall be null and void and
neither party shall have any liability or obligation to the other hereunder. The
purpose and intent of this provision is to avoid the application of the Rule
Against Perpetuities to this Lease.
44. SPECIAL STIPULATIONS
Additional provisions of this Lease are set forth in the Special
Stipulations attached hereto and made a part hereof as Exhibit "F". In the event
of a conflict between the preceding provisions of this Lease and the provisions
of the Special Stipulations, Exhibit "F", the provisions of the Special
Stipulations shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Lease under
their hands and seals the day and year first above written, each warranting to
the other that it has the authority to do so and the capacity to bind the
respective entities identified as Landlord and Tenant hereunder.
LANDLORD:
REGENCY PARK WEST ASSOCIATES, L.P.,
A Georgia Limited Partnership
By: AMERICAN RESURGENS MANAGEMENT
CORP.
A Georgia Corporation
As General Partner
WITNESS/ATTEST:
/s/ [Illegible] By: /s/ [Illegible]
- ------------------------------------ --------------------------------
Its: [Illegible]
-------------------------------
(CORPORATE SEAL)
TENANT:
THERATX, INCORPORATED
A Delaware Corporation
By: /s/ [Illegible]
--------------------------------
Its: [Illegible]
-------------------------------
(CORPORATE SEAL)
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APPROVED:
GENERAL ELECTRIC REAL
ESTATE EQUITIES, INC.
By: /s/ [Illegible]
-------------------------------
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EXHIBIT "A"
LEASED PREMISES FLOOR PLAN
TO BE PROVIDED
(per Special Stipulation #18, Exhibit "F")
[No Document Attached]
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EXHIBIT "B"
OFFICE PARK LEGAL DESCRIPTION
TO BE PROVIDED
(per Special Stipulation #17, Exhibit "F")
[No Document Attached]
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EXHIBIT "B-1"
Conceptual Plan for
GE Capital and
American Resurgens Management Corp.
[Office Site Design]
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EXHIBIT "C"
LEASED PREMISES IMPROVEMENT AGREEMENT
In consideration of Tenant's execution of the Lease to which this
Agreement forms an Exhibit, and for the mutual considerations hereinafter
recited, Landlord shall provide o the Premises and Tenant shall receive, accept
and provide the following:
SECTION (A) - ARCHITECTURAL, ENGINEERING AND OTHER SERVICES:
(1) Landlord shall provide Tenant with an allowance of Seventy Three
Thousand Fifty-Nine Dollars ($73,059.00), equivalent to One Dollar
($1.00) per usable square foot of the Lease Premises, for use by Tenant
in obtaining architectural and engineering services prior and incident
to construction of Tenant Improvements therein. Tenant, at its sole
cost and expense and through Landlord's designated Architect and/or
Engineer, shall then cause to be prepared Plans and Specifications for
Tenant's Premises as follows:
(a) Detailed architectural drawings and specifications for
Tenant's partition plan, reflected ceiling plan, power,
communication, and telephone plan (location of data and
telephone outlets with pull boxes only), electrical outlets,
finish plan, elevations, details and sections;
(b) Mechanical, electrical, plumbing and lighting plans and
specifications where necessary for installation to Base
Building heating and air conditioning systems. (Landlord shall
provide the Architectural and Mechanical services with respect
to completing the improvements outlined in Section B).
(2) Landlord and Tenant hereby agree that time is of the essence and that
the following sequence and schedule shall be strictly adhered to with
respect to the design and development of construction of Improvements
to Tenant's Premises:
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(a) Tenant shall select a coordinator who provides Architect with
information for development of initial space plan within
twelve (12) weeks from execution of Lease.
(b) Architect shall then prepare initial space plan within four
(4) weeks of receipt of Tenant information;
(c) Upon receipt of space plan, Tenant's coordinator, as required,
shall provide additional information for development of
schematic pricing drawings, in not later than two (2) weeks;
(d) Architect shall then prepare schematic pricing drawings and
specifications within two (2) weeks from receipt of
information provided for in (2)(c) above;
(e) Landlord, or its designated agent shall prepare a cost
estimate based upon the drawings referred to in (2)(d) above
within two (2) weeks of receipt of schematic pricing drawings;
(f) Tenant reviews and approves or adjusts the schematic pricing
drawings and the cost estimate, as outlined in (2)(d) and
(2)(e) above, and provides Landlord all remaining information
needed to develop final Plans and specifications by no later
than one week thereafter;
(g) Landlord, based upon all information previously provided and
approved by Tenant, authorizes Architect to prepare final
Plans and Specifications within four (4) weeks;
(h) Tenant reviews and signs off on the final Plans and
Specifications prepared in accordance with (2)(g) above within
one (1) week;
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Upon receipt from Tenant of the approved final Plans and Specifications
referred to in (2)(h) above, Landlord shall obtain a minimum of three
(3) competitive bids and select a contractor, who shall substantially
complete Tenant" Premises by June 30, 1996. Landlord shall provide
Tenant with a Tenant Improvement Allowance of One Million One Hundred
Twenty Thousand Dollars ($1,120,000.00), equivalent to Fourteen Dollars
($14.00) per rentable square foot of the Leased Premises. Should the
cost of all improvements to Tenant's premises exceed Tenant's
Improvements Allowance, Tenant shall pay Landlord such excess costs
prior to the time payment of any sum including same is due to be made
by Landlord to the contractor under the contract for improvements. Said
excess costs shall be deemed Additional Rent under the Lease. Failure
by Tenant to pay any sums when due will constitute a failure to pay
rent when due and be, at Landlord's option, an event of default by
Tenant under the Lease. Any contractor-initiated change order must be
reviewed and approved by Landlord and Tenant, which review and approval
will not e unreasonably withheld. Should cost of improvements to Tenant
be less than the Tenant Improvement Allowance, Tenant may apply the
remainder thereof to the cost of future Tenant improvements to
expansion areas.
(3) Should Tenant, subsequent to commencement of construction of
Improvements to its Premises, modify the Plans and Specifications in
any way, Tenant shall pay all additional costs thereby incurred by
Landlord plus a fee of twenty-one percent (21%) of the additional cost
for Landlord's cost of coordination, supervision and overhead resulting
from the revisions to said Plans and Specifications, excluding any
additional architectural and/or engineering fees. All revised or
additional Plans and Specifications are subject to Landlord's prior
review and written approval. Should any revisions or additions to the
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original Plans and Specifications result in a delay of substantial
completion of the Premises, Tenant agrees that such shall constitute a
"Tenant Delay".
SECTION (B) - LANDLORD'S IMPROVEMENTS:
Preliminary to completion of construction of the Tenant Improvement
Work provided for elsewhere in this Agreement, the following improvements to the
Premises (herein called "Base Building Work") shall have been or be completed by
Landlord at its expense
(1) Perimeter walls and core walls completed, taped and
bedded, ready for paint finish;
(2) Floor - Unfinished concrete slab floor at the
interior of the Leased Premises ready to receive
carpeting or other floor covering;
(3) Building Standard 110-volt power supplied to the
building core, together with building standard power
grid installed in ceiling;
(4) Men's and women's restroom facilities;
(5) Sprinkler riser and main loop;
(6) Building standard voice communication speakers, exit
lights, fire extinguishers and cabinets within common
areas, including the core area;
(7) 2' x 2' ceiling grid system installed throughout with
2' x 2' ceiling tiles stacked on the floors;
(8) Perimeter HVAC system installed from mixing boxes
including ductwork and perimeter slot diffusers;
(9) Building standard sprinkler distribution from main
loop to sprinkler heads, and building standard chrome
semi-recessed sprinkler heads;
(11) Thin line (1") aluminum horizontal blinds to cover
all exterior windows;
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(12) Electrical Service - Provision of up to 3.5 watts
(but no more that 3.5 watts) per usable square foot
of the Leased Premises. This service shall provide
power for lighting fixtures, base and floor outlets
and/or miscellaneous equipment. All additional
electrical service exceeding 3.5 watts per usable
square foot shall be separately connected and metered
at the power source. Tenant shall pay for any and all
costs to submeter and all excess power as metered on
a monthly basis;
(13) Heating, Ventilating and Air Conditioning Engineering
and installation of the base building HVAC system to
provide cool and warm air exterior zones supplied
though slot diffusers in accordance with the
following specifications:
Summer Conditions
Inside Temperature Outside Temperature
75 d.F dry bulb 92 d.F dry bulb
50% relative humidity 78 wet bulb
Winter Conditions
Inside Temperature Outside Temperature
72 d.F dry bulb 14 d.F dry bulb
Any relocation of sprinklers or addition of
sprinklers will be at Tenant's cost.
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All remaining preparation of the Leased
Premises shall be considered as Tenant's Work, to be completed
at Tenant's sole expense.
SECTION (C) - GENERAL PROVISIONS:
(1) Landlord will permit Tenant and its
agent to enter the premises prior to the date specified as the
Commencement Date of the Term of the Lease, allowing Tenant to
perform through its own contractors (to be first approved by
Landlord) such other work and decorations as Tenant may desire
at the same time that Landlord's contractors are working in
the Premises. The foregoing license to enter prior to the
Commencement Date of the Lease Term, however, is conditioned
upon Tenant's workmen and mechanics working in harmony with
and not interfering with the labor employed by Landlord,
Landlord's mechanics or contractors or by any other Tenant(s)
or their contractors, and not impeding or interfering with
Landlord's work or the progress thereof. Such access shall at
times be subject to the control and restrictions of the
Landlord. Such entry shall be deemed to be under all of the
terms, covenants, provisions and conditions of the Lease
except Landlord shall not be liable in any way for any injury,
loss or damage which may occur to any of Tenant's decorations
or installations made prior to the Commencement Date of the
Term of the Lease, the making of any of same being done solely
at Tenant's risk.
(2) Workers' compensation, and pubic
liability insurance for bodily injury and property damage, all
in required amounts and with company's name and on forms
satisfactory to Landlord, shall be provided and at all times
maintained by Tenant's contractors engaged in the performance
of the work,
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and before proceeding with the work, certificates of such
insurance shall be furnished to Landlord.
(3) If Tenant's contractors or anyone
employed by Tenant shall cause a delay in completing Tenant's
alterations, Tenant agrees that such delay will constitute a
"Tenant Delay."
(4) Should Landlord be unable to complete
the work as scheduled as a result of a "Tenant Delay", Tenant
shall pay to Landlord, as Additional Rent, one (1) day's base
rent computed in accordance with the Lease for each calendar
day of "Tenant Delay", as liquidated damages and not as a
penalty, it being agreed that Landlord's damages and not as a
penalty, it being agreed that Landlord's damages for such
delay would be otherwise difficult to determine. Said
Additional Rent will be due within thirty (30) days of
Tenant's receipt of Landlord's notice therefor.
(5) Landlord, upon prior notice to Tenant,
reserves the right to make reasonable substitutions of equal
or better quality and value for building standard materials in
the event of unavailability of materials or due to field
conditions.
(6) Tenant and Landlord acknowledge, by
execution in their respective spaces provided hereinbelow for
that purpose; that the foregoing correctly set forth all the
obligations of Landlord and Tenant with respect thereto are
hereby extinguished and merged into this Agreement; and that
each has full authority and consent to bind the respective
contracting parties.
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IN WITNESS WHEREOF the parties have executed
this Lease Premises Improvement Agreement this ____ day of
[Illegible], 1995.
LANDLORD:
REGENCY PARK WEST ASSOCIATES
A Georgia General Partnership
By: AMERICAN RESURGENS
MANAGEMENT CORP.,
A Georgia Corporation
WITNESS/ATTEST:
/s/ [Illegible]
------------------- By: /s/ James L. McMahan
-------------------------------------
James L. McMahan
Its: Chairman
(CORPORATE SEAL)
TENANT:
THERATX, INC.
A Delaware Corporation
By: /s/ John A. Bardis
-------------------------------------
Its: President and CEO
APPROVED:
GENERAL ELECTRIC REAL
ESTATE EQUITIES, INC.
By: [/s/ Illegible]
-------------------------
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EXHIBIT "D"
ESTOPPEL CERTIFICATE
(Lender's Name)
Gentlemen:
The undersigned, as Tenant under that certain lease (the "Lease") dated
__________________, 19,_, made with____________________________, as Landlord
(the "Landlord"), does hereby agree and certify:
1. That the copy of the Lease attached hereto as Exhibit "A" is a true and
complete copy of the Lease, and there are no amendments, modifications or
extensions of or to the Lease except as set forth immediately below:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
2. That the term of the Lease commenced or began on ______________, 19 ___, and
the Lease is now in full force and effect.
3. That its Leased Premises at the above location have been completed in
accordance with the terms of the Lease, that it has accepted possession of said
premises, that it now occupies the same and that Tenant is paying full lease
rental.
4. That it began paying rent on , 19__, and that, save only as may be required
by the terms of the Lease, no rental has been paid in advance, nor has the
undersigned deposited any sums with the Landlord as security except as set forth
immediately below:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
5. That there exist no defenses or offsets to enforcement of the Lease by the
Landlord and, so far as is known to the undersigned, the Landlord is not, as of
the date hereof, in default in the performance of the Lease, nor has the
Landlord committed any breach thereof, nor has any event occurred which, with
the passage of time or the giving of notice, or both, would constitute a default
or breach by the Landlord.
The undersigned acknowledges that you are relying on the above representations
of the undersigned in (advancing funds to purchase the existing first mortgage
loan covering the building in which the Leased Promises
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are located)/(purchasing the building in which the Leased Premises are located)
and does hereby warrant and affirm to and for your benefit, and that of your
successors and assigns, that each of the foregoing representations is true,
correct and complete as of the date hereof.
DATED: ______________________________________________
TENANT: _____________________________________________
BY: _________________________________________________
ITS: ________________________________________________
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EXHIBIT "E"
RULES AND REGULATIONS
1. Sidewalks, courts, ramps, parking facilities, loading docks and
areas, driveways, delivery, drop-off and pick-up areas, bus stops, halls,
passages, exits, entrances, elevators, escalators, stairways of the Building and
throughout the Common Area and other areas and improvements provided by Landlord
for the general use of tenants, their employees, visitors, invitees and
licensees, shall not be covered or obstructed by Tenant or used by it for any
purpose other than for ingress and egress from the Leased Premises, the Building
or the Common Area, as applicable. The walls, partitions, windows and doors that
reflect or admit light into passageways or into any other part of the Building
shall not be covered or obstructed. The halls, courts, parking facilities,
loading docks and areas, driveways, delivery, drop-off and pick-up areas,
passages, exits, entrances, elevators, escalators and stairways are not for the
use of the general public and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence, in the
judgment of Landlord, may be prejudicial to the safety, character, reputation
and interests of the Common Area, the Building and its tenants; provided that
nothing herein contained shall be construed to prevent such access to persons
with whom any tenant normally deals in the ordinary course of such tenant's
business unless such persons are engaged in illegal or immoral activities.
Tenant, and its employees, visitors, invitees or licensees of any tenant, shall
not go upon the roof of the Building, except as previously authorized by
Landlord.
2. No sign, placard, picture, name, notice, decoration or advertisement
visible horizontally or vertically from the exterior of Leased Premises shall be
inscribed, painted, affixed, installed or otherwise displayed by any tenant
either on its Premises or any interior or exterior part of the Building without
the prior written consent of Landlord, and only then at the sole cost and
expense of Tenant. Landlord shall have the right to remove any such sign,
placard, picture, name, notice, decoration or advertisement without notice to
and at the sole cost and expense of tenant.
(a) If Landlord shall have given such consent to Tenant at any
time, whether before or after the execution of a lease, such consent
shall in no way operate as a waiver or release of any of the provisions
hereof or of such lease, and shall be deemed to relate only to the
particular sign, placard, picture, name, notice, decoration or
advertisement so consented to by Landlord and shall not be construed as
dispensing with the necessity of obtaining the specific written consent
of Landlord with respect to any other such sign, placard, picture,
name, notice, decoration or advertisement.
(b) All approved signs or lettering on doors and walls shall
be printed, painted, affixed and inscribed at the sole expense of
Tenant by a person previously approved in writing by Landlord.
3. The directory of the Building will be provided exclusively for the
display of the name and location of tenants only, in such manner and arrangement
as may be from time to time determined by Landlord, and Landlord reserves the
right to exclude any other names therefrom.
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<PAGE> 140
4. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, awnings, hangings or decorations shall be attached to, hung or placed
in, or used in connection with, any window or door on any premises without the
prior written consent of Landlord. In any event with the prior written consent
of Landlord, all such items shall be installed inside of Landlord's standard
window covering and shall in no way be visible from the exterior of the
Building. No articles shall be placed or kept on the window sills so as to be
visible from the exterior of the Building. No articles shall be placed against
glass partitions or doors which might appear unsightly from outside Tenant's
Premises.
5. Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and 6:00 a.m. and at all hours on Saturdays, Sundays and
holidays all persons other than Tenant or its accompanied guests. Tenant shall
be responsible for all persons whom it allows to enter the Building and shall be
liable to Landlord for all acts of such persons.
(a) Landlord shall in no case be liable for damages or for
error with regard to the admission to or exclusion from the Building of
any person.
(b) During the continuance of any invasion, mob, riot, public
excitement or other circumstances rendering such action advisable in
Landlord's opinion, Landlord reserves the right to prevent access to
the Building by closing the doors, or otherwise, for the safety of
tenants and protection of the Building and property in the Building.
6. Tenant shall not employ any person or persons other than the janitor
of Landlord for the purpose of cleaning Premises unless otherwise agreed to by
Landlord in writing. Except with the written consent of Landlord no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning same. Tenant shall not cause any
unnecessary labor by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness of Tenant's Premises. Landlord shall
in no way be responsible to any tenant for any loss of property on the Premises,
however occurring, or for any damage done to the effects of any tenant by the
Landlord's janitor or any other employee or any other person.
7. Tenant shall not obtain or maintain for use on its Premises
coin-operated vending machines or accept barbering or bootblacking services in
its Premises except from persons authorized by Landlord.
8. Tenant shall see that all doors of its Premises are closed and
securely locked and must observe strict care and caution that all water faucets
or water apparatus are entirely shut off before the tenant or its employees
leave such Premises, and that all utilities shall likewise be carefully shut off
so as to prevent waste or damage, and for any default or carelessness the tenant
shall make good all injuries sustained by other tenants or occupants of the
Building. On multiple tenancy floors, all Tenants shall keep the door or doors
to the Building corridors closed at all times except for ingress and egress.
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<PAGE> 141
9. Tenant shall not waste electricity, water or air-conditioning and
agrees to cooperate fully with Landlord to assure the most effective operation
of the Building's mechanical systems, and shall refrain from attempting to
adjust any controls.
10. No additional locks or bolts of any kind shall be placed on any
door in the building or the Premises and no lock on any door therein shall be
changed or altered in any respect. Landlord shall furnish two keys for each lock
on doors in the Premises and shall, on Tenant's request and at Tenant's expense,
provide additional duplicate keys. All keys shall be returned to Landlord upon
the termination of this lease. Landlord may at all times keep a pass key to the
Premises.
11. The toilet-rooms, toilets, urinals, wash bowls, water apparatus,
and other plumbing facilities shall not be used any purpose other than for those
for which they were constructed or installed. All plumbing lines shall be kept
open and no sweepings, rubbish, chemical, or other unsuitable or foreign
substances of any kind shall be thrown or placed therein or in any of the
toilets, urinals, wash bowls, water apparatus or other plumbing facilities. The
expense of any breakage, stoppage or damage resulting from violation(s) of this
rule by Tenant or Tenant's agents, employees, invitee, licensees or visitors,
shall be borne by Tenant and shall be paid to Landlord immediately upon
Landlord's demand. No restrooms in the Common Areas shall be used as smoking
areas clothes changing facilities, or lounging or meeting areas. Furthermore, no
bathing (other than the washing of hands and face) shall be done in the
restrooms, and no hair dryers, shavers (electric or manual) or other appliances
shall be used in the restrooms at any time. Tenant shall not allow or permit its
agents, employees, invitee, licensees or visitors to congregate in the restrooms
for any reason or to otherwise violate the above provisions of this Rule 11.
12. Tenant shall not use, keep, store or permit in its Premises or the
Building any: (a) ether, naptha, phosphorous, benzol, gasoline, benzine,
petroleum, crude or refined earth or coal oils, kerosene or camphene, other than
in limited quantities necessary for the operation or maintenance of office
equipment; (b) any other flammable, combustible, explosive gas or material of
any kind; or (c) any other fluid, gas or material of any kind having an
offensive odor, unless previously obtaining written consent of the Landlord.
Tenant shall use no method of heating or air-conditioning other than that
supplied by Landlord.
13. No odors or vapors shall be caused or permitted to emanate from the
Premises. Tenant shall not use, keep, store or permit to be used or kept in its
Premises any foul or noxious gas or substance or permit or suffer such 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 and/or vibrations or
interfere in any way with other tenants or those having business therein, nor
shall any live animals or birds other than seeing eye dogs be brought or kept in
or about the Premises or the Building.
14. Tenant shall not use, permit or suffer the use of the Premises or
the Building or the Common Areas of the office park for living, sleeping or
lodging; shall not do any cooking or conduct any restaurant, luncheonette, or
cafeteria business for the sale or service of food or beverages to persons other
than its own employees and guests (in which event only equipment
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<PAGE> 142
approved by Underwriters' Laboratory shall be used or installed); and shall not
permit the delivery of food or beverage to the Premises, except by such persons
delivering the same as shall be approved by Landlord and only under regulations
fixed by Landlord.
15. Except with the prior written consent of Landlord, Tenant shall not
sell, permit the sale, at retail, of newspapers, magazines, periodicals, theatre
tickets or any other goods or merchandise in or on any Premises, nor shall
tenant carry on, or permit or allow any employee or other person to carry on,
the business of stenography, typewriting or any similar business in or from any
Premises for the service or accommodation of occupants of any other portion of
the Building, nor shall the Premises of Tenant be used for the storage of
merchandise or for manufacturing of any kind, or the business of a public barber
shop, beauty parlor, or bootblacking parlor nor shall the Premises of Tenant be
used for any improper, immoral or objectionable purpose, or any business
activity other than that specifically provided for in Tenant's Lease.
16. If Tenant requires telegraphic, telephonic, burglar alarm or
similar services, it shall first obtain, and comply with, Landlord's instruction
in their installation. Landlord will direct electricians as to where and how
telephone, telegraph and electrical wires are to be introduced or installed. No
boring or cutting for wires will be allowed without the prior written consent of
Landlord. The location of burglar alarms, telephones, call boxes or other office
equipment affixed to all Premises shall be subject to the written approval of
Landlord.
17. Tenant shall not install any radio or television antenna,
loudspeaker or any other device on the exterior walls or the roof of the
Building. Tenant shall not use or permit operation of any musical or
sound-producing instruments or devices which may be board outside the Premises,
or interfere with radio or television broadcasting or reception from or in the
Building or elsewhere. No signalling, telegraphic or telephonic instruments or
devices, or other wires, instruments or devices, shall be installed in
connection with the Premises without the prior written approval of Landlord.
Such installations, and the boring or cutting for wires, shall be made at the
sole cost and expense of Tenant and under the control and direction of Landlord.
Landlord retains in all cases the right to require (i) the installation and use
of such electrical protecting devices that prevent the transmission of excessive
currents of electricity into or through the Building, (ii) the changing of wires
and of their installation and arrangement underground or otherwise as Landlord
may direct, and (iii) compliance on the part of all using or seeking access to
such wires with such rules as Landlord may establish relating thereto. All such
wires used by Tenant must be clearly tagged at the Building, with (i) the number
of the Premises to which said wires lead, (ii) the purpose for which wires are
used, and (iii) the name of the company operating same.
18. Tenant shall lay no linoleum, tile, carpet or any other floor
covering so that the same shall be affixed to the floor of its Premises in any
manner except as approved in writing by Landlord. The expense of repairing any
damage resulting from a violation of this rule or the removal of any floor
covering shall be borne by Tenant if it or its contractors, employees or
invitees, shall have caused the damage.
19. No furniture, freight, equipment, materials, supplies, packages,
merchandise or other property will be received in the Building or carried upon
or down the elevators except
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between such hours and in such elevators as shall be designated by Landlord.
Landlord shall have the right to prescribe the weight, size and position of all
safes, furniture, files, bookcases or other heavy equipment brought into the
Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand an wood strips of such thickness as determined by Landlord to be
necessary to properly distribute the weight thereof. Landlord will not be
responsible for loss of or damage to any such safe, equipment or property from
any cause, and all damage done to the Building by moving or maintaining any such
safe, equipment or other property shall be repaired at the expense of Tenant.
20. 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
Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The persons employed by Tenant to
move such equipment in or out of the Building must be acceptable by Landlord.
21. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Tenant shall not mark, or drive nails, screws or drill
into, the partitions, woodwork or plaster or in any way deface such Premises or
any part thereof.
22. Tenant shall not install, maintain or operate upon the Premises any
vending machine without the written consent of the Landlord.
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EXHIBIT 10.3
WITNESS SYSTEMS, INC.
AMENDED & RESTATED
STOCK INCENTIVE PLAN
SECTION 1.
PURPOSE
The purpose of this Plan is to promote the interests of the Company by
providing the opportunity to purchase Shares or to receive compensation which is
based upon appreciation in the value of Shares to Employees and Key Persons in
order to attract and retain Employees and Key Persons by providing an incentive
to work to increase the value of Shares and a stake in the future of the Company
which corresponds to the stake of each of the Company's shareholders. The Plan
provides for the grant of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock Awards and Stock Appreciation Rights to aid the Company in
obtaining these goals.
SECTION 2.
DEFINITIONS
Each term set forth in this Section shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular, and reference to one gender shall include the other gender.
2.1 BOARD means the Board of Directors of the Company.
2.2 CODE means the Internal Revenue Code of 1986, as amended.
2.3 COMMITTEE means the Compensation Committee of the Board.
2.4 COMMON STOCK means the common stock of the Company having a par
value of $.01 per share.
2.5 COMPANY means Witness Systems, Inc., a Delaware corporation, and
any successor to such organization.
2.6 DIRECTOR means a member of the Board.
2.7 EMPLOYEE means an employee of the Company, a Subsidiary or a
Parent.
2.8 EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
2.9 EXERCISE PRICE means the price which shall be paid to purchase one
(1) Share upon the exercise of an Option granted under this Plan.
2.10 FAIR MARKET VALUE of each Share on any date means the price
determined below on the last business day immediately preceding the date of
valuation:
(a) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value per share shall be the
closing sale price for the Common Stock (or the mean of the closing bid and
asked prices, if no sales were reported), as quoted on such exchange or system
on the date of such determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; or
<PAGE> 2
(b) If the Common Stock is not listed on any established stock
exchange or a national market system, its Fair Market Value per share shall be
the average of the closing dealer "bid" and "ask" prices of a share of the
Common Stock as reflected on the NASDAQ interdealer quotation system of the
National Association of Securities Dealers, Inc. on the date of such
determination; or
(c) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board.
2.11 INSIDER means an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.12 ISO means an option granted under this Plan to purchase Shares
which is intended by the Company to satisfy the requirements of Code ss.422 as
an incentive stock option.
2.13 KEY PERSON means (i) a member of the Board who is not an Employee,
(ii) a consultant, distributor or other person who has rendered or committed to
render valuable services to the Company, a Subsidiary or a Parent, (iii) a
person who has incurred, or is willing to incur, financial risk in the form of
guaranteeing or acting as co-obligor with respect to debts or other obligations
of the Company, or (iv) a person who has extended credit to the Company. Key
Persons are not limited to individuals and, subject to the preceding definition,
may include corporations, partnerships, associations and other entities.
2.14 NON-ISO means an option granted under this Plan to purchase Shares
which is not intended by the Company to satisfy the requirements of Code ss.422.
2.15 OPTION means an ISO or a Non-ISO.
2.16 OUTSIDE DIRECTOR means a Director who is not an Employee and who
qualifies as (1) a "non-employee director" under Rule 16b-3(b)(3) under the 1934
Act, as amended from time to time, and (2) an "outside director" under Code
ss.162(m) and the regulations thereunder.
2.17 PARENT means any corporation which is a parent of the Company
(within the meaning of Code ss.424).
2.18 PARTICIPANT means an individual who receives a Stock Incentive
hereunder.
2.19 PERFORMANCE-BASED EXCEPTION means the performance-based exception
from the tax deductibility limitations of Code ss.162(m).
2.20 PLAN means the Witness Systems, Inc. Amended & Restated Stock
Incentive Plan, as may be amended from time to time.
2.21 SHARE means a share of the Common Stock of the Company.
2.22 STOCK INCENTIVE means an ISO, a Non-ISO, a Restricted Stock Award
or a Stock Appreciation Right.
2.23 STOCK INCENTIVE AGREEMENT means an agreement between the Company
and a Participant evidencing an award of a Stock Incentive.
2.24 SUBSIDIARY means any corporation which is a subsidiary of the
Company (within the meaning of Code ss.424(f)).
Page 2 of 10
<PAGE> 3
2.25 SURRENDERED SHARES means the Shares described in Section 8.2 which
(in lieu of being purchased) are surrendered for cash or Shares, or for a
combination of cash and Shares, in accordance with Section 8.
2.26 TEN PERCENT SHAREHOLDER means a person who owns (after taking into
account the attribution rules of Code ss.424(d)) more than ten percent (10%) of
the total combined voting power of all classes of shares of either the Company,
a Subsidiary or a Parent.
SECTION 3.
SHARES SUBJECT TO STOCK INCENTIVES
The total number of Shares that may be issued pursuant to Stock
Incentives under this Plan shall not exceed three million four hundred
eighty-six thousand (3,486,000), plus (1) an annual amount for each calendar
year beginning with the calendar year that begins on January 1, 2001, such that
the total number of Shares reserved for issuance under this Plan will be equal
to the sum of (A) the aggregate number of shares previously issued under this
Plan; (B) the aggregate number of Shares subject to outstanding options granted
under this Plan; and (C) 5% of the aggregate number of Shares outstanding on the
last day of the preceding calendar year, or (2) such lower amount as may be
determined by the Board in its sole discretion; provided, however, in no event
shall the increase in the number of Shares from one fiscal year to the next
exceed one million (1,000,000); all as adjusted pursuant to Section 11. Such
Shares shall be reserved, to the extent that the Company deems appropriate, from
authorized but unissued Shares, and from Shares which have been reacquired by
the Company. Furthermore, any Shares subject to a Stock Incentive which remain
after the cancellation, expiration or exchange of such Stock Incentive
thereafter shall again become available for use under this Plan, but any
Surrendered Shares which remain after the surrender of an ISO or a Non-ISO under
Section 8 shall not again become available for use under this Plan.
Notwithstanding anything herein to the contrary, no Participant may be granted
Options or Stock Appreciation Rights covering an aggregate number of Shares in
excess of one million (1,000,000) in any calendar year.
SECTION 4.
EFFECTIVE DATE
The effective date of this Plan, as amended and restated, shall be the
date it is adopted by the Board, provided the shareholders of the Company
approve this Plan within twelve (12) months after such effective date. If such
effective date comes before such shareholder approval, any Stock Incentives
granted under this Plan before the date of such approval automatically shall be
granted subject to such approval.
SECTION 5.
ADMINISTRATION
5.1 GENERAL ADMINISTRATION. This Plan shall be administered by the
Board. The Board, acting in its absolute discretion, shall exercise such powers
and take such action as expressly called for under this Plan. The Board shall
have the power to interpret this Plan and, subject to Section 13, to take such
other action in the administration and operation of the Plan as it deems
equitable under the circumstances. The Board's actions shall be binding on the
Company, on each affected Employee or Key Person, and on each other person
directly or indirectly affected by such actions.
5.2 DELEGATION OF AUTHORITY. The Board may delegate its authority
under the Plan, in whole or in part, to a Committee appointed by the Board
consisting of not less than two (2) directors. The members of the Committee
shall serve at the discretion of the Board. The Committee (if appointed) shall
act according to the policies and procedures set forth in the Plan and to those
policies and procedures established by the Board, and the Committee shall have
such powers and responsibilities as are set forth by the Board. Reference to the
Board in this Plan shall specifically include reference to the Committee where
the Board has delegated its authority to the Committee, and any action by the
Committee pursuant
Page 3 of 10
<PAGE> 4
to a delegation of authority by the Board shall be deemed an action by the Board
under the Plan. Notwithstanding the above, the Board may assume the powers and
responsibilities granted to the Committee at any time, in whole or in part. With
respect to Committee appointments and composition, only a Committee comprised
solely of two (2) or more Outside Directors may grant Stock Incentives which
will meet the Performance-Based Exception, and only a Committee comprised solely
of Outside Directors may grant Stock Incentives to Insiders that will be exempt
from Section 16(b) of the Exchange Act.
5.3 DECISIONS BINDING. All determination and decisions made by the
Board (or its delegate) pursuant to the provisions of this Plan and all related
orders and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Directors, Employees, Key
Persons, Participant, and their estates and beneficiaries.
SECTION 6.
ELIGIBILITY
Employees and Key Persons shall be eligible for the grant of Stock
Incentives under this Plan, but no Employee shall have the right to be granted a
Stock Incentive under this Plan merely as a result of his or her status as an
Employee.
SECTION 7
TERMS OF STOCK INCENTIVES
7.1 TERMS AND CONDITIONS OF ALL STOCK INCENTIVES.
(a) The Board, in its absolute discretion, shall grant Stock
Incentives under this Plan from time to time and shall have the right to grant
new Stock Incentives in exchange for outstanding Stock Incentives. Stock
Incentives shall be granted to Employees or Key Persons selected by the Board,
and the Board shall be under no obligation whatsoever to grant Stock Incentives
to all Employees or Key Persons, or to grant all Stock Incentives subject to the
same terms and conditions.
(b) The number of Shares as to which a Stock Incentive shall be
granted shall be determined by the Board in its sole discretion, subject to the
provisions of Section 3 as to the total number of shares available for grants
under the Plan.
(c) Each Stock Incentive shall be evidenced by a Stock Incentive
Agreement executed by the Company and the Participant, which shall be in such
form and contain such terms and conditions as the Board in its discretion may,
subject to the provisions of the Plan, from time to time determine.
(d) The date a Stock Incentive is granted shall be the date on
which the Board has approved the terms and conditions of the Stock Incentive
Agreement and has determined the recipient of the Stock Incentive and the number
of Shares covered by the Stock Incentive and has taken all such other action
necessary to complete the grant of the Stock Incentive.
7.2 TERMS AND CONDITIONS OF OPTIONS. Each grant of an Option shall be
evidenced by a Stock Incentive Agreement which shall:
(i) specify whether the Option is an ISO or Non-ISO; and
(ii) incorporate such other terms and conditions as the Board,
acting in its absolute discretion, deems consistent with the terms of this Plan,
including (without limitation) a restriction on the number of Shares subject to
the Option which first become exercisable or subject to surrender during any
calendar year.
Page 4 of 10
<PAGE> 5
In determining Employee(s) or Key Person(s) to whom an Option
shall be granted and the number of Shares to be covered by such Option, the
Board may take into account the recommendations of the Chief Executive Officer
of the Company and its other officers, the duties of the Employee or Key Person,
the present and potential contributions of the Employee or Key Person to the
success of the Company, the anticipated number of years of service remaining
before the attainment by the Employee of retirement age, and other factors
deemed relevant by the Board, in its sole discretion, in connection with
accomplishing the purpose of this Plan. An Employee or Key Person who has been
granted an Option to purchase Shares, whether under this Plan or otherwise, may
be granted one or more additional Options.
If the Board grants an ISO and a Non-ISO to an Employee on the
same date, the right of the Employee to exercise or surrender one such Option
shall not be conditioned on his or her failure to exercise or surrender the
other such Option.
(a) Exercise Price. Subject to adjustment in accordance with
Section 11 and the other provisions of this Section, the Exercise Price shall be
as set forth in the applicable Stock Incentive Agreement. With respect to each
grant of an ISO to a Participant who is not a Ten Percent Shareholder, the
Exercise Price shall not be less than the Fair Market Value on the date the ISO
is granted. With respect to each grant of an ISO to a Participant who is a Ten
Percent Shareholder, a Ten Percent Shareholder shall not be less than one
hundred ten percent (110%) of the Fair Market Value on the date the ISO is
granted. If a Stock Incentive is a Non-ISO, the Exercise Price for each Share
shall be no less than the minimum price required by applicable state law, or by
the Company's governing instrument, or $0.01, whichever price is greater. Any
Stock Incentive intended to meet the Performance-Based Exception must be granted
with an Exercise Price equivalent to or greater than the Fair Market Value of
the Shares subject thereto.
(b) Option Term. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Stock Incentive Agreement, but no Stock Incentive Agreement shall:
(i) make an Option exercisable before the date such Option is
granted; or
(ii) make an Option exercisable after the earlier of:
(A) the date such Option is exercised in full, or
(B) the date which is the tenth (10th) anniversary of the
date such Option is granted, if such Option is a Non-ISO or an ISO granted to a
non-Ten Percent Shareholder, or the date which is the fifth (5th) anniversary of
the date such Option is granted, if such Option is an ISO granted to a Ten
Percent Shareholder.
A Stock Incentive Agreement may provide for the exercise of an
Option after the employment of an Employee has terminated for any reason
whatsoever, including death or disability. The Employee's rights upon
termination of employment will be set forth in the applicable Stock Incentive
Agreement.
(c) Payment. Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised accompanied by full payment
for the Shares. Payment for all shares of Stock purchased pursuant to exercise
of an Option shall be made in cash or, if the Stock Incentive Agreement
provides, by delivery to the Company of a number of Shares which have been owned
and fully paid for by the holder for at least six (6) months prior to the date
of exercise having an aggregate Fair Market Value equal to the amount to be
tendered, or a combination thereof. In addition, if the Stock Incentive
Agreement so provides, the Option may be exercised through a brokerage
transaction following registration of the Company's equity securities under
Section 12 of the Securities Exchange Act of 1934 as permitted under the
provisions of Regulation T applicable to cashless exercises promulgated by the
Federal Reserve Board. However,
Page 5 of 10
<PAGE> 6
notwithstanding the foregoing, with respect to any Option recipient who is an
Insider, a tender of shares or a cashless exercise must (1) have met the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange
Act, or (2) be a subsequent transaction the terms of which were provided for in
a transaction initially meeting the requirements of an exemption under Rule
16b-3 promulgated under the Exchange Act. Except as provided in subparagraph (f)
below, payment shall be made at the time that the Option or any part thereof is
exercised, and no Shares shall be issued or delivered upon exercise of an Option
until full payment has been made by the Participant. The holder of an Option, as
such, shall have none of the rights of a stockholder.
Notwithstanding the above, and in the sole discretion of the
Board, an Option may be exercised as to a portion or all (as determined by the
Board) of the number of Shares specified in the Stock Incentive Agreement by
delivery to the Company of a promissory note, such promissory note to be
executed by the Participant and which shall include, with such other terms and
conditions as the Board shall determine, provisions in a form approved by the
Board under which: (i) the balance of the aggregate purchase price shall be
payable in equal installments over such period and shall bear interest at such
rate (which shall not be less than the prime bank loan rate as determined by the
Board) as the Board shall approve, and (ii) the Participant shall be personally
liable for payment of the unpaid principal balance and all accrued but unpaid
interest.
(d) Conditions to Exercise of an Option. Each Option granted
under the Plan shall be exercisable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Board shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of an Option, the Board, at any time before complete termination of
such Option, may accelerate the time or times at which such Option may be
exercised in whole or in part. The Board may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable,
including, without limitation, vesting or performance-based restrictions,
restrictions under applicable federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.
(e) Transferability of Options. Except as provided in subparagraph
(f) below, an Option shall not be transferable or assignable except by will or
by the laws of descent and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant, or in the event of the
disability of the Participant; provided, however, that in the event the
Participant is incapacitated and unable to exercise his or her Option, such
Option may be exercised by such Participant's legal guardian, legal
representative, or other representative whom the Board deems appropriate based
on applicable facts and circumstances. The determination of incapacity of a
Participant and the determination of the appropriate representative of the
Participant who shall be able to exercise the Option if the Participant is
incapacitated shall be determined by the Board in its sole and absolute
discretion. Notwithstanding the foregoing, a Non-ISO may also be transferred as
a bona fide gift to one or more members of the Optionee's family or to a trust
for the benefit of one or more family members, in which case the transferee
shall be subject to all provisions of the Plan, the Stock Incentive Agreement
and the Exercise and Shareholder Agreement provided by the Company in connection
with the exercise of the Option and purchase of Shares. In the event of such a
gift, the Optionee shall promptly notify the Board of such transfer and deliver
to the Board such written documentation as the Board may in its discretion
request, including, without limitation, the written acknowledgment of the donee
that the donee is subject to the provisions of the Plan, the Stock Incentive
Agreement and the Exercise and Shareholder Agreement.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section, any Option in
substitution for a stock option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code ss.424(a) is
applicable, may provide for an exercise price computed in accordance with Code
ss.424(a) and the regulations thereunder and may contain such other terms and
conditions as the Board may prescribe to cause such substitute Option to contain
as nearly as possible the same terms and conditions (including the applicable
vesting and termination provisions) as those contained in the previously issued
stock option being replaced thereby.
Page 6 of 10
<PAGE> 7
7.3 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in connection with an
Option. A Stock Appreciation Right shall entitle the Participant to receive upon
exercise or payment the excess of: (I) the Fair Market Value of a specified
number of Shares at the time of exercise, over (II) a specified price which
shall be not less than the Exercise Price for that number of Shares in the case
of a Stock Appreciation Right granted in connection with a previously or
contemporaneously granted Option, or in the case of any other Stock Appreciation
Right not less than one hundred percent (100%) of the Fair Market Value of that
number of Shares at the time the Stock Appreciation Right was granted. A Stock
Appreciation Right granted in connection with an Option may only be exercised to
the extent that the related Option has not been exercised. The exercise of a
Stock Appreciation Right shall result in a pro rata surrender of the related
Option to the extent the Stock Appreciation Right has been exercised.
(a) Payment. Upon exercise or payment of a Stock Appreciation
Right, the Company shall pay to the Participant the appreciation in cash or
Shares (at the aggregate Fair Market Value on the date of payment or exercise)
as provided in the Stock Incentive Agreement or, in the absence of such
provision, as the Board may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted
under the Plan shall be exercisable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Board shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of a Stock Appreciation Right, the Board, at any time before complete
termination of such Stock Appreciation Right, may accelerate the time or times
at which such Stock Appreciation Right may be exercised in whole or in part.
(c) Transferability of Stock Appreciation Rights. Except as
otherwise provided in a Participant's Stock Incentive Agreement, no Stock
Appreciation Right granted under the plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Stock Incentive Agreement, all Stock Appreciation Rights granted
to a Participant under the Plan shall be exercisable, during the Participant's
lifetime, only by the Participant; provided, however, that in the event the
Participant is incapacitated and unable to exercise his or her Stock
Appreciation Right, such Stock Appreciation Right may be exercised by such
Participant's legal guardian, legal representative, or other representative whom
the Board deems appropriate based on applicable facts and circumstances.
Notwithstanding the foregoing, a Stock Appreciation Right which is granted in
connection with the grant of a Non-ISO may be transferred, but only with the
Non-ISO and only as a bona fide gift, to one or more members of the Optionee's
family or to a trust for the benefit of one or more family members, in which
case the transferee shall be subject to all provisions of the Plan and the Stock
Incentive Agreement. In the event of such a gift, the Optionee shall promptly
notify the Board of such transfer and deliver to the Board such written
documentation as the Board may in its discretion request, including, without
limitation, the written acknowledgment of the donee that the donee is subject to
the provisions of the Plan and the Stock Incentive Agreement.
7.4 TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. Shares awarded
pursuant to Restricted Stock Awards shall be subject to such restrictions as
determined by the Board for periods determined by the Board. Unless the
applicable Stock Incentive Agreement provides otherwise, holders of Restricted
Stock Awards shall be entitled to vote and receive dividends during the periods
of restriction to the same extent as holders of unrestricted Common Stock. The
Board shall have the power to permit, in its discretion, an acceleration of the
expiration of the applicable restriction period with respect to any part or all
of the Shares awarded to a Participant. The Board may require a cash payment
from the Participant in an amount no greater than the aggregate Fair Market
Value of the Shares awarded determined at the date of grant in exchange for the
grant of a Restricted Stock Award or may grant a Restricted Stock Award without
the requirement of a cash payment.
Page 7 of 10
<PAGE> 8
SECTION 8.
SURRENDER OF OPTIONS
8.1 GENERAL RULE. The Board, acting in its absolute discretion, may
incorporate a provision in a Stock Incentive Agreement to allow an Employee or
Key Person to surrender his or Option in whole or in part in lieu of the
exercise in whole or in part of that Option on any date that:
(a) the Fair Market Value of the Shares subject to such Option
exceeds Exercise Price for such Shares, and
(b) the Option to purchase such Shares is otherwise
exercisable.
8.2 PROCEDURE. The surrender of an Option in whole or in part shall be
effected by the delivery of the Stock Incentive Agreement to the Board, together
with a statement signed by the Participant which specifies the number of Shares
("Surrendered Shares") as to which the Participant surrenders his or her Option
and how he or she desires payment be made for such Surrendered Shares.
8.3 PAYMENT. A Participant in exchange for his or her Surrendered
Shares shall receive a payment in cash equal in amount on the date such
surrender is effected to the excess of the Fair Market Value of the Surrendered
Shares on such date over the Exercise Price for the Surrendered Shares. The
Board, acting in its absolute discretion, can approve or disapprove a
Participant's request for payment in cash. In no event may a Participant ever
surrender an Option in exchange for Shares.
8.4 RESTRICTIONS. Any Stock Incentive Agreement which incorporates a
provision to allow a Participant to surrender his or her Option in whole or in
part also shall incorporate such additional restrictions on the exercise or
surrender of such Option as the Board deems necessary to satisfy the conditions
to the exemption under Rule 16b-3 (or any successor exemption) to Section 16(b)
of the Exchange Act.
SECTION 9.
SECURITIES REGULATION
Each Stock Incentive Agreement may provide that, upon the receipt of
Shares as a result of the surrender or exercise of a Stock Incentive, the
Participant shall, if so requested by the Company, hold such Shares for
investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement
satisfactory to the Company to that effect. Each Stock Incentive Agreement may
also provide that, if so requested by the Company, the Participant shall make a
written representation to the Company that he or she will not sell or offer to
sell any of such Shares unless a registration statement shall be in effect with
respect to such Shares under the Securities Act of 1933, as amended ("1933
Act"), and any applicable state securities law or, unless he or she shall have
furnished to the Company an opinion, in form and substance satisfactory to the
Company, of legal counsel acceptable to the Company, that such registration is
not required. Certificates representing the Shares transferred upon the exercise
or surrender of a Stock Incentive granted under this Plan may at the discretion
of the Company bear a legend to the effect that such Shares have not been
registered under the 1933 Act or any applicable state securities law and that
such Shares may not be sold or offered for sale in the absence of an effective
registration statement as to such Shares under the 1933 Act and any applicable
state securities law or an opinion, in form and substance satisfactory to the
Company, of legal counsel acceptable to the Company, that such registration is
not required.
Page 8 of 10
<PAGE> 9
SECTION 10.
LIFE OF PLAN
No Stock Incentive shall be granted under this Plan on or after the
earlier of:
(a) the tenth (10th) anniversary of the effective date of this Plan (as
determined under Section 4 of this Plan), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Stock Incentives have
been surrendered or exercised in full or no longer are exercisable, or
(b) the date on which all of the Shares reserved under Section 3 of
this Plan have (as a result of the surrender or exercise of Stock Incentives
granted under this Plan) been issued or no longer are available for use under
this Plan, in which event this Plan also shall terminate on such date.
SECTION 11.
ADJUSTMENT
The number of Shares reserved under Section 3 of this Plan, the limit
on the number of Shares which may be granted during a calendar year to any
individual under Section 3 of this Plan, the number of Shares subject to Stock
Incentives granted under this Plan, and the Exercise Price of any Options, shall
be adjusted by the Board in an equitable manner to reflect any change in the
capitalization of the Company, including, but not limited to, such changes as
stock dividends or stock splits. Furthermore, the Board shall have the right to
adjust (in a manner which satisfies the requirements of Code ss.424(a)) the
number of Shares reserved under Section 3, and the number of Shares subject to
Stock Incentives granted under this Plan, and the Exercise Price of any Options
in the event of any corporate transaction described in Code ss.424(a) which
provides for the substitution or assumption of such Stock Incentives. If any
adjustment under this Section creates a fractional Share or a right to acquire a
fractional Share, such fractional Share shall be disregarded, and the number of
Shares reserved under this Plan and the number subject to any Stock Incentives
granted under this Plan shall be the next lower number of Shares, rounding all
fractions downward. An adjustment made under this Section by the Board shall be
conclusive and binding on all affected persons and, further, shall not
constitute an increase in the number of Shares reserved under Section 3.
SECTION 12.
SALE OR MERGER OF THE COMPANY
If the Company agrees to sell substantially all of its assets for cash
or property, or for a combination of cash and property, or agrees to any merger,
consolidation, reorganization, division or other transaction in which Shares are
converted into another security or into the right to receive securities or
property, and such agreement does not provide for the assumption or substitution
of the Stock Incentives granted under this Plan, each Stock Incentive, at the
direction and discretion of the Board, or as is otherwise provided in the Stock
Incentive Agreements, (i) may be deemed to be fully vested and/or exercisable,
or (ii) may be canceled unilaterally by the Company in exchange for (a) whole
Shares (or, subject to satisfying the conditions of an exemption under Rule
16b-3 or any successor exemption to Section 16(b) of the Exchange Act, for the
whole Shares and cash in lieu of any fractional Share) which each Participant
otherwise would receive if he or she had the right to surrender or exercise his
or her outstanding Stock Incentive in full and he or she exercised that right
exclusively for Shares on a date fixed by the Board which comes before such sale
or other corporate transaction, or (b) cash or other property equivalent in
value, as determined by the Board in its sole discretion, to the Shares
described in clause (a) of this sentence. Any such Stock Incentive which is not
assumed or substituted as provided above and which the Company does not elect to
cancel prior to a sale or other corporate transaction as described in this
Section shall become fully vested and immediately exercisable just prior to the
closing of such transaction.
Page 9 of 10
<PAGE> 10
SECTION 13.
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate; provided, however, no such
amendment shall be made absent the approval of the shareholders of the Company:
(a) to increase the number of Shares reserved under Section 3, except as set
forth in Section 11, (b) to extend the maximum life of the Plan under Section 10
or the maximum exercise period under Section 7, (c) to decrease the minimum
Exercise Price under Section 7, or (d) to change the designation of Employees or
Key Persons eligible for Stock Incentives under Section 6. The Board also may
suspend the granting of Stock Incentives under this Plan at any time and may
terminate this Plan at any time; provided, however, the Company shall not have
the right to modify, amend or cancel any Stock Incentive granted before such
suspension or termination unless: (I) the Participant consents in writing to
such modification, amendment or cancellation, or (II) there is a dissolution or
liquidation of the Company or a transaction described in Section 11 or Section
12.
SECTION 14.
MISCELLANEOUS
14.1 SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder of the Company as a result of the grant of a Stock Incentive to him
or to her under this Plan or his or her exercise or surrender of such Stock
Incentive pending the actual delivery of Shares subject to such Stock Incentive
to such Participant.
14.2 NO GUARANTEE OF CONTINUED RELATIONSHIP. The grant of a Stock
Incentive to a Participant under this Plan shall not constitute a contract of
employment and shall not confer on a Participant any rights upon his or her
termination of employment or relationship with the Company in addition to those
rights, if any, expressly set forth in the Stock Incentive Agreement which
evidences his or her Stock Incentive.
14.3 WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company as a
condition precedent for the fulfillment of any Stock Incentive, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan Whenever Shares are to be issued or cash paid
to a Participant upon exercise of an Option, the Company shall have the right to
require the Participant to remit to the Company, as a condition of exercise of
the Option, an amount sufficient to satisfy federal, state and local withholding
tax requirements at the time of exercise. However, notwithstanding the
foregoing, to the extent that a Participant is an Insider, satisfaction of
withholding requirements by having the Company withhold Shares may only be made
to the extent that such withholding of Shares (1) has met the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3 promulgated
under the Exchange Act. Notwithstanding the foregoing, in no event shall payment
of withholding taxes be made by a retention of Shares by the Company unless such
method of satisfaction of withholding requirements has been approved by the
Company, and unless the Company retains only Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld.
14.4 TRANSFER. The transfer of an Employee between or among the
Company, a Subsidiary or a Parent shall not be treated as a termination of his
or her employment under this Plan.
14.5 CONSTRUCTION. This Plan shall be construed under the laws of the
State of Delaware.
Page 10 of 10
<PAGE> 1
EXHIBIT 10.5
ADDENDUM TO THE
STOCK OPTION GRANT CERTIFICATE
OF
----------------------------
DATED ___________ _____, 19___
THIS ADDENDUM is made effective as of the ____ day of ____________,
19___, by and between WITNESS SYSTEMS, INC., a Delaware corporation (the
"Company"), and __________________ (the "Executive").
A. Purpose. The Executive is now employed by the Company and the
Company desires to provide an incentive to the Executive to
continue to devote his disinterested attention and
undistracted dedication to the performance of his duties in
the potentially disturbing circumstances of a Change of
Control of the Company.
B. Severance Benefits and Limitation on Payment. If the
Executive's employment with the Company is terminated by the
Company other than for Cause or by the Executive for Good
Reason at any time (i) during the ninety (90) day period
before a Change of Control and (ii) after a Change of Control
and prior to December 31, 2001, that certain stock option
awarded to the Executive on the date hereof to acquire _______
shares of the Company's common stock, if less that fully
vested as of the Date of Termination, shall be deemed fully
vested and exercisable; provided, that acceleration in vesting
does not adversely impact the availability of pooling of
interests accounting treatment, as such determination is made
by the Board in its reasonable discretion.
C. Definitions. For purposes of this Amendment, the following
definitions shall apply:
1. Change of Control. A "Change of Control" shall be
conclusively deemed to have occurred if (and only if)
any of the following shall have taken place: (i) a
Change of Control is reported by the Company in
response to either Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or
Item 1 of Form 8-K promulgated under the Exchange
Act; (ii) any person (as such term is used in Section
13(d) and 14(d)(2) of the Exchange Act) is or becomes
the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) directly or indirectly, of
securities of the Company representing forty percent
(40%) or more of the combined voting power of the
Company's then outstanding securities; or (iii)
following the election or removal of directors, a
majority of the Board consists of individuals who
were not members of the Board two years before such
election or removal, unless the election of each
director who was not a director at the beginning of
such two-year period has been approved in advance by
directors
<PAGE> 2
representing at least a majority of the directors
then in office who were directors at the beginning of
the two-year period.
2. Date of Termination. "Date of Termination" means the
date on which a notice of termination is given either
by the Company or by the Executive.
3. Good Reason. "Good Reason" means the Executive's
termination of employment for any of the following
events, unless such event occurs with the Executive's
express prior written consent:
(a) The assignment to the Executive of any
duties materially inconsistent with, or a
diminution of, his position, duties, titles,
offices, responsibilities and status with
the Company as in effect immediately prior
to the Change of Control of the Company,
except in connection with the termination of
the Executive's employment for disability,
retirement, or Cause or as a result of the
Executive's death or termination of
employment other than for Good Reason;
(b) A reduction of fifteen percent (15%) or more
in the Executive's base salary as in effect
on the date of this Amendment or as the same
may be increased from time to time;
(c) A change in the location of the Executive's
principal place of employment by more than
one hundred (100) miles from the location
where he was principally employed
immediately prior to the Change of Control;
(d) Any material breach by the Company of any
provision of this Amendment or the
Agreement; or
(e) Any failure by the Company to obtain the
assumption of the Agreement by any successor
or assign of the Company.
4. Cause. "Cause" means termination of the Executive's
employment under any one or more of the following
events:
(a) Executive's knowing and willful misconduct
with respect to the business and affairs of
the Company;
(b) Any material violation by Executive of any
policy of the Company relating to ethical
conduct or practices or fiduciary duties of
a similarly situated executive;
(c) Knowing and willful material breach of any
provision of this Agreement which is not
remedied within thirty (30) days after
Executive's receipt of notice thereof;
-2-
<PAGE> 3
(d) Executive's commission of a felony or any
illegal act involving moral turpitude or
fraud or Executive's dishonesty which may
reasonably be expected to have a material
adverse effect on the Company; and/or
(e) Failure to comply with reasonable directives
of the Board which are consistent with the
Executive's duties, if not remedied within
thirty (30) days after the Executive's
receipt of notice thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as
of the date first above written.
WITNESS SYSTEMS, INC.
By:
-------------------------------
Its:
------------------------------
----------------------------------
Executive
-3-
<PAGE> 1
EXHIBIT 10.6
WITNESS SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE OF PLAN
Witness Systems, Inc. has adopted this employee stock purchase plan to
encourage the employees of the Company (and its participating affiliated
companies) to acquire a proprietary interest, or to increase their existing
proprietary interest, in the Company. The Board of Directors of the Company
believes that employee ownership of the Company's stock will serve as an
incentive, encouraging employees to continue their employment and to perform
diligently their duties as employees. It is further intended that the Plan
qualify as an "employee stock purchase plan" within the meaning of Code ss.423.
ARTICLE II
DEFINITIONS
When used in this Plan with initial capital letters, the following
terms shall have the meanings set forth below:
2.1 Board shall mean the Board of Directors of the Company.
2.2 Code shall mean the Internal Revenue Code of 1986, as amended.
2.3 Committee shall mean the group of individuals appointed by
the Board to administer the Plan, pursuant to Section 10.1.
2.4 Common Stock shall mean the common stock of the Company.
2.5 Company shall mean Witness Systems, Inc..
2.6 Effective Date shall mean the day on which the Common Stock is
initially offered for purchase to the public by the Company.
2.7 Eligible Employee shall mean, with respect to an Offering Period,
an Employee who is not described by the following:
(a) any Employee who is regularly scheduled to work (determined as
of the Enrollment Date for such Offering Period) 20 hours or less per
week;
(b) any Employee who is regularly scheduled to work (determined as
of the Enrollment Date for such Offering Period) for not more than five
(5) months in any calendar year; and
(c) any Employee who, immediately after an option would be
granted hereunder, would own shares of the Common Stock, or of the
stock of a parent or subsidiary corporation of the Company, possessing
5% or more of the total combined voting power or value of all classes
of such stock. In determining whether an Employee owns 5% of such
shares, (A) the attribution of ownership rules of Code ss.424(d) shall
apply, and (B) an Employee shall be deemed to own the shares of stock
underlying any outstanding option which he has been granted (whether
under the Plan or any other plan or arrangement).
2.8 Employee shall mean any individual who is a common-law employee of
any Participating Company. Certain Employees are not eligible to participate in
the Plan, pursuant to Section 3.2 hereof.
2.9 Enrollment Date shall mean the last business day of the calendar
month immediately preceding each Offering Commencement Date, except that, with
respect to the initial Offering Period, the
<PAGE> 2
Enrollment Date shall be the last business day of the calendar month immediately
following the calendar month in which the initial registration statement
registering the shares of Common Stock issuable hereunder pursuant to the
Securities Act of 1933, as amended, is declared effective.
2.10 Fair Market Value shall mean, as of any date, the value of Common
Stock determined as follows:
(a) For purposes of making purchases under the Plan which are
made on the open market, the Fair Market Value of the Common Stock
shall be the actual market price on the date and at the time of the
purchase;
(b) For purposes other than making purchases under the Plan, the
Fair Market Value of the Common Stock shall be determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the National Market of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System,
its Fair Market Value per share shall be the closing sale price
for the Common Stock (or the mean of the closing bid and asked
prices, if no sales were reported), as quoted on such exchange or
system on the date of such determination, as reported in The Wall
Street Journal or such other source as the Committee deems
reliable;
(ii) If the Common Stock is not listed on any established
stock exchange or a national market system, its Fair Market Value
per share shall be the average of the closing dealer "bid" and
"ask" prices of a share of the Common Stock as reflected on the
NASDAQ interdealer quotation system of the National Association of
Securities Dealers, Inc. on the date of such determination;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.
(iv) If, for any reason, the Fair Market Value per share
cannot be ascertained or is unavailable for the date in question,
the Fair Market Value per share shall be determined as of the
nearest preceding date on which such Fair Market Value can be
ascertained under the appropriate method indicated above.
2.11 Offering Commencement Date shall mean the first day of each
Offering Period.
2.12 Offering Exercise Date shall mean the last day of each Offering
Period.
2.13 Offering Period shall mean the period during which each option
granted pursuant to the Plan is in effect. The duration and timing of Offering
Periods may be changed by the Committee pursuant to Section 4.2 of this Plan.
2.14 Offering Period Pay shall mean, with respect to an Offering
Period, the product of (i) the number of complete payroll periods in such
Offering Period, times (ii) such Employee's Total Pay for the payroll period
which ends on or immediately prior to the Offering Commencement Date of such
Offering Period.
2.15 Participating Company shall mean (i) the Company, and (ii) any
"parent corporation" or "subsidiary corporation" (as defined in Code
ss.ss.424(e) and (f)) of the Company which have been designated by the Board and
which have adopted (by formal written resolutions of the board of directors of
such corporation) the Plan for the benefit of its employees.
2.16 Plan shall mean the Witness Systems, Inc. Employee Stock Purchase
Plan.
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<PAGE> 3
2.17 Total Pay shall mean, with respect to an Employee, all of his
regular straight-time earnings, plus commissions, overtime, shift premium,
incentive compensation, incentive payments, bonuses, and other compensation, all
as reported to the Internal Revenue Service for federal income tax purposes on
Form W-2, plus any before-tax contributions made to plans covered by Code
ss.ss.401(k) and 125.
ARTICLE III
ELIGIBILITY
3.1 Participation by Eligible Employees. An Eligible Employee of a
Participating Company shall be eligible to participate in the Plan as of the
first day of the Offering Period which next begins following the date of hire of
such Eligible Employee by the Company if the Employee is an Eligible Employee as
of such date.
3.2 Transfers to/from Eligible Class. An Employee who ceases to be an
Eligible Employee during an Offering Period but who remains an Employee shall be
treated as if he had made an election to modify his payroll deductions to zero
effective for payroll periods ending on or after the date on which such Employee
ceased to be an Eligible Employee. An Employee who becomes an Eligible Employee
during an Offering Period and who was an Employee prior to the date on which
such Employee became an Eligible Employee hereunder shall be entitled to
participate in the Plan as of the first day of the Offering Period which next
begins on or after the date on which such Employee becomes an Eligible Employee
if the Employee is an Eligible Employee as of such date.
ARTICLE IV
OFFERING PERIODS
4.1 Semi-Annual Offering Periods. The Plan shall be implemented by a
continuous series of Offering Periods. The Offering Periods under the Plan shall
be the six-month periods of January 1 through June 30, and July 1 through
December 31, with the initial Offering Period beginning on the Effective Date
and ending on June 30, 2000.
4.2 Other Offering Periods. Without amendment to the Plan, the
Committee may, in its sole discretion, designate other periods as Offering
Periods. These periods may be more or less frequent and may be in addition to or
in lieu of the semi-annual Offering Periods described in Section 4.1 above.
ARTICLE V
ELECTION TO PARTICIPATE
5.1 Election. Each employee who is eligible to participate in the Plan
may file with the Committee, on or before 5:00 p.m. on any Enrollment Date
(within such time period as provided by the Committee), an election form
authorizing specified regular payroll deductions over the next succeeding
Offering Period; provided, however, with respect to the initial Enrollment Date,
no election shall be valid unless given with a period specified by the Committee
prior to such date. These payroll deductions shall be on an after-tax basis, so
that all applicable federal, state, local and Social Security taxes shall apply.
At the time an Employee files his election form, he shall elect to have payroll
deductions made on each payday during the Offering Period (or, for the initial
Offering Period, during the period beginning immediately following the initial
Enrollment Date and ending on the initial Offering Exercise Date) in an amount
which is not less than 1% nor greater than 15% of such Employee's Total Pay for
each payroll period. No cash contributions or payments may be made by an
Employee to the Plan. Payroll deductions for an Employee shall commence on the
first payroll period beginning after the Offering Commencement Date (or, for the
initial Offering Period, the Enrollment Date) and shall end on the last payroll
in the Offering Period before the Offering Exercise Date, to which such
authorization is applicable, unless sooner terminated by the Employee.
5.2 Deemed Election. An Employee who has entered into a written
agreement with the Company not to be eligible for participation in this Plan
and/or any employee benefit plans of the Company
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<PAGE> 4
shall, by entering into such written agreement, automatically be considered to
have elected to have none of his pay deducted under this Plan during any
Offering Period which begins while such written agreement is in effect.
5.3 Accounts. The Committee shall establish a bookkeeping account for
each Employee in the Plan and shall credit each Employee's payroll deductions to
his account. Any funds actually held in Accounts shall remain part of the
general assets of the Company and may be used by the Company for any corporate
purpose.
5.4 Withdrawals. By written notice to the Committee during an Offering
Period (on such form or in such manner as the Committee may specify), but at
least thirty (30) days prior to the Offering Exercise Date for such Offering
Period, an Employee may elect to cease his payroll deductions effective as soon
as administratively practicable following receipt of such election, and the
Employee may also elect to withdraw the total amount (but not less than the
total amount) credited to his Account. Any such withdrawn amount shall be paid
to the Employee, in cash or its equivalent, without interest, as promptly as
administratively practicable. An Employee who elects to withdraw the total
amount credited to his Account shall cease participation in the Plan as of the
next following Offering Exercise Date and shall not participate again until the
Offering Commencement Date following such Offering Exercise Date, provided he
files an election form with the Committee on or before the Enrollment Date for
such succeeding Offering Commencement Date.
5.5 Modifications. An Employee may not elect to modify his payroll
deductions during an Offering Period, except as provided in Section 5.4 above.
5.6 Leave of Absence. For purposes of participation in the Plan, an
Employee who is on a leave of absence shall be deemed to be an Employee for the
first ninety (90) days of such leave of absence; provided, that as of the close
of business on the ninetieth (90th) day of such leave of absence, the Employee's
employment (solely for purposes of the Plan) shall be deemed to have terminated
unless the Employee shall have returned to his regular employment prior to the
close of business on such ninetieth (90th) day, except as otherwise required by
law. If an Employee's employment is terminated earlier by the Company, for any
reason, his right to participate in the Plan shall terminate simultaneously.
5.7 Interest. No interest will accrue or be paid on any payroll
deductions contributed to the Plan or credited to the Account of any Employee.
ARTICLE VI
GRANTING OF OPTIONS
6.1 Number of Option Shares. On each Offering Commencement Date, each
Employee who is eligible to participate in this Plan shall be granted an option
to purchase a maximum number of shares of the Common Stock determined by
dividing 15% of his expected Offering Period Pay by 85% of the Fair Market Value
of one share of the Common Stock on such Offering Commencement Date and rounding
the result down to the nearest whole number.
6.2 Duration. Each option granted on an Offering Commencement Date
shall terminate on the immediately following Offering Exercise Date, unless
terminated earlier pursuant to the terms of the Plan.
6.3 Annual Limit on Options Granted. No option to purchase shares
under the Plan shall be granted to an Employee if such option, when combined
with all other options granted under all of the Code ss.423 employee stock
purchase plans of the Company, its parents and its subsidiary corporations,
would permit such Employee to purchase shares of the Common Stock with a Fair
Market Value (determined at the time the option is granted) in excess of
$25,000 for each calendar year in which the option is outstanding at any time,
determined in accordance with Code ss.423(b)(8).
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<PAGE> 5
6.4 Option Exercise Price. The Option Exercise Price of each share of
the Common Stock shall be the lesser of (i) 85% of the Fair Market Value of such
share on the Offering Commencement Date, or (ii) 85% of the Fair Market Value of
such share on the Offering Exercise Date.
ARTICLE VII
EXERCISE OF OPTIONS
7.1 Automatic Purchase. As of each Offering Exercise Date and except
as provided in Sections 7.2 and 7.3 hereof, the Committee shall purchase, for
each Employee having funds credited to his Account, the number of whole shares
of the Common Stock which is the lesser of (i) the maximum number of such shares
for which such Employee has been granted an option to purchase during such
Offering Period, or (ii) the number of whole shares of the Common Stock
determined by dividing the amount credited to his Account by the Option Exercise
Price. No fractional shares shall be issued, and, except as provided in Sections
7.2 and 7.3 hereof, any amount in an Employee's Account that could have
represented the purchase of such fractional shares, or that exceeds the Option
Exercise Price for the shares of the Common Stock purchased on such Offering
Exercise Date, shall be carried forward in such Employee's Account and shall be
available for purchasing shares of Common Stock in the next succeeding Offering
Period.
7.2 Maximum Amount of Common Stock Purchased. Notwithstanding any
provisions to the contrary contained herein, no Employee may use the amount
credited to his Account pursuant to the Plan during any calendar year for
purchase of Common Stock exceeding $25,000 in Fair Market Value (determined as
of the Offering Commencement Date). When this amount of Common Stock has been
purchased, any excess amount credited to an Employee's Account (including any
excess resulting from an inability to purchase a whole share) shall be returned
to such Employee, payroll deductions for such Employee shall cease, and such
Employee shall be ineligible to participate in any subsequent Offering Period
occurring during that same calendar year. Such Employee's election automatically
shall become effective on the first Offering Commencement Date of the next
succeeding calendar year, subject to the termination provisions herein. To the
extent that the amount credited to his Account pursuant to the Plan for purchase
of Common Stock during any calendar year is greater than necessary for such
purchase, any excess shall be returned to such Employee as promptly as
administratively practicable.
ARTICLE VIII
DELIVERY OF COMMON STOCK; SHAREHOLDER RIGHTS
As soon as practicable after each Offering Exercise Date, the Company
shall issue and deliver to each Employee certificates representing the shares of
the Common Stock, if any, purchased for such Employee, together with any cash to
which he may be entitled hereunder. Upon issuance of such certificates (but not
prior thereto), the Employee shall have all of the rights and privileges of a
shareholder of the Company with respect to such shares. Common Stock to be
delivered to an Employee pursuant to the Plan shall be registered in the name of
the Employee.
ARTICLE IX
STOCK RESERVED FOR OPTIONS
9.1 Shares Reserved for Use By Plan. The Company shall reserve a total
of five hundred fifty thousand (550,000) shares of the Common Stock for issuance
and purchase by Employees under the Plan; provided, however, this total number
of shares of Common Stock that may be issued pursuant to this Plan shall be
automatically increased on the last trading day of the final month of each
calendar year of the Company, beginning with the calendar year ending December
31, 2000, by (1) a number of Shares equal to 2% of the number of shares of
Common Stock outstanding on the last trading day of the month preceding the
final month of each such calendar year or (2) such lesser amount as may be
determined by the Board in its sole discretion, but in no event shall any such
annual increase exceed five hundred thousand (500,000) Shares (as adjusted for
any change contemplated in Article XII hereof). The number of shares of the
Common Stock reserved for the Plan may be adjusted as provided in Article XII.
The
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<PAGE> 6
shares of the Common Stock reserved for the Plan may be shares now or hereafter
authorized but unissued or may be shares of treasury stock.
9.2 Shares Subject to Unexercised Options. If and to the extent that
any right to purchase reserved shares of the Common Stock shall not be exercised
by the Employee who is the holder of such right, or if such right shall
terminate as provided herein, then the shares subject to such right to purchase
(i) shall again become available for purposes of the Plan, unless the Plan shall
have been terminated, and (ii) shall not be deemed to increase the number of
shares of the Common Stock reserved for purposes of the Plan.
ARTICLE X
ADMINISTRATION OF PLAN
10.1 Appointment of Committee. The Plan shall be administered by a
committee, which shall consist of those persons so designated by the Board. The
Board from time to time may remove members from, or add members to, the
Committee. Vacancies on the Committee shall be filled by the Board.
10.2 Meetings. The Committee shall select one of its members as
Chairman and shall hold meetings at such times and places as the Chairman shall
determine. A majority of the members of the Committee shall constitute a quorum,
and the Committee may act by vote of a majority of its members at a meeting at
which a quorum is present, or without a meeting by a written consent to their
action signed by all members of the Committee.
10.3 Authority. The Committee may request advice or assistance or
employ such other persons as are necessary for proper administration of the
Plan. Subject to the express provisions of the Plan, the Committee shall have
authority to interpret the Plan, to prescribe rules and regulations for
administering the Plan, and to make all other determinations necessary or
advisable in administering the Plan; all of such determinations shall be final
and binding upon all persons, unless otherwise determined by the Board. Without
amendment to the Plan, the Committee shall be authorized to:
(a) limit the frequency and/or number of changes in the payroll
deduction amounts withheld during an Offering Period;
(b) permit payroll withholding in excess of the amount designated
by an Employee in order to adjust for delays or mistakes in the
Company's processing of properly completed election forms;
(c) establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts applied
toward the purchase of Company Stock for each Employee properly
correspond with amounts withheld from the Employee's paychecks; and
(d) establish such other limitations or procedures as it may
determine, in its sole discretion, advisable which are consistent with
the terms of the Plan.
ARTICLE XI
RIGHTS NOT TRANSFERABLE
Rights under the Plan are not transferable by an Employee other than by
will or the laws of descent and distribution and are exercisable during his
lifetime only by him.
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<PAGE> 7
ARTICLE XII
ADJUSTMENT IN CASE OF CHANGES
AFFECTING THE COMPANY'S STOCK
12.1 General Rule. In the event of a split, subdivision or
consolidation of outstanding shares of the Common Stock, or in the event of any
"corporate transaction", as defined in Treas. Reg. ss.1.425-1(a)(1)(ii), other
than a transaction described in Section 12.2 hereof, the number of shares of the
Common Stock reserved or authorized to be reserved under the Plan and the number
and price of such shares subject to purchase pursuant to options outstanding
hereunder, in the sole discretion of the Committee, may be adjusted in such
manner as may be deemed necessary or equitable by the Committee to give proper
effect to such event. If any adjustment hereunder would create a fractional
share or a right to acquire a fractional share, such fractional share shall be
disregarded, and the number of shares available under the Plan or the number of
shares to which any Employee shall be entitled will be the next lower number of
shares, rounding all fractions downward. Notwithstanding anything herein to the
contrary, all adjustments to the shares of the Common Stock shall be made in
such a manner as to comply with the requirements of Code ss.424 and to preserve
the options' status under Code ss.423.
12.2 Dissolution or Certain Mergers. A dissolution or liquidation of
the Company or a merger or consolidation in which the Company is not the
surviving corporation, shall cause each outstanding option to terminate;
provided, that each Employee shall, in such event, have paid to him in cash the
amount credited to his Account at that time prior to such dissolution or
liquidation, or merger or consolidation in which the Company is not the
surviving corporation.
12.3 Rights of Employees. Except as hereinabove expressly provided, no
Employee shall have any rights by reason of any subdivision or consolidation of
shares of stock of any class or any other increase or decrease in the number of
shares of stock of any class by reason of any dissolution, liquidation, merger
or consolidation or spin-off of the assets or stock of another corporation; and
any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of the Common Stock subject to the option. The grant of an option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or assets.
ARTICLE XIII
TERMINATION OF EMPLOYMENT OR DEATH OF EMPLOYEE
13.1 Termination of Employment. In the event of an Employee's
termination of employment (for any reason other than death) during a Offering
Period (other than the last day of such Offering Period), any option granted to
him under the Plan shall terminate immediately upon the date his employment
ends, and the amount credited to his Account shall be refunded to him in cash as
soon as practicable after the earlier of (1) the Offering Exercise Date of such
Offering Period, or (2) the payroll period next following his termination of
employment.
13.2 Death. In the event of an Employee's death during a Offering
Period (other than the last day of such Offering Period), any option granted to
him under the Plan for such Offering Period shall terminate immediately upon the
date of his death, and the amount credited to his Account for such Offering
Period shall be paid in cash to the person(s) designated as his beneficiary as
soon as practicable after the earlier of (1) the Offering Exercise Date of such
Offering Period, or (2) the payroll period next following his termination of
employment. Also, in the event any shares of the Common Stock and/or any cash is
payable to the deceased Employee with respect to an Offering Period ending on or
before his date of death, such shares and/or cash shall be paid to the person(s)
designated as his beneficiary.
13.3 Beneficiary. An Employee may file with the Committee a written
designation of a beneficiary who is to receive any Common Stock or cash pursuant
to the Plan in the event of the death
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<PAGE> 8
of such Employee prior to delivery to him of such Common Stock or cash. Such
designation of beneficiary may be changed by the Employee, and upon receipt by
the Committee of proof of the identity at the Employee's death of a beneficiary
validly designated by him pursuant to the Plan, the Company shall deliver such
Common Stock or cash to such beneficiary. In the absence of a validly-designated
beneficiary who is living at the time of such Employee's death, the Company
shall deliver such Common Stock or cash to the estate of such Employee. No
designated beneficiary shall, prior to the death of the Employee by whom he has
been designated, acquire any interest in the Common Stock or cash which may be
credited to the account of the Employee under the Plan. Any decision by the
Committee as to the person or persons to whom to distribute the Common Stock or
cash shall be binding and shall not create any liability whatsoever on the part
of the Company or the Committee or its members.
ARTICLE XIV
AMENDMENT AND TERMINATION OF THE PLAN
14.1 Amendment. The Board may amend the Plan in any respect; provided,
any amendment (i) increasing the number of shares of the Common Stock reserved
under the Plan, (ii) changing the designated class of employees eligible to
participate in the Plan, or (iii) materially increasing the benefits accruing to
Employees under the Plan, must be approved within 12 months of the adoption of
such an amendment by the holders of a majority of the voting power of the
outstanding shares of the Common Stock.
14.2 Termination. The Plan and all rights of Employees
hereunder shall terminate:
(a) as of the Offering Exercise Date that Employees
become entitled to purchase a number of shares of the Common Stock that
substantially exhausts the number of such shares available for issuance
under the Plan, to such an extent that the Board and the Committee
determine that no subsequent options are practicable; or
(b) in the sole discretion of the Board, as of the end of
any Offering Period with respect to future Offering Periods.
14.3 Compliance. To the extent necessary for compliance with Code
ss.423 (or any successor provisions), the Company shall obtain shareholder
approval in such a manner and to such a degree as may be required for any
amendment to or termination of the Plan.
ARTICLE XV
NOTICES
All notices or other communications by an Employee to the Committee
pursuant to or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Committee at the location, or
by the person, designated by the Committee for the receipt thereof.
ARTICLE XVI
INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors, the members of the Committee shall be indemnified by the Company
against reasonable expenses (including, without limitation, attorneys' fees)
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
to the extent required by and in the manner provided by the Bylaws of the
Company relating to indemnification of directors) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding
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<PAGE> 9
that such Committee member or members did not act in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company.
ARTICLE XVII
WITHHOLDING REQUIREMENTS
At the time the option is exercised, in whole or in part, or at the
time some or all of the Common Stock issued under the Plan is disposed of, the
Employee must make adequate provision for the Company's federal, state, or other
tax withholding obligations, if any, which arise upon the exercise of the option
or the disposition of the Common Stock. At any time, the Company may, but will
not be obligated to, withhold from the Employee's compensation the amount
necessary for the Company to meet applicable withholding obligations, including
any withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Employee.
ARTICLE XVIII
CONSTRUCTION OF PLAN
For purposes of the Plan, masculine, feminine, neuter, singular or
plural pronouns shall be deemed to refer to such person, persons or entity as
may be appropriate in the context.
ARTICLE XIX
EXPENSES OF PLAN
The Company shall pay all operational expenses of the Plan, including,
without limitation, all brokerage commissions due and payable for the purchase
and sale of Common Stock.
ARTICLE XX
COMPLIANCE
The Plan is intended to comply with the requirements of Code ss.423
(and any of its successor provisions). Pursuant to Code ss.423, an Employee may
be eligible for certain favorable tax treatment with regard to Common Stock
purchased under the Plan, if no disposition of the Common Stock is made by such
Employee within 2 years after the date of the granting of the option to him
under the Plan nor within 1 year after the transfer of the Common Stock to him.
ARTICLE XXI
EMPLOYEE STATEMENTS AND REPORTING
On or before January 31 of each calendar year, the Committee shall
provide a statement to each Employee who exercised an option under the Plan
during the previous calendar year. The Employee's statement shall contain the
following information: the name, address and employer identification number of
the Company, the date the Common Stock was transferred to the Employee, the
number of shares which were transferred to the Employee, and the type of option
under which the transferred shares were acquired. In addition, pursuant to Code
ss.6039, the Committee shall make any and all filings necessary to the Internal
Revenue Service with regard to options granted and exercised under the Plan.
ARTICLE XXII
EFFECTIVE DATE OF PLAN
The Plan shall become effective as of the Effective Date; provided,
within 12 months of the adoption of the Plan by the Board, the Plan is approved
by the holders of a majority of the voting power of the outstanding shares of
the Common Stock. If the Plan is not so approved, the Plan shall not become
effective and any prior grant of options hereunder shall be null and void ab
initio.
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<PAGE> 10
IN WITNESS WHEREOF, the Plan is hereby executed by a duly authorized
officer of the Company, on this 3rd day of December, 1999.
COMPANY:
WITNESS SYSTEMS, INC.
By: /s/ Jon W. Ezrine
---------------------------
Name: Jon W. Ezrine
Title: Chief Financial Officer
-------------------------------
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<PAGE> 1
EXHIBIT 10.17
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT dated as of
August 2, 1999, by and among WITNESS SYSTEMS, INC., a Delaware corporation (the
"Company"), each of those current shareholders of the Company defined
hereinbelow as the "Founders" and the "Series A and B Shareholders," and those
certain parties to the Stock Purchase Agreement (defined below) who are
purchasing Series C Shares (defined below) coincident with the execution and
delivery of this Agreement and are identified hereinbelow as the Purchasers (the
"Purchasers").
WITNESSETH:
WHEREAS, the Company, the Founders and the Series A and B Shareholders
are parties to that certain Registration Rights Agreement dated as of March 18,
1997, as amended pursuant to Amendment No. 1 to Registration Rights Agreement
(the "Existing Registration Rights Agreement"), whereby the Founders and the
Series A and B Shareholders were granted certain registration rights with
respect to certain securities of the Company;
WHEREAS, pursuant to the terms of the Stock Purchase Agreement dated as
of the date hereof by and among the Company and the Purchasers (the "Stock
Purchase Agreement"), the Company is issuing to the Purchasers an aggregate of
up to 1,325,028 shares (the "Series C Shares") of the Company's Series C
Convertible Preferred Stock;
WHEREAS, as an inducement to the Purchasers to enter into the Stock
Purchase Agreement, the Company desires to grant to the Purchasers certain
registration rights with respect to the Series C Shares, and the Company, the
Founders and Series A and B Shareholders desire to amend and restate the
Existing Registration Rights Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of
the Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued
or issuable upon conversion of the Preferred Shares, and any shares of
capital stock received in respect thereof.
<PAGE> 2
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Founders" shall mean Tom Snyder, Jim Judson, Steve Beckett
and Kirk Knous.
"Preferred Shares" shall mean shares of the Company's Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series C Convertible Preferred Stock, each $.01 par value per share.
"Purchasers" as defined in the recitals to this Agreement.
"Registration Expenses" shall mean the expenses so described
in Section 8.
"Restricted Stock" shall mean (1) the Conversion Shares,
excluding Conversion Shares which have been (a) registered under the
Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration
statement covering them or (b) publicly sold pursuant to Rule 144 under
the Securities Act, and (2) for purposes of Section 5 hereof, up to
3,940,200 shares of Common Stock held by the Founders, but excluding
shares of Common Stock which have been (a) registered under the
Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration
statement covering them, or (b) publicly sold pursuant to Rule 144
under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Selling Expenses" shall mean the expenses so described in
Section 8.
"Series A and B Restricted Stock" means shares of Restricted
Stock constituting Conversion Shares issued or issuable upon conversion
of the Series A Convertible Preferred Stock or the Series B Convertible
Preferred Stock, or any shares of capital stock received in respect
thereof.
"Series A and B Shareholders" shall mean the holders of the
Company's Series A Convertible Preferred Stock and the holders of the
Company's Series B Convertible Preferred Stock.
"Series C Restricted Stock" means shares of Restricted Stock
constituting Conversion Shares issued or issuable upon conversion of
the Series C Convertible Preferred Stock, or any shares of capital
stock received in respect thereof.
2. Restrictive Legend. Each certificate representing Preferred
Shares, Conversion Shares or Restricted Stock shall, except as otherwise
provided in this Section 2 or in Section 3, be stamped or otherwise imprinted
with a legend substantially in the following form:
2
<PAGE> 3
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS."
A certificate shall not bear such legend if in the opinion of counsel reasonably
satisfactory to the Company (it being agreed that each of Testa, Hurwitz &
Thibeault, LLP, and Jones, Day, Reavis & Pogue shall be satisfactory) the
securities being sold thereby may be publicly sold without registration under
the Securities Act.
3. Notice of Proposed Transfer. Prior to any proposed transfer of
any Preferred Shares, Conversion Shares or Restricted Stock (other than under
the circumstances described in Sections 4, 5 or 6), the holder thereof shall
give written notice to the Company of its intention to effect such transfer.
Each such notice shall describe the manner of the proposed transfer and, if
requested by the Company, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Company (it being agreed that each of Testa,
Hurwitz & Thibeault, LLP, and Jones, Day, Reavis & Pogue shall be satisfactory)
to the effect that the proposed transfer may be effected without registration
under the Securities Act, whereupon the holder of such stock shall be entitled
to transfer such stock in accordance with the terms of its notice; provided,
however, that no such opinion of counsel shall be required for a transfer to one
or more partners of the transferor (in the case of a transferor that is a
partnership), to one or more members of the transferor (in the case of a
transferor that is a limited liability company), or to an affiliated corporation
(in the case of a transferor that is a corporation). Each certificate for
Preferred Shares or Conversion Shares transferred as above provided shall bear
the legend set forth in Section 2, except that such certificate shall not bear
such legend if (i) such transfer is in accordance with the provisions of Rule
144 (or any other rule permitting public sale without registration under the
Securities Act) or (ii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee (other than an
affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 3 shall not apply to securities which are not
required to bear the legend prescribed by Section 2 in accordance with the
provisions of that Section.
4. Required Registration.
(a) The holders of Series A and B Restricted Stock
constituting at least a majority of the total shares of Series A and B
Restricted Stock then outstanding may request the Company to register under the
Securities Act all or any portion of the shares of Series A and B Restricted
Stock held by such requesting holder or holders for sale in the manner specified
in such notice, provided that the shares of Series A and B Restricted Stock for
which registration has been requested shall constitute at least 20% of the total
shares of Series A and B Restricted Stock originally issued (or any lesser
percentage if the reasonably anticipated aggregate price to the public of such
public offering would exceed $5,000,000).
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<PAGE> 4
(b) The holders of Series C Restricted Stock constituting
at least a majority of the total shares of Series C Restricted Stock then
outstanding may request the Company to register under the Securities Act all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders for sale in the manner specified in such notice.
(c) For purposes of this Section 4 and Sections 5, 6,
13(a) and 13(d), the term "Restricted Stock" shall be deemed to include the
number of shares of Restricted Stock which would be issuable to a holder of
Preferred Shares upon conversion of all shares of Preferred Stock held by such
holder at such time, provided, however, that the only securities which the
Company shall be required to register pursuant hereto shall be shares of Common
Stock, and provided, further, however, that, in any underwritten public offering
contemplated by this Section 4 or Sections 5 and 6, the holders of Preferred
Shares shall be entitled to sell such Preferred Shares to the underwriters for
conversion and sale of the shares of Common Stock issued upon conversion
thereof. Notwithstanding anything to the contrary contained herein, no request
may be made under this Section 4 within 120 days after the effective date of a
registration statement filed by the Company covering a firm commitment
underwritten public offering in which the holders of Restricted Stock shall have
been entitled to join pursuant to Sections 5 or 6.
(d) Following receipt of any notice under this Section 4,
the Company shall immediately notify all holders of Restricted Stock (including
the Founders) and Preferred Shares from whom notice has not been received and
such holders shall then be entitled within 30 days thereafter to request the
Company to include in the requested registration all or any portion of their
shares of Restricted Stock. The Company shall use its best efforts to register
under the Securities Act, for public sale in accordance with the method of
disposition specified in the notice from requesting holders described in
paragraph (a) above, the number of shares of Restricted Stock specified in such
notice (and in all notices received by the Company from other holders within 30
days after the giving of such notice by the Company). If such method of
disposition shall be an underwritten public offering, the holders of a majority
of the shares of Restricted Stock to be sold in such offering may designate the
managing underwriter of such offering, subject to the approval of the Company,
which approval shall not be unreasonably withheld or delayed. The Company shall
be obligated to register Restricted Stock pursuant to this Section 4 on two
occasions only in respect of requests by the holders of Series A and B Preferred
Stock, and on two occasions only in respect of requests by the holders of Series
C Preferred Stock, provided, however, that such obligation shall be deemed
satisfied only when a registration statement covering all shares of Restricted
Stock specified in notices received as aforesaid, for sale in accordance with
the method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
(e) The Company (or at the option of the Company, the
holders of Common Stock) shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company or such other holders for its own account, except as and to
the extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock to be sold. Except for
registration statements on Form S-4, S-8 or any
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<PAGE> 5
successor thereto, the Company will not file with the Commission any other
registration statement with respect to its Common Stock, whether for its own
account or that of other stockholders, from the date of receipt of a notice from
requesting holders pursuant to this Section 4 until the completion of the period
of distribution of the registration contemplated thereby.
(f) In respect of a request for registration pursuant to
Section 4(a) if in the opinion of the managing underwriter the inclusion of all
of the Restricted Stock requested to be registered under this Section would
adversely affect the marketing of such shares, after any shares to be sold by
the Company or other holders of Common Stock have been excluded, then Series C
Restricted Stock shall be next excluded to the extent so necessary, and then
shares to be sold by the remaining holders of Restricted Stock shall be excluded
in such manner that the shares to be sold shall be allocated among the selling
holders pro rata based on their ownership of Restricted Stock.
(g) In respect of a request for registration pursuant to
Section 4(b) if in the opinion of the managing underwriter the inclusion of all
of the Restricted Stock requested to be registered under this Section would
adversely affect the marketing of such shares, after any shares to be sold by
the Company or other holders of Common Stock have been excluded, then shares of
Restricted Stock other than Series C Restricted Stock shall be next excluded to
the extent necessary and then shares to be sold by the remaining holders of
Series C Restricted Stock shall be excluded in such manner that the shares to be
sold shall be allocated among such selling holders pro rata based on their
ownership of Restricted Stock.
5. Incidental Registration. If the Company at any time (other
than pursuant to Section 4 or Section 6) proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Restricted
Stock of its intention so to do. Upon the written request of any such holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of its Restricted Stock, the Company will use its
best efforts to cause the Restricted Stock as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder (in accordance
with its written request) of such Restricted Stock so registered. In the event
that any registration pursuant to this Section 5 shall be, in whole or in part,
an underwritten public offering of Common Stock, the number of shares of
Restricted Stock to be included in such an underwriting may be reduced (pro rata
among the requesting holders based upon the number of shares of Restricted Stock
held by such requesting holders) if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company therein, provided,
however, that such number of shares of Restricted Stock held by the Founders or
such other requesting holders of Restricted Stock shall not be reduced if any
shares are to be included in such underwriting for the account of any person
other than the Company, the Founders or such other requesting holders of
Restricted Stock, and, provided, further, that in no event shall the number of
shares of Restricted Stock included in the offering be reduced below twenty
percent (20%) of the total number of shares of Common Stock
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<PAGE> 6
included in such offering, unless the offering is the Company's initial public
offering of the Company's securities in which case the number of shares of
Restricted Stock to be included by the holders may be reduced or eliminated
entirely as set forth above. Notwithstanding the foregoing provisions, the
Company may withdraw any registration statement referred to in this Section 5
without thereby incurring any liability to the holders of Restricted Stock.
6. Registration on Form S-3.
(a) Subject to the limit of two registrations hereunder
in any 12 month period, if at any time (i) a holder or holders of Series A and B
Restricted Stock then outstanding request that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering of all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders, the reasonably anticipated aggregate price to the public of which would
exceed $500,000, and (ii) the Company is a registrant entitled to use Form S-3
or any successor thereto to register such shares, then the Company shall use its
best efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Stock specified in such
notice.
(b) Subject to the limit of two registrations hereunder
in any 12 month period, if at any time (i) a holder or holders of Series C
Restricted Stock then outstanding request that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering of all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders, the reasonably anticipated aggregate price to the public of which would
exceed $500,000, and (ii) the Company is a registrant entitled to use Form S-3
or any successor thereto to register such shares, then the Company shall use its
best efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Series C Restricted Stock specified in
such notice.
(c) Whenever the Company is required by this Section 6 to
use its best efforts to effect the registration of Restricted Stock, each of the
procedures and requirements of Section 4 (including but not limited to the
requirement that the Company notify all holders of Restricted Stock from whom
notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration, provided,
however, that except as provided above there shall be no limitation on the
number of registrations on Form S-3 which may be requested and obtained under
this Section 6.
(d) Notwithstanding anything to the contrary set forth in
this Agreement, the Company's obligation under this Agreement to register
Restricted Stock under the Securities Act on registration statements
("Registration Statements") may, upon the reasonable determination of the Board
of Directors made only once during any 12-month period, be suspended in the
event and during such period as unforeseen circumstances (including without
limitation (i) an underwritten primary offering by the Company (which includes
no secondary offering) if the Company is advised in writing by its underwriters
that the registration of the Restricted Stock would have a material adverse
effect on the Company's offering, or (ii) pending negotiations relating to, or
consummation of, a transaction or the occurrence of an event which would require
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<PAGE> 7
additional disclosure of material information by the Company in Registration
Statements or such other filings, as to which the Company has a bona fide
business purpose for preserving confidentiality or which renders the Company
unable to comply with Securities and Exchange Commission (the "SEC")
requirements) exist (such unforeseen circumstances being hereinafter referred to
as a "Suspension Event") which would make it impractical or unadvisable for the
Company to file the Registration Statements or such other filings or to cause
such to become effective. Such suspension shall continue only for so long as
such event is continuing but in no event for a period longer than ninety (90)
days. The Company shall notify the holders of Preferred Shares of the existence
and nature of any Suspension Event.
7. Registration Procedures. If and whenever the Company is
required by the provisions of Sections 4, 5 or 6 to use its best efforts to
effect the registration of any shares of Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 4, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with the
sellers' intended method of disposition set forth in such registration statement
for such period;
(c) furnish to each seller of Restricted Stock and to
each underwriter such number of copies of the registration statement and each
such amendment and supplement thereto (in each case including all exhibits) and
the prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the sellers of Restricted Stock or, in
the case of an underwritten public offering, the managing underwriter reasonably
shall request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock
covered by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;
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<PAGE> 8
(f) immediately notify each seller of Restricted Stock
and each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained 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 light of the circumstances then existing, and promptly
prepare and furnish to such seller a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Restricted Stock, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten and at the request of
any seller of Restricted Stock, use its best efforts to furnish on the date that
Restricted Stock is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing the Company
for the purposes of such registration, addressed to the underwriters and to such
seller, to such effect as reasonably may be requested by counsel for the
underwriters or by such seller or its counsel, and (ii) a letter dated such date
from the independent public accountants retained by the Company, addressed to
the underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
(h) make available for inspection by each seller of
Restricted Stock, any underwriter participating in any distribution pursuant to
such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, reasonable access to all financial and
other records, pertinent corporate documents and properties of the Company, as
such parties may reasonably request, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
(i) cooperate with the selling holders of Restricted
Stock and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Stock to be
sold, such certificates to be in such denominations and registered in such names
as such holders or the managing underwriters may request at least two business
days prior to any sale of Restricted Stock; and
(j) permit any holder of Restricted Stock which holder,
in the sole and exclusive judgment, exercised in good faith, of such holder,
might be deemed to be a controlling person of the Company, to participate in
good faith in the preparation of such registration or comparable statement and
to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such holder and its counsel should
be included.
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<PAGE> 9
For purposes of Section 7(a) and 7(b) and of Section 4(c), the
period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock covered thereby and
120 days after the effective date thereof.
In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information
requested by the Company with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5
or 6 covering an underwritten public offering, the Company and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
8. Expenses. All expenses incurred by the Company in complying
with Sections 4, 5 and 6, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of any insurance
which might be obtained and fees and disbursements of one counsel for the
sellers of Restricted Stock, but excluding any Selling Expenses, are called
"Registration Expenses". "Selling Expenses" shall include (i) all underwriting
discounts and commissions applicable to the sale of Restricted Stock; and (ii)
expenses of any registration proceeding begun pursuant to Section 4 or 6, the
request of which has been subsequently withdrawn by all of the requesting
holders, in which case such expenses shall be borne by the holders of Restricted
Stock requesting or causing such withdrawal unless, such withdrawal is a result
of an adverse change or material development in the Company's business or
prospects or, with respect to registrations under Section 4, the holders of at
least two-thirds of the securities to be registered agree to forfeit their right
to one demand registration pursuant to Section 4.
The Company will pay all Registration Expenses in connection
with each registration statement under Sections 4, 5 or 6. All Selling Expenses
in connection with each registration statement under Sections 4, 5 or 6 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree.
9. Indemnification.
(a) In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, the
Company will indemnify and hold harmless each seller of such Restricted Stock
thereunder, its officers and directors, each underwriter of such Restricted
Stock thereunder and each other person, if any, who controls such seller or
underwriter
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<PAGE> 10
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller, officer, director,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such Restricted Stock was registered under the Securities
Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof or 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, (ii)
any blue sky application or other document executed by the Company specifically
for that purpose or based upon written information furnished by the Company
filed in any state or other jurisdiction in order to qualify any or all of the
Restricted Stock under the securities laws thereof (any such application,
document or information herein called a "Blue Sky Application"), (iii) any
violation by the Company or its agents of any rule or regulation promulgated
under the Securities Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration,
or (iv) any failure to register or qualify the Restricted Stock in any state
where the Company or its agents has affirmatively undertaken or agreed in
writing that the Company (the undertaking of any underwriter chosen by the
Company being attributed to the Company) will undertake such registration or
qualification on the seller's behalf and will reimburse each such seller, and
such officer and director, each such underwriter and each such controlling
person for any reasonable 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 Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, each
seller of such Restricted Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each other
seller of Restricted Stock, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, other seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus or final prospectus contained therein or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any amendment or supplement thereof, or any Blue Sky Application
and will reimburse the Company and each such officer, director, other seller,
underwriter and controlling person for any reasonable legal or other
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<PAGE> 11
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of each seller shall not exceed the
proceeds received by such seller from the sale of Restricted Stock covered by
such registration statement.
(c) Promptly after receipt by an indemnified party
hereunder 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 hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Section 9 and shall only relieve it from any liability which it may have to such
indemnified party under this Section 9 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
(d) The indemnities provided in this Section 9 shall
survive the transfer of any Restricted Stock by such holder.
10. Changes in Common Stock or Preferred Stock. If, and as often
as, there is any change in the Common Stock or the Preferred Stock by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Preferred Stock as so changed.
11. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Stock to the public without registration,
at all times after 90 days after any registration statement
<PAGE> 12
covering a public offering of securities of the Company under the Securities Act
shall have become effective, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Stock without
registration.
12. Representations and Warranties of the Company. The Company
represents and warrants to the Series A and B Shareholders and to the Purchasers
as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Charter or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the extent the
indemnification provisions herein may be deemed not enforceable.
13. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Preferred Shares or Restricted
Stock), whether so expressed or not, provided, however, (i) that registration
rights conferred herein on the holders of shares of Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock or Series A and B
Restricted Stock shall only inure to the benefit of a transferee of such shares
if there is transferred to such transferee at least 20% of the total shares of
Restricted Stock originally issued pursuant to the Stock Purchase Agreements in
respect of the Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, dated March 18, 1997 and September 24, 1998, respectively, to
the direct or indirect transferor of such transferee
12
<PAGE> 13
or such transferee is a party hereto or a partner, member, shareholder or
affiliate of a party hereto and (ii) that registration rights conferred herein
on the holders of Series C Convertible Preferred Stock or Series C Restricted
Stock shall only inure to the benefit of a transferee of such shares if there is
transferred to such transferee the total shares of Restricted Stock originally
issued pursuant to the Stock Purchase Agreement in respect of the Series C
Convertible Preferred Stock of even date herewith, to the direct or indirect
transferor of such transferee or 20% of such total shares, whichever is less, or
such transferee is a party hereto or a partner, member, shareholder or affiliate
of a party hereto.
(b) All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by certified or
registered mail, return receipt requested, postage prepaid, or telexed, in the
case of non-U.S. residents, addressed as follows:
if to the Company or any other party hereto, at the address of
such party set forth in the Purchase Agreement or in a certain
Stockholders' Agreement by and among the parties hereto dated as of the
date hereof;
if to any subsequent holder of Preferred Shares or Restricted
Stock, to it at such address as may have been furnished to the Company
in writing by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares or
Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in
the case of the Company) in accordance with the provisions of this paragraph.
(c) This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
State of Georgia.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the Company and
the holders of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Restricted Stock, which in every event must include the
holders of at least sixty-six and two-thirds percent (66-2/3%) in interest of
the outstanding Conversion Shares. Notwithstanding the foregoing, no such
amendment or modification shall be effective if and to the extent that such
amendment or modification either (a) creates any additional affirmative
obligations to be complied with by any or all of the Purchasers or (b) grants to
any one or more Purchasers any rights more favorable than any rights granted to
all other Purchasers or otherwise treats any one or more Purchasers differently
than all other Purchasers.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13
<PAGE> 14
(f) The obligations of the Company to register shares of
Series A and B Restricted Stock under Sections 4, 5 or 6 shall terminate five
years after completion of an underwritten public offering of shares of Common
Stock in which the net proceeds received by the Company shall be at least $10
million and the price paid by the public for such shares shall be at least $8.58
per share (appropriately adjusted to reflect any subdivision or combination of
Common Stock). The obligations of the Company to register shares of Series C
Restricted Stock under Sections 4, 5 or 6 shall terminate 5 years after
completion of an underwritten public offering of shares of Common Stock in which
the net proceeds received by the Company shall be at least $30 million and the
price paid by the public for such shares shall be at least $12.60 per share if
the public offering is closed on or prior to the first anniversary of the date
hereof and $18.90 per share thereafter (appropriately adjusted to reflect any
subdivision or combination of Common Stock).
(g) If requested in writing by the underwriters for the
initial underwritten public offering of securities of the Company, each holder
of Restricted Stock who is a party to this Agreement shall agree not to sell
publicly any shares of Restricted Stock or any other shares of Common Stock
(other than shares of Restricted Stock or other shares of Common Stock being
registered in such offering), without the consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering; provided, however, that all
persons entitled to registration rights with respect to shares of Common Stock
who are not parties to this Agreement, all executive officers and directors of
the Company and all other holders of more than one percent (1%) of the voting
securities of the Company shall also have agreed not to sell publicly their
Common Stock under the circumstances and pursuant to the terms set forth in this
Section 13(g).
(h) Notwithstanding the provisions of Section 7(a), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 90 days in any 24-month period if there exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of the Company, should not be disclosed.
(i) The Company shall not grant to any third party any
registration rights more favorable than any of those contained herein, so long
as any of the registration rights under this Agreement remains in effect.
(j) If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
This Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and supercedes all prior agreements and
understandings between them or any of them as to such subject matter, including
without limitation, the Existing Registration Rights Agreement.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
WITNESS SYSTEMS, INC.
By: /s/ Jon W. Ezrine
-------------------------------------
Name: Jon W. Ezrine
Title: Chief Financial Officer
FOUNDERS:
/s/ W. Thomas Snyder
-------------------------------------
W. Thomas Snyder
/s/ James W. Judson, Jr.
-------------------------------------
James W. Judson, Jr.
/s/ Steven Beckett
-------------------------------------
Steven Beckett
/s/ Kirk Knous
-------------------------------------
Kirk Knous
15
<PAGE> 16
SERIES A AND B SHAREHOLDERS:
BATTERY VENTURES IV, L.P.
By: Battery Partners IV, LLC
By: /s/ Thomas J. Crotty
-------------------------
Member Manager
[SIGNATURES CONTINUED ON NEXT PAGE]
16
<PAGE> 17
[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
BATTERY INVESTMENT
PARTNERS IV, LLC
By: /s/ Thomas J. Crotty
----------------------------------
Member Manager
/s/ John Abraham
----------------------------------
John Abraham
PURCHASERS:
NORO-MOSELEY PARTNERS IV, L.P.
By: MKFJ-IV, L.L.C., General Partner
By: /s/ Allan S. Moseley
-----------------------------
Member
NORO-MOSELEY PARTNERS IV-B, L.P.
By: MKFJ-IV, L.L.C., General Partner
By: /s/ Allan S. Moseley
-----------------------------
Member
HAMBRECHT & QUIST CALIFORNIA,
a California corporation
By: /s/ Robert N. Savios
----------------------------------
Name: Robert N. Savios
Title: Tax Director-Attorney-in-Fact
[SIGNATURES CONTINUED ON NEXT PAGE]
17
<PAGE> 18
[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
HAMBRECHT & QUIST EMPLOYEE
VENTURE FUND, L.P. II, a
Delaware limited partnership
By: H&Q VENTURE MANAGEMENT,
L.L.C., a Delaware limited liability
company, its General Partner
By: /s/ Robert N. Savios
------------------------------------------------
Name: Robert N. Savios
Title: Tax Director-Attorney-in-Fact
ACCESS TECHNOLOGY PARTNERS, L.P., a Delaware
limited partnership
By: ACCESS TECHNOLOGY
MANAGEMENT, L.L.C., a Delaware
limited liability company, its General Partner
By: H&Q VENTURE MANAGEMENT,
L.L.C., a Delaware limited liability
ompany, its Managing Member
By: /s/ Robert N. Savios
----------------------------------------
Name: Robert N. Savios
Title: Tax Director-Attorney-in-Fact
ACCESS TECHNOLOGY PARTNERS BROKERS FUND, L.P.
By: H&Q VENTURE MANAGEMENT, L.L.C.,
a Delaware limited liability company, its
General Partner
By: /s/ Robert N. Savios
----------------------------------------
Name: Robert N. Savios
Title: Tax Director-Attorney-in-Fact
[SIGNATURES CONTINUED ON NEXT PAGE]
18
<PAGE> 19
[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
H&Q WITNESS SYSTEMS INVESTORS, LP, a
California limited partnership
By: H&Q VENTURE ASSOCIATES,
a California corporation, its
General Partner
By: /s/ Robert N. Savios
----------------------------------------------
Name: Robert N. Savios
Title: Tax Director-Attorney-in-Fact
THE PRODUCTIVITY FUND IV, L.P., a
Delaware limited partnership
By: FIRST ANALYSIS MANAGEMENT
COMPANY IV, LLC, a Delaware limited
liability company, its General Partner
By: FIRST ANALYSIS
CORPORATION, a Delaware
Corporation, Member
By: /s/ Mark Koulogeorge
-------------------------------------
Name: Mark Koulogeorge
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
19
<PAGE> 20
[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
THE PRODUCTIVITY FUND IV ADVISORS
FUND, L.P., a Delaware limited partnership
Delaware limited partnership
By: FIRST ANALYSIS MANAGEMENT
COMPANY IV, LLC, a Delaware limited
liability company, its General Partner
By: FIRST ANALYSIS
CORPORATION, a Delaware
Corporation, Member
By: /s/ Mark Koulogeorge
-----------------------------------
Name: Mark Koulogeorge
Title:
/s/ John P. Implay, Jr.
-----------------------------------------------------
JOHN P. IMLAY JR.
21
<PAGE> 1
EXHIBIT 10.19
FORM OF
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, effective as of ____________, 1999,
between WITNESS SYSTEMS, INC., a Delaware corporation (the "Corporation") and
_____________ ("Indemnitee").
W I T N E S S E T H:
WHEREAS, Indemnitee, a member of the Board of Directors and/or an
officer of the Corporation, performs a valuable service in such capacity for the
Corporation; and
WHEREAS, in order to induce Indemnitee to continue to serve as a
Director and/or an officer of the Corporation, the Corporation has determined
and agreed to enter into this Agreement with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's continued service as a
Director/and or an officer after the date hereof, the parties hereto agree as
follows:
1. SERVICES TO THE CORPORATION. Indemnitee will serve, at the
will of the Corporation under separate contract, if any such contract exists, as
an officer and/or Director of the Corporation, or as a director, officer or
other fiduciary of an affiliate of the Corporation (including any employee
benefit plan of the Corporation) faithfully and to the best of his ability so
long as he is duly elected and qualified in accordance with the Certificate of
Incorporation and the Bylaws, as amended or amended and restated from time to
time, of the Corporation or of such affiliate (the "Organizational Documents");
provided, however, that Indemnitee may at any time and for any reason resign
from such position or any other position (subject to any contractual obligation
that Indemnitee may have assumed apart from this Agreement) and that the
Corporation or any affiliate shall have no obligation under this Agreement to
continue Indemnitee in such position or any other position.
2. INDEMNITY OF INDEMNITEE. The Corporation hereby agrees to hold
harmless and indemnify Indemnitee to the fullest extent authorized or permitted
by the Organizational Documents and the Delaware General Corporation Law, as
amended (the "Code"), as the same may be amended from time to time (but only to
the extent that any such amendment permits the Corporation to provide broader
indemnification rights than the Organizational Documents or the Code permitted
prior to adoption of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of
the indemnification otherwise provided for herein, and subject only to the
Organizational Documents, the Code, any other applicable law and the exclusions
set forth in Section 4 hereof, the Corporation hereby further agrees to hold
harmless and indemnify Indemnitee against any and all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or expenses
of the types customarily incurred in
<PAGE> 2
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, arbitral, administrative or investigative (including an
action by or in the right of the Corporation), to which Indemnitee is, was or at
any time becomes a party, or is threatened to be made a party, by the reason of
the fact that Indemnitee is, was or at any time becomes a director, officer,
employee or other agent of the Corporation or is or was serving or at any time
serves at the written request of the Corporation as a director, officer,
employee or other agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise.
4. LIMITATIONS ON INDEMNITY. No indemnity pursuant to this
Agreement shall be paid by the Corporation:
(a) on account of any claim against Indemnitee for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Corporation, pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or
(b) for which payment has actually been made to
Indemnitee under a valid and collectible insurance policy or under a valid and
enforceable indemnity clause, bylaw or agreement, except in respect of any
excess beyond payment under such insurance, clause, bylaw or agreement; or
(c) in connection with any proceeding (or part thereof)
brought or made by Indemnitee against the Corporation, unless such
indemnification is expressly required to be made by law; or
(d) if indemnity is finally determined to be unlawful
under the Code.
5. NOTIFICATION AND DEFENSE OF CLAIM.
(a) Promptly after receipt by Indemnitee of notice of the
commencement of any action, suit or proceeding, Indemnitee will, if a claim in
respect thereto is to be made against the Corporation under this Agreement,
notify the Corporation of the commencement thereof, but the failure to so notify
the Corporation will not relieve it from any liability which it may have to
Indemnitee otherwise under this Agreement. With respect to any such action, suit
or proceeding as to which Indemnitee so notifies the Corporation:
(i) the Corporation will be entitled to
participate therein at its own expense; and
(ii) except as otherwise provided below, to the
extent that it may desire, the Corporation
may assume the defense thereof.
(b) After notice from the Corporation to Indemnitee of
its election to assume the defense thereof, the Corporation will not be liable
to Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
-2-
<PAGE> 3
shall have the right to employ counsel of his choosing in such action, suit or
proceeding but the fees and expenses of such counsel incurred after notice from
the Corporation of its assumption of the defense thereof shall be at the expense
of Indemnitee unless (i) the employment of counsel by Indemnitee has been
authorized in writing by the Corporation, (ii) the Corporation and Indemnitee
shall reasonably conclude that there may be a conflict of interest between the
Corporation and Indemnitee in the conduct of the defense of such action, or
(iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which case the reasonable fees and expenses
of Indemnitee's counsel shall be paid by the Corporation.
(c) The Corporation shall not be liable to Indemnitee
under this Agreement for any amounts paid in settlement of any threatened or
pending action, suit or proceeding without its prior written consent. The
Corporation shall not settle any such action, suit or proceeding in any manner
which would impose any penalty or limitation on Indemnitee without Indemnitee's
prior written consent. Neither the Corporation nor Indemnitee will unreasonably
withhold or delay its or his consent to any proposed settlement.
6. PREPAYMENT OF EXPENSES. Unless Indemnitee otherwise elects,
expenses incurred in defending any civil or criminal action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt by the Corporation of a written
affirmation of Indemnitee's good faith belief that his conduct meets the
standards required for indemnification under the Code and the Organizational
Documents, and Indemnitee furnishes the Corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is ultimately
determined that he is not entitled to be indemnified by the Corporation under
this Agreement.
7. CONTINUATION OF INDEMNITY. All agreements and obligations of
the Corporation contained in this Agreement shall continue during the period in
which Indemnitee is a member of the Board of Directors and/or an officer of the
Corporation and shall continue thereafter so long as Indemnitee shall be subject
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, and whether formal or
informal, by reason of the fact that Indemnitee was a director and/or an officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, agent or consultant of another corporation,
partnership, joint venture, trust or other enterprise.
8. RELIANCE. the Corporation has entered into this Agreement in
order to induce Indemnitee to continue as a member of the Board of Directors
and/or an officer of the Corporation, as the case may be, and acknowledges that
Indemnitee is relying upon this Agreement in continuing in such capacity.
9. SEVERABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
-3-
<PAGE> 4
10. GENERAL.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of law.
(b) Neither this Agreement nor any rights or obligations
hereunder shall be assigned or transferred by Indemnitee.
(c) This Agreement shall be binding upon Indemnitee and
upon the Corporation, its successors and assigns, including successors by merger
or consolidation, and shall inure to the benefit of Indemnitee, his heirs,
personal representatives and permitted assigns and to the benefit of the
Corporation, its successors and assigns.
(d) No amendment, modification or termination of this
Agreement shall be effective unless in writing signed by both parties hereof.
[Signatures contained on following page]
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
INDEMNITEE: WITNESS SYSTEMS, INC.
By:
- ----------------------------------- -------------------------------
Chief Executive Officer
Name:
------------------------------
Title: Date:
----------------------------- ------------------------------
Date:
------------------------------
<PAGE> 1
EXHIBIT 10.20
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
OF
DAVID GOULD
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT, is made as of the 4th day
of August, 1999 (the "Effective Date"), by and between WITNESS SYSTEMS, INC., a
Delaware corporation (the "Company") and DAVID GOULD ("Executive").
W I T N E S S E T H
WHEREAS, the Company and Executive are parties to that certain
Employment Agreement dated February 2, 1999 (the "Employment Agreement"); and
WHEREAS, the parties wish to amend the Employment Agreement to clarify
the intent of the parties with respect to the scope of the Company's obligations
under the Employment Agreement to pay a "Guaranteed Bonus" to Executive.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and other good and valuable consideration the receipt, adequacy
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Except as otherwise expressly amended in this Amendment No. 1
to Employment Agreement, the Employment Agreement shall remain in full force and
effect and all provisions of the Employment Agreement not expressly modified by
this Amendment No. 1 to Employment Agreement are hereby incorporated by
reference and made an express part hereof.
2. Subsection 2A. of the Employment Agreement is hereby amended
by deleting Section 2A. in its entirety and substituting the following new
Section 2A. therefor:
A. Base Salary, Guaranteed Bonus and Supplemental Bonuses.
During the Term (as defined below), Company shall pay to Executive a
base salary ("Base Salary") of Two Hundred Twenty-Five Thousand and
No/100 Dollars ($225,000.00) per year (subject to annual review and
adjustment beginning in December 1999), payable in arrears in
accordance with the Company's standard payroll practices for senior
executives (but in no event less frequently than in equal semi-monthly
payments). In the event of a Disability, to the extent payments are
received under an employer-sponsored disability program, the payments
of Base Salary hereunder are to be reduced by an amount equal to such
disability payments. The Company shall pay to Executive a bonus (the
"Guaranteed Bonus") equivalent to the sum of the amount of interest due
and payable pursuant to that certain promissory note delivered to
Company by Executive effective March 31, 1999 in the principal amount
of $1,461,383.43 and the amount of interest due and payable pursuant to
that certain promissory note delivered to Company by Executive
effective August 4, 1999 in the principal amount of $337,050.00
(collectively, the "Notes"). The Guaranteed Bonus shall be payable
annually, with the first such payment being due and payable on the
first day of the
<PAGE> 2
first month in which interest is due and payable under either of the
Notes. Company's obligations to pay the Guaranteed Bonus pursuant to
this Section 2.A. shall continue for so long as interest remains due
and payable under either of the Notes, notwithstanding the earlier
termination of this Agreement or Executive's employment with Company.
In addition to the Guaranteed Bonus, Company shall pay to Executive a
lump sum bonus of $150,000.00 on March 31, 2000, a lump sum bonus of
$105,000.00 on March 31, 2001 and a lump sum bonus of $105,000.00 on
March 31, 2002 (collectively, the "Supplemental Bonuses"). Company's
obligations to pay the Supplemental Bonuses pursuant to this Section
2.A. shall continue notwithstanding the earlier termination of this
Agreement or Executive's employment with Company.
3. Section 4 of the Employment Agreement is hereby amended by
deleting Section 4 in its entirety and substituting the following new Section 4
therefor:
4. Term. The term of employment of Executive under this
Agreement shall be for a period of one (1) year (the "Term") commencing
on the date hereof and ending on the one (1) year anniversary thereof,
subject to earlier termination as provided in Section 5. Unless either
party provides written notice to the other party at least thirty (30)
days prior to the end of a Term, this Agreement shall automatically
renew for successive one (1) year Terms. Notwithstanding the foregoing,
Company's obligations to pay the Guaranteed Bonus pursuant to Section
2.A. shall continue for so long as interest remains due and payable
under either of the Notes and Company's obligations to pay the
Supplemental Bonuses pursuant to Section 2.A. shall continue
notwithstanding the earlier termination of this Agreement or
Executive's employment with Company.
4. Section 17 of the Employment Agreement is hereby amended by
deleting Section 4 in its entirety and substituting the following new Section 17
therefor:
17. Successors. This Agreement shall be binding upon and inure
to the benefit of the heirs, legal representatives, successors, and
permitted assigns of the parties. The obligations of Company pursuant
to this Agreement, including without limitation, Company's obligations
with respect to payment of the Guaranteed Bonus and the Supplemental
Bonuses pursuant to Section 2.A., shall be binding upon Company's
successors and assigns.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the day and year first written above.
COMPANY: EXECUTIVE:
Witness Systems, Inc.
By: /s/ Jon W. Ezrine /s/ David Gould
------------------------------------ --------------------------------
Name: Jon W. Ezrine David Gould
----------------------------------
Title: Chief Financial Officer
---------------------------------
-3-
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Witness Systems, Inc.:
The audits referred to in our report dated November 18, 1999 included
the related financial statement schedule as of September 30, 1999, and for each
of the years in the three-year period ended December 31, 1998 and for the nine-
month period ended September 30, 1999, included in the registration statement.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We consent to the use of our reports included herein and to the
reference to our firm under the headings "Selected Consolidated Financial Data"
and "Experts" in the registration statement.
/s/ KPMG LLP
Atlanta, Georgia
December 10, 1999
